<PAGE>
- ---------------------------------------------------------
DIRECTORS OFFICERS
Barton M. Biggs Stefanie V. Chang
CHAIRMAN OF THE BOARD VICE PRESIDENT
Chairman and Director, Morgan Stanley Asset Management
Inc. and Morgan Stanley Asset Management Limited; Harold J. Schaaff, Jr.
Managing Director, Morgan Stanley & Co. Incorporated VICE PRESIDENT
Michael F. Klein
DIRECTOR AND PRESIDENT Joseph P. Stadler
Principal, Morgan Stanley Asset Management Inc. and VICE PRESIDENT
Morgan Stanley & Co. Incorporated
John D. Barrett II Valerie Y. Lewis
Chairman and Director, SECRETARY
Barrett Associates, Inc.
Gerard E. Jones Karl O. Hartmann
Partner, Richards & O'Neil LLP ASSISTANT SECRETARY
Andrew McNally IV
River Road Partners Joanna M. Haigney
Samuel T. Reeves TREASURER
Chairman of the Board and Chief Executive Officer,
Pinacle L.L.C. Rene J. Feuerman
Fergus Reid ASSISTANT TREASURER
Chairman and Chief Executive Officer, LumeLite
Plastics Corporation
Frederick O. Robertshaw
Of Counsel, Copple, Chamberlin &
Boehm, P.C.
- ---------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- ---------------------------------------------------------
DISTRIBUTOR
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
- ---------------------------------------------------------
CUSTODIANS
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
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, 1998
<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, 1998, the Portfolio had a total return of
8.17% for the Class A shares and 8.09% for the Class B shares, compared to a
total return of 7.32% for the IFC Global Total Return Composite Index (the
"Index"). For the one year ended March 31,
PERFORMANCE COMPARED TO THE IFC GLOBAL TOTAL RETURN COMPOSITE INDEX(1)
- ----------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS(2)
----------------------------------------------
AVERAGE
AVERAGE ANNUAL
ONE ANNUAL SINCE
YTD YEAR FIVE YEARS INCEPTION
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
PORTFOLIO--CLASS A......... 8.17% -2.82% 9.90% 11.23%
PORTFOLIO--CLASS B......... 8.09 -3.11 N/A 7.84
INDEX--CLASS A............. 7.32 -16.32 6.37 7.95
INDEX--CLASS B............. 7.32 -16.32 N/A -0.61
</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.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- ------------------------------
THE COUNTRY SPECIFIC PERFORMANCE RESULTS PROVIDED IN THIS OVERVIEW ARE AS
MEASURED BY THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EMERGING MARKETS
COUNTRY OR REGIONAL INDICES, 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.
1998, the Portfolio had a total return of -2.82% for the Class A shares and
- -3.11% for the Class B shares, compared to -16.32% for the Index. For the
five-year period ended March 31, 1998, the average annual total return of Class
A was 9.90% compared to 6.37% for the Index. From inception on September 25,
1992 to March 31, 1998, the average annual total return for Class A was 11.23%
as compared to 7.95% for the Index. From inception on January 2, 1996 to March
31, 1998, the average annual total return of Class B was 7.84% as compared to
- -0.61% for the Index.
The Portfolio gained 8.17% versus a return of 6.2% for the MSCI Emerging Markets
Free index during the first quarter. The largest contributors to the Portfolio's
outperformance relative to its benchmark were our overweights in Korea and
Thailand, which surged 59.1% and 43.4% respectively.
Latin America remained relatively flat during the first quarter, gaining only
0.2%. Brazil was the star performer returning 7.7% during the quarter, followed
by Argentina, which gained 1.4%, and Chile which appreciated 0.6%. The Latin
laggards were Colombia, which fell 22.7%, Venezuela (-9.3%), Mexico (-6.4%), and
Peru (-5.5%). During the quarter we trimmed our Mexican position and used the
proceeds to increase our Brazilian exposure. Within Brazil, we are focusing on
the banking and telecom stocks. Brazilian banks are attractive given their cheap
valuations and a declining interest rate environment. Regarding the telecom
sector, attractive valuations coupled with strong growth expectations and steady
progress on the privatization front are expected to drive returns. We are
underweight Mexico as a result of a worsening trade deficit and the potential
for higher than expected inflation and interest rate numbers. Within Mexico, we
continue to focus on the consumer sector taking advantage of the recovery which
began approximately ten months ago.
