<PAGE>
- ------------------------------------------------
OFFICERS AND DIRECTORS
Barton M. Biggs James W. Grisham
CHAIRMAN OF THE BOARD VICE PRESIDENT
Frederick B. Whittemore Michael F. Klein
VICE-CHAIRMAN OF THE VICE PRESIDENT
BOARD Harold J. Schaaff, Jr.
Warren J. Olsen VICE PRESIDENT
PRESIDENT AND DIRECTOR Joseph P. Stadler
John D. Barrett II VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
Gerard E. Jones SECRETARY
DIRECTOR Karl O. Hartmann
Andrew McNally, IV ASSISTANT SECRETARY
DIRECTOR James R. Rooney
Samuel T. Reeves TREASURER
DIRECTOR Joanna M. Haigney
Fergus Reid ASSISTANT TREASURER
DIRECTOR
Frederick O. Robertshaw
DIRECTOR
- ------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- ------------------------------------------------
DISTRIBUTOR
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
- ------------------------------------------------
CUSTODIANS
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11210
- ------------------------------------------------
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103
- ------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- ------------------------------------------------
For current performance, current net asset value, or for assistance with your
account, please contact the Fund at (800) 548-7786. This report is authorized
for distribution only when preceded or accompanied by prospectuses of the Morgan
Stanley Institutional Fund, Inc.
[LOGO] MORGAN STANLEY
INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, MA 02208-2798
[LOGO] MORGAN STANLEY
INSTITUTIONAL FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
FIRST QUARTER REPORT
MARCH 31, 1996
<PAGE>
LETTER TO SHAREHOLDERS
- -------
The investment objective of the International Equity Portfolio is long-term
capital appreciation through investment primarily in common stocks of non-U.S.
issuers. Common stocks for this purpose include common stocks and equivalents,
such as securities convertible into common stocks, and securities having common
stock characteristics, such as rights and warrants to purchase common stocks.
For the three month period ended March 31, 1996, the Portfolio had a total
return of 5.48% for the Class A shares and 4.79% for the Class B shares, as
compared to a total return of 2.89% for the Morgan Stanley Capital International
(MSCI) EAFE Index. The average annual total return for the twelve month and
five-year periods ended March 31, 1996 and for the period from inception on
August 4, 1989 through March 31, 1996 were 19.21%, 13.51% and 11.28%,
respectively, for the Class A shares, as compared to 12.33%, 8.42% and 3.85%,
respectively, for the Index.
PERFORMANCE COMPARED TO THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE
INDEX(1)
- ----------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS(2)
------------------------------------------------
AVERAGE AVERAGE
ANNUAL ANNUAL
ONE FIVE SINCE
YTD YEAR YEARS INCEPTION
----- --------- ----------- -----------
<S> <C> <C> <C> <C>
PORTFOLIO--CLASS A............ 5.48% 19.21% 13.51% 11.28%
PORTFOLIO--CLASS B(3)......... 4.79 N/A N/A N/A
INDEX......................... 2.89 12.33 8.42 3.85
</TABLE>
1. The MSCI EAFE Index is an unmanaged index of common stocks and includes
Europe, Australia and the Far East (assumes dividends reinvested net of
withholding taxes).
2. Total returns for the Portfolio reflect expenses waived and reimbursed, if
applicable, by the Adviser. Without such waiver and reimbursement, total
returns would be lower.
3. The Portfolio began offering Class B shares on January 2, 1996.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- ------------------------------
THE COUNTRY SPECIFIC PERFORMANCE RESULTS PROVIDED ARE FOR INFORMATIONAL PURPOSES
ONLY AND SHOULD NOT BE CONSTRUED AS A GUARANTEE OF THE PORTFOLIO'S FUTURE
PERFORMANCE. PAST PERFORMANCE SHOWN IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PLEASE SEE THE PROSPECTUS FOR A DESCRIPTION OF CERTAIN RISK CONSIDERATIONS
ASSOCIATED WITH INTERNATIONAL INVESTING.
The outperformance of the Portfolio was driven by the underweight position in
Japan and positive overall stock selection with particularly good showings in
Japan, Germany, Switzerland and Spain. To some extent countering this were poor
relative showings in the Netherlands and France where large cap growth stocks
performed outstandingly well. It was gratifying that the Portfolio's increased
currency hedging contributed positively after the disappointments of last year.
