MORGAN STANLEY AFRICA INVESTMENT FUND INC, PRE 14A, 1996-05-14

MORGAN STANLEY AFRICA INVESTMENT FUND INC
PRE 14A, 1996-05-14

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 14a-11(c) or 14a-12
</TABLE>

MORGAN STANLEY AFRICA INVESTMENT FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

MORGAN STANLEY AFRICA INVESTMENT FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------

To Our Stockholders:

Notice is hereby given that the Annual Meeting of Stockholders of Morgan
Stanley Africa Investment Fund, Inc. (the "Fund") will be held on Wednesday,
June 5, 1996, at 8:30 A.M. (New York time), in Conference Room 3 at 1221 Avenue
of the Americas, 22nd Floor, New York, New York 10020, for the following
purposes:

1. To elect three Class I Directors for a term of three years.

2. To ratify or reject the selection by the Board of Directors of
Price Waterhouse LLP as independent accountants of the Fund for the
fiscal year ending December 31, 1996.

3. To approve or disapprove the Investment Advisory and Management
Agreement between the Fund and Morgan Stanley Asset Management Inc.

4. If properly introduced at the Meeting, to approve or disapprove a
stockholder proposal requesting and recommending that the Board of
Directors of the Fund take the steps necessary, including amendment of the
Fund's existing Charter and/or By-Laws, to revise certain fundamental
investment policies.

5. If properly introduced at the Meeting, to approve or disapprove a
stockholder proposal requesting and recommending that the Board of
Directors of the Fund take the steps necessary, including amendment of the
Fund's existing Charter and/or By-Laws, to ensure that there will be no
rights offering by the Fund at any time in the future.

6. To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.

Only stockholders of record at the close of business on April 26, 1996 are
entitled to notice of, and to vote at, this Meeting or any adjournment thereof.

VALERIE Y. LEWIS
Secretary

Dated: May , 1996

IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO AVOID
THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE> 3

MORGAN STANLEY AFRICA INVESTMENT FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
------------------------

PROXY STATEMENT
------------------------

This statement is furnished by the Board of Directors of Morgan Stanley
Africa Investment Fund, Inc. (the "Fund") in connection with the solicitation of
Proxies for use at the Annual Meeting of Stockholders (the "Meeting") to be held
on Wednesday, June 5, 1996, at 8:30 A.M. (New York time), in Conference Room 3
at the principal executive office of Morgan Stanley Asset Management Inc.
(hereinafter "MSAM" or the "Manager"), 1221 Avenue of the Americas, 22nd Floor,
New York, New York 10020. The purpose of the Meeting and the matters to be acted
upon are set forth in the accompanying Notice of Annual Meeting of Stockholders.
It is expected that the Notice of Annual Meeting, Proxy Statement and form of
Proxy will first be mailed to stockholders on or about May , 1996.

If the accompanying form of Proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. A Proxy may be revoked at any time prior to the time
it is voted by written notice to the Secretary of the Fund or by attendance at
the Meeting. If no instructions are specified, shares will be voted FOR the
election of Directors and FOR the other proposals except the two stockholder
proposals, which management will vote against. Abstentions and broker non-votes
are each included in the determination of the number of shares present at the
Meeting.

The close of business on April 26, 1996 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting and at any adjournment thereof. On that date, the Fund had 15,448,477
shares of Common Stock outstanding and entitled to vote. Each share will be
entitled to one vote at the Meeting.

The expense of solicitation will be borne by the Fund and will include
reimbursement to brokerage firms and others for expenses in forwarding proxy
solicitation materials to beneficial owners. The solicitation of Proxies will be
largely by mail, but may include, without cost to the Fund, telephonic,
telegraphic or oral communications by regular employees of the Manager. The
solicitation of Proxies is also expected to include communications by employees
of Shareholder Communications Corporation, a proxy solicitation firm expected to
be engaged by the Fund at a cost not expected to exceed $5,000 plus expenses.

THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1995, TO ANY STOCKHOLDER REQUESTING SUCH REPORT.
REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE IN WRITING TO MORGAN STANLEY
AFRICA INVESTMENT FUND, INC., C/O CHASE GLOBAL FUNDS SERVICES COMPANY, P.O. BOX
2798, BOSTON, MASSACHUSETTS 02208-2798, OR BY CALLING 1-800-221-6726.

Chase Global Funds Services Company is an affiliate of the Fund's
administrator, The Chase Manhattan Bank, N.A. ("Chase Bank"), and provides
administrative services to the Fund. The business address of Chase Bank is One
Chase Manhattan Plaza, New York, New York 10081, and the business address of
Chase Global Funds Services Company is 73 Tremont Street, Boston, Massachusetts
02108.

The Board recommends that the stockholder vote in favor of each of the
matters mentioned in Items 1, 2 and 3 of the Notice of Annual Meeting and
against the stockholder proposals mentioned in Items 4 and 5 of the Notice of
Annual Meeting.
<PAGE> 4

ELECTION OF DIRECTORS
(PROPOSAL NO. 1)

At the Meeting, three Directors will be elected to hold office for a term
of three years and until their successors are duly elected and qualified. It is
the intention of the persons named in the accompanying form of Proxy to vote, on
behalf of the stockholders, for the election of Peter J. Chase, David B. Gill
and Warren J. Olsen as Class I Directors.

On or about the same date as the Meeting, each of the other closed-end,
U.S. registered investment companies advised by MSAM (except Morgan Stanley
India Investment Fund, Inc.) also is holding a meeting of stockholders at which,
among other things, such stockholders are considering a proposal to elect as
Class I directors of such other investment companies the same people nominated
to be Class I Directors of the Fund. Accordingly, if elected, all of the
nominees for Directors of the Fund also will act as directors of The Brazilian
Investment Fund, Inc., The Latin American Discovery Fund, Inc., The Malaysia
Fund, Inc., Morgan Stanley Asia-Pacific Fund, Inc., Morgan Stanley Emerging
Markets Debt Fund, Inc., Morgan Stanley Emerging Markets Fund, Inc., Morgan
Stanley Global Opportunity Bond Fund, Inc., The Morgan Stanley High Yield Fund,
Inc., The Pakistan Investment Fund, Inc., The Thai Fund, Inc. and The Turkish
Investment Fund, Inc. (collectively, with the Fund, the "MSAM closed-end
funds"). The Board believes that this arrangement enhances the ability of the
Directors to deal expeditiously with administrative matters common to the MSAM
closed-end funds, such as evaluating the performance of common service
providers, including MSAM and the administrators, transfer agents, custodians
and accountants for the MSAM closed-end funds.

Pursuant to the Fund's By-Laws, the terms of office of the Directors are
staggered. The Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with each class having a term of three years.
Each year the term of one class expires. Class I consists of Peter J. Chase,
David B. Gill and Warren J. Olsen. Class II consists of John W. Croghan, Graham
E. Jones and Frederick B. Whittemore. Class III consists of Barton M. Biggs,
John A. Levin and William G. Morton, Jr. Only the Directors in Class I are
being considered for election at this Meeting.

Pursuant to the Fund's By-Laws, each Director holds office until (i) the
expiration of his term and until his successor has been elected and qualified,
(ii) his death, (iii) his resignation, (iv) December 31 of the year in which he
reaches seventy-three years of age, or (v) his removal as provided by statute or
the Articles of Incorporation.

The Board of Directors has an Audit Committee. The Audit Committee makes
recommendations to the full Board of Directors with respect to the engagement of
independent accountants and reviews with the independent accountants the plan
and results of the audit engagement and matters having a material effect on the
Fund's financial operations. The members of the Audit Committee are currently
John W. Croghan, John A. Levin and William G. Morton, Jr., none of whom is an
"interested person," as defined under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Chairman of the Audit Committee is Mr. Levin. The
Audit Committee met twice during the fiscal year ended December 31, 1995. The
Board of Directors does not have nominating or compensation committees or other
committees performing similar functions.

There were four meetings of the Board of Directors held during the fiscal
year ended December 31, 1995. For the fiscal year ended December 31, 1995, each
current Director, during his tenure, attended at least seventy-five percent of
the aggregate number of meetings of the Board and of any committee on which he
served.

Each of the nominees for Director has consented to be named in this Proxy
Statement and to serve as a director if elected. The Board of Directors has no
reason to believe that any of the nominees named above will become unavailable
for election as a director, but if that should occur before the Meeting, Proxies
will be voted for such persons as the Board of Directors may recommend.

