<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY
AFRICA INVESTMENT
FUND, INC.
- --------------------------------------------------------------------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1998
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
MORGAN STANLEY
AFRICA INVESTMENT FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Valerie Y. Lewis
SECRETARY
Joanna M. Haigney
TREASURER
Belinda A. Brady
ASSISTANT TREASURER
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- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
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CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726.
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the nine months ended September 30, 1998, the Morgan Stanley Africa
Investment Fund, Inc. (the "Fund") had a total return, based on net asset value
per share, of -8.59% compared to -16.27% for the Fleming Africa Index including
South Africa (the "Index"). For the one year ended September 30, 1998, and for
the period since the Fund's commencement of operations on February 14, 1994
through September 30, 1998, the Fund's total return, based on net asset value
per share, was -24.23% and 38.11%, respectively, compared to -28.35% and 18.46%,
respectively, for the Index. On September 30, 1998, the closing price of the
Fund's shares on the New York Stock Exchange was $9 5/16, representing a 29.3%
discount to the Fund's net asset value per share.
SOUTH AFRICA
The South African market had a turbulent third quarter, falling by 24.4% in U.S.
dollar terms over the three month period, as it moved in sympathy with other
emerging markets and was specifically affected by the deteriorating situation in
Russia. The Rand exchange rate was volatile, depreciating in the first half of
the quarter but gaining strength at the close of the period. Interest rates
remained high with the prime rate (the benchmark lending rate by private banks)
at a level 18% above expected inflation. The appointment of Tito Mboweni, the
labor minister, to the post of Central Bank Governor in July, further
exacerbated negative sentiment in the market due to his lack of experience in
economics and close affiliation to the ruling party. We are not overly
concerned, however, as past ANC appointees to key posts have proven to be
capable, practical and market-friendly.
Expectations for economic performance have continued to be revised downward, as
the dampening effects of high interest rates on growth become apparent. We are
currently expecting 1998 to record gross domestic product growth below 1% and
1999 to fall in negative territory. Despite the unattractive outlook, we are
comforted in the fact that South Africa has a sound banking system and economic
policy is rational and targets clear objectives. The market remains an
underweight in the Fund, but has become more attractive after the steep fall in
prices. Further, we are encouraged by the increasing stability in the market and
exchange rate, and are monitoring the possibility of interest rate cuts in the
near future as the crucial event that will determine the magnitude of the
economic slowdown.
EGYPT
The Egyptian market continued to slip in the third quarter of 1998, losing 7.7%
of its value, as measured by the Egyptian Financial Group Index. Events in other
emerging markets had a serious influence on the behavior of Egypt, as corporate
profits reported during the period were actually strong and the government
channeled significant new investments into the stock market through the creation
of new funds capitalized with pension money. The Egyptian pound exchange rate
continued to be unchanged at EL3.4/U.S.D. (it has remained flat for six years)
and foreign reserves remained high at the U.S. $20 billion level, comprising
over 17 months of exports.
Egyptian economic prospects still remain attractive, with our expectation of
gross domestic product growth at the 5.3% level for fiscal 1998 and 5%-plus for
1999, led by construction and domestic consumption. The government's orthodoxy
in managing the current account and fiscal balances, along with a slow but
steady privatization program, will serve the country well and allow its economy
to grow without the creation of major distortions. The market fall (22.5% in
the nine months) spells out good value to us and we remain overweight this
market.
GHANA
Ghana, the continent's outperformer thus far this year, gave some of its gains
back during the third quarter as the Databank Index depreciated by 10.9%. The
market fell victim to technical selling resulting from the dramatic disparity
between its performance and that of its global peers, as investors sold to
realize gains. Corporate profits for the first half of the calendar year were
reported during the quarter and proved resilient, especially in the face of the
electric energy shortage the country endured for a few months earlier in 1998.
Inflation continues to come down and interest rates are falling, reflecting both
global conditions and effective economic management. The government continues to
work with the IMF to meet its plan targets and progress has been made on the
fiscal side, though we will closely monitor spending as 2000 Presidential
elections get closer. Despite the market's sharp 61.2% rise thus far this year,
it continues to offer one of the best values in the region (and the world) with
the 12-month forward price to earnings ratio at about 4.0. We continue to be
heavily overweight.
