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<PAGE>
MORGAN STANLEY
EMERGING MARKETS FUND, INC.
- ---------------------------------------------
DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS James W. Grisham
Warren J. Olsen VICE PRESIDENT
PRESIDENT AND DIRECTOR Michael F. Klein
Peter J. Chase VICE PRESIDENT
DIRECTOR Harold J. Schaaff, Jr.
John W. Croghan VICE PRESIDENT
DIRECTOR Joseph P. Stadler
David B. Gill VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
Graham E. Jones SECRETARY
DIRECTOR James R. Rooney
John A. Levin TREASURER
DIRECTOR Belinda A. Brady
ASSISTANT TREASURER
</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.
---------------
FIRST QUARTER REPORT
MARCH 31, 1997
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the three months ended March 31, 1997, the Morgan Stanley Emerging Markets
Fund, Inc. (the "Fund") had a total return, based on net asset value per share,
of 11.22% compared with 9.60% for the IFC Global Total Return Composite Index
(the "Index"). For the one year ended March 31, 1997, the Fund had a total
return, based on net asset value per share, of 15.24% compared with 11.35% for
the Index. For the period from commencement of operations on November 1, 1991
through March 31, 1997 the Fund's total return, based on net asset value per
share, was 133.45% compared with 78.83% for the Index. On March 31, 1997, the
closing price of the Fund's shares on the New York Stock Exchange was $15.75,
representing a 9.7% discount to the Fund's net asset value per share.
The Fund'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 Fund 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.
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 Fund'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 Fund.
South Africa's strong return for the quarter resulted 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.
2
<PAGE>
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 for 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.
Sincerely,
/s/ Warren J. Olsen
Warren J. Olsen
PRESIDENT AND DIRECTOR
/s/ Madhav Dhar
Madhav Dhar
PORTFOLIO MANAGER
/s/ Marianne L. Hay
Marianne L. Hay
PORTFOLIO MANAGER
April 1997
3
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Investment Summary as of March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
-------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
-------------------------- --------------------------- ----------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
-------------------------- --------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO DATE 13.51% -- 11.22% -- 9.60% --
ONE YEAR 0.98 0.98% 15.24 15.24% 11.35 11.35%
FIVE YEAR 65.76+ 10.64+ 93.44+ 14.11+ 52.23 8.77
SINCE INCEPTION* 110.72+ 14.75+ 133.45+ 16.94+ 78.83 11.33
</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>
YEARS ENDED DECEMBER 31:
TOTAL RETURN 1991* 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share $14.71 $16.74 $28.20 $20.30 $14.69 $15.69
Market Value Per Share $14.25 $18.13 $31.63 $21.50 $15.50 $13.88
Premium/(Discount) -3.1% 8.3% 12.2% 5.9% 5.5% -11.5%
Income Dividends $0.04 $0.01 - - - $0.05
Capital Gains Distributions - $0.01 $1.49 $6.50 $1.29 $0.98
Fund Total Return (2) 4.61% 13.94% 95.22%+ -5.33% -16.30%+ 13.84%
Index Total Return (3) 3.25% 0.33% 67.52% -0.51% -12.34% 7.84%
Morgan Stanley Emerging Markets Funds, Inc. (2)
IFC Global Total Return Composite Index (3)
<CAPTION>
YEARS ENDED DECEMBER 31: THREE MONTHS ENDED
TOTAL RETURN MARCH 31, 1997
<S> <C>
Net Asset Value Per Share $17.45
Market Value Per Share $15.75
Premium/(Discount) -9.7%
Income Dividends -
Capital Gains Distributions -
Fund Total Return (2) 11.22%
Index Total Return (3) 9.60%
Morgan Stanley Emerging Markets Funds, Inc. (2)
IFC Global Total Return Composite Index (3)
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
(3) The IFC Global Total Return Composite Index is an unmanaged index of common
stocks of developing countries in Latin America, East and South Asia,
Europe, the Middle East and Africa, including dividends.
