<PAGE>
MORGAN STANLEY
EMERGING MARKETS FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS James W. Grisham
Frederick B. Whittemore VICE PRESIDENT
VICE-CHAIRMAN OF THE BOARD Michael F. Klein
OF DIRECTORS VICE PRESIDENT
Warren J. Olsen Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR VICE PRESIDENT
Peter J. Chase Joseph P. Stadler
DIRECTOR VICE PRESIDENT
John W. Croghan Valerie Y. Lewis
DIRECTOR SECRETARY
David B. Gill James R. Rooney
DIRECTOR TREASURER
Graham E. Jones Belinda A. Brady
DIRECTOR ASSISTANT TREASURER
John A. Levin
DIRECTOR
</TABLE>
- ---------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
- --------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(617) 575-3120
- --------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse 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.
- ----------------------------------------------------------
MORGAN STANLEY
EMERGING MARKETS
FUND, INC.
---------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the nine months ended September 30, 1996, the Morgan Stanley Emerging
Markets Fund, Inc. (the "Fund") had a total return, based on net asset value per
share, of 15.20% compared with 9.71% for the IFC Global Total Return Composite
Index. For the period from commencement of operations on November 1, 1991
through September 30, 1996 the Fund's total return, based on net asset value per
share, was 112.40% compared with 65.99% for the Index. On September 30, 1996,
the closing price of the Fund's shares on the New York Stock Exchange was
$15.75, representing a 5.5% discount to the Fund's net asset value per share.
After a strong rebound in the first half of 1996, the emerging markets declined
during the third quarter. The correction came primarily in July as the emerging
markets fell in synchrony with the U.S. market, while August and September
continued the year's upward trend. The Fund had a total return, based on net
asset value per share, of -4.47% for the three months ended September 30, 1996
compared with -3.61% for the Morgan Stanley Capital International EMF Index.
Both major themes which negatively influenced the emerging markets during the
quarter were proven to be exaggerated. First, the anticipation of a rise in U.S.
interest rates to cool a U.S. economy reputedly growing too fast and second, the
slowdown in Asian exports. The U.S. economy wasn't as strong as had been feared,
and sentiment improved significantly in September when the U.S. Federal Reserve
left interest rates unchanged. After 18 months of strong export momentum in the
emerging markets, there have been signs of a slowdown. While Latin America and
India have been affected to some extent, Asia, with its large electronics export
quotient, has seen the sharpest down-turn. A fall in semi-conductor prices was
an important factor, but recently there have been signs of a recovery in demand
for electronic components.
Over the year-to-date, Latin American markets have risen 16.2%, leaving their
Asian counterparts lagging with only 3.9% appreciation overall although as the
table below illustrates, the performance differential among the Asian markets
has been wide. Taiwan is the best performer in the region with a gain of 33%
this year, based on a recovery from pre-election tension with mainland China.
South Korea, on the other hand, is now at the bottom of the Asian league, as
anxiety about declining electronics export volumes and prices, competition from
the weaker yen, and the slowing Korean economy have depressed the stock market.
Even the moves by the government to increase the level of allowable foreign
investment have
not helped. We believe that the pessimism is overdone, Korea is set to join the
OECD and the stockmarket should pick up from here.
<TABLE>
<CAPTION>
YEAR-TO-DATE CHANGE*
<S> <C>
Taiwan 33.6%
Malaysia 16.2%
Hong Kong 15.8%
Indonesia 13.2%
Philippines 12.1%
India 2.3%
Thailand -15.0%
Korea -23.3%
</TABLE>
- --------------------------
*The Morgan Stanley Capital International EMF Index to September 1996.
Hong Kong rose 4.4% over the quarter ended September 30, 1996. With the
hand-over of sovereignty from Britain becoming a reality in mid-1997 and the
deeper integration of Hong Kong into the nearby Guandong economy, Hong Kong is
now a China-play at last. The outlook for economic growth going forward is
improving as Beijing eases monetary policy. In addition, the property market has
definitely bottomed out. While there may not be unlimited upside in property
assets, there is still likely demand from smaller mainland Chinese companies
which have yet to establish foot-holds in Hong Kong. The situation is very
different from early 1994 when U.S. interest rates were on an upward trend and
the property bubble had yet to burst. When mortgages eventually become freely
available in China, there is huge potential for property companies and banks in
the supply and financing of low cost housing units.
