Morgan Stanley India Investment Fund, Inc.

Portfolio of Investments

Third Quarter Report

September 30, 2019 (unaudited)

 

 

 

Shares

 

Value
(000)

 

Common Stocks (93.5%)

 

 

 

 

 

 

 

 

 

 

 

Aerospace & Defense (1.2%)

 

 

 

 

 

Bharat Electronics Ltd.

 

2,298,197

 

$

3,516

 

 

 

 

 

 

 

Auto Components (2.2%)

 

 

 

 

 

Balkrishna Industries Ltd.

 

268,254

 

2,938

 

Motherson Sumi Systems Ltd.

 

2,362,065

 

3,504

 

 

 

 

 

6,442

 

Automobiles (2.9%)

 

 

 

 

 

Eicher Motors Ltd.

 

34,529

 

8,693

 

 

 

 

 

 

 

Banks (22.6%)

 

 

 

 

 

Axis Bank Ltd.

 

2,140,004

 

20,687

 

HDFC Bank Ltd.

 

881,394

 

15,258

 

ICICI Bank Ltd.

 

3,507,827

 

21,503

 

IndusInd Bank Ltd.

 

506,473

 

9,896

 

 

 

 

 

67,344

 

Capital Markets (0.1%)

 

 

 

 

 

IIFL Securities Ltd. (a) 

 

884,707

 

385

 

 

 

 

 

 

 

Chemicals (1.4%)

 

 

 

 

 

SRF Ltd.

 

111,509

 

4,346

 

 

 

 

 

 

 

Construction & Engineering (10.1%)

 

 

 

 

 

KEC International Ltd.

 

1,017,924

 

3,937

 

Larsen & Toubro Ltd.

 

825,297

 

17,172

 

Voltas Ltd.

 

935,519

 

8,972

 

 

 

 

 

30,081

 

Construction Materials (6.5%)

 

 

 

 

 

Ramco Cements Ltd. (The)

 

714,372

 

7,580

 

Shree Cement Ltd.

 

44,558

 

11,882

 

 

 

 

 

19,462

 

Consumer Finance (2.7%)

 

 

 

 

 

Cholamandalam Investment and Finance Co., Ltd.

 

1,868,399

 

8,106

 

 

 

 

 

 

 

Diversified Financial Services (2.1%)

 

 

 

 

 

L&T Finance Holdings Ltd.

 

5,332,915

 

6,382

 

 

 

 

 

 

 

Electric Utilities (3.0%)

 

 

 

 

 

Power Grid Corp. of India Ltd.

 

3,240,932

 

9,104

 

 

 

 

 

 

 

Entertainment (1.8%)

 

 

 

 

 

PVR Ltd.

 

204,658

 

5,324

 

 

 

 

 

 

 

Gas Utilities (3.2%)

 

 

 

 

 

Indraprastha Gas Ltd.

 

1,306,669

 

6,460

 

Mahanagar Gas Ltd.

 

243,990

 

3,140

 

 

 

 

 

9,600

 

Health Care Providers & Services (3.7%)

 

 

 

 

 

Apollo Hospitals Enterprise Ltd.

 

562,384

 

11,097

 

 


 

Information Technology Services (13.1%)

 

 

 

 

 

Infosys Ltd.

 

2,101,953

 

23,828

 

Larsen & Toubro Infotech Ltd.

 

262,240

 

5,593

 

Tata Consultancy Services Ltd.

 

324,094

 

9,598

 

 

 

 

 

39,019

 

Insurance (6.0%)

 

 

 

 

 

ICICI Prudential Life Insurance Co., Ltd.

 

1,360,833

 

8,906

 

SBI Life Insurance Co. Ltd.

 

750,546

 

8,974

 

 

 

 

 

17,880

 

Oil, Gas & Consumable Fuels (3.6%)

 

 

 

 

 

Petronet LNG Ltd.

 

2,931,067

 

10,761

 

 

 

 

 

 

 

Pharmaceuticals (3.9%)

 

 

 

 

 

Eris Lifesciences Ltd. (a) 

 

1,002,287

 

6,385

 

Natco Pharma Ltd.

 

640,565

 

5,261

 

 

 

 

 

11,646

 

Thrifts & Mortgage Finance (2.9%)

 

 

 

 

 

Aavas Financiers Ltd. (a) 

 

291,412

 

6,575

 

IIFL Finance Ltd.

 

1,107,442

 

1,951

 

 

 

 

 

8,526

 

Transportation Infrastructure (0.5%)

 

 

 

 

 

Gateway Distriparks Ltd.

