<PAGE>
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
- ---------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS James W. Grisham
Warren J. Olsen VICE PRESIDENT
PRESIDENT AND DIRECTOR Michael F. Klein
Peter J. Chase VICE PRESIDENT
DIRECTOR Harold J. Schaaff, Jr.
John W. Croghan VICE PRESIDENT
DIRECTOR Joseph P. Stadler
David B. Gill VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
Graham E. Jones SECRETARY
DIRECTOR James R. Rooney
John A. Levin TREASURER
DIRECTOR Belinda A. Brady
ASSISTANT TREASURER
- ---------------------------------------------
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.
---------------------
FIRST QUARTER REPORT
MARCH 31, 1997
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the three months ended March 31, 1997, the Morgan Stanley Asia-Pacific Fund,
Inc. (the "Fund") had a total return, based on net asset value per share, of
- -2.51% compared to its benchmark (as defined below) of -8.98%. For the one year
ended March 31, 1997, the Fund had a total return, based on net asset value per
share, of -9.78% compared with -19.11% for the benchmark. For the period since
the Fund's commencement of operations on August 2, 1994 through March 31, 1997,
the Fund's total return, based on net asset value per share, was -2.64% compared
with -19.61% for the benchmark. (The benchmark for investment purposes is the
weighted average of the percentage change month-on-month of two Morgan Stanley
Capital International (MSCI) indices; Japan and Combined Asia Pacific Free ex-
Japan, where the weights are based on the respective market capitalizations of
these indices at the beginning of each month). On March 31, 1997, the closing
price of the Fund's shares on the New York Stock Exchange was $9.75 representing
a 16.3% discount to the net asset value per share.
JAPAN
During the first quarter of 1997, an anticipated economic slowdown and the
future of Japan's growth prospects depressed investor sentiment, resulting in
the TOPIX falling by more than 6% in local currency. This was mostly a result of
the consumption tax hike from 3% to 5%, termination of the special income tax
cuts and increases in social security premiums, which all took effect in April
1997. Therefore, while the consensus believed an inevitable slowdown would occur
during the second quarter of 1997, the possibility of sluggish conditions during
the second half of 1997 due to this change in Japan's fiscal policy also plagued
investors.
Moreover, Japan's longer term role in the 21st century global economy came under
scrutiny. In order to meet these challenges Prime Minister Hashimoto announced a
Japanese style "Big Bang", including administrative restructuring, deregulation
of key industries and further financial reform. With the U.S. still showing
robust growth and the European Union about to begin in a few years, observers
felt these new announcements amounted to no more than a "Small Pop". Even the
new fiscal 1997 budget smacked of "business as usual" without any radically new
measures to stimulate domestic demand.
At the same time, Japan's non-performing loans yet again came under fire with
the collapse of Hanwa and Hyogo Sogo Bank. The actual magnitude of the losses
stemming from real estate related loans totally eclipsed the original "official"
estimates by these banks. Thus, the credibility of Japanese banks' disclosure
was focused on both by both domestic investors and foreigners and shares in bank
stocks were sold aggressively, pushing the TOPIX into a vicious cycle of
accelerated selling. With Japan's fiscal year ending in March, domestic
institutions, in order to raise cash for balance sheet requirements, further
unloaded their "cross holdings" in an already weak market.
Several bankruptcies and scandals also came to the fore during the first quarter
of 1997. Kyotaru Co., primarily a chain of Sushi restaurants and heavily
involved in real estate and stock speculation went bankrupt; Izui oil, Orange
Kayosai, Ajinomoto and Nomura Securities all announced various impropriety
dealings, helping to keep investor sentiment on the sidelines. As a result of a
rapidly declining equity market, interest rates on 10-year Japanese Government
Bonds hit a record low, as domestic investors sought a safe haven in Government
bonds.
On the other hand, international blue chips and globally competitive Japanese
companies such as pharmaceuticals and automobiles fared very well under the
sharp overall market decline of the first quarter. Companies such as TDK,
Cannon, Ricoh and Sankyo hit all-time highs. A very polarized "two tier" market,
which began in 1996, accelerated dramatically. Our Fund, heavily concentrated in
these sectors performed favorably verses our benchmark.
