<PAGE>
MORGAN STANLEY
INDIA INVESTMENT FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs James W. Grisham
CHAIRMAN OF THE BOARD VICE PRESIDENT
OF DIRECTORS Michael F. Klein
Warren J. Olsen VICE PRESIDENT
PRESIDENT AND DIRECTOR Harold J. Schaaff, Jr.
John Chu VICE PRESIDENT
DIRECTOR Joseph P. Stadler
Gerard la Hausse de Louviere VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
Gerard E. Jones SECRETARY
DIRECTOR James R. Rooney
John A. Levin TREASURER
DIRECTOR Belinda A. Brady
Fergus Reid ASSISTANT TREASURER
DIRECTOR
</TABLE>
- ---------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
- --------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- --------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726.
------------------------
MORGAN STANLEY
INDIA INVESTMENT
FUND, INC.
---------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the nine months ended September 30, 1996, the total return for the Morgan
Stanley India Investment Fund, Inc. based on a net asset value per share, was
- -0.11% compared to 2.43% for the U.S. dollar adjusted Bombay Stock Exchange
Sensitive Index (the "Index"). For the period since the Fund's inception on
February 25, 1994 through September 30, 1996, the Fund's total return based on
net asset value per share was -35.92% compared to -33.07% for the Index. On
September 30, 1996, the closing price of the Fund's shares on the New York Stock
Exchange was $8.75, representing a 1.7% discount to the net asset value per
share.
For the three months ended September 30, 1996, the U.S. dollar adjusted BSE
National Index and the broad CRISIL-500 Index declined by 17% and 21.7%,
respectively. For the same period, the Fund had a total return, based on net
asset value per share, of -19.46%. The Fund's underperformance is basically due
to its weighting in mid-cap stocks where valuations have dropped dramatically in
this bear market. People have questioned our mid-cap bias, but, we continue to
firmly believe that any sustainable market rise can only be sparked by domestic
participation and this participation will be focused primarily on mid-caps. Even
small amounts of buying can spark large price movements in the mid-cap universe
and this is what we expect to happen.
MARKET
Going through this tough, grinding 24-month bear market, one tends to forget
that the Indian economy has never performed better. The country, on the verge of
bankruptcy in 1991, has gone through the quickest and least painful structural
adjustment/stabilization program in IMF/ World Bank history. The economic
reforms have delivered all that they promised and more. GIP growth rates are up
from 1.2% (91-92) to 7% (95-96), foreign currency reserves are up from $1
billion (91-92) to $18.8 billion (Sept. 96), exports have been growing at over
20% per annum the last 3 years and industrial growth has moved from -2% to 12.2%
(95-96). The corporate sector has absolutely dazzled with earnings compounding
at 41% per annum over 93-96. Foreign Direct Investment has also nearly doubled
every year, rising from $150 million in 1991 to $2.3 billion in 96.
The basic point being made is that this market has not declined due to weak
fundamentals, or some type of macro economic crisis. Which leads one to ask why
has the market declined in the face of such excellent fundamentals? In hindsight
there seems to be 3 distinct reasons.
1) Past Performance
Prior to 1995, India had 5 consecutive positive years (90-94 both inclusive)
rising between 13% - 25% in dollar terms each year. Therefore the equity cult
was overdone, retail investors felt that stocks meant guaranteed profits and
there was far too much interest in stocks. In hindsight, the market seemed ripe
for a correction.
2) High Real Interest Rates
Over the last 2 years the market has also been affected by real interest rates
reaching record levels of 14 - 15% for AAA borrowers. This combined with a total
absence of liquidity in the financial system proved to be a real drag on the
stock market. The stock markets were doubly affected as another important source
of market liquidity, (the carry forward system) was abolished. These tight
liquidity conditions caused the domestic investor base to liquidate financial
assets across the board.