* The Fund commenced operations on November 1, 1991.
+ This return does not include the effect of the rights issued in connection
with the Rights Offering.
4
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Portfolio Summary as of March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 96.2%
Short-Term Investments 2.9%
Debt Securities 0.9%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Banking 15.1%
Beverages & Tobacco 7.1%
Chemicals 5.9%
Electronic Components & Instruments 2.5%
Energy Equipment & Services 6.5%
Energy Sources 3.0%
Food & Household Products 2.4%
Multi-Industry 7.7%
Telecommunications 15.6%
Utilities--Electrical & Gas 10.2%
Other 24.0%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Brazil 14.3%
India 11.1%
Mexico 10.4%
Russia 8.1%
Korea 6.9%
Indonesia 6.4%
Thailand 5.8%
South Africa 5.2%
Hong Kong 4.3%
Taiwan 4.1%
Other 23.4%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
1. Bharat Heavy Electricals Ltd. 6.5%
2. Eletrobras 4.6
3. Telebras 3.0
4. Telmex ADR 2.7
5. SASOL Ltd. 2.1
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
6. FEMSA 'B' 2.1%
7. Asustek Computer Inc. 1.7
8. State Bank of India Ltd. 1.5
9. Samsung Electronics Co. 1.4
10. Moscow Energy 1.4
-----
27.0%
-----
-----
</TABLE>
*Excludes short-term securities.
5
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
COMMON STOCKS (96.8%)
(Unless otherwise noted)
- --------------------------------------------------
- ----------
ARGENTINA (2.7%)
AUTOMOBILES
CIADEA 1 U.S.$ --@
------------
BEVERAGES & TOBACCO
Quilmes ADR 97,340 983
------------
ENERGY SOURCES
YPF ADR 82,865 2,196
------------
TELECOMMUNICATIONS
Telecom Argentina ADR 64,741 2,978
Telefonica Argentina ADR 155,040 4,554
------------
7,532
------------
10,711
------------
- ---------------------------------------------------------
- ------------
BRAZIL (14.2%)
APPLIANCES & HOUSEHOLD DURABLES
Lojas Arapua (Preferred) ADR 144A 7,330 169
Lojas Arapua (Preferred) 9,926,000 234
------------
403
------------
BANKING
Banco Bradesco (Preferred) 398,232,363 3,290
Banco Nacional (Preferred) 61,598,720 3
Itaubanco (Preferred) 4,658,500 2,410
------------
5,703
------------
BEVERAGES & TOBACCO
Brahma (Preferred) 7,904,209 5,153
------------
ENERGY SOURCES
Petrobras (Preferred) 12,121,999 2,409
------------
MERCHANDISING
Pao de Acucar (Preferred) 6,460,000 139
Pao de Acucar (Preferred) GDR 144A 56,050 1,202
Pao de Acucar (Preferred) GDR (Registered) 2,720 58
------------
1,399
------------
TELECOMMUNICATIONS
CRT (Preferred) 'A' 3,118,300 3,621
Telebras 36,515,000 3,681
Telebras (Preferred) 70,468,183 7,291
Telebras (Preferred) ADR 10,815 1,107
Telesp 1,970,535 500
Telesp (Common) 905,117 226
------------
16,426
------------
TEXTILES & APPAREL
Coteminas (Preferred) 2,188,000 876
------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
BRAZIL (CONTINUED)
UTILITIES -- ELECTRICAL & GAS
Celesc (Preferred) 'B' GDR 144A 5,680 U.S.$ 648
Cemig (Preferred) 89,085,867 3,667
Cemig (Preferred) ADR 144A 7,525 312
Cemig (Preferred) GDS 4,550 188
Eletrobras (Common) ADR 132,761 2,755
Eletrobras (Preferred) 'B' ADR 24,410 524
Eletrobras (Common) 'B' 23,593,078 9,756
Eletrobras (Preferred) 'B' 12,613,138 5,430
