<PAGE>
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
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 Belinda A. Brady
DIRECTOR ASSISTANT TREASURER
John A. Levin
DIRECTOR
- ---------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
- --------------------------------------------------------
SHAREHOLDER SERVICING AGENT
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.
---------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the nine months ended September 30, 1996, the Morgan Stanley Asia-Pacific
Fund, Inc. (the "Fund") had a total return, based on net asset value per share,
of 0.41% 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
September 30, 1996, the Fund's total return, based on net asset value per share,
was 3.17% compared with -4.90% for the benchmark. (The benchmark for investment
purposes 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 each
month). On September 30, 1996, the closing price of the Fund's shares on the New
York Stock Exchange was 10 7/8 representing a 14.2% discount to the net asset
value per share.
The Fund has outperformed the Index mainly because it was overweighted in Asia
ex-Japan and underweighted in Japan. Asia ex-Japan markets were generally strong
with a few exceptions, whereas the Japanese market fell 4.9%. Some of the better
performing markets were the Philippines (up 17.8%), Malaysia (up 16.2%), Hong
Kong (up 15.8%) and Indonesia (up 13.2%).
The Fund however underperformed the benchmark by 1.0% for the third quarter. The
Fund had a total return, based on net asset value per share, of -5.80% for the
three months ended September 30, 1996, compared with -4.81% for the benchmark.
The main reason for the underperformance was due to the overweight in several
markets which fell sharply. These were India (down 17.8%), Thailand (down 13.5%)
and South Korea (down 9.8%). The Fund made up some of the performance through
its underweight in Japan, which was down 5.7% this quarter.
JAPAN
The Japanese equity market was in a consolidation phase for the most part of
this year. The solid fundamental improvements during the first half of 1996
propelled equities to the highest closing levels since 1992. Some profit taking
and consolidation occurred during May as the market entered a transition from a
macro driven environment to a more earnings driven market.
Over the first nine months of 1996 macro conditions in the Japanese economy
showed evidence of a meaningful recovery underway, supported by a weakening Yen,
economic stimulus packages and record low interest rates. A low interest rate,
weaker Yen environment coupled with a 14 trillion Yen stimulus package announced
in September 1995 had a very profound impact on GDP, corporate profits and
business sentiment during the first half of 1996. Despite continued consensus by
G7 to strengthen the Dollar versus the Yen during the Lyon G7 Summit and more
favorable developments in Japanese individual company earnings forecasts,
investors were thrown into confusion by the dramatic differences between first
quarter GDP (up 12.7%) and the weaker than expected Tankan report of August.
There were concerns regarding the sustainability of the Japanese economy and the
interest rate outlook. A weaker than consensus book-to-bill ratio and
uncertainty over U.S. interest rate direction resulted in fairly lackluster
volume for the third quarter.
ASIA EX-JAPAN
In the first nine months of this year, Asian markets were generally on an
uptrend. But the performances of the countries varied widely. Domestic factors
were the key determinants of market directions for the most part of the year.
Hong Kong rose 15.8% year-to-date. The markets that were very weak were Thailand
and South Korea, which declined by 15.0% and 23.3% respectively. Both were
affected by domestic issues such as rising current account deficits, securities
margin calls and a rapidly slowing economy.
The best performing market in the third quarter was Hong Kong. Hong Kong
benefited mainly from flows into the region. The market had been volatile
throughout most of the quarter, moving in line with the volatility in the U.S.
equities markets. Half-year earnings came in strong and earnings were gradually
revised. Sentiment also turned positive towards China-related stocks. With the
U.S. Federal Reserve keeping interest rates unchanged, the market powered ahead
further.
Malaysia ended the quarter almost unchanged. The market had initially fallen on
fears of disappointing earnings and poor trade figures. But many companies
reported stronger than expected half-year earnings. In addition, the trade
deficit for the first half of 1996 was only MR 0.8 billion versus MR 5.6 billion
for the first half of 1995. This coupled with stable interest rates sparked a
strong round of buying. The second board on the Kuala Lumpur Stock Exchange had,
by the close of the quarter, outperformed the main board by a broad margin.
The Indian market fell sharply in the third quarter as foreigners sold in
anticipation of rising inflation, lower
2
<PAGE>
corporate earnings and political uncertainty. The imposition of a minimum tax
also caused earnings downgrades in many large corporates. The expected issue of
several large-sized GDRs depressed sentiment further.
