UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-8266
--------------------
India Fund, Inc.
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(Exact name of registrant as specified in charter)
200 Park Avenue
New York, NY 10166
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(Address of principal executive offices) (Zip code)
Simpson Thacher Bartlett
425 Lexington Avenue, 23rd Floor
New York, NY 10017
--------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 212-667-4711
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Date of fiscal year end: December 31, 2003
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Date of reporting period: June 30, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ADVANTAGE ADVISERS,INC.
The India Fund, Inc.
Semi-Annual Report
June 30, 2003
THE INDIA FUND, INC.
THE INDIA FUND, INC.
August 1, 2003
DEAR FUND SHAREHOLDER,
We are pleased to present you with the unaudited financial statements of The
India Fund, Inc. (the "Fund") for the six-month period ended June 30, 2003.
The Fund's net asset value (NAV) closed at $14.21 on June 30, 2003, representing
an increase of 11.71% during the six months ended on that date. The Fund
outperformed its benchmark, the IFC Investable Index which gained 7.73% during
the same period.
We believe that economically India will continue to thrive. We believe fiscal
year 2004 gross domestic product will be driven by services and a rebound in
agriculture aided by the strong start of the monsoon season. In our opinion,
retail lending remains strong particularly in the housing sector and corporate
lending has begun to show signs of revival especially in key sectors such as
steel and textiles.
On behalf of the Board of Directors, we thank you for your participation and
continued support of the Fund. If you have any questions, please do not hesitate
to call our toll-free number, (800) 421-4777.
Sincerely,
/S/ BRYAN MCKIGNEY
Bryan McKigney
Chairman and President
1
THE INDIA FUND, INC.
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CHANGE IN INVESTMENT POLICY
On April 30, 2002, the Board of Directors of the Fund approved a change to the
Fund's investment policies in connection with new Rule 35d-1 under the
Investment Company Act of 1940. Under normal conditions, the Fund will invest at
least 80% of the value of its assets in equity securities of Indian Companies
(as defined in the Fund's prospectus.) Previously, the Fund's investment
policies stated that the Fund would invest at least 65% of the value of its
assets in such securities. The Board also adopted a policy to provide the
stockholders of the Fund with 60 days' notice of any change to the investment
policy adopted if such notice is required by Rule 35d-1.
FUNDAMENTAL PERIODIC REPURCHASE POLICY
The Fund has adopted the following fundamental policy regarding periodic
repurchases:
a) The Fund will make offers to repurchase its shares at semi-annual
intervals pursuant to Rule 23c-3 under the Investment Company Act of 1940,
as amended from time to time ("Offers"). The Board of Directors may place
such conditions and limitations on Offers as may be permitted under Rule
23c-3.
b) 14 days prior to the last Friday of the Fund's first and third fiscal
quarters, or the next business day if such Friday is not a business day,
will be the deadline (the "Repurchase Request Deadline") by which the Fund
must receive repurchase requests submitted by stockholders in response to
the most recent Offer.
c) The date on which the repurchase price for shares is to be determined (the
"Repurchase Pricing Date") shall occur no later than the last Friday of
the Fund's first and third fiscal quarters, or the next business day if
such day is not a business day.
d) Offers may be suspended or postponed under certain circumstances, as
provided for in Rule 23c-3.
SHARE REPURCHASE PROGRAM
The Board of Directors of the Fund previously had authorized the Fund to
repurchase from time to time in the open market up to 4,000,000 shares of the
Fund's common stock at such times and in such amounts as management believed
will enhance shareholders value, subject to review by the Fund's Board of
Directors. During the year ended December 31, 2002, the Fund repurchased a total
of 89,000 shares of its common stock. This repurchase program has been suspended
by the Board of Directors since the Fund's stockholders approved an interval
fund structure at the Annual Meeting of Stockholders held on April 23, 2003.
(For details regarding shares repurchased by the Fund, see Note E to the
Financial Statements.)
--------------------------------------------------------------------------------
2
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (UNAUDITED)
INDIA (100% OF HOLDINGS)
COMMON STOCKS (97.41% of holdings)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
CEMENT 1.31%
1,396,443 Associated Cement Companies Ltd ..................... $ 4,033,732 $ 5,018,422
700 Gujarat Ambuja Cements Ltd .......................... 2,705 3,091
47,840 Panyam Cements and Mineral Industries Ltd*+ ......... 481,083 36,897
------------ ------------
4,517,520 5,058,410
------------ ------------
COMPUTER HARDWARE 0.36%
100 Digital Globalsoft Ltd .............................. 1,088 960
198,403 Moser-Baer India Ltd ................................ 1,186,267 1,402,100
------------ ------------
1,187,355 1,403,060
------------ ------------
COMPUTER SOFTWARE & PROGRAMMING 10.30%
60,000 Geodesic Information Systems+ ....................... 185,279 217,947
400,508 Infosys Technologies Ltd ............................ 5,090,019 28,138,565
66,407 Mphasis BFL Ltd ..................................... 791,436 893,144
1,695,729 Satyam Computer Services Ltd ........................ 1,896,015 7,019,015
1,300 Silverline Technologies Ltd+ ........................ 4,371 226
176,050 Wipro Ltd ........................................... 5,214,461 3,587,299
------------ ------------
13,181,581 39,856,196
------------ ------------
COMPUTER TRAINING 0.46%
583,340 NIIT Ltd ............................................ 4,032,011 1,789,437
------------ ------------
4,032,011 1,789,437
------------ ------------
CONSUMER MISCELLANEOUS 1.22%
2,495,146 Zee Telefilms Ltd ................................... 12,603,643 4,733,101
------------ ------------
12,603,643 4,733,101
------------ ------------
CONSUMER NON-DURABLES 12.02%
179,567 Godfrey Phillips India Ltd .......................... 3,109,433 1,391,094
358,000 Godrej Consumer Products Ltd ........................ 754,184 960,676
6,998,151 Hindustan Lever Ltd ................................. 26,401,160 26,873,694
1,047,051 ITC Ltd ............................................. 18,095,844 17,267,224
------------ ------------
48,360,621 46,492,688
------------ ------------
3
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
DIVERSIFIED INDUSTRIES 4.16%
819,300 Grasim Industries Ltd ............................... $ 6,336,877 $ 8,849,749
79,203 Gujarat Gas Company Ltd ............................. 917,786 775,242
149,000 Hinduja TMT Ltd ..................................... 983,998 792,134
1,744 Indian Rayon and Industries Ltd ..................... 6,451 4,839
1,073,931 Larsen & Toubro Ltd ................................. 6,228,686 5,662,001
------------ ------------
14,473,798 16,083,965
------------ ------------
ELECTRICITY 0.00%
4 CESC Ltd+ ........................................... 29 4
150 Tata Power Company Ltd+ ............................. 357 511
------------ ------------
386 515
------------ ------------
