<PAGE>
- --------------------------------------------------
<TABLE>
<S> <C>
DIRECTORS OFFICERS
Barton M. Biggs James W. Grisham
CHAIRMAN OF THE BOARD VICE PRESIDENT
Chairman and Director, Morgan Stanley Michael F. Klein
Asset Management Inc. and Morgan VICE PRESIDENT
Stanley Asset Management Limited; Harold J. Schaaff,
Managing Director, Morgan Stanley & Co. Jr.
Incorporated; Director, Morgan Stanley VICE PRESIDENT
Group Inc. Joseph P. Stadler
Warren J. Olsen VICE PRESIDENT
DIRECTOR AND PRESIDENT Valerie Y. Lewis
Principal, Morgan Stanley Asset SECRETARY
Management Inc. and Morgan Stanley & Karl O. Hartmann
Co. Incorporated ASSISTANT SECRETARY
John D. Barrett II James R. Rooney
Chairman and Director, Barrett TREASURER
Associates, Inc. Joanna M. Haigney
Gerard E. Jones ASSISTANT TREASURER
Partner, Richards & O'Neil LLP
Andrew McNally IV
Chairman and Chief Executive Officer,
Rand McNally
Samuel T. Reeves
Chairman of the Board and CEO, Pinacle
L.L.C.
Fergus Reid
Chairman and Chief Executive Officer,
LumeLite Corporation
Frederick O. Robertshaw
Of Counsel, Bryan, Cave LLP
</TABLE>
- ----------------------------------------------------------------
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
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.
EMERGING MARKETS PORTFOLIO
FIRST QUARTER REPORT
MARCH 31, 1997
<PAGE>
LETTER TO SHAREHOLDERS
- -------
The investment objective of the Emerging Markets Portfolio is to provide
long-term capital appreciation by investing in equity securities of emerging
country issuers.
For the three months ended March 31, 1997, the Portfolio had a total return of
10.16% for the Class A shares and 10.10% for the Class B shares, as compared to
a total return of 9.59% for the IFC Global Total Return Composite Index. The
average annual total return for the one year ended March 31, 1997 and for the
period from inception on September 25, 1992 through March 31, 1997 was 13.01%
and 14.61%, respectively, for the Class A shares as compared to 11.39% and
14.21%, respectively, for the Index.
PERFORMANCE COMPARED TO THE IFC GLOBAL TOTAL RETURN COMPOSITE INDEX(1)
- ----------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS(2)
---------------------------------------
AVERAGE ANNUAL
YTD ONE YEAR SINCE INCEPTION
--------- --------- -----------------
<S> <C> <C> <C>
PORTFOLIO--CLASS A................ 10.16% 13.01% 14.61%
PORTFOLIO--CLASS B(3)............. 10.10 12.72 17.53
INDEX............................. 9.59 11.39 14.21
</TABLE>
1. The IFC Global Total Return Composite Index is an unmanaged index of common
stocks and includes developing countries in Latin America, East and South
Asia, Europe, the Middle East and Africa (includes dividends).
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 IN THIS OVERVIEW, AS MEASURED
BY THE IFC GLOBAL TOTAL RETURN COMPOSITE INDEX, 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 Portfolio's strong outperformance over the quarter was equally attributable
to strong country selection and good stock selection.
A broad-based rally drove emerging markets in the first three months of this
year, as 21 of 27 markets followed by MSCI registered positive returns for the
first quarter. Leaders included Russia, up 50.4%, Turkey, up 47.4% and Brazil,
up 21.0%. During the quarter, Thailand continued to disappoint investors, as
banking problems and currency issues saw the market trail down 15.2%.
Latin America turned in stellar performance as only one market, Venezuela, was
off in the first quarter (-0.8%). Tremendous forward progress on the
privatization and market reform front propelled the markets. In
telecommunications, the government is resetting tariff levels in order to lay
the ground work for eventual privatization and liberalization. The sale of iron
ore behemoth CVRD to a strategic partner also proceeded. The significance of
these developments should not be underestimated, as we think they demonstrate
the seriousness with which the government is moving forward with free market
reforms. The Portfolio benefited from overweight positions in Brazil and Mexico.