Thailand came down hard in the third quarter with selling reaching climactic
levels. Weak economic numbers had sparked fears of a growth recession, i.e. 6%
GDP growth. For the first seven months of this year, exports had grown only 4%
and all signs point to a widening of the trade and current account deficits. The
slowdown has raised questions about the rapidly deteriorating real estate market
and the asset quality of the banks and finance companies which have exposure to
real estate. Sentiment was also not helped by a no-confidence motion against the
Prime Minister, which eventually culminated in his resignation. In a subsequent
surprise move, the parliament was dissolved and general elections were set for
November 17.
The other weak market was South Korea, which fell 9.9% in the third quarter. The
Korean market continued to be plagued by weak economic numbers. Real GDP growth,
for example, slowed to 6.7% in the second quarter of 1996, down from 7.9% in the
first quarter. There was also growing concern over the widening trade deficit
due to weak exports. South Korean competitiveness deteriorated with the Japanese
Yen weakening, where Japan is a major export competitor. Redemption of stock
margins and a massive supply of new equity (of close to US$2 billion) coming to
the market prompted heavy selling. Even the foreign limit expansion from 18% to
20% on October 1, failed to lift the market towards the close of the quarter.
PORTFOLIO ACTIVITIES
Major purchases were made during the quarter in Hong Kong, Japan, Korea and
Thailand. The Fund increased its weighting in Thailand and Korea as these
markets have fallen sharply, yielding stocks at attractive valuations.
Sales were made in India, the Philippines and Indonesia. The Fund took its
weightings down in Indonesia and the Philippines. The political risks in
Indonesia had basically increased due to widening wealth disparity and was
heightened when the President underwent a medical examination. The market had
risen as high as 23% at one stage. The Fund took advantage of this rise to trim
overvalued stocks in the portfolio. In the Philippines, positions were reduced
because several stocks had reached unsustainable valuations. India was reduced
as the political and economic environment turned less favorable.
MARKET OUTLOOK
Asian markets in general are likely to continue to trend up on the back of
sustained economic growth. In Japan, the consensus is increasingly heading
towards better corporate earnings, supported by a weaker currency and continued
record low interest rates. Furthermore, the bridge from a macro to a micro
earnings-driven market will be led by economically sensitive and international
blue chip issues and market leadership will emerge in these sectors propelling
the overall market to post recovery highs.
Hong Kong should continue to perform well because investors are becoming less
and less concerned about the 1997 handover to China. As the Chinese economy
should also be stimulated by the recent credit easing. This should bode well for
credit-strapped companies and some of the H-share companies are likely to
perform well. South Korea continues to be plagued by technical and macroeconomic
concerns. Until the macro picture improves, the market as a whole cannot take
off.
Malaysia should see interest returning to the big blue chip stocks, which have
done less well than the broader market. Earnings are expected to pick up in
these larger capitalization companies in the second half of the year. Previous
fears about economic over-heating and a widening current account deficit appear
to have receded. Liquidity remains ample in the system. Singapore should remain
dull in the coming months as no major corporate developments are expected. But
the correction in the market has taken it to the low end of its historical range
for forward price-earnings ratios. The Philippines is currently trading at a
relatively expensive valuation to the region. This will cap the upside on the
market. This is demonstrated by the fact that despite very positive
macroeconomic news and further upward earnings revision, the market has failed
to scale new heights. Political changes in Thailand should be a positive step
for the market. Still, there must be earnings momentum and an improving macro
picture before the market can take off from here. There are small signs that the
economy is rebounding, but remains to be seen whether it can be sustained.
PORTFOLIO STRATEGY
The Asia Pacific region continues to be one of the fastest growing regions in
the world. Relatively strong economic growth in the rest of the OECD world
should also buoy economic growth in this region. While there could be upward
pressures on interest rates stemming from the U.S., the impact should be quite
minimal. Over the next few months, the Fund is likely to continue its
underweight position in Japan. On the positive side, China is
3
<PAGE>
likely to begin its cyclical recovery. This will benefit the region as whole.
The Fund will also seek out stocks that will benefit from a stronger Chinese
economy. Countries like Thailand and South Korea, whose economies have slowed
first, are also likely to see lower interest rates, which should be a good boost
to their economies. The Fund is likely to increase its weighting in Thailand and
Korea. Both these markets have been sold down to historically low levels but
selective stocks appear very attractive. It could be a while before these
markets turn upwards; the Fund will use this opportunity to accumulate stocks
that offer great value in the long run. The increased allocations in these
countries will come mainly from cash.