We do not believe we will see a full blooded recovery in the world economy. In
this environment we believe the strong recovery in non-U.S. cyclical stocks in
the first quarter has run its course and our principal focus has been on value
banking and insurance sectors together with slow growth but cash generative
franchises in the food, drink and household product sectors.
On a geographic basis, the strong performance of the German stock market in
recent quarters has removed the last glaring undervaluation in world equity
markets. Switzerland, for so long a value investors' hunting ground, is now
downright expensive outside the area of recovery stocks, and the Netherlands is
fairly to fully valued. In this environment it is not easy for value investors
to add significant value but on an industry basis one can at least see
opportunity in the non-food retail sector as competition and weak pricing has
led to investor disillusion. However, the high relative ratings of growth stocks
implies that value stocks would be resilient in a market correction.
In the months ahead we expect bond markets to present a reasonably constructive
backdrop for equity valuations. However, the most important factor driving the
Portfolio's relative returns will be the conduct of Japanese monetary policy.
Sustained easing by the Bank of Japan on the current scale will drive the
Japanese equity market up to the detriment of value investor's relative returns.
GERMANY
The Morgan Stanley Capital International Germany Index increased by 4.83% in
U.S. dollar terms and by 8.13% in Deutschemark terms during the first quarter of
the year. As the numbers above illustrate, it was a period
2
<PAGE>
of relative weakness for the German currency against the U.S. dollar. This has
helped the equity market, particularly the export stocks. The top performing
sector in the first three months was chemicals, with all three large chemical
groups Bayer, BASF and Hoechst showing good returns. The sectors that showed
more disappointing returns included retailers and brewers. The most recent GDP
data continues to be as weak as expected. The West German economy hit a
difficult patch in the last quarter of 1995. There were two main reasons for
this, the particularly cold winter hurt many businesses including construction,
while stocks reduced, especially when compared to the final quarter of 1994.
Inflation rates remain low but there is some chance these could go higher
following the high wage increases. Unemployment remains a key negative factor
and this should lead to lower wage demands in the future.
FRANCE
During the first quarter of 1996 the Morgan Stanley Capital International France
Index increased by 8.42% in U.S. dollar terms and by 11.62% in French franc
terms. Following a poor year in 1995 this has been a strong start for the French
market, the best in Europe. Unlike most other European markets, retail stocks
showed good returns as did healthcare and beverages. Financial stocks were poor
performers, however, with largely disappointing returns from both banks and
insurers. The improved performance in the market largely reflects a more
optimistic economy. Consumer confidence and consumption of manufactured goods
have both picked up in the first quarter from the low levels following the
public sector strike and political turmoil in December last year. The pick up in
high street spending can be put down to different factors, the most important of
which has been a series of government introduced tax breaks to encourage the
consumer. Following further recent cuts, short term nominal interest rates are
near 30-year lows while inflation continues not to be a problem. The French
market continues to confer selective opportunities to the value investor.
SWITZERLAND
The Morgan Stanley Capital International Switzerland Index rose by 6.75% in U.S.
dollar terms and by 10.43% in local currency terms in the first quarter of the
year. This strong performance carries on the trend of last year when Switzerland
was one of the world's top performing equity markets. The pharmaceutical stocks
have maintained their strong run into 1996, being the top performing sector in
the first three months. The total market cap of this sector now represents about
50% of the Swiss market. The merger of Ciba-Geigy and Sandoz has been the
catalyst for this industry's continued strength. Following a robust 1995 the
financials have been more disappointing in 1996. Lack of consumer spending has
also meant that stocks in the retail sector have continued to underperform.
Consumer sentiment fell further in the opening period of 1996 as numbers
revealed a significant increase in those out of work. This year we have seen
inflation drop below 17% and, although we have not seen a cut in interest rates
since mid-December, fears of a rise in rates now appears unlikely.
NETHERLANDS
In the first quarter of 1996 the Morgan Stanley Capital International
Netherlands Index increased by 5.83% in U.S. dollar terms and by 9.1% in Dutch
guilder terms. Following a period of sustained growth relative to its neighbors,
the most recent data shows that growth rates in the Netherlands have slowed
considerably in recent months and came to a virtual standstill at the end of
1995. It appears, however, that it was largely temporary factors that caused
this recent weakness. As in Germany, the cold winter depressed construction work
while growth from inventories has come to an end. The weakness of the economies
of its three largest trading partners Germany, France and Belgium, must also be
a concern. Despite these factors the Dutch economy remains one of the most
healthy in Europe, as is the labor market, despite recent bad news including the
declared liquidation of Fokker. The labor force is growing, helped by restrained
wage growth and flexible labor practices. The equity market remains attractive
to the value investor with many cheap, well run companies. Investments in the
financial sector, ING and ABN-Amro, have shown particularily strong returns.
