<PAGE>
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS James W. Grisham
Frederick B. Whittemore VICE PRESIDENT
VICE-CHAIRMAN OF THE Michael F. Klein
BOARD OF DIRECTORS VICE PRESIDENT
Warren J. Olsen Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR VICE PRESIDENT
Peter J. Chase Joseph P. Stadler
DIRECTOR VICE PRESIDENT
John W. Croghan Valerie Y. Lewis
DIRECTOR SECRETARY
David B. Gill James R. Rooney
DIRECTOR TREASURER
Graham E. Jones Joanna M. Haigney
DIRECTOR ASSISTANT TREASURER
John A. Levin
DIRECTOR
</TABLE>
- ---------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank, N.A.
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company (International)
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank, N.A. (Domestic)
770 Broadway
New York, New York 10003
- --------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- --------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726.
------------------------
MORGAN STANLEY
ASIA-PACIFIC
FUND, INC.
---------------------
FIRST QUARTER REPORT
MARCH 31, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the three months ended March 31, 1996, the Morgan Stanley Asia-Pacific Fund,
Inc. had a total return, based on net asset value per share, of 5.02% compared
to its benchmark (as defined following) of 2.20%. For the period since the
Fund's commencement of operations on August 2, 1994 through March 31, 1996, the
Fund's total return based on net asset value per share is 7.91% compared with
- -0.62% for the benchmark. (The benchmark for investment performance is the
weighted average of the percentage change month-on-month of each of four Morgan
Stanley Capital International (MSCI) indices; Japan, Combined Asia Free
ex-Japan, Australia, and New Zealand, where the weights are based on the
respective market capitalizations of these indices at the beginning of the
month). On March 29, 1996, the closing price of the Fund's shares on the New
York Stock Exchange was $13 1/8 representing a 12.8% discount to the net asset
value per share.
JAPAN
At the beginning of the quarter, a weaker yen, expectations of Hashimoto's
Liberal Democratic Cabinet guiding the nation from recession and a positive
overall improvement in sentiment contributed to steady purchases of equities by
foreign and domestic institutional investors. Individual investors also stepped
up purchases in speculative short term trading with Japan's record low interest
rates and mounting confidence in the economy. The Paris G-7 meeting in January
confirmed that Japan, as a responsible member in the global community, must
resolve the "Jusen" non-performing loans and that the G-7, in general, was in
favor of a stronger dollar. Local sentiment was also helped by the consecutive
new highs in the U.S. and the lowering of the discount rate by the Federal
Reserve.
Despite such positive developments, Finance Minister Kubo's comments during
February, calling for higher interest rates to help pensioners, cooled the
market. Additionally, strong opposition, using taxpayers' funds for Jusen loans,
stalled the market. With short rates rising on Kubo's statements and short
covering by "carry-trades" for hedge funds, the yen began to rally and this
adversely affected the market. However, we believe Kubo's comments were a)
politically motivated for electoral votes, b) meant to slow speculative rises in
the stock market, and c) assess the vulnerability of the yen to rising rates. In
fact, following the "panic" rise of the yen, the Ministry of Finance, almost on
cue, announced that Hong Kong and Singapore monetary authorities would consider
working together with the Bank of Japan to support a weaker yen. Furthermore,
comments that low interest rates would continue by Bank of Japan Governor
Matsushita and massive currency intervention seemed to support our belief that
Mr. Kubo's comments were a "test" to determine the sensitivity of the market to
rising interest rates.
While Mr. Kubo's interest rate comments had a momentary effect on the market,
the inability of congress to agree on the use of public funds for Jusen
escalated into "sit-ins" by members of the opposition party. Fiscal 1996 budget
talks were halted and thus economic recovery anxiety spilled over into the
capital markets from mid-February to mid-March. Foreign investors, also
concerned by a highly volatile U.S. market reflecting rising U.S. interest
rates, backed away from further commitments to Japan. Moreover, domestic
institutional investors in closing their fiscal year at March-end were inactive
while domestic corporations continued their structural selling. After rising
almost 6% since January 1996, the equity market ended almost flat by the middle
of March.
Towards the end of the first quarter, it became evident to investors that the
yield gap between the U.S. and Japan had widened considerably and that the yen
would likely continue to weaken. With Bank of Japan comments that interest rates
will remain low, a favorable stream of economic data and perception by investors
that the worst news for Jusen was known, the stock market rallied to close at a
four year high. Although the index ended higher, economic sensitive and blue
chips were largely ignored with domestic and foreign institutions on the
sidelines. Moreover, the drop in book-to-bill ratio and perceived weakness in
the U.S. economy also negatively affected the blue chips and the Fund's
performance.
A clear consensus has yet to form regarding the economic recovery and we
continue to remain optimistic that upside surprises in earnings will occur.