The Fund successfully completed a rights offering on May 8, 1996, raising
approximately $173 million.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Ean Wah Chin
SENIOR PORTFOLIO MANAGER
October 10, 1996
4
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Investment Summary as of September 30, 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 -7.25%+ -- 0.41%+ -- -2.20% --
ONE YEAR 10.25+ 10.25%+ 5.63+ 5.63%+ 1.54 1.54%
SINCE INCEPTION* -11.45+ -5.46+ 3.17+ 1.45+ -4.90 -2.29
</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: NINE MONTHS ENDED
1994* 1995 SEPTEMBER 30, 1996 (UNAUDITED)
<S> <C> <C> <C>
Net Asset Value Per Share $13.20 $14.34 $12.67
Market Value Per Share $12.25 $13.33 $10.88
Premium/(Discount) -7.2% -7.0% -14.2%
Income Dividends $0.04 $0.05 $0.35
Capital Gains Distributions $0.01 $0.02 --
Fund Total Return (2) -5.94% 9.24% 0.41%+
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 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. This return does not include the effect of dilution in
connection with the Rights Offering. 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.
+Adjusted for Rights Offering.
5
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Portfolio Summary as of September 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 94.7%
Short-Term Investments 5.2%
Fixed Income Securities 0.1%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Automobiles 3.8%
Banking 11.9%
Chemicals 5.4%
Construction & Housing 3.7%
Electrical & Electronics 11.8%
Financial Services 5.0%
Machinery & Engineering 6.2%
Multi-Industry 6.2%
Real Estate 8.3%
Telecommunications 7.9%
Other 29.8%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Japan 39.8%
India 12.8%
Hong Kong 11.9%
Australia 6.9%
Thailand 6.3%
Singapore 5.9%
Korea 3.4%
Malaysia 2.9%
Indonesia 2.7%
Philippines 2.6%
Other 4.8%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS*
PERCENT OF NET
ASSETS
---------------
<C> <S> <C>
1. Cheung Kong (Holdings) Ltd. 2.1%
2. WMC Ltd. 1.9
3. HSBC Holdings plc 1.8
4. National Australia Bank Ltd. 1.8
5. Lend Lease Corp. Ltd. 1.7
<CAPTION>
PERCENT OF NET
ASSETS
---------------
<C> <S> <C>
6. Hutchison Whampoa Ltd. 1.6%
7. Hong Kong Telecom Ltd. 1.6
8. Broken Hill Proprietary Co.
Ltd. 1.5
9. Bangkok Bank Ltd. (Foreign) 1.4
10. Hitachi Ltd. 1.3
---
16.7%
---
---
</TABLE>
- --------------------------------------------------------------------------------
* Excludes short-term securities.
6
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
COMMON STOCKS (94.5%)
(Unless otherwise noted)
- --------------------------------------------------
- ----------
AUSTRALIA (6.9%)
BANKING
National Australia Bank Ltd. 1,571,884 U.S.$ 16,548
--------------
ENERGY SOURCES
Broken Hill Proprietary Co. Ltd. 1,052,964 13,502
--------------
METALS -- NON-FERROUS
WMC Ltd. 2,645,655 17,026
--------------
REAL ESTATE
Lend Lease Corp. Ltd. 959,277 15,566
--------------
62,642
--------------
- ---------------------------------------------------------
- ------------
CHINA (0.2%)
CHEMICALS
Jilin Chemical Industrial Co. Ltd. ADR
'H' 68,000 977
--------------
UTILITIES -- ELECTRICAL & GAS
Shandong Huaneng Power Co. Ltd. ADR 125,700 1,132
--------------
2,109
--------------
- ---------------------------------------------------------
- ------------
HONG KONG (11.9%)
BANKING
HSBC Holdings plc 899,148 16,685
--------------
MACHINERY & ENGINEERING
Cheung Kong Infrastructure 721,000 1,189
--------------
MULTI-INDUSTRY
Citic Pacific Ltd. 1,533,000 6,938
Hutchison Whampoa Ltd. 2,195,000 14,760