 

985,854

 

1,508

 

Total Common Stocks (Cost $244,441)

 

 

 

279,222

 

 

 

 

 

 

 

Short-Term Investment (0.8%)

 

 

 

 

 

Investment Company (0.8%)

 

 

 

 

 

Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class (b) (Cost $2,245)

 

2,244,536

 

2,245

 

Total Investments (94.3%) (Cost $246,686) (c)(d)(e)

 

 

 

281,467

 

Other Assets in Excess of Liabilities (5.7%)

 

 

 

17,028

 

Net Assets (100.0%)

 

 

 

$

298,495

 

 


(a)

Non-income producing security.

(b)

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government 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 administration fees paid by the Fund due to its investment in the Liquidity Funds. For the nine months ended September 30, 2019, advisory fees paid were reduced by approximately $4,000 relating to the Fund’s investment in the Liquidity Funds.

(c)

The approximate fair value and percentage of net assets, $278,837,000 and 93.4%, 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)

The Fund is permitted to purchase and sell securities (“cross-trade”) from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the “Rule”). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the nine months ended September 30, 2019, the Fund did not engage in any cross-trade transactions.

(e)

At September 30, 2019, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $56,617,000 and the aggregate gross unrealized depreciation is approximately $21,977,000, resulting in net unrealized appreciation of approximately $34,640,000.

 


 

Futures Contract:

 

The Fund had the following futures contract open at September 30, 2019:

 

 

 

Number
of
Contracts

 

Expiration
Date

 

Notional Amount
(000)

 

Value
(000)

 

Unrealized
Depreciation
(000)

 

Long:

 

 

 

 

 

 

 

 

 

 

 

SGX NIFTY 50 (Singapore)

 

587

 

Oct-19

 

1

 

$

13,546

 

$

(141

)

 


 

Portfolio Composition

 

Classification

 

Percentage of
Total Investments

 

Other*

 

38.3

%

Banks

 

23.9

 

Information Technology Services

 

13.9

 

Construction & Engineering

 

10.7

 

Construction Materials

 

6.9

 

Insurance

 

6.3

 

Total Investments

 

100.0

%**

 


*

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

**

Does not include an open long futures contract with a value of approximately $13,546,000 and unrealized depreciation of approximately $141,000.

 


 

Morgan Stanley India Investment Fund, Inc.

 

Notes to the Portfolio of Investments · September 30, 2019 (unaudited)

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820) - Disclosures Framework - Changes to Disclosure Requirements of Fair Value Measurement (“ASU 2018-13”) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years; however, management has elected to early adopt ASU 2018-13 as permitted by the standard. The impact of the Fund’s adoption was limited to changes in the Fund’s financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements, when applicable.

 

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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter (“OTC”) market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers; (3) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Fund’s Board of Directors (the “Directors”). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available in the relevant exchanges; (4) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (5) 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”), a wholly-owned subsidiary of Morgan Stanley, 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 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; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; and (7) 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.

 


 

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.

 

Fair Value Measurement: 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, 2019:

 

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

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

 

$

3,516

 

$

 

$

3,516

 

Auto Components

 

 

6,442

 

 

6,442

 

Automobiles

 

 

8,693

 

 

8,693

 

Banks

 

 

67,344

 

 

67,344

 

Capital Markets

 

385

 

 

 

385

 

Chemicals

 

 

4,346

 

 

4,346

 

Construction & Engineering

 

 

30,081

 

 

30,081

 

Construction Materials

 

 

19,462

 

 

19,462

 

Consumer Finance

 

 

8,106

 

 

8,106

 

Diversified Financial Services

 

 

6,382

 

 

6,382

 

Electric Utilities

 

 

9,104

 

 

9,104

 

Entertainment

 

 

5,324

 

 

5,324

 

Gas Utilities

 

 

9,600

 

 

9,600

 

Health Care Providers & Services

 

 

11,097

 

 

11,097

 

Information Technology Services

 

 

39,019

 

 

39,019

 

Insurance

 

 

17,880

 

 

17,880

 

Oil, Gas & Consumable Fuels

 

 

10,761

 

 

10,761

 

Pharmaceuticals

 

 

11,646

 

 

11,646

 

Thrifts & Mortgage Finance

 

 

8,526

 

 

8,526

 

Transportation Infrastructure

 

 

1,508

 

 

1,508

 

Total Common Stocks

 

385

 

278,837

 

 

279,222

 

Short-Term Investment

 

 

 

 

 

 

 

 

 

Investment Company

 

2,245

 

 

 

2,245

 

Total Assets

 

2,630

 

278,837

 

 

281,467

 

Liabilities:

 

 

 

 

 

 

 

 

 

Futures Contract

 

(141

)

 

 

(141

)

Total

 

$

2,489

 

$

278,837

 

$

 

$

281,326

 

 

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes.

 


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