3) Slowdown of reforms
While the reform program has achieved a great deal, it is still incomplete and
many important hard decisions are still to be taken. Over the last 2 years a
clear feeling has developed that the reform program has got stuck and that no
new decisions, fundamental or structural in nature, are being taken. This,
combined with political uncertainty, has led to a loss of confidence among many
investors. Whatever be the reason for the decline, the fact remains that India
is today the cheapest market in Asia, trading at 10 times estimated March 1997
earnings with earnings growth estimated at 20% over the next 3 years. We also
firmly
2
<PAGE>
believe that this correction is overdone and is setting the stage for another
extended bull run (like the one we saw in 90-94)
MARKET OUTLOOK:
The market needs the participation of the domestic investor to stage a
substantial rally, and for the domestic investor to regain confidence he needs a
rally to begin which he could jump on to in the second stage. There are four
possible catalysts for this rally:
1) LOWER INTEREST RATES
The new credit policy makes it clear that interest rates are headed lower and
that liquidity in the financial system will improve dramatically. We expect
prime lending rates of the banks to fall by 150 basis points and a similar fall
in long term rates. This improved liquidity should eventually reverse the
liquidation of financial assets observed over the past 2 years.
2) NATIONAL DEPOSITORY
The setting up of a depository in the first quarter of 1997 should spark large
overseas flows into the secondary markets from investors currently unwilling to
deal with India's existing antiquated paper based settlement system. Large
amounts of money presently invested in GDRs may also make this transition.
3) BUYBACK OF SHARES
Given the extremely low valuations prevailing at present, if permitted, this
measure may trigger a series of buyback programs from large Indian corporations
removing large amount of stock from the market.
4) KICKSTART OF REFORMS
The next budget is to be presented in February '97, and we expect the government
to make some fundamental policy announcement on insurance, PSU privatization and
the cutting of the fiscal deficit. If this were to happen, many investors would
regain confidence about the India story.
All of the above are likely to occur over the next 3-6 months and therefore the
outlook for the market beyond this horizon remains extremely positive.
Given the explosive nature of any rally in India and the difficulty in
predicting when it will commence, the Fund remains nearly fully invested.
Our bias towards mid-caps continues, though we may suffer some short term
underperformance, we believe this strategy will lead to superior outperformance
once the rally is fully established. Attempts are being made to reduce the
number of holdings (especially the inconsequential holdings). This portfolio
consolidation exercise is taking longer than anticipated due to weak market
conditions and investor disinclination towards mid-cap stocks.
Sincerely,
[WARREN OLSEN SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[VINOD SETHI SIGNATURE]
Vinod Sethi
PORTFOLIO MANAGER
November 14, 1996
3
<PAGE>
Morgan Stanley India Investment Fund, Inc.
Investment Summary as of September 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION (UNAUDITED)
TOTAL RETURN (%)
--------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (1)(3)
------------------------ ----------------------- -----------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C>
------------------------ ----------------------- -----------------------
FISCAL YEAR TO DATE -4.11% -- -0.11% -- 2.43% --
ONE YEAR -15.66 -15.66% -13.42 -13.42% -11.53 -11.53%
SINCE INCEPTION* -37.00 -16.30 -35.92 -15.75 -33.07 -14.32
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
A BAR CHART REFLECTING THE DATA BELOW IS REFLECTED HERE.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
1994* 1995 SEPTEMBER 30, 1996 (UNAUDITED)
<S> <C> <C> <C>
Net Asset Value Per Share $13.99 $8.91 $8.90
Market Value Per Share $11.25 $9.13 $8.75
Premium/(Discount) -19.6% 2.5% -1.7%
Capital Gains Distributions $0.17 - -
Fund Total Return (2) 0.72% -36.31% -0.11%
Index Total Return (1)(3)** -8.03% -28.96% 2.43%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
(3) The US dollar adjusted Bombay Stock Exchange (BSE) Sensitive Index is an
index composed of 30 companies traded on the exchange which are weighted
with respect to market importance.
