UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08266
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The India Fund, Inc.
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(Exact name of registrant as specified in charter)
200 Park Avenue
New York, NY 10166
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(Address of principal executive offices) (Zip code)
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-667-4939
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Date of fiscal year end: December 31, 2004
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Date of reporting period: December 31, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
ADVANTAGE ADVISERS, INC.
The India Fund, Inc.
Annual Report
December 31, 2004
THE INDIA FUND, INC.
The India Fund, Inc.
February 18, 2005
DEAR FUND SHAREHOLDER,
We are pleased to provide you with the audited financial statements of The India
Fund, Inc. (the "Fund") for the fiscal year ended December 31, 2004.
The Fund's net asset value ("NAV") closed at $28.47 on December 31, 2004,
representing an increase of 26.22% (after taking the Fund's dividends into
account) from the Fund's NAV on December 31, 2003 which was $23.76. The Fund
outperformed its benchmark, returning 26.22% versus the IFC Investable Index,
which gained 22.84% during the same period.*
The Indian stock market finished 2004 as one of the top performers in Asia
despite fears that the newly elected government would not last a full term and
would shelve the economic reform agenda. Initial fears were mitigated by the
strong performance of the new government in state elections and the
implementation of a broader economic reform agenda. The market got a lift in the
second half of the year as investors grew more confident of the government's
commitment to accelerate growth, initiate reforms and increase infrastructure
projects. The market was also boosted by record foreign investment inflows of
over $8.5 billion for the year and record foreign exchange reserves passing the
$130 billion mark.
Looking ahead, we believe that India will benefit from favorable conditions such
as high consumer confidence, favorable liquidity, strong currency and upward
pressure on wages. We believe these factors, in addition to a growing middle
class, will continue to support domestic consumption.
Finally, following 2004's impressive second half rally, we believe valuations
may not be as compelling as they were during the past year. Nevertheless, we
strongly believe that the fundamental long-term outlook for India remains
positive.
1
THE INDIA FUND, INC.
On behalf of the Board of Directors, we thank you for your participation and
continued support of the Fund. If you have any questions, please do not hesitate
to call our toll-free number, 800-421-4777.
Sincerely,
/s/ Bryan McKigney
Bryan McKigney
Chairman, President and Director
* Please note that the benchmark is an unmanaged index. Investors cannot
directly invest in the index. The index does not reflect transaction costs or
manager fees.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. There is no guarantee that
the Fund's or any other investment technique will be effective under all market
conditions.
2
THE INDIA FUND, INC.
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FUNDAMENTAL PERIODIC REPURCHASE POLICY
The Fund has adopted the following fundamental policy regarding periodic
repurchases:
a) The Fund will make offers to repurchase its shares at semi-annual
intervals pursuant to Rule 23c-3 under the Investment Company Act of 1940,
as amended from time to time ("Offers"). The Board of Directors may place
such conditions and limitations on Offers as may be permitted under Rule
23c-3.
b) 14 days prior to the last Friday of the Fund's first and third fiscal
quarters, or the next business day if such Friday is not a business day,
will be the deadline (the "Repurchase Request Deadline") by which the Fund
must receive repurchase requests submitted by stockholders in response to
the most recent Offer.
c) The date on which the repurchase price for shares is to be determined (the
"Repurchase Pricing Date") shall occur no later than the last Friday of
the Fund's first and third fiscal quarters, or the next business day if
such day is not a business day.
d) Offers may be suspended or postponed under certain circumstances, as
provided for in Rule 23c-3.
(For further details, see Note E to the Financial Statements.)
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3
THE INDIA FUND, INC.
DECEMBER 31, 2004
SCHEDULE OF INVESTMENTS
INDIA (100% OF HOLDINGS)
COMMON STOCKS (100.00% of holdings)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
--------------------------------------------------------------------------------------------------------------
CEMENT 1.25%
633,324 Gujarat Ambuja Cements Ltd ........................ $ 4,212,970 $ 5,850,270
299,124 Ultratech Cemco Ltd ............................... 1,692,990 2,341,659
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5,905,960 8,191,929
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CHEMICALS 0.27%
463,900 Tata Chemicals Ltd ................................ 1,630,711 1,763,503
------------ ------------
1,630,711 1,763,503
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COMPUTER HARDWARE 0.95%
290,500 HCL Infosystems Ltd ............................... 4,448,880 5,506,602
214,150 NIIT Technologies ................................. 557,065 742,899
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5,005,945 6,249,501
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COMPUTER SOFTWARE & PROGRAMMING 17.70%
95,436 Geodesic Information Systems Ltd+ ................. 451,906 1,780,506
1,561,728 Infosys Technologies Ltd .......................... 18,233,572 75,050,605
195,782 KPIT Cummins Infosystems Ltd ...................... 1,414,167 2,837,420
432,100 Pantni Computer Systems Ltd+ ...................... 3,279,956 3,813,553
2,046,395 Satyam Computer Services Ltd ...................... 8,643,556 19,296,465
771,650 Wipro Ltd ......................................... 8,055,046 13,277,989
------------ ------------
40,078,203 116,056,538
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COMPUTER TRAINING 0.16%
248,100 NIIT Ltd .......................................... 819,788 1,026,188
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819,788 1,026,188
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CONSULTING SERVICES 1.09%
233,594 Tata Consultancy Services ......................... 5,118,563 7,176,554
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5,118,563 7,176,554
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CONSUMER NON-DURABLES 6.64%
3,769,401 Hindustan Lever Ltd ............................... 14,903,100 12,443,272
1,032,745 ITC Ltd ........................................... 18,977,126 31,117,769
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33,880,226 43,561,041
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4
THE INDIA FUND, INC.
DECEMBER 31, 2004
SCHEDULE OF INVESTMENTS (CONTINUED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
--------------------------------------------------------------------------------------------------------------
DIVERSIFIED INDUSTRIES 9.23%
569,632 Grasim Industries Ltd ............................. $ 4,923,337 $ 17,328,108
104,900 Nav Bharat Ferro Alloys Ltd ....................... 657,642 875,977
3,444,193 Reliance Industries Ltd ........................... 24,763,410 42,293,771
------------ ------------
30,344,389 60,497,856
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ELECTRICITY 0.83%
2,695,800 National Thermal Power Corp ....................... 3,657,322 5,417,026
------------ ------------
3,657,322 5,417,026
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ELECTRONICS & ELECTRICAL EQUIPMENT 5.76%
551,972 Bharat Electronics Ltd ............................ 5,625,699 8,317,038
1,284,568 Bharat Heavy Electricals Ltd ...................... 4,293,307 22,751,068
501,392 Jyoti Structures Ltd .............................. 752,152 1,716,290
268,000 Salora International Ltd .......................... 1,140,144 1,113,122
94,849 Siemens India Ltd ................................. 1,061,014 2,884,745
70,500 Sterlite Industries (India) Ltd ................... 963,093 996,925
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13,835,409 37,779,188
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ENGINEERING 5.61%
222,813 ABB Ltd ........................................... 1,908,619 4,972,415
756,700 Bharat Earth Movers Ltd ........................... 4,756,323 5,965,518
165,129 Gammon India Ltd .................................. 1,659,648 2,924,990
160,004 Hindustan Construction Co ......................... 816,808 1,409,375
1,639,102 Jaiprakash Associates Ltd ......................... 4,405,475 7,162,352
327,536 Larsen & Toubro Ltd ............................... 3,851,555 7,399,134
565,358 Thermax India Ltd ................................. 1,934,139 6,984,064
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19,332,567 36,817,848
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EXTRACTIVE INDUSTRIES 6.02%
473,805 Hindalco Industries Ltd ........................... 8,225,027 15,551,529
1,269,691 Oil and Natural Gas Corporation Ltd ............... 19,123,893 23,937,779
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27,348,920 39,489,308
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FERTILIZERS 0.20%
440,560 Indo Gulf Fertilisers Ltd ......................... 539,287 1,287,627
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539,287 1,287,627
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5
THE INDIA FUND, INC.
DECEMBER 31, 2004
SCHEDULE OF INVESTMENTS (CONTINUED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
--------------------------------------------------------------------------------------------------------------
FINANCE 15.35%
7,553,000 Centurion Bank Ltd ................................ $ 693,971 $ 3,261,325
329,535 Corporation Bank .................................. 1,837,402 2,674,866
1,719,958 HDFC Bank Ltd ..................................... 9,635,212 20,529,105
1,459,040 Housing Development Finance Corporation Ltd ....... 11,042,989 25,713,608
1,839,279 ICICI Bank Ltd+ ................................... 5,090,329 15,686,973
196,746 Jammu and Kashmir Bank Ltd ........................ 1,239,078 1,736,633
189,782 Kotak Mahindra Bank Ltd ........................... 836,775 1,240,765
182,600 Lic Housing Finance Ltd ........................... 862,940 872,464
1,759,133 State Bank of India ............................... 7,688,997 26,403,182
45,550 State Bank of India GDR ........................... 525,435 1,662,575
521,650 Vijaya Bank Ltd ................................... 677,937 874,217
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40,131,065 100,655,713
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FOOD 0.22%
1,264,483 Sakthi Sugars Ltd ................................. 1,287,139 1,442,796
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1,287,139 1,442,796
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HOTELS & LEISURE 0.42%
797,157 Hotel Leelaventure Ltd ............................ 755,185 2,750,714
------------ ------------
755,185 2,750,714
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HOUSEHOLD APPLIANCES 0.32%
462,021 Voltas Ltd ........................................ 1,247,925 2,107,632
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1,247,925 2,107,632
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MEDIA 0.41%
523,600 Balaji Telefilms Ltd .............................. 1,168,345 1,451,433
749,500 Pritish Nandy Communications Ltd .................. 1,870,991 1,239,684
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3,039,336 2,691,117
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PETROLEUM RELATED 4.66%
3 Bharat Petroleum Corporation Ltd .................. 22 32
1,298,500 Bongaigaon Refinery & Petrochemicals Ltd .......... 2,006,299 2,885,555
735,678 Hindustan Petroleum Corporation Ltd ............... 4,260,498 6,777,986
1,392,240 Indian Oil Corporation Ltd ........................ 6,375,260 16,434,966
456,229 Indian Petrochemicals Corporation Ltd ............. 1,895,764 1,913,286
61,300 Niko Resources Ltd ADR ............................ 1,034,064 2,574,661
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15,571,907 30,586,486
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6
THE INDIA FUND, INC.
DECEMBER 31, 2004
SCHEDULE OF INVESTMENTS (CONTINUED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
--------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 7.09%
56,642 Biocon Ltd ........................................ $ 643,036 $ 662,452
118,719 Dishman Pharmaceuticals Ltd ....................... 1,270,102 1,715,103
134,508 Dr. Reddy's Laboratories Ltd ...................... 2,577,369 2,677,474
1,011,500 FDC Ltd ........................................... 1,469,510 1,414,750
165,735 Glaxosmithkline Pharmaceuticals Ltd ............... 1,592,881 2,933,247
205,927 Lupin Ltd ......................................... 2,979,310 3,221,784
175,088 Matrix Laboratories ............................... 3,443,494 9,863,250
492,513 Ranbaxy Laboratories Ltd .......................... 9,530,153 14,178,302
507,400 Sun Pharmaceutical Industries Ltd ................. 2,148,674 6,471,772
415,800 Wockhardt Ltd ..................................... 1,850,926 3,386,087
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27,505,455 46,524,221
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RETAIL STORES 0.39%
397,400 SB&T International Ltd ............................ 606,886 739,126
132,757 Trent Ltd ......................................... 467,324 1,795,747
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1,074,210 2,534,873
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STEEL 2.86%
725,575 Jindal Stainless Ltd .............................. 1,539,672 1,503,895
64,583 Jindal Steel & Power Ltd .......................... 1,271,106 1,333,928
769,940 Kalyani Steels Ltd ................................ 1,050,678 1,822,563
154,700 Maharashtra Seamless Ltd .......................... 761,283 1,115,142
1,462,391 Tata Iron and Steel Company Ltd ................... 6,689,849 12,967,072
------------ ------------
11,312,588 18,742,600
------------ ------------
TELECOMMUNICATIONS 4.60%
5,881,915 Bharti Tele-Ventures Ltd+ ......................... 15,443,719 29,172,783
272,938 Mahanagar Telephone Nigam Ltd ..................... 839,249 972,581
------------ ------------
16,282,968 30,145,364
------------ ------------
TELECOMMUNICATIONS EQUIPMENT 0.00%
1 Shyam Telecom Ltd+ ................................ 14 2
------------ ------------
14 2
------------ ------------
TEXTILES-COTTON 1.15%
403,200 Arvind Mills Ltd+ ................................. 1,037,638 1,227,131
471,800 Mahavir Spinning Mills Ltd ........................ 1,962,312 3,153,473
171,326 Sintex Industries Ltd ............................. 501,563 1,494,324
549,567 Welspun India Ltd ................................. 1,221,821 1,652,367
------------ ------------
4,723,334 7,527,295
------------ ------------
7
THE INDIA FUND, INC.