ELECTRONICS & ELECTRICAL EQUIPMENT 4.01%
723 Alstom Projects India Ltd+ .......................... 1,213 1,907
95,600 Bharat Electronics Ltd .............................. 361,955 704,400
2,416,918 Bharat Heavy Electricals Ltd ........................ 8,603,860 13,988,172
270,200 Exide Industries Ltd ................................ 774,715 811,124
------------ ------------
9,741,743 15,505,603
------------ ------------
ENGINEERING 2.02%
495,426 ABB Ltd ............................................. 5,551,958 3,931,319
103,423 Flat Products Equipments ............................ 184,755 215,882
340,999 Praj Industries Ltd+ ................................ 553,091 493,851
546,200 Thermax India Ltd ................................... 1,615,874 3,161,191
------------ ------------
7,905,678 7,802,243
------------ ------------
EXTRACTIVE INDUSTRIES 3.57%
358,905 Hindalco Industries Ltd ............................. 5,255,409 5,753,527
1,244,378 National Aluminium Company Ltd ...................... 1,750,176 2,995,131
485,998 Oil and Natural Gas Corporation Ltd ................. 3,768,987 5,049,278
600 Sesa Goa Ltd+ ....................................... 4,568 2,156
------------ ------------
10,779,140 13,800,092
------------ ------------
4
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
FERTILIZERS 0.23%
331,560 Indo Gulf Fertilisers Ltd ........................... $ 224,574 $ 491,240
700 Nagarjuna Fertilizers and Chemicals Ltd+ ............ 764 116
500,000 Rashtriya Chemicals and Fertilizers Ltd ............. 421,508 413,708
50 Southern Petrochemical Industries Corporation Ltd+ .. 43 9
------------ ------------
646,889 905,073
------------ ------------
FINANCE 17.31%
2,808,150 Andhra Bank Ltd ..................................... 1,740,514 1,909,567
328,200 Bank of Baroda ...................................... 751,856 788,189
991,100 Canara Bank Ltd+ .................................... 1,594,174 2,033,601
561,325 Corporation Bank .................................... 1,602,153 1,894,035
1,806,120 HDFC Bank Ltd ....................................... 8,494,575 10,064,449
26,100 HDFC Bank Ltd ADR ................................... 367,443 489,375
1,408,110 Housing Development Finance Corporation Ltd ......... 9,900,122 12,397,858
3,989,504 ICICI Bank Ltd+ ..................................... 10,730,313 12,894,852
1,407,600 Industrial Development Bank of India Ltd+ ........... 981,171 1,031,392
284,150 ING Vysya Bank Ltd .................................. 1,529,795 1,764,702
474,150 Oriental Bank of Commerce ........................... 1,245,184 1,635,089
400,800 Punjab National Bank Ltd+ ........................... 911,870 1,337,725
1,866,533 State Bank of India ................................. 8,053,371 15,431,941
98,000 State Bank of India GDR ............................. 1,117,250 2,009,000
1,736,500 Union Bank of India Ltd ............................. 1,055,822 1,296,677
------------ ------------
50,075,613 66,978,452
------------ ------------
FOOD 0.00%
50 Tata Tea Ltd+ ....................................... 179 243
276 United Breweries Holdings Ltd+ ...................... 1,110 126
184 United Breweries Ltd+ ............................... 1,118 376
------------ ------------
2,407 745
------------ ------------
HOTELS & LEISURE 0.00%
21 Indian Hotels Company Ltd+ .......................... 343 113
------------ ------------
343 113
------------ ------------
5
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
HOUSEHOLD APPLIANCES 0.00%
400 Phil Corporation Ltd+ ............................... $ 1,093 $ 60
200 Samtel Color Ltd .................................... 395 124
450 Videocon Appliances Ltd ............................. 2,629 115
194 Videocon International Ltd .......................... 174 133
------------ ------------
4,291 432
------------ ------------
MEDIA 0.68%
671,200 Balaji Telefilms Ltd ................................ 1,338,083 980,007
450,192 ETC Networks Ltd+ ................................... 459,084 505,703
737,500 Pritish Nandy Communications Ltd .................... 2,247,266 451,515
393,259 Sri Adhikari Brothers Television Network Ltd ........ 1,263,903 671,511
250,000 Vans Information Ltd+ ............................... 573,394 13,450
------------ ------------
5,881,730 2,622,186
------------ ------------
PETROLEUM RELATED 18.64%
830,653 Bharat Petroleum Corporation Ltd .................... 4,313,287 5,074,726
2,700 Chennai Petroleum Corporation Ltd ................... 3,200 3,027
1,860,228 Hindustan Petroleum Corporation Ltd ................. 9,408,870 13,990,746
830,760 Indian Oil Corporation Ltd .......................... 4,418,102 7,293,064
300 Indian Petrochemicals Corporation Ltd ............... 637 700
80,800 Niko Resources Ltd ADR .............................. 1,314,053 1,604,365
6,320,587 Reliance Industries Ltd ............................. 31,710,406 44,150,278
------------ ------------
51,168,555 72,116,906
------------ ------------
PHARMACEUTICALS 9.45%
610,458 Dr. Reddy's Laboratories Ltd ........................ 4,573,437 14,380,647
7,000 Dr. Reddy's Laboratories Ltd ADR .................... 150,918 163,170
106,805 Glaxosmithkline Pharmaceuticals Ltd ................. 673,608 823,044
100 IPCA Laboratories Ltd ............................... 309 785
38,600 Matrix Laboratories Ltd ............................. 363,701 448,423
219 Nicholas Piramal Ltd ................................ 2,327 1,640
100 Orchid Chemicals & Pharmaceuticals Ltd .............. 339 356
1,126,155 Ranbaxy Laboratories Ltd ............................ 8,496,789 19,020,080
229,600 Sun Pharmaceutical Industries Ltd ................... 457,240 1,720,889
------------ ------------
14,718,668 36,559,034
------------ ------------
6
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
RETAIL STORES 0.66%
607,910 Pantaloon Retail India Ltd+ ......................... $ 596,146 $ 1,126,341
940,160 SB&T International Ltd .............................. 651,619 684,838
180,315 Trent Ltd+ .......................................... 602,853 741,322
------------ ------------
1,850,618 2,552,501
------------ ------------
STEEL 1.65%
470,450 Jindal Iron & Steel Company Ltd ..................... 829,568 1,252,307
1,408,766 Tata Iron and Steel Company Ltd ..................... 4,130,398 5,127,886
------------ ------------
4,959,966 6,380,193
------------ ------------
TELECOMMUNICATIONS 1.56%
2,474,937 Mahanagar Telephone Nigam Ltd ....................... 7,843,826 6,042,215
------------ ------------
7,843,826 6,042,215
------------ ------------
TELECOMMUNICATIONS EQUIPMENT 0.33%
100 Himachal Futuristic Communications Ltd+ ............. 168 72
1,267,600 Shyam Telecom Ltd+ .................................. 8,621,487 1,290,241
------------ ------------
8,621,655 1,290,313
------------ ------------
TEXTILES - COTTON 0.00%
36 Arvind Mills Ltd+ ................................... 133 30
------------ ------------
133 30
------------ ------------
TRANSPORTATION 1.52%
793,451 Container Corporation of India Ltd .................. 4,187,519 5,877,892
100 South East Asia Marine Engineering and
Construction Ltd+ ................................ 308 72
------------ ------------
4,187,827 5,877,964
------------ ------------
VEHICLE COMPONENTS 0.76%
245,759 Apollo Tyres Ltd .................................... 709,232 987,637
125 FAG Bearings (India) Ltd ............................ 334 186
231,200 Maruti Udyog Ltd*+ .................................. 622,845 621,907
