<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
General Information
---------------------------------------------------------
THE FUND
The India Growth Fund Inc. (the "Fund") is a non-diversified, closed-end
management investment company whose shares trade on the New York Stock Exchange
("NYSE"). The Fund's investment objective is long-term capital appreciation
through investments primarily in equity securities of Indian companies. The
Fund's investment adviser is Unit Trust of India Investment Advisory Services
Limited and its Administrator is Mitchell Hutchins Asset Management Inc.
SHAREHOLDER INFORMATION
The Fund's NYSE trading symbol is "IGF". Daily market prices for the Fund's
shares are published in the NYSE Composite Transactions section of major
newspapers under the designation "IndiaGrFd" or "IndiaG". Net asset value and
market price information about the Fund is published each Monday in THE WALL
STREET JOURNAL, each Sunday in THE NEW YORK TIMES and each Saturday in BARRON'S,
as well as in other newspapers, in a table captioned "Publicly Traded Funds" or
"Closed-End Funds". Inquiries regarding shareholder accounts may be directed to
the Fund's transfer agent, dividend paying agent and registrar, PNC Bank, N.A.
(the "Plan Agent"), at (800) 852-4750. In addition, information on the Fund is
now available on the Internet at www.indiagrowth.com.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund intends to distribute to shareholders, at least annually, substantially
all of its net investment income and net realized capital gains, if any.
Pursuant to the Fund's Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), shareholders may elect to have all cash distributions automatically
reinvested by the Plan Agent in additional shares of Common Stock of the Fund.
Shareholders who do not participate in the Plan will receive all distributions
in cash paid by check in U.S. dollars mailed directly to the shareholder by the
Plan Agent.
The Plan Agent will serve as agent for the shareholders in administering the
Plan. If the Board of Directors of the Fund declares an income dividend or a
capital gain distribution payable either in the Fund's Common Stock or in cash,
as shareholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive Common Stock, to be issued by the Fund
or purchased in the open market, as provided below. If the market price on the
valuation date equals or exceeds net asset value on that date, the Fund will
issue new shares to participants at net asset value or, if the net asset value
is less than 95% of the market price on the valuation date, then at 95% of the
market price. The valuation date will be the dividend or distribution payment
date or, if that date is not a trading day on the NYSE, the next preceding
trading day. If the net asset value exceeds the market price on the valuation
date, or if the Fund should declare a dividend or capital gain distribution
payable only in cash, the Plan Agent will, as agent for the participants,
purchase shares of the Fund in the open market, on the NYSE or elsewhere, for
the participants' account on, or shortly after, the payment date.
1
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THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
General Information (continued)
----------------------------------------------------------------------
Participants in the Plan have the option of making additional cash payments to
the Plan Agent, semiannually, in any amount from $100 to $3,000, for investment
in the Fund's Common Stock. The Plan Agent will use all funds received from
participants to purchase Fund shares in the open market on or about February
15th and August 15th of each year. Any voluntary cash payments received more
than thirty days prior to these dates will be returned by the Plan Agent, and
interest will not be paid on any uninvested cash payments. 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 prior to
February 15th or August 15th, as the case may be. A participant may withdraw a
voluntary cash payment by written notice, if the notice is received by the Plan
Agent not less than forty-eight 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 the account, including information
required by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each shareholder's proxy will include those
shares purchased pursuant to the Plan.
In the case of shareholders, such as banks, brokers or nominees, who 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.
There is no charge to participants for reinvesting dividends or distributions.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be borne by the Fund. However, each participant's account
will be charged 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 or distributions. A participant will also pay a pro rata share of
brokerage commissions incurred in purchases from voluntary cash payments made by
the participant. Brokerage charges for purchasing small amounts of stock of
individual accounts through the Plan are expected to be less than the usual
brokerage charges for such transactions, since the Plan Agent will be purchasing
stock for all participants in blocks and prorating the lower commission thus
attainable.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax which may be payable on such dividends and
distributions. In addition, since the Fund expects, if eligible, to make an
election to treat the 10% Indian withholding tax paid (on income and capital
gain distributions from the Unit Trust of India trust fund arrangement to the
Fund), if any, as paid by shareholders, the amount of such withholding tax will
be included in the income of the Fund's shareholders, although the number of
shares received under the Plan will be based on the cash dividend amount
distributed to other Fund shareholders not participating in the Plan. With
certain limitations, Fund shareholders who are Plan participants may be able to
credit such withholding tax against their tax liabilities on foreign source
income.
2
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
General Information (continued)
----------------------------------------------------------------------
Participants in the Plan may withdraw from the Plan without penalty at any time
by written notice to the Plan Agent. Any shareholder withdrawing from the Plan
will receive, without charge, stock certificates issued in their name for all
full shares owned. The Plan Agent will convert any fractional shares any
shareholder holds at the time of its withdrawal to cash at the current market
price and send a check for the proceeds. Under the rules generally applicable to
sales of securities, a sale of shares (including fractional shares) will be a
taxable event for U.S. federal income tax purposes and may be taxable for state,
local and foreign tax purposes.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the rights to amend or terminate the Plan as applied to any
voluntary cash payment made and any dividend or distribution paid subsequent to
notice of the change sent to all shareholders at least 90 days prior to the
record date for such dividend or distribution. The Plan may also be amended or
terminated by the Plan Agent by at least 90 days' written notice to all
shareholders. All correspondence concerning the Plan should be directed to the
Plan Agent, c/o PNC Bank, N.A., 300 Bellevue Parkway, Wilmington, Delaware
19809.
SHARE REPURCHASE PROGRAM AND OTHER BOARD ACTION
At a Special Meeting of the Board of Directors held on August 18, 2000, the
Board approved a share repurchase program for up to 20% of the Fund's common
stock. The Fund intends to commence this share repurchase program during the
fourth quarter of 2000. The Fund will purchase such shares in the open market at
times and prices determined by management of the Fund to be in the best
interests of stockholders of the Fund.
If the average of the closing prices of the common stock of the Fund on the New
York Stock Exchange for the last trading day in each week during a 12-week
period (commencing in the second quarter of 2001 and ending in the third quarter
of 2001, as set by the Board of Directors) represents a discount of 20% or more
from the average net asset value of the Fund as determined on the same days in
the same period, the Board of Directors intends to consider taking appropriate
actions in the fourth quarter of 2001 to address the Fund's discount.
BYLAW AMENDMENTS
On January 24, 2000, the Board of Directors approved amendments to the Fund's
Bylaws to set forth provisions requiring a stockholder who wishes to make a
proposal at a stockholders' meeting to give advance notice of the proposal.
These provisions are intended to keep order at a stockholders' meeting by
eliminating surprises and to protect the interests of stockholders.
The Fund's advance notice Bylaw provisions provide that, in the case of annual
stockholders' meetings, notice of any stockholder nomination or business
proposal must be given no less than 60 days and no more than 90 days prior to
the first anniversary of the preceding year's annual meeting. In the event that
the annual meeting is advanced by more than 30 days or delayed by more than 60
days from the anniversary date of the preceding year's meeting, however, notice
by a stockholder must be delivered (i) not earlier than the 90th day prior to
the annual meeting and not
3
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THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
General Information (concluded)
----------------------------------------------------------------------
later than the close of business on the 60th day prior to the annual meeting or
(ii) the tenth day following the day on which public announcement of the date of
the annual meeting is first made. In the case of a special meeting of
stockholders, notice must be delivered by a stockholder (i) not earlier than the
90th day prior to such special meeting and not later than the close of business
the 60th day prior to such special meeting or (ii) the tenth day following the
day on which public announcement of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting is
made.
With respect to candidate nominations, the advance notice provisions require a
stockholder to disclose all information about the nominee that would need to be
included in a proxy statement filed with the Securities and Exchange Commission
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended.
With respect to any other business that the stockholder proposes to bring before
a stockholders meeting, a stockholder is required to disclose (i) a brief
description of the business desired to be brought before the meeting, (ii) the
reasons for conducting such business at the meeting and (iii) any material
interest in such business of such stockholder and of the beneficial owners, if
any, on whose behalf the proposal is made. In both instances a stockholder is
required to provide in its notice the name and address of such stockholder, the
names and addresses of beneficial holders, if any, and the class and number of
shares of stock of the Fund which are owned beneficially and of record by such
stockholder and such beneficial owners, if any.
At the meeting of the Board of Directors held on April 12, 2000, the Board
approved an amendment to Section 6 of the Fund's Bylaws which changed the quorum
requirement for stockholders' meetings from 1/3 of the shares entitled to vote
there at to a majority of those shares, in order to conform with Maryland law.
AMENDED CODE OF ETHICS
At a meeting of the Board of Directors of the Fund held on January 24, 2000, the
Directors adopted an amended Code of Ethics and Compliance Procedures to conform
to the amendments to Rule 17j-1 under the Investment Company Act of 1940,
adopted by the Securities and Exchange Commission on August 27, 1999. In
accordance with Rule 17j-1, the Fund filed an amendment to its Registration
Statement on approximately March 8, 2000 to reflect the adoption of an amended
Code of Ethics.