Thailand, where our allocation is below the benchmark weighting, has now hit its
lowest level in three years. To protect the currency, the Baht, interest rates
have been kept at a high level depressing economic growth. While new
construction has definitely slowed, over-investment in property is hitting the
smaller finance companies and builders. Additionally, the stock market -- which
is dominated by banks and finance companies -- has been affected by the prospect
of higher U.S. interest rates and falling domestic profitability. The local
investor has completely lost faith in equities. The situation is not being
helped by the lack of political leadership. Prime Minister Banharn resigned and
called an election for mid-November. Thailand needs strong political leadership
to improve the technical competence of the workforce in order to enable the
country to move up the value-added curve. Presently, much of the country's
exports are textiles and footwear, which face competition from cheaper
manufacturing centers in countries such as Vietnam. The situation
2
<PAGE>
is not hopeless, however. Thailand runs a fiscal surplus, has a savings rate in
excess of 30% and is well placed geographically to act as a manufacturing
center. General Motors, for example, announced a major investment project in
Thailand, which should boost local auto parts suppliers. At some point, Thailand
will be a buy.
India, one of the Fund's largest weightings, had a relatively poor quarter. The
domestic Indian investor has been largely absent from the market all year and
foreign investors reacted negatively to the July budget, which imposed a minimum
corporate tax, and thus lowered earnings of many Indian companies. India lost
almost 18% over the quarter.
Russian equities have fallen 14% over the last three months mainly on concerns
over the newly re-elected President Yeltsin's health. Even two years ago, such
details would never have been made public. Today an encouraging openness exists,
but such transparency inevitably causes stock market jitters. Several visits to
Russia have convinced us that the reform process is gradually being
institutionalized and cannot be reversed, and that Russia has values available
nowhere else in our emerging market universe. During the quarter, Russia
received a sovereign rating for external debt of BB-, a higher level than
anticipated, and the Gazprom issue has recently been successfully placed.
Year-to-date, Russia remains up 97%.
Finally, the two largest Latin American stockmarkets, Brazil and Mexico,
produced positive returns for the quarter. Argentina, where the Fund is modestly
underweight, fell 7.5% over the last three months as the country was rocked by
the departure of the popular economics minister Domingo Cavallo. Brazil advanced
2.3% as inflation continued to descend and second quarter profits were in line.
The most notable exception to earnings expectations, however, was Telebras, the
Fund's largest holding, which announced spectacular results, more than doubling
its earnings. Mexico rose 1.9%. There are clear signs of recovery in the Mexican
economy and exports have surged 20% in dollar terms.
The Fund will remain fully invested and we are optimistic about the prospects
for the emerging markets.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Madhav Dhar
PORTFOLIO MANAGER
[SIGNATURE]
Marianne L. Hay
PORTFOLIO MANAGER
October 28, 1996
3
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Investment Summary as of September 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION (UNAUDITED)
TOTAL RETURN (%)
-------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (1)(3)
--------------------------- --------------------------- -----------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
--------------------------- --------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO
DATE 3.15% -- 15.20% -- 9.71% --
ONE YEAR 4.70+ 4.70%+ 6.17+ 6.17%+ 6.39 6.39%
SINCE INCEPTION* 100.68+ 15.22+ 112.40+ 16.55+ 65.99 10.85
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
A BAR CHART REFLECTING THE DATA BELOW IS REFLECTED HERE.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31: SEPTEMBER 30,1996
1991* 1992 1993 1994 1995 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share $ 14.71 $ 16.74 $ 28.20 $ 20.30 $ 14.69 $ 16.67
Market Value Per Share $14.25 $18.13 $31.63 $21.50 $15.50 $15.75
Premium/(Discount) -3.1% 8.3% 12.2% 5.9% 5.5% -5.5%
Income Dividends $0.04 $0.01 - - - -
Capital Gains Distributions - $0.01 $1.49 $6.50 $1.29 $0.25
Fund Total Return (2) 4.61% 13.94% 95.22%+ -5.33% -16.30%+ 15.20%
Index Total Return (1)(3)** 3.25% 0.33% 67.52% -0.51% -12.34% 9.71%
</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. This return does not include the effect of dilution in
connection with the Rights Offering. 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 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.
* The Fund commenced operations on November 1, 1991.
** Unaudited.
+ Adjusted for Rights Offering.
