<PAGE>
----------------------------------------------------------------
MORGAN STANLEY
EMERGING MARKETS
FUND, INC.
----------------------------------------------------------------
FIRST QUARTER REPORT
MARCH 31, 1999
MORGAN STANLEY DEAN WITTER INVESTMENT
MANAGEMENT INC.
INVESTMENT ADVISER
MORGAN STANLEY
EMERGING MARKETS FUND, INC.
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DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD
OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT AND ACTING
SECRETARY
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Joanna M. Haigney
TREASURER
Belinda A. Brady
ASSISTANT TREASURER
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INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
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ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
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CUSTODIANS
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
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SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(800) 730-6001
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LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
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INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
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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 or visit our website at
www.msdw.com/institutional/investmentmanagement.
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the three months ended March 31, 1999, the Morgan Stanley Emerging Markets
Fund, Inc. (the "Fund") had a total return, based on net asset value per share,
of 12.78% compared with 8.86% for the IFC Global Total Return Composite Index
(the "IFC Index") and 12.44% for the Morgan Stanley Capital International (MSCI)
Emerging Markets Free Index (the "MSCI Index"). For the period since
commencement of operations on November 1, 1991 through March 31, 1999 the Fund's
total return, based on net asset value per share, was 88.46% compared with
22.23% for the IFC Index and 47.57% for the MSCI Index. On March 31, 1999,
the closing price of the Fund's shares on the New York Stock Exchange was
$9 9/16, representing a 17.9% discount to the Fund's net asset value per share.
OVERVIEW
After two consecutive positive quarters in the Emerging Markets Equity asset
class, is it still too early to declare the end of the emerging markets bear
market? Events in this first quarter suggest that we could be entering a
turnaround phase. The major event which took place this first quarter was the
devaluation of the Brazilian currency, the real, thus removing the "Sword of
Damocles" that had hung over this market for months. The truly amazing feature
of the devaluation was not that it occurred, but that the real lost roughly 30%
in value and the Brazilian equity market finished the first quarter in positive
territory in U.S. dollars. Before delving into the particulars of Brazil,
however, we would like to first review the major events which took place in the
first quarter in the Emerging Markets:
(1) Brazil's currency devalued roughly 30% against the dollar.
(2) Turkish authorities captured Kurdish terrorist Abdullah Ocalan, boosting
the political fortunes of the existing government and sentiment in that
market.
(3) On the back of a Euro-area economic slow down, current account and fiscal
deficit deterioration caused currency weakness and significant equity
market underperformance in Eastern Europe (Czech Republic, Hungary and
Poland), effectively stripping them of their "safe haven" status.
(4) Lack of hyperinflation and the strong oil price recovery propelled Russia
to the rank of top performing emerging market in the first quarter.
(5) A market-friendly budget in India boosted sentiment in that market as it
posted strong gains for the first quarter.
(6) The strong price of oil, robust U.S. economy, and lack of meltdown in
Brazil allowed Mexico to differentiate itself from the rest of Latin
America and stage a dramatic recovery from last year's anemic performance.
The devaluation of the real has removed one of the last remaining identifiable
risks in the asset class, and the market action in the wake of this devaluation
has been quite encouraging. As previously mentioned, despite a 30% decline in
the value of the currency vis-a-vis the U.S. dollar (USD), Brazil ended the
first quarter in positive territory in USD and was up 36.8% in the month of
March. While the devaluation was uncontrolled, the surprise selection of ex-
Soros fund manager Arminio Fraga to head Brazil's Central Bank injected a much
needed boost of confidence precisely when the currency markets were on the verge
of spiraling out of control. Although there were tense moments in the first
quarter, and the country is by no means out of the woods, the trends evolving by
quarter's end point to a more stable outlook for the country for the balance of
the year.
PORTFOLIO REVIEW AND OUTLOOK
Our stock selection and allocation decisions in Brazil had the single largest
positive impact on performance. Other contributors to performance included our
underweight positions in Colombia (-14.2%) and Venezuela (-13.3%) as well as
strong stock selection in Mexico, India, South Korea, and Thailand.
The Latin American region performed well during the first quarter, rising 12.9%
in U.S. dollar terms. As mentioned above, over the course of the first quarter,
we added to our Brazilian holdings and are now overweight relative to the MSCI
Index. Our cautious optimism is based on several points; interest rates are
declining, foreign banks are largely rolling over their loans to Brazilian
borrowers, the central bank is running a tight monetary policy, and inflation
seems under control. Within Brazil, we are focusing on the telecommunications
industry which offers strong management, high pent-up demand, and room for cost
efficiencies.
Mexico was the best performing Latin market, gaining 28.7% in U.S. dollar terms.