Telebras and Femsa were outstanding performers for the quarter and are among our
top ten holdings.
Similarly, in Emerging Europe, only the Czech Republic saw negative returns, as
negative news on the macro-economic front held the market back. Our Russian
holdings contributed in excess of 100 basis points to performance for the
quarter. Stand-out performers included Lukoil and Surgutneftegaz, both up in
excess of 25%.
Asian returns were relatively subdued, ranging from -3.3% in Korea to +9.5% in
Taiwan. Scandal continued to rock the Korean market, as Sammi, a large steel
company, announced problems in the wake of the Hanbo Steel bankruptcy. The Won
was devalued 6.6% versus the U.S. dollar, further buffeting the market. Thailand
continued its descent on a dearth of good news. S&P's downgrade of the credit
rating of several major Thai banks precipitated another market slide.
2
<PAGE>
On the positive side, Asian monthly trade deficit figures are on the decline as
exports of electronics continue to improve. Taiwan was one of the best
performing Asian markets as the electronic and construction sectors were
bolstered by recovery in earnings and growth prospects. Our underweight in the
Malaysian market was a plus, as that market declined 0.1% during the quarter.
India's strong early performance, largely a result of the newly unveiled budget,
was halted in March by political upheaval. The Congress Party's Mr. Kesri
challenged Prime Minister Deve Gowda's economic reform program and his rule of
the coalition of 13 political parties, causing his resignation. Despite the
setback, the Portfolio's Indian holdings did well, led by BHEL and State Bank of
India's strong first quarter returns.
Neighboring Pakistan was up 19.0% in the first quarter, driven by the electoral
victory of Nawaz Sharif in February. Sharif's election has renewed hopes of
forward progress on a much-needed reform program in this market. Compelling
valuations and 30% earnings growth rates make this market extremely attractive.
We are overweight Pakistan in the Portfolio.
South Africa's strong return for the quarter results from rand appreciation
(5.5%) and increasingly positive market sentiment. A declining interest rate
outlook and more attractive valuations have attracted portfolio flows, and while
the rand is not expected to continue to appreciate, earnings growth prospects
and continuation of privatization should sustain the market near-term.
The majority of markets shrugged off the 25 basis point increase in U.S.
interest rates shortly after its announcement. Hong Kong and Thailand were hit
more severely than most markets by the increase.
We are optimistic about the outlook for the emerging markets in 1997. Foreign
direct investment has continued to grow, and the emerging markets continue to
make progress on the macro-economic issues confronting them. We do expect to see
steady, albeit lower, flows of cash into the emerging markets as the likelihood
of a U.S. market correction increases.
We are heartened by the broad-based nature of the rally in these markets, as
economic reform takes hold and barriers to progress are removed. The emerging
markets are in much better financial shape now than at the end of 1994. While it
is unlikely that the emerging markets would continue to rise in the face of a
developed market correction, we would fully expect that they rebound faster and
farther in the event that such a correction takes place.