4
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Portfolio Summary as of September 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 95.5%
Short-Term Investments 3.8%
Debt Securities 0.7%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Banking 16.0%
Beverages 5.7%
Chemicals 4.2%
Energy Equipment & Services 4.1%
Energy Sources 4.7%
Food & Household Products 3.8%
Multi-Industry 10.3%
Real Estate 3.9%
Telecommunications 16.9%
Utilities-Electrical & Gas 3.1%
Other 27.3%
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Portfolio Summary as of September 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Brazil 12.7%
India 10.8%
Mexico 10.5%
Hong Kong 7.5%
Taiwan 6.3%
Russia 5.6%
Thailand 5.6%
Korea 5.0%
Indonesia 4.3%
South Africa 4.3%
Turkey 3.4%
Philippines 3.4%
Israel 3.0%
Pakistan 2.6%
Argentina 2.5%
Poland 1.4%
Greece 1.1%
Zimbabwe 1.1%
Egypt 1.0%
China 1.0%
Other 6.9%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT
OF
NET
ASSETS
------
<C> <S> <C>
1. Telebras 5.1%
2. Bharat Heavy Electricals 4.1
3. Brahma 1.9
4. G. Bancomer 1.7
5. Telekomunikasi (Foreign) 1.7
<CAPTION>
PERCENT
OF
NET
ASSETS
------
<C> <S> <C>
6. FEMSA 'B' 1.6%
7. Banco Bradesco (Preferred) 1.6
8. Cemex 1.5
9. G. Televisa ADR 1.5
10. State Bank of India Ltd. 1.5
------
22.2%
------
------
</TABLE>
- --------------------------------------------------------------------------------
*Excludes short-term securities.
6
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
COMMON STOCKS (96.4%)
(Unless otherwise noted)
- ---------------------------------------------------
- ----------
ARGENTINA (2.5%)
AUTOMOBILES
CIADEA 1 U.S.$ --
--------------
BEVERAGES
Quilmes Industrial S.A. 97,340 937
--------------
ENERGY SOURCES
YPF ADR 69,635 1,593
--------------
TELECOMMUNICATIONS
Telecom Argentina S.A. ADR 70,671 2,853
Telefonica de Argentina S.A. ADR 169,320 4,212
--------------
7,065
--------------
9,595
--------------
- ---------------------------------------------------------
- ------------
BRAZIL (12.7%)
BANKING
Banco Bradesco (Preferred) 715,271,363 6,095
Banco do Brasil (Rights) 47,773,790 --
Banco Nacional (Preferred) 61,598,720 3
Itaubanco (Preferred) 8,733,500 3,623
--------------
9,721
--------------
BEVERAGES
Brahma (Preferred) 11,628,209 7,232
Brahma (Rights) 966,600 --
--------------
7,232
--------------
ENERGY SOURCES
Petrobras (Preferred) 20,178,999 2,372
--------------
FOOD & HOUSEHOLD PRODUCTS
Pao de Acucar GDR 2,720 52
Pao de Acucar GDR 144A 60,670 1,164
Pao de Acucar (Preferred) 6,460,000 125
--------------
1,341
--------------
METALS -- STEEL
Usiminas (Preferred) 138,782,000 137
--------------
MULTI-INDUSTRY
Itausa Investimentos Itau (Preferred) 413,000 324
--------------
TELECOMMUNICATIONS
Telebras 50,853,000 3,307
Telebras (Preferred) 157,117,183 12,357
Telebras (Preferred) ADR 45,485 3,571
Telesp 1,985,117 336
Telesp (Preferred) 2,266,535 435
--------------
20,006
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
UTILITIES -- ELECTRICAL & GAS
Celesc GDS (Preferred) 5,680 U.S.$ 490
Cemig ADR 7,525 225
Cemig S.A. ADR 144A (Preferred) 30,288,867 905
Eletrobras ADR 34,630 463
Eletrobras 'B' 11,713,078 3,086
Eletrobras 'B' (Preferred) 5,938,138 1,658
Light 3,498,000 493
--------------
7,320
--------------
48,453
--------------
- ---------------------------------------------------------
- ------------
CHILE (0.3%)
FOOD & HOUSEHOLD PRODUCTS
Santa Isabel S.A. ADR 48,962 1,255
--------------
- ---------------------------------------------------------
- ------------
CHINA (1.0%)
CHEMICALS
Jilin Chemical Industrial Co. ADR 19,400 279
Shenzhen Yizheng Chemical Fibre Co.
Ltd. 4,342,000 1,055
--------------
1,334
--------------
ENERGY SOURCES
Zhenhai Refining & Chemical Co. Ltd.