The Asian markets rallied, gaining 16.2% during the quarter led by Korea
(+59.1%), Thailand (+43.4%), the Philippines (+34.9%), and Malaysia (+29.8%).
Indonesia
2
<PAGE>
continues to lag the region, declining 11.2%. We have been trimming our
Indonesian positions as we are not convinced that President Suharto will
implement the strict measures necessary to create positive momentum in that
market. Suharto's decision not to follow International Monetary Fund (IMF)
guidelines led to a delay of a $3 billion payment from the IMF. Conversely,
Korea and Thailand continue to take steps to improve financial conditions and
investor sentiment. For example, the Korean and Thai governments have recognized
the need for foreign participation and have removed or sharply reduced most
foreign ownership restrictions. Consequently, we remain overweight both Korea
and Thailand.
The Sub-continent experienced mixed results with India gaining 6.3% and Pakistan
falling 12.3%. India's gain was fueled by a dramatic drop in overnight interest
rates as well as the Bharatiya Janata Party (BJP) coalition government winning
the early-March national elections. Pakistan's market was driven by political
turmoil as four government ministers resigned and their political party withdrew
support from Prime Minister Sharif's coalition government. We remain overweight
both markets given their attractive valuations including 10 - 15% earnings
growth potential.
Europe, Middle-East and Africa posted mixed results. Poland and South Africa
were the star performers gaining 18.7% and 16.9% respectively. We are overweight
Poland given its macroeconomic strength (eg. three consecutive years of annual
real GDP growth in excess of 6%). We increased our South African weighting
during the quarter as a result of declining interest rates and increased
liquidity. Russia and Turkey, in which we have overweight positions, fared
poorly this quarter, due to political instability. The Russian equity market
fell 13.2% as a result of the dismissal of the entire Cabinet on March 23 by
President Boris Yeltsin. Additional pressure was placed on the Russian market as
declines in oil prices threatened the earnings of oil companies.
The Turkish market fell 21.7% as a result of political concerns and rising
tension along the Iraqi border. Fortunately, an agreement was reached between
the United Nations and Iraq on weapons inspections. Political concerns took
center stage in January when the Constitutional Court ruled that the pro-Islamic
party (the controversial Welfare Party) violated portions of the country's
secularist constitution. As a result, there is a possibility that the coalition
government would be forced to call early elections. Dissolution of the current
government would decrease the likelihood of the continuation of the current
anti-inflationary program. We attached a low probability to the idea of early
elections and are optimistic that the government's anti-inflation program will
be successful, thereby resulting in lower yields, which should make equities
more attractive.
Madhav Dhar
PORTFOLIO MANAGER
Robert L. Meyer
PORTFOLIO MANAGER
April 1998
3
<PAGE>
INVESTMENTS (UNAUDITED)
- ----------
MARCH 31, 1998
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
COMMON STOCKS (91.4%)
ARGENTINA (2.7%)
6 Acindar, Class B $ --
119,870 Nortel ADR 3,461
252,721 Telecom Argentina ADR 9,051
884,750 Telefonica de Argentina ADR 33,676
----------
46,188
----------
BRAZIL (17.8%)
1,115,984,653 Banco Bradesco (Preferred) 11,533
295,998,880 Banco Nacional (Preferred) 13
24,442,030 Brahma (Preferred) 18,939
268,425 Brahma (Preferred) ADR 4,161
398,494,993 CEMIG (Preferred) 19,346
110,376 CEMIG (Preferred) ADR 5,368
84,361 CEMIG (Preferred) (144A) ADR 4,106
12,714,900 Coteminas 3,299
98,865 Coteminas (144A) ADR 1,281
39,641,400 CRT (Preferred), Class A 49,857
185,219 CVRD (Preferred) ADR 4,466
93,941 CVRD (Preferred) 2,239
11,559,000 Encorpar (Preferred) 45
10,699,800 Itaubanco (Preferred) 6,870
1,277,207 Light-Servicos de Electricidade 489
4,012,000 Lightpar 1,041
119,019,000 Lojas Arapua (Preferred) 398
120,830 Lojas Arapua (Preferred) (144A)
GDR 414
52,673,000 Lojas Renner (Preferred) 1,992
39,236,000 Pao de Acucar (Preferred) 904
151,964 Pao de Acucar (Preferred) ADR 3,495
98,915 Petrobras (Preferred) (144A) ADR 2,314
56,777,333 Petrobras (Preferred) 13,533
64,807,000 Telebras 6,725
302,356,000 Telebras (Preferred) 39,809
682,058 Telebras (Preferred) ADR 88,540
1 TELESP --
478,299 TELESP (Preferred) 155
417,315 Unibanco GDR (Preferred) 15,128
----------
306,460
----------
CHILE (0.8%)
147,900 CCU ADR 4,474
110,760 Endesa ADR 2,132
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
209,125 Enersis ADR $ 6,601
67,786 Santa Isabel ADR 1,233
----------
14,440
----------
CHINA (0.9%)
231,575 Huaneng Power International, Inc.