ASIA EX-JAPAN
For the first quarter of 1997, the Asia Pacific ex-Japan markets, as represented
by the MSCI Combined Asia Pacific Free ex-Japan Index, fell 3.2% after a rise of
9.2% in 1996.
Divergence in performance among the individual country markets continued to be
wide with the worst performer, Thailand, falling a sharp 15.2% over the quarter
while best performing markets like Pakistan, India and Taiwan rose by 19.0%,
7.1% and 9.5%, respectively over the same period.
The year actually opened on a relatively firm note with the MSCI Combined Asia
Pacific Free ex-Japan Index registering gains of 0.8% in January and 0.9% in
February. However, the tone became progressively weaker with rising U.S.
interest rates and a faltering Dow culminating in a sell-off which took the
Index down by 4.9% in March.
STRATEGY AND OUTLOOK
India, the largest single overweight position in the Fund (14.7% vs 2.8% for the
Index), did very well with a rise of 7.1% over the quarter. The relatively
underowned market continues to be underpinned by economic recovery and good
liquidity with only political upsets as the
2
<PAGE>
major risk. The Fund intends to maintain its overweight position. The Fund's
mandate unfortunately does not allow investment in Taiwan, the other top
performing market for the quarter.
The Fund also did well in Malaysia and Hong Kong. The Fund is substantially
underweight in Malaysia which has taken a turn for the worst. Tightening
measures to rein in property and shares financing announced by the central bank,
Bank Negara, towards the end of the quarter has finally brought realization that
the party is about to end. Having defied gravity for so long, with its unbroken
ten-year record of above 8% real economic growth, the consolidation, once
started, is likely to ripple through the whole overstretched economy. Although
this dose of medicine or reality is for the long term good of the economy, the
unfolding correction is going to be painful.
The Fund's reduced position in Hong Kong stood it in good stead as the market
fell close to 10% over the quarter. The euphoria about the June 30, 1997
handover that had built up to a crescendo at the end of 1996 has since been
somewhat punctured by rising U.S. interest rates, a faltering Dow and
uncharacteristically early measures by the Hong Kong authorities to clamp down
on escalating property speculation.
However, stock prices have suffered steep declines and are beginning to look
historically cheap and attractive again. Based on improving economic
fundamentals in China and Hong Kong, once the speculative excesses have been
cleared, it is likely that it will rally again ahead of the historic handover at
the end of June. The Fund will seek to add to its Hong Kong positions with
oversold blue chips and emergent red chips and China plays.
Although the Thai market continued to underperform, the worst seems to be over.
Most recently, in the face of disappointing earnings and macro-economic news and
a downgrade by S&P, the market held its ground at the 700 level on the Stock
Exchange of Thailand Index. Foreign premiums on the bell-weather blue chip Thai
banks have expanded and the Thai market actually outperformed the regional index
in the March sell-off. Positives would include an oversold market which is
extremely cheap on historical levels, but economic fundamentals continue to
weaken as the financial crisis works its way through the system. The recovery is
likely to be slow and painful and the Fund will incrementally seek to add to
Thailand as the recovery progresses.
On the other hand, the Fund will be seeking to reduce its position in Singapore
and the Philippines. The economic slowdown and property consolidation in
Singapore is still working its way through the system and earnings growth is
likely to continue being anemic. There are signs of trouble in the overheated
Philippine real estate sector with attendant banking issues and it could presage
a difficult market ahead of the upcoming Presidential elections next year.
SUMMARY
In summary therefore, the overall short-term outlook for the Asian markets is
likely to continue to be dampened by rising U.S. interest rates and the
faltering Dow. Individually, the country markets are at different points in the
economic cycle and hence the significant divergence in their market performance.