OTHER INFORMATION
At the Annual Meeting of Stockholders of the Fund, as reconvened on October 21,
1999, the stockholders approved a proposal to change the Fund's
sub-classification under the Investment Company Act of 1940 from a diversified
investment company to a non-diversified investment company, and the elimination
of the Fund's corresponding investment restriction regarding diversification.
Since June 30, 1999, there have no material changes in the principal risk
factors associated with investments in the Fund.
4
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Chairman's Letter to Shareholders
---------------------------------------------------------
August 9, 2000
Dear Shareholders:
The Indian economy grew 6.4% during the 1999-2000 fiscal year (year ended
March 31, 2000). With signs of revival in the industrial sector and improved
growth in the agriculture sector, the economy is expected to grow 7.0% during
the 2000-01 fiscal year (year ending March 31, 2001). The upward trend in the
stock market during the 1999-2000 fiscal year reflects the growing confidence of
investors in the Indian economy.
Several economic indicators point towards a sustained high growth phase for the
Indian economy. The business confidence index has improved during the past year.
A strong demand for exports and a flourishing domestic consumer demand have
contributed to continued industrial recovery. The 1999-2000 fiscal year was
characterized by a low annual inflation rate of 3.2%. Non-food credit growth was
20.6% for the 1999-2000 fiscal year compared to 13.0% in the previous year.
Demand for bank credit has increased due to acceleration in industrial growth.
The Indian corporate sector performed well during the 1999-2000 fiscal year with
sales growth exceeding 20%, due primarily to the growth in the Indian
information technology ("IT") sector. The Nasscom-McKinsey ("Nasscom") report on
the IT industry has predicted a 40% compounded annual growth rate in this
industry by 2008. The report has forecasted annual earnings in the IT industry
to be US $85 billion through 2008, of which US $50 billion is expected to come
from exports. Nasscom has also estimated the Indian business e-commerce
potential to be greater than US $10 billion per year by 2005.
During the 1996-97 fiscal year, the Fund began investing in the IT sector which
has greatly contributed to the improvement in the performance of the Fund. Both
the IT sector and the telecommunications sector in India remain attractive to
foreign investors and the Fund intends to continue to take advantage of superior
investment opportunities in these areas.
The balance of payments situation remained stable through March 31, 2000 with
capital inflows greater than US $9.1 billion and foreign institutional investor
inflows estimated to be US $3.0 billion. The current account deficit is
estimated to be less than 1% of gross domestic product ("GDP") for the 1999-2000
fiscal year. Exports increased 13.3% (in US dollar terms) during the 1999-2000
fiscal year, growing more than 30% during April and May 2000. Import growth
remained stable at 11.5% during the 1999-2000 fiscal year. Foreign investor
confidence continues to be high with foreign exchange reserves increasing
US $5.5 billion to US $35 billion as of March 31, 2000.
5
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Chairman's Letter to Shareholders
---------------------------------------------------------
Sustained buying by foreign and domestic institutional investors and retail
investors has led to improved valuations in the stock market. The upward trend
in the stock market has helped revive investor interest in the new issue
(primary) market. During the 1999-2000 fiscal year, Rs. 616 billion were raised
in the Indian domestic primary market. Several companies in the information
technology and other sectors raised approximately US $925 million overseas by
issuing American Depositary Receipts ("ADRs") and Global Depositary Receipts
("GDRs") during the 1999-2000 fiscal year.
The focus on improving corporate governance by several Indian corporations as
well as improvements in the Indian regulatory scheme has created a more
favorable investment climate in India. In addition, the introduction of
derivative products permitted by the recent amendments to the Securities
Contract Regulation Act is expected to enable investors to hedge their risk more
effectively.
We believe the India Growth Fund Inc. offers a solid opportunity for capital
growth and our outlook for the Indian stock markets is positive. The Fund will
continue to take advantage of the potential for growth in the Indian stock
market.
Sincerely,
/s/ P.S. Subramanyam
P.S. Subramanyam
Chairman of the Board
& President
6
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Review of the Indian Economy*
---------------------------------------------------------
- The gross domestic product ("GDP") of India grew 6.4% during the 1999-2000
fiscal year (year ended March 31, 2000) compared to 6.8% during the
1998-99 fiscal year. Due to a favorable monsoon season, GDP is expected to
grow 7.0% during the 2000-01 fiscal year.
- Agricultural production increased 1.3% during the 1999-2000 fiscal year
with foodgrain production at 205.9 million tons during the 1999-2000
fiscal year compared to 203 million tons during the 1998-99 fiscal year.
The Indian government estimates that foodgrain production will reach 212
million tons during the 2000-01 fiscal year.
- During the 1999-2000 fiscal year, industrial growth increased to 8.2% from
4.0% during the 1998-99 fiscal year. Output in the manufacturing sector
rose 9.3% during the 1999-2000 fiscal year, compared to 4.3% during the
1998-99 fiscal year. A growing demand for exports as well as a flourishing
domestic consumer demand have contributed to continued industrial
recovery.
- Due to increased investments in mutual fund products, bank deposit growth
declined to 17.9% during the 1999-2000 fiscal year, compared to 19.3%
during the 1998-99 fiscal year.
- Bank credit growth during the 1999-2000 fiscal year was 21.9% compared to
13.8% during the 1998-99 fiscal year. Non-food credit growth was 20.6%
during the 1999-2000 fiscal year, compared to 13.0% during the 1998-99
fiscal year. Demand for non-food credit increased due to acceleration in
industrial growth. Increased demand is expected to put upward pressure on
interest rates.
- The 1999-2000 fiscal year was characterized by a low annual inflation rate
of 3.2%. Recently, the government has imposed price increases for power
and fuel leading to a rise in the inflation rate to 6% (on an annualized
basis) for the period from April-June 2000.
- Exports increased 13.3% (in US dollar terms) during the 1999-2000 fiscal
year, growing more than 30% during April and May 2000. Import growth
remained stable at 11.5% during the 1999-2000 fiscal year.
- The rupee depreciated 3% against the dollar from Rs. 43.37 on July 1, 1999
to Rs. 44.65 on June 30, 2000. The confidence of foreign investors
continued to be high and foreign exchange reserves increased
US $5.5 billion to US $35 billion as of March 31, 2000. The balance of
payments situation remained stable during the 1999-2000 fiscal year with
an estimated net capital inflow of more than US $8 billion and investments
by Foreign Instititional Investors ("FIIs") of approximately
US $3.0 billion.
*Source: Centre for Monitoring Indian Economy ("CMIE") and Government of India
Publications
7
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THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Review of the Capital Markets*
---------------------------------------------------------
- The Bombay Stock Exchange Sensitive Index ("BSESI") continued its upward
trend, increasing from 4,140.7 points on June 30, 1999 to 5,933.5 points
on February 11, 2000. On February 14, 2000, the BSESI reached an all-time
intra-day high of 6,151 points due to sustained foreign institutional and
retail investor buying. Following the announcement of the budget for
fiscal year 2000-01, the market declined to a low of 3,920 points on
May 22, 2000. On June 30, 2000, the BSESI closed at 4,748.8 points,
posting a one-year return of 14.7%.
- Foreign Institutional Investor ("FII") investment inflow during the
1999-2000 fiscal year (year ended March 31, 2000) was US $3.0 billion
compared to an outflow of US $0.68 billion during the 1998-99 fiscal year.
Due to continued interest in the Indian markets, the cumulative FII
investment in India has exceeded US $10 billion.
- During the 1999-2000 fiscal year, Rs. 616 billion were raised from the
domestic primary market compared to Rs. 433 billion raised during the
1998-99 fiscal year. Several companies in the information technology and
other sectors raised approximately US $925 million during the 1999-2000
fiscal year by issuing American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs").
- The Indian corporate sector performed well during the 1999-2000 fiscal
year. A survey by the Centre for Monitoring Indian Economy ("CMIE") of
1,179 manufacturing companies indicated a 22.9% increase in revenue during
the 1999-2000 fiscal year compared to 8.1% during the 1998-99 fiscal year.
In addition, the manufacturing sector's profits increased 26.5% during the
1999-2000 fiscal year, compared to a decrease in profits of 36.4% during
the 1998-99 fiscal year.
- In June 2000, the Bombay Stock Exchange ("BSE") and the National Stock
Exchange ("NSE") began trading derivatives. The BSE 30 and CNX S&P-FIFTY
(NSE 50) began trading one, two and three month index futures. The volume
of index futures trading is expected to increase rapidly as institutional
investors' participation in the derivatives market grows.