510,600 SKF Bearings India Limited .......................... 841,477 772,438
118,000 Swaraj Engines Ltd .................................. 1,298,970 535,787
------------ ------------
3,472,858 2,917,955
------------ ------------
7
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (concluded)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
VEHICLES 5.19%
1,468,090 Ashok Leyland Ltd ................................... $ 3,332,376 $ 4,054,862
337,651 Bajaj Auto Ltd ...................................... 3,107,169 4,169,959
780,737 Hero Honda Motors Ltd ............................... 2,771,322 4,253,985
1,766,458 Tata Engineering and Locomotive Company Ltd ......... 4,179,763 7,513,247
41,527 Tata Engineering and Locomotive Company Ltd -
Warrants Expire 9/30/04+ ......................... 0 71,490
------------ ------------
13,390,630 20,063,543
------------ ------------
TOTAL COMMON STOCKS ................................. 293,609,485 376,832,965
------------ ------------
PREFERRED STOCK (0.00% of holdings)
PHARMACEUTICALS 0.00%
800 Sun Pharmaceutical Industries Ltd
Preference Shares+ ................................ 23 17
------------ ------------
23 17
------------ ------------
TOTAL PREFERRED STOCK ............................... 23 17
------------ ------------
SHORT-TERM INVESTMENTS (2.59% of holdings)
10,907,629 HDFC Liquid Fund+ ................................... 2,838,104 2,859,035
11,408,196 Prudential ICICI Liquid Plan+ ....................... 3,628,304 3,700,460
14,117,519 Standard Chartered Grindlays Cash Fund+ ............. 3,432,127 3,464,763
------------ ------------
TOTAL SHORT-TERM INVESTMENTS ........................ 9,898,535 10,024,258
------------ ------------
8
THE INDIA FUND, INC.
JUNE 30, 2003
SCHEDULE OF INVESTMENTS (CONCLUDED) (UNAUDITED)
BONDS (0.00% of holdings)
PAR VALUE PERCENT OF
(000) SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES 0.00%
INR 41,989 Hindustan Lever Ltd 9% NCD 9.00%* ................... $ 0 $ 0
------------ ------------
0 0
------------ ------------
TOTAL BONDS ......................................... 0 0
------------ ------------
TOTAL INDIA ......................................... 303,508,043 386,857,240
------------ ------------
TOTAL INVESTMENTS** ..........................100.00% $303,508,043 $386,857,240
============ ============
----------
FOOTNOTES AND ABBREVIATIONS
ADR - American Depository Receipts
GDR - Global Depository Receipts
INR - Indian Rupee
NCD - Non Convertible Debenture
+ Non-income producing security.
* At fair value as determined under the supervision of the Board
of Directors.
** Aggregate cost for Federal income tax purposes is $306,714,875.
The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:
Excess of value over tax cost $112,738,385
Excess of tax cost over value (32,596,020)
------------
$ 80,142,365
============
See accompanying notes to financial statements.
9
THE INDIA FUND, INC.
JUNE 30, 2003
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
ASSETS
Investments, at value (Cost $303,508,043) .............................. $386,857,240
Cash (including Indian Rupees of $2,767,662 with a cost of $2,766,021) .. 3,272,034
Receivables:
Dividends and reclaims net of excess taxes withheld ................ 3,350,257
Interest ........................................................... 236
Securities sold .................................................... 1,251,489
Prepaid expenses ........................................................ 87,528
------------
TOTAL ASSETS .......................................... 394,818,784
------------
LIABILITIES
Payable for securities purchased ........................................ 2,308,116
Due to Investment Manager ............................................... 330,891
Due to Administrator .................................................... 67,969
Accrued expenses ........................................................ 397,500
------------
TOTAL LIABILITIES ..................................... 3,104,476
------------
NET ASSETS ............................................ $391,714,308
============
NET ASSET VALUE PER SHARE ($391,714,308/27,570,900
SHARES ISSUED AND OUTSTANDING) ........................ $ 14.21
============
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 34,007,133 shares issued
(100,000,000 shares authorized) .................................... $ 34,007
Paid-in capital ......................................................... 460,635,809
Cost of 6,436,233 shares repurchased .................................... (75,711,026)
Undistributed net investment income ..................................... 25,061
Accumulated net realized loss on investments ............................ (76,544,888)
Net unrealized appreciation in value of investments, foreign
currency holdings and on translation of other assets and liabilities
denominated in foreign currency .................................... 83,275,345
------------
NET ASSETS ............................................ $391,714,308
============
See accompanying notes to financial statements.
10
THE INDIA FUND, INC.
JUNE 30, 2003
STATEMENT OF OPERATIONS (UNAUDITED)
INVESTMENT INCOME
Dividends (net of Indian taxes withheld of $80,457) ................................ $ 3,376,982
Interest (net of Indian taxes withheld of $131) .................................... 1,351
-----------
TOTAL INVESTMENT INCOME .......................................... 3,378,333
-----------
EXPENSES
Management fees ..................................................... $1,852,824
Custodian fees ...................................................... 359,663
Administration fees ................................................. 352,934
Legal fees .......................................................... 136,441
Audit fees .......................................................... 117,943
Insurance ........................................................... 91,405
Transfer agent fees ................................................. 49,235
Printing ............................................................ 36,828
Directors' fees ..................................................... 28,253
NYSE fees ........................................................... 15,620
ICI fees ............................................................ 6,116
Miscellaneous expenses .............................................. 28,056
----------
TOTAL EXPENSES ................................................... 3,075,318
-----------
NET INVESTMENT INCOME ............................................ 303,015
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, FOREIGN CURRENCY HOLDINGS AND
TRANSLATION OF OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY:
Net realized gain on:
Security transactions ......................................................... 7,376,655
Foreign currency related transactions ......................................... 104,280
-----------
7,480,935
Net change in unrealized appreciation in value of investments, foreign currency
holdings and translation of other assets and liabilities denominated in
foreign currency ................................................................. 33,162,564
-----------
Net realized and unrealized gain on investments, foreign currency holdings and
translation of other assets and liabilities denominated in foreign currency ..... 40,643,499
-----------
Net increase in net assets resulting from operations ............................... $40,946,514
===========
See accompanying notes to financial statements.