Lightpar 2,591,000 783
------------
24,063
------------
56,432
------------
- ---------------------------------------------------------
- ------------
CHILE (0.5%)
BEVERAGES & TOBACCO
CCU ADR 41,390 817
------------
MERCHANDISING
Santa Isabel ADR 48,962 1,267
------------
2,084
------------
- ---------------------------------------------------------
- ------------
CHINA (0.8%)
CHEMICALS
Shenzhen Yizheng Chemical Fibre Co. Ltd. 'H' 3,838,000 822
------------
ENERGY SOURCES
Zhenhai Refining & Chemical Co. Ltd. 'H' 2,129,000 776
------------
PACKAGING & CONTAINER
China International Marine Container Ltd. 537,350 682
------------
TRANSPORTATION -- ROAD & RAIL
Guangshen Railway Co. Ltd. 1,134,000 490
Guangshen Railway Co. Ltd. ADR 20,000 438
------------
928
------------
3,208
------------
- ---------------------------------------------------------
- ------------
COLOMBIA (0.3%)
BANKING
Banco de Colombia 3,032,000 1,211
------------
- ---------------------------------------------------------
- ------------
EGYPT (1.8%)
BANKING
Commercial International Bank 53,890 1,296
Egypt American Bank 3,789 180
------------
1,476
------------
BEVERAGES & TOBACCO
Eastern Tobacco 47,790 1,234
------------
BUILDING MATERIALS & COMPONENTS
Ameriyah Cement Co. 35,900 888
Helwan Portland Cement 34,500 775
Torah Portland Cement Co. 37,150 1,045
------------
2,708
------------
CHEMICALS
Egyptian Finance & Industrial 14,850 905
------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
EGYPT (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS
North Cairo Flour Mills 7,910 U.S.$ 431
------------
REAL ESTATE
Madinet Nasr Housing & Development 3,500 482
------------
7,236
------------
- ---------------------------------------------------------
- ------------
HONG KONG (4.3%)
BANKING
Hang Seng Bank Ltd. 77,000 795
------------
MULTI-INDUSTRY
China EB-IHD Holdings Ltd. 1,239,000 935
China Resources Enterprise Ltd. 1,305,000 2,813
Hutchison Whampoa Ltd. 278,000 2,090
Shanghai Industrial Holdings Ltd. 576,000 2,527
------------
8,365
------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 214,000 1,885
China Resources Beijing Land 2,697,000 1,688
Lai Sun Development Co. Ltd. 375,000 436
Lai Sun Hotels International (Warrants), expiring
4/30/99 128,313 --@
New World Development Co. Ltd. 382,000 2,061
Sun Hung Kai Properties Ltd. 173,100 1,832
------------
7,902
------------
17,062
------------
- ---------------------------------------------------------
- ------------
HUNGARY (0.5%)
CHEMICALS
BorsodChem Rt. GDR 5,500 202
Pannonplast Rt. 5,835 259
Tiszai Vegyi Kombinat Rt. 34,500 426
------------
887
------------
HEALTH & PERSONAL CARE
Richter Gedeon Rt. 7,400 478
Richter Gedeon Rt. GDR 3,100 191
------------
669
------------
ENERGY SOURCES
MOL Magyar Olaj-es Gazipari Rt. 36,100 621
------------
2,177
------------
- ---------------------------------------------------------
- ------------
INDIA (10.5%)
AUTOMOBILES
Apollo Tyres Ltd. 34,375 103
Hero Honda Ltd. 188,829 1,579
MRF Ltd. 3,000 258
Tata Engineering & Locomotive Ltd. 5,395 51
------------
1,991
------------
BANKING
State Bank of India Ltd. 798,700 6,076
------------
BEVERAGES & TOBACCO
ITC Ltd. 10,918 109