*Source: Centre for Monitoring Indian Economy ("CMIE") and the Bombay Stock
Exchange ("BSE")
8
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THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Investment Adviser's Report
---------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
BOMBAY STOCK EXCHANGE SENSITIVE INDEX
July 1, 1999 through June 30, 2000
<TABLE>
<CAPTION>
BSESI
<S> <C>
1-Jul-99 4144.52
2-Jul-99 4194.55
5-Jul-99 4306.40
6-Jul-99 4332.70
7-Jul-99 4321.51
8-Jul-99 4326.41
9-Jul-99 4362.87
12-Jul-99 4585.63
13-Jul-99 4615.20
14-Jul-99 4710.25
15-Jul-99 4679.92
16-Jul-99 4639.94
19-Jul-99 4716.81
20-Jul-99 4617.82
21-Jul-99 4659.59
22-Jul-99 4728.78
23-Jul-99 4672.12
26-Jul-99 4625.40
27-Jul-99 4593.22
28-Jul-99 4598.18
29-Jul-99 4603.42
30-Jul-99 4542.34
2-Aug-99 4494.18
3-Aug-99 4527.30
4-Aug-99 4644.07
5-Aug-99 4601.19
6-Aug-99 4575.30
9-Aug-99 4639.20
10-Aug-99 4594.12
11-Aug-99 4553.63
12-Aug-99 4543.64
13-Aug-99 4487.87
16-Aug-99 4558.23
17-Aug-99 4621.00
18-Aug-99 4705.13
19-Aug-99 4630.06
20-Aug-99 4645.81
23-Aug-99 4729.78
24-Aug-99 4792.10
25-Aug-99 4718.73
26-Aug-99 4846.36
27-Aug-99 4870.66
30-Aug-99 4905.89
31-Aug-99 4898.21
1-Sep-99 4824.44
2-Sep-99 4729.73
3-Sep-99 4709.93
6-Sep-99 4832.56
7-Sep-99 4773.65
8-Sep-99 4781.62
9-Sep-99 4764.59
10-Sep-99 4760.21
14-Sep-99 4731.12
15-Sep-99 4661.04
16-Sep-99 4571.09
17-Sep-99 4618.39
20-Sep-99 4641.07
21-Sep-99 4633.00
22-Sep-99 4687.23
23-Sep-99 4735.81
24-Sep-99 4757.82
27-Sep-99 4715.67
28-Sep-99 4733.42
29-Sep-99 4797.41
30-Sep-99 4764.42
1-Oct-99 4702.31
4-Oct-99 4654.72
5-Oct-99 4708.92
6-Oct-99 4697.70
7-Oct-99 4963.10
8-Oct-99 4981.74
11-Oct-99 5031.78
12-Oct-99 5057.32
13-Oct-99 5032.99
14-Oct-99 5075.39
15-Oct-99 4884.02
18-Oct-99 4930.69
20-Oct-99 4943.14
21-Oct-99 4836.91
22-Oct-99 4783.08
25-Oct-99 4816.01
26-Oct-99 4814.34
27-Oct-99 4756.20
28-Oct-99 4594.57
29-Oct-99 4444.56
1-Nov-99 4720.74
2-Nov-99 4491.56
3-Nov-99 4456.18
4-Nov-99 4485.92
5-Nov-99 4598.45
9-Nov-99 4621.96
11-Nov-99 4639.36
12-Nov-99 4629.61
15-Nov-99 4585.92
16-Nov-99 4578.87
17-Nov-99 4541.48
18-Nov-99 4606.16
19-Nov-99 4584.10
22-Nov-99 4636.31
24-Nov-99 4686.11
25-Nov-99 4740.68
26-Nov-99 4704.99
29-Nov-99 4639.43
30-Nov-99 4622.21
1-Dec-99 4614.96
2-Dec-99 4691.67
3-Dec-99 4714.14
6-Dec-99 4835.98
7-Dec-99 4864.62
8-Dec-99 4799.22
9-Dec-99 4839.16
10-Dec-99 4788.47
13-Dec-99 4802.96
14-Dec-99 4690.78
15-Dec-99 4665.56
16-Dec-99 4710.49
17-Dec-99 4675.85
20-Dec-99 4746.61
21-Dec-99 4786.01
22-Dec-99 4948.54
23-Dec-99 4969.22
24-Dec-99 4874.73
27-Dec-99 4818.37
28-Dec-99 4861.93
29-Dec-99 4939.47
30-Dec-99 5005.82
3-Jan-00 5375.11
4-Jan-00 5491.01
5-Jan-00 5357.00
6-Jan-00 5421.53
7-Jan-00 5414.48
10-Jan-00 5518.39
11-Jan-00 5296.30
12-Jan-00 5491.20
13-Jan-00 5444.82
14-Jan-00 5471.27
17-Jan-00 5404.07
18-Jan-00 5464.51
19-Jan-00 5478.24
20-Jan-00 5355.80
21-Jan-00 5423.05
24-Jan-00 5458.06
25-Jan-00 5367.79
27-Jan-00 5369.10
28-Jan-00 5335.80
31-Jan-00 5205.29
1-Feb-00 5215.54
2-Feb-00 5304.92
3-Feb-00 5340.19
4-Feb-00 5313.59
7-Feb-00 5474.00
8-Feb-00 5610.56
9-Feb-00 5649.10
10-Feb-00 5789.04
11-Feb-00 5933.56
14-Feb-00 5924.31
15-Feb-00 5803.19
16-Feb-00 5725.50
17-Feb-00 5835.15
18-Feb-00 5721.65
21-Feb-00 5876.89
22-Feb-00 5883.33
23-Feb-00 5642.46
24-Feb-00 5810.17
25-Feb-00 5623.08
28-Feb-00 5740.69
29-Feb-00 5446.98
1-Mar-00 5642.12
2-Mar-00 5528.31
3-Mar-00 5378.27
6-Mar-00 5520.69
7-Mar-00 5589.85
8-Mar-00 5511.42
9-Mar-00 5328.79
10-Mar-00 5301.78
13-Mar-00 5129.22
14-Mar-00 5175.71
15-Mar-00 5249.76
16-Mar-00 5102.41
21-Mar-00 5133.24
22-Mar-00 5201.87
23-Mar-00 5115.02
24-Mar-00 5141.42
27-Mar-00 5146.30
28-Mar-00 5156.12
29-Mar-00 5102.46
30-Mar-00 5041.08
31-Mar-00 5001.28
3-Apr-00 5052.94
4-Apr-00 4691.46
5-Apr-00 4757.06
6-Apr-00 4866.73
7-Apr-00 5219.20
10-Apr-00 5442.86
11-Apr-00 5541.54
12-Apr-00 5426.82
13-Apr-00 5172.13
17-Apr-00 4880.71
18-Apr-00 4745.47
19-Apr-00 4665.81
20-Apr-00 4657.42
24-Apr-00 4511.05
25-Apr-00 4533.99
26-Apr-00 4792.95
27-Apr-00 4679.63
28-Apr-00 4657.55
2-May-00 4372.22
3-May-00 4335.29
4-May-00 4553.92
5-May-00 4693.88
8-May-00 4463.40
9-May-00 4578.49
10-May-00 4458.40
11-May-00 4251.36
12-May-00 4107.14
15-May-00 4212.53
16-May-00 4230.13
17-May-00 4234.23
18-May-00 4192.44
19-May-00 4068.65
22-May-00 3920.18
23-May-00 3943.54
24-May-00 3933.65
25-May-00 3999.03
26-May-00 4084.71
29-May-00 4189.85
30-May-00 4311.77
31-May-00 4433.61
1-Jun-00 4325.47
2-Jun-00 4453.47
5-Jun-00 4531.53
6-Jun-00 4591.68
7-Jun-00 4604.84
8-Jun-00 4728.81
9-Jun-00 4729.63
12-Jun-00 4639.46
13-Jun-00 4615.13
14-Jun-00 4625.04
15-Jun-00 4653.22
16-Jun-00 4764.67
19-Jun-00 4837.24
20-Jun-00 4863.90
21-Jun-00 4731.57
22-Jun-00 4794.16
23-Jun-00 4721.70
26-Jun-00 4670.09
27-Jun-00 4686.91
28-Jun-00 4748.80
29-Jun-00 4792.74
30-Jun-00 4748.77
3-Jul-00 4844.98
</TABLE>
The Bombay Stock Exchange Sensitive Index ("BSESI") reached an all time high of
6,151 points before closing at 5,924 points on February 14, 2000. Information
technology, telecommunications and media were among the best performing sectors.
India experienced a net inflow of investments by FIIs during the peaks of both
the Dow Jones Industrial Average and the Nasdaq on January 14, 2000 and
March 24, 2000, respectively. Investments by FIIs began to decline in May 2000.
Recently, however, investments by FIIs have increased due to the emergence of
broad based buying.
FUND PERFORMANCE
The Fund achieved a compound annual growth rate ("CAGR") of 25.8% in rupee terms
from August 19, 1988 through June 30, 2000 compared to a CAGR of 18.6%
registered by the BSESI during the same period.
