<PAGE>
- --------------------------------------------------------------------------------
THE
MALAYSIA FUND,
INC.
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1998
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
THE MALAYSIA FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD
OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Valerie Y. Lewis
SECRETARY
Joanna M. Haigney
TREASURER
Belinda A. Brady
ASSISTANT TREASURER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
MALAYSIAN INVESTMENT ADVISER
Arab-Malaysian Consultant Sdn Bhd
21st-29th Floors, Bangurian Arab-Malaysian
Jalan Raja Chulan, 5200 Kuala Lampur, Malaysia
- --------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------------------------------
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(800) 730-6001
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For additional Fund information, including the Fund=s net asset value per share
and information regarding the investments comprising the Fund=s portfolio,
please call 1-800-221-6726.
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the year ended December 31, 1998, the Malaysia Fund, Inc. (The "Fund") had a
total return, based on net asset value per share, of -39.70% compared to -29.61%
for the Kuala Lumpur Stock Exchange Composite Index expressed in adjusted U.S.
dollars (the "Index"). for the period since the Fund's commencement of
operations on May 4, 1987 through December 31, 1998, the Fund's total return,
based on net asset value per share, was -48.57% compared to -31.59% for the
Index. Note that the performance returns for the Index for 1998 have been
modified to reflect the Fund's fair valuation procedures resulting from the
imposition of capital controls in Malaysia during September, 1998 (see last
paragraph of this letter). On December 31, 1998, the closing price of the
Fund's shares on the New York Stock Exchange was $4.00, representing a 32.5%
premium to the Fund's net asset value per share.
The Malaysian government implemented capital controls on September 1, 1998.
The controls were imposed to maintain the value of the ringgit while
expansionary monetary and fiscal policies were implemented. During the first
half of 1998, the Malaysian government had been following a fairly orthodox
macroeconomic policy mix in an attempt to restore currency stability. These
tight policies shadowed the policies implemented by neighboring crisis
countries that had accepted IMF funding and IMF designed economic programs.
This tight monetary policy combined with excessive domestic leverage,
significant industrial over-capacity, over-built property markets and weak
export performance sent the economy into a deep recession. When the
government loosened monetary policy early in the third quarter, the ringgit's
value began to decline again. In a crisis atmosphere across the region, the
government lashed out at currency speculation and imposed a one-year holding
period on ringgit assets held by all foreign portfolio investors. Malaysians
were also prohibited from purchasing foreign currency. The government blamed
foreign speculators and a former Deputy Prime Minister who had been too close
to the IMF for the severity of the crisis. When foreign funds turned into net
sellers of stock, various regulatory obstacles coincidentally were imposed
that inhibited foreign trading. One of the changes, the ban on delivery
versus payment settlement of trades, is particularly difficult for American
funds as U.S. regulations governing mutual funds require that type of
settlement. Ironically, after Malaysia imposed the capital controls,
regional currency and market conditions improved dramatically. With a little
more patience the government might have gotten its stronger currency without
having to cut its capital markets out of the international financial system.
The Malaysian market partially recovered in the fourth quarter of 1998 on a
mix of easier monetary conditions, limited alternatives for domestic
investors (who are typically prohibited from purchasing foreign securities)
and some improvements in domestic economic conditions and policies. The most
important economic improvement has been the maintenance of a strong current
account surplus. The Malaysian current account has shifted from a deficit in
1997 to a significant surplus in 1998 largely on the back of a significant
decline in imports. Malaysian export performance was relatively weak in
1998, consistent with most other countries in the region. This current
account surplus has allowed Malaysia to rebuild foreign reserves to over $26
billion as of December. This increase in reserves also suggests that the
capital controls have been fairly successful at limiting capital flight.
Many observers, including ourselves, expected to see more signs of capital
flight by now. Some policies have been pleasant surprises. A bank
recapitalization scheme, which started inauspiciously with a significant
relaxation of regulatory standards, has recently picked up momentum as newly
created government entities have started to purchase impaired assets from
weak banks and to inject new capital into these institutions. In addition,
the Japanese government has been generous in providing loan guarantees and
some fresh loans to Malaysia. The two countries have very extensive trade
relations, with Malaysia's exports to Japan accounting for 26% of Malaysian
GDP. Inflation has been fairly subdued and falling recently. Finally,
industrial production data for October and November, while still down over
10% on a year-on-year basis, has been stable month- on-month suggesting that
the economy is bottoming. GDP is estimated to have contracted 6-7% in 1998
and most economic observers expect a small contraction or very modest growth
in 1999.