* The Fund commenced operations on February 25, 1994.
** Unaudited.
4
<PAGE>
Morgan Stanley India Investment Fund, Inc.
Portfolio Summary as of September 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Fixed Income Securities 0.4%
Equity Securities 97.3%
Short-Term Investments 2.3%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Automobiles 17.3%
Banking 6.0%
Chemicals 5.2%
Energy Equipment & Services 13.2%
Financial Services 5.5%
Health & Personal Care 8.8%
Machinery & Engineering 5.8%
Telecommunications 5.2%
Textiles & Apparel 4.8%
Transportation - Road & Rail 3.9%
Other 24.3%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
---------------
<C> <S> <C>
1. Bharat Heavy Electricals Ltd. 10.4%
2. State Bank of India Ltd. 5.0
3. Mahanagar Telephone Nigam Ltd. 4.7
4. Housing Development Finance Ltd. 4.7
5. Container Corp. of India Ltd. 3.9
<CAPTION>
PERCENT OF
NET ASSETS
---------------
<C> <S> <C>
6. Tata Engineering & Locomotive
Ltd. 3.7%
7. Sundaram Fasteners Ltd. 2.5
8. ITC Ltd. 2.4
9. MRF Ltd. 1.8
10. Madras Cements Ltd. 1.8
---------------
40.9%
---------------
---------------
</TABLE>
5
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- -----------------------------------------------------------------
- -------------
INDIAN COMMON STOCKS (97.0%)
(Unless otherwise noted)
- -----------------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (1.4%)
Bharat Pipes & Fittings Ltd. 512,020 U.S.$ 46
Blow Plast Ltd. 454,200 911
IFB Industries Ltd. 175
Kelvinator Ltd. 775 1
Kunstoffe Industries Ltd. 178,600 20
Peico Electronics & Electric Ltd. 662,950 1,692
Punjab Anand Lamp Industries Ltd. 227,000 127
Supreme Industries Ltd. 220,950 1,382
Symphony Comfort Systems Ltd. 7,700 3
TVS Whirlpool Ltd. 53,400 16
VIP Industries Ltd. 161,900 249
--------------
4,447
--------------
- -----------------------------------------------------------------
- -------------
AUTOMOBILES (17.3%)
Apollo Tyres Ltd. 511,275 1,649
Apollo Tyres Ltd. (Rights) 245 --
Apollo Tyres Ltd. (Warrants) 141,833 216
Ashok Leyland Ltd. 370,580 1,107
Autolec Industries Ltd. 241,064 412
Autolite Ltd. 132,670 375
Bajaj Tempo Ltd. (Rights) 48,766 466
Castrol Ltd. 70,650 819
Ceat Tyres Ltd. 833,547 1,824
Elgi Tyres & Tread Ltd. 139,500 1,115
Engine Values Ltd. 71,050 538
Escorts Ltd. 121,200 303
Harig Crankshafts Ltd. 189,400 29
Hero Honda Ltd. 268,402 1,882
Hitech Gears Ltd. 94,000 125
Invel Transmissions Ltd. 600 1
Jay Bharat Maruti Ltd. 92,800 79
LML Ltd. 261,000 377
Lumax Automatic Parts Industries Ltd. 295,300 646
Modi Rubber Ltd. 400 1
Motherson Sumi Systems Ltd. 223,938 835
Motherson Sumi Systems Ltd. (Rights) 120 --
Motor Industries Co. Ltd. 18,405 3,666
MRF Ltd. 73,250 5,856
Nippondenso India Ltd. 648,000 2,181
O.E.N. Connectors Ltd. 177,526 205
Pan Auto Ltd. 300,000 30
Patheja Forgings and Auto Ltd. 325,000 454
Premier Instruments Ltd. 245,987 987
