N-Q 1 a15-20824_6nq.htm N-Q

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-08238

 

Morgan Stanley India Investment Fund, Inc.

(Exact name of registrant as specified in charter)

 

522 Fifth Avenue, New York, New York

 

10036

(Address of principal executive offices)

 

(Zip code)

 

John H. Gernon

522 Fifth Avenue, New York, New York 10036

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

212-296-0289

 

 

Date of fiscal year end:

December 31,

 

 

Date of reporting period:

September 30, 2015

 

 



 

Item 1.  Schedule of Investments.

 

The Fund’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:

 



 

Morgan Stanley India Investment Fund, Inc.

Portfolio of Investments

Third Quarter Report

September 30, 2015 (unaudited)

 

 

 

Shares

 

Value
(000)

 

Common Stocks (95.6%)

 

 

 

 

 

Auto Components (2.2%)

 

 

 

 

 

Motherson Sumi Systems Ltd.

 

2,848,417

 

$

10,065

 

 

 

 

 

 

 

Automobiles (2.9%)

 

 

 

 

 

Maruti Suzuki India Ltd.

 

180,653

 

12,929

 

 

 

 

 

 

 

Banks (20.3%)

 

 

 

 

 

Axis Bank Ltd.

 

2,068,787

 

15,677

 

HDFC Bank Ltd.

 

805,293

 

15,759

 

ICICI Bank Ltd.

 

2,794,275

 

11,558

 

IndusInd Bank Ltd.

 

1,722,544

 

24,804

 

Jammu & Kashmir Bank Ltd. (The)

 

4,199,166

 

5,779

 

State Bank of India

 

3,537,409

 

12,834

 

Yes Bank Ltd.

 

450,000

 

5,024

 

 

 

 

 

91,435

 

Capital Markets (1.4%)

 

 

 

 

 

Motilal Oswal Financial Services Ltd.

 

1,362,724

 

6,096

 

 

 

 

 

 

 

Chemicals (1.5%)

 

 

 

 

 

Asian Paints Ltd.

 

536,311

 

6,893

 

 

 

 

 

 

 

Construction & Engineering (4.8%)

 

 

 

 

 

Ashoka Buildcon Ltd.

 

2,638,621

 

6,787

 

Larsen & Toubro Ltd.

 

662,429

 

14,840

 

 

 

 

 

21,627

 

Construction Materials (5.3%)

 

 

 

 

 

Prism Cement Ltd. (a) 

 

3,462,649

 

4,718

 

Ramco Cements Ltd. (The)

 

1,100,579

 

5,494

 

Shree Cement Ltd. (a) 

 

76,561

 

13,692

 

 

 

 

 

23,904

 

Consumer Finance (5.7%)

 

 

 

 

 

Cholamandalam Investment and Finance Co., Ltd.

 

489,064

 

4,868

 

Shriram Transport Finance Co., Ltd.

 

1,008,401

 

14,241

 

SKS Microfinance Ltd. (a) 

 

1,063,682

 

6,584

 

 

 

 

 

25,693

 

Electrical Equipment (0.7%)

 

 

 

 

 

Inox Wind Ltd. (a) 

 

605,385

 

3,319

 

 

 

 

 

 

 

Electronic Equipment, Instruments & Components (2.1%)

 

 

 

 

 

Redington India Ltd.

 

5,687,892

 

9,574

 

 

 

 

 

 

 

Gas Utilities (1.5%)

 

 

 

 

 

Gujarat State Petronet Ltd.

 

3,726,154

 

6,727

 

 

 

 

 

 

 

Information Technology Services (13.2%)

 

 

 

 

 

Cognizant Technology Solutions Corp., Class A (a) 

 

286,686

 

17,949

 

HCL Technologies Ltd.

 

900,412

 

13,502

 

Infosys Ltd.

 

883,988

 

15,757

 

Tata Consultancy Services Ltd.

 

308,367

 

12,172

 

 

 

 

 

59,380

 

 



 

Machinery (10.2%)

 

 

 

 

 

Ashok Leyland Ltd.

 

8,514,283

 

12,014

 

Cummins India Ltd.

 

355,460

 

5,945

 

Eicher Motors Ltd.

 

102,479

 

27,841

 

 

 

 

 

45,800

 

Oil, Gas & Consumable Fuels (4.2%)

 

 

 

 

 

Bharat Petroleum Corp., Ltd.

 

1,064,680

 

13,827

 

Reliance Industries Ltd.

 

399,688

 

5,263

 

 

 

 

 

19,090

 

Personal Products (3.1%)

 

 

 

 

 

Emami Ltd.

 

332,078

 

5,843

 

Marico Ltd.

 

1,325,189

 

8,179

 

 

 

 

 

14,022

 

Pharmaceuticals (7.5%)

 

 

 

 

 

Glenmark Pharmaceuticals Ltd.

 

726,417

 

11,655

 

Lupin Ltd.

 

462,986

 

14,368

 

Natco Pharma Ltd.

 

200,038

 

7,552

 

 

 

 

 

33,575

 

Tobacco (1.8%)

 

 

 

 

 

ITC Ltd.

 

1,628,665

 

8,201

 

 

 

 

 

 

 

Transportation Infrastructure (6.3%)

 

 

 

 

 

Gateway Distriparks Ltd.

 

3,581,161

 

19,486

 

Gujarat Pipavav Port Ltd. (a) 

 

3,062,788

 

8,684

 

 

 

 

 

28,170

 

Water Utilities (0.9%)

 

 

 

 

 

VA Tech Wabag Ltd.