Its market has been supported by falling interest rates, attractive corporate
earnings, and continued strong U.S. economic growth. Also buoying the market
has been Mexico's ability to differentiate itself from other Latin markets,
specifically Brazil. Markets within regions are typically highly correlated
during times of crisis, but Mexico was able to de-couple from Brazil. As a
result of Mexico's positive corporate and macroeconomic fundamentals, investors
have deemed it the "safe haven" within the region, further bolstering the
market. Given Mexico's favorable macro and micro scenario, we
2
<PAGE>
added to our position in the beginning of the first quarter, and later trimmed
as the market continued to climb higher. By quarter-end, we were market weight,
focusing on consumer-related industries, such as telecommunications, beverages,
retail, and health and personal care.
Asia gained 11.1% in U.S. dollar terms led by India, which rose 26.4%. The
government's announcement of a better-than-expected budget spurred the Indian
market. Our stock holdings fared well, and we trimmed some positions as the
market rallied. We are currently at neutral weight as we continue to find many
attractive stock opportunities. We are less compelled by the macro story, as
there are little signs of any improvement with respect to its economic
fundamentals. The Indian portion of the Fund's portfolio is tilted towards
technology-based stocks, such as Infosys, a $3 billion market capitalization
computer software company.
Taiwan's market rose 11.6% in U.S. dollar terms owing to a financial sector
reform package announced by the government. We are impressed with Taiwanese
companies as they offer strong management and excellent earnings growth
potential. We added to our Taiwanese positions during the first quarter and are
now modestly overweight the MSCI Index. As in India, we are focusing on the
technology sector. For example, Taiwan Semiconductor is a leader in making
integrated circuits for other companies. It is expected to benefit from both a
cyclical upturn in semiconductors and a long-term trend towards outsourcing
various computer components.
Our favorite Asian market is South Korea, where we are overweight the MSCI Index
owing to both strong macro and micro fundamentals. The Korean government has
come a long way over the past year to improve its economic condition. During
the first quarter, the Korean government focused on improving the non-performing
loan situation in its banking sector. Over $50 billion has been budgeted to
recapitalize its banks and to purchase non-performing loans. Also beneficial
has been the decline in interest rates which has encouraged retail investors and
institutions to switch from fixed income to equity investments. We also expect
to see a continuation of corporate restructuring. We have significant
weightings in Samsung Electronics and also within the telecommunications
industry. Samsung Electronics is a leading semiconductor, electronics, and
telecommunications equipment manufacturer. The company is positioned to benefit
from a cyclical upturn in semiconductor demand as well as its own corporate
restructuring.
Emerging Europe and the Middle East gained 14.3% in U.S. dollar terms. Russia
and Turkey were the star performers, each gaining more than 50%. We are market
weight Russia, as we believe it is unwise to underweight such a volatile, "low
valuation" country. Most recently, the market has been driven by positive
developments in IMF negotiations and oil price increases.
We added to and are now overweight Turkey as its political, economic, and
interest rate scenario begins to improve. The capture of Kurdish leader
Abdullah Ocalan could be very positive as it increases the likelihood that a
reform-minded coalition will be victorious in the April elections. The World
Bank and IMF have indicated they will provide financial support to the Turkish
contingent on the implementation of various reforms (banking, social security,
and agricultural subsidies). In Turkey, our largest weighting is in the banking
industry as we expect interest rates to trend lower.
Hungary (-15.2%) and Poland (+2.3%) were market laggards during the first
quarter. We trimmed both markets due to their deteriorating macro environment.
Both countries have widening current account deficits, which puts pressure on
their currencies and may prevent the central banks from lowering interest rates.
We are now at neutral weight in Hungary, but have maintained an overweight
position in Poland.
We have also trimmed Greece and are now underweight the market. Having returned
more than 80% in 1998 and 9.2% year-to-date, we have looked to Greece as a
source of cash. Greece has recently experienced some weakness given its role in
the handover of Ocalan to Turkey and the Kosovo crisis. Longer-term, we remain
positive on Greece as its market will be bolstered by its future induction into
the EMU.
Israel, a market we are overweight, has performed well gaining 16.4% during the
first quarter. The market was fuelled by a recent IMF report which forecasted
better economic and inflation figures. Israel is another market offering
outstanding technology-based companies with solid management and strong earnings
growth potential.
South Africa rose 13.1% responding favorably to interest rate cuts. We expect
continued market strength on the back of further rate cuts and a benign upcoming
election. We added to our South African weighting, though we maintain an
underweight position. We have significant exposure to the financial services
industry given our interest rate call and to the beverage industry as disposable
income is expected to rise. One of our large holdings, South African Breweries,
is a world class brewing operation with exposure to several emerging markets.
The company has excellent management and is attractively valued relative to its
emerging markets and global peers.
On July 30, 1998, the Fund commenced a share repurchase program for purposes of
enhancing shareholder
3
<PAGE>
value and reducing the discount at which the Fund's shares traded from their net
asset value. From that date through March 31, 1999, the Fund repurchased
2,045,600 shares or 8.96% of its Common Stock at an average price per share of
$8.30 and an average discount of 18.28% from net asset value per share. The Fund
expects to continue to repurchase its outstanding shares at such time and in
such amounts as it believes will further the accomplishment of the foregoing
objectives, subject to review by the Board of Directors.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
April 1999
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED.