The performance of the Fund's rupee net asset value ("NAV") through June 30,
2000 was superior to the 12 month performance of both the BSESI and CRISIL 500
index. For the 12 month period ended June 30, 2000, the BSESI and CRISIL 500
index increased 14.7% and 27.0%, respectively, while the Fund's rupee NAV
increased 37.7%.
9
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Investment Adviser's Report (continued)
----------------------------------------------------------------------
The Fund's rupee NAV underperformed the BSESI for the three and six month
periods ended June 30, 2000. The Fund's underperformance is attributable, in
part, to the Fund's 40.7% allocation to the information technology sector which
experienced a decline of 50-60% in market prices during the period from
March-May 2000.
The Fund's dollar NAV increased 31.0% from US $13.55 at June 30, 1999 to
US $17.75 at June 30, 2000. The market price of the Fund was US $11.38 at
June 30, 2000. During the year ended June 30, 2000, the price on the NYSE
reached a closing high of US $20.88 on February 9, 2000 when the NAV was
US $26.53, representing a discount of 21.3%. The NAV reached a high of
US $28.84 on March 8, 2000 when the closing price was US $18.75, representing a
discount of 35.0%.
The beta (a measure of risk) of the Fund was 0.82 at June 30, 1999 and 0.83 at
June 30, 2000. The strategy of maintaining a defensive posture in terms of risk
was a conscious decision undertaken in view of market volatility.
INVESTMENT STRATEGY
The Fund held positions in 119 companies at June 30, 2000 compared to 153
positions at June 30, 1999. However, 99% of the Fund's investments are in 88
companies, 50% of which were in 9 companies. During the twelve months ended
June 30, 2000, the BSESI increased 14.7%. During this period, 22 of the Fund's
top 40 stocks outperformed the BSESI. These superior performers represented
56.6% of the Fund's assets at June 30, 2000.
At June 30, 2000, the Fund had investments in 29 sectors. The largest investment
in terms of market value was in computer software (25.0%) followed by computer
training (14.4%), pharmaceuticals (10.7%), automobiles (8.4%) and consumer
products (7.8%). The Fund has reduced its holdings in sectors perceived to have
limited growth potential such as hotels, packaging, paints, rubber products and
shipping.
10
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Investment Adviser's Report (concluded)
----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
RUPEE NAV VS. BOMBAY STOCK EXCHANGE SENSITIVE INDEX
July 7, 1999 through June 30, 2000
<TABLE>
<CAPTION>
BSESI RENAV
<S> <C> <C>
07-Jul-99 100.00 100.00
14-Jul-99 109.00 104.91
21-Jul-99 107.82 107.57
28-Jul-99 106.40 108.54
04-Aug-99 107.46 110.23
11-Aug-99 105.37 108.89
18-Aug-99 108.88 115.49
25-Aug-99 109.19 113.98
01-Sep-99 111.64 116.64
08-Sep-99 110.46 116.82
15-Sep-99 107.86 116.32
22-Sep-99 108.46 120.81
29-Sep-99 111.01 123.99
06-Oct-99 108.71 123.57
13-Oct-99 116.46 137.33
20-Oct-99 114.38 134.88
27-Oct-99 110.06 125.56
03-Nov-99 103.12 119.01
10-Nov-99 106.95 129.57
17-Nov-99 105.09 126.01
24-Nov-99 108.44 132.39
01-Dec-99 106.79 136.23
08-Dec-99 111.05 144.42
15-Dec-99 107.96 147.12
22-Dec-99 114.51 159.93
29-Dec-99 112.51 163.09
05-Jan-00 123.96 176.87
12-Jan-00 127.07 169.25
19-Jan-00 126.77 177.52
26-Jan-00 124.21 181.28
02-Feb-00 122.76 191.46
09-Feb-00 130.72 195.85
16-Feb-00 132.49 199.11
23-Feb-00 130.57 215.38
01-Mar-00 130.56 212.38
08-Mar-00 127.53 213.57
15-Mar-00 121.48 194.75
22-Mar-00 120.37 195.98
29-Mar-00 118.07 188.44
05-Apr-00 110.08 153.89
12-Apr-00 125.58 174.92
19-Apr-00 107.97 143.68
26-Apr-00 110.91 138.55
03-May-00 100.32 120.77
10-May-00 103.17 129.36
17-May-00 97.98 116.99
24-May-00 91.02 109.23
31-May-00 102.59 120.84
07-Jun-00 106.56 132.24
14-Jun-00 107.02 133.29
21-Jun-00 109.49 137.03
28-Jun-00 109.89 132.08
30-Jun-00 109.89 131.45
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
RELATIVE PERFORMANCE OF NORMALIZED RUPEE NAV
VS. BOMBAY STOCK EXCHANGE SENSITIVE INDEX
July 7, 1999 through June 30, 2000
<TABLE>
<CAPTION>
RENAV BSESI
<S> <C> <C>
07-Jul-99 100.00 100
14-Jul-99 96.25 100
21-Jul-99 99.76 100
28-Jul-99 102.01 100
04-Aug-99 102.58 100
11-Aug-99 103.34 100
18-Aug-99 106.07 100
25-Aug-99 104.38 100
01-Sep-99 104.48 100
08-Sep-99 105.75 100
15-Sep-99 107.85 100
22-Sep-99 111.39 100
29-Sep-99 111.69 100
06-Oct-99 113.67 100
13-Oct-99 117.92 100
20-Oct-99 117.92 100
27-Oct-99 114.08 100
03-Nov-99 115.41 100
10-Nov-99 121.15 100
17-Nov-99 119.91 100
24-Nov-99 122.09 100
01-Dec-99 127.56 100
08-Dec-99 130.05 100
15-Dec-99 136.27 100
22-Dec-99 139.67 100
29-Dec-99 144.97 100
05-Jan-00 142.68 100
12-Jan-00 133.19 100
19-Jan-00 140.03 100
26-Jan-00 145.94 100
02-Feb-00 155.97 100
09-Feb-00 149.82 100
16-Feb-00 150.29 100
23-Feb-00 164.96 100
01-Mar-00 162.67 100
08-Mar-00 167.46 100
15-Mar-00 160.31 100
22-Mar-00 162.81 100
29-Mar-00 159.60 100
05-Apr-00 139.80 100
12-Apr-00 139.29 100
19-Apr-00 133.08 100
26-Apr-00 124.92 100
03-May-00 120.39 100
10-May-00 125.39 100
17-May-00 119.41 100
24-May-00 120.00 100
31-May-00 117.79 100
07-Jun-00 124.10 100
14-Jun-00 124.54 100
21-Jun-00 125.15 100
28-Jun-00 120.20 100
30-Jun-00 119.62 100
</TABLE>
11
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Top 20 Holdings -- June 30, 2000
---------------------------------------------------------
The Fund had positions in 119 companies at June 30, 2000. The top 20
holdings as of this date are as follows:
<TABLE>
<CAPTION>
COMPANY PERCENTAGE OF NET ASSETS
------- ------------------------
<C> <S> <C>
1. Software Solutions Integrated Ltd. ............... 11.91%
2. Satyam Computer Services Ltd. .................... 8.30
3. Hindustan Lever Ltd. ............................. 6.67
4. Hero Honda Motors Ltd. ........................... 5.09
5. Infosys Technologies ............................. 5.02
6. ITC Ltd. ......................................... 3.97
7. DSQ Software Ltd. ................................ 3.83
8. NIIT Ltd. ........................................ 3.43
9. Reliance Industries Ltd. ......................... 3.18
10. Zee Telefilms Ltd. ............................... 3.16
11. Mastek Ltd. ...................................... 3.05
12. Sun Pharmaceuticals Industries Ltd. .............. 1.95
13. Punjab Tractors Ltd. ............................. 1.94
14. SmithKline Beecham Consumer Healthcare Ltd. ...... 1.76
15. Mahindra & Mahindra Ltd. ......................... 1.63
16. Global Tele Systems Ltd. ......................... 1.58
17. Dr. Reddys Laboratories .......................... 1.56
18. Novartis India Ltd. .............................. 1.54
19. Wilpro Ltd. ...................................... 1.54
20. Himachal Futuristics Ltd. ........................ 1.46
-----
Total ............................................ 72.57%
=====
</TABLE>
12
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Portfolio of Investments
June 30, 2000
----------------------------------------------------------------------------
INVESTMENTS IN INDIA--106.69%
--------------------------------------------------------------------------------
EQUITIES & EQUITY EQUIVALENTS--105.19%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<C> <S> <C>
ALUMINUM--1.05%
1,542,220 National Aluminum Ltd. ........................... $ 1,828,904
------------
AQUACULTURE--0.00%
89,900 Aqua Marine Foods Ltd.* # ........................ 20
100 King International Aqua Ltd.* # .................. 0
------------
20
------------
AUTOMOBILES & AUTO ANCILLARIES--9.02%
75,325 Exide Industries Ltd. ............................ 206,743
401,579 Hero Honda Motors Ltd. ........................... 8,881,506
601,596 Mahindra & Mahindra Ltd. ......................... 2,850,339
222,900 Punjab Tractors Ltd. ............................. 3,390,926
150,432 Tata Engineering & Locomotive Co. Ltd. ........... 415,415
------------
15,744,929
------------
CEMENT--0.67%
12,940 Madras Cements Ltd. .............................. 1,164,774
------------
CERAMICS/GRANITES--0.00%
454,850 Grapco Industries Ltd.* # ........................ 102
------------
CHEMICALS & DYES--0.26%
4,601 Colour Chemicals Ltd. ............................ 156,115
19,075 Gujarat Gas Co. Ltd. ............................. 166,335
150,450 Tata Chemicals Ltd. .............................. 139,667
------------
462,117
------------
COMPUTER HARDWARE--0.93%
25,000 HCL Technology Ltd.* ............................. 721,389
105,300 Moser Baer India Ltd. ............................ 904,660
------------
1,626,049
------------
COMPUTER SOFTWARE--26.68%
112,913 Cybertech Systems & Software Ltd. ................ 466,066
141,141 Cybertech Systems & Software Ltd. (new shares)
# .............................................. 568,357
314,100 DSQ Software Ltd. ................................ 6,685,441