The Malaysian government is reportedly studying proposals to lift the capital
controls. The government is reportedly considering replacing the one-year
holding requirement with an exit tax on currency repatriation. Foreigners
are believed to hold $10 billion of stock in Malaysia; if these funds were
repatriated at once, Malaysia would lose almost 40% of its reserves. Lifting
the controls could be difficult without significant reforms of settlement
procedures and a protracted period of improved regulation as the market has
sustained significant damage to its reputation. The capital controls led
Morgan Stanley Capital International (MSCI) to drop Malaysia from its
developed market and its emerging market free indices effective November 30,
1998. These indices are widely used to benchmark performance and all
portfolio managers holding Malaysian securities are now effectively holding a
non-index position. Unless non-index positions have superlative
fundamentals, most benchmarked portfolio managers are not inclined to hold
them. In addition, some domestic political uncertainties would probably have
to be cleared up before capital controls could be lifted. A trial
2
<PAGE>
of Deputy Prime Minister Anwar Ibrahim has been underway for several months
now and is expected to continue for several more months. His supporters have
started a movement known as reformasi but will probably be unable to
challenge the current Prime Minister and his UMNO party. We are monitoring
developments regarding the capital controls carefully and hope that the
government moves to rebuild the market's international position.
As discussed in our September 1998 quarterly report, in light of the effect
of the restrictions and requirements on the Malaysian market, in early
September the Fund, under fair value procedures established by the Board of
Directors, began to discount the value of its Malaysian assets because it was
of the view that use of market prices and the official ringgit/U.S. dollar
exchange rate did not properly reflect the U.S. dollar value of such assets.
The extent of the discount implied by the Fund's valuation may change from
time to time with changes in market conditions. As a result of these events,
we have concentrated the portfolio in the highest quality Malaysian stocks,
including stocks with significant dividend yields as dividends are
convertible into dollars.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
January 1999
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED.
3
<PAGE>
The Malaysia Fund, Inc.
Investment Summary as of December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION TOTAL RETURN (%)
--------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
---------------------- -------------------- ----------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
ONE YEAR -38.66 -38.66 -39.70 -39.70 -29.61 -29.61
FIVE YEAR -78.55 -26.50 -83.40 -30.17 -77.22 -25.61
TEN YEAR -1.45+ -0.20+ -38.49+ -4.74+ -18.12 -1.98
SINCE INCEPTION* -31.88+ -3.29+ -48.57+ -5.54+ -31.59 -3.20
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share. . . $ 8.98 $13.77 $12.41 $13.55 $16.28 $27.32 $18.57 $18.58 $19.29 $ 5.04 $ 3.02
Market Value Per Share . . . . $ 7.50 $18.75 $11.38 $11.75 $16.25 $28.00 $17.38 $17.00 $17.50 $ 6.56 $ 4.00
Premium/(Discount) . . . . . . -16.5% 36.2% -8.3% -13.3% -0.2% 2.5% -6.4% -8.5% -9.3% 30.2% 32.5%
Income Dividends . . . . . . . $ 0.17 $ 0.11 $ 0.21 $ 0.07 -- $ 0.16 $ 0.02 -- -- -- $ 0.03
Capital Gains Distributions. . -- -- -- -- -- $ 1.13 $ 3.59 0.84 $ 2.82 $ 0.51 --
Fund Total Return (2). . . . . 23.32% 54.57% -8.35% 9.80% 20.15% 98.28%+ -18.87% 4.33% 19.93% -72.89% -39.70%
Index Total Return (3) . . . . 25.73% 57.91% -10.02% 9.13% 20.19% 92.60% -19.66% 3.05% 25.12% -68.71% -29.61%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
(3) The Kuala Lumpur Stock Exchange (KLSE) Composite Index expressed in U.S.
dollars (the "Index") is a broad based capitalization weighted index of 100
stocks listed on the exchange, including dividends. The performance
returns for the Index for 1998 have been modified to reflect the Fund's
fair valuation procedures resulting from the imposition of capital controls
in Malaysia during September 1998.
* The Fund commenced operations on May 4, 1987.
+ This return does not include the effect of the rights issued in connection
with the Fund's 1993 rights offering.
4
<PAGE>
The Malaysia Fund, Inc.
Portfolio Summary as of December 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Short-Term Investments (14.5%)
Equity Securities (85.5%)
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
[CHART]
<TABLE>
<S> <C>
Other (25.8%)
Utilities - Electrical & Gas (10.9%)
Transportation - Shipping (4.7%)
Telecom - Integrated (6.5%)
Multi-Industry (6.7%)
Beverages & Tobacco (11.1%)
Broadcasting & Publishing (4.3%)
Energy Sources (6.0%)
Food & Household Products (6.7%)
Leisure & Tourism (6.2%)
Misc. Materials & Commodities (11.1%)
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Tenaga Nasional Bhd 9.2%
2. Telekom Malaysia Bhd 6.5
3. Malaysian International Shipping Bhd 4.8
4. Petronas Gas Bhd 4.6
5. Rothmans of Pall Mall Bhd 4.0
6. Hap Seng Consolidated Bhd 3.9
7. Kuala Lumpur Kepong Bhd 3.6
8. Malayan Banking Bhd 3.6
9. Nestle Bhd 3.2
10. Genting Bhd 3.2
----
46.6%
----
----
</TABLE>
* Excludes short-term investments.