Madhav Dhar
PORTFOLIO MANAGER
Marianne L. Hay
PORTFOLIO MANAGER
April 1997
3
<PAGE>
INVESTMENTS (UNAUDITED)
- ----------
MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
COMMON STOCKS (85.7%)
ARGENTINA (2.6%)
6 Acindar, Class B $ --
293,038 Quilmes (Registered) 2,959
241,868 Telecom Argentina ADR 11,126
580,045 Telefonica Argentina ADR 17,039
310,065 YPF ADR 8,217
------------
39,341
------------
BRAZIL (7.3%)
20,000 CELESC GDR 2,280
17,566 CEMIG ADR 727
84,361 CEMIG ADR (144A) 3,501
12,068,800 CRT 14,014
37,260 Brahma ADR 485
95,110,000 Eletrobras 39,328
496,963 Eletrobras ADR 10,312
9,666,000 Lightpar 2,920
139,407,000 Telebras 14,055
229,385 Telebras ADR 23,483
4,957,162 Telesp 1,240
------------
112,345
------------
CHILE (0.5%)
147,900 CCU ADR 2,921
167,112 Santa Isabel ADR 4,324
------------
7,245
------------
CHINA (0.7%)
2,212,700 China International Marine
Container Ltd., Class B 2,807
60,000 Guangshen Railway Co., Ltd. ADR 1,313
4,056,000 Guangshen Railway Co., Ltd., Class
H 1,754
12,106,000 Yizheng Chemical Fibre Co., Ltd.,
Class H 2,593
7,998,000 Zhenhai Refining & Chemical Co.,
Ltd., Class H 2,916
------------
11,383
------------
COLOMBIA (0.3%)
12,728,000 Banco de Colombia 5,085
------------
EGYPT (1.7%)
89,993 Ameriyah Cement Co. 2,226
185,840 Commercial International Bank 4,471
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
187,700 Commercial International Bank GDR
(Registered) $ 4,242
114,650 Eastern Tobacco 2,961
14,525 Egypt American Bank 688
49,350 Egyptian Finance & Industrial 3,008
78,000 Helwan Cement 1,751
10,230 Madinet Nasr Housing & Development 1,410
21,655 North Cairo Flour Mills Co. 1,179
125,765 Tora Portland Cement 3,537
------------
25,473
------------
HONG KONG (4.1%)
805,000 Cheung Kong Holdings Ltd. 7,090
3,710,000 China Everbright-IHD Holdings Ltd. 2,801
10,353,000 China Resources Beijing Land 6,480
3,700,000 China Resources Enterprise Ltd. 7,974
289,000 Hang Seng Bank Ltd. 2,984
1,257,200 Hong Kong Telecommunications Ltd. 2,150
1,049,000 Hutchison Whampoa Ltd. 7,886
1,338,000 Lai Sun Development Co., Ltd. 1,554
1,410,000 New World Development Co., Ltd. 7,606
2,075,000 Shanghai Industrial Holdings Ltd. 9,105
672,000 Sun Hung Kai Properties Ltd. 7,111
------------
62,741
------------
HUNGARY (0.5%)
21,178 Borsod Chem Rt. GDR (Registered) 778
7,700 Gedeon Richter 498
28,300 Gedeon Richter GDR (Registered) 1,748
158,984 MOL Magyar GDR (Registered) 2,734
19,750 Pannonplast Industries plc 877
117,500 Tisza Vegyi Kombinat Rt. GDR
(Registered) 1,451
------------
8,086
------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
INDIA (8.7%)
230,000 American Dry Fruits $ 43
1,170 Andhra Valley Power Supply Co.,
Ltd. 3
486,850 Apollo Tyres Ltd. 1,463
34,500 AP Rayon Ltd., Class B 27
48,146 Associated Cement Cos. Ltd. 1,778
891,500 Balaji Foods & Feeds 106
400 Bharat Forge Co., Ltd., Class A 1
4,001,400 Bharat Heavy Electricals 32,972
219,300 Bharat Pipes & Fittings Ltd.,
Class B 6
710,040 Birla VXL Ltd. 317
141,642 Carrier Aircon Ltd. 828
335,400 Ceat Ltd. 444
8,777 Century Textiles and Industries
Ltd. 508
1,148,400 Container Corp. of India Ltd. 13,772
86,000 Cosmo Films Ltd. 67
380,100 Crompton Greaves Ltd. 949
115,100 Dabur India Ltd. 805
600,000 DCL Polyesters Ltd. 110
38,800 Delta Industries Ltd. 18
185,000 Esab India Ltd. 450
50,000 Essel Packagings Ltd. 133
5,950 Federal Bank Ltd. (New) 14
4,900 Fuller KCP Ltd. 20
200,300 Garware Plastics & Polyester (New) 430
376,700 Garware Plastics & Polyester,
Class A 809
688,500 Godrej Soaps Ltd. 584
3,109,500 Great Eastern Shipping Co. 3,100
387,800 Gujarat Ambuja Cements Ltd. 2,717
75,100 Gujarat Narmada Valley Fertilizers
Co., Ltd. 47
322,650 Hero Honda, Class B 2,697
740,100 Hindustan Development Corp., Ltd. 291
129,706 Housing Development Finance Corp. 9,948
122,650 ICI India Ltd. 472
@ 55,194 India Magnum Fund Ltd., (The)
Class A 2,153
@ 78,000 India Magnum Fund Ltd., (The)
Class A (Restricted) 3,042
644,625 India Organic Chemical Ltd. 144
1,000,000 Indian Petrochemicals Corp., Ltd. 3,856
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
16,500 Indian Seamless Metal Tubes Ltd.