------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co. Ltd. 5,967 220
------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
INDIA (CONTINUED)
CHEMICALS
Indian Petro Chemical Corp. Ltd. 6,110 U.S.$ 24
Reliance Industries Ltd. 852 6
------------
30
------------
HEALTH & PERSONAL CARE
E. Merck (India) Ltd. 45,983 223
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Modi Xerox Ltd. 59,550 191
------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 3,125,000 25,750
------------
FINANCIAL SERVICES
Housing Development Finance Corp. Ltd. 49,220 3,775
------------
MISCELLANEOUS MATERIALS & COMMODITIES
Essel Packaging Ltd. 35,650 94
------------
MULTI-INDUSTRY
*Morgan Stanley Growth Fund 6,881,800 1,152
------------
RECREATION, OTHER CONSUMER GOODS
Tube Investments of India Ltd. 149,500 214
------------
TEXTILES & APPAREL
Raymond Ltd. 1,242 3
Raymond Ltd. -- New 40,575 82
------------
85
------------
TRANSPORTATION -- ROAD & RAIL
Container Corp. of India Ltd. 147,500 1,769
------------
TRANSPORTATION -- SHIPPING
Great Eastern Shipping Co. 800 1
------------
UTILITIES -- ELECTRICAL & GAS
Tata Power Co. Ltd. 100 --@
------------
41,680
------------
- ---------------------------------------------------------
- ------------
INDONESIA (5.9%)
AUTOMOBILES
Astra International (Foreign) 1,184,500 3,848
------------
BANKING
Bank International Indonesia (Foreign) 3,705,003 2,816
Bank International Indonesia (Foreign) (Warrants),
expiring 1/17/00 329,334 117
Bank Negara Indonesia (Foreign) 5,428,000 3,108
------------
6,041
------------
BEVERAGES & TOBACCO
Gudang Garam (Foreign) 774,500 3,379
HM Sampoerna (Foreign) 839,000 3,931
------------
7,310
------------
CHEMICALS
Sorini Corp. (Foreign) 778,500 365
------------
FOOD & HOUSEHOLD PRODUCTS
Indofood Sukses Makmur (Foreign) 462,000 1,020
------------
FOREST PRODUCTS & PAPER
Indah Kiat Pulp & Paper (Foreign) 1,338,421 989
------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDONESIA (CONTINUED)
MERCHANDISING
Matahari Putra Prima (Foreign) 929,500 U.S.$ 1,355
------------
MULTI-INDUSTRY
Bimantara Citra (Foreign) 1,214,000 1,567
------------
TELECOMMUNICATIONS
Telekomunikasi (Foreign) 759,500 1,162
------------
23,657
------------
- ---------------------------------------------------------
- ------------
ISRAEL (2.5%)
AEROSPACE & MILITARY TECHNOLOGY
Elbit Systems Ltd 126,365 1,007
------------
BANKING
Bank Hapoalim Ltd. 162,500 320
First International Bank of Israel '5' 2,064 1,361
------------
1,681
------------
ELECTRICAL & ELECTRONICS
Scitex Ltd. 55,467 471
------------
FOOD & HOUSEHOLD PRODUCTS
Blue Square-Israel Ltd. ADR 87,700 1,557
Osem Investment Ltd. 94,176 524
Super Sol Ltd. 963,400 2,768
------------
4,849
------------
MULTI-INDUSTRY
Koor Industries Ltd. 10,850 999
Pec Israel Economic Corp. 43,870 828
------------
1,827
------------
9,835
------------
- ---------------------------------------------------------
- ------------
KOREA (6.9%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. (Foreign) 54,941 4,337
Samsung Electronics Co. GDR. -- New 28,170 1,289
------------
5,626
------------
BANKING
Cho Hung Bank Co. Ltd (Foreign) 43,900 230
Cho Hung Bank Co. Ltd. GDR (Foreign) 107,100 581