 

411,872

 

4,182

 

Total Common Stocks (Cost $280,167)

 

 

 

430,682

 

Short-Term Investment (0.4%)

 

 

 

 

 

Investment Company (0.4%)

 

 

 

 

 

Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (b) (Cost $1,709)

 

1,708,817

 

1,709

 

Total Investments (96.0%) (Cost $281,876) (c)(d)

 

 

 

432,391

 

Other Assets in Excess of Liabilities (4.0%)

 

 

 

18,175

 

Net Assets (100.0%)

 

 

 

$

450,566

 

 


(a)

Non-income producing security.

(b)

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - (the “Liquidity Funds”), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administrative service fees paid by the Fund due to its investment in the Liquidity Funds. For the nine months ended September 30, 2015, advisory fees paid were reduced by approximately $1,000 relating to the Fund’s investment in the Liquidity Funds.

(c)

The approximate fair value and percentage of net assets, $412,733,000 and 91.6%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in the Notes to the Portfolio of Investments.

 



 

(d)

At September 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $160,941,000 and the aggregate gross unrealized depreciation is approximately $10,426,000 resulting in net unrealized appreciation of approximately $150,515,000.

 



 

Portfolio Composition

 

Classification

 

Percentage of
Total Investments

 

Other*

 

23.8

%

Banks

 

21.2

 

Information Technology Services

 

13.7

 

Machinery

 

10.6

 

Pharmaceuticals

 

7.8

 

Transportation Infrastructure

 

6.5

 

Consumer Finance

 

5.9

 

Construction Materials

 

5.5

 

Construction & Engineering

 

5.0

 

Total Investments

 

100.0

%

 


*

Industries and/or investment types representing less than 5% of total investments.

 



 

Morgan Stanley India Investment Fund, Inc.

 

Notes to the Portfolio of Investments · September 30, 2015 (unaudited)

 

Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter (“OTC”) market quotations are readily available are valued at its latest reported sales price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the “Adviser”) or Morgan Stanley Investment Management Company (“MSIM Company”) (the “Sub-Adviser”) determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund’s Board of Directors (the “Directors”). Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business of the New York Stock Exchange (“NYSE”).  If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into United States dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities’ market value, in which case these securities will be valued at their fair market value determined by the Adviser.

 

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund’s Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund’s Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund’s valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

 

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

 



 

Fair Value Measurement: Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”) 820, “Fair Value Measurement” (“ASC 820”), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below.

 

· Level 1 — unadjusted quoted prices in active markets for identical investments

 

· Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

· Level 3 — significant unobservable inputs including the Fund’s own assumptions in determining the fair value of investments.  Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

 

The following is a summary of the inputs used to value the Fund’s investments as of September 30, 2015.

 

Investment Type

 

Level 1
Unadjusted
quoted
prices
(000)

 

Level 2
Other
significant
observable
inputs
(000)

 

Level 3
Significant
unobservable
inputs
(000)

 

Total
(000)

 

Assets:

 

 

 

 

 

 

 

 

 

Common Stocks

 

 

 

 

 

 

 

 

 

Auto Components

 

$

 

$

10,065

 

$

 

$

10,065

 

Automobiles

 

 

12,929

 

 

12,929

 

Banks

 

 

91,435

 

 

91,435

 

Capital Markets

 

 

6,096

 

 

6,096

 

Chemicals

 

 

6,893

 

 

6,893

 

Construction & Engineering

 

 

21,627

 

 

21,627

 

Construction Materials

 

 

23,904

 

 

23,904

 

Consumer Finance

 

 

25,693

 

 

25,693

 

Electrical Equipment

 

 

3,319

 

 

3,319

 

Electronic Equipment, Instruments & Components

 

 

9,574

 

 

9,574

 

Gas Utilities

 

 

6,727

 

 

6,727

 

Information Technology Services

 

17,949

 

41,431

 

 

59,380

 

Machinery

 

 

45,800

 

 

45,800

 

Oil, Gas & Consumable Fuels

 

 

19,090

 

 

19,090

 

Personal Products

 

 

14,022

 

 

14,022

 

Pharmaceuticals

 

 

33,575

 

 

33,575

 

Tobacco

 

 

8,201

 

 

8,201

 

Transportation Infrastructure

 

 

28,170

 

 

28,170

 

Water Utilities

 

 

4,182

 

 

4,182

 

Total Common Stocks

 

17,949

 

412,733

 

 

430,682

 

Short-Term Investment

 

 

 

 

 

 

 

 

 

Investment Company

 

1,709

 

 

 

1,709

 

Total Assets

 

$

19,658

 

$

412,733

 

$

 

$

432,391

 

 



 

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of September 30, 2015, the Fund did not have any investments transfer between investment levels.

 

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value.

 

 

 

Common Stock
(000)

 

Beginning Balance

 

$

199

 

Purchases

 

 

Sales

 

 

Amortization of discount

 

 

Transfers in

 

 

Transfers out

 

 

Corporate actions

 

 

Change in unrealized appreciation (depreciation)

 

53

 

Realized gains (losses)

 

(252

)

Ending Balance

 

$

 

 

 

 

 

Net change in unrealized appreciation (depreciation) from investments still held as of September 30, 2015

 

$

 

 



 

Item 2.  Controls and Procedures.

 

(a) The Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

 

(b)  There were no changes in the Fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

 

Item 3.  Exhibits.

 

(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Morgan Stanley India Investment Fund, Inc.

 

 

 

/s/ John H. Gernon

 

John H. Gernon

 

Principal Executive Officer

 

November 19, 2015

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

/s/ John H. Gernon

 

John H. Gernon

 

Principal Executive Officer

 

November 19, 2015

 

 

 

/s/ Francis Smith

 

Francis Smith

 

Principal Financial Officer

 

November 19, 2015