DECEMBER 31, 2004
SCHEDULE OF INVESTMENTS (CONCLUDED)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
--------------------------------------------------------------------------------------------------------------
TRANSPORTATION 1.27%
394,751 Container Corporation of India Ltd ................ $ 2,160,483 $ 8,336,357
------------ ------------
2,160,483 8,336,357
------------ ------------
VEHICLE COMPONENTS 1.09%
1,738,000 Amtek Auto Ltd .................................... 4,193,599 7,116,724
------------ ------------
4,193,599 7,116,724
------------ ------------
VEHICLES 4.46%
478,537 Hero Honda Motors Ltd ............................. 3,918,517 6,286,921
919,735 Mahindra & Mahindra Ltd ........................... 9,506,832 11,520,490
869,725 Tata Motors Ltd ................................... 6,869,605 10,106,777
112,200 Tata Motors Ltd ADR ............................... 1,001,160 1,337,424
------------ ------------
21,296,114 29,251,612
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TOTAL COMMON STOCKS ............................... 338,078,612 655,727,613
------------ ------------
PREFERRED STOCK (0.00% of holdings)
ENGINEERING 0.00%
1,248,400 Thermax India Ltd Preference Shares+ .............. 0 25,847
------------ ------------
0 25,847
------------ ------------
TOTAL PREFERRED STOCK ............................. 0 25,847
------------ ------------
TOTAL INDIA 338,078,612 655,753,460
------------ ------------
TOTAL INVESTMENTS** ........................100.00% $338,078,612 $655,753,460
============ ============
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FOOTNOTES AND ABBREVIATIONS
ADR - American Depository Receipts
GDR - Global Depository Receipts
+ Non income producing.
** Aggregate cost for federal income tax purposes is
$339,981,186.
The aggregate gross unrealized appreciation (depreciation)
for all securities is as follows:
Excess of value over tax cost $319,404,453
Excess of tax cost over value (3,632,179)
------------
$315,772,274
============
See accompanying notes to financial statements.
8
THE INDIA FUND, INC.
DECEMBER 31, 2004
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
Investments, at value (Cost $338,078,612) ........................................... $ 655,753,460
Cash (including Indian Rupees of $20,742,588 with a cost of $20,617,285) ............. 21,989,650
Receivables:
Dividends and reclaims net of excess taxes withheld ............................. 862,841
Interest ........................................................................ 689
Securities sold ................................................................. 2,912,284
Prepaid expenses ..................................................................... 433,569
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TOTAL ASSETS ....................................................... 681,952,493
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LIABILITIES
Distribution Payable ................................................................. 34,414,282
Payable for securities purchased ..................................................... 1,683,841
Due to Investment Manager ............................................................ 591,417
Accrued Custodian fees ............................................................... 73,379
Due to Administrator ................................................................. 114,300
Accrued expenses ..................................................................... 403,122
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TOTAL LIABILITIES .................................................. 37,280,341
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NET ASSETS ......................................................... $ 644,672,152
=============
NET ASSET VALUE PER SHARE ($644,672,152/22,640,975
SHARES ISSUED AND OUTSTANDING) ..................................... $ 28.47
=============
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 34,007,133 shares issued (100,000,000 shares authorized) $ 34,007
Paid-in capital ...................................................................... 460,635,809
Cost of 11,366,158 shares repurchased ................................................ (165,539,577)
Undistributed net investment income .................................................. 1,435,771
Accumulated net realized gain on investments ......................................... 30,337,244
Net unrealized appreciation in value of investments, foreign currency holdings and on
translation of other assets and liabilities denominated in foreign currency ....... 317,768,898
-------------
$ 644,672,152
=============
See accompanying notes to financial statements.
9
THE INDIA FUND, INC.
FOR THE YEAR ENDED
STATEMENT OF OPERATIONS DECEMBER 31, 2004
INVESTMENT INCOME
Dividends (net of Indian taxes withheld of $5,014) ................................. $ 10,694,443
------------
TOTAL INVESTMENT INCOME .......................................... 10,694,443
------------
EXPENSES
Management fees .................................................. $5,979,694
Administration fees .............................................. 1,114,896
Custodian fees ................................................... 649,331
Legal fees ....................................................... 452,355
Audit fees and tax fees .......................................... 183,210
Insurance ........................................................ 160,843
Transfer agent fees .............................................. 115,000
Printing ......................................................... 97,686
Directors' fees .................................................. 47,650
NYSE fees ........................................................ 21,250
ICI fees ......................................................... 12,482
Miscellaneous expenses ........................................... 54,768
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TOTAL EXPENSES ................................................... 8,889,165
------------
NET INVESTMENT INCOME ............................................ 1,805,278
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY
HOLDINGS AND TRANSLATION OF OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN
CURRENCY:
Net realized gain on:
Security transactions ......................................................... 108,884,413
Foreign currency related transactions ......................................... 115,102
------------
108,999,515
------------
Net change in unrealized appreciation in value of investments, foreign currency
holdings and translation of other assets and liabilities denominated in
foreign currency ................................................................ 29,701,635
------------
Net realized and unrealized gain on investments, foreign currency holdings and
translation of other assets and liabilities denominated in foreign currency ..... 138,701,150
------------
Net increase in net assets resulting from operations ............................... $140,506,428
============
See accompanying notes to financial statements.
10
THE INDIA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
-----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income ............................................... $ 1,805,278 $ 2,883,008
Net realized gain on investments and foreign currency
related transactions ........................................... 108,999,515 39,849,857
Net change in unrealized appreciation in value of investments,
foreign currency holdings and translation of other assets and
liabilities denominated in foreign currency .................... 29,701,635 237,954,482
------------ ------------
Net increase in net assets resulting from operations ................ 140,506,428 280,687,347
------------ ------------
DISTRIBUTION TO SHAREHOLDERS
Net investment income ($0.01 and $0.13 per share, respectively) ..... (226,410) (3,046,584)
Long term capital gains ($1.51 and $0.00 per share, respectively) ... (34,187,872) --
------------ ------------
Decrease in net assets resulting from distributions ................. (34,414,282) (3,046,584)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Shares repurchased under Tender Offer (including expenses of
$70,586 at December 31, 2003) .................................. -- (70,586)
Shares repurchased under Repurchase Offer (794,290 and
4,135,635 shares, respectively) (net of repurchase fee of
$368,126 and $1,459,052 respectively) including expenses
of $193,142 and $103,667, respectively ......................... (18,231,335) (71,597,216)
------------ ------------
Net decrease in net assets resulting from capital share transactions (18,231,335) (71,667,802)
------------ ------------
Total increase in net assets ........................................ 87,860,811 205,972,961
------------ ------------
NET ASSETS
Beginning of period ................................................. 556,811,341 350,838,380
------------ ------------
End of period (including undistributed net investment income
of $1,435,771) ................................................. $644,672,152 $556,811,341
============ ============
See accompanying notes to financial statements.
11
THE INDIA FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
DEC. 31, 2004 DEC. 31, 2003 DEC. 31, 2002 DEC. 31, 2001 DEC. 31, 2000
--------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year ........... $ 23.76 $ 12.72 $ 11.93 $ 16.18 $ 23.21
------- ------- ------- ------- -------
Net investment income (loss) ................. 0.08 2 0.11 2 0.09 0.07 (0.16)
Net realized and unrealized gain (loss)
on investments, foreign currency
holdings, and translation of other
assets and liabilities denominated
in foreign currency ....................... 6.14 11.00 0.76 (4.29) (7.27)
------- ------- ------- ------- -------
Net increase (decrease) from
investment operations ..................... 6.22 11.11 0.85 (4.22) (7.43)
------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from:
Net investment income ................... (0.01) (0.13) (0.09) (0.07) --
Long term capital gains ................. (1.51) -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ............ (1.52) (0.13) (0.09) (0.07) --
------- ------- ------- ------- -------
Capital share transactions
Anti-dilutive effect of Share
Repurchase Program ........................ 0.01 0.06 0.01 0.04 0.40
Anti-dilutive effect of Tender Offer ......... -- -- 0.02 -- --
------- ------- ------- ------- -------
Total capital share transactions ............. 0.01 0.06 0.03 0.04 0.40
------- ------- ------- ------- -------
Net asset value, end of year ................. $ 28.47 $ 23.76 $ 12.72 $ 11.93 $ 16.18
======= ======= ======= ======= =======
Per share market value, end of year .......... $29.6300 $25.2000 $10.5900 $ 9.5000 $12.0625
TOTAL INVESTMENT RETURN BASED
ON MARKET VALUE 1 ......................... 23.51% 139.04% 12.36% (20.69)% (27.99)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) .......... $644,672 $556,811 $350,838 $366,491 $504,769
Ratios of expenses to average
net assets ................................ 1.64% 1.76% 1.73% 1.70% 1.59%
Ratios of net investment income
(loss) to average net assets .............. 0.33% 0.72% 0.65% 0.57% (0.75)%
Portfolio turnover ........................... 35.90% 33.89% 39.36% 16.06% 19.24%
See accompanying notes to financial statements.
12
THE INDIA FUND, INC.
FINANCIAL HIGHLIGHTS (CONCLUDED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
1 Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of each period reported. Dividends and distributions, if
any, are assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment return
does not reflect brokerage commissions or sales charges and is not annualized.
Past performance is not a guarantee of future results.
2 Based on average shares outstanding.
See accompanying notes to financial statements.
13
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The India Fund, Inc. (the "Fund") was incorporated in Maryland on December 27,
1993, and commenced operations on February 23, 1994. The Fund operates through a
branch in the Republic of Mauritius. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a closed-end,
non-diversified management investment company. The Fund's investment objective
is long-term capital appreciation by investing primarily in Indian equity
securities.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
SIGNIFICANT ACCOUNTING POLICIES ARE AS FOLLOWS:
PORTFOLIO VALUATION. Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at:
(i) the last sales price prior to the time of determination, if there was
a sale on the date of determination,
(ii) at the mean between the last current bid and asked prices, if there
was no sales price on such date and bid and asked quotations are
available, and
(iii) at the bid price if there was no sales price on such date and only
bid quotations are available.
Securities that are traded over-the-counter are valued, if bid and asked
quotations are available, at the mean between the current bid and asked prices.
Securities for which sales prices and bid and asked quotations are not available
on the date of determination may be valued at the most recently available prices
or quotations under policies adopted by the Board of Directors. Investments in
short-term debt securities having a maturity of 60 days or less are valued at
amortized cost which approximates market value. Securities for which market
values are not readily ascertainable are carried at fair value as determined in
good faith by or under the supervision of the Board of Directors. The net asset
value per share of the Fund is calculated weekly and at the end of each month.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax reporting purposes. Interest income is recorded on the accrual basis;
dividend income is recorded on the ex-dividend date or, using reasonable
diligence, when known. The collectibility of income receivable from Indian
securities is evaluated periodically, and any resulting allowances for
uncollectible amounts are reflected currently in the determination of investment
income.
14
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
TAX STATUS. No provision is made for U.S. federal income or excise taxes as it
is the Fund's intention to continue to qualify as a regulated investment company
and to make the requisite distributions to its shareholders that will be
sufficient to relieve it from all or substantially all federal income and excise
taxes.
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP.
The tax character of distributions paid during the year ended December 31, 2004:
Ordinary income ............................................................... $ 226,410
Long term capital gains ....................................................... 34,187,872
-------------
Total ................................................................ $ 34,414,282
=============
At December 31, 2004, the components of net assets (excluding paid in capital)
on a tax basis were as follows:
Book and tax ordinary income .................................................. $ 1,435,771
-------------
Tax basis capital gain ......................................... $ 32,239,818
Plus/less: cumulative timing differences -- wash sales ......... (1,902,574)
------------
Accumulated net realized gain on investments .................................. 30,337,244
-------------
Book unrealized foreign exchange loss ......................................... (31,253)
-------------
Book unrealized appreciation on foreign currencies ............................ 125,303
-------------
Tax unrealized appreciation .................................... 315,772,274
Plus/less: cumulative timing differences -- wash sales ......... 1,902,574
-------------
Unrealized appreciation ....................................................... 317,674,848
-------------
Net assets (excluding paid in capital) ........................................ $ 349,541,913
=============
The differences between book and tax basis unrealized appreciation is
attributable to wash sales.
Net asset value ............................................................... $ 644,672,152
Paid in capital ............................................................... (295,130,239)
-------------
Net assets (excluding paid in capital) ........................................ $ 349,541,913
=============
During the year ended December 31, 2004, the Fund utilized $42,954,175 of prior
year capital loss carryforwards.
15
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the period ended December 31, 2004, the Fund reclassified $115,102 from
accumulated net realized gains on investments to undistributed net investment
income as a result of permanent book and tax differences relating primarily to
realized foreign currency gains. Net assets were not affected by the
reclassifications.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) value of investment securities, assets and liabilities at the
prevailing rates of exchange on the valuation date; and
(ii) purchases and sales of investment securities and investment income at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund generally does not isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. However, the Fund does isolate the effect of fluctuations in foreign
currency rates when determining the gain or loss upon the sale of foreign
currency denominated debt obligations pursuant to U.S. federal income tax
regulations; such amounts are categorized as foreign currency gains or losses
for federal income tax purposes. The Fund reports certain realized foreign
exchange gains and losses as components of realized gains and losses for
financial reporting purposes, whereas such amounts are treated as ordinary
income for federal income tax reporting purposes.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange rates. Foreign security
and currency transactions may involve certain considerations and risks not
typically associated with those of domestic origin as a result of, among other
factors, the level of governmental supervision and regulation of foreign
securities markets and the possibility of political or economic instability, and
the fact that foreign securities markets may be smaller and have less developed
and less reliable settlement and share registration procedures.
DISTRIBUTION OF INCOME AND GAINS. The Fund intends to distribute annually to
shareholders substantially all of its net investment income, including foreign
currency gains, and to distribute annually any net realized gains after the
utilization of available capital loss carryovers. An additional distribution may
be made to the extent necessary to avoid payment of a 4% federal excise tax.
Distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations, which may
differ from accounting principles generally accepted in the United States of
America. These "book/tax" differences are either considered temporary or
permanent
16
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
in nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income and net realized capital gains. To
the extent they exceed net investment income and net realized gains for tax
purposes, they are reported as distributions of additional paid-in capital.
NOTE B: MANAGEMENT, INVESTMENT ADVISORY, ADMINISTRATIVE SERVICES
AND DIRECTORS
Advantage Advisers, Inc. ("Advantage"), a subsidiary of Oppenheimer Asset
Management Inc. ("OAM") and an affiliate of Oppenheimer &Co. Inc.
("Oppenheimer"), serves as the Fund's Investment Manager (the "Investment
Manager") under the terms of a management agreement dated June 5, 2003 (the
"Management Agreement"). Imperial Investment Advisors Private Limited
("Imperial"), an Indian company and subsidiary of Oppenheimer and Advantage
India, Inc., serves as the Fund's Country Adviser (the "Country Adviser") under
the terms of an amended and restated advisory agreement dated October 26, 2004
(the "Country Advisory Agreement"). Pursuant to the Management Agreement, the
Investment Manager supervises the Fund's investment program and is responsible
on a day-to-day basis for investing the Fund's portfolio in accordance with its
investment objective and policies. Pursuant to the Country Advisory Agreement,
the Country Adviser provides statistical and factual information and research
regarding economic, political factors and investment opportunities in India to
the Investment Manager. For their services, the Investment Manager receives
monthly fees at an annual rate of 1.10% of the Fund's average weekly net assets
and the Country Adviser receives from the Investment Manager a monthly fee at an
annual rate of 0.10% of the Fund's average weekly net assets. For the year ended
December 31, 2004, fees earned by the Investment Manager amounted to $5,979,694.
Oppenheimer, a registered investment adviser and an indirect wholly-owned
subsidiary of Oppenheimer Holdings Inc., serves as the Fund's Administrator (the
"Administrator") pursuant to an administration agreement dated June 4, 2003. The
Administrator provides certain administrative services to the Fund. For its
services, the Administrator receives a monthly fee at an annual rate of 0.20% of
the value of the Fund's average weekly net assets. For the year ended December
31, 2004, these fees amounted to $1,087,217. The Administrator subcontracts
certain of these services to PFPC, Inc. In addition, Multiconsult Ltd. (the
"Mauritius Administrator") provides certain administrative services relating to
the operation and maintenance of the Fund in Mauritius. The Mauritius
Administrator receives a monthly fee of $1,500 and is reimbursed for certain
additional expenses. For the year ended December 31, 2004, fees and expenses of
the Mauritius Administrator amounted to $27,679.
17
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On January 3, 2003, Oppenheimer acquired the U.S. brokerage business of CIBC
World Markets Corp. ("CIBC WM"). Oppenheimer also acquired CIBC WM's U.S. asset
management business. The acquisition was completed on June 4, 2003. In
connection with the June 4, 2003 acquisition, a new investment management
agreement and country advisory agreement dated June 4, 2003 was executed, having
been previously approved by the Board of Directors of the Fund, including a
majority of the independent Directors at a special meeting held on January 17,
2003 and by the stockholders of the Fund at the Fund's April 23, 2003 annual
meeting of stockholders, as required by the 1940 Act.
The Fund pays each of its directors who is not a director, officer or employee
of the Investment Manager, the Country Adviser or the Administrator or any
affiliate thereof an annual fee of $5,000 plus up to $700 for each Board of
Directors meeting attended. In addition, the Fund reimburses all directors for
travel and out-of-pocket expenses incurred in connection with Board of Directors
meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities, other than short-term obligations, aggregated
$191,802,958 and $232,584,904 respectively, for the year ended December 31,
2004.
NOTE D: FOREIGN INCOME TAX
The Fund conducts its investment activities in India as a tax resident of
Mauritius and expects to obtain benefits under the double taxation treaty
between Mauritius and India (the "tax treaty" or "treaty"). To obtain benefits
under the double taxation treaty, the Fund must meet certain tests and
conditions, including the establishment of Mauritius tax residence and related
requirements. The Fund has obtained a certificate from the Mauritian authorities
that it is a resident of Mauritius under the double taxation treaty between
Mauritius and India. Under current regulations, a fund which is a tax resident
in Mauritius under the treaty, but has no branch or permanent establishment in
India, will not be subject to capital gains tax in India on the sale of
securities or to tax on dividends paid by Indian companies. The Fund is subject
to and accrues Indian withholding tax on interest earned on Indian securities at
the rate of 20.91%.
The Fund will, in any year that it has taxable income for Mauritius tax
purposes, elect to pay tax on its net income for Mauritius tax purposes at any
rate between 0% and 35%.
The Fund continues to: (i) comply with the requirements of the tax treaty
between India and Mauritius; (ii) be a tax resident of Mauritius; and (iii)
maintain that its central management and control resides in Mauritius and
therefore management believes that the Fund will be able to obtain the benefits
of the tax treaty between India and Mauritius. Accordingly, no provision for
Indian income taxes has been made in accompanying financial statements of the
Fund for taxes related to capital gains or dividends.
18
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The foregoing is based upon current interpretation and practice and is subject
to future changes in Indian or Mauritian tax laws and in the treaty between
India and Mauritius.
NOTE E: CAPITAL STOCK
In February 2003, the Board of Directors approved, subject to stockholder
approval, a fundamental policy whereby the Fund would adopt an "interval fund"
structure pursuant to Rule 23c-3 under the 1940 Act. Stockholders of the Fund
approved the policy on April 30, 2003. As an interval fund, the Fund makes
semi-annual repurchase offers at net asset value (less a 2% repurchase fee) to
all Fund stockholders. The percentage of outstanding shares that the Fund can
repurchase in each offer is established by the Fund's Board of Directors shortly
before the commencement of each semi-annual offer and is between 5% and 25% of
the Fund's then-outstanding shares.
During the year ended December 31, 2004, the results of the semi-annual
repurchase offer were as follows:
--------------------------------------------
REPURCHASE OFFER #2 REPURCHASE OFFER #3
----------------------------------------------------------------------------------------------------------
Commencement Date February 20, 2004 August 20, 2004
----------------------------------------------------------------------------------------------------------
Expiration Date March 12, 2004 September 10, 2004
----------------------------------------------------------------------------------------------------------
Repurchase Offer Date March 19, 2004 September 17, 2004
----------------------------------------------------------------------------------------------------------
% of Issued and Outstanding Shares of Common Stock 0.6% 2.8%
----------------------------------------------------------------------------------------------------------
Shares Validly Tendered 132,437.366 661,852.704
----------------------------------------------------------------------------------------------------------
Final Pro-ration Odd Lot Shares 607.12 989.70
----------------------------------------------------------------------------------------------------------
Final Pro-ration Non-Odd Lot Shares 131,830.166 652,393.000
----------------------------------------------------------------------------------------------------------
% of Non-Odd Lot Shares Accepted 11.12700% 1.78600%
----------------------------------------------------------------------------------------------------------
Shares Accepted for Tender 132,437.366 661,852.704
----------------------------------------------------------------------------------------------------------
Net Asset Value as of Repurchase Offer Date ($) 22.74 23.26
----------------------------------------------------------------------------------------------------------
Repurchase Fee per Share ($) 0.4548 0.4652
----------------------------------------------------------------------------------------------------------
Repurchase Offer Price ($) 22.2852 22.7948
----------------------------------------------------------------------------------------------------------
Repurchase Fee ($) 60,232 307,894
----------------------------------------------------------------------------------------------------------
Expenses ($) 127,333 65,809
----------------------------------------------------------------------------------------------------------
Total Cost ($) 3,078,726 15,152,609
----------------------------------------------------------------------------------------------------------
19
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended December 31, 2003, the results of the semi-annual
repurchase offer were as follows:
-------------------
REPURCHASE OFFER #1
-------------------------------------------------------------------------------
Commencement Date August 22, 2003
-------------------------------------------------------------------------------
Expiration Date September 12, 2003
-------------------------------------------------------------------------------
Repurchase Offer Date September 26, 2003
-------------------------------------------------------------------------------
% of Issued and Outstanding Shares of Common Stock 15%
-------------------------------------------------------------------------------
Shares Validly Tendered 17,530,127.5345
-------------------------------------------------------------------------------
Final Pro-ration Odd Lot Shares 139,149
-------------------------------------------------------------------------------
Final Pro-ration Non-Odd Lot Shares 3,996,486
-------------------------------------------------------------------------------
% of Non-Odd Lot Shares Accepted 22.97983%
-------------------------------------------------------------------------------
Shares Accepted for Tender 4,135,635
-------------------------------------------------------------------------------
Net Asset Value as of Repurchase Offer Date ($) 17.64
-------------------------------------------------------------------------------
Repurchase Fee per Share ($) 0.3528
-------------------------------------------------------------------------------
Repurchase Offer Price ($) 17.2872
-------------------------------------------------------------------------------
Repurchase Fee ($) 1,459,052
-------------------------------------------------------------------------------
Expenses ($) 103,667
-------------------------------------------------------------------------------
Total Cost ($) 71,597,216
--------------------------------------------------------------------------------
NOTE F: RIGHTS OFFER
On December 17, 2004, the Fund commenced a rights offering and issued to
stockholders as of December 17, 2004 one right for each share of common stock
held. The rights were not transferable and, consequently, were not listed on any
exchange. The rights entitled holders to subscribe for an aggregate of 7,546,991
shares of the Fund's common stock. In addition, the Fund had the option of
issuing additional shares in an amount up to 25% of the shares that were
available in the primary offering, or 1,886,747 shares, for an aggregate total
of 9,433,738 shares. The offer expired on January 31, 2005. The Fund sold
9,433,738 shares at the subscription price per share of $26.50 (representing 95%
of the Fund's net asset value per share on the expiration date of the offer).
The total proceeds of the rights offering were $249,994,057 and the Fund
incurred costs to date of $288,352.
Pursuant to an amended and restated management agreement that will become
effective upon the consummation of the rights offering, the Fund shall pay the
Investment Manager a monthly fee at an annual rate of: (i) 1.10% of the Fund's
average weekly net assets up to and including $600,000,000 and (ii) 0.95% of the
Fund's average weekly net assets in excess of $600,000,000.
20
THE INDIA FUND, INC.
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE G: CONCENTRATION OF RISKS
At December 31, 2004, substantially all of the Fund's net assets were invested
in Indian securities. The Indian securities markets are among other things
substantially smaller, less developed, less liquid, subject to less regulation
and more volatile than the securities markets in the United States.
Consequently, and as further discussed above, acquisitions and dispositions of
securities by the Fund involve special risks and considerations not present with
respect to U.S. securities. At December 31, 2004, the Fund has a concentration
of its investment in computer, finance, and diversified industries. The values
of such investments may be affected by changes in such industry sectors.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange. Foreign security and
currency transactions involve certain considerations and risks not typically
associated with those of domestic origin as a result of, among other factors,
the level of governmental supervision and regulation of foreign securities
markets and the possibilities of political or economic instability, the fact
that foreign securities markets may be smaller and less developed, and the fact
that securities, tax and corporate laws may have only recently developed or are
in developing stages, and laws may not exist to cover all contingencies or to
protect investors adequately.
In the normal course of business, the Fund may enter into contracts that contain
a variety of representations and warranties and which may provide for general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the Fund
that have not yet occurred. However, based on experience, management expects the
risk of loss to be remote.
21
THE INDIA FUND, INC.
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THE INDIA FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule 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 Fund, Inc. (the "Fund")
at December 31, 2004, 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 of
America. 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 the standards of the Public Company Accounting Oversight Board
(United States). Those standards 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 December 31, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
February 14, 2005
22
THE INDIA FUND, INC.
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS
The Fund held its Annual Meeting of Stockholders on April 28, 2004. At the
meeting, stockholders elected each of the nominees proposed for election to the
Fund's Board of Directors. The following table provides information concerning
the matters voted on at the meeting:
I. ELECTION OF DIRECTORS
VOTES NON-VOTING TOTAL VOTING AND
NOMINEE VOTES FOR WITHHELD SHARES NON-VOTING SHARES
------- ---------- -------- ---------- -----------------
Lawrence K. Becker 16,222,267 137,841 6,942,720 23,302,828
J. Marc Hardy 16,230,797 129,311 6,942,720 23,302,828
Stephane R.F. Henry 16,231,583 128,525 6,942,720 23,302,828
Bryan McKigney 16,237,881 122,227 6,942,720 23,302,828
At December 31, 2004, in addition to Lawrence K. Becker, J. Marc Hardy, Stephane
R.F. Henry and Bryan McKigney, the other directors of the Fund were as follows:
Leslie H. Gelb
Luis F. Rubio
Jeswald W. Salacuse
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge
upon request by calling the Fund's toll free number at 1-800-421-4777 and at the
Securities and Exchange Commission website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent twelve month period ended June 30, 2005 is
available after August 30, 2005, without charge, upon request, by calling the
Fund's toll free number at 1-800-421-4777 and at the Securities and Exchange
Commission website at http://www.sec.gov.
--------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
For taxable non-corporate shareholders, 100% of the Fund's income represents
qualified dividend income subject to the 15% rate category.
--------------------------------------------------------------------------------
23
THE INDIA FUND, INC.