Swire Pacific Ltd. 'A' 1,040,000 9,314
--------------
31,012
--------------
REAL ESTATE
CDL Hotels International 740,000 402
Cheung Kong (Holdings) Ltd. 2,447,000 18,828
New World Development Co. Ltd. 1,731,000 9,088
Sun Hung Kai Properties Ltd. 649,000 6,903
Wharf (Holdings) Ltd. 1,198,000 4,957
--------------
40,178
--------------
TELECOMMUNICATIONS
Asia Satellite Telecom Holdings 671,500 1,776
Hong Kong Telecom Ltd. 8,050,200 14,574
--------------
16,350
--------------
TRANSPORTATION -- ROAD & RAIL
Guangshen Railway ADR 21,000 399
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
UTILITIES -- ELECTRICAL & GAS
China Light & Power Co. Ltd. 564,000 U.S.$ 2,626
--------------
108,439
--------------
- ---------------------------------------------------------
- ------------
INDIA (12.1%)
APPLIANCES & HOUSEHOLD DURABLES
Peico Electronics & Electric Ltd. 123,582 315
--------------
AUTOMOBILES
Apollo Tyres Ltd. 647,775 2,090
Apollo Tyres Ltd. (Warrants, expiring
2/28/98) 190,368 290
Autolec Industries Ltd. 152,800 261
Autolite Ltd. 232,100 656
Autopal Industries, Ltd. 65,000 47
Bajaj Tempo Ltd. (Rights) 5,450 52
Ceat Tyres Ltd. 368,000 805
Escorts Ltd. 966,450 2,413
Hero Honda Ltd. 37,150 261
Jay Bharat Maruti Ltd. 53,200 46
Lumax Automatic Parts Industries Ltd. 100,825 221
MRF Ltd. 9,550 763
Nippondenso India Ltd. 71,400 240
Patheja Forgings and Auto Ltd. 677,700 946
Rico Auto Industries Ltd. 82,000 179
Sona Steering System Ltd. 56,000 98
Tata Engineering & Locomotive Ltd. 309,522 3,870
--------------
13,238
--------------
BANKING
State Bank of India Ltd. 793,481 5,626
--------------
BEVERAGES
ITC Ltd. 440,330 3,709
United Breweries Ltd. 149,100 114
--------------
3,823
--------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co., Ltd. 128,209 6,401
Gujarat Ambuja Cements Ltd. 256,050 2,112
India Cements, Ltd. 75,000 252
Kesoram Industries Ltd. 311,100 359
Madras Cements Ltd. 50 15
Murudeshwar Ceramics Ltd. 46,000 67
Panyam Cements & Minerals Ltd. 27,580 728
Saurashtra Cement & Chemicals 26,200 30
--------------
9,964
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDIA (CONTINUED)
CHEMICALS
Asian Paints Ltd. 71,614 U.S.$ 672
EID Parry Ltd. 64,300 126
Gujarat Narmada Valley Fertilizers
Ltd. 275,000 926
Gujarat Narmada Valley Fertilizers
Ltd. 'A' 305,450 206
Gujarat State Fertilisers Ltd. 6,550 15
Indian Dyestuff Industries Ltd. 304,250 94
Indian Organic Chemical Ltd. 275,480 131
Indian Petro Chemical Corp. 1,140,700 3,560
Jaysynth Dyechem Ltd. 145,800 129
Sudarshan Chemicals 4,600 15
United Phosphorous Ltd. 97,500 543
--------------
6,417
--------------
CONSTRUCTION & HOUSING
Hindustan Construction Co. 257,100 252
Nagarjuna Construction Ltd. 151,200 361
--------------
613
--------------
DATA PROCESSING & REPRODUCTION
Modi Xerox Ltd. 16,850 53
--------------
ELECTRICAL & ELECTRONICS
BPL Ltd. 263,000 273
Bajaj Electricals Ltd. 16,350 205
--------------
478
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Infosys Technology Ltd. 9,600 178
Rolta India Ltd. 999,500 407
S & S Power Switchgear Ltd. 63,550 204
Samtel India Ltd. 1,000 1
Vikas WSP Ltd. 225,000 871
Viral Filaments Ltd. 5,000 9
--------------
1,670
--------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 2,042,000 10,239
Crompton Greaves Ltd. 455,410 2,117
KEC International Ltd. 350,000 667
--------------
13,023
--------------
FINANCIAL SERVICES
Housing Development Finance Corp. Ltd. 161,360 10,405
Industrial Finance Corp (India) Ltd. 1,294,800 1,235
--------------
11,640
--------------
FOOD & HOUSEHOLD PRODUCTS