2
<PAGE> 5

Certain information regarding the Directors and executive officers of the
Fund is set forth below:

<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS APRIL 26, DEFERRED FEE PERCENT-
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1996** ARRANGEMENTS+ AGE
- ------------------------------- --------------- -------------------------------------- --- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Barton M. Biggs*............... Director and Chairman, Director and Managing 63 0 -- ***
1221 Avenue of the Americas Chairman of Director of Morgan Stanley Asset
New York, New York 10020 the Board Management Inc. and Chairman and
since 1994 Director of Morgan Stanley Asset
Management Limited; Managing
Director of Morgan Stanley & Co.
Incorporated; Director of Morgan
Stanley Group Inc.; Member of the
Investment Advisory Council of The
Thailand Fund; Director of the Rand
McNally Company; Member of the Yale
Development Board; Director and
Chairman of the Board of sixteen
U.S. registered investment companies
managed by Morgan Stanley Asset
Management Inc.
Peter J. Chase................. Nominee; Chairman and Chief Financial Officer, 63 500 0 ***
1441 Paseo De Peralta Director High Mesa Technologies, LLC;
Santa Fe, New Mexico 87501 since 1995 Chairman of CGL, Inc.; Director of
twelve U.S. registered investment
companies managed by Morgan Stanley
Asset Management Inc.; Member of the
Investment Advisory Council of The
Thailand Fund.
John W. Croghan................ Director Chairman of Lincoln Capital Management 65 1,000 215 ***
200 South Wacker Drive since 1995 Company; Director of St. Paul
Chicago, Illinois 60606 Bancorp, Inc. and Lindsay
Manufacturing Co.; Director of
twelve U.S. registered investment
companies managed by Morgan Stanley
Asset Management Inc.; Previously
Director of Blockbuster
Entertainment Corporation.
David B. Gill.................. Nominee; Director of twelve U.S. registered 69 533 -- ***
3042 Cambridge Place, N.W. Director investment companies managed by
Washington, D.C. 20007 since 1995 Morgan Stanley Asset Management
Inc.; Director of the Mauritius Fund
Limited; Director of Moneda Chile
Fund Limited; Member of Investment
Advisory Council of The Thailand
Fund; Chairman of the Advisory Board
of Advent Latin American Private
Equity Fund; Chairman and Director
of Norinvest Bank; Director of
Surinvest International Limited;
Director of National Registry
Company. Previously Director of
Capital Markets Department of the
International Finance Corporation;
Trustee, Batterymarch Finance
Management; Chairman and Director of
Equity Fund of Latin America S.A.
and Director of Commonwealth Equity
Fund Limited; and Director of Global
Securities, Inc.
</TABLE>

3
<PAGE> 6

<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS APRIL 26, DEFERRED FEE PERCENT-
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1996** ARRANGEMENTS+ AGE
- ------------------------------- --------------- -------------------------------------- --- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Graham E. Jones................ Director Senior Vice President of BGK 63 500 0 ***
P.O. Box 428 since 1995 Properties; Trustee of nine funds
Arroyo Seco, New Mexico 87514 managed by Weiss, Peck & Greer;
Trustee of eleven funds managed by
Morgan Grenfell Capital Management
Incorporated; Director of twelve
U.S. registered investment companies
managed by Morgan Stanley Asset
Management Inc.; Member of the
Investment Advisory Council of The
Thailand Fund. Previously Chief
Financial Officer of Practice
Management Systems, Inc.
John A. Levin.................. Director President of John A. Levin & Co., 57 1,000 56 ***
One Rockefeller Plaza since 1995 Inc.; Director of thirteen U.S.
New York, New York 10020 registered investment companies
managed by Morgan Stanley Asset
Management Inc.
William G. Morton, Jr.......... Director Chairman and Chief Executive Officer 59 894 0 ***
1 Boston Place since 1994 of Boston Stock Exchange; Director of
Boston, Massachusetts 02108 Tandy Corporation; Director of
twelve U.S. registered investment
companies managed by Morgan Stanley
Asset Management Inc.
Warren J. Olsen*............... Nominee; Principal of Morgan Stanley & Co. 39 0 -- ***
1221 Avenue of the Americas Director and Incorporated and Morgan Stanley
New York, New York 10020 President Asset Management Inc.; Director and
since 1994 President of sixteen U.S. registered
investment companies managed by
Morgan Stanley Asset Management Inc.
Frederick B. Whittemore*....... Director and Advisory Director of Morgan Stanley & 65 0 -- ***
1585 Broadway Vice- Chairman Co. Incorporated; Chairman for the
New York, New York 10036 since 1995 United States National Committee for
Pacific Economic Cooperation;
Director and Vice-Chairman of
fifteen U.S. registered investment
companies managed by Morgan Stanley
Asset Management Inc. Previously
Managing Director of Morgan Stanley
& Co. Incorporated.
James W. Grisham*.............. Vice Principal of Morgan Stanley & Co. 54 335 -- ***
1221 Avenue of the Americas President Incorporated and Morgan Stanley
New York, New York 10020 since 1994 Asset Management Inc.; Vice
President of Morgan Stanley Asset
Management Inc.; Officer of various
investment companies managed by
Morgan Stanley Asset Management Inc.
Harold J. Schaaff, Jr.*........ Vice Principal of Morgan Stanley & Co. 35 0 -- ***
1221 Avenue of the Americas President Incorporated and Morgan Stanley
New York, New York 10020 since 1994 Asset Management Inc.; General
Counsel and Secretary of Morgan
Stanley Asset Management Inc.;
Officer of various investment
companies managed by Morgan Stanley
Asset Management Inc.
</TABLE>

4
<PAGE> 7

</TABLE>

- ---------------

* "Interested person" within the meaning of the 1940 Act, as amended. Mr.
Biggs is chairman, director and managing director of the Manager, and
Messrs. Olsen, Grisham, Schaaff and Stadler and Ms. Lewis are officers of
the Manager. Mr. Whittemore is an Advisory Director of Morgan Stanley & Co.
Incorporated, an affiliate of the Manager and a registered broker-dealer,
and he owns a beneficial interest in Morgan Stanley Group Inc.

** This information has been furnished by each Director and officer.

*** Less than 1%.

+ Indicates share equivalents owned by the Directors and held in bookkeeping
accounts by the Fund on behalf of the Directors in connection with the
deferred fee arrangements described below.

Each officer of the Fund will hold such office until a successor has been
duly elected and qualified.

The Fund pays each of its Directors who is not a director, officer or
employee of MSAM or its affiliates, in addition to certain out-of-pocket
expenses, an annual fee of $6,000. Each of the members of the Fund's Audit
Committee receives an additional fee of $1,100 for serving on such committee.
Aggregate fees and expenses paid or payable to the Board of Directors for the
fiscal year ended December 31, 1995 were approximately $40,000.

Each of the Directors who is not an "affiliated person" of MSAM within the
meaning of the 1940 Act may enter into a deferred fee arrangement (the "Fee
Arrangement") with the Fund, pursuant to which such Director defers to a later
date the receipt of his Director's fees. The deferred fees owed by the Fund are
credited to a bookkeeping account maintained by the Fund on behalf of such
Director and accrue income from

5
<PAGE> 8

and after the date of credit in an amount equal to the amount that would have
been earned had such fees (and all income earned thereon) been invested and
reinvested either (i) in shares of the Fund or (ii) at a rate equal to the
prevailing rate applicable to 90-day United States Treasury Bills at the
beginning of each calendar quarter for which this rate is in effect, whichever
method is elected by the Director.

Under the Fee Arrangement, deferred Director's fees (including the return
accrued thereon) will become payable in cash upon such Director's resignation
from the Board of Directors in generally equal annual installments over a period
of five years (unless the Fund has agreed to a longer or shorter payment period)
beginning on the first day of the year following the year in which such
Director's resignation occurred. In the event of a Director's death, remaining
amounts payable to him under the Fee Arrangement will thereafter be payable to
his designated beneficiary; in all other events, a Director's right to receive
payments is non-transferable. Under the Fee Arrangement, the Board of Directors
of the Fund, in its sole discretion, has reserved the right, at the request of a
Director or otherwise, to accelerate or extend the payment of amounts in the
deferred fee account at any time after the termination of such Director's
service as a director. In addition, in the event of liquidation, dissolution or
winding-up of the Fund or the distribution of all or substantially all of the
Fund's assets and property to its stockholders (other than in connection with a
reorganization or merger into another fund advised by MSAM), all unpaid amounts
in the deferred fee account maintained by the Fund will be paid in a lump sum to
the Directors participating in the Fee Arrangement on the effective date
thereof.

Currently, John W. Croghan and John A. Levin are the only Directors who
have entered into the Fee Arrangement with the Fund.

Set forth below is a table showing the aggregate compensation paid or
payable by the Fund to each of its Directors, as well as the total compensation
paid to each Director by the Fund and by other U.S. registered investment
companies advised by MSAM or its affiliates (collectively, the "Fund Complex"),
for their services as Directors of such investment companies for the fiscal year
ended December 31, 1995.