ADR 5,442
2,029,000 Qingling Motors Co., Class H 943
344,650 Yanzhou Coal Mining Co. ADR 5,514
8,647,000 Zhejiang Expressway Co., Class H 2,187
3,331,000 Zhenhai Refining & Chemical Co.,
Class H 1,042
----------
15,128
----------
COLOMBIA (0.0%)
989,763 Banco de Colombia 256
----------
EGYPT (1.8%)
66,200 Al-Ahram Beverages Co., GDR 2,003
89,993 Ameriyah Cement Co. 1,849
185,840 Commercial International Bank 3,488
137,200 Commercial International Bank GDR
(Registered) 2,552
145,055 Eastern Tobacco 3,321
49,350 Egyptian Finance & Industrial 2,719
78,000 Helwan Cement 1,644
50,603 Industrial & Engineering 921
80,460 Madinet Nasr Housing & Development 5,018
21,655 North Cairo Flour Mills Co. 515
2,500 Paints & Chemical Industry 85
331,200 Paints & Chemical Industry GDR 3,701
125,765 Torah Portland Cement 2,731
----------
30,547
----------
HONG KONG (1.8%)
677,000 Cheung Kong Holdings Ltd. 4,805
1,228,000 China Resources Enterprise Ltd. 2,488
1,701,000 CLP Holdings, Ltd. 8,562
202,600 HSBC Holdings plc 6,197
3,573,000 Ng Fung Hong Ltd. 3,481
321,000 Shanghai Industrial Holdings Ltd. 1,313
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
HONG KONG (CONTINUED)
654,000 Sun Hung Kai Properties Ltd. $ 4,452
----------
31,298
----------
HUNGARY (1.4%)
7,700 Gedeon Richter Rt. 810
28,300 Gedeon Richter Rt. GDR
(Registered) 2,957
257,800 MOL Magyar Olaj-es Gazipari GDR 7,907
330,484 MOL Magyar Olaj-es Gazipari Rt.
GDR (Registered) 10,129
49,300 OTP Bank Rt. 2,507
----------
24,310
----------
INDIA (7.9%)
6,575 Apollo Tyres Ltd. 14
598 Associated Cement Cos., Ltd. 22
336,400 Bajaj Auto Ltd. 5,060
4,386,700 Bharat Heavy Electricals Ltd. 39,642
131,650 Bharat Pipes & Fittings Ltd.,
Class B 2
131 Ceat Ltd. --
15,990 Century Textiles and Industries
Ltd. 28
1,218,400 Container Corp of India Ltd. 12,953
255,300 Esab India Ltd. 753
1,900 Federal Bank Ltd. (New) 4
605,277 Hero Honda Motors Ltd., Class B 13,387
200,000 Hoechst Marion Roussel Ltd. 1,958
146,916 Housing Development Finance Corp. 11,822
59,450 ICI India Ltd. 301
@ 55,194 India Magnum Fund Ltd., (The)
Class A 2,015
@ 78,000 India Magnum Fund Ltd., (The)
Class A 2,847
400 Indian Petrochemicals Corp., Ltd. 1
200 Indo Rama Synthetics Ltd. (New) --
1,300 Industrial Credit & Investment
Corp. of India Ltd. 1
182,500 Infosys Technology Ltd. 8,444
150 ITC Bhadrachalam Paperboards Ltd. --
729,867 ITC Ltd. 13,191
296,862 JK Synthetics Ltd. 20
156,550 Kirloskar Cummins Ltd. 1,724
145,800 Lakshmi Precision Screws 33
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
@ 42,697,100 Morgan Stanley Growth Fund $ 6,485
136,581 MRF Ltd., Class B 6,949
190,900 Shanti Gears Ltd. 362
180,800 Shriram Honda Power Equipment,
Class B 1,002
45,000 Sri Venkatesa Mills Ltd. 59
925,800 State Bank of India 6,515
65,100 Sudarshan Chemical Industries Ltd. 75
1,900 Supreme Industries Ltd. 9
992 Tata Engineering & Locomotive
Ltd., Class A 7
196,017 Tube Investments of India 188
455,800 Uttam Steels Ltd., Class A 63
2,300 Wartsila Diesel Ltd. 11
----------
135,947
----------
INDONESIA (1.3%)
849,504 Daya Guna Samudera 849
3,582,841 Gudang Garam 4,960
68,600 Gulf Indonesia Resources Ltd. 1,235
2,473,000 Hanjaya Mandala Sampoerna
(Foreign) 2,244
12,964,855 Indah Kiat Pulp & Paper Corp.