Punjab Tractors Ltd. 141,835 2,948
Rane Madras Ltd. 173,550 1,940
Rico Auto Industries Ltd. 221,000 484
S.K.F. Bearings Ltd. 34,925 2,425
Sona Steering System Ltd. 400 1
Subros Auto Ltd. 159,395 715
Sundaram Abex Ltd. 27,550 162
Sundaram Brake Ltd. (Warrants) 2,850 16
Sundaram Fasteners Ltd. 481,150 8,098
Tata Engineering & Locomotive Ltd. 946,163 11,830
VST Tillers & Tractors Ltd. 173,000 365
--------------
55,162
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
BANKING (6.0%)
Federal Bank Ltd. 600 U.S.$ 2
Federal Bank Ltd. -- New 139,000 526
Federal Bank Ltd. (Rights) 100 --
HDFC Bank Ltd. 1,067,100 1,085
Oriental Bank of Commerce Ltd. 841,100 1,545
State Bank of India Ltd. 2,239,420 15,878
--------------
19,036
--------------
- -----------------------------------------------------------------
- -------------
BEVERAGES (2.4%)
ITC Ltd. 896,048 7,547
McDowell & Co. Ltd. 300 --
--------------
7,547
--------------
- -----------------------------------------------------------------
- -------------
BROADCASTING & PUBLISHING (1.7%)
Navneet Publications Ltd. 233,100 955
New Delhi Television Ltd. 333,300 1,262
Srishti Video Corp. Ltd. 225,000 94
Tamil Nadu Newsprint & Paper Ltd. 500,000 715
Tata Press Ltd. 150,600 1,297
Zee Telefilms Ltd. 250,800 938
--------------
5,261
--------------
- -----------------------------------------------------------------
- -------------
BUILDING MATERIALS & COMPONENTS (3.8%)
Associated Cement Co. Ltd. 31,238 1,559
Bell Ceramics Ltd. 524,750 197
Bell Ceramics Ltd. (Rights) 1,455 --
Dalmia Cement Ltd. 124,850 1,103
Gujarat Sidhee Cement Ltd. 2,500,000 375
India Cements Ltd. GDR 170,000 510
ITW Signode India Ltd. 574,950 1,246
Madras Cements Ltd. 19,665 5,791
Murudeshwar Ceramics Ltd. 346,700 506
Orissa Cement Ltd. 86,660 365
Priyadarshini Cement Ltd. 240,750 172
Shree Cements Ltd. 224,050 166
Somani Cement Co. Ltd. 200,000 54
--------------
12,044
--------------
- -----------------------------------------------------------------
- -------------
CHEMICALS (5.1%)
Asian Paints Ltd. 235,980 2,216
Atul Products Ltd. 345,471 346
Chemox Chemicals Ltd. 250,000 123
Chemox Chemicals Ltd. -- New 193,800 95
Chemplast Sanmar Ltd. 41,668 61
Colour Chem Ltd. 19,562 1,125
E.I.D. Parry Ltd. GDR 94,320 170
Gujarat Narmada Valley Fertilizers
Ltd. 477,400 321
Gujarat Narmada Valley Fertilizers
Ltd. GDR 212,000 821
Hindustan Organic Chemicals Ltd. 554,600 537
Hoechst Schering Agrevo Ltd. 225,400 3,572
ICI India Ltd. 484,400 2,307
Indian Dyestuff Industries Ltd. 60,095 19
Indian Organic Chemical Ltd. 679,050 324
Indian Petro Chemical Corp. Ltd. 611,100 1,907
Indian Petro Chemical Corp. Ltd. GDR 22,000 258
- -----------------------------------------------------------------
- -------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
CHEMICALS (CONTINUED)
Indo Gulf Fertilizer & Chemical Ltd.