6
<PAGE> 9

<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT TOTAL COMPENSATION NUMBER OF FUNDS IN
COMPENSATION BENEFITS ACCRUED FROM FUND AND FUND COMPLEX FOR
FROM AS PART OF THE FUND COMPLEX PAID WHICH DIRECTOR
NAME OF DIRECTOR FUND(2)(3) FUND'S EXPENSES TO DIRECTORS(2)(4) SERVES(5)
- ------------------------------------ ------------ ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Barton M. Biggs(1) $ 0 None $ 0 16
Frederick B. Whittemore(1) 0 None 28,254 15
Warren J. Olsen(1) 0 None 0 16
James J. Biundo(6) 3,650 None 10,604 2
Peter J. Chase 3,000 None 47,300 12
John W. Croghan 3,651 None 48,645 12
David B. Gill 3,000 None 46,719 12
Gerard E. Jones(6) 4,100 None 78,822 9
Graham E. Jones 3,000 None 47,673 12
John A. Levin 3,550 None 49,546 13
William G. Morton, Jr. 7,050 None 48,400 12
Fergus Reid(6) 3,650 None 56,388 5
Leslie Ann Shad(6) 3,500 None 3,500 1
</TABLE>

- ---------------
(1) "Interested persons" of the Fund within the meaning of the 1940 Act. Messrs.
Biggs and Olsen do not receive any compensation from the Fund or any other
investment company in the Fund Complex for their services as a director of
such investment companies.

(2) The amounts reflected in this table include amounts payable by the Fund and
the Fund Complex for services rendered during the fiscal year ended December
31, 1995, regardless of whether such amounts were actually received by the
Directors during such fiscal year.

(3) Mr. Croghan earned $1,876 in deferred compensation from the Fund, pursuant
to the deferred fee arrangements described above, including any capital
gains or losses or interest associated therewith, during the fiscal year
ended December 31, 1995. Such amounts are included in the aggregate
compensation from the Fund reported in this table.

(4) Mr. Croghan earned $35,657, Mr. Gill earned $26,719, Mr. Graham E. Jones
earned $21,723 and Mr. Levin earned $21,796 in deferred compensation from
the Fund and the Fund Complex, pursuant to the deferred fee arrangements
described above, including any capital gains or losses or interest
associated therewith, during the fiscal year ended December 31, 1995. Such
amounts are included in these Directors' respective aggregate compensations
from the Fund and the Fund Complex reported in this table.

(5) Indicates the total number of boards of directors of investment companies in
the Fund Complex on which the Director served at any time during the fiscal
year ended December 31, 1995.

(6) Messrs. Gerard E. Jones and Reid and Ms. Shad served as Directors until the
expiration of their terms on June 26, 1995. Mr. Biundo served as a Director
of the Fund until he resigned in 1995. As of the date hereof, Mr. Gerard E.
Jones and Mr. Reid serve as directors on four, and Mr. Biundo and Ms. Shad
do not serve as directors on any, boards of directors of investment
companies in the Fund Complex.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Fund's officers and directors, and persons who own more than ten percent of
a registered class of the Fund's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"Commission") and the New York Stock Exchange, Inc. Certain Forms 3--Initial
Statement of Beneficial Ownership of Securities and 5--Annual Statement of
Beneficial Ownership of Securities were filed late by management of the Fund,
which had undertaken to file such forms on behalf of the Directors and officers
of

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<PAGE> 10

the Fund. A Form 3 was filed late for each of Messrs. Chase, Croghan, Gill,
Graham E. Jones, Levin and Whittemore. A Form 5 was filed late for each of Mr.
Biggs with respect to three transactions in the shares of the Fund, and Messrs.
Gill, Morton and Grisham with respect to one transaction in the shares of the
Fund.

The election of Messrs. Chase, Gill and Olsen requires the affirmative vote
of a majority of the votes cast at a meeting at which a quorum is present. Under
the Fund's By-Laws, the presence in person or by proxy of stockholders entitled
to cast a majority of the votes entitled to be cast thereat shall constitute a
quorum. For this purpose, abstentions and broker non-votes will be counted in
determining whether a quorum is present at the Meeting, but will not be counted
as votes cast at the Meeting.

THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF THE THREE NOMINEES AS DIRECTORS.

SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)

The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected Price Waterhouse LLP as
independent accountants for the Fund for the fiscal year ending December 31,
1996. The ratification of the selection of independent accountants is to be
voted on at the Meeting, and it is intended that the persons named in the
accompanying Proxy will vote for Price Waterhouse LLP. Price Waterhouse LLP acts
as the independent accountants for certain of the other investment companies
advised by MSAM. Although it is not expected that a representative of Price
Waterhouse LLP will attend the Meeting, a representative will be available by
telephone to respond to stockholder questions, if any.

The Board's policy regarding engaging independent accountants' services is
that management may engage the Fund's principal independent accountants to
perform any services normally provided by independent accounting firms, provided
that such services meet any and all of the independence requirements of the
American Institute of Certified Public Accountants and the Commission. In
accordance with this policy, the Audit Committee reviews and approves all
services provided by the independent accountants prior to their being rendered.
The Board of Directors also receives a report from its Audit Committee relating
to all services that have been performed by the Fund's independent accountants.

The ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at a meeting at which a quorum
is present. For this purpose, abstentions and broker non-votes will be counted
in determining whether a quorum is present at the Meeting, but will not be
counted as votes cast at the Meeting.

THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 2.

APPROVAL OR DISAPPROVAL OF THE INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
(PROPOSAL NO. 3)

The Fund entered into an Investment Advisory and Management Agreement on
February 3, 1994 (the "Management Agreement"), with MSAM. The Management
Agreement was approved by the Fund's Board of Directors, including a majority of
the Directors who are not interested persons of the Fund, on January 28, 1994
and was approved by the initial stockholder of the Fund on January 28, 1994. The
Management Agreement by its terms expired on the second anniversary of the date
the Fund's registration statement was

8
<PAGE> 11

declared effective, and would have continued in effect from year to year
thereafter, provided that such continuance was approved at least annually by an
affirmative vote of a majority of the Fund's Directors who are neither parties
to the Management Agreement nor interested persons of the Fund or of the Manager
or of any entity regularly furnishing investment advisory services with respect
to the Fund pursuant to an agreement with the Manager, as well as an affirmative
vote of a majority of either the Fund's Board of Directors or the Fund's
outstanding voting securities. Due to the absence of a majority of directors who
are not interested persons of the Fund or the Manager at a meeting of the Fund's
Board of Directors held in January 1996, continuation of the Management
Agreement was not approved prior to the expiration thereof, which resulted in a
termination of the Management Agreement. The Fund's Board of Directors,
including a majority of the directors who are not interested persons of the Fund
or the Manager, subsequently approved the Management Agreement on February 16,
1996. Under the 1940 Act, the Management Agreement must now be approved by the
affirmative vote of a majority of the Fund's outstanding shares of Common Stock
in order for it to be renewed. For this purpose, the "affirmative vote of a
majority of the Fund's outstanding shares of Common Stock" means greater than
50% of all of the Fund's issued and outstanding shares of Common Stock. The
terms of the Management Agreement, as approved by the Board of Directors of the
Fund on February 16, 1996, remain unchanged from the terms in effect prior to
its termination, including the level of management fees, which is discussed
below. A copy of the Management Agreement is attached as Exhibit A.

THE MANAGER

MSAM is a wholly owned subsidiary of Morgan Stanley Group Inc., and is
registered under the U.S. Investment Advisers Act of 1940, as amended (the
"Advisers Act"). It provides portfolio management and named fiduciary services
to various closed-end and open-end companies, taxable and nontaxable
institutions, international organizations and individuals investing in United
States and international equities and fixed income securities. At March 31,
1996, MSAM had, together with its affiliated investment management companies,
assets under management (including assets under fiduciary advisory control)
totaling approximately $96.9 billion, of which approximately $6.9 billion was
invested in developing or emerging country markets.

As an investment adviser, MSAM emphasizes a global investment strategy and
benefits from research coverage of a broad spectrum of investment opportunities
worldwide. MSAM draws upon the capabilities of its asset management specialists
located in its various offices throughout the world. It also draws upon the
research capabilities of Morgan Stanley Group Inc. and its other affiliates, as
well as the research and investment ideas of other companies whose brokerage
services MSAM utilizes. The principal address of Morgan Stanley Group Inc. is
1585 Broadway, New York, New York 10036.