'H' 2,129,000 578
--------------
PACKAGING & CONTAINERS
China International Marine Containers
Ltd. Co. 1,690,000 1,307
--------------
TRANSPORTATION -- ROAD & RAIL
Guangshen Railway Co. Ltd. 220,000 85
Guangshen Railway Co. Ltd. ADR 20,000 380
--------------
465
--------------
3,684
--------------
- ---------------------------------------------------------
- ------------
COLOMBIA (0.3%)
BANKING
Banco de Colombia 3,032,000 1,290
--------------
- ---------------------------------------------------------
- ------------
EGYPT (1.0%)
BANKING
Commercial International Bank 5,389 743
Egypt American Bank 3,789 106
--------------
849
--------------
BUILDING MATERIALS & COMPONENTS
Ameriyah Cement Co. 35,900 604
Helwan Portland Cement 34,500 494
Torah Portland Cement Co. 37,150 656
--------------
1,754
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
EGYPT (CONTINUED)
FINANCIAL SERVICES
Egyptian Finance & Industrial 14,850 U.S.$ 265
--------------
FOOD & HOUSEHOLD PRODUCTS
North Cairo Flour Mills 7,910 261
--------------
REAL ESTATE
Madinet Nasr Housing & Development 3,500 149
--------------
TOBACCO
Eastern Tobacco 47,790 654
--------------
3,932
--------------
- ---------------------------------------------------------
- ------------
GREECE (1.1%)
BANKING
Ergo Bank S.A. 25,000 1,441
--------------
BEVERAGES
Hellenic Bottling Co. S.A. 54,000 1,836
--------------
CONSTRUCTION & HOUSING
Aegek 13,550 66
--------------
FOOD & HOUSEHOLD PRODUCTS
Delta Dairy S.A. 68,210 792
--------------
4,135
--------------
- ---------------------------------------------------------
- ------------
HONG KONG (7.5%)
FOOD & HOUSEHOLD PRODUCTS
Tingyi (Cayman Island) Holding Co. 3,572,000 753
--------------
MULTI-INDUSTRY
China Resources Enterprise Ltd. 594,000 599
Citic Pacific Ltd. 854,000 3,865
Hutchison Whampoa Ltd. 748,000 5,030
Swire Pacific Ltd. 'A' 322,000 2,884
--------------
12,378
--------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 644,000 4,955
New World Development Co. Ltd. 556,000 2,919
Sun Hung Kai Properties Ltd. 281,100 2,990
--------------
10,864
--------------
TELECOMMUNICATIONS
Asia Satellite Telcom Holdings Ltd. 355,000 939
Hong Kong Telecom Ltd. 1,121,200 2,030
--------------
2,969
--------------
TRANSPORTATION -- SHIPPING
Cosco Pacific Ltd. 1,384,000 1,172
Hong Kong Ferry Holdings 116,000 205
--------------
1,377
--------------
28,341
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
HUNGARY (0.2%)
CHEMICALS
Pannonplast Rt. 5,835 U.S.$ 195
Tiszai Vegyi Kombinat Rt. 34,500 307
--------------
502
--------------
FOREST PRODUCTS & PAPER
Cofinec S.A. GDR 4,900 135
--------------
637
--------------
- ---------------------------------------------------------
- ------------
INDIA (10.8%)
AUTOMOBILES
Apollo Tyres Ltd. 123,750 399
Hero Honda Ltd. 189,979 1,332
MRF Ltd. 8,000 640
Tata Engineering & Locomotive Ltd. 130,500 1,632
--------------
4,003
--------------
BANKING
Bank of Rajasthan -- New 222,950 757
State Bank of India Ltd. 798,700 5,663
--------------
6,420
--------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co. Ltd. 6,742 337
Gujarat Ambuja Cements Ltd. 96,000 792
--------------
1,129
--------------
CHEMICALS
Indian Petro Chemical Corp. Ltd. 351,300 1,096
Reliance Industries Ltd. 1,152 6
--------------
1,102
--------------
ELECTRICAL COMPONENTS & INSTRUMENTS
Modi Xerox Ltd. 99,550 321
--------------
ELECTRICAL & ELECTRONICS
Asian Electronics Ltd. 97,300 519
--------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 3,125,000 15,669
Crompton Greaves Ltd. 270 1
--------------
15,670
--------------
FINANCIAL SERVICES
Housing Development Finance Corp. Ltd. 49,220 3,174
--------------
HEALTH & PERSONAL CARE
E. Merck (India) Ltd. 182,000 817
Nicholas Piramal India Ltd. 225,000 672
--------------
1,489
--------------
MACHINERY & ENGINEERING
Bharat Forge Co. Ltd. 48,433 141
Bharat Forge Co. Ltd. -- New 14,285 42
--------------
183
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDIA (CONTINUED)
MISCELLANEOUS MATERIALS & COMMODITIES