Housing & Commercial Bank, Korea 97,380 1,730
Kookmin Bank 3,300 58
Kookmin Bank GDR 81,300 1,439
Korea Exchange Bank 76,700 484
Shinhan Bank Co. Ltd. (Foreign) 95,350 1,367
------------
5,889
------------
BEVERAGES & TOBACCO
Chosun Brewery Co. Ltd. (Foreign) 8,410 230
------------
CHEMICALS
Hanwha Chemical Corp. 382,220 4,149
------------
CONSTRUCTION & HOUSING
Hyundai Engineering (Foreign) 75,700 1,564
Hyundai Engineering (Foreign) RFD 1,514 31
------------
1,595
------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
KOREA (CONTINUED)
ENERGY SOURCES
Ssangyong Oil Refining Co. Ltd. 30,630 U.S.$ 554
------------
METALS -- STEEL
Pohang Iron & Steel Ltd. (Foreign) 7,870 504
Pohang Iron & Steel Ltd. ADR 29,430 699
------------
1,203
------------
TELECOMMUNICATIONS
Korea Mobile Telecom (Foreign) RFD 47 44
Korea Mobile Telecom ADR 135,786 1,392
LG Information & Communication Ltd. 43,500 4,395
------------
5,831
------------
UTILITIES -- ELECTRICAL & GAS
Korea Electric Power Corp. (Foreign) 87,420 2,538
------------
27,615
------------
- ---------------------------------------------------------
- ------------
MALAYSIA (1.8%)
BANKING
Commerce Asset Holding Bhd 254,000 1,783
------------
FINANCIAL SERVICES
Rashid Hussain Bhd 121,000 952
------------
LEISURE & TOURISM
Genting Bhd 267,400 1,813
Resorts World Bhd 383,000 1,638
------------
3,451
------------
MACHINERY & ENGINEERING
United Engineers (Malaysia) Bhd 104,000 907
------------
7,093
------------
- ---------------------------------------------------------
- ------------
MAURITIUS (0.6%)
BANKING
State Bank of Mauritius 4,300,000 2,462
------------
- ---------------------------------------------------------
- ------------
MEXICO (10.4%)
BANKING
Banacci 'B' 578,272 1,322
Banacci 'L' 805,847 1,634
Bancomer 'B' 914,690 325
Bancomer 'B' ADR 144A 326,778 2,369
------------
5,650
------------
BEVERAGES & TOBACCO
FEMSA 'B' 1,857,825 8,232
------------
BROADCASTING & PUBLISHING
Televisa CPO ADR 191,353 4,760
------------
BUILDING MATERIALS & COMPONENTS
Apasco 168,638 1,145
Cemex 37,960 153
Cemex CPO 717,205 2,629
Cemex CPO ADR 166,319 1,254
------------
5,181
------------
CONSTRUCTION & HOUSING
ICA ADR 38,254 607
------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
MEXICO (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS
Gruma 'B' 145,834 U.S.$ 719
Gruma ADR (Registered) 13,520 265
Maseca 'B' 280,405 291
------------
1,275
------------
MERCHANDISING
Cifra 'A' 36,785 50
Cifra 'C' 300,754 422
------------
472
------------
MULTI-INDUSTRY
Carso ADR 100,870 1,208
Carso 'A1' 291,580 1,712
Desc ADR 54,910 1,441
Sidek 'A' 1,000 --@
------------
4,361
------------
TELECOMMUNICATIONS
Telmex ADR 281,600 10,842
------------
41,380
------------
- ---------------------------------------------------------
- ------------
PAKISTAN (2.5%)
CHEMICALS
Fauji Fertilizer Co. Ltd. 1,628,700 3,190
------------
ENERGY SOURCES
Pakistan State Oil Co. Ltd. 206,700 1,444
------------
TELECOMMUNICATIONS
Pakistan Telecommunications 5,407,000 3,879
Pakistan Telecommunications GDR 7,650 574
------------
4,453
------------
TEXTILES & APPAREL
Nishat Mills Ltd. 471,926 300
------------
UTILITIES -- ELECTRICAL & GAS
Karachi Electric Supply Corp. 554,400 225