9
<PAGE> 12

The following table sets forth information relating to certain of the
registered investment companies, including the Fund, for which MSAM acts as the
investment adviser:

<TABLE>
<CAPTION>
NET ASSETS
AS OF MANAGEMENT FEE
INVESTMENT COMPANY MARCH 31, 1996 (ANNUAL RATE OF MSAM'S COMPENSATION)
- ----------------------------------------- --------------- --------------------------------------
<S> <C> <C>
Morgan Stanley Institutional Fund,
Inc.(1)
-- Active Country Allocation
Portfolio........................... $ 193,571,917 0.65% of average daily net assets
-- Aggressive Equity Portfolio......... $ 41,310,338 0.80% of average daily net assets
-- Asian Equity Portfolio.............. $ 422,638,274 0.80% of average daily net assets
-- Balanced Portfolio.................. $ 20,208,877 0.50% of average daily net assets
-- China Growth Portfolio(2)........... $ -0- 1.00% of average daily net assets
-- Emerging Growth Portfolio........... $ 115,009,033 1.00% of average daily net assets
-- Emerging Markets Debt Portfolio..... $ 171,323,112 1.00% of average daily net assets
-- Emerging Markets Portfolio.......... $ 1,107,222,464 1.25% of average daily net assets
-- Equity Growth Portfolio............. $ 176,138,724 0.60% of average daily net assets
-- European Equity Portfolio........... $ 95,033,515 1.00% of average daily net assets
-- Fixed Income Portfolio.............. $ 172,067,389 0.35% of average daily net assets
-- Global Equity Portfolio............. $ 75,258,224 0.80% of average daily net assets
-- Global Fixed Income Portfolio....... $ 100,635,423 0.40% of average daily net assets
-- Gold Portfolio...................... $ 13,605,727 1.00% of average daily net assets(3)
-- Growth and Income Fund(2)........... $ -0- 0.75% of average daily net assets
-- High Yield Portfolio................ $ 66,831,980 0.50% of average daily net assets
-- International Equity Portfolio...... $ 1,867,917,357 0.80% of average daily net assets
-- International Magnum Portfolio...... $ 3,567,642 0.80% of average daily net assets
-- International Small Cap Portfolio... $ 211,054,707 0.95% of average daily net assets
-- Japanese Equity Portfolio........... $ 184,722,866 0.80% of average daily net assets
-- Latin American Portfolio............ $ 20,741,435 1.10% of average daily net assets
-- Money Market Portfolio.............. $ 1,072,229,101 0.30% of average daily net assets
-- Mortgaged-Backed Securities
Portfolio(2)........................ $ -0- 0.30% of average daily net assets
-- Municipal Bond Portfolio............ $ 45,436,875 0.30% of average daily net assets
-- Municipal Money Market Portfolio.... $ 527,643,094 0.30% of average daily net assets
-- Small Cap Value Equity Portfolio.... $ 55,380,518 0.85% of average daily net assets
-- U.S. Real Estate Portfolio.......... $ 98,720,584 0.80% of average daily net assets
-- Value Equity Portfolio.............. $ 160,543,956 0.50% of average daily net assets
PCS Cash Fund, Inc.
-- Government Obligations Portfolio.... $ 49,582,159 0.45% of the first $250 million of
average daily net assets
0.40% of the next $250 million of
average daily net assets
0.35% of the excess over $500 million
of average daily net assets
</TABLE>

10
<PAGE> 13

<TABLE>
<CAPTION>
NET ASSETS
AS OF MANAGEMENT FEE
INVESTMENT COMPANY MARCH 31, 1996 (ANNUAL RATE OF MSAM'S COMPENSATION)
- ----------------------------------------- --------------- --------------------------------------
<S> <C> <C>
-- Money Market Portfolio.............. $ 158,625,616 0.45% of the first $250 million of
average daily net assets
0.40% of the next $250 million of
average daily net assets
0.35% of the excess over $500 million
of average daily net assets
Morgan Stanley Fund, Inc.(4)
-- American Value Fund................. $ 47,277,202 0.85% of average daily net assets
-- Aggressive Equity................... $ 6,726,546 0.90% of average daily net assets
-- Asian Growth Fund................... $ 443,350,485 1.00% of average daily net assets
-- Emerging Markets Fund............... $ 115,655,027 1.25% of average daily net assets
-- Global Equity Allocation Fund....... $ 119,624,261 1.00% of average daily net assets
-- Global Fixed Income Fund............ $ 18,312,977 0.75% of average daily net assets
-- High Yield Fund(5).................. $ -0- 0.75% of average daily net assets
-- Japanese Equity Fund(5)............. $ -0- 1.00% of average daily net assets
-- International Magnum Fund(5) ....... $ -0- 1.00% of average daily net assets
-- Latin America Fund.................. $ 19,300,020 1.25% of average daily net assets
-- Money Market Fund(2)................ $ -0- 0.35% of average daily net assets
-- U.S. Real Estate Fund(5) ........... $ -0- 1.00% of average daily net assets
-- Worldwide High Income Fund.......... $ 93,786,723 0.75% of average daily net assets
Morgan Stanley Africa Investment Fund,
Inc. .................................. $ 261,887,424 1.20% of average weekly net assets
Morgan Stanley Asia-Pacific Fund, 1.00% of average weekly net assets
Inc. .................................. $ 808,283,815
Morgan Stanley Emerging Markets Fund, Inc. $ 367,788,021 1.25% of average weekly net assets
Morgan Stanley Emerging Markets Debt
Fund, Inc. ............................ $ 273,843,367 1.00% of average weekly net assets
Morgan Stanley Global Opportunity Bond
Fund, Inc. ............................ $ 53,760,967 1.00% of average weekly net assets
The Morgan Stanley High Yield Fund,
Inc. .................................. $ 118,682,145 0.70% of average weekly net assets
Morgan Stanley India Investment Fund,
Inc. .................................. $ 370,274,660 1.10% of average weekly net assets
The Brazilian Investment Fund, Inc. ..... $ 41,391,585 0.90% of the first $50 million of
average weekly net assets
0.70% of the next $50 million of
average weekly net assets
0.50% of the excess over $100 million
of average weekly net assets
The Latin American Discovery Fund, Inc. .. $ 146,943,799 0.75% of average weekly net assets of
average weekly net assets
</TABLE>

11
<PAGE> 14

<TABLE>
<CAPTION>
NET ASSETS
AS OF MANAGEMENT FEE
INVESTMENT COMPANY MARCH 31, 1996 (ANNUAL RATE OF MSAM'S COMPENSATION)
- ----------------------------------------- --------------- --------------------------------------
<S> <C> <C>
The Malaysia Fund, Inc. ................. $ 207,664,542 0.90% of the first $50 million of
average weekly net assets
0.70% of the next $50 million of
average weekly net assets
0.50% of the excess over $100 million
of average weekly net assets
The Pakistan Investment Fund, Inc. ...... $ 79,319,883 1.00% of average weekly net assets of
average weekly net assets
The Thai Fund, Inc. ..................... $ 339,337,016 0.90% of the first $50 million of
average weekly net assets
0.70% of the next $50 million of
average weekly net assets
0.50% of the excess over $100 million
of average weekly net assets
The Turkish Investment Fund, Inc. ....... $ 40,753,457 0.95% of the first $50 million of
average weekly net assets
0.75% of the next $50 million of
average weekly net assets
0.55% of the excess over $100 million
of average weekly net assets
</TABLE>

- ---------------
(1) Includes Class A and Class B shares.

(2) Currently Inactive.

(3) Management fee includes a 0.40% sub-advisory fee payable by the Manager.

(4) Includes Class A, Class B and Class C shares.

(5) As of March 31, 1996, such portfolio had not yet commenced operations.

12
<PAGE> 15

Certain information regarding the directors and the principal executive
officers of the Manager is set forth below.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH MSAM OTHER INFORMATION
- ---------------------------- ----------------------- ----------------------------------------
<S> <C> <C>
Barton M. Biggs*............ Chairman, Director and Managing Director of Morgan Stanley &
Managing Director Co. Incorporated; Chairman of Morgan
Stanley Asset Management Limited
Peter A. Nadosy*............ Vice Chairman, Director Managing Director of Morgan Stanley &
and Co. Incorporated; Director of Morgan
Managing Director Stanley Asset Management Limited
James M. Allwin*............ President, Director Managing Director of Morgan Stanley &
and Managing Director Co. Incorporated; President of Morgan
Stanley Realty Inc.
Gordon S. Gray*............. Director and Managing Director of Morgan Stanley &
Managing Director Co. Incorporated; Director of Morgan
Stanley Asset Management Limited
Dennis G. Sherva*........... Director and Managing Director of Morgan Stanley &
Managing Director Co. Incorporated
</TABLE>

- ---------------
* Business Address: 1221 Avenue of the Americas, New York, New York 10020

TERMS OF MANAGEMENT AGREEMENT

Under the terms of the Management Agreement, the Manager makes all
investment decisions, prepares and makes available research and statistical
data, and supervises the purchase and sale of securities on behalf of the Fund,
including the selection of brokers and dealers to carry out the transactions,
all in accordance with the Fund's investment objective and policies, under the
direction and control of the Fund's Board of Directors. The Manager is also
responsible for maintaining records and furnishing or causing to be furnished
all required records or other information of the Fund to the extent such
records, reports and other information are not maintained or furnished by the
Fund's administrators, custodians or other agents. The Manager pays the salaries
and expenses of the Fund's officers and employees, as well as the fees and
expenses of the Fund's Directors, who are directors, officers or employees of
the Manager or any of its affiliates. However, the Fund bears travel expenses or
an appropriate fraction thereof of officers and Directors of the Fund who are
directors, officers or employees of the Manager or its affiliates to the extent
that such expenses relate to attendance at meetings of the Fund's Board of
Directors or any committee thereof.