Essel Packaging Ltd. 71,950 U.S.$ 262
--------------
MULTI-INDUSTRY
@Morgan Stanley Growth Fund 6,881,800 1,322
--------------
RECREATION & OTHER CONUMER GOODS
Tube Investments of India Ltd. 204,150 511
--------------
TELECOMMUNICATIONS
Videsh Sanchar Nigam Ltd. 62,600 1,791
--------------
TEXTILES & APPAREL
Mahavir Spinning Mills Ltd. 5,500 10
Raymond Ltd. 81,150 509
--------------
519
--------------
TOBACCO
ITC Ltd. 209,800 1,767
--------------
TRANSPORTATION -- SHIPPING
Great Eastern Shipping Ltd. 'A' 779,446 771
--------------
UTILITIES -- ELECTRICAL & GAS
Tata Power Co. Ltd. 100 --
--------------
40,953
--------------
- ---------------------------------------------------------
- ------------
INDONESIA (4.3%)
BANKING
Bank International Indonesia (Foreign) 1,111,500 1,627
--------------
CHEMICALS
Sorini Corp. (Foreign) 778,500 502
--------------
FOREST PRODUCTS & PAPER
Barito Pacific Timber (Foreign) 839,000 515
Indah Kiat Pulp & Paper (Foreign) 2,302,630 1,759
--------------
2,274
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Charoen Pokphand Indonesia (Foreign) 87,694 117
--------------
TELECOMMUNICATIONS
Telekomunikasi (Foreign) 4,114,500 6,376
--------------
TOBACCO
Gudang Garam (Foreign) 841,000 3,168
HM Sampoerna (Foreign) 233,000 2,267
--------------
5,435
--------------
16,331
--------------
- ---------------------------------------------------------
- ------------
ISRAEL (3.0%)
AEROSPACE & MILITARY TECHNOLOGY
Elbit Ltd. 37,909 1,572
--------------
BANKING
First International Bank of Israel 10,321 1,090
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
ELECTRICAL & ELECTRONICS
Scitex Ltd. 55,467 U.S.$ 686
--------------
FOOD & HOUSEHOLD PRODUCTS
Blue Square-Israel Ltd. 87,700 1,294
Osem Investment Ltd. 154,176 898
Super Sol Ltd. 88,993 2,031
--------------
4,223
--------------
HEALTH & PERSONAL CARE
Teva Pharmaceutical Industries Ltd.
ADR 20,000 928
--------------
MULTI-INDUSTRY
Koor Industries Ltd. 19,850 1,762
Pec Israel Economic Corp. 43,870 751
--------------
2,513
--------------
REAL ESTATE
Israel Land Development 157,600 437
--------------
11,449
--------------
- ---------------------------------------------------------
- ------------
KOREA (5.0%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. (Foreign) 27,671 2,171
Samsung Electronics Co. GDR 990 49
Samsung Electronics Co. -- New 2,000 102
Samsung Electronics Co. RFD (Foreign)
(Bonus Issue) 8,080 634
--------------
2,956
--------------
BANKING
Cho Hung Bank Co. Ltd (Foreign) 17,500 197
Housing & Commercial Bank, Korea 97,380 2,460
Kookmin Bank GDR 72,000 1,764
Korea Exchange Bank 53,700 618
Shinhan Bank Co. Ltd. (Foreign) 76,710 1,773
--------------
6,812
--------------
BEVERAGES
Chosun Brewery Co. Ltd. (Foreign) 8,410 277
--------------
CHEMICALS
Hanwha Chemical Corp. 68,100 620
--------------
CONSTRUCTION & HOUSING
Hyundai Engineering & Construction Co.
(Foreign) 7,700 237
--------------
ENERGY EQUIPMENT & SERVICES
Yukong Ltd. (Rights) 564 4
--------------
ENERGY SOURCES
Ssangyong Oil Refining Co. Ltd. 52,740 1,213
--------------
METALS -- STEEL
Pohang Iron & Steel (Foreign) 7,870 563
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
KOREA (CONTINUED)
TELECOMMUNICATIONS
Korea Mobile Telecom ADR 59,000 U.S.$ 892
Korea Mobile Telecom (Foreign) 660 730
LG Information & Communication Ltd. 23,200 2,851
--------------
4,473
--------------
UTILITIES -- ELECTRICAL & GAS
Korea Electric Power (Foreign) 49,300 1,629
--------------
18,784
--------------
- ---------------------------------------------------------
- ------------
MAURITIUS (0.8%)
BANKING
State Bank of Mauritius 6,880,000 2,837
--------------
- ---------------------------------------------------------
- ------------
MEXICO (10.5%)
BANKING
G. Banacci 'B' 1,040,565 2,250
G. Banacci 'L' 805,847 1,647
G. Bancomer 'B' 1,013,690 495
G. Bancomer 'B' ADR 597,883 5,904
--------------
10,296
--------------
BEVERAGES
FEMSA 'B' 2,007,775 6,127
Panamerican Beverages, Inc. 'A' 18,992 781
--------------
6,908
--------------
BROADCASTING & PUBLISHING