Corporate earnings should remain strong throughout fiscal year 1996 and 1997
excluding the financial sector (banks) and the yen should continue to weaken
verses the dollar in our view. Policy makers in Japan will keep interest rates
low while supply and demand will improve as local pension funds commit an
increasing amount of their asset allocation to equities. On the other hand,
Japanese corporations will likely maintain their current position to gradually
liquidate cross-holdings of shares, however, this selling will be much smaller
than in the past. We also believe that the Jusen problem is now well known and
already discounted by the market. If congress fails to reach a consensus to
2
<PAGE>
resolve Jusen issues, the market will fall but this in turn will most likely
force policy makers to compromise. We will continue to maintain our
overweightings in economic sensitive sectors and international blue-chips which
are expected to benefit from this scenario, while excluding bank shares which do
not have "value" in our opinion.
ASIA EX-JAPAN
The Asian markets performed strongly during the first quarter of 1996, with the
benchmark MSCI combined Far East Free ex-Japan Index posting a 9.2% gain. Gains
were widespread throughout the region with the exception of Korea (-2.4%) and
Taiwan (-0.3%). The best performing markets, in U.S. dollar terms, were Malaysia
(+14.2%), Indonesia (+13.3%) and Hong Kong (+10.9%). They were followed by
Singapore (+7.7%), Philippines (+6.2%) and Thailand (+0.7%). Nearly the entire
gain during the quarter was made in January when expectations of falling global
interest rates and continued weak yen triggered waves of foreign portfolio
investments into Asia. Escalating political tensions between China and Taiwan
and a change in market expectations about interest rates in the latter half of
the quarter resulted in mild corrections in Asian stocks.
As the largest and most liquid Asian market, Hong Kong benefitted from the surge
of funds into Asia. The market was driven by the direction of U.S. interest
rates, Sino-Taiwanese relations and corporate earnings. Earnings announcements
during the quarter were generally in line with market expectations, while the
economy and the property market had shown signs of recovery. The latest land
auctions attracted strong interest from established developers and several
residential project launches also met with good responses.
In Singapore, investors were encouraged by a stronger than expected 1995 real
GDP growth of 8.9% and high liquidity in the financial system. Several new
transactions in the prime office sector during the first quarter reflected
higher rentals and capital values, while a swift reversal in sentiment resulted
in strong response to many new residential launches. Several land tenders in the
prime area also achieved record prices. As a result, property stocks were well
sought after by investors. Banks performed well initially but succumbed to
profit-taking later as concerns over slow earnings growth resurfaced. The marine
sector continued to underperform on the back of very tough industry operating
conditions.
The Malaysian market, which was shunned by most international funds last year,
saw a resurgence of foreign interest during the quarter. Better trade account
numbers coupled with resolutions on the tariff structures for Telekom and
Tenaga, the two major listed utilities, resulted in an improvement in market
sentiment. A good crop of corporate results and active retail participation also
kept the market buoyant.
Thailand started off on a strong note in January, reaching a peak in early
February. The rally ended abruptly as regional markets underwent a correction.
The poor spate of earnings being reported for 1995 did not help sentiment and
confidence, while the slight rumblings on the political front prompted
speculation of further political turmoil in the Thai Cabinet.
Indonesia performed strongly on the back of a surge in the share price of
Telekom, which was heavily weighted in the Index. The Central Bank continued to
maintain a restrictive monetary policy to avoid a possible blowout in the
external accounts. GDP growth for 1996 is expected to slow down from the 8.2%
achieved last year while the current account deficit is forecast to be within
the targeted threshold of 4.0% of GDP.
In the Philippines, stock prices were buoyed by strong corporate earnings
announcements. A number of stocks reached their all-time highs during the rally,
notably Ayala Land.
The Taiwanese market continued to be plagued by cross-strait tensions during the
quarter. Domestic investors remained largely cautious as China conducted missile
tests near Taiwan ahead of Taiwan's first ever presidential election. Buying by
the Government's Stock Market Stabilization Fund helped to limit losses.
Shipping stocks performed particularly well as investors were hopeful for a
peaceful resolution of the China-Taiwan dispute that would pave the way for the
establishment of direct shipping links between Taiwan and the mainland. Banks
and finance stocks rose strongly as a result of speculative buying despite their
rich valuations.
Sentiment was poor in Korea as fears of a rapidly declining economy and
political uncertainties took their toll. Securities companies continued to
unload stocks in a bid to reduce their equity exposure, while local investment
trust companies raised cash to meet redemptions. A seemingly unstable North
Korean regime also caused some concerns among investors.
3
<PAGE>
Otherwise, the fundamentals of the market remained sound. Slower corporate
investment activity led to lower interest rates, while export growth remained
healthy despite the weak yen.