-- New 100 U.S.$ --
ITC Agrotech Co. Ltd. 100 --
ITC Agrotech Co. Ltd. (Rights) 95,800 --
Jaysynth Dyechem Ltd. 340,500 301
Metrochem Industries Ltd. 150,700 132
MSL Industries Ltd. 208,300 436
MSL Industries Ltd. -- New 62,000 130
National Organic Chemical Industries
Ltd. 10 --
Reliance Industries Ltd. 43,002 230
Sandoz Exports Ltd. 25,000 165
Sudarshan Chemicals Ltd. 234,957 758
Tainwala Chemicals & Plastics Ltd. 52,109 14
Tamil Nadu Petrochemicals Ltd. 200 --
--------------
16,368
--------------
- -----------------------------------------------------------------
- -------------
CONSTRUCTION & HOUSING (0.4%)
Hindustan Construction Ltd. 350,000 344
Hindustan Sanitaryware Ltd. 70,000 371
Nagarjuna Construction Ltd. 156,100 372
Nagarjuna Construction Ltd. -- New 97,500 232
--------------
1,319
--------------
- -----------------------------------------------------------------
- -------------
CONSUMER GOODS (0.1%)
Titan Industries Ltd. 149,200 419
--------------
- -----------------------------------------------------------------
- -------------
ELECTRICAL & ELECTRONICS (1.3%)
AKG Acoustics (India) Ltd. 81,300 34
Asian Electronics Ltd. 306,000 1,631
Bajaj Electricals Ltd. 146,300 1,838
BPL Ltd. 670,600 697
Centrum Electronics Ltd. 200,000 16
--------------
4,216
--------------
- -----------------------------------------------------------------
- -------------
ELECTRONIC COMPONENTS & INSTRUMENTS (3.2%)
Datar Switchgear Ltd. 280,400 750
Fujitsu ICIM Ltd. 655,365 276
Infosys Technology Ltd. 240,200 4,447
Mastek Ltd. 171,400 595
Modi Xerox Ltd. 778,550 2,511
Rolta India Ltd. 1,089,000 443
Samtel Colour Ltd. 759,150 367
S&S Power Switchgear Ltd. 226,105 728
Vikas Hybrids & Electronics Ltd. 175 --
--------------
10,117
--------------
- -----------------------------------------------------------------
- -------------
ENERGY EQUIPMENT & SERVICES (13.2%)
Bharat Heavy Electricals Ltd. 6,620,000 33,193
Crompton Greaves Ltd. 1,000,330 4,651
Jyoti Structure Ltd. 148,450 695
KEC International Ltd. 546,857 1,042
Kirloskar Oil Engine Ltd. 380,940 727
Modern Malleables Ltd. -- New 420,000 186
Shiram Honda Power Equipment Ltd. 302,065 1,199
Uniflex Cables Ltd. 287,400 256
--------------
41,949
--------------
- -----------------------------------------------------------------
- -------------
ENERGY SOURCES (0.3%)
Residential Photovoltaics Ltd. 200,000 898
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FINANCIAL SERVICES (5.5%)
Canfin Homes Ltd. 1,011,050 U.S.$ 397
Housing Development Finance Corp. Ltd. 229,657 14,809
ICICI Ltd. 430 1
ICICI Ltd. -- New 11,333 23
Industrial Finance Corp India Ltd. 1,266,300 1,208
SCICI Ltd. 1,200 1
UTI Master Gain 1,095,500 323
UTI MasterShares 1,940,810 731
--------------
17,493
--------------
- -----------------------------------------------------------------
- -------------
FOOD & HOUSEHOLD PRODUCTS (0.5%)
American Dry Fruits Ltd. 538,500 166
Aruna Sugars & Enterprises Ltd. 11,800 4
Brooke Bond Lipton Ltd. 650 6
Dhampur Sugar Mills Ltd. 200,000 314
Sakthi Sugar Ltd. 164,665 128
Thiru Arooran Sugars Ltd. 264,500 594
Umred Agro Complex Ltd. 124,500 10
Vadilal Industries Ltd. 250,000 62
Western Hatcheries Ltd. 237,933 202
--------------