474,200 Goldstone Engineering Ltd. ....................... 1,656,248
6,000 Hughes Software System ........................... 405,044
47,000 Infosys Technologies+ ............................ 8,756,684
131,800 InfoTech Enterprises Ltd. ........................ 1,349,290
1,600 Leading Edge Systems Ltd. ........................ 31,633
147,000 Mastek Ltd. ...................................... 5,314,881
17,900 R.S. Software (India) Ltd. ....................... 134,240
216,934 Satyam Computer Services Ltd. .................... 14,489,636
384,000 Shonkh Technologies* # ........................... 1,118,029
141,466 Silverline Industries Ltd. ....................... 1,377,591
110,300 Sonata Software Ltd. ............................. 1,526,661
41,250 Wilpro Ltd. ...................................... 2,679,171
------------
46,558,972
------------
COMPUTER TRAINING--15.34%
120,934 NIIT Ltd. ........................................ 5,986,707
326,400 Software Solutions Integrated Ltd. ............... 20,792,740
------------
26,779,447
------------
</TABLE>
13
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Portfolio of Investments (continued)
June 30, 2000
----------------------------------------------------------------------------
EQUITIES & EQUITY EQUIVALENTS--(continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<C> <S> <C>
CONSUMER DURABLES--0.13%
8,150 Mirc Electronics Ltd. ............................ $ 72,346
250,000 Polar Industries Ltd.* # ......................... 147,648
------------
219,994
------------
CONSUMER PRODUCTS--8.33%
19,900 Archies Greetings & Gifts Ltd. ................... 120,336
29,900 Archies Greetings & Gifts Ltd. (new shares) # .... 176,788
10,760 Colgate Palmolive India .......................... 43,401
183,218 Hindustan Lever Ltd. ............................. 11,638,754
6,800 India Shaving Products Ltd. ...................... 155,342
59,000 Marico Industries Ltd. ........................... 331,140
37,356 Nirma Ltd. ....................................... 737,917
52,457 Procter & Gamble India Ltd. ...................... 785,798
1,011,400 Vashisti Detergents Ltd.* ........................ 542,509
------------
14,531,985
------------
DIVERSIFIED--8.19%
389,782 ITC Ltd. ......................................... 6,937,072
284,779 Larsen & Toubro Ltd. ............................. 1,573,460
130,426 Raymond Ltd.+ .................................... 233,978
727,533 Reliance Industries Ltd. ......................... 5,554,670
------------
14,299,180
------------
ELECTRICALS--0.25%
50,638 Siemens India Ltd.* .............................. 344,883
12,659 Siemens India Ltd. (new shares)* ................. 86,217
------------
431,100
------------
ENGINEERING--2.04%
125,000 Bharat Heavy Electric Ltd. ....................... 373,600
90,000 Cummins India Ltd. ............................... 905,342
145,000 Growel Times Ltd.* # ............................. 32
25,400 Ingersoll Rand India Ltd. ........................ 105,468
174,425 Thermax Ltd. ..................................... 368,382
168,600 Wartsila Diesel India Ltd. ....................... 435,755
5,000,000 Welspun Syntex Ltd.* # ........................... 1,371,781
1,650 Western Paques (India) Ltd.* # ................... 0
------------
3,560,360
------------
FERTILIZERS--0.88%
112,850 Gujarat Narmada Valley Fertilizers Company
Ltd. ........................................... 60,406
95,000 Hindustan Lever Chemicals Ltd. ................... 577,021
940,950 Indo Gulf Corp. Ltd. ............................. 893,534
------------
1,530,961
------------
FINANCE & LEASING--0.42%
120,000 Credit Rating Information Services of India
Ltd. ........................................... 725,778
------------
FOOD & AGRO PRODUCTS--2.94%
517,000 Agritech Hatcheries & Foods Ltd.* # .............. 15,632
244,850 Nestle India Ltd. ................................ 2,048,185
400,717 SmithKline Beecham Consumer Healthcare Ltd. ...... 3,072,014
------------
5,135,831
------------
HOTELS--0.64%
368,525 EIH Ltd. ......................................... 957,422
48,220 Hotel Leela Venture Ltd. - Warrants expire
9/30/00* # ..................................... 4,860
32,402 Indian Hotels Co. Ltd. ........................... 156,458
------------
1,118,740
------------
</TABLE>
14
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
----------------------------------------------------------------------------
EQUITIES & EQUITY EQUIVALENTS--(continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<C> <S> <C>
HOUSING & CONSTRUCTION--0.00%
27,950 NCL Seccolor Ltd.* # ............................. $ 6
------------
IRON & STEEL--0.48%
300,000 Asian Alloys Ltd.* # ............................. 36,282
421,000 Kanakdhara Steel Ltd.* # ......................... 94
251,464 Tata Iron & Steel ................................ 665,690
984,000 Welspun Stahl Rohren Ltd.* # ..................... 132,228
------------
834,294
------------
MEDIA--4.63%
118,700 Crest Communications Ltd. ........................ 902,944
600 Pentamedia Graphics .............................. 7,914
58,388 SRI Adhikari Bros. Telecommunications Network .... 752,767
66,150 Television Eighteen India* ....................... 900,247
550,000 Zee Telefilms Ltd. ............................... 5,519,093
------------
8,082,965
------------
PAINTS/DYES/RUBBER--0.08%
50,607 Ciba Specialty Chemicals Ltd. .................... 147,344
------------
PESTICIDES/AGROCHEMICALS--1.54%
147,211 Novartis India Ltd. .............................. 2,682,109
------------
PETROCHEMICALS--0.19%
49,177 Castrol India Ltd. ............................... 334,106
------------
PETROLEUM--2.07%
76,700 Bharat Petroleum Corporation Ltd. ................ 331,279
346,000 Hindustan Petroleum Corp. Ltd. ................... 951,209
173,000 Hindustan Petroleum Corp. Ltd. (new shares)* # ... 432,984
1,575,000 Reliance Petroleum Ltd. .......................... 1,903,052
------------
3,618,524
------------
PHARMACEUTICALS--11.41%
125,900 Aurobindo Pharmaceuticals Ltd. ................... 1,256,885
125,900 Aurobindo Pharmaceuticals Ltd. (new shares)* # ... 1,242,787
4,005 Bayer India Ltd. ................................. 60,905
78,790 Burroughs Wellcome India Ltd. .................... 590,969
33,256 Cipla Ltd. ....................................... 643,483
20,000 Cipla Ltd. (new shares)* # ....................... 383,628
92,872 Dr. Reddys Laboratories .......................... 2,716,168
75,100 E. Merck India Ltd. .............................. 537,558
37,850 Fulford India Ltd.* .............................. 173,779
59,624 German Remedies Ltd. ............................. 800,017
108,145 Hoechst Marion Roussel Ltd. ...................... 1,160,046
60,200 Knoll Pharmaceuticals Ltd. ....................... 473,713
131,367 Morepan Laboratories Ltd. ........................ 1,750,432
248,200 Orchid Chemicals & Pharmaceuticals Ltd. .......... 812,973
112,400 Pfizer Ltd........................................ 1,413,874
200 Pharmasia Ltd.* .................................. 17
84,000 Ranbaxy Labs...................................... 1,084,757
36,050 Rhone Poulenc Ltd. ............................... 610,387
283,500 Sun Pharmaceuticals Industries Ltd. .............. 3,407,714
55,500 Wockhart Ltd. .................................... 552,638
55,500 Wockhardt Life Sciences Ltd....................... 57,054
33,750 Wyeth Lederle Ltd. ............................... 182,167
------------
19,911,951
------------
PLASTICS/PIPES--0.00%
300 Uniplas India Ltd.* # ............................ 6
------------
</TABLE>
15
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Portfolio of Investments (concluded)
June 30, 2000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EQUITIES & EQUITY EQUIVALENTS--(concluded)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<C> <S> <C>
POWER & ENERGY--0.38%
122,298 BSES Ltd. ........................................ $ 672,434
------------
TEA & PLANTATION--0.35%
81,501 Tata Tea Ltd. .................................... 605,462
------------
TELECOMMUNICATIONS & CABLE--4.27%
92,000 Global Tele Systems Ltd. ......................... 2,758,146
80,000 Himachal Futuristics Ltd. ........................ 2,544,054
350,790 Mahanagar Telephone Nigam Ltd. ................... 1,685,599
78,200 Shyam Telecom Ltd.* .............................. 471,915
------------
7,459,714
------------
TEXTILES--0.83%
224,697 Grasim Industries Ltd. ........................... 1,440,275
46,200 K.G. Denim Ltd.* ................................. 4,501
------------
1,444,776
------------
MISCELLANEOUS--1.19%
220,746 Hindustan Zinc Ltd. .............................. 44,495
277,600 Modiluft Ltd.* ................................... 60,929
194,844 Navneet Publications Ltd. ........................ 1,242,812