Dhampur Sugar Mills Ltd. 141,850 209
--------------
FOREST PRODUCTS & PAPER
Ballarpur Industries Ltd. 232,264 494
ITC Bhadrachalam Paperboards Ltd. 193,750 418
--------------
912
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
HEALTH & PERSONAL CARE
Godrej Soaps Ltd. 197,700 U.S.$ 218
Hoechst India Ltd. 50,650 391
Sun Pharmaceutical Industries Ltd. 161,600 993
TTK Biomed Ltd. 21,500 14
--------------
1,616
--------------
LEISURE & TOURISM
ITC Hotels Ltd. 279,255 916
--------------
MACHINERY & ENGINEERING
Artson Engineering Ltd. 234,700 135
DGP Windsor India Ltd. 218,800 681
Esab India Ltd. 307,265 690
Flat Products Equipments (India) Ltd. 174,900 828
Hindustan Power Plus Ltd. 70,600 201
Thermax Ltd. 31,900 371
Veejay Lakshmi Engineering Ltd. 150,700 380
--------------
3,286
--------------
METALS -- STEEL
Special Steels Ltd. 464,800 965
Special Steels Ltd. (Rights) 3,290 6
Tata Iron & Steel Co. Ltd. 47,790 230
--------------
1,201
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Amforge Industries Ltd. 34,855 38
Amforge Industries Ltd. (Warrants,
expiring 7/1/97) 5,150 --
Bharat Forge Co. Ltd. 260,000 760
Cosmo Films Ltd. 175,000 243
Essel Packaging Ltd. 146,300 533
Hindustan Development Corp. 1,085,430 502
ITW Signode India Ltd. 329,732 714
Polyplex Ltd. 225,000 187
Suashish Diamonds Ltd. 71,600 104
Supreme Industries Ltd. 178,624 1,117
Wimco Ltd. 422,200 198
--------------
4,396
--------------
MULTI-INDUSTRY
Bajaj Hindustan Ltd. 21,000 29
Indian Rayon & Industries Ltd. 800 8
JK Corp. Ltd. GDR 61,140 69
JK Corp. Ltd. GDR 249,240 280
Max India Ltd. -- New 100,000 743
@Morgan Stanley Growth Fund 17,514,300 3,365
Straw Products Ltd. 100 --
UTI MasterShares Ltd. 2,268,290 856
Voltas Ltd. 147,950 148
VXL Ltd. 847,000 459
--------------
5,957
--------------
REAL ESTATE
Alacrity Housing Ltd. 381,000 209
--------------
RECREATION, OTHER CONSUMER GOODS
Tube Investments of India Ltd. 109,450 273
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDIA (CONTINUED)
TELECOMMUNICATIONS
Mahanagar Telephone Nigam Ltd. 412,600 U.S.$ 2,381
Videsh Sanchar Nigam Ltd. 234,600 6,712
--------------
9,093
--------------
TEXTILES & APPAREL
Century Textile & Industry Ltd. 11,038 941
Coates of India Ltd. 100,700 499
DCL Polyesters Ltd. 195,000 68
Garware Plastics & Polyester 191,250 511
G.T.N. Textiles Ltd. 243,000 457
Indo Rama Synthetics 483,000 427
Indo Rama Synthetics Ltd. -- New 46,170 41
Indo Rama Synthetics (Rights) 180 --
J.K. Synthetics Ltd. 689,834 288
Mahavir Spinning Mills Ltd. 173,886 329
Morajee Goculdas Spinning Ltd. 125,000 196
Raymond Ltd. 253,724 1,592
Viniyoga Clothes Ltd. 486,600 55
Viral Syntex Ltd. 5,000 4
--------------
5,408
--------------
TRANSPORTATION -- ROAD & RAIL
Container Corp. of India Ltd. 1,199,600 7,302
--------------
TRANSPORTATION -- SHIPPING
Great Eastern Shipping Ltd. 'A' 1,883,555 1,862
--------------
109,500
--------------
- ---------------------------------------------------------
- ------------
INDONESIA (2.7%)
AUTOMOBILES
Astra International (Foreign) 1,166,500 2,285
--------------
BANKING
Bank International Indonesia (Foreign) 1,354,595 1,983
--------------
BEVERAGES
Gudang Garam (Foreign) 1,076,000 4,053
--------------
CHEMICALS
Sorini Corp. (Foreign) 2,700,000 1,743
--------------
FOREST PRODUCTS & PAPER
Barito Pacific Timber (Foreign) 1,157,000 710
Indah Kiat Pulp & Paper (Foreign) 2,434,520 1,860
--------------
2,570
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Charoen Pokphand Indonesia (Foreign) 874,000 1,166