2
<PAGE>
ZIMBABWE
The situation in Zimbabwe deteriorated further during the third quarter, with
wild moves in the value of the Zimbabwe dollar as well as financial asset
prices. The currency, victimized by falls in other emerging market currencies
such as the South African rand and the collapse of tobacco and mineral prices,
the country's main exports, as well as reacting to the follies of its own
government, depreciated by an astounding 42% during the quarter. President
Mugabe's military foray into the Congo has proved disastrous in its implications
for the budget deficit (currently estimated at 6.5% of gross domestic product
for 1998), the demand for hard currency to finance the venture, and the
psychological impact on financial markets and public opinion. The IMF, however,
is still holding talks and a new program is expected to be concluded soon. We
are, on the whole, discouraged by the government's apparent inability to offer
practical solutions to most of the critical issues facing the country, including
the reduction of the fiscal gap and the redistribution of land. The government
seems to be caught between its desire to perpetuate populist policies to appease
the public (including maintaining huge subsidies on fuels and electricity) and
its need to come to grips with its dire financial circumstances. The market
correction of 63.6% during the third quarter has made it one of the cheapest in
the area, trading at an estimated 1999 price to earnings of 4.2, yet the
immediate prospects are not bright. We are keeping our overweight position,
awaiting a major shift in government policy or a change in government itself.
REST OF AFRICA
The Fund holds approximately 25% of its assets in countries other than those
mentioned above. Mauritius, the most significant of these holdings, had a fairly
uneventful quarter, falling 1.3%, as measured by the SEMDEX Index. Corporate
profits announced during the quarter were generally healthy, with State Bank of
Mauritius, the Fund's single largest holding reporting strong 22% earnings per
share growth for its fiscal year ended June 30, 1998. Amidst the emerging market
deluge, Mauritius continues to be a bastion of stability, with the economy
chugging along at 5% to 6% per year and the currency depreciating by 9% thus far
in 1998. Botswana also had a quiet quarter, losing 1.9% of the value of the BSE
Index. Public sector employees received an important pay increase during the
quarter, narrowing the gap between their salaries and those in the private
sector. This, while marginally negative for inflation, will benefit Sechaba
Breweries, our only Botswanan holding, as increased disposable income is likely
to stimulate consumption of beer. Finally, Morocco, an underweight in the Fund,
continued its gravity-defying rise, as the USI Index rose 9.6%, fueled by local
liquidity finding its way into the equity market. The market offers poor value,
trading at a price to earnings ratio of 21 with corporate profit growth at only
14%, making it the most richly valued in our universe. We will maintain an
underweight, as we anticipate an increase in fixed investment (and therefore
stock issuance) by Moroccan corporates needing to enhance their competitive
position in anticipation of the enactment of its free trade pact with the EU, as
well as a natural convergence down towards regional and global valuation levels.
On July 2, 1998, the Fund commenced a share repurchase program for purposes of
enhancing shareholder value and reducing the discount at which the Fund's shares
traded from their net asset value. From that date through September 30, 1998,
the fund repurchased 875,656 shares of its Common Stock at an average price of
$10.98 and an average discount of 26.27% from net asset value per share. The
Fund will 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. We will update you on
the progress of the repurchase program in future shareholder reports.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
October 1998
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.
3
<PAGE>
Morgan Stanley Africa Investment Fund, Inc.
Investment Strategy as of September 30, 1998 (Unaudited)
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION TOTAL RETURN (%)
-------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
------------------------- ------------------------- -------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ----------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year to Date 18.72% -- 8.59% -- -16.27% --
One Year -35.36 -35.36% -24.23 -24.23% -28.37 -28.37%
Since Inception* 2.27 0.49 38.11 7.23 18.42 3.72
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION (2)
[GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS
ENDED
SEPTEMBER 30,
1994* 1995 1996 1997 1998
--------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Per Share . . $14.43 $17.05 $16.86 $14.45 $13.16
Market Value Per Share . . . $11.38 $12.88 $13.63 $11.50 $9.31
Premium/(Discount). . . . . . -21.1% -24.5% -19.2% -20.4% -29.3%
Income Dividends. . . . . . . $0.54 $ 0.96 $0.14 $0.30 $0.05
Capital Gains Distributions . -- $ 0.01 $1.23 $2.25 $0.00#
Fund Total Return (2) . . . . 7.34% 26.14% 8.64% 2.69% -8.59%
Index Total Return (3). . . . 44.69% 14.81% -10.72% -4.61% -16.27%
</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 Fleming Africa Index including South Africa is a market capitalization
weighted index based on the indices of eleven countries including Botswana,
Egypt, Ghana, Kenya, Malawi, Mauritius, Morocco, Namibia, South Africa,
Tunisia, and Zimbabwe. The local indices include dividends except for
Botswana, Ghana, Kenya and Namibia. The historical return of the Index for
the comparable periods are presented above.