OUTLOOK
Asia has started the year strongly after two years of underperformance relative
to the developed markets. On one hand, the Asian stock markets are no longer
over-owned by institutional investors and there are no speculative excesses. On
the other hand, stock prices in Asia have responded to several negative news
items in the recent past. These include the potential adverse impact on the
stability of the region arising from conflicts between China and Taiwan, the
risk of rising interest rates as well as earnings downgrades in certain markets.
These factors, together with continued robust earnings growth and modest
valuations, should combine to provide a strong platform for further stock price
advances.
In Hong Kong, expectations of higher interest rates in the U.S. and caution over
the Most-Favored-Nation (MFN) renewal issue could put pressure on the stock
market in the near term. On the positive side, the Chinese economy is poised for
a cyclical recovery this year. This will benefit the Hong Kong economy, lead to
stronger corporate earnings growth and possibly spur capital flows from the
mainland into Hong Kong. Singapore will continue to be underpinned by sound
economic fundamentals and domestic liquidity. In the case of Malaysia, Thailand,
Indonesia and the Philippines, while economic and interest rate risks tend to be
higher, their rate of change at the margin has turned positive.
We expect cross-strait tensions to ease after Taiwan's presidential election,
although we recognize the dispute is unlikely to be resolved completely in the
near term. Meanwhile, the Taiwanese stock market should regain part of its lost
ground given the depth of its recent decline. The Korean market is also looking
increasingly compelling after the recent sell-off. It is now one of the cheapest
in Asia with good earnings growth prospects.
The Fund successfully completed a rights offering on May 8, 1996 raising
approximately $173 million (after deducting offering expenses) in order to take
advantage of current market opportunities in the Asia - Pacific region. These
proceeds have increased the Fund's total net assets to approximately $1.0
billion. We expect to complete the investment of these proceeds within the next
few weeks.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Ean Wah Chin
SENIOR PORTFOLIO MANAGER
May 15, 1996
4
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Investment Summary as of March 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION (UNAUDITED)
TOTAL RETURN (%)
----------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (1)(3)
------------------------ ------------------------ ------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO DATE -1.50% -- 5.02% -- 2.20% --
ONE YEAR 25.69 25.69% 18.31 18.31% 5.77 5.77%
SINCE INCEPTION* -5.96 -3.63 7.91 4.68 -0.62 -0.37
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
A BAR CHART REFLECTING THE DATA BELOW IS REFLECTED HERE.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31: THREE MONTHS ENDED
<S> <C> <C> <C>
1994* 1995 March 31, 1996 (Unaudited)
Net Asset Value Per Share $13.20 $14.34 $15.06
Market Value Per Share $12.25 $13.33 $13.13
Premium/(Discount) -7.20% -7.00% -12.80%
Income Dividends $0.04 $0.05 -
Capital Gains Distributions $0.01 $0.02 -
Fund Total Return (2) -5.94% 9.24% 5.02%
Index Total Return (1)(3)
** -5.90% 0.87% 2.20%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on per share net asset value 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 benchmark for investment performance is the weighted average of the
percentage change month-on-month of each of four Morgan Stanley Capital
International (MSCI) indices; Japan, Combined Asia Free ex-Japan, Australia,
and New Zealand, where the weights are based on the respective market
capitalizations of these indices at the beginning of the month.
* The Fund commenced operations on August 2, 1994.
** Unaudited.
5
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Portfolio Summary as of March 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 98.2%
Short-Term Investments 1.8%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Automobiles 4.1%
Banking 10.8%
Chemicals 6.1%
Construction & Housing 4.1%
Electrical & Electronics 11.6%
Financial Services 6.0%
Machinery & Engineering 7.1%
Multi-Industry 7.7%
Real Estate 10.4%
Telecommunications 7.5%
Other 24.6%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Japan 38.0%
India 15.2%
Hong Kong 13.2%
Malaysia 7.6%
Thailand 7.5%
Singapore 6.5%
Australia 4.8%
Indonesia 3.7%
Philippines 3.3%
Korea 2.3%
China 0.6%
Other -2.7%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
---------------
<C> <S> <C>
1. Cheung Kong (Holdings) Ltd. 2.1%
2. Hutchison Whampoa Ltd. 1.7
3. HSBC Holdings plc 1.7
4. Housing Development Finance Corp. 1.6
5. Toshiba Corp. 1.5
<CAPTION>
PERCENT OF
NET ASSETS
---------------
<C> <S> <C>
6. Charoen Pokphand Co. 1.5%
7. Bangkok Bank Ltd. 1.4
8. Broken Hill Proprietary Co., Ltd. 1.4
9. Lend Lease Corp. Ltd. 1.4
10. Hitachi Ltd. 1.2
---
15.5%
---
---
</TABLE>
6
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ----------------------------------------------------------------
- -------------
COMMON STOCKS (101.1%)
(Unless otherwise noted)
- --------------------------------------------------
- ----------
AUSTRALIA (4.8%)
BANKING
National Australia Bank Ltd. 907,074 U.S.$ 8,083
--------------
ENERGY SOURCES
Broken Hill Proprietary Co. Ltd. 780,127 11,110
--------------
METALS -- NON-FERROUS
Western Mining Corp. Ltd. 1,295,750 8,568
--------------
REAL ESTATE
Lend Lease Corp. Ltd. 758,877 10,986
--------------
38,747
--------------
- ----------------------------------------------------------------
- -------------
CHINA (0.6%)
AUTOMOBILES
Shenzen North Jianshe Motorcycle 'B' 3,090,300 1,189
--------------
CHEMICALS
Jilin Chemical Industrial Co. Ltd. 'H' 68,000 1,436
--------------
MACHINERY & ENGINEERING
Harbin Power Equipment Co. Ltd. 'H' 810,000 149
--------------
TEXTILES & APPAREL
Shenzhen Yizheng Chemical Fibre Co.