11
THE INDIA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2003 ENDED
(UNAUDITED) DECEMBER 31, 2002
-----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income ................................................. $ 303,015 $ 2,370,803
Net realized gain (loss) on investments and foreign currency
related transactions ............................................. 7,480,935 (12,691,975)
Net change in unrealized appreciation in value of investments,
foreign currency holdings and translation of other assets
and liabilities denominated in foreign currency .................. 33,162,564 31,237,020
------------ ------------
Net increase in net assets resulting from operations .................. 40,946,514 20,915,848
------------ ------------
DISTRIBUTION TO SHAREHOLDERS
Net investment income ($0.085 per share at December 31, 2002) ......... -- (2,343,527)
------------ ------------
Decrease in net assets resulting from distributions ................... -- (2,343,527)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Shares repurchased under Stock Repurchase Plan
(89,000 shares at December 31, 2002) ............................. -- (920,118)
Shares repurchased under Tender Offer
(3,063,433 shares at December 31, 2002), including expenses
of $70,586 and $97,512 respectively .............................. (70,586) (33,305,126)
------------ ------------
Net decrease in net assets resulting from capital share transactions .. (70,586) (34,225,244)
------------ ------------
Total increase (decrease) in net assets ............................... 40,875,928 (15,652,923)
NET ASSETS
Beginning of period ................................................... 350,838,380 366,491,303
------------ ------------
End of period (Including undistributed net investment income
of $25,061 at June 30, 2003) ..................................... $391,714,308 $350,838,380
============ ============
See accompanying notes to financial statements.
12
THE INDIA FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE SIX
MONTHS ENDED FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
JUNE 30, 2003 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) DEC. 31, 2002 DEC. 31, 2001 DEC. 31, 2000 DEC. 31, 1999 DEC. 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period ............................. $ 12.72 $ 11.93 $ 16.18 $ 23.21 $ 8.85 $ 8.11
-------- -------- -------- -------- -------- ---------
Net investment income (loss) .......... 0.01 0.09 0.07 (0.16) (0.10) (0.03)
Net realized and unrealized gain (loss)
on investments, foreign currency
holdings, and translation of other
assets and liabilities denominated
in foreign currency ................ 1.48 0.76 (4.29) (7.27) 14.36 0.77
-------- -------- -------- -------- -------- ---------
Net increase (decrease) from
investment operations .............. 1.49 0.85 (4.22) (7.43) 14.26 0.74
-------- -------- -------- -------- -------- ---------
Less: Dividends and Distributions
Dividends from net investment
income ........................... -- (0.09) (0.07) -- -- --
-------- -------- -------- -------- -------- ---------
Total dividends and distributions ..... -- (0.09) (0.07) -- -- --
-------- -------- -------- -------- -------- ---------
Capital share transactions
Anti-dilutive effect of Share
Repurchase Program ................. -- 0.01 0.04 0.40 0.10 --
Anti-dilutive effect of Tender Offer .. -- 0.02 -- -- -- --
-------- -------- -------- -------- -------- ---------
Total capital share transactions ...... -- 0.03 0.04 0.40 0.10 --
-------- -------- -------- -------- -------- ---------
Net asset value, end of period ........ $ 14.21 $ 12.72 $ 11.93 $ 16.18 $ 23.21 $ 8.85
======== ======== ======== ======== ======== =========
Per share market value,
end of period ...................... $12.2500 $10.5900 $ 9.5000 $12.0625 $16.7500 $ 6.3125
TOTAL INVESTMENT RETURN BASED
ON MARKET VALUE* ................... 15.68% 12.36% (20.69)% (27.99)% 165.35% (14.41)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) ... $391,714 $350,838 $366,491 $504,769 $768,948 $300,523
Ratios of expenses to average
net assets ......................... 1.82%+ 1.73% 1.70% 1.59% 1.84% 2.03%
Ratios of net investment income
(loss) to average net assets ....... 0.18%+ 0.65% 0.57% (0.75)% (0.68)% (0.34)%
Portfolio turnover .................... 13.95% 39.36% 16.06% 19.24% 18.65% 28.85%
See accompanying notes to financial statements.
13
THE INDIA FUND, INC.
FINANCIAL HIGHLIGHTS (CONCLUDED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
* Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of each period reported. Dividends and distributions, if
any, are assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment return
does not reflect brokerage commissions or sales charges and is not annualized.
+ Annualized.
See accompanying notes to financial statements.
14
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The India Fund, Inc. (the "Fund") was incorporated in Maryland on December 27,
1993, and commenced operations on February 23, 1994. The Fund operates through a
branch in the Republic of Mauritius. The Fund is registered under the Investment
Company Act of 1940, as amended, as a closed-end, non-diversified management
investment company.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
SIGNIFICANT ACCOUNTING POLICIES ARE AS FOLLOWS:
PORTFOLIO VALUATION. Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at:
(i) the last sales price prior to the time of determination, if there was
a sale on the date of determination,
(ii) at the mean between the last current bid and asked prices, if there
was no sales price on such date and bid and asked quotations are
available, and
(iii) at the bid price if there was no sales price on such date and only
bid quotations are available.
Securities that are traded over-the-counter are valued, if bid and asked
quotations are available, at the mean between the current bid and asked prices.
Securities for which sales prices and bid and asked quotations are not available
on the date of determination may be valued at the most recently available prices
or quotations under policies adopted by the Board of Directors. Investments in
short-term debt securities having a maturity of 60 days or less are valued at
amortized cost which approximates market value. Securities for which market
values are not readily ascertainable, which totaled $658,804 (0.17% of net
assets) at June 30, 2003, are carried at fair value as determined in good faith
by or under the supervision of the Board of Directors. The net asset value per
share of the Fund is calculated weekly and at the end of each month.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax reporting purposes. Interest income is recorded on the accrual basis;
dividend income is recorded on the ex-dividend date or, using reasonable
diligence, when known. The collectibility of income receivable from Indian
securities is evaluated periodically, and any resulting allowances for
uncollectible amounts are reflected currently in the determination of investment
income.