The Fund pays all of its other expenses, including, among others,
organization expenses (but not the overhead or employee costs of the Manager);
legal fees and expenses of counsel to the Fund; auditing and accounting
expenses; taxes and governmental fees; listing fees; dues and expenses incurred
in connection with membership in investment company organizations; fees and
expenses of the Fund's custodians, subcustodians, transfer agents and
registrars; fees and expenses with respect to administration, except as may be
provided otherwise pursuant to administration agreements; expenses for portfolio
pricing services by a pricing agent, if any; expenses of preparing share
certificates and other expenses in connection with the issuance, offering and
underwriting of shares issued by the Fund; expenses relating to investor and
public relations; expenses of registering or qualifying securities of the Fund
for public sale; freight, insurance and other charges in connection with the
shipment of the Fund's portfolio securities; brokerage commissions and other
costs of

13
<PAGE> 16

acquiring or disposing of any portfolio holding of the Fund; expenses of
preparation and distribution of reports, notices and dividends to stockholders;
expenses of the dividend reinvestment and share purchase plan (except for
brokerage expenses paid by participants in such plan); costs of stationery; any
litigation expenses; and costs of stockholders' and other meetings.

For services under the Management Agreement, the Manager receives a fee,
computed weekly and payable monthly, at an annual rate of 1.20% of the Fund's
average weekly net assets. The Fund's management and advisory fees are higher
than advisory fees paid by most other U.S. investment companies, primarily
because of the additional time and expense required of the Manager in pursuing
the Fund's objective of investing in securities of African issuers and debt
securities issued or guaranteed by African governments or governmental entities.
This investment objective entails additional time and expense because available
public information concerning securities of African issuers is limited in
comparison to that available for U.S. companies and accounting standards are
more flexible. In addition, available research concerning African issuers is not
comparable to available research concerning U.S. companies. The aggregate fee
paid to the Manager for the fiscal year ended December 31, 1995 was $2,851,000.
The aggregate fees paid to the Manager for the period from February 14, 1994,
the date of the commencement of the Fund's operations, to December 31, 1994 was
$2,232,585.

Under the Management Agreement, the Manager is permitted to provide
investment advisory services to other clients, including clients who may invest
in African securities. Conversely, information furnished by others to the
Manager in the course of providing services to clients other than the Fund may
be useful to the Manager in providing services to the Fund.

The Management Agreement, if approved by the stockholders at the Meeting,
will be effective until February 16, 1997 and will continue in effect from year
to year thereafter provided such continuance is specifically approved at least
annually by (i) a vote of a majority of those members of the Board of Directors
of the Fund who are neither parties of the Management Agreement nor interested
persons of the Fund or of the Manager or any entity regularly furnishing
investment advisory services with respect to the Fund pursuant to an agreement
with the Manager, cast in person at a meeting called for the purpose of voting
on such approval, and (ii) a majority vote of either the Fund's Board of
Directors or the Fund's outstanding voting securities. The Management Agreement
may be terminated at any time without payment of penalty by the Fund or by the
Manager upon 60 days' written notice. The Management Agreement will
automatically terminate in the event of its assignment, as defined under the
1940 Act.

Under the Management Agreement, the Fund agrees to indemnify the Manager
for any losses, costs and expenses incurred or suffered by the Manager arising
from any action, proceeding or claims which may be brought against the Manager
in connection with the performance or non-performance in good faith of its
functions under the Management Agreement, except losses, costs and expenses
resulting from willful misfeasance, bad faith or gross negligence in the
performance of the Manager's duties or from reckless disregard of the Manager's
obligations and duties under the Management Agreement. In addition, the
Management Agreement provides that the Manager will not be liable for any act or
omission, error of judgment or mistake of law, or for any loss suffered by the
Fund in connection with matters to which the Management Agreement relates,
except for a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its duties, or from
reckless disregard by it of its obligations and duties under the Management
Agreement.

RECOMMENDATION OF THE BOARD OF DIRECTORS

In considering the continuation of the Management Agreement, the Board of
Directors requested and reviewed various materials, including materials
furnished by MSAM. These materials included information

14
<PAGE> 17

regarding MSAM (and its affiliated companies), its personnel, operations,
financial condition and investment philosophy. MSAM also provided information
regarding the performance records and expenses of other funds advised by MSAM.
The Board of Directors also considered that the terms of the Management
Agreement remained unchanged since it was initially approved by the Board of
Directors.

In connection with the approval of the continuation of the Management
Agreement, the Board of Directors considered that the Fund's total operating
expenses were anticipated to be the same as they were prior to the expiration of
the Management Agreement, and that MSAM was expected to provide the same level,
quality and types of investment advisory services as it did under the Management
Agreement.

The Board of Directors also took into account the financial strength of
MSAM and its management, personnel and operations, and the commitment of MSAM to
the financial services industry. The Board of Directors based their
determinations in this regard on discussions with representatives of MSAM at a
meeting of the Board of Directors held on February 16, 1996, and a review of
materials forwarded by MSAM in connection with the meeting. These materials
included MSAM's annual report and various documents outlining the history and
current operations of MSAM and the funds that it advises, as well as
opportunities for the Fund to request other information which counsel for the
Board of Directors believed to be relevant to this review.

Based on the considerations set forth above, the Board of Directors,
including the Directors of the Fund who are not "interested persons," have
determined that the continuation of the Management Agreement is in the best
interest of the Fund and its stockholders. In addition, MSAM expects that there
will be no diminution in the scope and quality of services provided by it to the
Fund as a result of the expiration of the Management Agreement. The Board of
Directors believes that the Fund should receive investment advisory services
under the Management Agreement equal to those that it received under the
Management Agreement prior to its expiration.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Manager places orders for securities to be purchased by the Fund. The
primary objective of the Manager in choosing brokers for the purchase and sale
of securities for the Fund's portfolio is to obtain the most favorable net
results taking into account such factors as price, commission, size of order,
difficulty of execution, and the degree of skill required of the broker-dealer.
The capability and financial condition of the broker may also be criteria for
the choice of that broker. The placing and execution of orders for the Fund is
also subject to restrictions under U.S. securities laws, including certain
prohibitions against trading among the Fund and its affiliates (including the
Manager and its affiliates). The Fund may utilize affiliates of the Manager in
connection with the purchase or sale of securities in accordance with rules or
exemptive orders adopted by the Commission when the Manager believes that the
charge for the transaction does not exceed usual and customary levels. In
addition, the Fund may purchase securities in a placement for which affiliates
of the Manager have acted as agent to or for issuers, consistent with applicable
rules adopted by the Commission or regulatory authorization, if necessary. The
Fund will not purchase securities from or sell securities to any affiliate of
the Manager acting as principal.

The Manager on behalf of the Fund may place brokerage transactions through
brokers who provide it with investment research services, including market and
statistical information and quotations for the Fund's portfolio valuation
purposes. The terms "investment research" and "market and statistical
information and quotations" include advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities and potential buyers or sellers of securities, as
well as the furnishing of analyses and reports concerning issuers, industries,
securities, economic factors and trends, and portfolio

15
<PAGE> 18

strategy, each and all as consistent with those services mentioned in Section
28(e) of the Securities Exchange Act of 1934, as amended.

Research provided to the Manager in advising the Fund is in addition to and
not in lieu of the services required to be performed by the Manager itself, and
the Manager's fees will not be reduced as a result of the receipt of such
supplemental information. It is the opinion of the management of the Fund that
such information is only supplementary to the Manager's own research efforts,
since the information must still be analyzed, weighed and reviewed by the
Manager's staff. Such information may be useful to the Manager in providing
services to clients other than the Fund, and not all such information is
necessarily used by the Manager in connection with the Fund. Conversely,
information provided to the Manager by brokers and dealers through whom other
clients of the Manager effect securities transactions may prove useful to the
Manager in providing services to the Fund.

The Fund's Board of Directors reviews at least annually the commissions
allocated by the Manager on behalf of the Fund to determine if such allocations
were reasonable in relation to the benefits inuring to the Fund. For the fiscal
year ended December 31, 1995, no brokerage commissions were paid by the Fund to
affiliates of the Manager.