(New) $ 16
40,000 Indian Seamless Steel & Alloys 4
571,047 Indo Rama Synthetics Ltd. 314
171,154 Indo Rama Synthetics Ltd. (New) 83
1,149,500 Industrial Finance Corp. of India 818
100,000 Infosys Technology Ltd. 2,808
130,700 ITC Agrotech Ltd., Class B 128
388,350 ITC Bhadrachalam Paperboards Ltd. 536
500,913 ITC Bhadrachalam Paperboards Ltd.
(New) 650
12,755 ITC Ltd. 127
5,292 JCT Ltd. GDR 14
1,500,162 JK Synthetics Ltd. 339
490,000 KEC International Ltd. 854
110,200 Kirloskar Oil Engines Ltd. 270
185,450 Lakme Ltd., Class B 1,196
150,000 Lakshmi Precision Screws 113
10 Madras Cement Ltd. 2
798,800 Mahanagar Telephone Nigam 5,369
306,484 Mahavir Spinning Mills Ltd. 615
@ 42,697,100 Morgan Stanley Growth Fund 7,145
@ 19,389 Morgan Stanley India Investment
Fund, Inc. 189
73,581 MRF Ltd., Class B 6,340
25,000 OM Sindoori Hotels Ltd. 43
350,000 Patheja Forgings & Auto Parts,
Class B 206
530 PCS Data Products Ltd., Class B --
218,500 Philips India Ltd. 481
14,900 Priyadarshini Cement Ltd., Class B 6
75,700 PVD Plastic Mouldings Industries
Ltd., Class B 6
95,600 Raymond Ltd. 207
104,875 Raymond Ltd. (Bonus Shares) 212
3,770 Reliance Industries Ltd. GDS 58
73,581 Reliance Industries Ltd. GDS (New) 1,131
84,500 Rossel Industries Ltd. 66
1,248,100 Sanghi Polyesters Ltd. 317
350 SCICI Ltd., Class B --
135,400 Shanti Gears Ltd. 598
37,300 Sharp Industries Ltd. 5
150,636 Shree Vindhya Paper Mills 79
92,500 Siemens India Ltd. 760
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
INDIA (CONTINUED)
45,000 Sri Venkatesa Mills Ltd. $ 126
1,605,150 State Bank of India 12,210
37,250 Sudarshan Chemical Industries Ltd. 67
22,250 Super Forgings & Steels 4
312,662 Tata Engineering & Locomotive,
Class A 2,965
570 Tata Hydro Electric Power 1
3,699 Tata Iron & Steel Co., Ltd. 17
196,017 Tube Investments of India 280
1,676 United Phosphorus Ltd. GDR 10
1,430,600 Uttam Steels Ltd., Class A 411
100 Videocon International Ltd., Class
A --
14,800 Videsh Sanchar Nigam Ltd. 402
89,600 Wartsila Diesel Ltd. 747
------------
134,469
------------
INDONESIA (5.5%)
4,530,500 Astra International (Foreign) 14,718
11,288,294 Bank International Indonesia
(Foreign) 8,580
20,407,000 Bank Negara Indonesia (Foreign) 11,687
4,580,500 Bimantara Citra (Foreign) 5,914
2,705,500 Gudang Garam (Foreign) 11,803
2,973,000 Hanjaya Mandala Sampoerna
(Foreign) 13,930
7,404,777 Indah Kiat Pulp & Paper Corp.