1,486
--------------
- -----------------------------------------------------------------
- -------------
FOREST PRODUCTS & PAPER (1.1%)
Andrah Paper Ltd. 19,615 658
Ballarpur Industries Ltd. 603,042 1,281
ITC Bhadrachalam Paperboards Ltd. 200,000 432
Paper Products Ltd. -- New 218,900 774
Pudumjee Ltd. 221,600 257
--------------
3,402
--------------
- -----------------------------------------------------------------
- -------------
HEALTH & PERSONAL CARE (8.8%)
Apollo Hospitals Enterprises Ltd. 500,000 461
Cipla Ltd. 233,300 2,466
Clariant (India) Ltd. 25,000 100
Crossland Research Labs Ltd. 371,000 2,029
E. Merck (India) Ltd. 406,400 1,824
Godrej Soaps Ltd. -- New 586,550 679
Hoechst India Ltd. 560,200 4,321
Indian Shaving Products Ltd. 196,706 1,744
Lakme Ltd. 258,450 2,797
Marico Industries Ltd. 285,400 2,045
Nicholas Piramal India Ltd. 280,300 837
Pfizer Ltd. 383,250 2,236
Ranbaxy Labs Ltd. (Warrants) 40,000 539
Searle (India) Ltd. 300,000 711
Smithkline Beecham Pharmaceutical Ltd. 218,000 1,761
Sun Pharmaceutical Industries Ltd. 444,100 2,728
TTK Biomed Ltd. 143,700 97
Unichem Labs Ltd. 162,700 767
--------------
28,142
--------------
- -----------------------------------------------------------------
- -------------
INDUSTRIAL COMPONENTS (1.5%)
BOC India Ltd. 331,500 521
Carborondum Universal Ltd. 493,300 2,228
Chicago Pneumatic India Ltd. 277,040 2,168
OCL India Ltd. (Rights) 28,886 4
--------------
4,921
--------------
- -----------------------------------------------------------------
- -------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
LEISURE & TOURISM (0.4%)
Indian Hotels Co. Ltd. 50 U.S.$ 1
ITC Hotels Ltd. 317,100 1,041
Kamat Hotels India Ltd. 300,000 178
--------------
1,220
--------------
- -----------------------------------------------------------------
- -------------
MACHINERY & ENGINEERING (5.8%)
Advani-Oerlikon Ltd. 300,585 1,012
Ahmednagar Forgings Ltd. 166,100 297
Artson Engineering Ltd. 204,293 117
Bharat Forge Co. Ltd. 633,518 1,853
Esab India Ltd. 564,300 1,266
Graphite India Ltd. 272,500 576
Indian Seamless Metal Tubes Ltd. 424,480 453
Ingersoll Rand (India) Ltd. 6,650 62
Kabra Extrusion Technik Ltd. 153,000 339
Lakshmi Machine Works Ltd. 5 1
Lakshmi Synthetic Machinery Ltd. 152,400 192
M.M. Forgings Ltd. 35,800 33
Praj Industries Ltd. 153,200 309
Revathi-CP Equipment Ltd. 60,650 746
Siemens Ltd. 137,650 2,047
Thermax Ltd. 472,500 5,494
Wartsila Diesel Ltd. 429,500 3,642
--------------
18,439
--------------
- -----------------------------------------------------------------
- -------------
METALS -- NON-FERROUS (0.1%)
Pennar Aluminum Co. Ltd. 1,632,800 275
--------------
- -----------------------------------------------------------------
- -------------
METALS -- STEEL (0.4%)
India Seamless Steel & Alloy Ltd. 905,800 152
Isibars Ltd. 500,000 512
Mukand Iron & Steel Works Ltd. 11,416 35
Panchmahal Steels Ltd. 197,700 111
Sesa Goa Ltd. 70 --
Sesa Goa Ltd. -- New 2,014 11
Sesa Goa Ltd. (Rights) 10 --
Shri Ishar Alloy Steels Ltd. 369,500 114
Tata SSL Ltd. 62,550 130
Tata SSL Ltd. -- New 13,800 29
Tata Iron & Steel Co. Ltd. 1,166 6
Uttam Galva Steels Ltd. 653,550 219
--------------
1,319
--------------