Ltd. 'H' 3,558,000 920
--------------
UTILITIES -- ELECTRICAL & GAS
Shandong Huaneng Power Co. Ltd. ADR 125,700 1,100
--------------
4,794
--------------
- ----------------------------------------------------------------
- -------------
HONG KONG (12.5%)
BANKING
HSBC Holdings plc 899,148 13,485
--------------
FOOD & HOUSEHOLD PRODUCTS
Charoen Pokphand Co. Ltd. 7,242,000 3,441
--------------
MULTI-INDUSTRY
Citic Pacific Ltd. 1,565,000 6,070
Guangdong Investments Ltd. 11,316,000 7,169
Hutchison Whampoa Ltd. 2,210,000 13,944
Swire Pacific Ltd. 'A' 950,000 8,352
--------------
35,535
--------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 2,389,000 16,834
Hopewell Holdings 9,104,000 5,297
New World Development Co. Ltd. 1,648,000 7,670
Sun Hung Kai Properties Ltd. 708,000 6,339
Wharf (Holdings) Ltd. 390,000 1,472
--------------
37,612
--------------
TELECOMMUNICATIONS
Hong Kong Telecom Ltd. 4,110,000 8,210
--------------
TRANSPORTATION -- SHIPPING
Cosco Pacific, Ltd. 516,000 407
--------------
UTILITIES -- ELECTRICAL & GAS
China Light & Power Co. Ltd. 564,000 2,545
--------------
101,235
--------------
- ----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- --------------------------------------------------------
- ------------
INDIA (14.5%)
APPLIANCES & HOUSEHOLD DURABLES
Peico Electronics & Electric 123,600 U.S.$ 517
--------------
AUTOMOBILES
Apollo Tyres Ltd. 424,625 2,229
Apollo Tyres Ltd. (Warrants) 170,168 265
Autolec Industries 152,800 431
Autolite Ltd. 171,100 1,054
Autopal Industries, Ltd. 15,000 22
Escorts Ltd. 558,800 1,950
Hero Honda 30,000 255
Jay Bharat Maruti 53,200 90
Lumax Automatic Parts Industries 95,400 369
Nippondenso India Ltd. 71,400 230
Patheja Forgings and Auto 'B' 527,000 1,199
Rico Auto Industries Ltd. 82,000 327
Sona Steering System 92,500 197
Tata Engineering & Locomotive 309,502 4,139
--------------
12,757
--------------
BANKING
State Bank of India 789,181 5,502
--------------
BEVERAGES & TOBACCO
ITC Ltd. 442,200 2,970
United Breweries 149,100 153
--------------
3,123
--------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co. Ltd. 73,675 8,210
Gujarat Ambuja Cements Ltd. 212,500 2,193
India Cements, Ltd. 75,000 341
Madras Cements 3,695 1,192
Murudeshwar Ceramics Ltd. 46,000 108
Saurashtra Cement & Chemicals 'B' 26,200 60
--------------
12,104
--------------
CHEMICALS
Asian Paints Ltd. 54,200 545
Gujarat Narmada Valley Fertilizers
Ltd. 275,000 2,117
Gujarat Narmada Valley Fertilizers
Ltd. 'A' 263,600 406
Gujarat State Fertilizers 16,100 52
Hoechst India Ltd. 50,650 374
Indian Dyestuff Industries Ltd. 304,250 205
Indian Organic Chemical Ltd. 275,480 254
Indian Petro Chemical Corp. 1,013,300 4,665
Jaysynth Dyechem Ltd. 145,800 299
Sudarshan Chemicals Inds. Ltd. 4,600 45
--------------
8,962
--------------
CONSTRUCTION & HOUSING
Hindustan Construction Co. 116,300 206
Larsen & Toubro 150 1
Nagarjuna Construction 174,500 819
--------------
1,026
--------------
CONSUMER GOODS
Godrej Soaps 203,700 377
--------------
DATA PROCESSING & REPRODUCTION
Modi Xerox Ltd. 16,850 94
--------------