- --------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO CHARACTERISTICS,
CAN NOW BE ACCESSED AT WWW.MSDW.COM/INSTITUTIONAL/INVESTMENTMANAGEMENT.
4
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Investment Summary as of March 31, 1999 (Unaudited)
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<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
-------------------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) IFC INDEX (3) MSCI INDEX (4)
---------------------- ---------------------- ---------------------- ----------------------
AVERAGE AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year to Date 17.69% -- 12.78% -- 8.86% -- 12.44% --
One Year -23.50 -23.50% -18.82 -18.82% -19.99 -19.99% -20.95 -20.95%
Five Year 26.25+ -5.91+ 15.53+ -3.32+ -24.26+ -5.41+ -23.99+ -5.34+
Since Inception* 54.69+ 6.06+ 88.46+ 8.92+ 22.23+ 2.74+ 47.57+ 5.39+
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
THREE MONTHS
ENDED
MARCH 31,
1991* 1992 1993 1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share. . . . . . $14.71 $16.74 $28.20 $20.30 $14.69 $15.69 $15.52 $10.33 $11.65
Market Value Per Share . . . . . . . $14.25 $18.13 $31.63 $21.50 $15.50 $13.88 $13.06 $ 8.13 $ 9.56
Premium/(Discount) . . . . . . . .. -3.1% 8.3% 12.2% 5.9% 5.5% -11.5% -15.9% -21.3% -17.9%
Income Dividends . . . . . . . . . . $ 0.04 $0.01 -- -- -- $ 0.05 $ 0.01 $ 0.11 --
Capital Gains Distributions. . . . . -- $0.01 $ 1.49 $ 6.50 $ 1.29 $ 0.98 $ 0.01 $ 2.18 --
Fund Total Return (2). . . . . . . . 4.61% 13.94% 95.22%+ -5.33% -16.30%+ 13.84% -0.97% -19.61% 12.78%
IFC Index Total Return (3) . . . . . 5.29% 0.33% 67.50% -0.53% -12.32% 7.88% -14.54% -21.09% 8.86%
MSCI Index Total Return (4). . . . . 9.58% 11.40% 74.84% -7.32% -5.21% 6.03% -11.59% -25.34% 12.44%
</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 (the "IFC 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.
(4) The Morgan Stanley Capital International Emerging Markets Free Index (the
"MSCI Index") is a market capitalization weighted index composed of
companies that are representative of the market structure of developing
countries in Latin America, Asia, Eastern Europe, the Middle East and
Africa.
* 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.
5
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Portfolio Summary as of March 31, 1999 (Unaudited)
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DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities (97.7%)
Debt Instruments (0.2%)
Short-Term Investments (2.1%)
</TABLE>
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SECTORS
[CHART]
<TABLE>
<S> <C>
Appliances & Household Durables (5.7%)
Banking (9.4%)
Beverages & Tobacco (8.4%)
Broadcasting & Publishing (4.2%)
Data Processing & Reproduction (3.5%)
Electrical & Electronics (5.5%)
Electronics Components, Instruments (8.7%)
Energy Sources (3.8%)
Telecommunications -- Integrated (19.7%)
Utilities -- Electrical & Gas (4.7%)
Other (26.4%)
</TABLE>
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COUNTRY WEIGHTINGS
[CHART]
<TABLE>
<S> <C>
Mexico (13.4%)
Korea (12.9%)
Brazil (12.2%)
Taiwan (11.1%)
India (9.6%)
South Africa (8.2%)
Greece (6.0%)
Israel (4.5%)
Turkey (3.8%)
Thailand (2.3%)
Poland (2.2%)
Other (13.8%)
</TABLE>
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TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Samsung Electronics Co. (Korea) 5.3%
2. Telebras (Brazil) 4.0
3. Hellenic Telecommunications
Organization (OTE) (Greece) 3.9
4. Telmex (Mexico) 3.5
5. Taiwan Semiconductor Co. (Taiwan) 3.3
6. Televisa (Mexico) 3.0
7. FEMSA (Mexico) 2.5
8. Korea Telecom Corp. (Korea) 2.1
9. South African Breweries plc
(South Africa) 2.0
10. Hon Hai Precision Industry
(Taiwan) 1.7
----
31.3%
----
----
</TABLE>
6
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS (UNAUDITED)
- ---------
MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.0%)
(Unless otherwise noted)
- --------------------------------------------------------------------------------
ARGENTINA (2.0%)
AUTOMOBILES
CIADEA 1 U.S.$ --@
--------------
ENERGY SOURCES
YPF ADR 38,588 1,218
--------------