INFORMATION ABOUT DIRECTORS AND OFFICERS
The business and affairs of The India Fund, Inc. (the "Fund") are managed under
the direction of the Board of Directors. Information pertaining to the Directors
and executive officers of the Fund is set forth below. The Fund's Statement of
Additional Information includes additional information about the Directors and
is available, without charge, upon request by calling (800) 421-4777.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
TERM OF OVERSEEN BY OTHER
POSITION OFFICE 1 AND DIRECTOR TRUSTEESHIPS/
WITH LENGTH OF PRINCIPAL OCCUPATION(S) (INCLUDING DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND 1 TIME SERVED DURING PAST 5 YEARS THE FUND) HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Lawrence K. Becker Director, Member of Since 2003 Private Investor, Real Estate 11 None
the Audit and Investment Management (July
8039 Harbor View Terrace Nominating 2003-Present); Vice President
Brooklyn, NY 11209 Committees, Class I - Controller/Treasurer,
National Financial Partners
Age: 49 (2000-2003); Managing Director
- Controller/Treasurer,
Oppenheimer Capital - PIMCO
(1981-2000).
------------------------------------------------------------------------------------------------------------------------------------
Leslie H. Gelb Director and Member Since 1994 President Emeritus, The 2 Britannica.com;
of the Audit and Council on Foreign Relations Director of 34
The Council on Foreign Nominating (2003-Present); President, The registered investment
Relations Committees, Class II Council on Foreign Relations companies advised by
58 East 68th Street (1993-2003); Columnist Salomon Brothers Asset
New York, NY 10021 (1991-1993), Deputy Editorial Management ("SBAM").
Page Editor (1985-1990) and
Age: 67 Editor, Op-Ed Page
(1988-1990), THE NEW YORK
TIMES.
------------------------------------------------------------------------------------------------------------------------------------
J. Marc Hardy Director and Member Since 2002 Managing Director, Mainstream 1 None
of the Nominating Ltd. (independent financial
c/o Multiconsult Limited Committee, Class III advisor) and Value Investors
De Chazal De Mee Building 10 Ltd. (private investment
Frere Felix de Valois Street company).
Port Louis, Mauritius
Age: 50
------------------------------------------------------------------------------------------------------------------------------------
24
THE INDIA FUND, INC.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
TERM OF OVERSEEN BY OTHER
POSITION OFFICE 1 AND DIRECTOR TRUSTEESHIPS/
WITH LENGTH OF PRINCIPAL OCCUPATION(S) (INCLUDING DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND 1 TIME SERVED DURING PAST 5 YEARS THE FUND) HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Stephane R.F. Henry Director and Member Since 2004 Managing Director, Premium 1 Boyer Allan
of the Nominating Asset Management Ltd., India Fund Inc.
c/o Premium Asset Committee (1998-present).
Management Ltd.
Jamalacs, Vieux Conseil
Street
Port Louis, Mauritius
Age: 38
------------------------------------------------------------------------------------------------------------------------------------
Luis F. Rubio Director and Member Since 1999 President, Centro de 11 None
of the Audit and Investigacion para el
Jaime Balmes No. 11, D-2 Nominating Desarrollo, A.C. (Center of
Los Morales Polanco Committees, Class II Research for Development)
Mexico, D.F. 11510 (2002-Present); Director
General, Centro de
Age: 49 Investigacion para el
Desarrollo, A.C. (1984-2002);
frequent contributor of op-ed
pieces to THE LOS ANGELES
TIMES and THE WALL STREET
JOURNAL.
------------------------------------------------------------------------------------------------------------------------------------
Jeswald W. Salacuse Director and Since 1993 Henry J. Braker Professor of 2 Director of 34
Chairman of the Commercial Law, The Fletcher registered investment
The Fletcher School of Audit Committee School of Law & Diplomacy companies advised by
Law & Diplomacy and Chairman of (1986-Present); Dean, The SBAM.
at Tufts University, the Nominating Fletcher School of Law &
Medford, MA 02155 Committee, Class I Diplomacy, Tufts University
(1986-1994).
Age: 67
------------------------------------------------------------------------------------------------------------------------------------
25
THE INDIA FUND, INC.
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
TERM OF OVERSEEN BY OTHER
POSITION OFFICE 1 AND DIRECTOR TRUSTEESHIPS/
WITH LENGTH OF PRINCIPAL OCCUPATION(S) (INCLUDING DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND 1 TIME SERVED DURING PAST 5 YEARS THE FUND) HELD BY DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Bryan McKigney President, Director Since 1999 Managing Director, Oppenheimer 11 None
and Chairman of the Asset Management Inc. (June
90 Broad Street Board Class III 2003-Present); Managing
New York, NY 10004 Director (2000-June 2003) and
Executive Director
Age: 46 (1993-2000), CIBC World
Markets Corp.; Managing
Director, CIBC Oppenheimer
Advisers, L.L.C. and
Advantage; President of the
Asia Tigers Fund, Inc.; and
formerly, Vice President and
Division Executive, Head of
Derivative Operations
(1986-1993).
------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
------------------------------------------------------------------------------------------------------------------------------------
Alan E. Kaye Treasurer Since 1999 Senior Vice President, None None
Oppenheimer Asset Management
90 Broad Street Inc. since June 2003 and
New York, NY 10004 Executive Director (1995-June
2003), CIBC World Markets
Age: 53 Corp.; formerly, Vice
President, Oppenheimer & Co.,
Inc. (1986-1994).
------------------------------------------------------------------------------------------------------------------------------------
Deborah Kaback Secretary Since 2003 Senior Vice President and None None
Senior Counsel, Oppenheimer
200 Park Avenue Asset Management Inc. since
24th Floor June 2003; Executive Director,
New York, NY 10166 CIBC World Markets Corp.
(August 2001-June 2003); Vice
Age: 53 President and Senior Counsel,
Oppenheimer Funds Inc.
(November 1999-August 2001);
Senior Vice President and
Deputy General Counsel,
Oppenheimer Capital (April
1989-November 1999).
------------------------------------------------------------------------------------------------------------------------------------
1 The Fund's Board of Directors is divided into three classes: Class I, Class II, and Class III. The terms of office of the Class
I, Class II, and Class III Directors expire at the Annual Meeting of Stockholders in the year 2006, year 2005, and year 2004,
respectively, or thereafter in each case when their respective successors are duly elected and qualified. The Fund's executive
officers are chosen each year at the first meeting of the Fund's Board of Directors following the Annual Meeting of Stockholders,
to hold office until the meeting of the Board following the next Annual Meeting of Stockholders and until their successors are
duly elected and qualified.
The Fund's CEO has submitted to the NYSE the required annual certification and,
the Fund also has included the certifications of the Fund's CEO and CFO required
by Section 302 of the Sarbanes-Oxley Act in the Fund's Form N-CSR filed with the
SEC, for the period of this report.
26
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund intends to distribute annually to shareholders substantially all of its
net investment income, and to distribute any net realized capital gains at least
annually. Net investment income for this purpose is income other than net
realized long and short-term capital gains net of expenses.
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names will
be deemed to have elected to have all distributions automatically reinvested by
the Plan Agent in Fund shares pursuant to the Plan, unless such shareholders
elect to receive distributions in cash. Shareholders who elect to receive
distributions in cash will receive all distributions in cash paid by check in
dollars mailed directly to the shareholder by the dividend paying agent. In the
case of shareholders such as banks, brokers or nominees that hold shares for
others who are beneficial owners, the Plan Agent will administer the Plan on the
basis of the number of shares certified from time to time by the shareholders as
representing the total amount registered in such shareholders' names and held
for the account of beneficial owners that have not elected to receive
distributions in cash. Investors that own shares registered in the name of a
bank, broker or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash,
nonparticipants in the Plan will receive cash and participants in the Plan will
receive Common Stock, to be issued by the Fund or purchased by the Plan Agent in
the open market, as provided below. If the market price per share on the
valuation date equals or exceeds net asset value per share on that date, the
Fund will issue new shares to participants at net asset value; provided,
however, that if the net asset value is less than 95% of the market price on
valuation date, then such shares will be issued at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a New York Stock Exchange trading day, the next preceding trading
day. If net asset value exceeds the market price of Fund shares at such time, or
if the Fund should declare an income dividend or capital gains distribution
payable only in cash, the Plan Agent will, as agent for the participants, buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere, for
the participants' accounts on, or shortly after, the payment date. If, before
the Plan Agent has completed its purchases, the market price exceeds the net
asset value of a Fund share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares
issued by the Fund on the dividend payment date.
27
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS (CONTINUED)
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Because of the forgoing difficulty with respect to open market purchases, the
Plan provides that if the Plan Agent is unable to invest the full dividend
amount in open-market purchases during the purchase period or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will cease making open-market purchases and shareholders will receive the
uninvested portion of the dividend amount in newly issued shares at the close of
business on the last purchase date.
Participants have the option of making additional cash payments to the Plan
Agent, annually, in any amount from $100 to $3,000, for investment in the Fund's
Common Stock. The Plan Agent will use all such funds received from participants
to purchase Fund shares in the open market on or about February 15.
Any voluntary cash payment received more than 30 days prior to this date will be
returned by the Plan Agent, and interest will not be paid on any uninvested cash
payment. To avoid unnecessary cash accumulations, and also to allow ample time
for receipt and processing by the Plan Agent, it is suggested that participants
send in voluntary cash payments to be received by the Plan Agent approximately
ten days before an applicable purchase date specified above. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before such payment is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. There will be no brokerage charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gains distributions payable either in stock or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open-market purchases in connection with the
reinvestment of dividends and capital gains distributions and voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock for individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commissions thus attainable.
28
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS (CONCLUDED)
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The receipt of dividends and distributions under the Plan will not relieve
participants of any income tax that may be payable on such dividends or
distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to members of the Plan at
least 30 days before the record date for such dividend or distribution. The Plan
also may be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent at
P.O. Box 43027, Westborough, Massachusetts 43027.
29
THE INDIA FUND, INC.
PRIVACY POLICY OF
ADVANTAGE ADVISERS, INC.
THE ASIA TIGERS FUND, INC.
THE INDIA FUND, INC.
--------------------------------------------------------------------------------
YOUR PRIVACY IS PROTECTED
An important part of our commitment to you is our respect for your right to
privacy. Protecting all the information we are either required to gather or
which accumulates in the course of doing business with you is a cornerstone of
our relationship with you. While the range of products and services we offer
continues to expand, and the technology we use continues to change, our
commitment to maintaining standards and procedures with respect to security
remains constant.
COLLECTION OF INFORMATION
The primary reason that we collect and maintain information is to more
effectively administer our customer relationship with you. It allows us to
identify, improve and develop products and services that we believe could be of
benefit. It also permits us to provide efficient, accurate and responsive
service, to help protect you from unauthorized use of your information and to
comply with regulatory and other legal requirements. These include those related
to institutional risk control and the resolution of disputes or inquiries.
Various sources are used to collect information about you, including (i)
information you provide to us at the time you establish a relationship, (ii)
information provided in applications, forms or instruction letters completed by
you, (iii) information about your transactions with us or our affiliated
companies, and/or (iv) information we receive through an outside source, such as
a bank or credit bureau. In order to maintain the integrity of client
information, we have procedures in place to update such information, as well as
to delete it when appropriate. We encourage you to communicate such changes
whenever necessary.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic, personal information (such as your name,
address or tax identification number) about our clients or former clients to
anyone, except as permitted or required by law. We maintain physical, electronic
and procedural safeguards to protect such information, and limit access to such
information to those employees who require it in order to provide products or
services to you.
The law permits us to share client information with companies that are
affiliated with us which provide financial, credit, insurance, trust, legal,
accounting and administrative services to us or our clients. This allows us to
enhance our relationship with you by providing a broader range of products to
better meet your needs and to protect the assets you may hold with us by
preserving the safety and soundness of our firm.
30
PRIVACY POLICY OF
ADVANTAGE ADVISERS, INC.
THE ASIA TIGERS FUND, INC.
THE INDIA FUND, INC.
--------------------------------------------------------------------------------
Finally, we are also permitted to disclose nonpublic, personal information to
unaffiliated outside parties who assist us with processing, marketing or
servicing a financial product, transaction or service requested by you,
administering benefits or claims relating to such a transaction, product or
service, and/or providing confirmations, statements, valuations or other records
or information produced on our behalf.
It may be necessary, under anti-money laundering or other laws, to disclose
information about you in order to accept your subscription. Information about
you may also be released if you so direct, or if we or an affiliate are
compelled to do so by law, or in connection with any government or
self-regulatory organization request or investigation.
We are committed to upholding this Privacy Policy. We will notify you on an
annual basis of our policies and practices in this regard and at any time that
there is a material change that would require your consent.
May 2003
31
THE INDIA FUND, INC.
INVESTMENT MANAGER:
Advantage Advisers, Inc.,
a subsidiary of Oppenheimer Asset
Management Inc.
ADMINISTRATOR:
Oppenheimer & Co. Inc.
SUB-ADMINISTRATOR:
PFPC Inc.
TRANSFER AGENT:
PFPC Inc.
CUSTODIAN:
Deutsche Bank AG
The Fund has adopted the Investment Manager's proxy voting policies and
procedures to govern the voting of proxies relating to its voting securities.