Sui Northern Gas Co. 687,700 515
------------
740
------------
10,127
------------
- ---------------------------------------------------------
- ------------
PERU (0.3%)
TELECOMMUNICATIONS
Telefonica Peru ADR 56,480 1,257
------------
- ---------------------------------------------------------
- ------------
POLAND (2.0%)
BANKING
Bank Rozwoju Eksportu 22,750 681
Bank Slaski 6,900 651
------------
1,332
------------
CHEMICALS
Eastbridge 33,600 2,259
Polifarb Wroclaw 125,000 659
------------
2,918
------------
CONSTRUCTION & HOUSING
Exbud 33,550 447
Mostostal Exports 50,000 152
------------
599
------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
POLAND (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS
Agros Holding 'C' 29,000 U.S.$ 731
Agros Holdings (Rights) 29,000 14
------------
745
------------
INDUSTRIAL COMPONENTS
Debica 32,862 871
------------
MULTI-INDUSTRY
International UNP Holdings Ltd. 2,280,000 330
------------
WHOLESALE & INTERNATIONAL TRADE
Elektrim 148,500 1,304
------------
8,099
------------
- ---------------------------------------------------------
- ------------
RUSSIA (7.9%)
BROADCASTING & PUBLISHING
Storyfirst Communications, Inc. 'C' (Preferred) 270 180
Storyfirst Communications, Inc. 'D' (Preferred) 720 540
Storyfirst Communications, Inc. 'E' (Preferred) 780 780
Storyfirst Communications, Inc. 'F' (Preferred) 139 348
------------
1,848
------------
ENERGY SOURCES
Lukoil Holdings 180,900 2,562
Lukoil Holdings ADR 27,065 1,502
------------
4,064
------------
FOREST PRODUCTS & PAPER
Alliance Cellulose 'B' 156,075 1,049
------------
MERCHANDISING
TSUM 2,880,000 1,944
------------
TELECOMMUNICATIONS
Global Tele-Systems Ltd. 214,285 4,286
Rostelecom 807,100 3,148
Russian Telecom Development Corp. 176,000 1,760
------------
9,194
------------
UTILITIES -- ELECTRICAL & GAS
Edinaya Energetiches 62,500 12
Irkutskenergo 9,860,000 2,534
Moscow Energy 4,225,000 5,535
Unified Energy System 26,822,500 5,142
------------
13,223
------------
31,322
------------
- ---------------------------------------------------------
- ------------
SINGAPORE (0.4%)
FOOD & HOUSEHOLD PRODUCTS
Want Want Holdings 492,000 1,412
------------
- ---------------------------------------------------------
- ------------
SOUTH AFRICA (5.2%)
APPLIANCES & HOUSEHOLD DURABLES
Ellerine Holdings Ltd. 149,700 881
------------
BANKING
First National Bank Holdings Ltd. 110,100 683
------------
BUSINESS & PUBLIC SERVICE
Persetel Holdings Ltd. -- New 265,000 1,655
------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
SOUTH AFRICA (CONTINUED)
CHEMICALS
SASOL Ltd. 800,000 U.S.$ 8,553
------------
ELECTRICAL & ELECTRONICS
Reunert Ltd. 27,200 96
------------
FINANCIAL SERVICES
Amalgamated Banks of South Africa 30,000 190
------------
MISCELLANEOUS MATERIALS & COMMODITIES
De Beers Centenary AG 10,000 364
------------
MULTI-INDUSTRY
Barlow Ltd. 186,700 2,072
Bidvest Group Ltd. 101,250 624
Bidvest Group Ltd. (Rights) 4,860 --@
Gencor Ltd. 427,100 1,981
*Morgan Stanley Africa Investment Fund 141,445 2,369
Rembrandt Group Ltd. 97,800 1,046
------------
8,092
------------
20,514
------------
- ---------------------------------------------------------