(Foreign) 5,474
1,792,000 Indofood Sukses Makmur (Foreign) 3,956
3,480,500 Matahari Putra Prima (Foreign) 5,074
3,658,500 Sorini Corp. (Foreign) 1,714
1,238,000 Telekomunikasi Indonesia (Foreign) 1,895
------------
84,745
------------
ISRAEL (2.5%)
592,600 Bank Hapoalim Ltd. 1,169
152,300 Blue Square ADR 2,703
100,500 Elbit Ltd. 215
413,803 Elbit Medical Imaging Ltd. 2,208
413,803 Elbit Systems Ltd. 3,298
5,250 First International Bank of
Israel, Class 1 657
4,561 First International Bank of
Israel, Class 5 3,008
106,835 Koor Industries Ltd. 9,832
768,000 Osem Investment Ltd. 4,275
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
4,002,150 Supersol Ltd. $ 11,497
------------
38,862
------------
KOREA (6.7%)
154,800 Cho Hung Bank Co., Ltd. (Foreign) 811
374,700 Cho Hung Bank Co., Ltd. GDR 2,033
20,110 Chosun Brewery Co., Ltd. 549
1,349,270 Hanwa Chemical Corp. 14,645
286,590 Housing & Commercial Bank Korea 5,092
265,160 Hyundai Engineering & Construction
Co. 5,478
327,900 Kookmin Bank GDR 5,804
9,800 Kookmin Bank GDR (Foreign) 171
329,110 Korea Electric Power 9,555
270,400 Korea Exchange Bank 1,706
5,938 Korea Mobile Telecommunications
Corp. 5,580
478,591 Korea Mobile Telecommunications
Corp. ADR 4,906
162,760 LG Information & Communication
Ltd. 16,445
20,890 Pohang Iron & Steel Co., Ltd. 1,337
108,670 Pohang Iron & Steel Co., Ltd. ADR 2,581
181,371 Samsung Electronics 14,316
110,620 Samsung Electronics GDR 5,061
345,639 Shinhan Bank Co., Ltd. 4,956
109,280 Ssangyong Oil Refining Co., Ltd. 1,977
------------
103,003
------------
MALAYSIA (1.7%)
978,000 Commerce Asset Holding Bhd 6,867
1,010,200 Genting Bhd 6,848
431,000 Rashid Hussain Bhd 3,391
1,442,000 Resorts World Bhd 6,168
390,000 United Engineers Ltd. 3,399
------------
26,673
------------
MEXICO (10.3%)
590,602 Apasco 4,009
4,068,734 Banacci, Class B 9,300
966,103 Banacci, Class L 1,959
6,860,658 Bancomer, Class B 2,437
1,110,780 Bancomer, Class B, 144A ADR 8,053
385,475 Carso ADR 4,616
1,212,460 Carso, Class A1 7,120
1,870,420 Cemex CPO 6,857
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
MEXICO (CONTINUED)
1,009,632 Cemex CPO ADR $ 7,613
149,940 Cemex, Class B 606
146,857 Cifra, Class A 200
1,200,725 Cifra, Class C 1,685
205,620 Desc ADR 5,398
6,974,652 FEMSA, Class B 30,905
60,790 Gruma ADR 1,193
509,044 Gruma, Class B 2,510
121,547 ICA ADR 1,930
1,055,469 Maseca, Class B 1,094
731,438 Televisa CPO GDR 18,194
1,088,285 Telmex ADR 41,899
29,760 Telmex, Class L ADR 1,146
------------
158,724
------------
MOROCCO (0.8%)
163,200 SNI Maroc, Series 'V' (Bearer) 12,305
------------
PAKISTAN (2.6%)
35,316 Cherat Cement Ltd. 22
31,200 Dewan Salman Fibre 30
843,419 D.G. Khan Cement Ltd. 318
6,299,500 Fauji Fertilizer Co., Ltd. 12,338
2,068,660 Karachi Electric Supply Corp. 839
1,256,519 Nishat Mills Ltd. 799
716,106 Pakistan State Oil Co., Ltd. 5,003
38,350 Pakistan Telecommunications Corp.