* The Fund commenced operations on February 14, 1994.
# Amount is less than U.S.$0.01 per share.
4
<PAGE>
Morgan Stanley Africa Investment Fund, Inc.
Portfolio Summary as of September 30, 1998 (Unaudited)
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- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities (97.9%)
Short-Term Investments (2.1%)
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
[CHART]
<TABLE>
<S> <C>
Banking (22.1%)
Beverages & Tabacco (15.4%)
Broadcasting & Publishing (3.0%)
Business & Public Services (6.1%)
Chemicals (6.3%)
Financial Services (3.2%)
Food & Household Products (2.5%)
Merchandising (5.8%)
Multi-Industry (12.1%)
Real Estate (3.1%)
Other (20.4%)
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[CHART]
<TABLE>
<S> <C>
South Africa (28.3%)
Egypt (20.9%)
Ghana (13.2%)
Mauritius (12.6%)
Zimbabwe (6.0%)
Botswana (4.9%)
Kenya (2.3%)
Morocco (1.5%)
Zambia (1.2%)
Ivory Coast (1.0%)
Other (8.1%)
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. State Bank of Mauritius Ltd. (Mauritius) 7.2%
2. Sechaba Breweries Ltd. (Botswana) 4.9
3. Standard Chartered Bank (Ghana) 4.9
4. Educor (South Africa) 3.5
5. Al-Ahram Beverages Co. (Egypt) 3.5
6. Primedia Ltd. (South Africa) 3.0
7. Eastern Tobacco (Egypt) 3.0
8. Social Security Bank Ltd. (Ghana) 2.9
9. Persetel Holdings Ltd. (South Africa) 2.7
10. Meikles Africa Ltd. (Zimbabwe) 2.5
----
38.1%
----
----
</TABLE>
* Excludes short-term investments.
5
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS (UNAUDITED)
- ---------
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (93.3%)
(Unless otherwise noted)
- ------------------------------------------------------------------------------
BOTSWANA (4.9%)
BEVERAGES & TOBACCO
Sechaba Breweries Ltd. 7,449,450 U.S.$ 9,407
-----------
- ------------------------------------------------------------------------------
EGYPT (20.9%)
BANKING
Al Watany Bank of Egypt 22,014 268
Commercial International Bank 90 1
National Societe Generale Bank 92,500 1,710
-----------
1,979
-----------
BEVERAGES & TOBACCO
Al-Ahram Beverages Co. 36,750 2,317
Al-Ahram Beverages Co. GDR 137,500 4,307
Eastern Tobacco 256,150 5,784
-----------
12,408
-----------
BUILDING MATERIALS & COMPONENTS
Suez Cement Co. 6,600 105
Suez Cement Co. GDR 143,400 2,072
-----------
2,177
-----------
CHEMICALS
Egyptian Finance & Industrial Co. 185,400 3,262
Paints & Chemical Industries 19,510 532
Paints & Chemical Industries GDR 325,900 2,697
-----------
6,491
-----------
CONSTRUCTION & HOUSING
Arabian International Construction 40,800 1,705
-----------
ELECTRICAL & ELECTRONICS
Egyptian Electro Cables 2,541 44
-----------
FOOD & HOUSEHOLD PRODUCTS
Central Flour Mills 110 1
North Cairo Flour Mills 605 10
-----------
11
-----------
MERCHANDISING
MISR Free Shops Co. 78,320 876
-----------
MULTI-INDUSTRY
Industrial & Engineering Enterprises Co. 238,138 3,911
-----------
REAL ESTATE
Alexandria Real Estate Investment Co. 19,155 730
Heliopolis Housing 11,500 966
Madinet Nasr Housing & Development 96,740 4,213
5,909
-----------
UTILITIES -- ELECTRICAL & GAS
Egypt Gas Co. 50,000 4,516
-----------
40,027
-----------
- ------------------------------------------------------------------------------
GHANA (13.2%)
AUTOMOBILES
Mechanical Lloyd Co., Ltd. 1,317,000 113
-----------
BANKING
Ghana Commercial Bank 5,394,580 2,552
Social Security Bank Ltd. 6,560,000 5,643
Standard Chartered Bank 900,500 9,296
-----------
17,491
-----------
BEVERAGES & TOBACCO
Guinness Ghana Ltd. 3,800,979 1,471
Ghana Brewery Ltd. 336,000 347