- ------------
TAIWAN (3.9%)
CHEMICALS
Formosa Plastics Corp. 401,000 1,012
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Acer, Inc. 653,000 1,648
Asustek Computer Inc. 306,000 6,922
Siliconware Precision Industries Co. 370,000 1,189
------------
9,759
------------
INSURANCE
Cathay Life Insurance Co. Ltd. 183,400 1,092
------------
METALS -- STEEL
China Steel Corp. 1,056,775 1,013
------------
TEXTILES & APPAREL
Far East Textile 1,687,000 2,518
------------
15,394
------------
- ---------------------------------------------------------
- ------------
THAILAND (5.8%)
BANKING
Bangkok Bank Ltd. (Foreign) 496,800 4,824
Siam Commercial Bank Co. Ltd. (Foreign) 585,600 3,429
Thai Farmers Bank Ltd. (Foreign) 790,360 5,146
Thai Farmers Bank (Warrants), expiring 9/15/02 259,720 188
Thai Farmers Bank (Warrants), expiring 9/30/99 200,000 96
------------
13,683
------------
CHEMICALS
National Petrochemical Ltd. (Foreign) 296,000 302
------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
THAILAND (CONTINUED)
ELECTRICAL & ELECTRONICS
Shinawatra Computer Co. Ltd. (Foreign) 326,200 U.S.$ 2,740
------------
FINANCIAL SERVICES
Finance One Co. Ltd. (Foreign) 626,000 573
National Finance & Securities Co. Ltd. (Foreign) 297,300 391
------------
964
------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd. (Foreign) 401,200 3,432
United Communications Industry Ltd. 319,700 2,069
------------
5,501
------------
23,190
------------
- ---------------------------------------------------------
- ------------
TURKEY (4.0%)
APPLIANCES & HOUSEHOLD DURABLES
Aksa Arcelik 40,000 5
------------
BANKING
Turkiye Garanti Bankasi 23,710,000 1,616
Yapi Ve Kredi Bankasi 89,045,000 3,976
------------
5,592
------------
BEVERAGES & TOBACCO
Efes Sinai Yatirim 30,236,087 947
Ege Biracilik Ve Malt Sanayii 12,231,000 3,114
------------
4,061
------------
BROADCASTING & PUBLISHING
Sabah Yayincilik AS 30,998,000 461
------------
MERCHANDISING
Migros Turk TAS 1,585,000 1,645
------------
METALS -- STEEL
Eregli Demir Ve Celik Fabrikalari TAS 24,694,000 3,337
------------
TEXTILES & APPAREL
Aksa Akrilik Kimya Sanayii AS -- New 2,293,153 368
Bossa Ticaret Sanayii Isletme 4,315,000 372
------------
740
------------
15,841
------------
- ---------------------------------------------------------
- ------------
ZIMBABWE (1.1%)
MULTI-INDUSTRY
Delta Corp. 456,000 709
Trans Zambezi Industries Ltd. 4,000,000 3,600
------------
4,309
------------
- ---------------------------------------------------------
- ------------
TOTAL COMMON STOCKS
(Cost U.S. $340,669) 385,308
------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
DEBT INSTRUMENTS (0.9%)
- ---------------------------------------------------------
- ------------
BULGARIA (0.4%)
FOREIGN GOVERNMENT BOND
+Republic of Bulgaria Discount Bond 'A' Euro 6.5625%,
7/28/24 U.S.$ 1,200 U.S.$ 713
Republic of Bulgaria Front Loaded Interest Reduction
Bond 'A' 2.25%, 7/28/12 1,750 737
------------
1,450
------------
- ---------------------------------------------------------
- ------------
INDIA (0.3%)
CHEMICALS
Supreme Petrochem Ltd. 2.25%, 4/22/02 INR 57,920 183
------------
METALS -- STEEL
Shri Ishar Alloy Steels Ltd. 2.85%, 4/21/01 58,100 214