107,800 Peerless Shipping* ............................... 301,792
250,000 Shree Rama Multi-Tech Ltd. ....................... 363,382
26,800 Skyline Nepc Ltd.* ............................... 600
152,000 TamilNadu Hospitals Ltd.* # ...................... 34
400,000 Tejoomal Industries Ltd.* # ...................... 90
5,000 Vikas WSP Limited* ............................... 56,697
------------
2,070,831
------------
TOTAL EQUITIES & EQUITY EQUIVALENTS (cost--$110,237,304)...... 183,583,765
------------
</TABLE>
16
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
----------------------------------------------------------------------------
NON-CONVERTIBLE DEBENTURES --0.12%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
--------------------- ------------
<C> <S> <C>
Rs. 12,938 10.5% Jindal Iron & Steel Co. Ltd of Rs. 500 each;
redeemable starting 1/14/01#.............................. $ 213,208
15,000 16.0% Rama Newsprint & Papers Ltd. of Rs. 60 each;
redeemable starting 1/02/00* #............................ 0
------------
TOTAL NON-CONVERTIBLE DEBENTURES (cost--$890,508)................................... 213,208
------------
</TABLE>
--------------------------------------------------------------------------------
BANK DEPOSIT --1.38%
--------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
107,500 Banque Nationale de Paris, 7.00%, due 7/03/00
(cost--$2,407,615)........................................ 2,407,615
------------
TOTAL INVESTMENTS IN INDIA (cost--$113,535,427)..................................... 186,204,588
------------
</TABLE>
OTHER INVESTMENTS--0.09%
--------------------------------------------------------------------------------
TIME DEPOSITS--0.09%
--------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
US$ 159 Brown Brothers Harriman & Co. Grand Cayman, 5.00%,
due 7/03/00 @ (cost--$159,579).................. 159,579
------------
TOTAL INVESTMENTS (cost--$113,695,006)--106.78%................ 186,364,167
Liabilities in excess of other assets--(6.78)%................. (11,839,604)
------------
NET ASSETS (equivalent to $17.75 per share; applicable to
9,830,611 shares outstanding)--100%.......................... $174,524,563
============
</TABLE>
------------------------------
Rs -- Indian Rupees
+ Affiliated security. Deemed as such because a Director of
the Fund or an employee of the Investment Adviser or Trustee
is an officer or director of the Company.
* Non-income producing security.
# Fair valued security, aggregating $5,844,596 or 3.35% of net
assets.
@ Variable rate account--rate resets on a monthly basis;
amount available upon 48 hours' notice.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Statement of Assets and Liabilities
June 30, 2000
----------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
INVESTMENTS IN UNAFFILIATED SECURITIES, AT
VALUE (COST--$111,262,963)................... $177,373,505
INVESTMENTS IN AFFILIATED SECURITIES, AT VALUE
(COST--$2,432,043)........................... 8,990,662 $186,364,167
------------
INDIAN RUPEES, AT VALUE (COST $21,996)........ 1,512
RECEIVABLE FOR INVESTMENTS SOLD............... 1,493,930
DIVIDENDS AND INTEREST RECEIVABLE............. 148,994
PREPAID EXPENSES AND OTHER ASSETS............. 56,479
------------
TOTAL ASSETS.............................. 188,065,082
------------
LIABILITIES
DEFERRED INDIAN WITHHOLDING TAXES............. 12,924,098
INVESTMENT ADVISORY FEE PAYABLE............... 81,615
TRUST ADMINISTRATOR FEE PAYABLE............... 41,356
ADMINISTRATOR FEE PAYABLE..................... 20,698
ACCRUED EXPENSES AND OTHER LIABILITIES........ 472,752
------------
TOTAL LIABILITIES......................... 13,540,519
------------
NET ASSETS
COMMON STOCK, $0.01 PAR VALUE; 9,830,611
SHARES ISSUED AND OUTSTANDING
(50,000,000 SHARES AUTHORIZED)............... 98,306
ADDITIONAL PAID-IN CAPITAL.................... 113,347,650
UNDISTRIBUTED NET INVESTMENT LOSS............. (2,058,212)
ACCUMULATED NET REALIZED LOSS................. (2,770,066)
NET UNREALIZED APPRECIATION OF INVESTMENTS AND
OTHER ASSETS AND LIABILITIES DENOMINATED IN
INDIAN RUPEES (NET OF DEFERRED INDIAN
WITHHOLDING TAX OF $8,843,419)............... 65,906,885
------------
$174,524,563
============
NET ASSET VALUE PER SHARE......................... $17.75
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Statement of Operations
For the Year Ended June 30, 2000
----------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
DIVIDENDS FROM UNAFFILIATED SECURITIES................................. $ 2,138,357
DIVIDENDS FROM AFFILIATED SECURITIES................................... 9,534
INTEREST............................................................... 78,225 $ 2,226,116
-----------
EXPENSES
ADVISORY FEES.......................................................... 1,002,902
CUSTODIAN AND ACCOUNTING FEES.......................................... 916,706
TRUST ADMINISTRATION FEES.............................................. 588,861
LEGAL AND AUDIT FEES................................................... 351,374
ADMINISTRATION FEES.................................................... 273,195
INTEREST EXPENSE....................................................... 156,345
DIRECTORS' FEES AND EXPENSES........................................... 150,439
INSURANCE EXPENSE...................................................... 105,526
REPORTS TO SHAREHOLDERS................................................ 93,513
TRANSFER AGENT FEES.................................................... 27,621
MAURITIUS ADMINISTRATION FEES AND OTHER EXPENSES....................... 16,800
REGISTRATION FEES...................................................... 12,688
MISCELLANEOUS.......................................................... 32,735 3,728,705
----------- -------------
NET INVESTMENT LOSS BEFORE TAXES....................................... (1,502,589)
DEFERRED INDIAN WITHHOLDING TAX EXPENSE................................ (17,189)
-------------
NET INVESTMENT LOSS.................................................... (1,519,778)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
NET REALIZED GAIN ON INVESTMENTS--UNAFFILIATED SECURITIES.............. 16,399,849
NET REALIZED LOSS ON INVESTMENTS--AFFILIATED SECURITIES................ (496,220)
DEFERRED INDIAN WITHHOLDING TAX........................................ (1,892,106)
-----------
NET REALIZED GAIN ON INVESTMENTS....................................... 14,011,523
NET REALIZED LOSS ON FOREIGN CURRENCY TRANSACTIONS..................... (261,368)
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION OF:
INVESTMENTS (NET OF INCREASE IN DEFERRED INDIAN WITHHOLDING TAX OF
$2,675,635)........................................................ 29,206,232
OTHER ASSETS AND LIABILITIES DENOMINATED IN INDIAN RUPEES.......... (154,019)
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS.......................................................... 42,802,368
-------------
NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS...................... $ 41,282,590
=============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
---------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999
---------------- --------------
<S> <C> <C>
INCOME (LOSS) FROM INVESTMENT OPERATIONS
NET INVESTMENT LOSS........................... $ (1,519,778) $ (789,446)
NET REALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS........................ 13,750,155 5,110,428
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS AND OTHER ASSETS AND LIABILITIES
DENOMINATED IN INDIAN RUPEES................. 29,052,213 34,527,062
--------------- ------------
TOTAL FROM INVESTMENT OPERATIONS.............. 41,282,590 38,848,044
--------------- ------------
CAPITAL SHARE TRANSACTIONS
CAPITAL CONTRIBUTIONS FROM INVESTMENT
ADVISER...................................... -- 437,275
--------------- ------------
NET INCREASE IN NET ASSETS........................ 41,282,590 39,285,319
NET ASSETS
BEGINNING OF YEAR............................. 133,241,973 93,956,654
--------------- ------------
END OF YEAR................................... $ 174,524,563 $133,241,973
=============== ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Notes to Financial Statements
June 30, 2000
----------------------------------------------------------------------------
NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The India Growth Fund Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a non-diversified,
closed-end management investment company. The Fund invests through an Indian
unit investment trust (the "Trust") organized through a trust fund agreement
(the "Trust Agreement") between the Fund and Unit Trust of India ("UTI"). In
March 1999, the Fund registered itself as a foreign company in the Republic of
Mauritius.