REQUIRED VOTE

Approval of the Management Agreement requires the affirmative vote of a
majority of the Fund's outstanding shares, which for this purpose means the
lesser of (1) the holders of more than 50% of the outstanding shares of the Fund
or (2) the holders of 67% or more of the shares present at the Meeting if more
than 50% of the shares are present at the Meeting in person or by proxy. For
this purpose, both abstentions and broker non-votes will have the effect of a
vote to disapprove the continuance of the Management Agreement. As discussed
above, the approval of the Management Agreement by the directors, including
those directors who are not interested persons, has been obtained. If
stockholders do not approve the continuance of the Management Agreement, the
Management Agreement will terminate on June 15, 1996. If the respective
Management Agreement is not approved by stockholders of the Fund, the Board of
Directors will decide the appropriate actions to be taken with respect to the
Fund's investment advisory arrangement at that time.

THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 3.

STOCKHOLDER PROPOSALS

From time to time, the individual stockholders of the Fund may submit
proposals which they believe should be voted upon by the stockholders. This
year, the following two proposals have been submitted. Each was accompanied by a
supporting statement and notice of intention to present the proposal for action
at the Annual Meeting.

Each stockholder proponent must appear personally or by proxy at the Annual
Meeting to present its proposal for action. Approval of each of the stockholder
proposals requires an affirmative vote of the majority of the votes cast. Unless
marked to the contrary, proxies received will be voted against the stockholder
proposals.

PROPOSAL NO. 4

Mr. Robert LaNeil Shaefer, 345 Lincoln Avenue, #1124, Amherst,
Massachusetts 01002-1937, has given notice that he intends to present for action
at the Meeting the following proposal:

16
<PAGE> 19

"Whereas:

1. On average, African stocks outside of South Africa presently have
much lower Price to Earnings and Price to Book Value ratios than South
African stocks.

2. The Fund presently has well over 50% of its assets in South African
securities even though the Fund is called The Morgan Stanley Africa Fund,
and even though South Africa occupies only 4.0% of the land area of Africa
and has only a 6.3% of its population. (Source: The World Almanac 1995, pp.
819, 820, 839.)

Therefore, it is requested and recommended that the board of directors of
the Fund take the steps necessary, including amendment of the Fund's existing
Charter and/or Bylaws, to revise fundamental investment policy as follows:

No active investment may be made in a country while the total value of
securities from that country exceed 25% of the net assets of the fund.

The total value of securities from any country may not exceed 30% of
the net assets of the fund."

THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "AGAINST" THIS
PROPOSAL NO. 4 FOR THE FOLLOWING REASONS:

The Fund's overall objective is to maximize total return of the Fund on
behalf of its stockholders. Although South Africa occupies only 4% of the land
area of Africa and has approximately 6% of the population of Africa, over 90% of
Africa's current stock market capitalization, which stands at approximately $275
billion, is represented by the market capitalization of South Africa. In
comparison, only 63% of the Fund's equity holdings is represented by South
African investments as of March 31, 1996. Therefore, the Fund is actually
under-invested in South African equities when viewed on the basis of the
continent's total market capitalization. Additionally, the Fund believes that
the implementation of the investment restrictions proposed by the stockholder
would, based on the Fund's estimates of the current market capitalization of
South Africa, eliminate over half of the Fund's available investments in Africa,
and would likely have a substantial impact on the ability of the Fund to meet
its investment objective.

As the stockholder mentions in his proposal, other African markets trade at
lower price to earnings, price to book and price to cash earning multiples than
the South African stock market. The Fund is increasing its holdings in these
markets. Since the fourth quarter of 1994, the Fund has invested in Zimbabwe,
Ghana, Mauritius and Egypt. As of March 31, 1996, equity investments in these
countries represent approximately 12% of the Fund's assets. Despite the Fund's
efforts to increase its equity investments in these countries even further, the
Fund has been hampered by the fact that markets in these countries are very
small and illiquid, making it difficult for the Fund to acquire such equity
investments. Nevertheless, the Fund is actively pursuing investments in these
and other potential markets. Where difficulties exist in making equity
investments in African markets, the Fund may invest in debt obligations issued
by African governments. As of March 31, 1996, approximately 11% of the Fund's
total assets is invested in debt obligations issued by Algeria, the Ivory Coast,
Morocco and Nigeria.

When making investment decisions, many factors should be considered in
addition to price to earnings and price to book value ratios. These include
consideration of political and economic factors in the country in which the
issuer is located, foreign investment restrictions, the availability of
appropriate custodial arrangements and market liquidity. Such factors or
restrictions will affect the Fund's ability to invest in markets other than
South Africa.

As stated above, the overall objective of the Fund is to maximize total
return of the Fund on behalf of its stockholders. Therefore, if there is greater
near term potential for capital appreciation in South Africa, the

17
<PAGE> 20

Fund should have the flexibility to be able to marginally increase its weighting
in that market if that is in the best interest of the stockholders. The
investment restrictions proposed by the stockholder, if implemented, would limit
such flexibility. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "AGAINST" THIS PROPOSAL NO. 4, AND YOUR PROXY WILL BE SO VOTED
IF THE PROPOSAL IS PRESENTED UNLESS YOU SPECIFY OTHERWISE.

Approval of this proposal, if properly presented, requires the affirmative
vote of a majority of the votes cast at a meeting at which a quorum is present.
For this purpose, abstentions and broker non-votes will be counted in
determining whether a quorum is present at the Meeting, but will not be counted
as votes cast at the Meeting.

PROPOSAL NO. 5

Mr. Robert LaNeil Shaefer, 345 Lincoln Avenue, #1124, Amherst,
Massachusetts 01002-1937, has given notice that he intends to present for action
at the Meeting the following proposal:

"Whereas:

1. Rights offerings would significantly reduce the net asset value per
share of the fund.

2. Rights offerings would largely increase the supply of the funds
shares and, therefore, by the law of supply and demand, rights offerings
would exert a significant downward pressure on the market price of the
Fund's shares.

3. In my opinion, rights offerings could increase the size of the Fund
to the point where it becomes very difficult for the Fund to invest in
smaller and better valued stock markets in Africa.

4. In my opinion, rights offerings usually are made after the market
price of a Fund's shares has been on a significant uptrend and and is quite
possibly near a significant downtrend.

5. In my opinion, rights offerings are proposed by management for the
primary purpose of increasing their total management fees.

6. Rights offerings tend to coerce present shareholders to buy more
shares.

7. Rights offerings usually have a sales load of around 4% on new
shares purchased, while shares purchased on the open market do not have a
sales load.

8. When a shareholder exercises or sells rights, he or she usually
must pay an additional brokerage commission or fee.

9. Rights offerings cause major tax accounting difficulties for many
shareholders.

10. The Fund manager is known for its very high frequency of rights
offerings with its older closed-end funds.

THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "AGAINST" THIS
PROPOSAL NO. 5 FOR THE FOLLOWING REASONS:

Rights offerings are one of the means for a registered investment company,
such as the Fund, to raise additional capital for purposes of taking advantage
of investment opportunities when market conditions warrant. Management of the
Fund believes that rights offerings can reward the Fund's existing stockholders
by

18
<PAGE> 21

giving them the opportunity to purchase additional shares of Common Stock at a
price below market and net asset value and invest the proceeds (net of offering
expenses) at a time when market opportunities are, in the opinion of management,
available to enhance stockholder return.

The Fund will only conduct a rights offering if the Board of Directors
believes that there are compelling reasons for such an offering and that the
offering is in the best interests of the Fund and its stockholders.
Additionally, contrary to the stockholder's assertions, the Board of Directors
of the Fund could not, without violating its fiduciary duties to the Fund and
its stockholders, conduct a rights offering for the primary purpose of
increasing the fees of the Manager. Furthermore, if the Board of Directors
believed that increasing the assets of the Fund would make it difficult for the
Fund to invest its assets in a manner beneficial to the stockholders of the
Fund, the Board would not approve a rights offering.

The Fund believes that the decision to raise additional capital through
rights offerings is properly left to the Board of Directors which, in the Fund's
opinion, can effectively evaluate and consider numerous factors, including
market conditions, investment opportunities available to the Fund and the
interests of the stockholders of the Fund. Furthermore, leaving the decision to
the Board of Directors provides the necessary flexibility to allow the Fund to
act quickly to take advantage of any such investment opportunities.