15
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
TAX STATUS. No provision is made for U.S. Federal income or excise taxes as it
is the Fund's intention to continue to qualify as a regulated investment company
and to make the requisite distributions to its shareholders that will be
sufficient to relieve it from all or substantially all Federal income and excise
taxes.
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP.
The tax character of distributions paid during the year ended December 31, 2002:
Ordinary income .................................................................... $ 2,343,527
=============
At December 31, 2002, the components of net assets (excluding paid in capital)
on a tax basis were as follows:
Currently Distributable Ordinary Income .......................... $ 0
Plus/Less: Cumulative Timing Differences ......................... (277,954)
------------
Accumulated net investment loss .................................................... $ (277,954)
-------------
Tax basis capital loss carryover ................................. $(76,658,179)
Plus/Less: Cumulative Timing Differences ......................... (3,018,507)
------------
Accumulated capital loss ........................................................... (79,676,686)
-------------
Book unrealized foreign exchange loss .............................................. (113,308)
-------------
Book unrealized appreciation ..................................... $ 50,226,089
Plus/Less: Cumulative Timing Differences ......................... (4,349,137)
------------
Unrealized appreciation ............................................................ 45,876,952
-------------
Net assets (excluding paid in capital) ............................................. $ (34,190,996)
=============
The differences between book and tax basis unrealized appreciation is primarily
attributable to wash sales and a dividend overdistribution. The cumulative
timing difference for the capital loss carryover is due to Post October Losses.
Net Asset Value .................................................................... $ 350,838,380
Paid in Capital .................................................................... (385,029,376)
-------------
Net assets (excluding paid in capital) ............................................. $ (34,190,996)
=============
16
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
At December 31, 2002, the Fund had a capital loss carryover of $76,658,179 which
is available to offset future net realized gains on securities transactions to
the extent provided for in the Internal Revenue Code. Of the aggregate capital
losses, $9,970,780 will expire in 2005, $34,828,858 will expire in 2006,
$20,935,877 will expire in 2009 and $10,922,664 will expire in 2010.
The Fund's realized capital losses incurred after October 31, 2002, but before
December 31, 2002, are deemed to arise on the first business day of the
following year. The Fund incurred and elected to defer such realized capital
losses of $3,018,507.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, assets and liabilities at the
prevailing rates of exchange on the valuation date; and
(ii) purchases and sales of investment securities and investment income at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund generally does not isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. However, the Fund does isolate the effect of fluctuations in foreign
currency rates when determining the gain or loss upon the sale of foreign
currency denominated debt obligations pursuant to U.S. Federal income tax
regulations; such amounts are categorized as foreign currency gains or losses
for federal income tax purposes. The Fund reports certain realized foreign
exchange gains and losses as components of realized gains and losses for
financial reporting purposes, whereas such amounts are treated as ordinary
income for Federal income tax reporting purposes.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange. Foreign security and
currency transactions may involve certain considerations and risks not typically
associated with those of domestic origin as a result of, among other factors,
the level of governmental supervision and regulation of foreign securities
markets and the possibility of political or economic instability, and the fact
that foreign securities markets may be smaller and have less developed and less
reliable settlement and share registration procedures.
DISTRIBUTION OF INCOME AND GAINS. The Fund intends to distribute annually to
shareholders, substantially all of its net investment income, including foreign
currency gains, and to distribute annually any net realized gains after the
utilization of available capital loss carryovers. An additional distribution may
be made to the extent necessary to avoid payment of a 4% Federal excise tax.
17
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with Federal income tax regulations, which may
differ from accounting principles generally accepted in the United States of
America. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their Federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income and net realized
capital gains. To the extent they exceed net investment income and net realized
gains for tax purposes, they are reported as distributions of additional paid-in
capital.
During the period ended December 31, 2002, the Fund reclassified $137,200 from
accumulated net realized loss on investments to overdistribution of net
investment income as a result of permanent book and tax differences relating
primarily to realized foreign currency losses. Net investment income and net
assets were not affected by the reclassifications.
NOTE B: MANAGEMENT, INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Advantage Advisers, Inc. ("Advantage"), a subsidiary of Oppenheimer Asset
Management Inc. and an affiliate of Fahnestock &Co. Inc. ("Fahnestock"), serves
as the Fund's Investment Manager (the "Investment Manager") under the terms of a
management agreement dated June 5, 2003 (the "Management Agreement"). Imperial
Investment Advisors Private Limited ("Imperial"), an Indian company and
subsidiary of Fahnestock and Advantage India, Inc., serves as the Fund's Country
Adviser (the "Country Adviser") under the terms of an advisory agreement dated
June 5, 2003 (the "Country Advisory Agreement"). From August 1, 2001 to April
30, 2002, Advantage India, Inc. served as the Fund's Country Adviser under
similar terms. Pursuant to the Management Agreement, the Investment Manager
supervises the Fund's investment program and is responsible on a day-to-day
basis for investing the Fund's portfolio in accordance with its investment
objective and policies. Pursuant to the Country Advisory Agreement, the Country
Adviser provides statistical and factual information and research regarding
economic, political factors and investment opportunities in India to the
Investment Manager. For their services, the Investment Manager receives monthly
fees at an annual rate of 1.10% of the Fund's average weekly net assets and the
Country Adviser receives from the Investment Manager a fee to be agreed upon by
the Investment Manager and the Country Adviser from time to time. For the six
months ended June 30, 2003, fees earned by the Investment Manager amounted to
$1,852,824.
Fahnestock, a registered investment advisor and an indirect wholly-owned
subsidiary of Fahnestock Viner Holdings Inc. ("FVH"), serves as the Fund's
Administrator (the "Administrator") pursuant to an administration agreement
dated June 5, 2003. The Administrator provides certain administrative services
to the Fund. For its services, the Administrator receives a monthly fee at an
annual rate of 0.20% of the Fund's average weekly net assets. For the six months
ended June 30, 2003, administration
18
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
fees amounted to $336,877 (Prior to June 5, 2003, administration fees were paid
to CIBC World Markets Corp.). The Administrator subcontracts certain of these
services to PFPC, Inc. In addition, Multiconsult Ltd. (the "Mauritius
Administrator") provides certain administrative services relating to the
operation and maintenance of the Fund in Mauritius. The Mauritius Administrator
receives a monthly fee of $1,500 and is reimbursed for certain additional
expenses. For the six months ended June 30, 2003, fees and expenses of the
Mauritius Administrator amounted to $16,057.