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TELECOMMUNICATIONS
Telekomunikasi Indonesia (Foreign) 5,559,000 U.S.$ 8,615
--------------
TOBACCO
Hanjaya Mandala Sampoerna (Foreign) 194,500 1,892
--------------
24,307
--------------
- ---------------------------------------------------------
- ------------
JAPAN (39.6%)
AEROSPACE & MILITARY TECHNOLOGY
Mitsubishi Heavy Industries Ltd. 1,150,000 9,347
--------------
APPLIANCES & HOUSEHOLD DURABLES
Rinnai Corp. 109,100 2,503
--------------
AUTOMOBILES
Asahi Tec Corp. 443,000 2,997
Kansei Corp. 154,000 1,305
Nissan Motor Co. 900,000 7,250
Suzuki Motor Co. Ltd. 630,000 7,679
--------------
19,231
--------------
BUILDING MATERIALS & COMPONENTS
Nippon Pillar Packing Co. 157,000 1,449
Sangetsu Co. Ltd. 100,000 2,321
Sanwa Shutter Corp. Ltd. 472,000 3,984
Sanwa Shutter Corp. Ltd. (Warrants,
expiring 1/20/98) 2,400 780
Seksui House Ltd. 100,000 1,093
--------------
9,627
--------------
BUSINESS & PUBLIC SERVICES
Dai Nippon Printing Co. Ltd. 370,000 6,896
--------------
CHEMICALS
Daicel Chemical Industries Ltd. 912,000 4,822
Fuji Photo Film Ltd. 240,000 7,291
Kaneka Corp. 899,000 5,518
Mitsubishi Chemical Corp. 1,510,000 6,360
Nifco, Inc. 330,000 3,696
Okura Industrial Co. Ltd. 434,000 2,858
Sekisui Chemical Co. 760,000 8,990
--------------
39,535
--------------
CONSTRUCTION & HOUSING
Kyudenko Co. Ltd. 389,000 4,985
Matsui Construction Co. 171,000 1,364
Nishio Rent All Co. 122,100 2,626
Nishio Rent All Co. (Warrants,
expiring 2/20/98) 1,055 376
Ohbayashi Corp. 820,000 6,716
Taisei Corp. Ltd. 1,080,000 6,997
Yahagi Construction Co. 238,000 1,761
--------------
24,825
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
JAPAN (CONTINUED)
ELECTRICAL & ELECTRONICS
Canon, Inc. 450,000 U.S.$ 8,831
Hitachi Ltd. 1,185,000 11,468
Kyocera Corp. 60,000 4,274
Kyocera Corp. (Warrants, expiring
1/23/98) 1,450 1,803
Matsushita Communication Industrial
Co. 281,000 7,604
Matsushita Electric Industrial Co.
Ltd. 562,000 9,417
NEC Corp. 975,000 11,445
Nintendo Ltd. 130,000 8,329
Ricoh Co. Ltd. 706,000 7,212
Sony Corp. 155,000 9,764
Stanley Electric Co. 690,000 4,261
Tokyo Electron Ltd. 245,000 7,092
Toshiba Corp. 1,630,000 11,263
--------------
102,763
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Mitsumi Electric Co. Ltd. 388,000 6,781
Murata Manufacturing Co. 130,000 4,636
TDK Corp. 145,000 9,004
--------------
20,421
--------------
FINANCIAL SERVICES
Hitachi Credit Corp. 188,000 3,336
Nikko Securities Co. 757,000 8,072
Nomura Securities Co., Ltd. 435,000 7,991
Sumitomo Lease Co. 102,000 511
--------------
19,910
--------------
HEALTH & PERSONAL CARE
Sankyo Co. Ltd. 323,000 8,249
Secom Co. 130,000 8,213
Yamanouchi Pharmaceutical Co. 290,000 6,133
--------------
22,595
--------------
INSURANCE
Nichido Fire & Marine Insurance Co. 215,000 1,507
Sumitomo Marine & Fire Co. 642,000 5,051
--------------
6,558
--------------
MACHINERY & ENGINEERING
Amada Co. Ltd. 667,000 6,156
Daifuku Co. Ltd. 431,000 5,909
Daikin Kogyo Co. 600,000 5,860
Fuji Machine Co. 329,000 8,402
Kurita Water Industries Ltd. 274,000 5,918
Tsubakimoto Chain Co. 872,000 5,689
--------------
37,934
--------------
REAL ESTATE
Daibiru Corp. 308,000 3,947
Keihanshin Real Estate Co. 205,000 1,635
Mitsubishi Estate Co. Ltd. 597,000 8,185
--------------
13,767
--------------
RECREATION, OTHER CONSUMER GOODS
Square Co. Ltd. 51,900 2,976
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TELECOMMUNICATIONS
Nippon Telephone & Telegraph Corp. 982 U.S.$ 7,216
--------------
TEXTILES & APPAREL
Japan Vilene Co. Ltd. 304,000 1,751