G. Televisa ADR 196,432 5,672
--------------
BUILDING MATERIALS & COMPONENTS
Apasco 222,558 1,532
Cemex CPO 'A' 1,005,155 3,761
Cemex CPO ADR 268,302 2,029
--------------
7,322
--------------
CONSTRUCTION & HOUSING
Empresas ICA Sociedad Controladora
S.A. ADS 64,389 982
--------------
FOOD & HOUSEHOLD PRODUCTS
Gruma S.A. 'B' 87,694 548
Maseca 'B2' 562,675 717
--------------
1,265
--------------
INSURANCE
Invercorp. ADR 93,690 24
--------------
MERCHANDISING
Cifra 'B' 381,300 551
Cifra S.A. de C.V. 'C' 1,034,064 1,487
--------------
2,038
--------------
MULTI-INDUSTRY
Desc S.A. de C.V. 60,490 1,346
G. Carso 'A1' 124,050 571
G. Carso ADR 93,690 874
G. Sidek 'A' 1,000 --
--------------
2,791
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TELECOMMUNICATIONS
Telmex 'L' ADR 83,305 U.S.$ 2,676
--------------
39,974
--------------
- ---------------------------------------------------------
- ------------
MOROCCO (0.6%)
BANKING
Wafabank 20,000 1,152
--------------
MULTI-INDUSTRY
Groupe Ona 21,400 1,098
--------------
2,250
--------------
- ---------------------------------------------------------
- ------------
PAKISTAN (2.6%)
BUILDING MATERIALS & COMPONENTS
Cherat Cement Ltd. 21,056 11
D.G. Khan Cement Ltd. 684,500 171
--------------
182
--------------
CHEMICALS
Fauji Fertilizer Co. Ltd. 1,315,700 2,458
--------------
ENERGY SOURCES
Pakistan State Oil Co. Ltd. 148,200 1,332
--------------
FOOD & HOUSEHOLD PRODUCTS
Industrial Fruit Products 100 --
--------------
INSURANCE
Adamjee Insurance Co. Ltd. 14,855 34
--------------
TELECOMMUNICATIONS
Pakistan Telecommunications 49,630 4,495
Pakistan Telecommunications GDR 4,500 394
--------------
4,889
--------------
TEXTILES & APPAREL
Crescent Textile Mills Ltd. 2,770 1
Nishat Mills Ltd. 471,926 134
--------------
135
--------------
UTILITIES -- ELECTRICAL & GAS
Karachi Electric Supply Corp. 554,400 317
Sui Northern Gas Co. 337,000 340
--------------
657
--------------
9,687
--------------
- ---------------------------------------------------------
- ------------
PERU (0.6%)
TELECOMMUNICATIONS
Telefonica del Peru ADR 103,060 2,357
--------------
- ---------------------------------------------------------
- ------------
PHILIPPINES (3.4%)
CONSTRUCTION & HOUSING
DMCI Holdings, Inc. 1,918,400 1,426
--------------
ENERGY SOURCES
Petron Corp. 3,592,581 1,301
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
PHILIPPINES (CONTINUED)
MULTI-INDUSTRY
JG Summit Holdings 'B' 6,477,600 U.S.$ 2,049
--------------
REAL ESTATE
Ayala Land, Inc. 'B' 984,571 1,201
C&P Homes, Inc. 1,045,500 708
SM Prime Holdings, Inc. 6,564,480 1,526
--------------
3,435
--------------
TELECOMMUNICATIONS
Philippine Long Distance Telephone 'B' 39,180 2,434
--------------
UTILITIES -- ELECTRICAL & GAS
Manila Electric Co. 'B' 288,164 2,131
--------------
12,776
--------------
- ---------------------------------------------------------
- ------------
POLAND (1.4%)
AUTOMOBILES
Debica 9,700 207
--------------
BEVERAGES
Zwyeic 4,500 267
--------------
CHEMICALS
Eastbridge 33,600 2,259
--------------
CONSTRUCTION & HOUSING
Mostostal Exports S.A. 246,000 700
Mostostal Exports S.A. (Rights) 246,000 13
Polifarb Wroclaw S.A. 24,000 121
--------------
834
--------------
FINANCIAL SERVICES
Bank Rozwoju Eksportu 4,550 156
--------------
MULTI-INDUSTRY
Elektrim 116,500 1,140
International UNP Holdings Ltd. 2,280,000 603
--------------
1,743
--------------
5,466
--------------
- ---------------------------------------------------------
- ------------
RUSSIA (5.6%)
BROADCASTING & PUBLISHING
Storyfirst Communications 'C'
(Preferred) 270 180
Storyfirst Communications 'D'
(Preferred) 720 540
Storyfirst Communications 'E'
(Preferred) 780 780
Storyfirst Communications 'F'
(Preferred) 139 348
--------------
1,848
--------------
ENERGY SOURCES
Irkutskenergo 11,460,000 1,146
LUKoil Holdings 180,900 1,659
LUKoil Holdings 144A 27,065 988
Moscow Energy 4,225,000 3,777
Unified Energy System 26,935,000 1,993
--------------
9,563
--------------
FOREST PRODUCTS & PAPER