You may obtain a copy of these proxy voting procedures, without charge, by
calling (800) 421-4777 and by visiting the Securities and Exchange Commission's
website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings wih the Securities
and Exchange Commission for the first and third quarters of its fiscal year on
Form N-Q. You may obtain a copy of these filings by visiting the Securities and
Exchange Commission's website at www.sec.gov or its Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room may
be obtained by calling (800) SEC-0330.
This report is sent to shareholders of the Fund for their information. It is not
a Prospectus, circular or representation intended for use in the purchase or
sale of shares of the Fund or of any securities mentioned in this report.
ITEM 2. CODE OF ETHICS.
(a) As of the end of the period covered by this report, the registrant has
adopted a Code of Ethics (the "Code of Ethics") that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party.
(b) Not Applicable.
(c) There have been no amendments during the period covered by this report
to any provisions of the Code of Ethics.
(d) The registrant has not granted any waivers during the period covered by
this report, including an implicit waiver, from any provisions of the
Code of Ethics.
(e) Not Applicable.
(f) A copy of the registrant's Code of Ethics is filed as an exhibit
hereto. The registrant undertakes to provide a copy of the Code of
Ethics to any person without charge upon request to the registrant at
its address at 200 Park Avenue, New York, NY 10166.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of directors has determined that the registrant has at
least one audit committee financial expert serving on its audit committee, Mr.
Lawrence Becker, and that Mr. Becker is "independent." Mr. Becker was elected as
a non-interested Director of the audit committee at a meeting of the board of
directors held on October 23, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
----------
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$95,550 for 2003 and $107,000 for 2004.
Audit-Related Fees
------------------
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2003 and $0 for 2004.
Tax Fees
--------
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $65,265 for 2003 and
$60,000 for 2004.
All Other Fees
--------------
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2003 and $0 for 2004.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
THE ASIA TIGERS FUND, INC.
THE INDIA FUND, INC.
AUDIT COMMITTEE PRE-APPROVAL POLICIES
As adopted on October 26, 2004
The Audit Committee (the "Committee") of each of The Asia Tigers Fund,
Inc. and The India Fund, Inc. (each, a "Fund") must pre-approve any independent
accounting firm's engagement to render audit and/or permissible non-audit
(including audit-related) services, as required by law. In evaluating a proposed
engagement by the Fund's independent accountants, the Committee will evaluate
the effect that the engagement might reasonably be expected to have on the
accountant's independence. That evaluation will be based on several factors,
including:
o a review of the nature of the professional services expected to
be provided;
o the fees to be charged in connection with the services expected
to be provided;
o a review of the safeguards put into place by the accounting firm
to safeguard independence; and
o periodic meetings with the accounting firm.
I. POLICY FOR AUDIT AND NON-AUDIT SERVICES TO BE PROVIDED TO THE FUND
------------------------------------------------------------------
On an annual basis, the Fund's Committee will review and pre-approve
the scope of the audits of the Fund and proposed audit fees and permitted
non-audit services that may be performed by the Fund's independent accountants.
At least annually, the Committee will receive a report of all audit and
non-audit services that were rendered in the previous calendar year pursuant to
this policy. The term of any pre-approval is twelve months from the date of
pre-approval, unless the Committee specifically provides otherwise. The
Committee may modify any pre-approval at its discretion. Fee levels for all
services pre-approved under this policy will be established annually by the
Committee.
In addition to the Committee's pre-approval of services pursuant to
this policy, the engagement of the independent accounting firm for any permitted
non-audit service provided to the Fund will also require the separate written
pre-approval of the President of the Fund, who will independently confirm that
the accounting firm's engagement will not adversely affect the firm's
independence. All non-audit services performed by the independent accounting
firm will be disclosed, as required, in filings with the Securities and Exchange
Commission (the "SEC").
A. AUDIT SERVICES
The categories of audit services and related fees to be reviewed and
pre-approved annually by the Committee are:
2
o annual Fund financial statement audits (including applicable
internal control reports);
o seed audits (related to new product filings, as required);
o semiannual financial statement reviews (if applicable); and
o SEC and regulatory filings and consents issued in connection with
any of the above;
B. AUDIT-RELATED SERVICES
The following categories of audit-related services are considered to be
consistent with the role of the Fund's independent accountants, and services
falling under one of these categories will be pre-approved by the Committee on
an annual basis if the Committee deems the services to be consistent with the
accounting firm's independence:
o accounting consultations;
o Fund merger support services;
o agreed-upon procedure reports;
o attestation reports;
o SEC and regulatory filings and consents issued in connection with
filings previously authorized by the Board of Directors;
o comfort letters; and
o internal control reports (other than issued pursuant to annual
Fund financial statement audits).
Individual audit-related services that fall within one of these
categories and are not presented to the Committee as part of the annual
pre-approval process may be pre-approved, if deemed consistent with the
accounting firm's independence, by the Committee Chairman (or any other
Committee member who is a disinterested director under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), to whom this
responsibility has been delegated) so long as the estimated fee for the services
does not exceed $75,000. Any such pre-approval shall be reported to the full
Committee at its next regularly scheduled meeting.
C. TAX SERVICES
The following categories of tax and tax compliance services are
considered to be consistent with the role of the Fund's independent accountants,
and services falling under one of these categories will be pre-approved by the
Committee on an annual basis if the Committee deems the services to be
consistent with the accounting firm's independence:
3
o federal, state and local income tax compliance as well as sales
and use tax compliance;
o timely "regulated investment company" qualification reviews;
o tax distribution analysis and planning;
o tax authority examination services;
o tax appeals support services;
o accounting methods studies;
o Fund merger support services; and
o other tax consulting services and related projects.
Individual tax services that fall within one of these categories and
are not presented to the Committee as part of the annual pre-approval process
may be pre-approved, if deemed consistent with the accounting firm's
independence, by the Committee Chairman (or any other Committee member who is a
disinterested director under the Investment Company Act to whom this
responsibility has been delegated) so long as the estimated fee for the services
does not exceed $75,000. Any such pre-approval shall be reported to the full
Committee at its next regularly scheduled meeting.
C. PROSCRIBED SERVICES
The Fund's independent accountants will not render services in the
following categories of non-audit services:
o bookkeeping or other services related to the accounting records
or financial statements of the Fund;
o financial information systems design and implementation;
o appraisal or valuation services, fairness opinions or
contribution-in-kind reports;
o actuarial services;
o internal audit outsourcing services;
o management functions or human resources;
o broker/dealer, investment adviser or investment banking services;
o legal and other expert services unrelated to the audit; and
4
o any other service that the Public Company Accounting Oversight
Board determines, by regulation, is impermissible.
II. PRE-APPROVAL OF NON-AUDIT SERVICES PROVIDED TO OTHER ENTITIES WITHIN
--------------------------------------------------------------------
THE INVESTMENT COMPANY COMPLEX
------------------------------
The Committee will pre-approve annually any permitted non-audit
services to be provided to Advantage Advisers, Inc. or any other investment
manager to the Fund (but not including any sub-adviser whose role is primarily
portfolio management and is sub-contracted by the investment manager) (the "
Investment Manager") and any entity controlling, controlled by or under common
control with the Investment Manager that provides ongoing services to the Fund
(including affiliated sub-advisers to the Funds), provided that, in each case,
the engagement relates directly to the operations and financial reporting of the
Fund (such entities, including the Investment Manager, shall be referred to
herein as the "Service Affiliates"). Individual projects that are not presented
to the Committee as part of the annual pre-approval process may be pre-approved,
if deemed consistent with the accounting firm's independence, by the Committee
Chairman (or any other Committee member who is a disinterested director under
the Investment Company Act to whom this responsibility has been delegated) so
long as the estimated fee for the services does not exceed $100,000. Any such
pre-approval shall be reported to the full Committee at its next regularly
scheduled meeting.
The Committee will also receive an annual report from the Fund's
independent accounting firm showing the aggregate fees for all services provided
to the Service Affiliates.
III. DE MINIMUS EXCEPTION TO REQUIREMENT OF PRE-APPROVAL OF NON-AUDIT
----------------------------------------------------------------
SERVICES
--------
With respect to the provision of permitted non-audit services to a Fund
or Service Affiliates, the pre-approval requirement is waived if each of the
following requirements is met:
(1) The aggregate amount of all non-approved permitted non-audit
services provided constitutes no more than (i) with respect to such
services provided to the Fund, five percent (5%) of the total
amount of revenues paid by the Fund to its independent accountant
during the fiscal year in which such services are provided and (ii)
with respect to such services provided to Service Affiliates, five
percent (5%) of the total amount of revenues paid to the Fund's
independent accountant by the Fund and the Service Affiliates
during the fiscal year in which such services are provided;
(2) Such services were not recognized by the Fund at the time of the
engagement for such services to be non-audit services; and
(3) Such services are promptly brought to the attention of the
Committee and approved prior to the completion of the audit by the
Committee or by the Committee Chairman (or any other Committee
member who is a disinterested director under the Investment Company
Act to whom this responsibility has been delegated). Any approval
by the Committee Chairman or other delegate shall be reported to
the full Committee at its next regularly scheduled meeting.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X
are as follows:
(b) N/A
(c) 100%
(d) N/A
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $40,000 for 2003 and $50,000 for 2004.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated audit committee consisting of all the
independent directors of the registrant. The members of the audit committee are
Lawrence K. Becker, Leslie H. Gelb, Luis F. Rubio, and Jeswald W. Salacuse.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
ADVANTAGE ADVISERS, INC.
PROXY VOTING MANUAL
TABLE OF CONTENTS
PAGE
----
INTRODUCTION...................................................................1
CHAPTER 1 BOARD OF DIRECTORS..................................................2
VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS..................3
CHAIRMAN AND CEO ARE THE SAME PERSON..................................4
INDEPENDENCE OF DIRECTORS.............................................5
STOCK OWNERSHIP REQUIREMENTS..........................................6
CHARITABLE CONTRIBUTIONS..............................................7
DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION.........8
SIZE OF THE BOARD....................................................10
VOTING ON DIRECTOR NOMINEES IN CONTESTED ELECTIONS...................11
TERM OF OFFICE.......................................................12
COMPENSATION DISCLOSURE..............................................13
CHAPTER 2 AUDITORS...........................................................14
RATIFYING AUDITORS...................................................15
CHAPTER 3 TENDER OFFER DEFENSES..............................................16
POISON PILLS.........................................................17
GREENMAIL............................................................18
SUPERMAJORITY VOTE...................................................19
CHAPTER 4 MERGERS AND CORPORATE RESTRUCTURING................................20
CHANGING CORPORATE NAME..............................................21
REINCORPORATION......................................................22
CHAPTER 5 PROXY CONTEST DEFENSES.............................................23
BOARD STRUCTURE: STAGGERED VS. ANNUAL ELECTIONS.....................24
CUMULATIVE VOTING....................................................25
SHAREHOLDERS' ABILITY TO CALL SPECIAL MEETING........................26
SHAREHOLDERS' ABILITY TO ALTER SIZE OF THE BOARD.....................27
CHAPTER 6 MISCELLANEOUS CORPORATE GOVERNANCE PROVISIONS......................28
CONFIDENTIAL VOTING..................................................29
SHAREHOLDER ADVISORY COMMITTEES......................................30
FOREIGN CORPORATE MATTERS............................................31
-i-
GOVERNMENT SERVICE LIST..............................................32
CHAPTER 7 SOCIAL AND ENVIRONMENTAL ISSUES....................................33
ENERGY AND ENVIRONMENTAL ISSUES (CERES PRINCIPLES)...................34
NORTHERN IRELAND (MACBRIDE PRINCIPLES)...............................35
MAQUILADORA STANDARDS AND INTERNATIONAL OPERATIONS AND POLICIES......36
EQUAL EMPLOYMENT OPPORTUNITY AND DISCRIMINATION......................37
ANIMAL RIGHTS........................................................38
CHAPTER 8 CAPITAL STRUCTURE..................................................39
COMMON STOCK AUTHORIZATION...........................................40
BLANK CHECK PREFERRED STOCK..........................................41
PREEMPTIVE RIGHTS....................................................42
STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS...........................43
STOCK SPLITS.........................................................43
REVERSE STOCK SPLITS.................................................44
ADJUSTMENTS TO PAR VALUE OF COMMON STOCK.............................45
DEBT RESTRUCTURINGS..................................................46
CHAPTER 9 EXECUTIVE AND DIRECTOR COMPENSATION................................47
DIRECTOR COMPENSATION................................................48
SHAREHOLDER PROPOSAL TO LIMIT EXECUTIVE AND DIRECTOR PAY.............49
EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)...............................50
OPTIONS EXPENSING....................................................51
GOLDEN PARACHUTES....................................................52
PROPOSAL TO BAN GOLDEN PARACHUTES....................................53
OUTSIDE DIRECTORS' RETIREMENT COMPENSATION...........................54
CHAPTER 10 STATE OF INCORPORATION............................................55
CONTROL SHARE ACQUISITION STATUTES...................................56
OPT-OUT OF STATE TAKEOVER STATUTES...................................57
CORPORATE RESTRUCTURING, SPIN-OFFS ASSET SALES, LIQUIDATIONS.........58
CHAPTER 11 CONFLICTS OF INTEREST.............................................59
CONFLICTS............................................................60
CHAPTER 12 GOVERNANCE COMMITTEE AND PROXY MANAGERS...........................62
GOVERNANCE COMMITTEE.................................................63
PROXY MANAGERS.......................................................64
CHAPTER 13 SPECIAL ISSUES WITH VOTING FOREIGN PROXIES........................65
SPECIAL ISSUES WITH VOTING FOREIGN PROXIES...........................66
-ii-
CHAPTER 14 RECORD KEEPING....................................................67
RECORD KEEPING.......................................................68
-iii-
INTRODUCTION
------------
Rule 206(4)-6 (the "Rule") adopted under the Investment Advisers Act of 1940, as
amended (the "Advisers Act") requires all registered investment advisers that
exercise voting discretion over securities held in client portfolios to adopt
proxy voting policies and procedures.