ELECTRICAL & ELECTRONICS
BPL Ltd. 263,000 504
Bajaj Electricals Ltd. 14,850 203
Rolta India Ltd. 1,000,000 469
--------------
1,176
--------------
- ----------------------------------------------------------------
- -------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------
- ------------
<S> <C> <C>
INDIA (CONTINUED)
ELECTRONIC COMPONENTS & INSTRUMENTS
Vikas WSP Ltd. 104,000 U.S.$ 427
Viral Filaments 5,000 12
--------------
439
--------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals 1,155,000 4,107
Crompton Greaves Ltd. 409,580 3,251
Esab India Ltd. 307,765 659
S & S Power Switchgear Ltd. 57,000 301
--------------
8,318
--------------
FINANCIAL SERVICES
Housing Development Finance Corp. 133,050 12,642
Industrial Finance Corp India 1,048,000 1,306
Tube Investments of India 102,600 439
--------------
14,387
--------------
FOOD & HOUSEHOLD PRODUCTS
Dhampur Sugar Mills Ltd. 15,400 52
--------------
FOREST PRODUCTS & PAPER
Ballarpur Industries Ltd. 204,964 1,082
J.K. Corp. Ltd. GDR 61,140 191
J.K. Corp. Ltd. GDR 249,240 779
--------------
2,052
--------------
HEALTH & PERSONAL CARE
Sun Pharmaceutical 162,100 1,274
TTK Biomed Ltd. 21,500 25
--------------
1,299
--------------
INDUSTRIAL COMPONENTS
Indian Rayon & Industries Ltd. 10,000 136
Thermax Ltd. 50,000 484
--------------
620
--------------
LEISURE & TOURISM
ITC Hotels Ltd. 238,600 1,301
--------------
MACHINERY & ENGINEERING
Artson Engineering Ltd. 235,600 142
Hindustan Power Plus Ltd. 67,000 151
Veejay Lakshmi Engineering 91,100 427
--------------
720
--------------
METALS -- NON-FERROUS
Hindalco Industries Ltd. 5,000 167
--------------
METALS -- STEEL
KEC International Ltd. 350,000 1,155
Special Steels Ltd. 300,050 1,029
Special Steels Ltd. (Rights) 10 --
Tata Iron & Steel Co. Ltd. 270,150 1,569
--------------
3,753
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Amforge Industries 33,100 78
Amforge Industries (Rights) 5,225 7
Bharat Forge Co. Ltd. 260,000 1,125
Cosmo Films Ltd. 175,000 657
Essel Packaging Ltd. 138,800 871
Hindustan Development Corp. 1,048,500 723
ITW Signode India Ltd. 97,250 326
MRF Ltd. 7,050 538
Panyam Cements & Minerals 17,190 504
Polyplex Ltd. 225,000 435
Supreme Industries Ltd. 91,300 964
Wimco Ltd. 225,150 252
--------------
6,480
--------------
- ----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- --------------------------------------------------------
- ------------
MULTI-INDUSTRY
Bajaj Hindustan Ltd. 21,000 U.S.$ 48
Container Corp. of India 1,291,000 5,303
EID Parry Ltd. 64,300 209
Max India (Rights) 100,000 1,387
Morgan Stanley Growth Fund 5,855,900 962
Suashish Diamonds 71,600 298
UTI MasterShares Ltd. 2,270,030 885
VXL Ltd. 847,000 708
Voltas, Ltd. 15,250 31
--------------
9,831
--------------
REAL ESTATE
Alacrity Housing Ltd. 181,000 165
--------------
TELECOMMUNICATIONS
Infosys Technology Ltd. 9,600 138
Mahanagar Telephone Nigam 572,000 3,019
Videsh Sanchar Nigam Ltd. 270,000 9,501
--------------
12,658
--------------
TEXTILES & APPAREL
Century Textile & Industry 1,945 344
Coates of India Ltd. 93,750 646