(Foreign) 3,222
20,500 Indofood Sukses Makmur (Foreign) 9
1,695,400 London Sumatra Indonesia 534
3,474,500 Matahari Putra Prima (Foreign) 191
431,500 Tambang Timah 362
12,946,800 Telekomunikasi Indonesia 6,174
292,995 Telekomunikasi Indonesia ADR 2,875
----------
22,655
----------
ISRAEL (2.9%)
2,208,000 Bank Hapoalim Ltd. (Registered) 6,047
277,326 Elbit Systems Ltd. 3,551
5,250 First International Bank of
Israel, Class 1 815
7,680 First International Bank of
Israel, Class 5 5,549
154,001 Koor Industries Ltd. 19,163
4,184,850 Supersol Ltd. 13,542
122,100 Supersol Ltd ADR 1,961
----------
50,628
----------
KOREA (5.6%)
1,188,360 Daewoo Heavy Industries 6,092
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
KOREA (CONTINUED)
191,000 Hankuk Glass Industry Co., Ltd. $ 3,034
9,432 Hansol Paper Co., Ltd. 70
122,638 LG Information & Communication
Ltd. 4,259
497,150 Pohang Iron & Steel Co., Ltd. 27,374
48,820 S1 Corp. 6,831
799,460 Samsung Electronics Co. 42,138
17,054 Samsung Electronics Co. GDR (New)
(144A) 426
9,486 SK Telecom Co., Ltd. 5,353
----------
95,577
----------
MALAYSIA (3.4%)
568,800 AMMB Holdings Bhd 651
202,000 Carlsberg Brewery Malaysia Bhd 786
1,338,000 Commerce Asset Holdings Bhd 1,166
2,237,200 Genting Bhd 7,662
1,922,000 Golden Hope Plantations Bhd 2,422
1,014,000 IOI Corp. Bhd 778
1,204,000 Kuala Lumpur Kepong Bhd 2,886
1,352,000 Magnum Corp. Bhd 1,156
1,413,600 Malayan Banking Bhd 5,422
1,269,000 Malayan United Industries Bhd 276
491,000 Malaysian International Shipping
Corp. Bhd (Foreign) 942
156,000 Malaysian Pacific Industries Bhd 457
385,000 Nestle Bhd 2,131
252,000 New Straits Times Press Bhd 394
415,000 Perusahaan Otomobil Nasional Bhd 722
1,502,000 Petronas Gas Bhd 3,992
503,000 Rashid Hussain Bhd 717
479,000 Resorts World Bhd 1,056
2,062,000 RHB Capital Bhd 1,808
492,000 R.J. Reynolds Bhd 903
498,000 Rothmans of Pall Mall Bhd 4,161
21,000 Sime Darby Bhd 23
1,825,000 Technology Resources Industries
Bhd 2,080
2,039,000 Telekom Malaysia Bhd 7,039
3,451,000 Tenaga Nasional Bhd 8,698
----------
58,328
----------
MEXICO (8.0%)
1,244,479 Banacci, Class B 3,162
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
966,103 Banacci, Class L $ 2,243
1,414,316 Cemex CPO 6,300
994,727 Cemex CPO ADR 8,798
4,795,960 FEMSA, Class B 34,788
3,541,394 Kimberly-Clark, Class A 18,206
506,260 Televisa CPO GDR (Reg S) 18,542
751,070 Telmex, Class L ADR 42,342
189,267 TV Azteca ADR 3,714
----------
138,095
----------
MOROCCO (0.4%)
82,900 SNI Maroc, Series 'V' (Bearer) 7,018
----------
PAKISTAN (3.7%)
32 Crescent Textile Mills Ltd. --
3,162 D.G. Khan Cement Ltd. --
6,545,800 Fauji Fertilizer Co., Ltd. 12,170
10,043,700 Hub Power Co. 10,690
1,327,865 Pakistan State Oil Co., Ltd. 7,728
38,350 Pakistan Telecommunications Corp.