- -----------------------------------------------------------------
- -------------
MISCELLANEOUS MATERIALS & COMMODITIES (1.0%)
Alpha Geo Ltd. 68,700 13
Control Print (India) Ltd. 75,000 17
Control Print (India) Ltd. -- New 27,500 6
Cosmo Films Ltd. 209,900 291
Essel Packaging Ltd. 368,100 1,342
Flex Industries Ltd. 428 1
Flex Industries Ltd. (Rights) 9,342 --
Flex Industries Ltd. (Warrants) 53,939 121
Garware Plastics & Polyester Ltd. 397,789 1,063
Pearl Polymers Ltd. 338,300 125
PVD Plastic Mouldings Industries Ltd. 147,400 34
Sharp Industries Ltd. 700 --
Su-Raj Diamonds Ltd. 50 --
Uniworth International Ltd. 500 --
Vesuvius (India) Ltd. 20,000 33
Vippy Solvex Products Ltd. 250,000 41
--------------
3,087
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
MULTI-INDUSTRY (1.0%)
Grasim Industries Ltd. 3,955 U.S.$ 43
Indian Rayon & Industries Ltd. 50 --
Indian Rayon & Industries Ltd. GDS 50,000 500
Indian Rayon & Industries Ltd. GDS --
New 8,900 87
Kothari Sugars & Chemicals Ltd. 191,700 110
Larsen & Toubro Ltd. 1,350 9
Ramco Ltd. 42,800 1,171
S&S Industries & Enterprises Ltd. 580,820 147
SKS Ltd. 100,000 26
Standard Industries Ltd. 121,366 33
Straw Products Ltd. 357,483 589
VXL Ltd. 712,810 385
--------------
3,100
--------------
- -----------------------------------------------------------------
- -------------
RECREATION, OTHER CONSUMER GOODS (0.4%)
Tube Investments of India Ltd. 198,133 470
Tube Investments of India Ltd. GDR 283,316 708
--------------
1,178
--------------
- -----------------------------------------------------------------
- -------------
TELECOMMUNICATIONS (5.2%)
Indian Telephone Industries Ltd. 832,700 207
Mahanagar Telephone Nigam Ltd. 2,592,900 14,965
Punjab Wire Ltd. 138,700 265
Videsh Sanchar Nigam Ltd. 35,000 1,001
--------------
16,438
--------------
- -----------------------------------------------------------------
- -------------
TEXTILES & APPAREL (4.8%)
A.P. Rayon Ltd. 231,575 260
Arun Processors Ltd. 176,000 14
Bata India Ltd. 120,150 198
Century Textiles & Industries Ltd. GDR 6,500 536
Coates of India Ltd. 238,150 1,181
Cosmos Leather Exports Ltd. 325,000 41
DCL Polyesters Ltd. 899,650 309
Delta Industries Ltd. 380,000 261
G.T.N. Textiles Ltd. 257,500 484
Indo Rama Synthetics Ltd. 1,114,922 985
Indo Rama Synthetics Ltd. -- New 309,423 273
Indo Rama Synthetics Ltd. (Rights) 302 --
J.K. Synthetics Ltd. 2,093,216 875
Mahavir Spinning Mills Ltd. 491,000 930
Maral Overseas Ltd. 650,600 356
Modi Threads Ltd. 662,300 31
Precot Mills Ltd. -- New 66,777 174
Priyadashini Spinning Ltd. 2,450 1
Raymond Ltd. 387,550 2,432
Raymond Ltd. GDR 202,000 2,626
Raymond Ltd. -- New 52,500 330
Sanotgen Ltd. 272,800 27
Shree Rajasthan Syntex Ltd. 266,550 164
SIV Industries Ltd. GDR 313,500 627
SRF Ltd. 665,119 562
Super Spinning Mills Ltd. 200,357 450
Vardhaman Polytex Ltd. 282,600 180
Vardhaman Spinning & General Mills
Ltd. 373,500 629
Viral Syntex Ltd. 250,000 185
Woolworth India Ltd. 1,120 1
--------------
15,122
--------------
- -----------------------------------------------------------------
- -------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- -----------------------------------------------------------------
- -------------
TRANSPORTATION -- ROAD & RAIL (3.9%)