The greater China block comprising Taiwan, Hong Kong and China, and India are on
the upcycle and are likely to continue to outperform. Thailand and Korea are
still mired in a painful consolidation and any market recovery is likely to be
slow and steady rather than quick and sharp while Malaysia's consolidation has
just started and probably has some ways to go.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Ean Wah Chin
SENIOR PORTFOLIO MANAGER
April 1997
3
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Investment Summary as of March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 0.00% -- -2.51% -- -8.98% --
ONE YEAR -13.40+ -13.40%+ -9.78+ -9.78%+ -19.11 -19.11%
SINCE INCEPTION* -18.56+ -7.42+ -2.64+ -1.00+ -19.61 -7.87
</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>
TOTAL RETURN
YEARS ENDED DECEMBER 31: THREE MONTH ENDED
1994* 1995 1996 MARCH 31, 1997
<S> <C> <C> <C> <C>
Net Asset Value Per Share $13.20 $14.34 $11.95 $11.65
Market Value Per Share $12.25 $13.33 $9.75 $9.75
Premium/(Discount) -7.20% -7.00% -18.4% -16.3%
Income Dividends $0.04 $0.05 $0.61 -
Capital Gains Distributions $0.01 $0.02 - -
Fund Total Return (2) -5.94% 9.24% -2.87%+ -2.51%
Index Total Return (3) -5.90% 0.87% -9.17% -8.98%
Morgan Stanley Asia-Pacific Fund, Inc.
(2)
MSCI Regional Composite Index (3)
</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 benchmark for investment performance is the weighted average of the
percentage change month-on-month of two Morgan Stanley Capital International
(MSCI) indices; Japan and Combined Asia Pacific Free ex-Japan, 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.
+ This return does not include the effect of the rights issued in connection
with the Rights Offering.
4
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Portfolio Summary as of March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 88.4%
Short-Term Investments 11.5%
Fixed Income Securities 0.1%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Automobiles 3.3%
Banking 12.3%
Chemicals 5.3%
Electrical & Electronics 10.9%
Electronic Components & Instruments 2.6%
Financial Services 4.0%
Machinery & Engineering 7.1%
Multi-Industry 4.2%
Real Estate 6.6%
Telecommunications 5.5%
Other 38.2%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Japan 37.4%
India 16.0%
Australia 8.1%
Singapore 6.4%
Hong Kong 6.3%
Thailand 3.5%
Philippines 3.4%
Korea 3.2%
Malaysia 2.9%
Indonesia 2.6%
Other 10.2%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS*
PERCENT OF NET
ASSETS
---------------
<C> <S> <C>
1. National Australia Bank Ltd. 2.4%
2. Bharat Heavy Electricals Ltd. 2.2
3. Housing Development Finance
Corp. Ltd. 2.2
4. Cheung Kong (Holdings) Ltd. 2.2
5. WMC Ltd. 2.0
<CAPTION>
PERCENT OF NET
ASSETS
---------------
<C> <S> <C>
6. Lend Lease Corp. Ltd. 2.0%
7. HSBC Holdings plc 1.8
8. Container Corp. of India Ltd. 1.7
9. Broken Hill Proprietary Co.
Ltd. 1.7
10. Hutchison Whampoa Ltd. 1.6
---
19.8%
---
---
</TABLE>
* Excludes short-term investments.