5
<PAGE>
FINANCIAL STATEMENTS
- --------
STATEMENT OF NET ASSETS
- --------
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MALAYSIAN COMMON STOCKS(86.1%)
(Unless otherwise noted)
- --------------------------------------------------------------------------------
AUTOMOBILES(3.6%)
Oriental Holdings Bhd 210,000 U.S.$ 226
Tan Chong Motor Holdings Bhd 3,697,000 838
----------------
1,064
----------------
- --------------------------------------------------------------------------------
BANKING(3.5%)
Malayan Banking Bhd 735,000 1,042
----------------
- --------------------------------------------------------------------------------
BEVERAGES & TOBACCO(11.1%)
Carlsberg Brewery (Malaysia) Bhd 415,000 833
Guinness Anchor Bhd 967,000 680
R.J. Reynolds Bhd 720,500 571
Rothmans of Pall Mall Bhd 283,000 1,167
----------------
3,251
----------------
- --------------------------------------------------------------------------------
BROADCASTING & PUBLISHING(4.3%)
Nanyang Press Bhd 496,000 336
Star Publications (Malaysia) 934,000 929
----------------
1,265
----------------
- --------------------------------------------------------------------------------
CONSTRUCTION & HOUSING(0.7%)
Tan & Tan Development Bhd 764,000 207
----------------
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENTS, INSTRUMENTS(0.7%)
Malaysian Pacific Industries Bhd 200,000 191
----------------
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES(2.0%)
(a)Puncak Niaga Holding Bhd 1,134,000 585
----------------
- --------------------------------------------------------------------------------
ENERGY SOURCES(6.0%)
Petronas Gas Bhd 856,000 1,356
Shell Refining Co. Bhd 574,000 423
----------------
1,779
----------------
- --------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS(6.7%)
Amway (Malaysia) Holdings Bhd 485,000 697
Nestle Bhd 340,000 952
Yeo Hiap Seng (Malaysia) Bhd 649,000 313
----------------
1,962
----------------
- --------------------------------------------------------------------------------
LEISURE & TOURISM(6.2%)
Genting Bhd 624,200 949
Tanjong plc 870,000 865
----------------
1,814
----------------
- --------------------------------------------------------------------------------
MISC. MATERIALS & COMMODITIES(11.1%)
Austral Enterprises Bhd 840,000 671
Golden Hope Plantations Bhd 1,017,000 768
IOI Corporation Bhd 1,896,000 761
Kuala Lumpur Kepong Bhd 887,000 1,062
----------------
3,262
----------------
- --------------------------------------------------------------------------------
MULTI-INDUSTRY(6.7%)
Hap Seng Consolidated Bhd 2,547,000 1,149
Sime Darby Bhd 1,031,400 828
----------------
1,977
----------------
- --------------------------------------------------------------------------------
REAL ESTATE(1.4%)
Selangor Properties Bhd 1,351,000 413
----------------
- --------------------------------------------------------------------------------
TELECOM INTEGRATED(6.5%)
Telekom Malaysia Bhd 1,029,000 1,895
----------------
- --------------------------------------------------------------------------------
TRANSPORTATION SHIPPING(4.7%)
Malaysian International
Shipping Bhd 1,131,000 1,395
----------------
- --------------------------------------------------------------------------------
UTILITIES - ELECTRICAL & GAS(10.9%)
Tenaga Nasional Bhd 1,889,000 2,714
YTL Power International Bhd 907,000 499
----------------
3,213
----------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$40,477) 25,315
----------------
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS(11.6%)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT(11.6%)
Chase Securities, Inc.