As an alternative to a rights offering, a registered investment company
can, under certain conditions, conduct a secondary offering of its shares.
However, a secondary offering does not ensure that stockholders will be able to
purchase any of the shares being offered and entails significant additional
risks due to the requirements imposed under the 1940 Act. For example, in order
for a secondary offering to be successfully completed, the Fund's shares need to
be trading at a significant premium to the net asset value of such shares during
the offering period. If the premium at which such shares were trading declines
to an unacceptable level at any time prior to the closing of the offering, there
would be a substantial risk that the offering would not be completed, resulting
in a substantial cost to the Fund. Additionally, in a rights offering,
stockholders can purchase new shares with no direct commissions.

The stockholder's proposal, if implemented by the Board of Directors, would
diminish the Fund's ability to act upon market conditions and available
opportunities. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "AGAINST" THIS PROPOSAL NO. 5, AND YOUR PROXY WILL BE SO VOTED IF THE
PROPOSAL IS PRESENTED UNLESS YOU SPECIFY OTHERWISE.

19
<PAGE> 22

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

To the knowledge of the Fund's management, the following persons owned
beneficially more than 5% of the Fund's outstanding shares at April 26, 1996:

<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------------------------ --------------------------------------- ----------
<S> <C> <C>
President and Fellows of Harvard College........ 794,400 shares, with sole voting power 5.14%
c/o Harvard Management Company, Inc. and sole dispositive power.*
600 Atlantic Avenue
Boston, MA 02210
Lazard Freres & Co. LLC......................... 819,700 shares, with sole voting
30 Rockefeller Plaza power and sole dispositive power;
New York, NY 10020 15,000 shares, with no voting power
and sole dispositive power.** 5.40%
</TABLE>

- ---------------
* Based on a Schedule 13G filed by the President and Fellows of Harvard College
with the Commission on February 14, 1996.

** Based on a Schedule 13G filed by Lazard Freres & Co. LLC with the Commission
on February 20, 1996.

OTHER MATTERS

No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.

STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING

A stockholder's proposal intended to be presented at the Fund's Annual
Meeting of Stockholders in 1997 must be received by the Fund on or before
January , 1997, in order to be included in the Fund's proxy statement and form
of proxy relating to that meeting.

VALERIE Y. LEWIS
Secretary
Dated: May , 1996

STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.

20
<PAGE> 23

EXHIBIT A

INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT

AGREEMENT, dated as of February 3, 1994, between MORGAN STANLEY AFRICA
INVESTMENT FUND, INC., a Maryland corporation (the "Fund"), and MORGAN STANLEY
ASSET MANAGEMENT INC., a Delaware corporation (the "Investment Manager").

WHEREAS, the Fund is a closed-end, non-diversified management investment
company registered under the U.S. Investment Company Act of 1940, as amended
(the "1940 Act"), shares of common stock of which are registered under the
Securities Act of 1933, as amended; and

WHEREAS, the Fund's investment objective is long term capital appreciation
which it seeks to achieve by investing primarily in equity securities of African
issuers (as defined in the Prospectus dated the date hereof (the "Prospectus")
contained in the Fund's Registration Statement on Form N-2 (File Nos. 33-72896
and 811-8218) (the "Registration Statement")), and by investing, from time to
time, in Sovereign Debt (as defined in the Prospectus); and

WHEREAS, the Fund desires to retain the Investment Manager to render
investment management services with respect to its assets and the Investment
Manager is willing to render such services.

NOW, THEREFORE, in consideration of the mutual covenants hereafter
contained, it is hereby agreed by and between the parties hereto as follows:

1. Appointment of Investment Manager.

(a) The Fund hereby employs the Investment Manager for the period and
on the terms and conditions set forth herein, subject at all times to the
supervision of the Board of Directors of the Fund, to:

(i) Make all investment decisions for the assets of the Fund and
manage the investment and reinvestment of those assets in accordance
with the investment objective and policies of the Fund, as set forth in
the Fund's Prospectus, and subject always to the restrictions of the
Fund's Articles of Incorporation and By-Laws, as amended or restated
from time to time, the provisions of the 1940 Act and the Fund's
investment objective and policies and investment restrictions, as the
same are set forth in the Fund's Prospectus. Should the Board of
Directors of the Fund at any time make any definite determination as to
investment policy and notify the Investment Manager thereof, the
Investment Manager shall be bound by such determination for the period,
if any, specified in such notice or until similarly notified that such
determination has been revoked. The Investment Manager shall take, on
behalf of the Fund, all actions which it deems necessary to implement
the investment policies of the Fund and to place all orders for the
purchase or sale of portfolio securities for the Fund with brokers or
dealers selected by it and, in connection therewith, the Investment
Manager is authorized as agent of the Fund to give instructions to the
custodians from time to time of the Fund's assets as to deliveries of
securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing
of such orders, the Investment Manager is directed at all times to seek
to obtain for the Fund the most favorable net results as determined by
the Board of Directors of the Fund. Subject to this requirement and the
provisions of the 1940 Act, the U.S. Securities Exchange Act of 1934, as
amended, and any other applicable provisions of law, nothing shall
prohibit the Investment Manager from selecting brokers or dealers with
which it or the

A-1
<PAGE> 24

Fund is affiliated or which provide the Investment Manager with
investment research services as described in the Fund's Prospectus;

(ii) Prepare and make available to the Fund research and
statistical data in connection therewith; and

(iii) Maintain or cause to be maintained for the Fund all books and
records required under the 1940 Act, to the extent that such books and
records are not maintained or furnished by administrators, custodians or
other agents of the Fund.

(b) The Investment Manager accepts such employment and agrees during
the term of this Agreement to render such services, to permit any of its
directors, officers or employees to serve without compensation as directors
or officers of the Fund if elected to such positions, and to assume the
obligations set forth herein for the compensation herein provided. The
Investment Manager shall for all purposes herein provided be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Fund in any
way or otherwise be deemed an agent of the Fund.

2. Compensation. For the services and facilities described in Section 1,
the Fund agrees to pay in United States dollars to the Investment Manager, a
fee, computed weekly and payable monthly, at an annual rate of 1.20% of the
Fund's average weekly net assets. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration on the
basis of the number of days that this Agreement is in effect during such month
and year, respectively.

3. Investment in Fund Stock. The Investment Manager agrees that it will
not make a short sale of any capital stock of the Fund, or purchase any share of
the capital stock of the Fund other than for investment.

4. Non-Exclusivity of Services. Nothing herein shall be construed as
prohibiting the Investment Manager from providing investment advisory services
to, or entering into investment advisory agreements with, any other clients
(including other registered investment companies), including clients which may
invest in Pakistani equity securities, so long as the Investment Manager's
services to the Fund are not impaired thereby.

5. Standard of Care; Indemnification.

(a) The Investment Manager may rely on information reasonably believed
by it to be accurate and reliable. Neither the Investment Manager nor its
officers, directors, employees, agents or controlling persons (as defined
in the 1940 Act) shall be subject to any liability for any act or omission,
error of judgment or mistake of law, or for any loss suffered by the Fund,
in the course of, connected with or arising out of any services to be
rendered hereunder, except by reason of willful misfeasance, bad faith or
gross negligence on the part of the Investment Manager in the performance
of its duties or by reason of reckless disregard on the part of the
Investment Manager of its obligations and duties under this Agreement. Any
person, even though also employed by the Investment Manager, who may be or
become an employee of the Fund shall be deemed, when acting within the
scope of his employment by the Fund, to be acting in such employment solely
for the Fund and not as an employee or agent of the Investment Manager.

(b) The Fund agrees to indemnify and hold harmless the Investment
Manager, its officers, directors, employees, agents, shareholders,
controlling persons or other affiliates (each an "Indemnified Party"), for
any losses, costs and expenses incurred or suffered by any Indemnified
Party arising from any action, proceeding or claims which may be brought
against such Indemnified Party in connection with the performance or
non-performance in good faith of its functions under this Agreement, except
losses, costs and expenses resulting from willful misfeasance, bad faith or
gross negligence in the performance of such

A-2
<PAGE> 25

Indemnified Party's duties or from reckless disregard on the part of such
Indemnified Party of such Indemnified Party's obligations and duties under
this Agreement.

6. Allocation of Charges and Expenses.

(a) The Investment Manager shall assume and pay for maintaining its
staff and personnel, and shall, at its own expense, provide the equipment,
office space and facilities necessary to perform its obligations hereunder.
The Investment Manager shall pay the salaries and expenses of such of the
Fund's officers and employees and any fees and expenses of such of the
Fund's directors who are directors, officers or employees of the Investment
Manager or any of its affiliates, provided, however, that the Fund, and not
the Investment Manager, shall bear travel expenses or an appropriate
fraction thereof of directors and officers of the Fund who are directors,
officers or employees of the Investment Manager to the extent that such
expenses relate to attendance at meetings of the Board of Directors of the
Fund or any committees thereof.