5
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
COMMON STOCKS (88.3%)
(Unless otherwise noted)
- --------------------------------------------------
- ----------
AUSTRALIA (8.0%)
BANKING
National Australia Bank Ltd. 1,571,884 U.S.$ 19,901
--------------
ENERGY SOURCES
Broken Hill Proprietary Co. Ltd. 1,052,964 14,033
--------------
METALS -- NON-FERROUS
WMC Ltd. 2,645,655 16,717
--------------
REAL ESTATE
Lend Lease Corp. Ltd. 959,277 16,439
--------------
67,090
--------------
- ---------------------------------------------------------
- ------------
CHINA (0.2%)
UTILITIES -- ELECTRICAL & GAS
Shandong Huaneng Power Co. Ltd. ADR 125,700 1,320
--------------
- ---------------------------------------------------------
- ------------
HONG KONG (6.3%)
BANKING
HSBC Holdings plc 639,948 14,866
--------------
MULTI-INDUSTRY
Hutchison Whampoa Ltd. 1,749,000 13,148
--------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 2,067,000 18,206
Sun Hung Kai Properties Ltd. 583,000 6,170
--------------
24,376
--------------
52,390
--------------
- ---------------------------------------------------------
- ------------
INDIA (14.7%)
APPLIANCES & HOUSEHOLD DURABLES
Phillips India Ltd. 123,582 272
--------------
AUTOMOBILES
Apollo Tyres Ltd. 687,750 2,067
Apollo Tyres Ltd. (Warrants), expiring
2/28/98 189,643 135
Autolec Industries Ltd. 152,800 217
Autolite Ltd. 231,900 537
Autopal Industries Ltd. 65,000 44
Bajaj Tempo Ltd. 2,425 16
Bajaj Tempo Ltd. (Rights) 1,717 7
Bajaj Tempo Ltd. -- New 3,648 24
Ceat Ltd. 368,000 487
Denso India Ltd. 71,200 183
Escorts Ltd. 965,925 1,980
Hero Honda Ltd. 37,150 311
Jay Bharat Maruti Ltd. 53,200 38
Lumax Automatic Parts Industries Ltd. 100,825 285
MRF Ltd. 18,000 1,551
Patheja Forgings and Auto Ltd. 677,700 399
Sona Steering System Ltd. 56,000 78
Tata Engineering & Locomotive Ltd. 223,022 2,115
--------------
10,474
--------------
</TABLE>
- ---------------------------------------------------------
- ------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
BANKING
State Bank of India Ltd. 918,312 U.S.$ 6,986
--------------
BEVERAGES & TOBACCO
ITC Ltd. 25,175 252
United Breweries Ltd. 149,100 121
--------------
373
--------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co. Ltd. 54,441 2,010
Gujarat Ambuja Cements Ltd. 520,950 3,650
India Cements Ltd. 75,000 155
Kesoram Industries Ltd. 310,238 366
Murudeshwar Ceramics Ltd. 46,000 55
Panyam Cements & Minerals Ltd. 33,765 678
Saurashtra Cement & Chemicals Ltd. 50 --@
--------------
6,914
--------------
CHEMICALS
Asian Paints Ltd. 71,445 557
EID Parry Ltd. 64,300 132
Gujarat Narmada Valley Fertilizers
Ltd. GDR 275,000 825
Gujarat Narmada Valley Fertilizers
Ltd. 'A' 303,995 192
Gujarat State Fertilisers Ltd. 6,550 16
Indian Dyestuff Industries Ltd. 304,250 106
Indian Organic Chemical Ltd. 275,480 61
Indian Petro Chemical Corp. Ltd. 1,977,890 7,626
Jaysynth Dyechem Ltd. 145,800 102
Sudarshan Chemicals Ltd. 4,600 8
United Phosphorous Ltd. 97,500 489
--------------
10,114
--------------
CONSTRUCTION & HOUSING
Hindustan Construction Co. 255,825 214