4.45%, dated 12/31/98, due
1/4/99, to be repurchased at
U.S.$3,410, collateralized by
U.S.$2,480, United States
Treasury Bonds, 8.75%, due
5/15/17, valued at U.S.$3,477
(Cost U.S.$3,408) U.S.$ 3,408 3,408
----------------
- --------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN(3.0%)
Malaysian Ringgit
(Cost U.S.$1,097) MYR 4,743 874
----------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS(100.7%)
(Cost U.S.$44,982) 29,597
----------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are in an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AMOUNT
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS (0.3%)
Cash U.S.$ 1
Dividends Receivable 66
Interest Receivable 1
Other Assets 15 U.S.$ 83
--------------- ----------------
- -------------------------------------------------------------------------------
LIABILITIES (-1.0%) Payable For:
U.S. Investment Advisory Fees (92)
Professional Fees (44)
Custodian Fees (43)
Shareholder Reporting Expenses (43)
Administrative Fees (23)
Directors' Fees and Expenses (12)
Malaysian Investment Advisory Fees (11)
Other Liabilities (12) (280)
--------------- ----------------
- -------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 9,738,015, issued and
outstanding U.S.$0.01 par value shares
(20,000,000 shares authorized) U.S.$ 29,400
----------------
----------------
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 3.02
----------------
----------------
- -------------------------------------------------------------------------------
AT DECEMBER 31, 1998, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------
Common Stock U.S.$ 97
Capital Surplus 121,059
Distributions in Excess of Net Investment
Income (5)
Accumulated Net Realized Loss (76,369)
Unrealized Depreciation on Investments and
Foreign Currency Translations (15,382)
- -------------------------------------------------------------------------------
TOTAL NET ASSETS U.S.$ 29,400
----------------
----------------
- -------------------------------------------------------------------------------
</TABLE>
(a)--Non-income producing
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Dividends. . . . . . . . . . . . . . . . . . . . . . . U.S.$ 1,053
Interest . . . . . . . . . . . . . . . . . . . . . . . 185
Less: Foreign Taxes Withheld . . . . . . . . . . . . . (264)
- --------------------------------------------------------------------------------
Total Income. . . . . . . . . . . . . . . . . . . 974
- --------------------------------------------------------------------------------
EXPENSES
U.S. Investment Advisory Fees. . . . . . . . . . . . . 325
Malaysian Investment Advisory Fees . . . . . . . . . . 98
Administrative Fees. . . . . . . . . . . . . . . . . . 77
Custodian Fees . . . . . . . . . . . . . . . . . . . . 83
Shareholder Reporting Expenses . . . . . . . . . . . . 87
Professional Fees. . . . . . . . . . . . . . . . . . . 105
Directors' Fees and Expenses . . . . . . . . . . . . . 20
Transfer Agent Fees. . . . . . . . . . . . . . . . . . 10
Other Expenses . . . . . . . . . . . . . . . . . . . . 53
- --------------------------------------------------------------------------------
Total Expenses. . . . . . . . . . . . . . . . . . 858
- --------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . 116
- --------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)
Investment Securities Sold. . . . . . . . . . . . . . (47,877)
Foreign Currency Transactions . . . . . . . . . . . . 185
- --------------------------------------------------------------------------------
Net Realized Loss. . . . . . . . . . . . . . . . (47,692)
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
Appreciation on Investments . . . . . . . . . . . . . 28,450
Depreciation on Foreign Currency Translations . . . . (205)
- --------------------------------------------------------------------------------
Change in Unrealized Appreciation/Depreciation . 28,245
- --------------------------------------------------------------------------------
Total Net Realized Loss and Change in Unrealized
Appreciation/Depreciation. . . . . . . . . . . . . . . . (19,447)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . U.S.$ (19,331)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) in Net Assets
<S> <C> <C>
Operations:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . U.S.$ 116 U.S.$ 187
Net Realized Loss. . . . . . . . . . . . . . . . . . . . . . . . . (47,692) (28,726)
Change in Unrealized Appreciation/Depreciation . . . . . . . . . . 28,245 (105,245)
- ------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations . . . . . . . (19,331) (133,784)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . (327) --
In Excess of Net Investment Income . . . . . . . . . . . . . . . . (5) --
In Excess of Net Realized Gain . . . . . . . . . . . . . . . . . . -- (4,930)
Total Distributions. . . . . . . . . . . . . . . . . . . . . . . . (333) (4,930)
- ------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Reinvestment of Distributions (5,049 and 0 shares, respectively) . 16 --
Total Decrease . . . . . . . . . . . . . . . . . . . . . . . . . . (19,648) (138,714)
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period. . . . . . . . . . . . . . . . . . . . . . . . 49,048 187,762
- ------------------------------------------------------------------------------------------------------------------------------
End of Period (including distribution in excess of net investment
income / accumulated net investment loss of U.S.$5 and U.S.$89,
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . U.S.$ 29,400 U.S.$ 49,048
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SELECTED PER SHARE DATA -------------------------------------------------------------------------
AND RATIOS: 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD. . . . . . . . . U.S.$ 5.04 U.S.$ 19.29 U.S.$ 18.58 U.S.$ 18.57 U.S.$ 27.32
- ---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss). . . . . . . . . . . . . 0.01 0.02 (0.04) (0.03) 0.01
Net Realized and Unrealized Gain (Loss) on
Investments . . . . . . . . . . . . . . . . . . . . . (2.00) (13.76) 3.57 0.88 (5.15)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations . . . . . . . . (1.99) (13.74) 3.53 0.85 (5.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income . . . . . . . . . . . . . . . (0.03) -- -- -- --
In Excess of Net Investment Income. . . . . . . . . (0.00)# -- -- -- (0.02)