G.T.N. Textiles Ltd. 243,000 855
Garware Plastics & Polyester 157,800 972
Indo Rama Synthetics 379,900 446
Indo Rama Synthetics (Rights) 46,350 --
J.K. Synthetics Ltd. 605,500 515
Mahavir Spinning Mills Ltd. 145,450 529
Morajee Goculdas Spinning 125,000 587
Raymond Ltd. 239,850 2,356
Viniyoga Clothes Ltd. 486,600 143
Viral Syntex Ltd. 5,000 7
--------------
7,400
--------------
TRANSPORTATION -- SHIPPING
Great Eastern Shipping Ltd. 'A' 1,362,000 1,797
--------------
117,077
--------------
- ----------------------------------------------------------------
- -------------
INDONESIA (3.7%)
BUILDING MATERIALS & COMPONENTS
Indocement Tunggal Perkasa (Foreign) 120,000 435
Semen Gresik (Foreign) 634,500 2,246
--------------
2,681
--------------
CHEMICALS
Sorini Corp. (Foreign) 600,000 3,157
--------------
CIGARETTES
PT Hanjaya Mandala Sampoerna (Foreign) 100,000 1,045
--------------
FOOD & HOUSEHOLD PRODUCTS
Mayora Indah (Foreign) 27,000 20
--------------
FOREST PRODUCTS & PAPER
Barito Pacific Timber (Foreign) 1,387,000 1,394
--------------
HEALTH & PERSONAL CARE
Kalbe Farma (Foreign) 883,500 2,692
--------------
MACHINERY & ENGINEERING
United Tractors (Foreign) 716,500 1,440
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Charoen Pokphand Indonesia (Foreign) 2,510,000 5,019
--------------
REAL ESTATE
Duta Pertiwi Property (Foreign) 280,000 251
--------------
- ----------------------------------------------------------------
- -------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------
- ------------
<S> <C> <C>
INDONESIA (CONTINUED)
TELECOMMUNICATIONS
Indosat (Foreign) 1,810,000 U.S.$ 6,213
Telekomunikasi Indonesia (Foreign) 3,637,000 5,678
--------------
11,891
--------------
29,590
--------------
- ----------------------------------------------------------------
- -------------
JAPAN (37.9%)
AEROSPACE & MILITARY TECHNOLOGY
Mitsubishi Heavy Industries Ltd. 1,220,000 10,540
--------------
AUTOMOBILES
Asahi Tec Corp. 360,000 2,457
Kansei Corp. 170,000 1,384
Nissan Motor Co. 900,000 6,967
Suzuki Motor Co. Ltd. 660,000 8,145
--------------
18,953
--------------
BUILDING MATERIALS & COMPONENTS
Sangetsu Co. Ltd. 100,000 2,412
Sanwa Shutter Corp. (Warrants)
expiring 1/20/98 49,400 898
--------------
3,310
--------------
BUSINESS & PUBLIC SERVICES
Dai Nippon Printing Co. Ltd. 280,000 5,105
--------------
CHEMICALS
Daicel Chemical Industries 750,000 4,537
Fuji Photo Film Ltd. 160,000 4,578
Kaneka Corp. 999,000 6,613
Mitsubishi Chemical Corp. 1,160,000 6,128
Nifco 311,300 3,900
Okura Industrial Co. Ltd. 434,000 2,982
Sekisui Chemical Co. 520,000 6,807
--------------
35,545
--------------
CONSTRUCTION & HOUSING
Kyudenko Co. Ltd. 349,000 4,568
Matsui Construction 171,000 1,359
Nishio Rent All Co. 111,000 2,460
Nishio Rent All Co.
(Warrants), expiring 2/20/98 1,055 475
Ohbayashi Corp. 320,000 2,747
Taisei Corp. Ltd. 1,240,000 8,811
Yahagi Construction 238,000 1,938
--------------
22,358
--------------
ELECTRICAL & ELECTRONICS
Canon Inc. 180,000 3,433
Hitachi Ltd. 1,085,000 10,550
Kyocera Corp. 40,000 2,715
Kyocera Corp.