Advantage Advisers, Inc., (the "Adviser") is a registered investment adviser
under the Advisers Act and is therefore required to adopt proxy voting policies
and procedures pursuant to the Rule.
When the Adviser has investment discretion over a client's investment portfolio,
then the Adviser votes proxies for the Account pursuant to the policies and
procedures set forth herein.
CHAPTER 1
BOARD OF DIRECTORS
2
VOTING ON DIRECTOR NOMINEES
---------------------------
IN UNCONTESTED ELECTIONS
------------------------
These proposals seek shareholder votes for persons who have been nominated by a
corporation's board of directors to stand for election to serve as members of
that board. No candidates are opposing these board nominees.
In each analysis of an uncontested election of directors you should review:
a) Company performance
b) Composition of the board and key board committees
c) Attendance at board meetings
d) Corporate governance provisions and takeover activity
We may also consider:
a) Board decisions concerning executive compensation
b) Number of other board seats held by the nominee
c) Interlocking directorships
VOTE RECOMMENDATION
It is our policy to vote IN
FAVOR of the candidates
proposed by the board.
We will look carefully at each candidate's background contained in the proxy
statement. In the absence of unusual circumstances suggesting a nominee is
clearly not qualified to serve as a member of the board, we will vote with
management.
3
CHAIRMAN AND CEO ARE THE SAME PERSON
------------------------------------
Shareholders may propose that different persons hold the positions of the
chairman and the CEO.
We would evaluate these proposals on a case by case basis depending on the size
of the company and performance of management.
4
INDEPENDENCE OF DIRECTORS
-------------------------
Shareholders may request that the board be comprised of a majority of
independent directors and that audit, compensation and nominating
committees of the Board consists exclusively of independent directors. We
believe that independent directors are important to corporate governance.
VOTE RECOMMENDATION
It is our policy to vote
FOR proposals requesting
that a majority of the
Board be independent and
that the audit,
compensation and nominating
committees of the board
include only independent
directors.
5
STOCK OWNERSHIP REQUIREMENTS
----------------------------
Shareholders may propose that directors be required to own a minimum amount
of company stock or that directors should be paid in company stock, not
cash. This proposal is based on the view that directors will align
themselves with the interest of shareholders if they are shareholders
themselves. We believe that directors are required to exercise their
fiduciary duty to the company and its shareholders whether or not they own
shares in the company and should be allowed to invest in company stock
based on their own personal considerations.
VOTE RECOMMENDATION
Vote AGAINST proposals that
require director stock
ownership.
6
CHARITABLE CONTRIBUTIONS
------------------------
Charitable contributions by companies are generally useful for assisting
worthwhile causes and for creating goodwill between the company and its
community. Moreover, there may be certain long-term financial benefits to
companies from certain charitable contributions generated from, for
example, movies spent helping educational efforts in the firm's primary
employment areas. Shareholders should not decide what the most worthwhile
charities are.
VOTE RECOMMENDATION
(Shareholders Proposals)
Vote AGAINST proposals
regarding charitable
contribution.
Shareholders have differing and equally sincere views as to which charities
the company should contribute to, and the amount it should contribute. In
the absence of bad faith, self-dealing, or gross negligence, management
should determine which contributions are in the best interest of the
company.
7
DIRECTOR AND OFFICER INDEMNIFICATION
------------------------------------
AND LIABILITY PROTECTION
------------------------
These proposals typically provide for protection (or additional protection)
which is to be afforded to the directors of a corporation in the form of
indemnification by the corporation, insurance coverage or limitations upon
their liability in connection with their responsibilities as directors.
When a corporation indemnifies its directors and officers, it means the
corporation promises to reimburse them for certain legal expenses, damages,
and judgements incurred as a result of lawsuits relating to their corporate
actions. The corporation becomes the insurer for its officers and
directors.
8
VOTE RECOMMENDATION
Vote AGAINST proposals that
eliminate entirely director
and officers' liability for
monetary damages for
violating the duty of care.
Vote AGAINST
indemnification proposals
that would expand coverage
beyond just legal expenses
to acts, such as
negligence, that are more
serious violations of
fiduciary obligations than
mere carelessness.
Vote FOR only those
proposals providing such
expanded coverage in cases
when a director's or
officer's legal defense was
unsuccessful if: a) the
director was found to have
acted in good faith, and b)
only if the director's
legal expenses would be
covered.
The following factors should be considered:
1. The present environment in which directors operate provides substantial
risk of claims or suits against them in their individual capacities
arising out of the discharge of their duties.
2. Attracting and retaining the most qualified directors enhances
shareholder value.
9
SIZE OF THE BOARD
-----------------
Typically there are three reasons for changing the size of the board. The
first reason may be to permit inclusion into the board of additional
individuals who, by virtue of their ability and experience, would benefit
the corporation. The second reason may be to reduce the size of the board
due to expiration of terms, resignation of sitting directors or, thirdly,
to accommodate the corporation's changing needs.
VOTE RECOMMENDATION
Vote FOR the board's
recommendation to increase
or decrease the size of the
board.
The following factors should be considered:
1. These proposals may aim at reducing or increasing the influence of
certain groups of individuals.
2. This is an issue with which the board of directors is uniquely qualified
to deal, since they have the most experience in sitting on a board and
are up-to-date on the specific needs of the corporation.
10
VOTING ON DIRECTOR NOMINEES IN CONTESTED ELECTIONS
--------------------------------------------------
Votes in contested elections of directors are evaluated on a CASE-BY-CASE basis.
The following factors are considered:
1. management's track record
2. background to the proxy contest
3. qualifications of director nominees
11
TERM OF OFFICE
--------------
This is a shareholder's proposal to limit the tenure of outside directors. This
requirement may not be an appropriate one. It is an artificial imposition on the
board, and may have the result of removing knowledgeable directors from the
board.
VOTE RECOMMENDATION
Vote AGAINST shareholder
proposals to limit the
tenure of outside
directors.
The following factors should be considered:
1. An experienced director should not be disqualified because he or she has
served a certain number of years.
2. The nominating committee is in the best position to judge the directors'
terms in office due to their understanding of a corporation's needs and
a director's abilities and experience.
3. If shareholders are not satisfied with the job a director is doing, they
can vote him/her off the board when the term is up.
12
COMPENSATION DISCLOSURE
-----------------------
These proposals seek shareholder approval of a request that the board of
directors disclose the amount of compensation paid to officers and employees, in
addition to the disclosure of such information in the proxy statement as
required by the SEC regulations.
VOTE RECOMMENDATION
(shareholders policy)
Vote AGAINST these
proposals that require
disclosure, unless we have
reason to believe that
mandated disclosures are
insufficient to give an
accurate and meaningful
account of senior
management compensation.
The following factors should be considered:
1. Federal securities laws require disclosure in corporate proxy statements
of the compensation paid to corporate directors and officers.
2. Employees other than executive officers and directors are typically not
in policy-making roles where they have the ability to determine, in a
significant way, the amount of their own compensation.
3. The disclosure of compensation of lower-level officers and employees
infringes upon their privacy and might create morale problems.
13
CHAPTER 2
AUDITORS
14
RATIFYING AUDITORS
------------------
Shareholders must make certain that auditors are responsibly examining the
financial statements of a company, that their reports adequately express any
legitimate financial concerns, and that the auditor is independent of the
company it is serving.
VOTE RECOMMENDATION
Vote FOR proposal to ratify
auditors.
The following factors should be considered:
1. Although lawsuits are sometimes filed against accounting firms,
including those nationally recognized, these firms typically complete
their assignments in a lawful and professional manner.
2. Sometimes it may be appropriate for a corporation to change accounting
firms, but the board of directors is in the best position to judge the
advantages of any such change and any disagreements with former auditors
must be fully disclosed to shareholders.
3. If there is a reason to believe the independent auditor has rendered an
opinion which is neither accurate nor indicative of the company's
financial position, then in this case vote AGAINST ratification.
15
CHAPTER 3
TENDER OFFER DEFENSES
16
POISON PILLS
------------
Poison pills are corporate-sponsored financial devices that, when triggered by
potential acquirers, do one or more of the following: a) dilute the acquirer's
equity in the target company, b) dilute the acquirer's voting interests in the
target company, or c) dilute the acquirer's equity holdings in the post-merger
company. Generally, poison pills accomplish these tasks by issuing rights or
warrants to shareholders that are essentially worthless unless triggered by a
hostile acquisition attempt.
A poison pill should contain a redemption clause that would allow the board to
redeem it even after a potential acquirer has surpassed the ownership threshold.
Poison pills may be adopted by the board without shareholder approval. But
shareholders must have the opportunity to ratify or reject them at least every
two years.
VOTE RECOMMENDATION
Vote FOR shareholder
proposals asking that a
company submit its poison
pill for shareholder
ratification.
Vote on a CASE-BY-CASE
basis regarding shareholder
proposals to redeem a
company's poison pill.
Vote on a CASE-BY-CASE
basis regarding management
proposals to ratify a
poison pill.
17
GREENMAIL
---------
Greenmail payments are targeted share repurchases by management of company stock
from individuals or groups seeking control of the company. Since only the
hostile party receives payment, usually at a substantial premium over the
market, the practice discriminates against all other shareholders.
Greenmail payments usually expose the company to negative press and may result
in lawsuits by shareholders. When a company's name is associated with such a
practice, company customers may think twice about future purchases made at the
expense of the shareholders.
VOTE RECOMMENDATION
Vote FOR proposals to adopt
anti Greenmail or bylaw
amendments or otherwise
restrict a company's
ability to make Greenmail
payments
Vote on a CASE-BY-CASE
basis regarding
anti-Greenmail proposals
when they are bundled with
other charter or bylaw
amendments.
The following factors should be considered:
1. While studies by the SEC and others show that Greenmail devalues the
company's stock price, an argument can be made that a payment can enable
the company to pursue plans that may provide long-term gains to the
shareholders.
18
SUPERMAJORITY VOTE
------------------
Supermajority provisions violate the principle that a simple majority of voting
shares should be all that is necessary to effect change regarding a company and
its corporate governance provisions. These proposals seek shareholder approval
to exceed the normal level of shareholder participation and approval from a
simple majority of the outstanding shares to a much higher percentage.
VOTE RECOMMENDATIONS
Vote AGAINST management
proposals to require a
Supermajority shareholder
vote to approve mergers and
other significant business
combinations.
Vote FOR shareholder
proposals to lower
Supermajority vote
requirements for mergers
and other significant
business combinations.
The following factors should be considered:
1. Supermajority requirements ensure broad agreement on issues that may
have a significant impact on the future of the company.
2. Supermajority vote may make action all but impossible.
3. Supermajority requirements are counter to the principle of majority
rule.
19
CHAPTER 4
MERGERS
AND
CORPORATE
RESTRUCTURING
20
CHANGING CORPORATE NAME
-----------------------
This proposal seeks shareholder approval to change the corporation's name. It is
probably better to vote for the proposed name change before management goes back
to the drawing board and spends another small fortune attempting again to change
the name.
VOTE RECOMMENDATION
Vote FOR changing the
corporate name.
The following factors should be considered:
1. A name of a corporation symbolizes its substance.
2. There are many reasons a corporation may have for changing its name,
including an intention to change the direction of the business or to
have a contemporary corporate image.
3. The board of directors is well-positioned to determine the best name for
the corporation because, among other reasons, it usually seeks
professional advice on such matters.
21
REINCORPORATION
---------------
These proposals seek shareholder approval to change the state in which a company
is incorporated. Sometimes this is done to accommodate the company's most active
operations or headquarters. More often, however, the companies want to
reincorporate in a state with more stringent anti-takeover provisions.
Delaware's state laws, for instance, including liability and anti-takeover
provisions, are more favorable to corporations.
VOTE RECOMMENDATION
Vote on a CASE-BY-CASE
basis, carefully reviewing
the new state's laws and
any significant changes the
company makes in its
charter and by-laws.
The following factors should be considered:
1. The board is in the best position to determine the company's need to
incorporate.
2. Reincorporation may have considerable implications for shareholders,
affecting a company's takeover defenses, its corporate structure or
governance features.
3. Reincorporation in a state with stronger anti-takeover laws may harm
shareholder value.
22
CHAPTER 5
PROXY
CONTEST
DEFENSES
23
BOARD STRUCTURE: STAGGERED VS. ANNUAL ELECTIONS
-----------------------------------------------
A company that has a classified, or staggered, board is one in which directors
are typically divided into three classes, with each class serving three-year
terms; each class's reelection occurs in different years. In contrast, all
directors of an annually elected board serve one year and the entire board
stands for election each year.
Classifying the board makes it more difficult to change control of a company
through a proxy contest involving election of directors. Because only a minority
of the directors are elected each year, it will be more difficult to win control
of the board in a single election.
VOTE RECOMMENDATIONS
Vote AGAINST proposals to
classify the board. Vote
FOR proposals to repeal
classified boards and to
elect all directors
annually.
The following factors should be considered:
1. The annual election of directors provides an extra check on management's
performance. A director who is doing a good job should not fear an
annual review of his/her directorship.