TELECOMMUNICATIONS - INTEGRATED
Telecom Argentina ADR 100,159 2,748
Telefonica Argentina ADR 31,935 966
--------------
3,714
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4,932
--------------
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BRAZIL (12.2%)
BANKING
Banco Bradesco (Preferred) 49,588,000 266
Banco Nacional (Preferred) 61,598,720 2
Unibanco (Preferred) GDR 131,943 2,540
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2,808
--------------
BEVERAGES & TOBACCO
Brahma (Preferred) 1,557,108 733
--------------
ENERGY SOURCES
Petrobras (Preferred) 18,804,000 2,610
(a)Petrobras (Preferred) ADR 12,570 175
--------------
2,785
--------------
FOOD & HOUSEHOLD PRODUCTS
Pao de Acucar (Preferred) 6,460,000 95
(a)Pao de Acucar (Preferred) ADR 8,110 119
--------------
214
--------------
MERCHANDISING
Lojas Arapua (Preferred) 30,412,000 --@
(a)Lojas Arapua (Preferred) ADR 31,540 --@
Renner (Preferred) 9,577,000 7
--------------
7
--------------
METALS--STEEL
CVRD (Preferred) 1,386 21
CVRD (Preferred) ADR 44,219 647
Usiminas (Preferred) 79,200 135
Usiminas (Preferred) ADR 13,735 23
--------------
826
--------------
TELECOMMUNICATIONS--INTEGRATED
CRT (Preferred) 'A' 9,817,376 2,977
Tele Centro-Sul (Preferred) 89,934,945 839
Tele Centro-Sul ADR 8,727 403
Tele Norte-Leste (Preferred) 28,703,945 438
Tele Norte-Leste (Preferred) ADR 31,507 484
Telebras (Preferred) 47,020,200 3,816
Telebras (Preferred) 28,703,945 5
Telebras Holders 72,419 5,839
Telesp (Preferred) 12,742,945 267
--------------
15,068
--------------
TELECOMMUNICATIONS--LONG DISTANCE
Embratel (Preferred) 28,703,945 482
Embratel ADR 18,462 308
--------------
790
--------------
TELECOMMUNICATIONS--WIRELESS
Tele Celular Sul (Preferred) 111,462,745 U.S.$ 224
Tele Celular Sul ADR 5,010 96
Tele Nordeste Celular (Preferred) 80,405,945 87
Tele Nordeste Celular ADR 2,340 52
Tele Norte Celular (Preferred) 28,703,945 17
Tele Sudeste Celular (Preferred) 95,705,945 391
Tele Sudeste Celular ADR 1,218 25
Teleleste Celular (Preferred) 112,154,945 75
Telemig Celular (Preferred) 119,640,945 161
Telemig Celular ADR 2,910 76
Telerj Celular (Preferred) 'B' 3,756,000 63
Telesp Celular (Preferred) 67,936,945 566
Telesp Celular (Preferred) 'B' 24,484,313 914
Telesp Celular ADR 5,386 113
--------------
2,860
--------------
TEXTILES & APPAREL
Coteminas 2,200,500 124
(a)Coteminas ADR 23,460 69
--------------
193
--------------
UTILITIES--ELECTRICAL & GAS
Cemig (Preferred) 82,145,169 1,837
Cemig (Preferred) ADR 46,823 1,042
(a)Cemig (Preferred) ADR 9,208 205
Eletrobras 2,680,000 52
Eletrobras (Preferred) 'B' 6,360,000 133
--------------
3,269
--------------
29,553
--------------
- --------------------------------------------------------------------------------
CHILE (1.1%)
BEVERAGES & TOBACCO
CCU ADR 28,420 620
--------------
MERCHANDISING
Santa Isabel ADR 13,022 114
--------------
UTILITIES--ELECTRICAL & GAS
Endesa ADR 40,519 569
Enersis ADR 54,335 1,457
--------------
2,026
--------------
2,760
--------------
- --------------------------------------------------------------------------------
CHINA (0.7%)
ENERGY SOURCES
Yanzhou Coal Mining Co., Ltd. ADR 67,230 534
Zhenhai Refining & Chemical Co., Ltd. 'H' 4,172,000 721
--------------
1,255
--------------
FOOD & HOUSEHOLD PRODUCTS
Want Want Holdings Ltd. 123,000 124
--------------
UTILITIES--ELECTRICAL & GAS
Huaneng Power International, Inc. ADR 33,350 332
--------------
1,711
--------------
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COLOMBIA (0.0%)
BANKING
Bancolombia (Preferred) 6,249 U.S.$ 7
--------------
- --------------------------------------------------------------------------------
CZECH REPUBLIC (0.7%)
TELECOMMUNICATIONS--INTEGRATED
SPT Telecom 93,152 1,248
SPT Telecom GDR 39,420 508
--------------
1,756
--------------
- --------------------------------------------------------------------------------
EGYPT (0.8%)
BEVERAGES & TOBACCO
Al-Ahram Beverages Co. GDR 16,852 520
Eastern Tobacco 27,138 769
--------------
1,289
--------------
BUILDING MATERIALS & COMPONENTS
Industrial & Engineering Enterprises Co. 10,516 138
--------------
CHEMICALS
Paints & Chemical Industries GDR 1,210 8