(Warrants), expiring 1/23/98 1,450 1,341
Matsushita Communication Industries 191,000 4,536
Matsushita Electric Industries Ltd. 555,000 9,029
NEC Corp. 775,000 8,985
Nintendo Ltd. 115,000 7,354
Ricoh Co. Ltd. 700,000 7,527
Sony Corp. 140,000 8,364
Stanley Electric Co. 750,000 4,972
Tokyo Electron Ltd. 175,000 5,972
Toshiba Corp. 1,630,000 12,375
--------------
87,153
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Mitsumi Electric Co. Ltd. 388,000 6,603
Murata Manufacturing 50,000 1,720
TDK Corp. 135,000 6,955
--------------
15,278
--------------
- ----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- --------------------------------------------------------
- ------------
FINANCIAL SERVICES
Hitachi Credit Corp. 118,000 U.S.$ 2,184
Nikko Securities Co. 700,000 8,901
Nomura Securities Co. 335,000 7,361
Sumitomo Lease 102,000 525
--------------
18,971
--------------
HEALTH & PERSONAL CARE
Sankyo Co. Ltd. 217,000 4,971
Secom Co. 94,000 6,143
Yamanouchi Pharmaceutical Co. 240,000 5,341
--------------
16,455
--------------
INSURANCE
Nichido Fire & Marine Insurance Co. 215,250 1,620
Sumitomo Marine & Fire 600,000 5,150
--------------
6,770
--------------
MACHINERY & ENGINEERING
Amada Co. Ltd. 500,000 5,283
Daifuku 450,000 6,774
Daikin Kogyo Co. 600,000 6,171
Fuji Machine Co. 256,000 6,941
Kurita Water Industries 149,600 3,469
Teijin Seiki Co. 431,000 2,293
Tsubakimoto Chain 817,000 5,316
--------------
36,247
--------------
REAL ESTATE
Daibiru Corp. 308,000 4,031
Keihanshin Real Estate Co. 205,000 1,700
Mitsubishi Real Estate Co. Ltd. 470,000 6,460
--------------
12,191
--------------
TELECOMMUNICATIONS
Nippon Telephone & Telegraph 612 4,475
--------------
TEXTILES & APPAREL
Japan Vilene Co. Ltd. 304,000 1,899
--------------
TRANSPORTATION -- ROAD & RAIL
Nippon Konpo Unyu Soko 295,000 2,507
--------------
WHOLESALE & INTERNATIONAL TRADE
FamilyMart 162,030 6,984
Inabata & Co. 249,000 1,727
--------------
8,711
--------------
306,468
--------------
- ----------------------------------------------------------------
- -------------
KOREA (2.3%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. RFD 12,266 1,443
Samsung Electronics Co. (Foreign) 40,701 4,787
Samsung Electronics Co. RFD (Foreign) 1,176 138
--------------
6,368
--------------
BANKING
Korea Housing Bank 23,550 653
--------------
CONSTRUCTION & HOUSING
Hyundai Engineering RFD (Foreign) 2,488 119
Hyundai Engineering (Foreign) 132,963 6,340
--------------
6,459
--------------
METALS -- STEEL
Pohang Iron & Steel ADR 43,500 1,055
--------------
UTILITIES -- ELECTRICAL & GAS
Korea Electric Power (Foreign) 93,920 3,955
--------------
18,490
--------------
- ----------------------------------------------------------------
- -------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------
- ------------
<S> <C> <C>
MALAYSIA (7.6%)
BANKING
Malayan Banking Bhd 1,127,000 U.S.$ 10,513
--------------
LEISURE & TOURISM
Genting Bhd 513,000 4,643
Resorts World Bhd 711,000 4,047
--------------
8,690
--------------
MACHINERY & ENGINEERING
United Engineers, Ltd. 1,369,000 9,470
--------------
MULTI-INDUSTRY
Renong Bhd 5,468,000 8,904
Renong Bhd (Rights) 1,093,600 --
Renong Bhd (Warrants) 683,500 --
--------------
8,904
--------------
REAL ESTATE
Bandar Raya Developments Bhd 1,161,000 1,983
--------------
TELECOMMUNICATIONS
Technology Resources Industries Bhd 1,064,000 3,827
Telekom Malaysia Bhd 989,000 9,108
--------------
12,935
--------------
UTILITIES -- ELECTRICAL & GAS
Petronas Gas Bhd 200,000 901
Tenaga Nasional Bhd 1,920,000 8,120
--------------
9,021
--------------
61,516
--------------
- ----------------------------------------------------------------
- -------------
PHILIPPINES (3.2%)
BEVERAGES & TOBACCO
San Miguel Corp. 'B' 534,800 1,798
--------------
CONSTRUCTION & HOUSING
DMCI Holdings Inc. 4,947,000 3,212
--------------
ENERGY SOURCES
Petron Corp. 7,127,500 3,063
--------------
MULTI-INDUSTRY
Ayala Corp. 'B' 1,519,000 2,205
JG Summit Holdings 'B' 6,423,700 2,233
--------------
4,438
--------------
REAL ESTATE
Ayala Land, Inc. 'B' 2,265,750 3,678
C&P Homes, Inc. 2,963,600 2,236
SM Prime Holdings, Inc. 8,031,400 2,393
--------------
8,307
--------------
TELECOMMUNICATIONS
Philippine Long Distance Telephone 'B' 55,650 3,018
--------------
UTILITIES -- ELECTRICAL & GAS
Manila Electric Co. 'B' 285,270 2,517
--------------
26,353
--------------
- ----------------------------------------------------------------
- -------------
SINGAPORE (6.5%)
BANKING
Development Bank of Singapore
(Foreign) 448,000 5,506
Oversea-Chinese Banking Corp.