Pioneer Tobacco Co., Ltd. 5,906,600 1,436
-----------
3,254
-----------
FINANCIAL SERVICES
Home Finance Co. 2,345,700 757
-----------
FOOD & HOUSEHOLD PRODUCTS
Unilever Ghana Ltd. 2,494,900 2,146
-----------
MANUFACTURING
Aluworks Ghana Ltd. 1,070,000 1,289
-----------
METALS -- NON-FERROUS
Ghana Pioneer Aluminum Factory 1,043,400 179
-----------
25,229
-----------
- ------------------------------------------------------------------------------
IVORY COAST (1.0%)
MISCELLANEOUS MATERIALS & COMMODITIES
SOC Ivoirienne de Coco Rappe 24,000 793
-----------
MULTI-INDUSTRY
Filature Tissages Sacs 20,000 1,072
-----------
1,865
-----------
- ------------------------------------------------------------------------------
KENYA (2.3%)
BANKING
Kenya Commercial Bank Ltd. 991,326 1,025
National Industrial Credit Bank 311,551 171
-----------
1,196
-----------
CONSTRUCTION & HOUSING
Athi River Mining Ltd. 3,262,500 345
-----------
INDUSTRIAL COMPONENTS
Firestone East Africa Ltd. 3,171,300 848
-----------
MERCHANDISING
Uchumi Supermarket Ltd. 2,501,107 1,782
-----------
UTILITIES -- ELECTRICAL & GAS
Kenya Power & Lighting Co., Ltd. 100,000 307
-----------
4,478
-----------
- ------------------------------------------------------------------------------
MALAWI (0.4%)
FOOD & HOUSEHOLD PRODUCTS
Sugar Corp. of Malawi 7,160,000 799
-----------
- ------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
MAURITIUS (12.6%)
BANKING
Mauritius Commercial Bank 1,030,645 U.S.$ 4,737
State Bank of Mauritius Ltd. 20,111,364 13,743
-----------
18,480
-----------
FOOD & HOUSEHOLD PRODUCTS
Happy World Foods Ltd. 226,536 162
-----------
LEISURE & TOURISM
New Mauritius Hotels 1,351,112 2,885
-----------
MULTI-INDUSTRY
Rogers and Co., Ltd. 415,781 2,588
-----------
24,115
-----------
- ------------------------------------------------------------------------------
MOROCCO (1.5%)
MULTI-INDUSTRY
Credor 25,000 2,878
-----------
- ------------------------------------------------------------------------------
MOZAMBIQUE (0.2%)
MINING
Kenmare Resources plc 2,975,000 444
-----------
- ------------------------------------------------------------------------------
NIGERIA (0.2%)
OIL & GAS
Tuskar Resources plc 17,829,000 455
-----------
- ------------------------------------------------------------------------------
SOUTH AFRICA (28.3%)
BANKING
Nedcor Ltd. 75,181 1,215
-----------
BEVERAGES & TOBACCO
Amalgamated Beverage Industries Ltd. 416,073 2,336
South African Breweries Ltd. 127,390 1,920
Suncrush Ltd. 151,300 271
-----------
4,527
-----------
BROADCASTING & PUBLISHING
Primedia Ltd. 2,320,800 5,804
-----------
BUSINESS & PUBLIC SERVICES
Educor 5,599,350 6,669
Persetel Holdings Ltd. 611,700 5,089
-----------
11,758
-----------
CHEMICALS
Polfin Ltd. 1,000,000 851
SASOL Ltd. 771,902 3,539
SASOL Ltd. 8.50% (Convertible Preferred) 294,400 1,227
-----------
5,617
-----------
CONSTRUCTION & HOUSING
Concor Ltd. 294,522 621
-----------
ELECTRICAL & ELECTRONICS
DataTec Ltd. 26,450 270
-----------
ELECTRONIC COMPONENTS & INSTRUMENTS
Software Connection, Ltd. 1,664,000 513
-----------
- ------------------------------------------------------------------------------
FINANCIAL SERVICES
BOE Corp. Ltd. 'N' 7,255,468 4,629
BOE Ltd. 1 -- @
Coronation Holdings Ltd. 11,000 122
Real Africa Durolink Holdings Ltd. 458,000 635
-----------
5,386
-----------
LEISURE & TOURISM
Spur Holdings Ltd. 472,200 314
Sun International Ltd. 2,518,371 429
-----------
743
-----------
MACHINERY & ENGINEERING
Howden Africa Holdings Ltd. 2,010,172 410
-----------
MERCHANDISING