--------------
UTILITIES--ELECTRICAL & GAS
Egypt Gas Co. 6,100 404
--------------
1,839
--------------
- --------------------------------------------------------------------------------
GREECE (6.0%)
BANKING
Alpha Credit Bank 14,980 998
Commercial Bank of Greece 2,362 370
Ergo Bank 2,648 199
National Bank of Greece 42,730 2,899
--------------
4,466
--------------
BEVERAGES & TOBACCO
Hellenic Bottling Co. 14,690 437
--------------
TELECOMMUNICATIONS--INTEGRATED
Hellenic Telecommunication Organization (OTE) 241,541 5,878
Hellenic Telecommunication Organization (OTE) ADR 313,469 3,664
--------------
9,542
--------------
14,445
--------------
- --------------------------------------------------------------------------------
HONG KONG (0.1%)
UTILITIES--ELECTRICAL & GAS
Zhejiang Expressway Co., Ltd. 'H' 1,251,000 213
--------------
- --------------------------------------------------------------------------------
HUNGARY (1.1%)
BANKING
OTP Bank Rt. 14,728 571
--------------
ENERGY SOURCES
MOL Magyar Olaj-es Gazipari Rt. GDR 21,970 451
--------------
TELECOMMUNICATIONS--INTEGRATED
Matav Rt. 96,178 513
Matav Rt. ADR 44,155 1,181
--------------
1,694
--------------
2,716
--------------
- --------------------------------------------------------------------------------
INDIA (9.4%)
AUTOMOBILES
Hero Honda Ltd. 119,405 U.S.$ 2,463
Tata Engineering & Locomotive Co. Ltd. 206,729 825
--------------
3,288
--------------
BANKING
State Bank of India Ltd. 3,750 19
--------------
BEVERAGES
ITC Ltd. 57,902 1,314
--------------
BROADCASTING & PUBLISHING
Zee Telefilms Ltd. 46,000 1,070
--------------
BUILDING MATERIALS & COMPONENTS
Gujarat Ambuja Cements Ltd. 57,000 403
--------------
BUSINESS & PUBLIC SERVICES
Aptech Ltd. 11,500 256
--------------
CHEMICALS
Reliance Industries Ltd. 1,349 4
--------------
DATA PROCESSING & REPRODUCTION
HCL Infosystems Ltd. 30,000 443
Infosys Technology Ltd. 55,800 3,847
NIIT Ltd. 27,000 1,193
Satyam Computer Services Ltd. 60,000 2,294
--------------
7,777
--------------
ELECTRICAL & ELECTRONICS
Bharat Heavy Electricals Ltd. 416,500 2,332
Digital Equipment (India) Ltd. 49,000 449
--------------
2,781
--------------
FINANCIAL SERVICES
Housing Development Finance Corp., Ltd. 18,111 973
--------------
FOOD & HOUSEHOLD PRODUCTS
Hindustan Lever Ltd. 1,500 80
Hindustan Lever Ltd. 26,500 1,414
--------------
1,494
--------------
INDUSTRIAL COMPONENTS
Apollo Tyres Ltd. 8,450 10
MRF Ltd. 10,000 457
--------------
467
--------------
MACHINERY & ENGINEERING
Larsen & Toubro Ltd. 630 4
--------------
MULTI-INDUSTRY
(b)Morgan Stanley Growth Fund 6,881,800 1,176
--------------
TELECOMMUNICATIONS--INTEGRATED
Mahanagar Telephone Nigam Ltd. 105,000 437
--------------
TRANSPORTATION--ROAD & RAIL
Container Corp. of India Ltd. 279,600 1,159
--------------
22,622
--------------
- --------------------------------------------------------------------------------
INDONESIA (1.3%)
BEVERAGES & TOBACCO
Gudang Garam 1,375,460 1,833
--------------
BUILDING MATERIALS & COMPONENTS
Semen Gresik 267,200 304
--------------
FOREST PRODUCTS & PAPER
Indah Kait Pulp & Paper 3,629,805 1,028
--------------
3,165
--------------
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ISRAEL (4.5%)
BANKING
Bank Hapoalim Ltd. 220,200 U.S.$ 517
Bank Leumi Le-Israel 313,800 557
--------------
1,074
--------------
ELECTRICAL & ELECTRONICS
Comverse Technology, Inc. 12,860 1,093
ECI Telecommunications Ltd. 53,600 1,876
Elbit Systems Ltd. 1 --@
Gilat Satellite Networks Ltd. 22,690 1,362
Nice Systems Ltd. 4,294 127
Nice Systems Ltd. ADR 24,792 731
Orckit Communications Ltd. 7,480 156
--------------
5,345
--------------
ELECTRONIC COMPONENTS, INSTRUMENTS
Orbotech Ltd. 24,285 1,193
--------------
ENERGY SOURCES
Dor Energy 1988 Ltd. GDR 42,500 140
--------------
HEALTH & PERSONAL CARE
Teva Pharmaceutical Industries Ltd. ADR 17,260 819
--------------
MULTI-INDUSTRY
Koor Industries Ltd. 21,175 2,246
Koor Industries Ltd. ADR 2,190 46
--------------
2,292
--------------
10,863
--------------
- --------------------------------------------------------------------------------
KOREA (12.9%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. 162,381 12,572