------------
MULTI-INDUSTRY
+DCM Shriram Industries Ltd. 9.90%, 2/21/02 33,500 460
DCM Shriram Industries Ltd. (Convertible) 7.50%,
2/21/02 33,000 355
------------
815
------------
1,212
------------
- ---------------------------------------------------------
- ------------
POLAND (0.0%)
BRADY BOND
Polish People's Republic Past Due Interest Bond
3.75%, 10/27/14 U.S.$ 28 22
------------
- ---------------------------------------------------------
- ------------
RUSSIA (0.2%)
BROADCASTING & PUBLISHING
Storyfirst Communications, Inc., First Section,
Tranche 1 (Convertible) 25.00%, 4/30/97 526 624
Storyfirst Communications, Inc., Second Section,
Tranche II (Convertible) 26.00%, 4/30/97 137 163
Storyfirst Communications, Inc., Tranche IV
(Convertible) 28.00%, 4/30/97 207 246
------------
1,033
------------
- ---------------------------------------------------------
- ------------
TOTAL DEBT INSTRUMENTS
(Cost U.S. $4,089) 3,717
------------
- ---------------------------------------------------------
- ------------
SHORT-TERM INVESTMENT (1.4%)
REPURCHASE AGREEMENT
Chase Securities Inc., 6.00%, dated 3/31/97, due
4/1/97, to be repurchased at U.S. $5,522,
collateralized by United States Treasury Bonds,
11.25%, due 2/15/15, valued at U.S. $5,641
(Cost U.S. $5,521) 5,521 5,521
------------
<CAPTION>
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.5%)
Argentine Peso ARP 6 U.S.$ 6
Brazilian Real BRL 396 373
Colombian Peso COP 2,284 2
Egyptian Pound EGP 244 72
Greek Drachma GRD 1 --@
Hong Kong Dollar HKD 660 85
Indian Rupee INR 53,902 1,503
Indonesian Rupiah IDR 4,072,437 1,696
South Korean Won KRW 142,323 159
Mexican Peso MXP 97 12
Pakistani Rupee PKR 26 1
Peruvian New Sol PSS 4 1
Philippine Peso PHP 705 27
Polish Zloty PLZ 435 141
Portuguese Escudo PTE 1 --@
South African Rand ZAR 1,378 312
Taiwan Dollar TWD 23,162 841
Thai Baht THB 2,544 98
Zimbabwe Dollar ZWD 7,865 699
------------
(Cost U.S. $6,037) 6,028
------------
- ---------------------------------------------------------
- ------------
TOTAL INVESTMENTS (100.6%)
(Cost U.S. $356,316) 400,574
------------
- ---------------------------------------------------------
- ------------
OTHER ASSETS AND LIABILITIES (-0.6%)
Other Assets U.S.$ 14,233
Liabilities (16,624) (2,391)
------------- ------------
- ---------------------------------------------------------
- ------------
NET ASSETS (100%)
Applicable to 22,824,344 issued and outstanding U.S.
$0.01 par value shares (100,000,000 shares
authorized) U.S.$398,183
------------
------------
- ---------------------------------------------------------
- ------------
NET ASSET VALUE PER SHARE U.S.$ 17.45
------------
------------
</TABLE>
- ---------------------------------------------------------
- ------------
<TABLE>
<S> <C> <C>
+ -- Variable/floating rate security -- rate disclosed is as of March 31,
1997.
@ -- Value is less than U.S. $500.
* -- Advised by an affiliate.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
GDS -- Global Depositary Shares
RFD -- Ranked for Dividend
NOTE: Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging 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.
</TABLE>
11
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