Alliance Cellulose 'B' 156,075 2,931
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TELECOMMUNICATIONS
Global Telesystems Group 214,285 U.S.$ 2,893
Rostelecom 953,500 2,288
Russian Telecom Development Corp. 176,000 1,760
--------------
6,941
--------------
21,283
--------------
- ---------------------------------------------------------
- ------------
SINGAPORE (0.3%)
FOOD & HOUSEHOLD PRODUCTS
Want Want Holdings 492,000 1,171
--------------
- ---------------------------------------------------------
- ------------
SOUTH AFRICA (4.3%)
CHEMICALS
SASOL Ltd. 453,588 5,349
--------------
FINANCIAL SERVICES
Amalgamated Banks of South Africa 108,844 587
--------------
FOOD & HOUSEHOLD PRODUCTS
Bidvest Group Ltd. 243,100 1,350
--------------
MERCHANDISING
Metro Cash and Carry Ltd. 421,000 1,439
--------------
MULTI-INDUSTRY
Anglo American Industrial Corp. 38,850 1,370
Barlow Ltd. 333,500 3,235
Gencor Ltd. 268,000 957
@Morgan Stanley Africa Investment Fund 141,445 1,821
--------------
7,383
--------------
16,108
--------------
- ---------------------------------------------------------
- ------------
TAIWAN (6.3%)
BANKING
Hua Nan Commercial Bank 805,000 3,940
--------------
CHEMICALS
Formosa Plastics Corp. 623,000 1,383
--------------
CONSTRUCTION & HOUSING
Pacific Construction 1,041,000 981
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Acer, Inc. 1,148,000 1,730
Siliconware Precision Industries Co. 1,528,000 2,435
Taiwan Semiconductor Co. 487,800 950
--------------
5,115
--------------
INSURANCE
Cathay Life Insurance Co. Ltd. 808,900 5,181
--------------
METALS -- STEEL
China Steel Corp. 4,891,000 4,556
--------------
TRANSPORTATION -- SHIPPING
Yang Ming Marine Transport 2,134,000 2,819
--------------
23,975
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
<S> <C> <C>
- ------------
THAILAND (5.6%)
BANKING
Bangkok Bank Ltd. (Foreign) 373,200 U.S.$ 4,873
Siam Commercial Bank Co. Ltd.
(Foreign) 320,500 3,883
Thai Farmers Bank Ltd. (Foreign) 301,460 3,178
Thai Farmers Bank Ltd. (Warrants),
expiring 9/15/02 36,220 97
--------------
12,031
--------------
ELECTRICAL & ELECTRONICS
Shinawatra Computer Co. Ltd. 31,200 535
Shinawatra Computer Co. Ltd. (Foreign) 138,200 2,370
--------------
2,905
--------------
FINANCIAL SERVICES
Finance One Co. Ltd. (Foreign) 305,500 3,572
National Finance & Securities Co. Ltd.
(Foreign) 157,100 538
--------------
4,110
--------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd. 41,400 537
Advanced Information Services Co. Ltd.
(Foreign) 127,000 1,648
--------------
2,185
--------------
21,231
--------------
- ---------------------------------------------------------
- ------------
TURKEY (3.4%)
AUTOMOBILES
Tofas Turk Otomobil Fabrikasi 14,507,500 505
--------------
BANKING
Turkiye Garanti Bankasi 10,017,000 452
Yapi Ve Kredi Bankasi AS 29,176,000 729
--------------
1,181
--------------
BEVERAGES
Ege Biracilik Ve Malt Sanayii 11,055,380 3,245
Erciyas Biracilik Ve Malt Sanayii 1,582,000 817
Guney Biracilik Ve Malt Sanayii 1,046,000 188
--------------
4,250
--------------
BROADCASTING & PUBLISHING
Sabah Yayincilik AS 30,998,000 472
--------------
BUILDING MATERIALS & COMPONENTS
Borusan Birmesik 5,757,000 419
Trakya Cam Sanayii AS 9,164,000 578
--------------
997
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
CHEMICALS
Bagfas Bandirma Gubre Fabrikalari AS 771,000 U.S.$ 149
--------------
FOOD & HOUSEHOLD PRODUCTS
Migros Turk TAS 1,400,000 1,248
Tat Konserve Sanayii AS 4,336,999 613
--------------
1,861
--------------
HEALTH & PERSONAL CARE
Efes Sinai Yatirim 30,236,087 756
Efes Sinai Yatirim (Rights) 30,236,087 --
--------------
756
--------------
METALS -- STEEL
Eregli Demir Ve Celik Fabrikalari TAS 18,150,000 1,953
--------------
TEXTILES & APPAREL
Aksa Akrilik Kimya Sanayii AS 778,290 157
Aksa Akrilik Kimya Sanayii AS -- New 1,953,863 393
Bossa Ticaret Sanayii Isletme 4,315,000 361
--------------
911
--------------
13,035
--------------
- ---------------------------------------------------------
- ------------