On December 10, 2002, Canadian Imperial Bank of Commerce, CIBC World Markets
Corp. ("CIBC WM"), Fahnestock and FVH announced that Fahnestock had agreed to
acquire the U.S. brokerage and asset management businesses of CIBC WM. The
acquisition of the U.S. brokerage business closed on January 3, 2003. As
required under the Investment Company Act of 1940, as amended (the "1940 Act"),
the Fund's then existing Management Agreement and Country Advisory Agreement
provided for their automatic termination in the event of their "assignment" as
defined in the 1940 Act. Consummation of the acquisition by Fahnestock and FVH
of the asset management business of CIBC WM constituted an assignment of the
Fund's then existing Management Agreement and Country Advisory Agreement. At a
meeting on January 17, 2003, the Board of Directors of the Fund, including a
majority of the independent Directors, approved a new investment management
agreement between the Fund and Advantage and a new Country Advisory Agreement
between Advantage and Imperial. As required by the 1940 Act, stockholders of the
Fund approved the new investment management agreement and the new country
advisory agreement at the Fund's 2003 annual meeting of stockholders. Fahnestock
completed its acquisition of the asset management business on June 4, 2003.
Fahnestock replaced CIBC WM as the Fund's administrator and FVH acquired
ultimate control of Advantage and Imperial.
The Fund pays each of its directors who is not a director, officer or employee
of the Investment Manager, the Country Adviser or the Administrator or any
affiliate thereof an annual fee of $5,000 plus up to $700 for each Board of
Directors meeting attended. In addition, the Fund reimburses all directors for
travel and out-of-pocket expenses incurred in connection with Board of Directors
meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities, other than short-term obligations, aggregated
$47,098,643 and $56,976,562 respectively, for the six months ended June 30,
2003.
NOTE D: FOREIGN INCOME TAX
The Fund conducts its investment activities in India as a tax resident of
Mauritius and expects to obtain benefits under the double taxation treaty
between Mauritius and India (the "tax treaty" or "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
19
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
a certificate from the Mauritian authorities that it is a resident of Mauritius
under the double taxation treaty between Mauritius and India. Under current
regulations, 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 but is subject to a 15%
withholding tax on dividends declared, distributed or paid by an Indian company
prior to June 1, 1997 and after March 31, 2002. During the period June 1, 1997
through March 31, 2002, dividend income from domestic companies was exempt from
Indian income tax. Effective April 1, 2003, dividend income from domestic
companies is exempt from Indian tax. The Fund is subject to and accrues Indian
withholding tax on interest earned on Indian securities at the rate of 20.5%
effective April 1, 2003, 21% between April 1, 2002 and April 1, 2003, and 20%
prior to April 1, 2002.
The Fund will, in any year that it has taxable income for Mauritius tax
purposes, elect to pay tax on its net income for Mauritius tax purposes at any
rate between 0% and 35%.
In March 2000, the Indian tax authorities issued an assessment order ("March
2000 Assessment Order") with respect to the Fund's Indian income tax return
filed for the fiscal year ended March 31, 1997 which denied the benefits of the
tax treaty between India and Mauritius. In the March 2000 Assessment Order, the
Indian tax authorities held that the Fund is not a resident of Mauritius and
assessed tax on the dividend income for the year ended March 31, 1997 at the
rate of 20%, instead of the 15% rate claimed by the Fund under the tax treaty
between India and Mauritius. Similar assessment orders were issued to several
other mutual fund companies relying on the tax treaty between India and
Mauritius. On April 13, 2000, the Central Board of Direct Taxes ("CBDT") of the
Ministry of Finance in India issued a circular ("Circular 789") "clarifying" its
position on Indian taxation under the tax treaty between India and Mauritius
that, wherever a certificate of residence is issued by the Mauritian
authorities, such certificate will constitute sufficient evidence for accepting
the status of residence as well as beneficial ownership for applying the tax
treaty between India and Mauritius. The Fund, relying on Circular 789 and in
absence of a rectification order from the assessing officer, filed an appeal
against the March 2000 Assessment Order with the Indian tax authorities.
Hearings on the appeal were scheduled in which the Fund made submissions to the
Indian tax authorities, however, the hearings were adjourned by Indian tax
authorities, each time without a decision.
Previously, however, an Indian public interest group had initiated litigation in
the Indian courts challenging Circular 789. In connection with this litigation,
the Delhi High Court, in May 2002, passed an order invalidating Circular 789.
The history of past assessments by the Indian tax authorities (prior to issuance
of Circular 789) and the arguments made in the recent Delhi High Court ruling
suggest that the Indian tax authorities may adopt an aggressive position and
investigate the taxability of Mauritius based funds, i.e., the Indian tax
authorities may look beyond the tax residency certificate issued by Mauritius
tax authorities to Mauritius based funds. The Indian tax authorities may also
seek to reopen previously completed assessments of the Fund's Indian income tax
returns and deny
20
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
the benefits of the tax treaty between India and Mauritius to the Fund. During
the period the public interest litigation was pending with the high courts in
India, the Indian tax authorities were generally allowing the benefits of the
tax treaty between India and Mauritius to Mauritius based funds relying on
Circular 789, however, the assessment orders issued were conditional upon the
outcome of the public interest litigation.
The Government of India had filed a Special Leave Petition against the Delhi
High Court Order. Newspaper reports indicate that the matter has come up for
hearing and the Supreme Court has reserved its judgement in this matter.
To the extent that it is later determined that the Fund would be unable to
obtain the benefits of the treaty, the Fund would be subject to tax on capital
gains in India on the prior sale of securities, which are currently at the rates
of 10.25% on long-term capital gains and 30.75% on short-term capital gains
(10.5% and 31.5%, respectively, between April 1, 2002 and April 1, 2003 and 10%
and 30%, respectively, prior to April 1, 2002). Further, the Fund, if the treaty
benefits are denied, would be subject to tax on dividend income earned by the
Fund prior to June 1, 1997 at 20% and subsequent to March 31, 2002 at 21%. As
already stated above, from April 1, 2003 dividend income is exempt from tax.
In addition, for the fiscal years for which the assessment of the Fund's Indian
tax returns has been completed, the Indian tax authorities have denied the
carryforward of realized capital losses incurred by the Fund in such fiscal
years on the grounds that the Fund was not subject to taxes on realized capital
gains in India due to the application of the benefits of the tax treaty between
India and Mauritius to the Fund. Therefore, the Fund may not, in a year in which
it has net realized capital gains and the benefits of the tax treaty between
India and Mauritius are denied by the Indian tax authorities, be able to offset
capital losses realized in previous years.
The Fund continues to: (i) comply with the requirements of the tax treaty
between India and Mauritius; (ii) be a tax resident of Mauritius; and (iii)
maintain that its central management and control resides in Mauritius and
therefore management believes that the Fund will be able to obtain the benefits
of the tax treaty between India and Mauritius. Accordingly, no provision for
Indian income taxes has been made in accompanying financial statements of the
Fund.