GDS 2,550
40,740,600 Pakistan Telecommunications Corp.,
Class A 27,031
5,627,702 Sui Northern Gas 2,982
----------
63,151
----------
PERU (0.0%)
47 Cementos Lima --
----------
PHILIPPINES (1.8%)
13,409,500 Ayala Corp. 6,175
1,723,520 Ayala Land, Inc., Class B 828
1,193,270 Manila Electric Co., Class B 3,894
346,170 Philippine Long Distance Telephone
Co. 9,611
26,100 Philippine Long Distance Telephone
Co., ADR 728
3,176,360 San Miguel Corp., Class B 5,517
18,875,000 SM Prime Holdings, Inc. 3,676
----------
30,429
----------
POLAND (2.0%)
229,420 Agros Holding, Class C 5,352
38,860 Bank Slaski 2,815
1,650,000 BIG Bank Gdanski 2,319
194,000 BIG Bank Gdanski GDR 4,147
68,000 BRE Bank 1,892
160,560 Debica 4,187
33,400 Eastbridge NV 2,245
727,000 Elektrim 9,059
2,085,038 International UNP Holdings Ltd. 323
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
POLAND (CONTINUED)
483,800 Polifarb Cieszyn-Wroclaw $ 2,019
----------
34,358
----------
RUSSIA (8.3%)
150,000 AO Tatneft ADR 3,478
592,359 Alliance Cellulose Ltd. 2,358
600,000 Global Tele-Systems Group, Inc.
(Registered) 28,050
13,765,000 Irkutskenergo 2,340
214,733 Lukoil Holding 3,766
128,973 Lukoil Holding ADR 9,028
6,523,333 Mosenergo ADR 7,991
37,259,635 Mustcom 30,408
17,600 Norilsk Nickel 105
317,851 Russian Telecom Development Corp. 1,510
990 Storyfirst Communications, Inc.,
Class C 1,416
2,640 Storyfirst Communications, Inc.,
Class D 3,775
3,250 Storyfirst Communications, Inc.,
Class E 4,648
1,331 Storyfirst Communications, Inc.,
Class F 3,807
406,000 Surgutneftgaz ADR 3,197
21,882,643 Svyaz Finance 19,694
54,736,000 Unified Energy Systems (2nd Issue) 17,373
----------
142,944
----------
SOUTH AFRICA (6.4%)
128,400 Amalgamated Banks of South Africa 1,167
548,200 Barlow Rand Ltd. 4,464
194,235 Bidvest Group Ltd. 2,122
33,000 Coronation Holdings Ltd. 649
90,900 Coronation Holdings Ltd. (New) 1,728
1,078,300 Ellerine Holdings Ltd. 10,279
564,968 Foodcorp Ltd. 3,545
842,400 Forbes Group Ltd. 2,091
1,608,300 Illovo Sugar Ltd. 2,747
212,600 Liberty Life Association of Africa
Ltd. 7,177
2,275,975 Malbak Ltd. 2,124
319,400 Metropolitan Life Ltd. 1,281
2,524,370 NBS Boland Group Ltd. 6,868
7,974,500 New Africa Investments Ltd., Class
N 11,402
1,903,300 Orion Selections Holdings Ltd. 6,822
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
1,287,000 Orion Selections Ltd. $ 3,450
354,000 Primedia Ltd., N Shares 2,327
636,000 Persetel Holdings Ltd. 5,197
4,250,000 Protea Furnishers Ltd. 3,671
1,051,800 Rembrandt Group Ltd. 8,689
210,800 South African Breweries Ltd. 6,254
1,281,800 Sasol Ltd. 10,386
800,000 Spur Holdings Ltd. 953
2,547,400 The Education Investment Corp.,