--------------
TRANSPORTATION -- ROAD & RAIL
Nippon Konpo Unyu Soko Co. 245,000 2,028
--------------
WHOLESALE & INTERNATIONAL TRADE
FamilyMart 162,000 7,243
Inabata & Co. 406,000 2,911
--------------
10,154
--------------
360,037
--------------
- ---------------------------------------------------------
- ------------
KOREA (3.4%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. (Foreign) 41,873 3,285
Samsung Electronics Co. RFD 12,619 990
--------------
4,275
--------------
BANKING
Kookmin Bank GDR 82,000 2,060
Housing & Commercial Bank, Korea 67,550 1,706
Shinhan Bank Co. Ltd. (Foreign) 42,040 972
--------------
4,738
--------------
CONSTRUCTION & HOUSING
Hyundai Engineering (Foreign) 135,502 4,167
Hyundai Engineering (Foreign) RFD 7,889 242
--------------
4,409
--------------
METALS -- STEEL
Pohang Iron & Steel ADR 161,500 3,453
--------------
TELECOMMUNICATIONS
Korea Mobile Telecom (Foreign) 5,560 6,149
LG Information & Communication Ltd. 35,620 4,377
--------------
10,526
--------------
UTILITIES -- ELECTRICAL & GAS
Korea Electric Power (Foreign) 95,920 3,170
--------------
30,571
--------------
- ---------------------------------------------------------
- ------------
MALAYSIA (2.9%)
BANKING
Malayan Banking Bhd 430,000 4,272
--------------
LEISURE & TOURISM
Genting Bhd 441,000 3,202
--------------
MACHINERY & ENGINEERING
United Engineers Ltd. 584,000 4,520
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
MALAYSIA (CONTINUED)
MULTI-INDUSTRY
Renong Bhd 2,468,000 U.S.$ 3,781
Renong Bhd (Warrants, expiring
11/21/00) 683,500 284
Renong Bhd 4.00%, 5/21/01, CULS 1,093,600 402
--------------
4,467
--------------
TELECOMMUNICATIONS
Telekom Malaysia Bhd 847,000 7,468
--------------
UTILITIES -- ELECTRICAL & GAS
Tenaga Nasional Bhd 563,000 1,978
--------------
25,907
--------------
- ---------------------------------------------------------
- ------------
PHILIPPINES (2.6%)
CONSTRUCTION & HOUSING
DMCI Holdings, Inc. 4,947,000 3,677
--------------
ENERGY SOURCES
Petron Corp. 8,909,375 3,226
--------------
MULTI-INDUSTRY
Ayala Corp. 'B' 727,900 832
JG Summit Holdings 'B' 11,933,700 3,776
--------------
4,608
--------------
REAL ESTATE
Ayala Land, Inc. 'B' 2,126,025 2,593
C&P Homes, Inc. 862,200 583
SM Prime Holdings, Inc. 9,637,680 2,241
--------------
5,417
--------------
TELECOMMUNICATIONS
Philippine Long Distance Telephone 'B' 64,250 3,992
--------------
UTILITIES -- ELECTRICAL & GAS
Manila Electric Co. 'B' 370,851 2,744
--------------
23,664
--------------
- ---------------------------------------------------------
- ------------
SINGAPORE (5.9%)
BANKING
Development Bank of Singapore
(Foreign) 884,000 10,860
Oversea-Chinese Banking Corp.
(Foreign) 528,000 6,337
United Overseas Bank (Foreign) 979,200 9,526
--------------
26,723
--------------
BEVERAGES
Fraser & Neave 388,400 3,999
--------------
BROADCASTING & PUBLISHING
Singapore Press Holdings (Foreign) 120,000 2,190
--------------
FINANCIAL SERVICES
Kay Hian Holdings Ltd. (Foreign) 1,416,000 1,257
--------------
MACHINERY & ENGINEERING
Keppel Corp. 978,000 7,571
Sembawang Corp. 369,000 1,729
--------------
9,300
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
MULTI-INDUSTRY
Singapore Technologies Industrial
Corp. 1,990,000 U.S.$ 4,720
Straits Steamship Land Ltd. 1,469,000 4,798
--------------
9,518
--------------
52,987
--------------
- ---------------------------------------------------------
- ------------
THAILAND (6.3%)
BANKING
Bangkok Bank Ltd. (Foreign) 958,300 12,513
Siam Commercial Bank Co. Ltd.