The preparation of the financial statements in accordance with accounting
principles generally accepted in the United States, requires Fund management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund:
VALUATION OF INVESTMENTS--All securities for which market quotations are readily
available are valued at the last sale price on the day of determination or, if
there was no sale on such day, at the mean between the highest current bid and
lowest current asked prices. Securities which are traded over-the-counter, if
bid and asked quotations are available, are valued at the mean between the
current bid and asked prices of two reputable dealers or, if such quotations are
not available, are valued at their fair value as determined in good faith in
accordance with guidelines established by the Fund's Board of Directors.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost if their term to maturity from date of purchase was less than 60
days, or by amortizing their value on the 61st day prior to maturity if their
term to maturity from date of purchase was greater than 60 days. All other
securities and assets are valued at fair value as determined in good faith in
accordance with guidelines established by the Fund's Board of Directors.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date (the date on which the buy or sell order is
executed). Realized gains and losses from investments and foreign currency
transactions are calculated on the identified cost basis. Interest income is
recorded on an accrual basis. Dividend income and other distributions are
recorded on the ex-dividend date ("ex-date") except for certain dividends which
are recorded as soon after the ex-date as the Fund, using reasonable diligence,
becomes aware of such dividends.
FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are maintained
in U.S. Dollars. Indian Rupee amounts are translated into U.S. Dollars on the
following basis: (1) the foreign currency market value of investments and other
assets and liabilities denominated in Indian Rupees at the closing rate of
exchange on the valuation date; and (2) purchases and sales of investments,
income and expenses are translated at the rate of exchange prevailing on the
21
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
----------------------------------------------------------------------
respective dates of such transactions. The resulting net foreign currency gain
and loss is included in the Statement of Operations.
The Fund does not generally isolate that portion of the results of operations
arising as a result of changes in the foreign currency exchange rates from the
fluctuations arising from changes in the market prices of securities.
Accordingly, such foreign currency gain (loss) is included in net realized and
unrealized gain (loss) on investments. However, the Fund does isolate the effect
of fluctuations in foreign currency rates when determining the gain or loss upon
the sale or maturity of Indian Rupee denominated debt obligations pursuant to
U.S. federal income tax regulations; such amount is categorized as foreign
currency gain or loss for income tax reporting purposes.
Net foreign currency gain (loss) from valuing Indian Rupee denominated assets
and liabilities at the period end exchange rate is reflected as a component of
net unrealized appreciation of investments and other assets and liabilities
denominated in Indian Rupees. Net realized foreign currency gain (loss) is
treated as ordinary income (loss) for income tax reporting purposes.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-date. Dividends and distributions from net investment income
and net realized capital gain, respectively, are determined in accordance with
federal income tax regulations, which may differ from generally accepted
accounting principles. These "book/tax" differences are considered either
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
or net realized capital gains for financial reporting purposes, but not for tax
purposes, are reported as dividends in excess of net investment income or
distributions in excess of net realized gain on investments. To the extent they
exceed net investment income or net realized capital gain for tax purposes, they
are reported as distributions of additional paid-in-capital. As a result of
permanent book/tax differences relating to a net operating loss for the year,
$1,738,602 has been reclassified from undistributed net investment loss to
additional paid-in capital.
NOTE 2 INVESTMENT ADVISORY, ADMINISTRATION AND OTHER FEES
The Fund has an Investment Advisory Agreement with Unit Trust of India
Investment Advisory Services Limited (the "Investment Adviser"), an indirect,
wholly-owned subsidiary of UTI. Under the Investment Advisory Agreement, the
Investment Adviser receives a monthly fee, computed weekly, at an annual rate of
0.75% of the first $50 million of the value of the Fund's average weekly net
assets, 0.60% of such net assets in excess of $50 million but not in excess of
$100 million, and 0.45% of such net assets in excess of $100 million.
22
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
----------------------------------------------------------------------
Pursuant to the Trust Agreement, the Fund pays UTI a monthly fee for
administration of the Trust, including accounting and valuation services, based
on the value of the Fund's average weekly net assets held in the Trust at the
following annual rates: 0.35% of the first $50 million of the value of the
Fund's average weekly net assets, 0.30% of the next $50 million of such net
assets, and 0.25% of such net assets in excess of $100 million. In addition, UTI
is entitled to reimbursement for all out-of-pocket expenses incurred by UTI
directly in the performance of its duties under the Trust Agreement other than
employee costs and overhead.
Mitchell Hutchins Asset Management Inc. ("MHAM") serves as the Fund's
administrator. MHAM receives a monthly fee, computed weekly, at the annual rate
of 0.20% of the first $62.5 million of the value of the Fund's average weekly
net assets, 0.15% of such net assets in excess of $62.5 million but not in
excess of $100 million, and 0.10% of such net assets in excess of $100 million,
subject to a minimum annual fee of $125,000.
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 $1,000 for
administration services and a quarterly fee of $800 for certain other services
and is reimbursed for certain expenses incurred in the performance of its duties
under the agreement. Two officers of the Mauritius Administrator are also
directors of the Fund.
NOTE 3 INVESTMENTS IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at June 30,
2000 was $115,118,680. Accordingly, net unrealized appreciation of investments
of $71,245,487 was composed of gross appreciation of $96,263,154 for those
investments having an excess of value over cost and gross depreciation of
$25,017,667 for those investments having an excess of cost over value.
For the year ended June 30, 2000, aggregate purchases and sales of portfolio
securities, excluding short term securities, were $40,214,417 and $48,407,437,
respectively.
At June 30, 2000, the Fund owned securities valued at approximately $1,421,400
which were in the process of being registered in the name of the Fund or being
dematerialized. Significant delays are common in registering the transfer of
securities in India, and such transfers can take a year or longer. Indian
securities regulations normally preclude the Fund from selling such securities
until the completion of the registration or the dematerialization process.
23
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
----------------------------------------------------------------------
NOTE 4 TRANSACTIONS WITH AFFILIATES
The Fund paid or accrued approximately $243,413 for the year ended June 30, 2000
for legal services to a law firm of which the Fund's assistant secretary is a
partner.
For the year ended June 30, 2000, the Fund paid approximately $10,749, $4,757,
$1,525, $982 and $359 in brokerage commissions to UTI Securities Exchange Ltd.,
IDBI Capital Markets, ABN Amro Asia Equities, DSP Merrill Lynch and Investsmart
India Ltd., respectively, affiliates of the Investment Adviser or the Fund's
directors.
NOTE 5 U.S. FEDERAL INCOME TAXES
The Fund intends to distribute all of its taxable income and to comply with the
other requirements of the Internal Revenue Code of 1986, as amended, applicable
to regulated investment companies. Accordingly, no provision for U.S. federal
income tax is required. In addition, by distributing substantially all of its
net investment income, capital gains and certain other amounts, if any, during
the calendar year, the Fund intends not to be subject to U.S. federal excise
tax.
During the year ended June 30, 2000, the Fund utilized $13,134,959 of capital
losses carried forward from prior years. In accordance with U.S. Treasury
regulations, the Fund elected to defer realized foreign currency losses occuring
after October 31, 1999 in the amount of $25,077. Such losses are treated for tax
purposes as arising on July 1, 2000.
The Fund's taxable net income and capital gains are different than the Fund's
net investment income and realized gains primarily due to Indian withholding
taxes as described in Note 6, which are recognized for U.S. federal income tax
purposes when they are actually paid.
NOTE 6 FOREIGN INCOME TAXES
Net investment income of the Fund derived in India and realized and unrealized
gains on assets of the Fund held in the Trust by UTI under the Trust Agreement
are not subject to taxation in India. However, remittances to the Fund from the
Trust of distributions representing net investment income and gains realized on
such assets are subject to a 10% Indian withholding tax. The Fund accrues for
such withholding taxes on the net investment income and net realized and
unrealized gains derived in India. At June 30, 2000, $12,924,098 in aggregate
net deferred Indian withholding taxes payable were accrued by the Fund. With
certain limitations, U.S. shareholders will be able to credit such withholding
taxes against their U.S. federal income tax liabilities on foreign source income
in the year when such tax is actually paid by the Fund, if so elected by the
Fund. Should the Fund require funds from the Trust in excess of the net
investment income or net realized gains earned by the Trust, the Fund would have
to redeem units representing interest in the Trust. Gains,
24
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
----------------------------------------------------------------------
if any, realized upon redemption of units representing the Fund's interest in
the Trust described above would be subject to 10% withholding tax to the extent
the gains are long-term and 48% to the extent the gains are short-term.