UNITED KINGDOM (0.2%)
MULTI-INDUSTRY
Lonrho plc 320,907 854
--------------
- ---------------------------------------------------------
- ------------
ZIMBABWE (1.1%)
MULTI-INDUSTRY
Trans Zambezi Industries Ltd. 1,800,000 4,320
--------------
- ---------------------------------------------------------
- ------------
TOTAL COMMON STOCKS
(Cost U.S. $340,739) 366,163
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
DEBT INSTRUMENTS (0.7%)
- ---------------------------------------------------------
- ------------
INDIA (0.7%)
CHEMICALS
Supreme Petrochem Ltd. 15.00%, 4/22/02 INR 600 210
--------------
MACHINERY & ENGINEERING
Bharat Forge Co. Ltd. 14.50%, 4/18/02 14 16
--------------
METALS -- STEEL
Shri Ishar Alloy Steels Ltd. 15.00%,
4/21/02 581 245
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDIA (CONTINUED)
MULTI-INDUSTRY
DCM Shriram Industries Ltd. 16.50%,
3/2/02 INR 335 U.S.$ 517
DCM Shriram Industries (Convertible)
Ltd. 15.00%, 3/2/02 330 386
Raymond Ltd. 16.00%, 1/5/02 124 308
Somani Pilkington Ltd. 15.00%, 1/4/02 207 969
--------------
2,180
--------------
2,651
--------------
- ---------------------------------------------------------
- ------------
POLAND (0.0%)
BRADY BOND
Polish People's Republic Past Due
Interest Bond 3.75%, 10/27/14 U.S.$ 28 22
--------------
- ---------------------------------------------------------
- ------------
TOTAL DEBT INSTRUMENTS
(Cost U.S. $3,359) 2,673
--------------
- ---------------------------------------------------------
- ------------
SHORT-TERM INVESTMENT (2.8%)
- ---------------------------------------------------------
- ------------
UNITED STATES (2.8%)
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.40%, dated
9/30/96, due 10/1/96, to be
repurchased at U.S. $10,580,
collateralized by U.S. $7,780 United
States Treasury Notes 10.625%, due
8/15/15, valued at U.S. $10,707 (Cost
$10,578) 10,578 10,578
--------------
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.0%)
Argentine Peso ARP 6 6
Brazilian Real BRC 217 212
Colombian Peso COP 13,236 13
Egyptian Pound EGP 33 10
Greek Drachma GRD 1,244 5
Hong Kong Dollar HKD 413 53
Indian Rupee INR 16,631 466
Indonesian Rupiah IDR 190 --
Israeli Shekels ISS 82 26
Korean Won KRW 40,968 49
Mexican Peso MXP 1 --
Pakistani Rupee PKR 26 1
Peruvian New Sol PSS 1 1
Philippine Peso PHP 283 11
Polish Zloty PLZ 43 15
South African Rand ZAR 571 126
Taiwan Dollar TWD 81,534 2,967
--------------
(Cost U.S. $4,014) 3,961
--------------
</TABLE>
- ---------------------------------------------------------
- ------------
<TABLE>
<CAPTION>
AMOUNT AMOUNT
(000) (000)
- ---------------------------------------------------------
<S> <C> <C>
- ------------
TOTAL INVESTMENTS (100.9%)
(Cost U.S. $358,690) U.S.$ 383,375
--------------
- ---------------------------------------------------------
- ------------
OTHER ASSETS AND LIABILITIES (-0.9%)
Other Assets U.S.$ 15,261
Liabilities (18,763) (3,502)
--------------- --------------
- ---------------------------------------------------------
- ------------
NET ASSETS (100%)
Applicable to 22,794,370 issued and outstanding U.S.
$0.01 par value shares (100,000,000 shares authorized) U.S.$ 379,873
--------------
--------------
- ---------------------------------------------------------
- ------------
NET ASSET VALUE PER SHARE U.S.$ 16.67
--------------
--------------
</TABLE>
- ---------------------------------------------------------
- ------------
ADR -- American Depositary Receipt.
ADS -- American Depositary Shares.
GDR -- Global Depositary Receipt.
GDS -- Global Depositary Shares.
RFD -- Ranked for Dividend.
@ -- The Fund is advised by an affiliate.
NOTE: Prior governmental approval for foreign investments may be required under
certain circumstances in some markets, and foreign ownership limitations
may also be imposed by the charters of individual companies in such
markets. As a result, an additional class of shares designated as
"foreign" may be created and offered for investment. The "local" and
"foreign" shares' market values may vary.
13