Net Realized Gains. . . . . . . . . . . . . . . . . -- -- (2.82) (0.74) (3.30)
In Excess of Net Realized Gains . . . . . . . . . . -- (0.51) -- (0.10) (0.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . (0.03) (0.51) (2.82) (0.84) (3.61)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD. . . . . . . . . . . . U.S.$ 3.02 U.S.$ 5.04 U.S.$ 19.29 U.S.$ 18.58 U.S.$ 18.57
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END OF PERIOD . . . . . . . . U.S.$ 4.00 U.S.$ 6.56 U.S.$ 17.50 U.S.$ 17.00 U.S.$ 17.38
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN:
Market Value . . . . . . . . . . . . . . . . . . (38.66)% (61.09)% 18.92% 2.03% (25.94)%
Net Asset Value (1). . . . . . . . . . . . . . . (39.70)% (72.89)% 19.93% 4.33% (18.87)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS) . . . . . . . . U.S.$29,400 U.S.$49,048 U.S.$187,762 U.S.$180,674 U.S.$180,587
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets . . . . . . . 2.32% 1.35% 1.29% 1.44% 1.19%
Ratio of Net Investment Income (Loss) to Average
Net Assets. . . . . . . . . . . . . . . . . . . . . 0.31% 0.14% (0.18)% (0.14)% 0.05%
Portfolio Turnover Rate . . . . . . . . . . . . . . . 124% 107% 50% 33% 23%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# Amount is less than U.S.$0.01.
(1) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. This percentage is not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes to Financial Statements
December 31, 1998
- --------
The Malaysia Fund, Inc. (the "Fund") was incorporated on March 12, 1987 and
is registered as a diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended. The Fund's investment objective
is long-term capital appreciation through investment primarily in equity
securities.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION:In valuing the Fund's assets, all listed securities for
which market quotations are readily available are valued at the last sales
price on the valuation date, or if there was no sale on such date, at the
mean between the current bid and asked prices. Securities which are traded
over-the-counter are valued at the average of the mean of current bid and
asked prices obtained from reputable brokers. Short-term securities which
mature in 60 days or less are valued at amortized cost. All other
securities and assets for which market values are not readily available
(including investments which are subject to limitations as to their sale)
are valued at fair value as determined in good faith by the Board of
Directors (the "Board"), although the actual calculations may be done by
others.
At December 31, 1998, Malaysian securities and currency comprised 89.1% of
the Fund's net assets. These securities and currency have been fair valued
under procedures approved by the Board of Directors due to the imposition
of capital controls in Malaysia. The impact on the Fund of such fair
valuation procedures was significant. The fair values assigned may differ
from the actual U.S. dollar amounts realized upon disposition of the
investments and the differences could be material.
2. TAXES:It is the Fund's intention to continue to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly,
no provision for U.S. Federal income taxes is required in the financial
statements.
Prior to November 1, 1993, pursuant to a memorandum of understanding (the
"MOU") with the Malaysian Treasury, the Fund was exempt, contingent on
compliance with certain conditions, from payment of Malaysian income tax
for a period of eight years which commenced with the establishment of the
Fund. Effective November 1, 1993, the MOU was revised and as a result
approximately 95% of the Fund's income was exempt from payment of Malaysian
income tax of 25% through October 31, 1995. Effective November 1, 1995, all
of the Fund's income is subject to Malaysian income tax. Malaysian income
tax is included in foreign taxes withheld on the Statement of Operations.
3. REPURCHASE AGREEMENTS:In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying securities, with a market value at least equal to the amount of
the repurchase transaction, including principal and accrued interest. To
the extent that any repurchase transaction exceeds one business day, the
value of the collateral is marked-to-market on a daily basis to determine
the adequacy of the collateral. In the event of default on the obligation
to repurchase, the Fund has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the counter-party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal
proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currency are
generally translated into U.S. dollars at the mean of the bid and asked
prices of such currencies against U.S. dollars last quoted by a major bank
as follows:
- investments, other assets and liabilities at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the prevailing rate
of exchange on the dates of such transactions.
As described in Note A-1, at December 31, 1998, the Malaysian securities
and currency have been fair valued under procedures approved by the Board
due to the imposition of capital controls in Malaysia. The impact to the
Fund of such fair valuation procedures was significant.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not
isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of the securities held at period end.
Similarly, the Fund does not isolate the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market
prices of securities sold during
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the period. Accordingly, realized and unrealized foreign currency gains
(losses) are included in the reported net realized and unrealized gains
(losses) on investment transactions and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of foreign
currency exchange contracts, disposition of foreign currencies, currency
gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amount of
investment income and foreign withholding taxes recorded on the Fund's
books and the U.S. dollar equivalent amounts actually received or paid. Net
unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period end exchange rates are
reflected as a component of unrealized appreciation (depreciation) on
investments and foreign currency translations in the Statement of Net
Assets. The change in net unrealized currency gains (losses) for the period
is reflected in the Statements of Operations.