SPAIN
During the first quarter of 1996 the Morgan Stanley Capital International Spain
Index rose by 6.02% in U.S. dollar terms and by 8.47% in local currency terms.
Following a strong start to the year the equity market
3
<PAGE>
performed poorly in March as a result of political uncertainty after the
national elections. Although the Partido Popular (PP) emerged as the largest
grouping in parliament they failed to win a clear majority, falling 20 seats
short. This result has ended 14 years of socialist rule and the PP are now
dependent on regional party support for a majority. This lack of political
clarity resulted in the equity market falling 5% although some of this ground
was recovered towards the end of the month. In line with the rest of Europe,
Spanish growth eased back during the second half of 1995, as the consumer
recovery faltered. The positive news for the economy is that interest rates have
declined and inflation has fallen below 4% for the first time in post-Franco
history. Unemployment remains a real concern, however, with recent improvements
having halted leaving the total unemployed at over 22%. Recent sector
performance largely reflects this environment, with poor returns from retail
stocks, hurt by low consumer spending, and insurance shares following weak bond
markets. Stronger performance has been seen from Telefonica and Repsol, both of
which should benefit from the new political structure.
ITALY
The Morgan Stanley Capital International Italy Index fell by 0.55% in U.S.
dollar terms and by 1.6% in local currency terms in the first quarter. This
makes the Italian market the worst performing in Europe during this period. The
economy, however, has been one of the strongest. Following a 3.2% rise in GDP in
1995, growth has continued into 1996 driven by strong investment and export
demand. By contrast, expenditure by both the household and public sectors has
been subdued. Much of the nervousness in the market can be put down to continued
political turmoil. On February 16, President Scalfero called a general election
after Prime Minister designate Antonio Maccanico failed to achieve a consensus
on constitutional reform. The election will be held on April 21 when a fragile
coalition representing a broad range of political views is expected to be
formed. The issues of reducing the budget deficit and the continuation of the
privatization program will remain firmly on the agenda. The banks have been a
particularly poor performing sector recently, with many under pressure and Banco
Napoli being suspended in the market following liquidation by the Bank of Italy.
Following this weakness we are finding some good investment opportunities in
Italy, particularly in the telecommunications sector.
U.K.
In the first quarter of 1996, the Morgan Stanley Capital International U.K.
Index rose by 0.11% in U.S. dollar terms and by 1.82% in local currency.
The consensus estimate on GDP growth in the first quarter of 1996 is around 2%
year-on-year, slightly higher than expectations at the end of 1995. Recent
sentiment has been dominated by the "mad cow" crisis; the slaughter of several
thousand cattle is likely to knock approximately 0.2% off GDP during this
calendar year.
Signs that consumer confidence is gradually returning are apparent in February
data; retail sales volume rose 0.6% month-on-month in February following a
January decline, and retail prices rose 0.6% month-on-month. The cut in the base
rate from 6.5% at the end of December 1995 to 6% by the end of the first quarter
of 1996 should provide support for the slowly recovering housing market.
Much of the market performance this quarter arose from takeover rumors in the
media, leisure and engineering sectors. The heady combination of low interest
rates, low inflation and bid speculation leaves the value investor with few new
ideas. Selective stock picking is becoming even more important.
JAPAN
During the first quarter the Morgan Stanley Capital International Japan Index
appreciated 0.35% in U.S. dollars and 3.90% in yen terms.
Though this was a weak return relative to other major stock markets, it could be
termed resilient given that the market had to absorb the financial year end
selling from institutions shoring up March 1996 results by taking profits on
long-term equity positions. Towards quarter end the market took heart from a
strong final quarter performance from the economy where for the first time
private capital expenditure showed signs of meaningful recovery, itself a
significant coincident indicator of a recovery in corporate confidence.
With exceptionally low interest rates driving a housing recovery and government
spending still kicking into the economy, growth will continue to surprise on the
upside
4
<PAGE>
with net exports the only negative contributor to GNP in the quarters ahead.