(b) In addition to the fee of the Investment Manager, the Fund shall
assume and pay the following expenses: organization expenses (but not the
overhead or employee costs of the Investment Manager); legal fees and
expenses of counsel to the Fund; auditing and accounting expenses; taxes
and governmental fees; New York Stock Exchange listing fees; dues and
expenses incurred in connection with membership in investment company
organizations; fees and expenses of the Fund's custodians, sub-custodians,
investment advisers, transfer agents and registrars; fees and expenses with
respect to administration, except as may be herein expressly provided
otherwise; expenses for portfolio pricing services by a pricing agent, if
any; expenses of preparing share certificates and other expenses in
connection with the issuance, offering and underwriting of shares issued by
the Fund; expenses relating to investor and public relations; expenses of
registering or qualifying securities of the Fund for public sale; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; brokerage commissions or other costs of acquiring or
disposing of any portfolio holding of the Fund; expenses of preparation and
distribution of reports, notices and dividends to stockholders; expenses of
the dividend reinvestment and cash purchase plan; costs of stationery; any
litigation expenses; and costs of stockholders' and other meetings.

7. Potential Conflicts of Interest.

(a) Subject to applicable statutes and regulations, it is understood
that directors, officers or agents of the Fund are or may be interested in
the Investment Manager or its affiliates as directors, officers, employees,
agents, shareholders or otherwise, and that the directors, officers,
employees, agents or shareholders of the Investment Manager or its
affiliates may be interested in the Fund as directors, officers, agents or
otherwise.

(b) If the Investment Manager considers the purchase or sale of
securities for the Fund and other advisory clients of the Investment
Manager at or about the same time, transactions in such securities will be
made for the Fund and such other clients in a manner equitable to the Fund
and such other clients or, insofar as feasible, in accordance with
guidelines which may be adopted by the Board of Directors of the Fund.

8. Duration and Termination.

(a) This Agreement shall become effective for a period of two years
from the date the Fund's Registration Statement is declared effective by
the U.S. Securities and Exchange Commission, and will continue in effect
from year to year thereafter, provided that such continuance is
specifically approved at least annually by (i) a vote of a majority of the
members of the Fund's Board of Directors who are neither parties to this
Agreement nor interested persons of the Fund or of the Investment Manager
or of any entity regularly furnishing investment advisory services with
respect to the Fund pursuant to an agreement with the Investment Manager,
cast in person at a meeting called for the purpose of voting on

A-3
<PAGE> 26

such approval, and (ii) a vote of a majority of either the Fund's Board of
Directors or the Fund's outstanding voting securities.

(b) This Agreement may nevertheless be terminated at any time without
payment of penalty by the Fund or by the Investment Manager upon 60 days'
written notice. This Agreement shall automatically be terminated in the
event of its assignment, provided, however, that a transaction which does
not, in accordance with the 1940 Act, result in a change of actual control
or management of the Investment Manager's business shall not be deemed to
be an assignment for the purposes of this Agreement.

(c) Termination of this Agreement shall not (i) affect the right of
the Investment Manager to receive payments of any unpaid balance of the
compensation described in Section 2 earned prior to such termination, or
(ii) extinguish the Investment Manager's right of indemnification under
Section 5.

As used herein, the terms "interested person," "assignment," and "vote of a
majority of the outstanding voting securities" shall have the meanings set forth
in the 1940 Act.

9. Amendment. This Agreement may be amended by mutual agreement, but only
after authorization of such amendment by the affirmative vote of (i) the holders
of a majority of the outstanding voting securities of the Fund, and (ii) a
majority of the members of the Fund's Board of Directors who are not interested
persons of the Fund or of the Investment Manager, cast in person at a meeting
called for the purpose of voting on such approval.

10. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York, provided, however, that nothing herein shall
be construed as being inconsistent with the 1940 Act.

11. Notices. Any communication hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by mailing such
communication, air mail postage prepaid, on the date on which such telex or
facsimile is sent, to the address set forth below). Any communication or
document to be made or delivered by one person to another pursuant to this
Agreement shall be made or delivered to that other person at the following
relevant address (unless that other person has by fifteen (15) days' notice to
the other specified another address):

If to the Investment Manager:

Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: General Counsel
Telephone No.: (212) 296-7100
Facsimile No.: (212) 921-5477
Telex No.: (212) 680-1248

If to the Fund:

Morgan Stanley Africa Investment Fund, Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: President
Telephone No.: (212) 296-7100
Facsimile No.: (212) 921-5477
Telex No.: (212) 680-1248

Communications or documents made or delivered by personal delivery shall be
deemed to have been received on the day of such delivery. Communications or
documents made or delivered by telex or facsimile shall be deemed to have been
received, if by telex, when acknowledged by the addressee's correct answer back
code and, if by facsimile, upon production of a transmission report by the
machine from which the facsimile was

A-4
<PAGE> 27

sent which indicates that the facsimile was sent in its entirety to the
facsimile number of the recipient; provided that a hard copy of the
communication or document so made or delivered by telex or facsimile was posted
the same day as the communication or document was made or delivered by
electronic means.

12. Jurisdiction. Each party hereto irrevocably agrees that any suit,
action or proceeding against either of the Investment Manager or the Fund
arising out of or relating to this Agreement shall be subject exclusively to the
jurisdiction of the United States District Court for the Southern District of
New York or the Supreme Court of the State of New York, New York County, and
each party hereto irrevocably submits to the jurisdiction of each such court in
connection with any such suit, action or proceeding. Each party hereto waives
any objection to the laying of venue of any such suit, action or proceeding in
either such court, and waives any claim that such suit, action or proceeding has
been brought in an inconvenient forum. Each party hereto irrevocably consents to
service of process in connection with any such suit, action or proceeding by
mailing a copy thereof in English by registered or certified mail, postage
prepaid, to their respective addresses as set forth in this Agreement.

13. Representation and Warranty of the Investment Manager. The Investment
Manager represents and warrants that it is duly registered as an investment
adviser under the U.S. Investment Advisers Act of 1940, as amended, and that it
will use its reasonable efforts to maintain effective its registration during
the term of this Agreement.

14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

15. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.

IN WITNESS WHEREOF, the parties have executed this Investment Advisory and
Management Agreement by their officers thereunto duly authorized as of the day
and year first written above.

MORGAN STANLEY AFRICA
INVESTMENT FUND, INC.

By: /s/ WARREN J. OLSEN

------------------------------------
Name: Warren J. Olsen
Title: President

MORGAN STANLEY ASSET
MANAGEMENT INC.

By: /s/ WARREN J. OLSEN

------------------------------------
Name: Warren J. Olsen
Title: Vice President

A-5
<PAGE> 28
PROXY

MORGAN STANLEY AFRICA INVESTMENT FUND, INC.

C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints WARREN J. OLSEN, VALERIE Y.
LEWIS and HAROLD J. SCHAAFF, JR., and each of them, as proxies for the
undersigned, with full power of substitution and resubstitution, and hereby
authorizes said proxies, and each of them, to represent and vote, as designated
on the reverse side, all stock of the above Company held of record by the
undersigned on April 26, 1996 at the Annual Meeting of Stockholders to be held
on June 5, 1996, and at any adjournment thereof.

The undersigned hereby revokes any and all proxies with respect to such
stock heretofore given by the undersigned. The undersigned acknowledges receipt
of the Proxy Statement dated May , 1996.

(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.) SEE REVERSE
SIDE

<PAGE> 29
[X] Please mark your votes as in this sample.

1. Election of the following nominees as Directors:

FOR WITHHELD

[ ] [ ] Class I Nominees: Peter J. Chase, David B. Gill and
Warren J. Olsen

______________________________________
For all nominees except as noted above

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]

2. Ratification of the selection of Price Waterhouse LLP as independent
accountants.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

3. Approval of the Investment Advisory and Management Agreement with Morgan
Stanley Asset Management Inc.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

4. Stockholder proposal requesting and recommending that the Board of
Directors take the necessary steps to revise certain fundamental
investment policies.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

5. Stockholder proposal requesting and recommending that the Board of
Directors take the necessary steps to ensure that there will be no
further rights offerings by the Fund at any time in the future.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

6. In the discretion of such proxies, upon any and all other business as may
properly come before the Meeting or any adjournment thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE THREE CLASS I NOMINEES AND IN FAVOR OF
PROPOSAL NO. 2 AND PROPOSAL NO. 3 AND AGAINST PROPOSAL NO. 4 AND PROPOSAL
NO. 5. PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY
JOINT TENANTS, EACH JOINT TENANT SHOULD SIGN.

SIGNATURES(S)___________________________________ DATE _______________, 1996

When signing as attorney, executor, administrator, trustee, guardian or
custodian, please sign full title as such. If a corporation, please sign
full corporate name by authorized officer and indicate the signer's office.
If a partnership, please sign in partnership name. PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.