The Fund may use derivatives to achieve its investment objectives. The Fund may
engage in transactions in futures contracts on foreign currencies, stock
indices, as well as in options, swaps and structured notes. Consistent with the
Fund's investment objectives and policies, the Fund may use derivatives for
non-hedging as well as hedging purposes.
Following is a description of derivative instruments and their associated risks
that the Fund may utilize:
5. FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into foreign
currency exchange contracts generally to attempt to protect securities and
related receivables and payables against changes in future foreign exchange
rates and, in certain situations, to gain exposure to a foreign currency. A
foreign currency exchange contract is an agreement between two parties to
buy or sell currency at a set price on a future date. The market value of
the contract will fluctuate with changes in currency exchange rates. The
contract is marked-to-market daily and the change in market value is
recorded by the Fund as unrealized gain or loss. The Fund records realized
gains or losses when the contract is closed equal to the difference between
the value of the contract at the time it was opened and the value at the
time it was closed. Risk may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their
contracts and is generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to U.S.
dollars.
6. FORWARD COMMITMENTS AND WHEN-ISSUED/DELAYED DELIVERY SECURITIES:The Fund
may make forward commitments to purchase or sell securities. Payment and
delivery for securities which have been purchased or sold on a forward
commitment basis can take place a month or more (not to exceed 120 days)
after the date of the transaction. Additionally, the Fund may purchase
securities on a when-issued or delayed delivery basis. Securities purchased
on a when-issued or delayed delivery basis are purchased for delivery
beyond the normal settlement date at a stated price and yield, and no
income accrues to the Fund on such securities prior to delivery. When the
Fund enters into a purchase transaction on a when-issued or delayed
delivery basis, it either establishes a segregated account in which it
maintains liquid assets in an amount at least equal in value to the Fund's
commitments to purchase such securities or denotes such securities on the
custody statement for its regular custody account. Purchasing securities on
a forward commitment or when-issued or delayed-delivery basis may involve a
risk that the market price at the time of delivery may be lower than the
agreed upon purchase price, in which case there could be an unrealized loss
at the time of delivery.
7. SWAP AGREEMENTS: The Fund may enter into swap agreements to exchange the
return generated by one security, instrument or basket of instruments for
the return generated by another security, instrument or basket of
instruments. The following summarizes swaps which may be entered into by
the Fund:
INTEREST RATE SWAPS:Interest rate swaps involve the exchange of commitments
to pay and receive interest based on a notional principal amount. Net
periodic interest payments to be received or paid are accrued daily and are
recorded in the Statement of Operations as an adjustment to interest
income. Interest rate swaps are marked-to-market daily based upon
quotations from market makers and the change, if any, is recorded as
unrealized appreciation or depreciation in the Statement of Operations.
TOTAL RETURN SWAPS:Total return swaps involve commitments to pay interest
in exchange for a market-linked return based on a notional amount. To the
extent the total return of the security, instrument or basket of
instruments underlying the transaction exceeds or falls short of the
offsetting interest obligation, the Fund will receive a payment from or
make a payment to the counterparty, respectively. Total return swaps are
marked-to-market daily based upon quotations from market makers and the
change, if any, is recorded as unrealized gains or losses in the Statement
of Operations. Periodic payments received or made at the end of each
measurement period, but prior to termination, are recorded as realized
gains or losses in the Statement of Operations.
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Realized gains or losses on maturity or termination of interest rate and
total return swaps are presented in the Statement of Operations. Because
there is no organized market for these swap agreements, the value reported
in the Statement of Net Assets may differ from that which would be realized
in the event the Fund terminated its position in the agreement. Risks may
arise upon entering into these agreements from the potential inability of
the counterparties to meet the terms of the agreements and are generally
limited to the amount of net interest payments to be received and/or
favorable movements in the value of the underlying security, instrument or
basket of instruments, if any, at the date of default.
8. STRUCTURED SECURITIES:The Fund may invest in interests in entities
organized and operated solely for the purpose of restructuring the
investment characteristics of sovereign debt obligations. This type of
restructuring involves the deposit with or purchase by an entity of
specified instruments and the issuance by that entity of one or more
classes of securities ("Structured Securities") backed by, or representing
interests in, the underlying instruments. Structured Securities generally
will expose the Fund to credit risks of the underlying instruments as well
as of the issuer of the Structured Security. Structured Securities are
typically sold in private placement transactions with no active trading
market. Investments in Structured Securities may be more volatile than
their underlying instruments, however, any loss is limited to the amount of
the original investment.