With the weak yen buoying up export pricing, 1996 will unquestionably be a year
of strong profits growth. However, as a value investor we would argue that alot
is discounted in a market that has risen 50% since July while Japan's
competitiveness in key industries, such as electronics, is under structural
threat from emerging market economies. It is important to grasp that Japan's
prowess in manufacturing technology has not developed into areas with high
intellectual content such as software and multimedia. As such it is vulnerable
to pricing pressures from low labor cost economies. Coupled with this, the
vicious cycle in the semi-conductor memory market and the outlook for one of
Japan's key industries appears somewhat cloudy.
Nonetheless, with cash rates yielding less than 0.5% as the Bank of Japan
continues to reliquify the banking system, the stock market must appear
attractive to Japan's individual investor. Therefore, any general return of
confidence in the economy could lead to a sharp upward movement in the stock
market. However, value and quality do not abound in this market and Japan's
derisorily low interest rates are unsustainable in the longer term. More
importantly, the political will must be found to increase Value Added Tax in
order to bring back some order to government finances. These factors do not
augur well for the long-term re-rating of Japanese equities.
However, as we have been saying for several quarters, there is a short-term
window of opportunity in this market for the momentum investor but for the value
investor there is little opportunity in the sectors which perform in these types
of markets.
HONG KONG
The Hong Kong stock market closed the quarter well off its best but still proved
a strong performer, with the Morgan Stanley Capital International Hong Kong
Index appreciating 11.73% in U.S. dollar terms and 11.75% in Hong Kong dollars.
The strength of the market owed alot to the positive sentiment for emerging
markets so often seen at the beginning of the investment year. However, it was
an impressive performance given that during the quarter the market had to
confront extreme political jitters on the Taiwan front and the likelihood of
flat to rising local interest rates in the current year as the colony's interest
rate policy is dictated by the United States.
At current levels we believe the Hong Kong stock market discounts a significant
fall in local interest rates and a major rally in residential property prices.
Given the clear recovery in the U.S. economy and the dictation of Hong Kong
interest rate policy from that source, we believe the market will be sorely
disappointing in the quarters ahead with respect to both interest rates and
property prices. The downside in the market significantly outweighs its upside.
AUSTRALIA
The Australian stock market meandered trendlessly during the first quarter as
the Morgan Stanley Capital International Australia Index appreciated 0.6% in
Australian dollars and 5.79% in U.S. dollar terms.
The appreciation of the Australian dollar was the most significant development
of the quarter and this reflected overseas confidence in the new Liberal
government which made encouraging comments on reducing the government deficit.
Other than extreme strength in the small, specialist areas of gold and oil, the
stock market was subdued by poor pricing behavior from the principal metals, and
disappointing earnings from the industrial sector. The banking sector was also
corrected moderately as local bond yields ran up in line with U.S. bonds.
We believe this market to be reasonably valued at current levels and are
selectively adding at current levels.