(Foreign) 632,500 7,662
Thai Farmers Bank Ltd. (Foreign) 1,024,000 10,794
Thai Farmers Bank Ltd. (Warrants
expiring 9/15/02) 128,000 343
--------------
31,312
--------------
BUILDING MATERIALS & COMPONENTS
Siam Cement Co. Ltd. (Foreign) 41,000 1,671
--------------
ELECTRICAL & ELECTRONICS
Shinawatra Computer Co. Ltd. (Foreign) 234,800 4,027
--------------
FINANCIAL SERVICES
Finance One Co. Ltd. (Foreign) 1,119,527 6,605
National Finance & Securities Co. Ltd.
(Foreign) 792,400 2,712
Phatra Thanakit Co. Ltd. (Foreign) 513,135 2,926
--------------
12,243
--------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd.
(Foreign) 136,300 1,769
Advanced Information Services Co. Ltd.
(Local) 185,800 2,543
TelecomAsia Corp. Ltd. (Foreign) 920,000 1,864
United Communications Industry
(Foreign) 175,000 1,597
United Communications Industry (Local) 60,000 624
--------------
8,397
--------------
57,650
--------------
- ---------------------------------------------------------
- ------------
TOTAL COMMON STOCKS
(Cost U.S. $881,978) 857,813
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
FIXED INCOME SECURITIES (0.1%)
- ---------------------------------------------------------
- ------------
INDIA (0.1%)
METALS -- STEEL
Special Steels Ltd. 14.00%, 12/6/02 INR 3,290 U.S.$ 4
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Amforge Industries, Zero Coupon,
12/1/96 5,150 5
--------------
MULTI-INDUSTRY
Max India Part B, Zero Coupon, 12/1/96 100,000 734
--------------
- ---------------------------------------------------------
- ------------
TOTAL FIXED INCOME SECURITIES
(Cost U.S. $755) 743
--------------
- ---------------------------------------------------------
- ------------
SHORT-TERM INVESTMENT (4.3%)
- ---------------------------------------------------------
- ------------
UNITED STATES (4.3%)
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.40%, dated
9/30/96, due 10/1/96, to be
repurchased at U.S. $39,056,
collateralized by U.S. $36,945 United
States Treasury Notes 9.00%, due
5/15/98, valued at
U.S.$39,727 (Cost $39,050) U.S.$ 39,050 39,050
--------------
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.8%)
Hong Kong Dollar HKD 915 118
Indian Rupee INR 199,246 5,589
Indonesian Rupiah IDR 12,773 5
Japanese Yen JPY 218,772 1,960
Korean Won KRW 70,958 86
Philippine Peso PHP 428 16
Singapore Dollar SGD 129 93
--------------
(Cost U.S. $7,913) 7,867
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TOTAL INVESTMENTS (99.7%)
(Cost U.S. $929,696) U.S.$ 905,473
--------------
- ---------------------------------------------------------
- ------------
OTHER ASSETS AND LIABILITIES (0.3%)
Other Assets U.S.$ 225,818
Liabilities (223,220) 2,598
--------------- --------------
- ---------------------------------------------------------
- ------------
NET ASSETS (100%)
Applicable to 71,654,508 issued and outstanding U.S.
$0.01 par value shares (200,000,000 shares
authorized) U.S.$ 908,071
------------
- ---------------------------------------------------------
- ------------
NET ASSET VALUE PER SHARE U.S.$ 12.67
------------
- ---------------------------------------------------------
- ------------
</TABLE>
<TABLE>
<C> <C> <S>
ADR -- American Depositary Receipt.
CULS -- Convertible Unsecured Loan Stock.
RFD -- Ranked for Dividend
GDR -- Global Depositary Receipt
@ -- The Fund is advised by an affiliate
NOTE: Prior Governmental approval for foreign
investments may be required under certain
circumstances in some markets, and foreign
ownership limitations may also be imposed by the
charters of individual companies in such
markets. As a result, an additional class of
shares designated as "foreign" may be created
and offered for investment. The "local" and
"foreign" shares' market values may vary.
</TABLE>
12