The foregoing is based upon current interpretation and practice and is subject
to future changes in Indian or Mauritian tax laws and in the treaty between
India and Mauritius.
Although management of the Fund expects to obtain the benefits of the tax
treaty, if the Fund were denied such benefits retrospectively, the Fund could be
subject to cumulative income taxes, interest and penalties. Management estimates
that the amount of taxes and interest, based on realized gains
21
THE INDIA FUND, INC.
JUNE 30, 2003
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) (UNAUDITED)
through June 30, 2003 and unrealized gains as of June 30, 2003 could be in the
range of $23.0 million to $43.8 million (6% to 11% of the Fund's net assets at
June 30, 2003). This range does not include penalties which could be assessed as
such penalties are not determinable. The aforementioned range is estimated
utilizing various assumptions as to how the Indian tax authorities might
interpret the calculation of Indian income taxes if the tax treaty benefits were
denied. Actual amounts, if incurred, could differ significantly from the
aforementioned estimate.
NOTE E: CAPITAL STOCK
During the year ended December 31, 2002, the Fund purchased 89,000 shares of
capital stock on the open market at a total cost of $920,118. The weighted
average discount of these purchases, comparing the purchase price to the net
asset value at the time of purchase, was 17.29%. These shares were purchased
pursuant to the Fund's Stock Repurchase Plan previously approved by the Fund's
Board of Directors authorizing the Fund to purchase up to 4,000,000 shares of
its capital stock on the open market.
At a meeting of the Board of Directors held on January 29, 2002, the Board of
Directors approved a tender offer. Pursuant to the tender offer, the Fund
offered to purchase up to 10% of the Fund's outstanding shares of common stock
for cash at a price equal to 95% of the Fund's net asset value per share as of
the closing date. The tender offer commenced on August 30, 2002 and expired on
September 27, 2002. In connection with the tender offer, the Fund purchased
3,063,433 shares of capital stock at a total cost of $33,375,712, including
expenses of $168,098.
In February 2003, the Board of Directors approved, subject to stockholder
approval, a fundamental policy whereby the Fund would adopt an "interval fund"
structure pursuant to Rule 23c-3 under the Investment Company Act of 1940.
Stockholders of the Fund were to approve the policy at the Annual Meeting of
Stockholders held on April 23, 2003, however the proposal was adjourned and
later approved on April 30, 2003. As an interval fund, the Fund will make semi
annual repurchase offers at net asset value (less a 2% repurchase fee) to all
Fund stockholders. The percentage of outstanding shares that the Fund can
repurchase in each offer will be established by the Fund's Board of Directors
shortly before the commencement of each quarterly offer, and will be between 5%
and 25% of the Fund's then outstanding shares.
NOTE F: CONCENTRATION OF RISKS
At June 30, 2003, substantially all of the Fund's net assets were invested in
Indian securities. The Indian securities markets are among other things
substantially smaller, less developed, less liquid, subject to less regulation
and more volatile than the securities markets in the United States.
Consequently, and as further discussed above, acquisitions and dispositions of
securities by the Fund involve special risks and considerations not present with
respect to U.S. securities. At June 30, 2003, the Fund has a concentration of
its investment in computer and technology-related industries. The values of such
investments may be affected by changes in such industry sectors.
22
THE INDIA FUND, INC.
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS
The Fund held its Annual Meeting of Stockholders on April 23, 2003. At the
meeting, stockholders elected each of the nominees proposed for election to the
Fund's Board of Directors. Stockholders also voted on an approval of a new
management agreement between Advantage Advisers, Inc. and the Fund (Proposal 2),
an approval of a new country advisory agreement between Advantage Advisers, Inc.
and Imperial Investment Advisors Private Limited (Proposal 3), and an approval
of a fundamental policy whereby the Fund would adopt an interval fund structure
(Proposal 4). Proposal 4 was adjourned to April 30, 2003. The following tables
provide information concerning the matters voted on at the meeting:
I. ELECTION OF DIRECTORS
VOTES NON-VOTING TOTAL
NOMINEE VOTES FOR WITHHELD SHARES VOTING SHARES
------- ---------- --------- ---------- -------------
Charles F. Barber* 17,261,204 2,080,465 8,229,231 27,570,900
J. Marc Hardy 17,334,282 2,007,387 8,229,231 27,570,900
Jeswald W. Salacuse 17,261,554 2,080,115 8,229,231 27,570,900
Howard M. Singer* 17,338,200 2,003,469 8,229,231 27,570,900
At June 30, 2003, in addition to J. Marc Hardy and Jeswald W. Salacuse, the
other directors of the Fund were as follows:
Leslie H. Gelb
Bryan McKigney
Luis F. Rubio
Gabriel Seeyave
II. APPROVAL OF A NEW MANAGEMENT AGREEMENT BETWEEN ADVANTAGE ADVISERS, INC. AND
THE FUND.
VOTES NON-VOTING TOTAL
VOTES FOR VOTES AGAINST ABSTAINED SHARES VOTING SHARES
--------- ------------- --------- ---------- -------------
17,002,834 2,197,497 141,338 8,229,231 27,570,900
* Resigned as Director of the Fund effective May 8, 2003. Bryan McKigney was
appointed Chairman of the Fund as of May 8, 2003.
23
THE INDIA FUND, INC.
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS (CONTINUED)
III. APPROVAL OF A NEW COUNTRY ADVISORY AGREEMENT BETWEEN ADVANTAGE ADVISERS,
INC. AND IMPERIAL INVESTMENT ADVISORS PRIVATE LIMITED.
VOTES NON-VOTING TOTAL
VOTES FOR VOTES AGAINST ABSTAINED SHARES VOTING SHARES
---------- ------------- --------- ---------- -------------
16,988,052 2,206,401 147,216 8,229,231 27,570,900
IV. APPROVAL OF A FUNDAMENTAL POLICY WHEREBY THE FUND WOULD ADOPT AN INTERVAL
FUND STRUCTURE.
VOTES NON-VOTING TOTAL
VOTES FOR VOTES AGAINST ABSTAINED SHARES VOTING SHARES
---------- ------------- --------- ---------- -------------
14,069,169 2,779,725 63,919 10,658,087 27,570,900
24
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund intends to distribute annually to shareholders substantially all of its
net investment income, and to distribute any net realized capital gains at least
annually. Net investment income for this purpose is income other than net
realized long and short-term capital gains net of expenses.