24
CUMULATIVE VOTING
-----------------
Most companies provide that shareholders are entitled to cast one vote for each
share owned, the so-called "one share, one vote" standard. This proposal seeks
to allow each shareholder to cast votes in the election of directors
proportionate to the number of directors times the number of shares owned by
each shareholder for one nominee.
VOTE RECOMMENDATION
Vote AGAINST proposals that
permit cumulative voting.
The following factors should be considered:
1. Cumulative voting would allow a minority owner to create an impact
disproportionate to his/her holdings.
2. Cumulative voting can be used to elect a director who would represent
special interests and not those of the corporation and its shareholders.
3. Cumulative voting can allow a minority to have representation.
4. Cumulative Voting can lead to a conflict within the board which could
interfere with its ability to serve the shareholders' best interests.
25
SHAREHOLDERS' ABILITY TO CALL SPECIAL MEETING
---------------------------------------------
Most state corporation statutes allow shareholders to call a special meeting
when they want to take action on certain matters that arise between regularly
scheduled annual meetings.
VOTE RECOMMENDATION
Vote AGAINST proposals to
restrict or prohibit
shareholder ability to call
special meetings.
Vote FOR proposals that
remove restrictions on the
right of shareholders to
act independently of
management.
26
SHAREHOLDERS' ABILITY TO ALTER SIZE OF THE BOARD
------------------------------------------------
Proposals which would allow management to increase or decrease the size of the
board at its own discretion are often used by companies as a takeover defense.
Shareholders should support management proposals to fix the size of the board at
a specific number of directors, preventing management from increasing the size
of the board without shareholder approval. By increasing the size of the board,
management can make it more difficult for dissidents to gain control of the
board.
VOTE RECOMMENDATIONS
Vote FOR proposal which
seek to fix the size of the
board.
Vote AGAINST proposals
which give management the
ability to alter the size
of the board without
shareholder approval.
27
CHAPTER 6
MISCELLANEOUS
CORPORATE
GOVERNANCE
PROVISIONS
28
CONFIDENTIAL VOTING
-------------------
Confidential voting, also known as voting by secret ballot, is one of the key
structural issues in the proxy system. All proxies, ballots, and voting
tabulations that identify individual shareholders are kept confidential.
VOTE RECOMMENDATIONS
Vote FOR shareholder
proposals requesting that
corporations adopt
confidential voting.
Vote FOR management
proposals to adopt
confidential voting.
The following factors should be considered:
1. Some shareholders elect to have the board not know how they voted on
certain issues.
2. Should the board be aware of how a shareholder voted, the board could
attempt to influence the shareholder to change his/her vote, giving
itself an advantage over those that do not have access to this
information.
3. Confidential voting is an important element of corporate democracy which
should be available to the shareholder.
29
SHAREHOLDER ADVISORY COMMITTEES
-------------------------------
These proposals request that the corporation establish a shareholder advisory
committee to review the board's performance. In some instances, it would have a
budget funded by the corporation and would be composed of salaried committee
members with authority to hire outside experts and to include reports in the
annual proxy statement.
VOTE RECOMMENDATION
Vote AGAINST proposals to
establish a shareholder
advisory committee.
The following factors should be considered:
1. Directors already have fiduciary responsibility to represent
shareholders and are accountable to them by law, thus rendering
shareholder advisory committees unnecessary.
2. Adding another layer to the current corporate governance system would be
expensive and unproductive.
30
FOREIGN CORPORATE MATTERS
-------------------------
These proposals are usually submitted by companies incorporated outside of the
United States seeking shareholder approval for actions which are considered
ordinary business and do not require shareholder approval in the United States
(i.e., declaration of dividends, approval of financial statements, etc.).
VOTE RECOMMENDATION
Vote FOR proposals that
concern foreign companies
incorporated outside of the
United States.
The following factors should be considered:
1. The laws and regulations of various countries differ widely as to those
issues on which shareholder approval is needed, usually requiring
consent for actions which are considered routine in the United States.
2. The board of directors is well positioned to determine whether or not
these types of actions are in the best interest of the corporation's
shareholders.
31
GOVERNMENT SERVICE LIST
-----------------------
This proposal requests that the board of directors prepare a list of employees
or consultants to the company who have been employed by the government within a
specified period of time and the substance of their involvement.
Solicitation of customers and negotiation of contractual or other business
relationships is traditionally the responsibility of management. Compilation of
such a list does not seem to serve a useful purpose, primarily because existing
laws and regulations serve as a checklist on conflicts of interest.
VOTE RECOMMENDATION
Vote AGAINST these
proposals which request a
list of employees having
been employed by the
government.
The following factors should be considered:
1. For certain companies, employing individuals familiar with the
regulatory agencies and procedures is essential and, therefore, is in
the best interests of the shareholders.
2. Existing laws and regulations require enough disclosure and serve as a
check on conflicts of interest.
3. Additional disclosure would be an unreasonable invasion of such
individual's privacy.
32
CHAPTER 7
SOCIAL
AND
ENVIRONMENTAL
ISSUES
33
ENERGY AND ENVIRONMENTAL ISSUES
-------------------------------
(CERES PRINCIPLES)
------------------
CERES proposals ask management to sign or report on process toward compliance
with ten principles committing the company to environmental stewardship.
Principle 10 directs companies to fill out the CERES report. This report
requires companies to disclose information about environmental policies, toxic
emissions, hazardous waste management, workplace safety, energy use, and
environmental audits.
VOTE RECOMMENDATION
Vote AGAINST proposals
requesting that companies
sign the CERES Principles.
The following factors should be considered:
1. We do not believe a concrete business case is made for this proposal. In
our opinion, the company will be best served by continuing to carry on
its business as it did before the proposal was made.
34
NORTHERN IRELAND
----------------
(MACBRIDE PRINCIPLES)
---------------------
It is well documented that Northern Ireland's Catholic community faces much
higher unemployment figures then the Protestant community. Most proposals ask
companies to endorse or report on progress with respect to the MacBride
Principles.
In evaluating a proposal to adopt the MacBride Principles, you must decide if
the principles will cause the company to divest, and worsen unemployment
problems.
VOTE RECOMMENDATION
REFRAIN from voting on
proposals that request
companies to adopt the
MacBride Principles.
The following factors should be considered:
1. We believe that human and political rights are of the utmost importance
for their own sake as well as for the enhancement of economic potential
of a nation.
2. We do not believe a concrete business case has been made for this
proposal. We will refrain from making social or political statements by
voting for these proposals. We will only vote on proposals that maximize
the value of the issuers' status without regard to (i.e., we will not
pass judgement upon) the non-economic considerations.
35
MAQUILADORA STANDARDS AND
INTERNATIONAL OPERATIONS AND POLICIES
Proposals in this area generally request companies to report on or to adopt
certain principles regarding their operations in foreign countries.
The Maquiladora Standards are a set of guidelines that outline how U.S.
companies should conduct operations in Maquiladora facilities just across the
U.S.-Mexican border. These standards cover such topics as community development,
environmental policies, health and safety policies, and fair employment
practices.
VOTE RECOMMENDATION
ABSTAIN from providing a
Vote Recommendation on
proposals regarding the
Maquiladora Standards and
international operating
policies.
The following factors should be considered:
1. We believe that human rights are of the utmost importance for their own
sake as well as for the enhancement of economic potential of a nation.
2. We do not believe that a concrete business case has been made for these
proposals. We will refrain from making social statements by voting for
these proposals. We will not only vote on proposals that maximize the
value of the issuers' securities without regard to (i.e., we will not
pass judgement upon) the non-economic considerations.
36
EQUAL EMPLOYMENT OPPORTUNITY
----------------------------
AND DISCRIMINATION
------------------
In regards to equal employment and discrimination, companies without
comprehensive EEO programs will find it hard to recruit qualified employees and
find them at a long-term competitive disadvantage. Companies who are not
carefully watching their human resource practices could also face lawsuits.
VOTE RECOMMENDATION
REFRAIN from voting on any
proposals regarding equal
employment opportunities
and discrimination.
The following factors should be considered:
1. We feel that the hiring and promotion of employees should be free from
prohibited discriminatory practices. We also feel that many of these
issues are already subject to significant state and federal regulations.
37
ANIMAL RIGHTS
-------------
A Corporation is requested to issue a report on its progress towards reducing
reliance on animal tests for consumer product safety.
VOTE RECOMMENDATION
REFRAIN from making Vote
Recommendations on
proposals regarding animal
rights.
The following factors should be considered:
1. Needless cruelty to animals should never be tolerated. However, the
testing of products on animals may be very important to the health and
safety of consumers.
2. We also feel that this issue is already subject to significant state and
federal regulation.
38
CHAPTER 8
CAPITAL
STRUCTURE
39
COMMON STOCK AUTHORIZATION
--------------------------
The ability to increase the number of authorized shares could accommodate the
sale of equity, stock splits, dividends, compensation-based plans, etc. The
board can usually be trusted to use additional shares for capital-raising and
other transactions that are in the corporation's best interests.
However, excessive escalation in the number of authorized shares may allow the
board to radically change the corporation's direction without shareholder
approval. Be careful to view that the increased number of shares will not enable
the company to activate a poison pill.
VOTE RECOMMENDATION
Vote CASE-BY-CASE on
proposals to increase the
number of shares of common
stock authorized for issue.
Vote AGAINST proposed
common share authorization
that increase existing
authorization by more then
100 percent unless a clear
need for the excess shares
is presented by the
company.
The following factors should be considered:
1. Is this company going to make frequent business acquisitions over a
period of time?
2. Is the company expanding its operations?
3. Within the company, are there any debt structuring or prepackaged
bankruptcy plans?
40
BLANK CHECK PREFERRED STOCK
---------------------------
The terms of blank check preferred stock give the board of directors the power
to issue shares of preferred stock at their discretion, with voting, conversion,
distribution and other rights to be determined by the board at the time of the
issue.
Blank check preferred stock can provide corporations with the flexibility to
meet changing financial conditions. However, once the blank check preferred
stock has been authorized, the shareholders have no further power over how or
when it will be allocated.
VOTE RECOMMENDATION
Vote AGAINST proposals
authorizing the creation of
new classes of preferred
stock with unspecified
voting, conversion,
dividend distribution, and
other rights.
The following factors should be considered:
1. Blank check preferred stock can be used as the vehicle for a poison pill
defense against hostile suitors, or it may be placed in friendly hands
to help block a takeover bid.
41
PREEMPTIVE RIGHTS
-----------------
These proposals request that the corporation provide existing shareholders with
an opportunity to acquire additional shares in proportion to their existing
holdings whenever new shares are issued. In companies with a large shareholder
base and ease in which shareholders could preserve their relative interest
through purchases of shares on the open market, the cost of implementing
preemptive rights does not seem justifiable in relation to the benefits.
VOTE RECOMMENDATION
Vote AGAINST proposals
seeking preemptive rights.
The following factors should be considered:
1. The existence of preemptive rights can considerably slow down the
process of issuing new shares due to the logistics involved in
protecting such rights.
2. Preemptive rights are not necessary for the shareholder in today's
corporations, whose stock is held by a wide range of owners and is, in
most cases, highly liquid.
42
STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS
-----------------------------------------
STOCK SPLITS
------------
The corporation requests authorization for a stock split.
VOTE RECOMMENDATION
Vote FOR management
proposal to authorize stock
splits unless the split
will result in an increase
of authorized but unissued
shares of more than 100%
after giving effect to the
shares needed for the
split.
43
REVERSE STOCK SPLITS
--------------------
VOTE RECOMMENDATION
Vote FOR management
proposal to authorize
reverse stock split unless
the reverse stock split
results in an increase of
authorized but unissued
shares of more than 100%
after giving effect to the
shares needed for the
reverse split.
44
ADJUSTMENTS TO PAR VALUE OF COMMON STOCK
----------------------------------------
The purpose of par value stock is to establish the maximum responsibility of
stockholder in the event that a corporation becomes insolvent. It represents the
maximum amount that a shareholder must pay the corporation if the stock is to be
fully paid when issued.
The corporation requests permission to reduce the par value of its stock. In
most cases, adjusting par value is a routine financing decision and should be
supported.
VOTE RECOMMENDATION
Vote FOR management
proposals to reduce the par
value of common stock.
The following factors should be considered:
1. State laws sometimes prohibit issuance of new stock priced below that of
the outstanding shares.
2. A corporation may be unable to raise capital if the par value is
overstated.
45
DEBT RESTRUCTURINGS
-------------------
The corporation may propose to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan.
VOTE RECOMMENDATION
It is our policy to vote
CASE-BY-CASE on debt
restructuring.
The following factors should be considered:
1. Dilution - How much will ownership interest of existing shareholders be
reduced and how extreme will dilution to future earnings be?
2. Change in Control - Will the transaction result in a change of control
of the company?
3. Bankruptcy - Is the threat of bankruptcy, which would result in severe
losses in shareholder value, the main factor driving the debt
restructuring?
46
CHAPTER 9
EXECUTIVE
AND
DIRECTOR
COMPENSATION
47
DIRECTOR COMPENSATION
---------------------
Directors represent shareholders and are responsible for protecting shareholder
interests. Companies state in the proxy material that they pay directors well in
order to attract the most qualified candidates. All compensation packages for
any executive, director or employee should include a pay-for-performance
component.
VOTE RECOMMENDATION
Vote on a CASE-BY-CASE
basis for director
compensation.