Nagarjuna Construction Ltd. 151,100 195
--------------
409
--------------
DATA PROCESSING & REPRODUCTION
Modi Xerox Ltd. 16,850 54
--------------
ELECTRICAL & ELECTRONICS
BPL Ltd. 400 --@
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Infosys Technology Ltd. 9,600 270
Rolta India Ltd. 999,500 403
S&S Power Switchgear Ltd. 63,550 125
Samtel India Ltd. 1,000 --@
--------------
798
--------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 2,262,400 18,642
Crompton Greaves Ltd. 455,210 1,136
KEC International Ltd. 881,750 1,537
--------------
21,315
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDIA (CONTINUED)
FINANCIAL SERVICES
Housing Development Finance Corp. Ltd. 238,292 U.S.$ 18,276
Industrial Finance Corp (India) Ltd. 1,462,700 1,040
--------------
19,316
--------------
FOOD & HOUSEHOLD PRODUCTS
Dhampur Sugar Mills Ltd. 141,575 203
--------------
FOREST PRODUCTS & PAPER
Ballarpur Industries Ltd. 232,264 334
ITC Bhadrachalam Paperboards Ltd. 273,595 378
Vikas WSP Ltd. 234,700 890
--------------
1,602
--------------
HEALTH & PERSONAL CARE
Godrej Soaps Ltd. 197,600 167
Hoechst India Ltd. 50,650 453
Pfizer Ltd. 8,850 57
Sun Pharmaceutical Industries Ltd. 161,200 1,169
TTK Biomed Ltd. 21,500 15
--------------
1,861
--------------
LEISURE & TOURISM
ITC Hotels Ltd. 213,000 814
--------------
MACHINERY & ENGINEERING
Artson Engineering Ltd. 234,700 95
DGP Windsor India Ltd. 218,800 362
Esab India Ltd. 346,865 844
Flat Products Equipments (India) Ltd. 174,900 585
Hindustan Power Plus Ltd. 75,600 170
Thermax Ltd. 31,200 260
Veejay Lakshmi Engineering Ltd. 149,100 229
--------------
2,545
--------------
METALS -- STEEL
Hindustan Development Corp. Ltd. 989,180 389
Tata Iron & Steel Co. Ltd. 43,517 194
Tata SSL Ltd. 464,500 483
Tata SSL Ltd. (Rights) 3,290 3
--------------
1,069
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Amforge Industries Ltd. 34,505 23
Amforge Industries Ltd. (Warrants)
expiring 7/1/97 5,150 --@
Bharat Forge Co. Ltd. 217,996 544
Cosmo Films Ltd. 175,000 137
Essel Packaging Ltd. 146,300 388
ITW Signode India Ltd. 571,132 1,521
Polyplex Ltd. 225,000 99
Suashish Diamonds Ltd. 148,100 186
Supreme Industries Ltd. 178,449 872
Wimco Ltd. 422,200 173
--------------
3,943
--------------
</TABLE>
- ---------------------------------------------------------
- ------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
MULTI-INDUSTRY
Bajaj Hindustan Ltd. 21,000 U.S.$ 24
Birla VXL Ltd. 846,998 378
Indian Rayon & Industries Ltd. 520 4
JK Corp Ltd. 100 --@
JK Corp Ltd. GDR 61,140 76
JK Corp. Ltd. GDR 144A 249,240 312
Max India Ltd. -- New 100,000 558
*Morgan Stanley Growth Fund 32,892,200 5,504
UTI MasterShares Ltd. 2,268,290 791
Voltas Ltd. 207,950 162
--------------
7,809
--------------
REAL ESTATE
Alacrity Housing Ltd. 381,000 104
--------------
RECREATION, OTHER CONSUMER GOODS
Tube Investments of India Ltd. 109,400 156
--------------
TELECOMMUNICATIONS
Mahanagar Telephone Nigam Ltd. 707,600 4,756
--------------
TEXTILES & APPAREL
Century Textile & Industry Ltd. 11,038 639
Coates of India Ltd. 100,680 418