9. OVER-THE-COUNTER TRADING:Derivative instruments that may be purchased or
sold by the Fund are expected to regularly consist of instruments not
traded on an exchange. The risk of nonperformance by the obligor on such an
instrument may be greater, and the ease with which the Fund can dispose of
or enter into closing transactions with respect to such an instrument may
be less, than in the case of an exchange-traded instrument. In addition,
significant disparities may exist between bid and asked prices for
derivative instruments that are not traded on an exchange. Derivative
instruments not traded on exchanges are also not subject to the same type
of government regulation as exchange traded instruments, and many of the
protections afforded to participants in a regulated environment may not be
available in connection with such transactions.
10. OTHER:Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Interest
income is recognized on the accrual basis. Dividend income is recorded on
the ex-dividend date (except certain dividends which may be recorded as
soon as the Fund is informed of such dividend) net of applicable
withholding taxes where recovery of such taxes is not reasonably assured.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing book and tax treatments for foreign currency
transactions and the timing of the recognition of gains and losses on
securities.
Permanent book and tax basis differences relating to shareholder
distributions may result in reclassifications to undistributed net
investment income (loss), accumulated net realized gain (loss) and capital
surplus.
Adjustments for permanent book-tax differences, if any, are not reflected
in ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
B. Morgan Stanley Dean Witter Investment Management Inc. (the "U.S. Adviser")
provides investment advisory services to the Fund under the terms of an
Investment Advisory Agreement (the "Agreement"). Under the Agreement, the U.S.
Adviser is paid a fee computed weekly and payable monthly at an annual rate of
0.90% of the Fund's first $50 million of average weekly net assets, 0.70% of the
Fund's next $50 million of average weekly net assets and 0.50% of the Fund's
average weekly net assets in excess of $100 million.
C. Arab-Malaysian Consultant Sdn Bhd (the "Malaysian Adviser") provides
investment advice, research and assistance on behalf of the Fund to Morgan
Stanley Asset Management Inc. under terms of a contract. Under the contract, the
Malaysian Adviser is paid a fee computed weekly and payable monthly at an annual
rate of 0.25% of the Fund's first $50 million of average weekly net assets,
0.15% of the Fund's next $50 million of average weekly net assets and 0.10% of
the Fund's average weekly net assets in excess of $100 million.
D. The Chase Manhattan Bank, through its corporate affiliate Chase Global
Funds Services Company (the "Administrator"), provides administrative services
to the Fund under an Administration Agreement. Under the Administration
Agreement, the Administrator is paid a fee computed weekly and payable monthly
at an annual rate of 0.20% of the Fund's first $50 million of average weekly
net assets, 0.15% of the Fund's next $50 million of average weekly net assets
and 0.10% of the Fund's average weekly net assets in excess of $100 million. In
addition, the Fund is charged certain out of pocket expenses by the
Administrator.
E. The Chase Manhattan Bank and its affiliates serve as custodian for the
Fund. The Fund's assets held outside the
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United States have been held by Morgan Stanley Trust Company ("MSTC"), which was
an affiliate of the U.S. Adviser prior to October 1, 1998. On October 1, 1998,
MSTC was acquired by the Chase Manhattan Bank. Custody fees are payable
monthly based on assets held in custody, investment purchase and sales activity
and account maintenance fees, plus reimbursement for certain out-of-pocket
expenses. Through September 30, 1998, the Fund paid MSTC fees of $72,000.
F. During the year ended December 31, 1998, the Fund made purchases and sales
totaling $43,364,000 and $41,769,000, respectively, of investment securities
other than long-term U.S. Government securities and short-term investments.
There were no purchases or sales of long-term U.S. Government securities. At
December 31, 1998, the U.S. Federal income tax cost basis of securities was
$45,779,000 and, accordingly, net unrealized depreciation for U.S. Federal
income tax purposes was $17,056,000, of which $105,000 related to appreciated
securities and $17,161,000 related to depreciated securities. At December 31,
1998, the Fund had a capital loss carryforward for U.S. Federal income tax
purposes of approximately $74,475,000 available to offset future capital gains
of which $8,792,000 will expire on December 31, 2005 and $65,683,000 will expire
on December 31, 2006. For the year ended December 31, 1998, the Fund elects to
defer to January 1, 1999 for U.S. Federal Income Tax purposes, post October
currency losses of $25,000. To the extent that capital loss carryforwards are
used to offset any future capital gains realized during the carryforward period
as provided by U.S. Federal income tax regulations, no capital gains tax
liability will be incurred by the Fund for gains realized and not distributed.
To the extent that capital gains are offset, such gains will not be distributed
to the shareholders.
G. For the year ended December 31, 1998, the Fund incurred brokerage
commissions of $1,000 with Morgan Stanley & Co. Incorporated, an affiliate, of
the U.S. Adviser.