Ltd. 4,629
----------
110,022
----------
TAIWAN (4.9%)
1,604,000 Asustek Computer, Inc. 36,398
1,504,000 Cathay Construction Corp. 1,546
3,170,759 Compal Electronics 12,683
9,838,441 Far Eastern Textile Ltd. 10,774
2,096,000 Hon Hai Precision Industry 12,560
635,000 Kuoyang Construction 1,516
2,905,200 Siliconware Precision Industries
Co. 8,793
----------
84,270
----------
THAILAND (3.1%)
103,800 Advance Agro PCL (Foreign) 98
1,361,850 Advanced Info Service PCL
(Foreign) 10,590
5,867,100 Bangkok Expressway PCL (Foreign) 5,442
26,700 Bank of Ayudhya PCL (Foreign) 16
305,500 BEC World PCL (Foreign) 1,677
678,000 Central Pattana PCL (Foreign) 172
412,900 Delta Electronics PCL (Foreign) 5,477
567,600 Grammy Entertainment PCL (Foreign) 2,914
224,000 Lanna Lignite PCL (Foreign) 1,002
300,000 National Finance & Securities PCL
(Foreign) 166
1,926,300 National Petrochemical PCL
(Foreign) 1,934
794,700 PTT Exploration & Production PCL
(Foreign) 9,007
1,048,400 Shinawatra Computer Co. PCL
(Foreign) 6,448
34,400 Siam Cement PCL (Foreign) 92
3,798,933 Siam Commercial Bank PCL (Foreign) 5,599
268,100 Thai Engine Manufacturing PCL
(Foreign) 613
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------- ----------
<C> <S> <C>
1,534,000 United Communication Industry PCL
(Foreign) $ 1,384
----------
52,631
----------
TURKEY (3.7%)
47,993,500 Arcelik 4,146
54,812,100 Ege Biracilik 7,891
40,512,000 Erciyas Biracilik 6,582
98,859,000 Eregli Demir Celik 12,402
39,848,000 Vestel Elektronik Sanayi Ve
Ticaret A.S. 3,114
860,454,710 Yapi Ve Kredi Bankasi A.S. 29,730
----------
63,865
----------
VENEZUELA (0.1%)
1,783,780 Electricidad de Caracas 1,683
----------
ZIMBABWE (0.5%)
3,872,081 Delta Corp. Ltd. 3,596
290,800 Meikles Africa Ltd. 414
1,495,500 Meikles Africa Ltd. ADR 1,832
9,900,000 Trans Zambesi Industries Ltd.
(144A) 2,299
3,800,000 Trans Zambesi Industries Ltd.
(Registered) 882
----------
9,023
----------
OTHER (0.2%)
@ 224,490 Morgan Stanley Africa Investment
Fund, Inc. 3,171
----------
TOTAL COMMON STOCKS (Cost $1,459,384) 1,572,422
----------
PREFERRED STOCK (0.0%)
RUSSIA (0.0%)
85,000 Norilsk Nickel (Cost $357) 404
----------
<CAPTION>
NO. OF
RIGHTS
- ---------------
<C> <S> <C>
RIGHTS (0.1%)
BRAZIL (0.1%)
1,111,637 CRT RFD 1,398
----------
INDIA (0.0%)
30 Philips India Ltd. --
----------
TOTAL RIGHTS (Cost $1,436) 1,398
----------
<CAPTION>
NO. OF
WARRANTS
- ---------------
<C> <S> <C>
WARRANTS (0.0%)
INDONESIA (0.0%)
8,404 Bank International Indonesia
(Foreign), expiring 1/17/00 --
<CAPTION>
NO. OF VALUE
WARRANTS (000)
- --------------- ----------
<C> <S> <C>
1,093,112 Indah Kiat Pulp & Paper Corp.