DCL Polyesters Ltd. 195,000 36
Garware Plastics & Polyester Ltd. 275,525 592
G.T.N. Textiles Ltd. 243,000 337
Indo Rama Synthetics Ltd. 689,200 379
Indo Rama Synthetics Ltd. -- New 46,170 22
J.K. Synthetics Ltd. 686,901 155
Mahavir Spinning Mills Ltd. 173,686 349
Morajee Goculdas Spinning Ltd. 125,000 146
Raymond Ltd. 102,801 222
Raymond Ltd. Bonus Shares 126,060 255
Viniyoga Clothes Ltd. 486,600 17
--------------
3,567
--------------
TRANSPORTATION -- ROAD & RAIL
Container Corp. of India Ltd. 1,199,600 14,386
--------------
TRANSPORTATION -- SHIPPING
Great Eastern Shipping Ltd. 'A' 2,609,434 2,602
--------------
122,442
--------------
- ---------------------------------------------------------
- ------------
INDONESIA (2.6%)
AUTOMOBILES
Astra International (Foreign) 718,500 2,334
--------------
BANKING
Bank International Indonesia (Foreign) 4,515,319 3,432
Bank International Indonesia (Foreign)
(Warrants) expiring 1/17/00 401,362 142
--------------
3,574
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
INDONESIA (CONTINUED)
BEVERAGES & TOBACCO
Gudang Garam (Foreign) 729,500 U.S.$ 3,183
HM Sampoerna (Foreign) 389,000 1,823
--------------
5,006
--------------
CHEMICALS
Sorini Corp. (Foreign) 2,700,000 1,265
--------------
FOREST PRODUCTS & PAPER
Indah Kiat Pulp & Paper (Foreign) 2,455,444 1,815
--------------
TELECOMMUNICATIONS
Telekomunikasi Indonesia (Foreign) 4,938,000 7,558
--------------
21,552
--------------
- ---------------------------------------------------------
- ------------
JAPAN (37.2%)
APPLIANCES & HOUSEHOLD DURABLES
Rinnai Corp. 140,700 2,401
--------------
AUTOMOBILES
Asahi Tec Corp. 443,000 1,885
Nissan Motor Co. 1,000,000 6,026
Suzuki Motor Co. Ltd. 630,000 6,115
--------------
14,026
--------------
BUILDING MATERIALS & COMPONENTS
Sangetsu Co. Ltd. 100,000 1,739
Sanwa Shutter Corp. Ltd. 472,000 3,455
Sanwa Shutter Corp. Ltd. (Warrants),
expiring 1/20/98 2,400 210
--------------
5,404
--------------
BUSINESS & PUBLIC SERVICES
Dai Nippon Printing Co. Ltd. 370,000 6,195
--------------
CHEMICALS
Daicel Chemical Industries Ltd. 912,000 3,283
Fuji Photo Film Ltd. 222,000 7,308
Kaneka Corp. 899,000 4,792
Mitsubishi Chemical Industriies 2,060,000 6,248
Nifco Inc. 330,000 2,856
Okura Industrial Co. Ltd. 434,000 1,660
Sekisui Chemical Co. 703,000 6,937
--------------
33,084
--------------
CONSTRUCTION & HOUSING
Kyudenko Co. Ltd. 389,000 2,876
Ohbayashi Corp. 865,000 5,079
Sekisui House Ltd. 307,000 3,005
Taisei Corp. Ltd. 1,000,000 3,882
Yahagi Construction Co. 173,000 910
--------------
15,752
--------------
DATA PROCESSING & REPRODUCTION
Fujitsu Ltd. 460,000 4,688
Ricoh Co. Ltd. 836,000 9,534
--------------
14,222
--------------
</TABLE>
- ---------------------------------------------------------
- ------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
ELECTRICAL & ELECTRONICS
Canon, Inc. 450,000 U.S.$ 9,645
Hitachi Ltd. 1,185,000 10,543
Kyocera Corp. 60,000 3,407
Kyocera Corp. (Warrants), expiring
1/23/98 1,450 662
Matsushita Communication Industrial
Co. 201,000 4,682
Matsushita Electric Industrial Co.