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names will
be deemed to have elected to have all distributions automatically reinvested by
the Plan Agent in Fund shares pursuant to the Plan, unless such shareholders
elect to receive distributions in cash. Shareholders who elect to receive
distributions in cash will receive all distributions in cash paid by check in
dollars mailed directly to the shareholder by the dividend paying agent. In the
case of shareholders such as banks, brokers or nominees, that hold shares for
others who are beneficial owners, the Plan Agent will administer the Plan on the
basis of the number of shares certified from time to time by the shareholders as
representing the total amount registered in such shareholders' names and held
for the account of beneficial owners that have not elected to receive
distributions in cash. Investors that own shares registered in the name of a
bank, broker or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash,
nonparticipants in the Plan will receive cash and participants in the Plan will
receive Common Stock, to be issued by the Fund or purchased by the Plan Agent in
the open market, as provided below. If the market price per share on the
valuation date equals or exceeds net asset value per share on that date, the
Fund will issue new shares to participants at net asset value; provided,
however, that if the net asset value is less than 95% of the market price on
valuation date, then such shares will be issued at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a New York Stock Exchange trading day, the next preceding trading
day. If net asset value exceeds the market price of Fund shares at such time, or
if the Fund should declare an income dividend or capital gains distribution
payable only in cash, the Plan Agent will, as agent for the participants, buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere, for
the participants' accounts on, or shortly after, the payment date. if, before
the Plan Agent has completed its purchases, the market price exceeds the net
asset value of a Fund share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares
issued by the Fund on the dividend payment date.
25
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS (CONTINUED)
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Because of the forgoing difficulty with respect to open market purchases, the
Plan provides that if the Plan Agent is unable to invest the full dividend
amount in open market purchases during the purchase period or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will cease making open-market purchases and shareholders will receive the
uninvested portion of the dividend amount in newly issued shares at the close of
business on the last purchase date.
Participants have the option of making additional cash payments to the Plan
Agent, annually, in any amount from $100 to $3,000, for investment in the Fund's
Common Stock. The Plan Agent will use all such funds received from participants
to purchase Fund shares in the open market on or about February 15.
Any voluntary cash payment received more than 30 days prior to this date will be
returned by the Plan Agent, and interest will not be paid on any uninvested cash
payment. To avoid unnecessary cash accumulations, and also to allow ample time
for receipt and processing by the Plan Agent, it is suggested that participants
send in voluntary cash payments to be received by the Plan Agent approximately
ten days before an applicable purchase date specified above. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before such payment is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. There will be no brokerage charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gains distributions payable either in stock or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and capital gains distributions and voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock for individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commissions thus attainable.
26
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS (CONCLUDED)
The receipt of dividends and distributions under the Plan will not relieve
participants of any income tax that may be payable on such dividends or
distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to members of the Plan at
least 30 days before the record date for such dividend or distribution. The Plan
also may be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent at
301 Bellevue Parkway, Wilmington, Delaware 19809.
27
PRIVACY POLICY OF
ADVANTAGE ADVISERS, INC.
THE ASIA TIGERS FUND, INC.
THE INDIA FUND, INC.
--------------------------------------------------------------------------------
YOUR PRIVACY IS PROTECTED
An important part of our commitment to you is our respect for your right to
privacy. Protecting all the information we are either required to gather or
which accumulates in the course of doing business with you is a cornerstone of
our relationship with you. While the range of products and services we offer
continues to expand, and the technology we use continues to change, our
commitment to maintaining standards and procedures with respect to security
remains constant.
COLLECTION OF INFORMATION
The primary reason that we collect and maintain information is to more
effectively administer our customer relationship with you. It allows us to
identify, improve and develop products and services that we believe could be of
benefit. It also permits us to provide efficient, accurate and responsive
service, to help protect you from unauthorized use of your information and to
comply with regulatory and other legal requirements. These include those related
to institutional risk control and the resolution of disputes or inquiries.
Various sources are used to collect information about you, including (i)
information you provide to us at the time you establish a relationship, (ii)
information provided in applications, forms or instruction letters completed by
you, (iii) information about your transactions with us or our affiliated
companies, and/or (iv) information we receive through an outside source, such as
a bank or credit bureau. In order to maintain the integrity of client
information, we have procedures in place to update such information, as well as
to delete it when appropriate. We encourage you to communicate such changes
whenever necessary.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic, personal information (such as your name,
address or tax identification number) about our clients or former clients to
anyone, except as permitted or required by law. We maintain physical, electronic
and procedural safeguards to protect such information, and limit access to such
information to those employees who require it in order to provide products or
services to you.
The law permits us to share client information with companies that are
affiliated with us which provide financial, credit, insurance, trust, legal,
accounting and administrative services to us or our clients. This allows us to
enhance our relationship with you by providing a broader range of products to
better meet your needs and to protect the assets you may hold with us by
preserving the safety and soundness of our firm.
28
PRIVACY POLICY OF
ADVANTAGE ADVISERS, INC.
THE ASIA TIGERS FUND, INC.
THE INDIA FUND, INC.
--------------------------------------------------------------------------------
Finally, we are also permitted to disclose nonpublic, personal information to
unaffiliated outside parties who assist us with processing, marketing or
servicing a financial product, transaction or service requested by you,
administering benefits or claims relating to such a transaction, product or
service, and/or providing confirmations, statements, valuations or other records
or information produced on our behalf.
It may be necessary, under anti-money laundering or other laws, to disclose
information about you in order to accept your subscription. Information about
you may also be released if you so direct, or if we or an affiliate are
compelled to do so by law, or in connection with any government or
self-regulatory organization request or investigation.
We are committed to upholding this Privacy Policy. We will notify you on an
annual basis of our policies and practices in this regard and at any time that
there is a material change that would require your consent.
May 2003
29
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THE INDIA FUND, INC.
INVESTMENT MANAGER:
Oppenheimer Asset Management Inc.,
an affiliate of Fahnestock & Co. Inc.
ADMINISTRATOR:
Fahnestock & Co. Inc.
SUB-ADMINISTRATOR:
PFPC Inc.
TRANSFER AGENT:
PFPC Inc.
CUSTODIAN:
Deutsche Bank AG
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) The India Fund, Inc.
--------------------------------------------------------------------
By (Signature and Title)* /S/ BRIAN MCKIGNEY
-------------------------------------------------------
Brian McKigney, President & Chairman
(principal executive officer)
Date AUGUST 14, 2003
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ BRIAN MCKIGNEY
-------------------------------------------------------
Brian McKigney, President & Chairman
(principal executive officer)
Date AUGUST 14, 2003
----------------------------------------------------------------------------
By (Signature and Title)* /S/ ALAN KAYE
-------------------------------------------------------
Alan Kaye, Treasurer
(principal financial officer)
Date AUGUST 14, 2003
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.