Upon registration as a foreign company in Mauritius, 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. 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 certificate from the Mauritian
authorities that it is a resident of Mauritius under the double taxation treaty
between Mauritius and India. 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 or redemption of securities
(units of the Trust).
The Fund will be liable for tax in Mauritius at a fixed rate of 15% on its
taxable income for Mauritius tax purposes. It will, however, be entitled to a
tax credit equivalent to the higher of the foreign taxes paid and 90% of the
Mauritius tax on its foreign source income which will result in a maximum tax
rate of 1.5%. There is no capital gains tax in Mauritius. For the year ended
June 30, 2000, no provision for Mauritius taxes is considered necessary as a
result of a net investment loss incurred by the Fund.
The Fund continues to comply with the tests and conditions and the related
requirements to be eligible for the benefits of the double taxation treaty
between Mauritius and India. However, due to the uncertainty surrounding the
availability of the benefits under the double taxation treaty to the Fund, the
Fund continues to accrue the applicable withholding tax in India described
above.
The foregoing is based on current interpretation and practice and is subject to
any future changes in Indian or Mauritius tax laws or in the tax treaty between
India and Mauritius.
NOTE 7 CAPITAL STOCK
There were no transactions in shares of common stock for the year ended
June 30, 2000 or for the year ended June 30, 1999.
25
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
----------------------------------------------------------------------
NOTE 8 CREDIT FACILITY
On March 22, 1999, the Fund entered into a credit facility (the "Credit
Facility") of Indian Rupees 210,000,000 ($4,827,586) from UTI Bank Ltd. ("UTI
Bank"), an affiliate of the Investment Adviser, for a period of one year at an
interest rate of 16.32% per annum through December 31, 1999 and 15.81%
thereafter.
On April 6, 1999, the Credit Facility was increased to Indian Rupees 310,000,000
($7,126,437). During the year ended June 30, 2000 the maximum and average amount
of the loan outstanding under the Credit Facility during the borrowing period
was approximately $7,118,107 and approximately $2,330,606, respectively. During
the year ended June 30, 2000, the Fund incurred $156,345 in interest expense
under the Credit Facility at a weighted average interest rate of 16.26%. At
June 30, 2000, the Fund did not have an outstanding loan balance to UTI Bank
under the Credit Facility.
NOTE 9 CONCENTRATION OF RISK
At June 30, 2000, all of the Fund's portfolio assets were invested in Indian
securities. The Indian securities markets are substantially smaller, less
developed, less liquid, subject to less regulations and more volatile than the
securities markets in the United States. Investments in India may involve
certain considerations and risks not typically associated with investments in
the U.S. as a result of, among other factors, future political and economic
developments and the level of Indian governmental supervision and regulation of
its securities markets.
The ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic and political developments in a specific
industry or region.
26
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Financial Highlights
---------------------------------------------------------
Selected data for a share of common stock outstanding throughout each year is
presented below:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year.............................. $13.55 $ 9.56 $12.52 $13.67 $15.86
-------- -------- ------- -------- --------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net investment income (loss) before
tax............................... (0.15) (0.11) (0.07) (0.05) 0.11 *
Net deferred Indian withholding
(tax)/tax benefit on net
investment income (loss).......... (0.00)@ 0.03 0.02 0.02 (0.01)*
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions............. 4.82 4.51 (3.06) (1.16) (1.47)*
Deferred Indian withholding
(tax)/tax benefit on net realized
and unrealized gain (loss) on
investments....................... (0.47) (0.48) 0.15 0.12 0.03 *
-------- -------- ------- -------- --------
Total income (loss) from investment
operations........................ 4.20 3.95 (2.96) (1.07) (1.34)
-------- -------- ------- -------- --------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income.......... -- -- -- (0.08) --
From net realized gain on
investments....................... -- -- -- -- --
In excess of net realized gain on
investments....................... -- -- -- -- (0.35)
-------- -------- ------- -------- --------
Total dividends and distributions to
shareholders...................... -- -- -- (0.08) (0.35)
-------- -------- ------- -------- --------
CAPITAL SHARE TRANSACTIONS
Capital contributions from
Investment Adviser................ -- 0.04 -- -- --
Dilutive effect of rights
offering.......................... -- -- -- -- (0.37)
Offering costs charged and
adjustments to additional paid-in
capital........................... -- -- -- -- (0.13)
-------- -------- ------- -------- --------
Total capital share transactions.... -- 0.04 -- -- (0.50)
-------- -------- ------- -------- --------
Net asset value, end of year........ $17.75 $13.55 $ 9.56 $12.52 $13.67
======== ======== ======= ======== ========
Market value, end of year........... $11.38 $ 9.56 $ 7.25 $13.38 $14.63
======== ======== ======= ======== ========
TOTAL INVESTMENT RETURN (a)......... 19.04% 31.90% (45.79)% (7.98)% (15.88)%
======== ======== ======= ======== ========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000 omitted)..................... $174,525 $133,242 $93,957 $123,086 $134,329
Ratio of expenses, excluding
(tax)/tax benefit, to average net
assets (b)........................ 1.94% 2.51% 2.32% 2.37% 2.17%
Ratio of expenses, including
(tax)/tax benefit, to average net
assets (c)........................ 1.95% 2.21% 1.87% 2.23% 2.24%
Ratio of net investment income
(loss) to average net assets...... (0.79)% (0.70)% (0.18)% (0.26)% 0.72%
Portfolio turnover.................. 20% 30% 23% 31% 10%
</TABLE>
----------------------------------
@ Net deferred Indian withholding tax on net investment income for Indian tax
purposes equivalent to $0.0017 per share.
* Based on average shares outstanding.
(a) Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day, the purchase of common stock
pursuant to any rights offering occurring in the year and a sale at the
current market price on the last day of each year 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 sales charges or brokerage
commissions.
(b) Includes interest expense of $156,345 (or 0.08% of average net assets) and
$153,641 (or 0.14% of average net assets) for the years ended June 30, 2000
and 1999, respectively.
(c) Includes interest expense net of deferred Indian withholding tax benefit of
$140,711 (or 0.07% of average net assets) and of $138,277 (or 0.12% of
average net assets) for the years ended June 30, 2000 and 1999,
respectively.
27
<PAGE>
THE INDIA GROWTH FUND INC.
--------------------------------------------------------------------------------
Report of Independent Accountants
---------------------------------------------------------
To the Shareholders and Board of Directors of
The India Growth Fund Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The India Growth Fund Inc. (the
"Fund") at June 30, 2000, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 2000 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
August 21, 2000
28
<PAGE>
--------------------------------------------------------------------------------
INVESTMENT ADVISER
Unit Trust of India Investment Advisory Services Ltd.
Commerce Centre 1,
World Trade Center, 8th Floor
G.D. Somani Marg
Cuffe Parade, Colaba
Mumbai, 400-005, India
Telephone Number 9122-218-0087
Fax Number 9122-218-8859
Internet [email protected]
ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
Telephone Number (201) 318-4150
Fax Number (201) 533-2847
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
INDIAN CUSTODIAN
Citibank, N.A.
Custody Services
81, Annie Besant Road
Barodawale Mansion
Mumbai, 400-018, India
SHAREHOLDER SERVICING AGENT
PNC Bank, N.A.
300 Bellevue Parkway
Wilmington, Delaware 19809
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
TRUSTEE
Unit Trust of India
13, Sir V. Thackersey Marg
Mumbai, 400-020, India
DIRECTORS
Pierre Dinan
Uday Kumar Gujadhur
G.P. Gupta
Thomas L. Hansberger
Ishaat Hussain (appointed January 24, 2000)
N.R. Narayan Murthy
Peter J. Pearson
Christopher Reeves
P.S. Subramanyam
Antoine W. van Agtmael
OFFICERS
P.S. Subramanyam, CHAIRMAN OF THE BOARD & PRESIDENT
J.S. Mascarenhas, TREASURER & SECRETARY
Laurence E. Cranch, ASSISTANT SECRETARY
THIS REPORT, INCLUDING THE FINANCIAL STATEMENTS HEREIN, IS SENT TO THE
SHAREHOLDERS OF THE FUND FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR
OF REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND
OR OF ANY SECURITIES MENTIONED IN THIS REPORT.
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(c) OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, THAT FROM TIME TO TIME THE FUND MAY PURCHASE
SHARES OF ITS COMMON STOCK IN THE OPEN MARKET.
[LOGO]
THE INDIA
GROWTH
FUND INC.
----------------------
----------------------
ANNUAL REPORT
JUNE 30, 2000