Samsung Electronics Co. GDR - New 3,550 138
--------------
12,710
--------------
BANKING
Housing & Commercial Bank 112,870 2,254
--------------
ELECTRONIC COMPONENTS, INSTRUMENTS
S1 Corp. 274 52
Samsung Electro-Mechanics Co. 55,310 1,267
--------------
1,319
--------------
METALS--STEEL
Pohang Iron & Steel Co., Ltd. 40,750 2,567
--------------
MISC. MATERIALS & COMMODITIES
Hankuk Glass Industry Co., Ltd. 30,240 592
--------------
TELECOMMUNICATIONS--INTEGRATED
Korea Telecom Corp. 129,100 5,099
--------------
TELECOMMUNICATIONS--WIRELESS
SK Telecom Co., Ltd. 3,184 2,867
--------------
UTILITIES--ELECTRICAL & GAS
Korea Electric Power Corp. 39,450 952
Korea Electric Power Corp. ADR 227,030 2,880
--------------
3,832
--------------
31,240
- --------------------------------------------------------------------------------
MALAYSIA (0.8%)
BEVERAGES & TOBACCO
Rothmans of Pall Mall Bhd 138,200 U.S.$ 818
--------------
FOOD & HOUSEHOLD PRODUCTS
Nestle Bhd 109,000 382
--------------
MISC. MATERIALS & COMMODITIES
Kuala Lumpur Kepong Bhd 21,000 26
--------------
TELECOMMUNICATIONS--INTEGRATED
Telekom Malaysia Bhd 346,000 697
--------------
1,923
--------------
- --------------------------------------------------------------------------------
MEXICO (13.4%)
BANKING
Banacci 'B' 601,678 1,303
Banacci 'L' 45,447 91
Bancomer 'B' 406,959 139
(a)Bancomer 'B' ADR 64,825 446
--------------
1,979
--------------
BEVERAGES & TOBACCO
FEMSA 1,127,717 3,449
FEMSA ADR 80,798 2,500
--------------
5,949
--------------
BROADCASTING & PUBLISHING
Televisa CPO GDR 230,817 7,242
--------------
BUILDING MATERIALS & COMPONENTS
Cemex 'B' 77,258 325
Cemex 'B' ADR 117,149 981
Cemex CPO 310,357 1,267
Cemex CPO ADR 171,119 1,390
--------------
3,963
--------------
HEALTH & PERSONAL CARE
Kimberly 'A' 517,036 1,948
--------------
MERCHANDISING
Cifra 'C' 327,398 506
Cifra 'V' 422,305 663
Cifra 'V' ADR 46,036 712
--------------
1,881
--------------
MULTI-INDUSTRY
ALFA 'A' 98,195 298
Grupo Carso 'A1' 175,665 722
--------------
1,020
--------------
TELECOMMUNICATIONS--INTEGRATED
Telmex 'L' ADR 129,964 8,513
--------------
32,495
--------------
- --------------------------------------------------------------------------------
PAKISTAN (1.1%)
CHEMICALS
Fauji Fertilizer Co., Ltd. 1,218,800 1,304
--------------
ENERGY SOURCES
Pakistan State Oil Co., Ltd. 200,301 326
--------------
TELECOMMUNICATIONS--INTEGRATED
Pakistan Telecommunications Co., Ltd. 2,373,400 850
--------------
UTILITIES--ELECTRICAL & GAS
Sui Northern Gas Co. 886,995 167
--------------
2,647
--------------
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PHILIPPINES (1.1%)
BEVERAGES & TOBACCO
San Miguel Corp. 'B' 601,760 U.S.$ 1,002
--------------
REAL ESTATE
SM Prime Holdings, Inc. 'B' 3,862,580 797
--------------
UTILITIES--ELECTRICAL & GAS
Manila Electric Co. 'B' 222,040 733
--------------
2,532
--------------
- --------------------------------------------------------------------------------
POLAND (2.2%)
BANKING
Bank Slaski 72 3
Pekao Bank 11,234 117
Powszechny Bank Kredytowy 6,975 119
Wielkopolski Bank Kredytowy 19,705 108
--------------
347
--------------
CHEMICALS
Eastbridge 33,600 2,259
--------------
DATA PROCESSING & REPRODUCTION
Prokom GDR 21,845 370
--------------
FOOD & HOUSEHOLD PRODUCTS
Agros Holdings 'C' 1,182 8
--------------
TELECOMMUNICATIONS
Telekomunikacja Polska GDR 301,980 1,638
--------------
WHOLESALE & INTERNATIONAL TRADE
Elektrim 65,400 696
--------------
5,318
--------------
- --------------------------------------------------------------------------------
RUSSIA (2.1%)
BROADCASTING & PUBLISHING
Storyfirst Communications, Inc. 'C' (Preferred) 270 65
Storyfirst Communications, Inc. 'D' (Preferred) 720 174
Storyfirst Communications, Inc. 'E' (Preferred) 780 188
StoryFirst Communications, Inc. 'F' (Preferred) 139 67
--------------
494
--------------
ENERGY SOURCES
Lukoil Holdings ADR 53,222 1,537
Surgutneftegaz ADR 224,307 1,430
Tatneft ADR 21,800 60
--------------
3,027
--------------
FOREST PRODUCTS & PAPER
Alliance Cellulose Ltd. 'B' 156,075 240
--------------
TELECOMMUNICATIONS