Ellerine Holdings Ltd. 418,000 931
New Clicks Holdings Ltd. 3,569,115 2,672
-----------
3,603
-----------
METALS -- STEEL
Iscor Ltd. 20,706,200 4,650
-----------
MULTI-INDUSTRY
Bidvest Group Ltd. 407,061 2,458
First South Africa Corp. 278,404 261
New Africa Investments Ltd. (Preferred) 'N' 8,849,700 4,155
Rembrandt Group Ltd. 139,200 840
Woolworths Holdings Ltd. 1,190,000 557
-----------
8,271
-----------
RETAIL -- MAJOR DEPARTMENT STORES
Protea Furnishers Ltd. 1,839,632 798
-----------
54,186
-----------
- ------------------------------------------------------------------------------
UNITED KINGDOM (0.6%)
BANKING
(a) EFG-Hermes Holding GDR 100,000 1,200
-----------
- ------------------------------------------------------------------------------
ZAMBIA (1.2%)
FOOD & HOUSEHOLD PRODUCTS
Zambia Sugar Co., Ltd. 151,371,609 1,440
-----------
MINING
Zambia Consolidated Copper Mines 600,000 915
-----------
2,355
-----------
- ------------------------------------------------------------------------------
ZIMBABWE (6.0%)
BANKING
NMBZ Holdings Ltd. 1,368,000 479
NMBZ Holdings Ltd. 916,000 332
-----------
811
-----------
BUILDING MATERIALS & COMPONENTS
PG Industries Ltd. 1,713,446 48
Portland Holdings Ltd. 4,025,000 134
-----------
182
-----------
ENERGY SOURCES
Wankie Colliery Co. Ltd. 7,871,900 384
-----------
- ------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
ZIMBABWE (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS
Eastern Highland Plantation 3,375,659 U.S.$ 187
-----------
LEISURE & TOURISM
Zimbabwe Sun Ltd. 6,617,338 417
-----------
MERCHANDISING
Meikles Africa Ltd. 8,419,880 4,842
-----------
METALS -- NON-FERROUS
Bindura Nickel Corp., Ltd. 658,750 18
-----------
MULTI-INDUSTRY
CFI Holdings 694,953 10
Delta Corp., Ltd. 13,497,630 3,512
TA Holdings Ltd. 11,432,100 252
Trans Zambezi Industries Ltd. 6,012,410 339
(a) Trans Zambezi Industries Ltd. ADR 2,200,000 124
Trans Zambezi Industries Ltd. - New 360,000 20
TSL Ltd. 3,477,000 197
-----------
4,454
-----------
WHOLESALE & INTERNATIONAL TRADE
Interfresh Ltd. 15,000,000 213
-----------
11,508
-----------
- ------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost U.S.$204,117) 178,946
-----------
- ------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount
(000)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (2.1%)
Botswana Pula BWP 220 49
Egyptian Pound EGP 2,121 622
Ghana Cedi GHC 1,290,973 555
Kenyan Shilling KES 4,015 67
Mauritius Rupee MUR 3,355 136
Moroccan Dirham MAD 822 89
South African Rand ZAR 12,888 2,193
Zimbabwe Dollar ZWD 5,990 189
-----------
(Cost U.S.$4,032) 3,900
-----------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS (95.4%)
(Cost U.S.$208,149) 182,846
-----------
- ------------------------------------------------------------------------------
<CAPTION>
Amount Amount
(000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES (4.6%)
Other Assets U.S.$ 18,396
Liabilities (9,491) 8,905
------------- -------------
- ------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 14,573,321 issued and
outstanding U.S.$0.01 par value shares
(100,000,000 shares authorized) U.S.$ 191,751
-------------
-------------
- ------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 13.16
-------------
-------------
- ------------------------------------------------------------------------------
</TABLE>
(a)-- 144A Security - certain conditions for public sale may
exist.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
- ------------------------------------------------------------------------------