Container Corp. of India Ltd. 2,061,600 U.S.$ 12,550
--------------
- -----------------------------------------------------------------
- -------------
TRANSPORTATION -- SHIPPING (0.4%)
Great Eastern Shipping Ltd. 1,204,500 1,191
Great Eastern Shipping Ltd. GDR 20,000 95
Mercator Lines Ltd. 188,200 43
--------------
1,329
--------------
- -----------------------------------------------------------------
- -------------
UTILITIES -- ELECTRICAL & GAS (0.0%)
Andhra Valley Power Supply Co. Ltd. 200 1
Tata Hydro Electric Power Supply Co.
Ltd. 450 1
--------------
2
--------------
- -----------------------------------------------------------------
- -------------
TOTAL INDIAN COMMON STOCKS
(Cost U.S. $432,244) 308,286
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FIXED INCOME SECURITIES (0.4%)
- ---------------------------------------------------------
- ------------
CHEMICALS (0.1%)
MSL Industries Ltd. 16.00%, 7/31/00 INR 62 125
--------------
- -----------------------------------------------------------------
- -------------
CONSTRUCTION & HOUSING (0.1%)
Nagarjuna Construction Ltd. 14.90%,
3/1/97 98 226
--------------
- -----------------------------------------------------------------
- -------------
CONSUMER GOODS (0.0%)
Srishti Video Corp. Ltd. 12.00%,
11/12/96 225 78
--------------
- -----------------------------------------------------------------
- -------------
METALS -- STEEL (0.0%)
Tata SSL Ltd. 14.00%, 12/6/02 14 15
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
MISCELLANEOUS MATERIALS & COMMODITIES (0.2%)
Garware Plastics & Polyester Ltd.
16.00%, 5/1/05 INR 277 U.S.$ 691
--------------
- -----------------------------------------------------------------
- -------------
TOTAL FIXED INCOME SECURITIES
(Cost U.S. $1,720) 1,135
--------------
- -----------------------------------------------------------------
- -------------
SHORT-TERM INVESTMENT (0.3%)
- ---------------------------------------------------------
- ------------
REPURCHASE AGREEMENT (0.3%)
Chase Securities, Inc. 5.40%, dated
9/30/96, due 10/1/96, to be
repurchased at U.S.$1,066,
collateralized by U.S.$785 United
States Treasury Notes 10.625%, due
8/15/15, valued at U.S.$1,080 (Cost
U.S. $1,066) U.S.$ 1,066 1,066
--------------
- -----------------------------------------------------------------
- -------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (2.0%)
Indian Rupee (Cost U.S. $6,306) INR 224,811 6,306
--------------
- -----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (99.7%)
(Cost U.S. $441,336) 316,793
--------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS AND LIABILITIES (0.3%)
Other Assets U.S.$ 8,786
Liabilities (7,686) 1,100
----------- --------------
- -----------------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 35,707,092, issued and outstanding
U.S. $0.01 par value shares (100,000,000 shares
authorized) U.S.$ 317,893
--------------
--------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 8.90
--------------
--------------
- -----------------------------------------------------------------
- -------------
</TABLE>
GDR -- Global Depositary Receipt.
GDS -- Global Depositary Shares.
NCD -- Non Convertible Debentures.
9