Rostelecom ADR 34,500 162
--------------
TELECOMMUNICATIONS--INTEGRATED
Russian Telecom Development Corp. 176,000 407
--------------
TELECOMMUNICATIONS--WIRELESS
Vimpel-Communications ADR 21,790 338
--------------
UTILITIES--ELECTRICAL & GAS
Unified Energy Systems ADR 11,000 54
Unified Energy Systems GDR 74,930 U.S.$ 370
--------------
424
--------------
5,092
--------------
- --------------------------------------------------------------------------------
SOUTH AFRICA (8.2%)
BANKING
Nedcor Ltd. 77,510 1,730
--------------
BEVERAGES & TOBACCO
Rembrandt Group Ltd. 173,185 1,245
South African Breweries plc 455,610 4,008
South African Breweries plc 93,940 815
--------------
6,068
--------------
BROADCASTING & PUBLISHING
Primedia Ltd. 87,790 171
--------------
BUSINESS & PUBLIC SERVICES
Educor 377,134 459
--------------
ELECTRICAL & ELECTRONICS
Comparex Holdings Ltd. 63,710 497
Dimensions Data Holdings Ltd. 11,330 50
--------------
547
--------------
FINANCIAL SERVICES
ABSA Group Ltd. 287,520 1,376
B.O.E. Corp. Ltd. 'N' 2,169,876 1,584
BOE Ltd. 269,856 240
--------------
3,200
--------------
INSURANCE
FirstRand Ltd. 1,666,760 1,598
Liberty Life Association of Africa Ltd. 60,648 751
New Africa Investments Ltd. (Preferred) 'N' 985,810 568
--------------
2,917
--------------
MERCHANDISING
Ellerine Holdings Ltd. 239,880 951
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
De Beers 24,730 477
De Beers ADR 13,200 250
--------------
727
--------------
MULTI-INDUSTRY
Anglo American Corp. of South Africa 28,090 975
Bidvest Group Ltd. 246,843 2,022
(b)Morgan Stanley Africa Investment Fund, Inc. 9,670 91
--------------
3,088
--------------
19,858
--------------
- --------------------------------------------------------------------------------
TAIWAN (11.1%)
BANKING
Bank Sinopac 693,000 380
First Commercial Bank 443,000 728
Hua Nan Commercial Bank 493,000 848
International Commercial Bank of China 223,000 260
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TAIWAN (CONTINUED)
BANKING (CONTINUED)
Taishin International Bank 402,000 U.S.$ 227
--------------
2,443
--------------
CHEMICALS
Formosa Plastics Corp. 273,000 449
Nan Ya Plastic Corp. 319,000 468
--------------
917
--------------
DATA PROCESSING & REPRODUCTION
Quanta Computer Inc. 23,000 389
--------------
ELECTRICAL & ELECTRONICS
Advanced Semiconductor Engineering, Inc. 451,000 1,061
Siliconware Precision Industries Co. 687,800 1,401
Winbond Electronics Corp. 181,000 214
Winbond Electronics Corp. GDR 12,440 146
--------------
2,822
--------------
ELECTRONIC COMPONENTS, INSTRUMENTS
Acer, Inc. 342,000 455
Asustek Computer, Inc. 413,978 3,497
Compal Electronics, Inc. 207,423 544
Compeq Manufacturing Co., Ltd. 44,000 210
Hon Hai Precision Industry 777,800 4,154
Taiwan Semiconductor Co. 1,405,000 4,409
Taiwan Semiconductor Manufacturing Co., Ltd. ADR 149,819 3,539
United Micro Electronics Corp. Ltd. 951,000 1,650
--------------
18,458
--------------
MERCHANDISING
President Chain Store Corp. 158,274 489
--------------
TEXTILES & APPAREL
Far East Textile Ltd. 1,395,000 1,372
--------------
26,890
--------------
- --------------------------------------------------------------------------------
THAILAND (2.3%)
BROADCASTING & PUBLISHING
BEC World Public Co., Ltd. (Foreign) 178,400 865
--------------
BUILDING MATERIALS & COMPONENTS
Siam City Cement Public Co., Ltd. (Foreign) 210,500 712
--------------
ELECTRICAL & ELECTRONICS
Delta Electronics Public Co., Ltd. (Foreign) 166,800 733
Shinawatra Computer Public Co., Ltd. (Foreign) 447,800 1,168
--------------
1,901
--------------
TELECOMMUNICATIONS--WIRELESS
Advanced Info. Services Public Co., Ltd. (Foreign) 287,300 2,081
--------------
5,559
--------------
- --------------------------------------------------------------------------------
TURKEY (3.8%)
APPLIANCES & HOUSEHOLD DURABLES
Vestel Elektronik Sanayi Ve Ticaret AS 12,522,292 U.S.$ 1,192
--------------
BANKING
(a)Akbank TAS 13,960 90
Akbank TAS 31,804,700 1,023
Turkiye Garanti Bankasi 4,047,000 168
Turkiye Is Bankasi 23,412,000 1,020
Yapi Ve Kredi Bankasi 144,714,355 2,676
--------------
4,977
--------------
BEVERAGES & TOBACCO