Dominic Caldecott
PORTFOLIO MANAGER
April 1996
5
<PAGE>
INVESTMENTS (UNAUDITED)
- ----------
MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
COMMON STOCKS (86.6%)
AUSTRALIA (3.9%)
3,470,000 Brambles Industries Ltd. $ 45,784
2,595,000 Coles Myer Ltd. 8,844
5,300,000 CSR Ltd. 17,648
----------
72,276
----------
BELGIUM (0.9%)
52,500 Arbed S.A. 5,884
254,000 G.I.B. Holdings Ltd. 11,353
2,156 G.I.B. Holdings Ltd. VVPR (New) 95
----------
17,332
----------
DENMARK (1.5%)
88,000 Novo-Nordisk A/S, Class B 11,254
350,000 Unidanmark A/S, Class A
(Registered) 15,841
----------
27,095
----------
FINLAND (1.0%)
350,000 Huhtamaki Oy, Series 1 11,177
168,467 Merita Ltd., Class A 389
215,000 Nokia AB Oy, Series A 7,423
----------
18,989
----------
FRANCE (8.4%)
142,300 Assurances Generales de France 3,957
250,000 Banque Nationale de Paris 9,783
14,100 Bongrain S.A. 7,506
140,000 Cie de Saint Gobain 18,187
153,050 Credit Lyonnaise CDI 6,445
350,000 Elf Aquitaine 23,741
73,500 Groupe Danone 11,271
138,050 Lafarge Coppee S.A. 9,142
150,000 Peugeot S.A. 22,882
355,700 Thomson CSF 8,938
255,000 Total S.A., Class B 17,221
346,980 Valeo S.A. 18,436
----------
157,509
----------
GERMANY (8.8%)
70,000 BASF AG 18,867
105,000 Bayer AG 35,589
50,000 Commerzbank AG 11,546
28,750 Hoechst AG 10,202
90,500 Karstadt AG 34,015
60,125 Mannesmann AG 21,967
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
24,900 Varta AG $ 4,519
452,100 Veba AG 21,977
15,120 Volkswagen AG 5,284
----------
163,966
----------
HONG KONG (2.7%)
90,600 China Light & Power Co., Ltd. 410
7,000,000 Hong Kong Land Holdings Ltd. 16,800
10,400,000 Jardine Strategic Holdings, Inc. 32,864
----------
50,074
----------
ITALY (2.1%)
6,337,000 Olivetti Di Risp 3,253
2,560,500 Olivetti Di Risp (NCS) 1,012
863,317 SME Meridonale 945
9,000,000 Stet Di Risp (NCS) 17,908
4,720,000 Telecom Italia S.p.A. 7,480
6,000,000 Telecom Italia S.p.A. Di Risp
(NCS) 8,476
----------
39,074
----------
JAPAN (22.4%)
1,050,000 Aisin Seiki Co., Ltd. 15,020
1,000,000 Canon, Inc. 19,073
123,000 Chudenko Corp. 4,163
1,500,000 Daibiru Corp. 19,634
1,465,000 Daicel Chemical Industry Ltd. 8,862
660,000 Daikin Industries Ltd. 6,788
1,037,000 Dainippon Ink & Chemical, Inc. 5,148
4,000 East Japan Railway Co. 20,569
2,150,000 Fuji Photo Film Ltd. 61,512
2,700,000 Hitachi Ltd. 26,254
2,100,000 Kao Corp. 26,114
650,000 Kirin Brewery Co., Ltd. 7,840
1,625,000 Matsushita Electric Industries
Ltd. 26,436
81,000 Murata Manufacturing Co., Ltd. 2,787
3,427,200 Nichido Fire & Marine Insurance
Co., Ltd. 25,795
2,700 Nippon Telegraph & Telephone Corp. 19,741
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
JAPAN (CONTINUED)
221,000 Ryosan Co. $ 5,434
350,000 Sony Corp. 20,911
856,000 Stanley Electric Co. 5,674
2,100,000 Sumitomo Marine & Fire Insurance
Co. 18,024
3,000,000 Sumitomo Rubber Industries 25,188
298,000 TDK Corp. 15,352
918,000 Toyo Seikan Kaisha Ltd. 32,358
----------
418,677
----------
NETHERLANDS (9.3%)
792,000 ABN Amro Holdings N.V. 39,401
230,000 Akzo Nobel N.V. 25,571
81,059 Hollandsche Beton Groep N.V. 13,589
575,744 Internationale Nederlanden Groep
N.V. 41,814
258,500 Koninklijke Bijenkorf Beheer N.V. 16,630
153,050 Nedlloyd Groep N.V. 3,196
773,000 Philips Electronics N.V. 28,117
39,415 Unilever N.V. (Certificate) 5,374
----------
173,692
----------
NEW ZEALAND (0.4%)
2,144,627 Fisher & Paykel Industries Ltd. 6,865
392,500 Smith City Group Ltd. --
----------
6,865
----------
NORWAY (1.4%)
3,500,000 Den Norske Bank A/S 10,858
573,800 Hafslund Nycomed, Class B 15,654
----------
26,512
----------
SINGAPORE (0.2%)
3,265,000 Neptune Orient Lines Ltd.