(Foreign) 480,000 6,444
United Overseas Bank (Foreign) 979,200 9,878
--------------
21,828
--------------
BEVERAGES & TOBACCO
Fraser & Neave 218,400 2,467
--------------
BROADCASTING & PUBLISHING
Singapore Press Holdings (Foreign) 120,000 2,395
--------------
- ----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- --------------------------------------------------------
- ------------
ELECTRICAL & ELECTRONICS
Acma Ltd. 284,400 U.S.$ 885
--------------
MACHINERY & ENGINEERING
Keppel Corp. 878,000 7,984
Sembawang Corp. 250,000 1,252
--------------
9,236
--------------
MULTI-INDUSTRY
Singapore Technologies Industrial Corp. 1,534,000 3,574
--------------
REAL ESTATE
City Developments Ltd. 888,000 7,885
DBS Land Ltd. 1,153,000 4,423
--------------
12,308
--------------
52,693
--------------
- ----------------------------------------------------------------
- -------------
THAILAND (7.5%)
BANKING
Bangkok Bank Ltd. (Foreign) 840,300 11,316
Siam Commercial Bank Co., Ltd. (Foreign) 410,000 6,301
Thai Farmers Bank Ltd. (Foreign) 785,000 9,203
--------------
26,820
--------------
BUILDING MATERIALS & COMPONENTS
Siam Cement Co., Ltd. (Foreign) 48,700 2,508
--------------
ELECTRICAL & ELECTRONICS
Shinawatra Computer Co. Ltd. (Foreign) 186,800 4,794
--------------
FINANCIAL SERVICES
Finance One Co. Ltd. (Foreign) 898,727 6,728
National Finance & Securities Co.,
Ltd. (Foreign) 649,000 4,087
Phatra Thanakit Co., Ltd. (Foreign) 513,135 4,715
--------------
15,530
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Charoen Pokphand Feedmill Co., Ltd.
(Local) 668,000 3,360
--------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd.
(Foreign) 127,100 2,396
TelecomAsia Corp. Ltd. (Foreign) 920,000 2,605
United Communication Industry (Foreign) 175,000 2,398
--------------
7,399
--------------
60,411
--------------
- ----------------------------------------------------------------
- -------------
TOTAL COMMON STOCKS
(Cost U.S. $782,190) 817,374
--------------
- ----------------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- --------------------------------------------------------
- ------------
FIXED INCOME SECURITY (0.0%)
- ----------------------------------------------------------------
- -------------
INDIA (0.0%)
METALS -- STEEL
Special Steels Ltd. 14.00%, 12/6/02
(Cost U.S. $8) INR 2,980 11
--------------
- ----------------------------------------------------------------
- -------------
REPURCHASE AGREEMENT (0.3%)
- --------------------------------------------------------
- ------------
UNITED STATES
REPURCHASE AGREEMENT
The Chase Manhattan Bank, N.A. 5.15%,
dated 3/29/96, due 4/1/96, to be
repurchased at U.S.$2,568,
collateralized by U.S.$1,725 United
States Treasury Bond 11.25%, due
2/15/15, valued at U.S.$2,624
(Cost $2,567) U.S.$ 2,567 2,567
--------------
- ----------------------------------------------------------------
- -------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------
- ------------
<S> <C> <C>
FOREIGN CURRENCY ON DEPOSIT
WITH CUSTODIAN (1.6%)
Hong Kong Dollar HKD 45,164,972 U.S.$ 5,839
Indian Rupee INR 204,803,182 6,006
Japanese Yen JPY 55,464,997 519
Philippine Peso PHP 89,210 3
Singapore Dollar SGD 18,216 13
Thai Baht THB 877,461 35
--------------
(Cost U.S. $12,447) 12,415
--------------
- ----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (103.0%)
(Cost U.S. $797,212) 832,367
--------------
- ----------------------------------------------------------------
- -------------
OTHER ASSETS AND LIABILITIES (-3.0%)
Other Assets U.S.$ 7,481
Liabilities (31,564) (24,083)
--------------- --------------
- ----------------------------------------------------------------
- -------------
NET ASSETS (100.0%)
Applicable to 53,654,508, issued and outstanding U.S.
$0.01 par value shares (200,000,000 shares
authorized) U.S.$ 808,284
--------------
--------------
- ----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 15.06
--------------
--------------
- ----------------------------------------------------------------
- -------------
</TABLE>
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
RFD -- Ranked For Dividend
Note: Prior governmental approval for foreign investments may be required under
certain circumstances in some emerging markets, and foreign ownership
limitations may also be imposed by the charters of individual companies
in emerging markets. As a result, an additional class of shares
designated as "foreign" may be created and offered for investment. The
"local" and "foreign" shares' market values may vary.
11