H. A significant portion of the Fund's net assets consist of Malaysian equity
securities and foreign currency. Changes in currency exchange rates will affect
the value of and investment income from such investments. Foreign securities may
be subject to greater price volatility, lower liquidity and less diversity than
equity securities of companies based in the United States. In addition, foreign
securities may be subject to substantial governmental involvement in the economy
and greater social, economic and political uncertainty.
I. Each Director of the Fund who is not an officer of the Fund or an
affiliated person as defined under the Investment Company Act of 1940, as
amended, may elect to participate in the Directors' Deferred Compensation Plan
(the "Plan"). Under the Plan, such Directors may elect to defer payment of a
percentage of their total fees earned as a Director of the Fund. These deferred
portions are treated, based on an election by the Director, as if they were
either invested in the Fund's shares or invested in U.S. Treasury Bills, as
defined under the Plan. The deferred fees payable, under the Plan, at December
31, 1998, totaled $11,000 and are included in Payable for Directors' Fees and
Expenses on the Statement of Net Assets.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended December 31, 1998, the Fund expects to pass through to
shareholders foreign tax credits of approximately $264,000. In addition, for
the year ended December 31, 1998, gross income derived from sources within a
foreign country amounted to $1,053,000.
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REPORT OF INDEPENDENT ACCOUNTANTS
- ---------
To the Shareholders and Board of Directors of
The Malaysia Fund, Inc.
In our opinion, the accompanying statement of net assets 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 Malaysia Fund, Inc. (the "Fund") at December 31, 1998, 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 generally accepted
accounting principles. 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 generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
As discussed in Note A-1 to the financial statements, at December 31, 1998,
Malaysian securities and currency comprised 89.1% of the Fund's net assets.
These securities and currency have been fair valued under procedures approved by
the Board of Directors. The impact on the Fund of such fair valuation procedures
was significant. The fair values assigned may differ from the actual U.S. dollar
amounts realized upon disposition of the investments and the differences could
be material.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 8, 1999
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<PAGE>
YEAR 2000 DISCLOSURE (UNAUDITED):
The investment advisory services provided to the Fund by the Advisers depend on
the smooth operation of their computer systems. Many computer and software
systems in use today cannot recognize the year 2000, but revert to 1900 or some
other date, due to the manner in which dates were encoded and calculated. That
failure could have a negative impact on the handling of securities trades,
pricing and account services. The Advisers have been actively working on
necessary changes to their own computer systems to deal with the year 2000
problem and expect that their systems will be adapted before that date. There
can be no assurance, however, that they will be successful. In addition, other
unaffiliated service providers may be faced with similar problems. The Advisers
are monitoring their remedial efforts, but, there can be no assurance that they
and the services they provide will not be adversely affected.
In addition, it is possible that the markets for securities in which the Fund
invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.
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DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders may elect, by instructing Boston Equiserve (the "Plan Agent") in
writing, to have all distributions automatically reinvested in Fund shares.
Participants in the Plan have the option of making additional voluntary cash
payments to the Plan Agent, semiannually, in any amount from $100 to $3,000, for
investment in Fund shares. Shareholders who do not participate in the Plan will
receive distributions in cash.
Dividend and capital gain distributions will be reinvested on the
reinvestment date in full and fractional shares. If the market price per share
equals or exceeds net asset value per share on the reinvestment date, the Fund
will issue shares to participants at net asset value. If net asset value is less
than 95% of the market price on the reinvestment date, shares will be issued at
95% of the market price. If net asset value exceeds the market price on the
reinvestment date, participants will receive shares valued at market price. The
Fund may purchase shares of its Common Stock in the open market in connection
with dividend reinvestment requirements at the discretion of the Board of
Directors. Should the Fund declare a dividend or capital gain distribution
payable only in cash, non-participants in the Plan will receive cash and the
Plan Agent will purchase Fund shares for participants in the open market as
agent for the participants.
The Plan Agent's fees for the reinvestment of dividends and distributions
will be paid by the Fund. However, each participant's account will be charged a
pro rata share of brokerage commissions incurred on any open market purchases
effected on such participant's behalf. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. Although
shareholders in the Plan may receive no cash distributions, participation in the
Plan will not relieve participants of any income tax which may be payable on
such dividends or distributions.
In the case of shareholders, such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Shareholders who do not wish to have distributions automatically reinvested
should notify the Plan Agent in writing. There is no penalty for
non-participation or withdrawal from the Plan, and shareholders who have
previously withdrawn from the Plan may rejoin at any time. Requests for
additional information or any correspondence concerning the Plan should be
directed to the Plan Agent at:
The Malaysia Fund, Inc.
Boston Equiserve
Dividend Reinvestment and Cash Purchase Plan
P.O. Box 1681
Boston, MA 02105
1-800-730-6001
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