(Foreign) 3,711
----------
SPAIN (4.4%)
137,500 Grupo Duro Felguera S.A. 740
2,745,000 Iberdrola S.A. 25,317
490,000 Repsol S.A. 18,472
2,403,400 Telefonica Nacional de Espana S.A. 38,138
----------
82,667
----------
SWEDEN (4.2%)
196,100 Electrolux AB, Series B 9,573
350,000 Nordbanken AB 5,782
443,700 Skandia Forsakrings AB 9,785
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
1,683,100 Skandinaviska Enskilda Banken,
Class A $ 12,456
899,100 S.K.F. AB, Class B 19,827
283,500 Sparbenken Sverige AB, Class A 3,179
1,014,000 Svenska Cellulosa AB, Class B 18,420
----------
79,022
----------
SWITZERLAND (6.6%)
2,605 Ascom Holdings AG (Bearer) 2,910
35,000 Ciba-Geigy AG (Registered) 43,774
20,000 Forbo Holding AG (Registered) 8,164
36,000 Nestle S.A. (Registered) 40,580
6,125 Schindler Holding AG
(Participating Certificates) 7,331
15,550 Sulzer AG (Participating
Certificates) 9,796
16,000 Sulzer AG (Registered) 10,617
----------
123,172
----------
UNITED KINGDOM (8.4%)
1,260,000 Associated British Foods plc 7,731
1,360,104 Automated Security Holdings plc 623
4,905,000 Christian Salvesen plc 19,164
251,100 English China Clays plc 1,138
2,578,146 Grand Metropolitan plc 16,605
4,841,985 John Mowlem & Co. plc 6,355
2,400,000 Kwik Save Group plc 17,216
843,000 McAlpine (Alfred) plc 2,136
456,318 Pilkington plc 1,456
1,969,250 Reckitt & Colman plc 20,016
2,016,300 Rolls-Royce plc 6,632
1,928,000 Royal Insurance Holdings plc 10,417
1,957,100 Unilever plc 36,441
3,816,000 WPP Group plc 11,648
----------
157,578
----------
TOTAL COMMON STOCKS (Cost $1,312,456) 1,618,211
----------
PREFERRED STOCKS (3.3%)
GERMANY (3.3%)
777,000 RWE AG 23,521
29,525 Spar Handels AG 5,798
125,000 Volkswagen AG 32,083
----------
TOTAL PREFERRED STOCKS (Cost $46,498) 61,402
----------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
CONVERTIBLE PREFERRED SECURITIES (0.1%)
HONG KONG (0.1%)
1,863,000 Jardine Strategic Holdings, Inc.
IDR, 7.50%, 5/07/97 $ 2,082
----------
NETHERLANDS (0.0%)
1,506 ABN Amro Holdings N.V. 6
2,196 International Nederlanden Groep
N.V. 11
----------
17
----------
TOTAL CONVERTIBLE PREFERRED SECURITIES (Cost $1,923) 2,099
----------
<CAPTION>
NO. OF
WARRANTS
- ---------------
<C> <S> <C>
WARRANTS (0.0%)
SWITZERLAND (0.0%)
5,235 Schindler Holding AG, expiring
12/16/96 (Cost $0) 20
----------
TOTAL FOREIGN SECURITIES (90.0%) (Cost $1,360,877) 1,681,732
----------
<CAPTION>
FACE
AMOUNT
(000)
- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENT (3.6%)
REPURCHASE AGREEMENT (3.6%)
$ 66,958 The Chase Manhattan Bank, N.A.,
5.15%, dated 3/29/96, due
4/01/96, to be repurchased at
$66,987, collateralized by
$67,290 United States Treasury
Notes, 6.875%, due 2/28/97,
valued at $68,299 (Cost $66,958) 66,958
----------
<CAPTION>
AMOUNT VALUE
(000) (000)
- --------------- ----------
<C> <S> <C>
FOREIGN CURRENCY (5.2%)
GBP 4,781 British Pound $ 7,297
DEM 67,803 Deutsche Mark 45,917
FRF 1 French Franc --
ITL 1,439,562 Italian Lira 918
JPY 4,272,727 Japanese Yen 39,949
ESP 277,207 Spanish Peseta 2,233
----------
TOTAL FOREIGN CURRENCY (Cost $96,717) 96,314
----------
TOTAL INVESTMENTS (98.8%) (Cost $1,524,552) 1,845,004
----------
OTHER ASSETS AND LIABILITIES (1.2%)
Other Assets 455,748
Liabilities (432,835)
----------
22,913
----------
NET ASSETS (100%) $1,867,917
----------
----------
CLASS A SHARES:
Net Assets $1,863,575
Shares Issued and Outstanding ($0.001 par value)
(Authorized 500,000,000 shares) 116,649
Net Asset Value, Offering and Redemption Price
Per Share $15.98
----------
----------
CLASS B SHARES:
Net Assets $4,342
Shares Issued and Outstanding ($0.001 par value)
(Authorized 500,000,000 shares) 272
Net Asset Value, Offering and Redemption Price
Per Share $15.97
----------
----------
</TABLE>
- ----------------------------------
CDI -- Certificate of Investment
IDR -- International Depositary Receipt
NCS -- Non Convertible Shares
8