Efes Sinai Yatirim 30,236,087 421
Ege Biracilik Ve Malt Sanayii 8,817,000 922
Erciyas Biracilik 4,524,000 113
--------------
1,456
--------------
BUSINESS & PUBLIC SERVICES
Dogan Holding 43,373,000 389
--------------
MERCHANDISING
Migros Turk TAS 322,000 423
--------------
MULTI-INDUSTRY
Koc Holding 2,454,000 306
--------------
WHOLESALE & INTERNATIONAL TRADE
Tupras-Turkiye Petrol Rafinerileri AS 6,455,000 459
--------------
9,202
--------------
- --------------------------------------------------------------------------------
ZIMBABWE (0.1%)
MERCHANDISING
Meikles Africa Ltd. 186,470 149
--------------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$244,172) 239,487
--------------
- --------------------------------------------------------------------------------
<CAPTION>
NO. OF
WARRANTS
- --------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS (0.0%)
- --------------------------------------------------------------------------------
THAILAND (0.0%)
Siam Commercial Bank Co. Ltd.
(Foreign), expiring 12/31/02
(Cost U.S.$--) 280,333 --@
--------------
- --------------------------------------------------------------------------------
<CAPTION>
NO. OF
UNITS
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITS (0.1%)
- --------------------------------------------------------------------------------
RUSSIA (0.1%)
Storyfirst Communications, Inc.,
First Section, Tranche I
(Convertible) 604 146
Storyfirst Communications, Inc.,
First Section, Tranche II
(Convertible) 35 8
- --------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NO OF VALUE
UNITS (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITS (CONTINUED)
Storyfirst Communications, Inc.,
Second Section, Tranche II
(Convertible) 152 U.S.$ 37
Storyfirst Communications, Inc.,
Tranche IV (Convertible) 207 50
--------------
241
- -------------------------------------------------------------------------------
TOTAL UNITS
(Cost U.S.$1,192) 241
--------------
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
DEBT INSTRUMENTS (0.2%)
- --------------------------------------------------------------------------------
INDIA (0.2%)
METALS--STEEL
Shri Ishar Alloy Steels Ltd.
15.00%, 4/21/01 INR 581 101
--------------
MULTI-INDUSTRY
(c)DCM Shriram Industries Ltd.
16.50%, 2/21/02 335 184
DCM Shriram Industries Ltd.
(Convertible) 7.50%, 2/21/02 330 136
--------------
320
--------------
- -------------------------------------------------------------------------------
TOTAL DEBT INSTRUMENTS
(Cost U.S.$1,495) 421
--------------
- -------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (2.1%)
Brazil Real BRL 133 78
Egyptian Pound EGP 222 65
Hungarian Forint HUF 72 --@
Indian Rupee INR 166 4
Malaysian Ringgit MYR 13,747 3,618
Mexican Peso MXP 2,245 236
Pakistani Rupee PKR 16,474 317
Philippine Peso PHP 5,735 148
Polish Zloty PLZ 371 93
South African Rand ZAR 1,561 253
South Korean Won KRW 250,801 204
Taiwan Dollar TWD 3,419 103
Zimbabwe Dollar ZWD 652 17
--------------
(Cost U.S.$4,682) 5,136
--------------
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.4%)
(Cost U.S.$251,541) 245,285
--------------
- -------------------------------------------------------------------------------
<CAPTION> AMOUNT AMOUNT
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES (-1.4%)
Other Assets U.S.$ 13,324
Liabilities (16,635) U.S.$ (3,311)
--------------------------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 20,778,744 issued and
outstanding U.S.$0.01 par value shares
(100,000,000 shares authorized) U.S.$ 241,974
--------------
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 11.65
--------------
- -------------------------------------------------------------------------------
</TABLE>
(a) - 144A Security - certain conditions for public sale may exist.
(b) - The Fund is advised by an affiliate.
(c) - Variable/floating rate security--rate disclosed is as of March 31, 1999.
@ - Amount is less than U.S.$500.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
GDS - Global Depositary Shares
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
emerging 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.
12