(Foreign), expiring 7/11/02 $ 139
----------
139
----------
MALAYSIA (0.0%)
244,500 Commerce Asset Holdings Bhd,
expiring 7/11/02 42
61,571 Rashid Hussain Bhd, expiring
12/31/02 27
----------
69
----------
THAILAND (0.0%)
1,020,633 Siam Commercial Bank PCL --
----------
TOTAL WARRANTS (Cost $230) 208
----------
<CAPTION>
NO. OF
UNITS
- ---------------
<C> <S> <C>
UNITS (0.3%)
RUSSIA (0.3%)
1,637 Storyfirst Communications, Inc.,
First Section, Tranche I, 25.00%,
4/30/98 2,341
96 Storyfirst Communications, Inc.,
Second Section, Tranche I,
25.00%, 4/30/98 137
421 Storyfirst Communications, Inc.,
Tranche II, 26.00%, 4/30/98 602
562 Storyfirst Communications, Inc.,
Tranche IV, 28.00%, 4/30/98 804
654 Storyfirst Communications, Inc.,
Tranche V, 29.00%, 4/30/98 936
550 Storyfirst Communications, Inc.,
Tranche VI, 30.00%, 4/30/98 787
----------
TOTAL UNITS (Cost $4,675) 5,607
----------
<CAPTION>
FACE
AMOUNT
(000)
- ---------------
<C> <S> <C>
CONVERTIBLE DEBENTURES (0.1%)
INDIA (0.0%)
INR 336 DCM Shriram Industries Ltd.,
7.50%, 2/21/02 189
----------
SOUTH AFRICA (0.1%)
ZAR 111 Sasol Ltd. 8.50%, 12/29/49 857
----------
TOTAL CONVERTIBLE DEBENTURES (Cost $1,863) 1,046
----------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- --------------- ----------
<C> <S> <C>
NON-CONVERTIBLE DEBENTURES (0.1%)
INDIA (0.1%)
INR 341 DCM Shriram Industries Ltd.,
(Floating Rate), 9.90%, 2/21/02 $ 241
700 Saurashtra Cement & Chemicals
Ltd., 18.00%, 11/27/98 1,502
----------
TOTAL NON-CONVERTIBLE DEBENTURES (Cost $2,865) 1,743
----------
TOTAL FOREIGN & U.S. SECURITIES (92.0%)
(Cost $1,470,810) 1,582,828
----------
SHORT-TERM INVESTMENT (8.3%)
REPURCHASE AGREEMENT (8.3%)
$ 142,748 Chase Securities, Inc. 5.60%,
dated 3/31/98, due 4/01/98, to be
repurchased at $142,770,
collateralized by U.S. Treasury
Notes, 5.50%, due 3/31/03, valued
at $145,787 (Cost $142,748) 142,748
----------
FOREIGN CURRENCY (0.8%)
ARP 4 Argentine Peso 4
BRL 1,707 Brazilian Real 1,501
EGP 4,187 Egyptian Pound 1,229
HKD 423 Hong Kong Dollar 55
HUF 278,344 Hungarian Forint 1,305
INR 60,375 Indian Rupee 1,528
IDR 2,154 Indonesian Rupiah --
ILS 6,080 Israeli Shekels 1,689
MYR 3,395 Malaysian Ringgit 930
MXP 399 Mexican Peso 47
MAD 895 Morrocam Dhiram 90
PKR 21,199 Pakistan Rupee 480
PHP 91 Philippine Peso 2
PLN 3,056 Poland Zloty 885
ZAR 3 South African Rand 1
KRW 3,098,602 South Korean Won 2,237
LKR 2 Sri Lankan Rupee --
TWD 6,647 Taiwan Dollar 202
THB 71,315 Thai Baht 1,812
VEB 15,616 Venezuelan Bolivar 30
ZID 74 Zimbabwe Dollars 5
----------
TOTAL FOREIGN CURRENCY (Cost $14,210) 14,032
----------
<CAPTION>
VALUE
(000)
----------
<C> <S> <C>
TOTAL INVESTMENTS (101.1%) (Cost $1,627,768) $1,739,608
----------
OTHER ASSETS AND LIABILITIES (-1.1%)
Other Assets 189,151
Liabilities (208,407)
----------
(19,256)
----------
NET ASSETS (100%) $1,720,352
----------
----------
CLASS A:
- -----------------------------------------------------
NET ASSETS
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE $1,708,726
Applicable to 121,799,913 outstanding $0.001 par
value shares (authorized 500,000,000 shares)
$14.03
----------
----------
CLASS B:
- -----------------------------------------------------
NET ASSETS
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE $11,626
Applicable to 828,398 outstanding $0.001 par value
shares (authorized 500,000,000 shares)
$14.03
----------
----------
</TABLE>
- ------------------------------
@ -- Advised by an affiliate
ADR -- American Depositary Receipt
CPO -- Certificate of Participation
GDR -- Global Depositary Receipt
GDS -- Global Depositary Shares
PCL -- Public Company Limited
RFD -- Ranked for Dividend
Floating Rate Security -- 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, 1998.
9