GDS 2,876
19,589,000 Pakistan Telecommunications Corp.,
Class A 14,052
4,859,854 Sui Northern Gas 3,638
------------
39,915
------------
PERU (0.3%)
42 Cementos Lima --
199,350 Tel Peru, Class A ADR 4,436
------------
4,436
------------
PHILIPPINES (0.0%)
22,496 Ayala Land, Inc., Class B 26
------------
POLAND (1.9%)
165,000 Agros Holding S.A. 81
165,000 Agros Holding S.A., Class C 4,159
19,840 Bank Slaski S.A. 1,871
68,000 BRE Bank 2,035
132,155 Debica S.A. 3,503
33,400 Eastbridge N.V. 2,245
587,000 Elektrim 5,155
265,116 Exbud S.A. 3,535
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
2,085,038 International UNP Holdings Ltd. $ 301
373,740 Mostostal Exports S.A. 1,137
493,000 Polifarb Wroclaw S.A. 2,598
11,125 Wedel S.A. 626
22,135 Zywiec 1,548
------------
28,794
------------
RUSSIA (7.7%)
592,359 Alliance Cellulose Ltd. 3,981
112,039,000 Edinaya Energetics 21,478
400,000 Global Tele-Systems Group, Inc.
(Restricted) 8,000
54,315,000 Irkutskenergo 13,959
710,100 LUKoil Holding 10,055
80,000 LUKoil Holding ADR 4,440
127,230 LUKoil Holding GDR (144A) 7,061
16,490,000 Mosenergo 21,602
352,340 Noyabrskneftegaz 4,580
2,911,600 Rostelecom (New) 11,355
317,851 Russian Telecomm Development Corp. 3,179
990 Storyfirst Communications, Inc.,
Class C 660
2,640 Storyfirst Communications, Inc.,
Class D 1,980
3,250 Storyfirst Communications, Inc.,
Class E 3,250
1,331 Storyfirst Communications, Inc.,
Class F 3,327
------------
118,907
------------
SINGAPORE (0.3%)
1,576,000 Want Want Holdings 4,523
------------
SOUTH AFRICA (4.9%)
722,800 Barlow Rand Ltd. 8,022
275,501 Bidvest Group Ltd. 1,699
120,000 De Beers Centenary AG 4,371
287,500 Dreifontein Consolidated Ltd. 2,609
570,800 Ellerine Holdings Ltd. 3,358
213,600 First National Bank Holdings Ltd. 1,324
1,702,700 Gencor Ltd. 7,898
@ 224,490 Morgan Stanley Africa Investment
Fund, Inc. 3,760
890,000 Persetel Holdings Ltd. 5,558
373,300 Rembrandt Group Ltd. 3,991
103,900 Reunert Ltd. 365
500,000 Sage Group Ltd. 2,478
2,724,000 Sasol Ltd. 29,123
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
SOUTH AFRICA (CONTINUED)
800,000 Spur Holdings Ltd. $ 1,593
------------
76,149
------------
TAIWAN (3.7%)
2,420,000 Acer, Inc. 6,107
1,186,000 Asustek Computer, Inc. 26,829
690,900 Cathay Life Insurance Co., Ltd. 4,114
3,714,600 China Steel Corp. 3,561
5,863,000 Far East Textiles 8,750
1,410,000 Formosa Plastics Corp. 3,558
1,393,000 Siliconware Precision Industries
Co. 4,477
------------
57,396
------------
THAILAND (5.6%)
233,000 Advanced Information Service PCL 1,993
1,275,650 Advanced Information Service PCL
(Foreign) 10,911
1,867,400 Bangkok Bank PCL (Foreign) 18,131
2,216,400 Finance One PCL (Foreign) 2,028
248,000 National Finance & Securities Co.,
Ltd. 332
1,222,000 National Finance & Securities PCL
(Foreign) 1,636
1,148,000 National Petrochemical PCL
(Foreign) 1,172
1,201,400 Shinawatra Computer Co. PCL
(Foreign) 10,091
2,203,800 Siam Commercial Bank PCL (Foreign) 12,906
3,006,600 Thai Farmers Bank PCL (Foreign) 19,577
1,131,000 United Communications Industry 7,320
------------
86,097
------------
TURKEY (3.7%)
7,259,000 Aksa 1,166
26,077,000 Arcelik 3,473
23,161,000 Bossa 1,996
41,314,050 Ege Biracilik 10,518
43,404,000 Erciyas Biracilik 3,995
80,584,000 Eregli Demir Celik 10,889
89,708,000 Garanti Bankasi A.S. 6,114
496,085 Turkiye Garanti Bankasi ADR 144A 3,381
<CAPTION>
VALUE
SHARES (000)
- --------------- ------------
<C> <S> <C>
3,375,750 Guney Biracilik Ve Malt Sanayii $ 254
2,320,000 Migros (Registered) 2,408
85,761,000 Sabah 1,276
2,380,000 Tat Konserve Sanayii 317
5,805,000 Trakya Cam Sanayii 268
263,362,000 Yapi Ve Kredi Bankasi A.S. 11,760
------------
57,815
------------
ZIMBABWE (1.1%)
1,740,000 Delta Corp. 2,704
559,500 Meikles Africa Ltd. 1,237
9,900,000 Trans Zambezi Industries Ltd. 144A 8,910
3,800,000 Trans Zambezi Industries Ltd.