The following factors should be considered:
1. As directors take an increasingly active role in corporate
decision-making and governance, their compensation is becoming more
performance-based.
48
SHAREHOLDER PROPOSAL TO LIMIT EXECUTIVE AND DIRECTOR PAY
--------------------------------------------------------
Shareholder compensation proposals that set limits or reduce executive
compensation should be closely scrutinized. Many of these proposals may be
flawed in their emphasis on an absolute dollar figure in compensation.
VOTE RECOMMENDATION
Vote on a CASE-BY-CASE basis.
The following factors should be considered:
1. Executive compensation is established by a committee that consists of
independent directors who have fiduciary responsibility to act in the
best interest of the shareholders and who are best placed to make
compensation decisions.
49
EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)
--------------------------------------
These proposals ask for stockholder endorsement of compensation plans for key
employees which involve the issuance of company shares by granting of stock
options, SARs, restricted stock, etc. These plans help attract and retain
best-qualified corporate personnel and tie their interests more closely to those
of the shareholders.
VOTE RECOMMENDATION
Vote FOR proposals to adopt
share-based compensation
plans when the following
items are involved:
1. The exercise price for stock options is less than 85% of fair market
value on the date of the grant.
2. It is an omnibus stock plan which gives directors broad discretion in
deciding how much and what kind of stock to award, when and to whom.
3. The shares for issue exceed 8% of the company's outstanding shares; or,
in the case of the evergreen plans, the amount of increase exceeds 1.5%
of the total number of shares outstanding.
Vote AGAINST proposals
adopting share based
compensation plans when the
following items are
involved:
1. Re-load options (new options issued for any exercised).
2. The plan would allow for management to pyramid their holdings by using
stock to purchase more stock, without having to lay out cash. Vote YES
if this is for directors.
50
OPTIONS EXPENSING
-----------------
Shareholder proposal to expense options.
VOTE RECOMMENDATION
It is our policy to vote
FOR proposals to expense
options.
51
GOLDEN PARACHUTES
-----------------
Golden parachutes are designed to protect the employees of a corporation in the
event of a change in control. The change in control agreement will specify the
exact payments to be made under the golden parachutes. The calculation for
payout is usually based on some multiple of an employee's annual or monthly
compensation. Golden parachutes are generally given to employees whose annual
compensation exceeds $112,000.
Recent experience has shown a willingness of many managements to treat severance
agreements as equal to equity investments and to reward themselves as if
substantial amounts of equity were at risk.
VOTE RECOMMENDATION
Vote FOR proposals which
seek to limit additional
compensation payments.
Vote FOR shareholder
proposals to have golden
parachutes submitted for
shareholder ratification.
The following factors should be considered:
1. The stability of management may be affected by an attempted acquisition
of the corporation.
2. There is a tendency on the part of an entrenched management to overstate
the value of their continuing control of and influence on the day-to-day
functions of a corporation.
52
PROPOSAL TO BAN GOLDEN PARACHUTES
---------------------------------
Based on the foregoing information:
VOTE RECOMMENDATION
We are FOR this proposal,
which essentially bans
golden parachutes, because
we feel management's
compensation should be
solely based on real-time
contributions to the
corporation while they are
serving it. Deferred
current compensation is
viewed differently than
future, contingent
compensation for current
services.
53
OUTSIDE DIRECTORS' RETIREMENT COMPENSATION
------------------------------------------
We believe that directors should only be compensated while serving the company.
VOTE RECOMMENDATIONS
Vote AGAINST proposals
establishing outside
directors' retirement
compensation.
Vote FOR proposals that
revoke outside directors'
retirement compensation.
54
CHAPTER 10
STATE
OF
INCORPORATION
55
CONTROL SHARE ACQUISITION STATUTES
----------------------------------
These proposals suggest that the board of directors solicit shareholder approval
before committing acquisitions or divestiture of a business exceeding stipulated
threshold levels. Such statutes function by denying shares their voting rights
when they contribute to ownership in excess of certain thresholds.
VOTE RECOMMENDATION
Vote AGAINST proposals
which request the board to
seek shareholder approval
before committing to an
acquisition.
The following factors should be considered:
1. These proposals deprive the board of directors of its ability to act
quickly in propitious circumstances.
2. Conforming to these requirements can be expensive.
3. The board of directors is uniquely qualified and positioned to be able
to make these decisions without prior shareholder approval.
4. The threshold levels usually imposed by these proposals are much more
stringent than required by law.
56
OPT-OUT OF STATE TAKEOVER STATUTES
----------------------------------
These proposals seek shareholder approval to opt-out (not be governed by)
certain provisions of the anti-takeover laws of various states. Delaware law,
for instance, dictates that a bidder has to acquire at least 85% of a company's
stock before exercising control, unless he or she has board approval. This means
that a company may thwart an otherwise successful bidder by securing 15% of its
stock in friendly hands.
VOTE RECOMMENDATION
Vote on a CASE-BY-CASE
basis for these proposals.
The following factors should be considered:
1. It is the directors' responsibility to act on behalf of the shareholders
in opposing coercive takeover attempts.
2. Creating deterrents to corporate takeovers may allow for entrenchment of
inefficient management.
3. These statutes strengthen the board's ability to deal with potential
buyers on fair and reasonable terms.
4. Shareholders should have the final say on whether the company should be
merged or acquired.
57
CORPORATE RESTRUCTURING, SPIN-OFFS ASSET SALES, LIQUIDATIONS
------------------------------------------------------------
Votes on corporate restructuring, spin-offs, asset sales and liquidations are
evaluated on a CASE BY CASE basis.
58
CHAPTER 11
CONFLICTS
OF
INTEREST
59
CONFLICTS
From time to time, proxy voting proposals may raise conflicts between the
interests of the Advisers clients and the interests of the Adviser, its
affiliates and its employees. Conflicts of interest may arise when:
1. Proxy votes regarding non-routine matters are solicited by an issuer
that may have a separate account relationship with an affiliate of the
Adviser or an investment banking relationship with Fahnestock & Co. Inc.
2. A proponent of a proxy proposal has a business relationship with the
Adviser or one of its affiliates or the Adviser or one of its affiliates
has a business relationship with participants in proxy contests,
corporate directors or director candidates.
3. An employee of the Adviser has a personal interest in the outcome of a
particular matter before shareholders.
If the Adviser receives a proxy that to the knowledge of the Proxy Manager
raises a conflict of interest, the Proxy Manager shall advise the Governance
Committee which shall determine whether the conflict is "material" to any
specific proposal involved in the proxy. The Governance Committee will determine
whether the proposal is material as follows:
1. Routine proxy proposals are presumed not to involve a material conflict
of interest.
2. Non-routine proxy proposals. Proxy proposals that are "non-routine" will
be presumed to involve a material conflict of interest unless the
Governance Committee determines that the conflict is unrelated to the
proposal. Non-routine proposals would include a merger, compensation
matters for management and contested elections of directors.
60
CONFLICTS CONT'D
----------------
3. The Governance Committee may determine on a case-by-case basis that
particular non-routine proposals do not involve a material conflict of
interest because the proposal is not directly related to the Adviser's
conflict vis-a-vis the issue. The Governance Committee will record the
basis for any such determination. With respect to any proposal that the
Governance Committee determines presents a material conflict of
interest, the Adviser may vote regarding that proposal in any of the
following ways:
a) Obtain instructions from the client on how to vote.
b) Use existing proxy guidelines if the policy with respect to the
proposal is specifically addressed and does not involve a
case-by-case analysis.
c) Vote the proposal that involves the conflict according to the
recommendations of an independent third party such as
Institutional Share Services Inc. or Investor Responsibility
Research Center.
61
CHAPTER 12
GOVERNANCE COMMITTEE
AND
PROXY MANAGERS
62
GOVERNANCE COMMITTEE
--------------------
The Governance Committee is responsible for the maintenance of the Proxy Voting
Policies and Procedures and will determine whether any conflict between the
interest of clients and the Advisers in voting proxies is material. The
Governance Committee includes the following: (1) Bryan McKigney, (2) Barbara
Pires, and (3) Punita Kumar-Sinha.
63
PROXY MANAGERS
--------------
The Proxy Manager for the Adviser is Punita Kumar-Sinha, Portfolio Manager. The
Proxy Manager will determine how votes will be cast on proposals that are
evaluated on a case-by case basis.
64
CHAPTER 13
SPECIAL ISSUES WITH VOTING
FOREIGN PROXIES
65
SPECIAL ISSUES WITH VOTING FOREIGN PROXIES
------------------------------------------
Voting proxies with respect to shares of foreign stock may involve significantly
greater effort and corresponding cost than voting proxies in the U.S domestic
market. Issues in voting foreign proxies include the following:
1. Each country has its own rules and practices regarding shareholder
notification, voting restrictions, registration conditions and share
blocking.
2. In some foreign countries shares may be "blocked" by custodian or
depository or bearer shares deposited with specific financial
institutions for a certain number of days before or after the
shareholders meeting. When blocked, shares typically may not be traded
until the day after the blocking period. Advantage may refrain from
voting shares of foreign stocks subject to blocking restrictions where
in the Adviser's judgment the benefit from voting the shares is
outweighed by the interest in maintaining client liquidity in the
shares. This decision is made on a case-by-case basis based on a
relevant factors including the length of the blocking period, the
significance of the holding and whether the stock is considered by a
long-term holding.
3. Time frames between shareholder notification, distribution of proxy
materials, book closures and the actual meeting date may be too short to
allow timely action.
4. In certain countries, applicable regulations require that votes must be
made in person at the shareholder meeting. The Adviser will weigh the
costs and benefits of voting on proxy proposals in countries that
require in-person voting on a case-by-case basis and make decisions on
whether voting on a given proxy proposal is prudent. Generally, the
Adviser will not vote shares in countries that require in person voting
on routine matters such as uncontested elections of directors,
ratification of auditors.
66
CHAPTER 14
RECORD KEEPING
67
RECORD KEEPING
--------------
Advantage will maintain the following records:
1. Copies of these policies
2. A copy of each proxy statement that the Adviser receives regarding
client securities. The Adviser may satisfy this requirement by relying
on a third party to keep copies of proxy statements provided that the
Adviser has an undertaking from the third party to provide a copy of the
proxy statement promptly upon request.
3. A record of each vote cast on behalf of a client. A third party may keep
these voting records provided that the Adviser has an undertaking from
the third party to provide a copy of the record promptly upon request.
4. A copy of any document created by the Adviser that was material to
making a decision on how to vote proxies or that memorializes the basis
for that decision.
5. A copy of each written client request for information on how an Adviser
voted proxies on behalf of the client and a copy of written response by
the Adviser to any client request for information on how the Adviser
voted proxies on behalf of the client.
The above records shall be maintained for five years from the end of the fiscal
year during which the last entry was made on such record, the first two years in
an appropriate office of the Adviser.
68
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
REGISTRANT PURCHASES OF EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------------------
(A) TOTAL
NUMBER OF (C) TOTAL NUMBER OF SHARES (OR (D) MAXIMUM NUMBER (OR APPROXIMATE
SHARES (OR (B) AVERAGE UNITS) PURCHASED AS PART OF DOLLAR VALUE) OF SHARES (OR UNITS)
UNITS) PRICE PAID PER PUBLICLY ANNOUNCED PLANS OR THAT MAY YET BE PURCHASED UNDER THE
PERIOD PURCHASED SHARE (OR UNIT) PROGRAMS PLANS OR PROGRAMS
-------------------- ------------- --------------- ------------------------------- -----------------------------------
07/01/04 to 07/31/04 NONE NONE NONE NONE
-------------------- ------------- --------------- ------------------------------- -----------------------------------
08/01/04 to 08/31/04 NONE NONE NONE NONE
-------------------- ------------- --------------- ------------------------------- -----------------------------------
09/01/04 to 09/30/04 661,852.7044 $22.7948 661,852.7044 (1) NONE
-------------------- ------------- --------------- ------------------------------- -----------------------------------
10/01/04 to 10/31/04 NONE NONE NONE NONE
-------------------- ------------- --------------- ------------------------------- -----------------------------------
11/01/04 to 11/30/04 NONE NONE NONE NONE
-------------------- ------------- --------------- ------------------------------- -----------------------------------
12/01/04 to 12/31/04 NONE NONE NONE NONE
-------------------- ------------- --------------- ------------------------------- -----------------------------------
Total 661,852.7044 $22.7948 661,852.7044 NONE
---------------------------------------------------------------------------------------------------------------------------
Footnote
(1) These shares were repurchased in connection with the Fund's regular,
semi-annual repurchase offer announced on August 20, 2004 that expired on
September 10, 2004. In connection with this repurchase offer, the Fund
offered to repurchase up to 661,852.7044 shares of its common stock, an
amount equal to 5% of its outstanding shares of common stock, for cash at a
price approximately equal to the Fund's net asset value as of September 17,
2004.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics that is the subject of disclosure required by Item
2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The India Fund, Inc.
-------------------------------------------------------------------
By (Signature and Title)* /s/ Bryan McKigney
------------------------------------------------
Bryan McKigney, Director, President & Chairman
(principal executive officer)
Date February 23, 2005
---------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Bryan McKigney
------------------------------------------------
Bryan McKigney, Director, President & Chairman
(principal executive officer)
Date February 23, 2005
---------------------------------------------------------------------
By (Signature and Title)* /s/ Alan Kaye
------------------------------------------------
Alan Kaye, Treasurer
(principal financial officer)
Date February 18, 2005
---------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.