(Registered) 3,420
------------
16,271
------------
TOTAL COMMON STOCKS (Cost $1,221,986) 1,320,809
------------
PREFERRED STOCKS (6.7%)
BRAZIL (NON-VOTING STOCKS) (6.7%)
1,517,291,448 Banco Bradesco 12,534
295,998,880 Banco Nacional 14
30,166,030 Brahma 19,665
620,000 Brasmotor 177
7,737,000 Coteminas 3,097
288,899,993 CEMIG 11,891
46,639,850 Eletrobras, Class B 20,078
89,520 Eletrobras, Class B ADR 1,921
18,089,800 Itaubanco 9,359
48,513,000 Lojas Arapua 1,145
26,515 Lojas Arapua GDR 144A 610
39,236,000 Pao de Acucar 846
182,679 Pao de Acucar GDR 144A 3,916
46,268,333 Petrobras 9,195
12,500 Sadia Concordia 9
74,882,000 Telebras 7,748
7,769 Telebras ADR 795
6,018,615 Telesp 1,528
------------
104,528
------------
INDIA (0.0%)
2,700 Fabworth (India) Ltd. 1
------------
RUSSIA (0.0%)
85,000 Norilsk Nickel 349
------------
TOTAL PREFERRED STOCKS (Cost $85,538) 104,878
------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NO. OF VALUE
RIGHTS (000)
- --------------- ------------
<C> <S> <C>
RIGHTS (0.0%)
INDIA (0.0%)
155,100 ITC Agrotech Ltd. $ --
------------
SOUTH AFRICA (0.0%)
13,224 Bidvest Group Ltd., expiring
10/04/97 1
------------
TOTAL RIGHTS (Cost $0) 1
------------
<CAPTION>
NO. OF
WARRANTS
- ---------------
<C> <S> <C>
WARRANTS (0.1%)
HONG KONG (0.0%)
460,241 Lai Sun Hotels International,
expiring 4/30/99 --
------------
INDIA (0.0%)
176,850 Apollo Tyres Ltd., expiring
2/28/98 126
27,383 Flex Industries Ltd., expiring
11/23/97 33
44,702 Garware Plastics & Polyester,
expiring 4/04/98 --
------------
159
------------
INDONESIA (0.0%)
1,003,404 Bank International Indonesia
(Foreign), expiring 1/17/00 355
------------
THAILAND (0.1%)
800,000 Thai Farmers Bank PCL (Foreign),
expiring 9/30/99 385
970,662 Thai Farmers Bank PCL (Foreign),
expiring 9/15/02 701
------------
1,086
------------
TOTAL WARRANTS (Cost $1,458) 1,600
------------
<CAPTION>
FACE
AMOUNT
(000)
- ---------------
<C> <S> <C>
FIXED INCOME SECURITIES (0.3%)
BULGARIA (0.3%)
$ 3,950 Bulgaria Discount Bond, Series A,
'Euro', (Floating Rate), 6.563%,
7/28/24 2,345
6,250 Bulgaria Front Loaded Interest
Reduction Bond, Series A, 2.25%,
7/28/12 2,633
------------
TOTAL FIXED INCOME SECURITIES (Cost $4,479) 4,978
------------
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- --------------- ------------
<C> <S> <C>
CONVERTIBLE DEBENTURES (0.2%)
INDIA (0.0%)
INR 336 DCM Shriram Industries Ltd.,
7.50%, 2/21/02 $ 361
$ 130 Tata Iron & Steel Co., Ltd.,
2.25%, 4/01/99 118
------------
479
------------
RUSSIA (0.2%)
675 Storyfirst Communications, Inc.,
First Section, Tranche I, 25.00%,
4/30/97 802
745 Storyfirst Communications, Inc.,
Second Section, Tranche I,
25.00%, 4/30/97 885
371 Storyfirst Communications, Inc.,
Tranche II, 26.00%, 4/30/97 441
562 Storyfirst Communications, Inc.,
Tranche IV, 28.00%, 4/30/97 667
------------
2,795
------------
TOTAL CONVERTIBLE DEBENTURES (Cost $3,384) 3,274
------------
NON-CONVERTIBLE DEBENTURES (0.2%)
INDIA (0.2%)
INR 341 DCM Shriram Industries Ltd.,
9.90%, 2/21/02 468
45 Garware Plastics & Polyester,
16.00%, 5/01/05 111
700 Saurashtra Cement & Chemicals
Ltd., 18.00%, 11/27/98 1,647
------------
TOTAL NON-CONVERTIBLE DEBENTURES (Cost $3,207)
2,226
------------
LOAN AGREEMENTS (0.4%)
POLAND (0.0%)
$ 54 Republic of Poland Interest
Arrears PDI Bonds, (Floating
Rate), 3.75%, 10/27/14 43
------------
RUSSIA (0.4%)
CHF 11,910 Bank for Foreign Economic Affairs
0.00%, 12/31/00 6,227
------------
TOTAL LOAN AGREEMENTS (Cost $3,270) 6,270
------------
TOTAL FOREIGN SECURITIES (93.6%) (Cost $1,323,322)
1,444,036
------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- --------------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENT (5.1%)
REPURCHASE AGREEMENT (5.1%)
$ 78,994 Chase Securities, Inc. 6.00%,
dated 3/31/97, due 4/01/97, to be
repurchased at $79,007,
collateralized by U.S. Treasury
Notes, 9.125%, due 5/15/99,
valued at $80,652 (Cost $78,994) $ 78,994
------------
FOREIGN CURRENCY (2.2%)
ARP 4 Argentine Peso 4
BRL 65 Brazilian Real 62
EGP 19 Egyptian Pound 5
HUF 59,707 Hungarian Forint 340
INR 552,995 Indian Rupee 15,423
IDR 10,017,824 Indonesian Rupiah 4,172
KRW 1,235,502 Korean Won 1,380
MXP 291 Mexican Peso 37
PKR 78,178 Pakistan Rupee 1,951
PHP 2,186 Philippines Peso 83
PLZ 1,815 Poland Zlotey 590
ZAR 16,201 South African Rand 3,666
LKR 2 Sri Lankan Rupee --
TWD 87,155 Taiwan Dollar 3,165
THB 887 Thai Baht 34
ZWD 30,010 Zimbabwe Dollar 2,665
------------
TOTAL FOREIGN CURRENCY (Cost $33,751) 33,577
------------
TOTAL INVESTMENTS (100.9%) (Cost $1,436,067) 1,556,607
------------
OTHER ASSETS AND LIABILITIES (-0.9%)
Other Assets 109,207
Liabilities (122,735)
------------
(13,528)
------------
NET ASSETS (100%) $ 1,543,079
------------
------------
<CAPTION>
VALUE
(000)
------------
<C> <S> <C>
CLASS A:
NET ASSETS $1,532,067
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE
Applicable to 94,865,926 outstanding $0.001 par
value shares (authorized 500,000,000 shares) $16.15
------------
------------
CLASS B:
NET ASSETS $11,012
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE
Applicable to 682,246 outstanding $0.001 par value
shares (authorized 500,000,000 shares) $16.14
------------
------------
</TABLE>
- ----------------------------------
<TABLE>
<S> <C> <C>
@ -- Advised by an affiliate
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
GDS -- Global Depositary Shares
CPO -- Ordinary Participating Certificates (no voting rights)
PCL -- Public Company Limited
PDI -- Past Due Interest
Floating Rate -- Interest rate changes on these instruments are based on changes
in a designated base rate. The rates shown are those in effect on March 31, 1997.
</TABLE>
10