Ltd. 562,000 8,773
NEC Corp. 925,000 10,474
Nintendo Ltd. 130,000 9,337
Sony Corp. 145,000 10,145
Stanley Electric Co. 690,000 3,343
Tokyo Electron Ltd. 269,500 8,937
Toshiba Corp. 1,630,000 9,018
--------------
88,966
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Mitsumi Electric Co. Ltd. 388,000 7,124
Murata Manufacturing Co. 140,000 5,028
TDK Corp. 131,000 9,006
--------------
21,158
--------------
FINANCIAL SERVICES
Hitachi Credit Corp. 188,000 2,767
Nikko Securities Co. 757,000 4,249
Nomura Securities Co. Ltd. 365,000 4,045
--------------
11,061
--------------
HEALTH & PERSONAL CARE
Sankyo Co. Ltd. 266,000 7,336
Secom Co. 130,000 7,308
Yamanouchi Pharmaceutical Co. 300,000 6,212
--------------
20,856
--------------
INDUSTRIAL COMPONENTS
Furakawa Electric Co. 400,000 1,773
--------------
INSURANCE
Nichido Fire & Marine Insurance Co. 30,000 162
Sumitomo Marine & Fire Co. 642,000 3,895
--------------
4,057
--------------
MACHINERY & ENGINEERING
Amada Co. Ltd. 817,000 5,914
Daifuku Co. Ltd. 531,000 5,798
Daikin Kogyo Co. 600,000 4,489
Fuji Machine Co. 329,000 8,542
Kurita Water Industries Ltd. 274,000 5,319
Mitsubishi Heavy Industries Ltd. 1,150,000 7,488
Nishio Rent All Co. 94,000 1,194
Nishio Rent All Co. (Warrants),
expiring 2/20/98 1,055 53
Tsubakimoto Chain Co. 872,000 5,099
--------------
43,896
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Nippon Pillar Packing Co. 157,000 857
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
JAPAN (CONTINUED)
REAL ESTATE
Daibiru Corp. 308,000 U.S.$ 2,989
Keihanshin Real Estate Co. 205,000 1,144
Mitsubishi Estate Co. Ltd. 447,000 4,772
--------------
8,905
--------------
TELECOMMUNICATIONS
Nippon Telephone & Telegraph Corp. 982 6,918
--------------
TEXTILES & APPAREL
Shimamura Co. Ltd. 58,900 1,706
--------------
TRANSPORTATION -- ROAD & RAIL
Nippon Konpo Unyu Soko Co. 50,000 283
--------------
WHOLESALE & INTERNATIONAL TRADE
FamilyMart 178,200 6,731
Inabata & Co. 406,000 2,430
--------------
9,161
--------------
310,681
--------------
- ---------------------------------------------------------
- ------------
KOREA (3.1%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. (Foreign) 54,492 4,301
--------------
BANKING
Housing & Commercial Bank, Korea 67,550 1,200
Kookmin Bank GDR 82,000 1,451
Shinhan Bank Co. Ltd. (Foreign) 42,040 603
--------------
3,254
--------------
CONSTRUCTION & HOUSING
Hyundai Engineering (Foreign) 143,391 2,962
Hyundai Engineering (Foreign) RFD 2,754 57
--------------
3,019
--------------
METALS -- STEEL
Pohang Iron & Steel ADR 161,500 3,836
--------------
TELECOMMUNICATIONS
Korea Mobile Telecom (Foreign) 5,560 5,225
Korea Mobile Telecom (Foreign) RFD 166 156
LG Information & Communication Ltd.
(Foreign) 35,620 3,599
--------------
8,980
--------------
UTILITIES -- ELECTRICAL & GAS
Korea Electric Power (Foreign) 95,920 2,785
--------------
26,175
--------------
- ---------------------------------------------------------
- ------------
MALAYSIA (2.9%)
AUTOMOBILES
Edaran Otomobil Nasional Bhd 58,000 585
--------------
BANKING
Malayan Banking Bhd 430,000 4,902
--------------
</TABLE>
- ---------------------------------------------------------
- ------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
CONSTRUCTION & HOUSING
IJM Corp., Bhd 37,000 U.S.$ 91
--------------
LEISURE & TOURISM
Genting Bhd 441,000 2,990
--------------
MACHINERY & ENGINEERING
United Engineers Ltd. 584,000 5,090
--------------
MULTI-INDUSTRY
Renong Bhd 2,468,000 4,183
--------------
TELECOMMUNICATIONS
Telekom Malaysia Bhd 847,000 6,596
--------------
24,437
--------------
- ---------------------------------------------------------
- ------------
PHILIPPINES (3.4%)
CONSTRUCTION & HOUSING
DMCI Holdings, Inc. 4,947,000 3,518
--------------
ENERGY SOURCES
Petron Corp. 8,909,375 3,633
--------------
MULTI-INDUSTRY
JG Summit Holdings 17,430,100 4,562
--------------
REAL ESTATE
Ayala Land, Inc. 2,126,025 2,419
SM Prime Holdings, Inc. 9,637,680 2,815
--------------
5,234
--------------
TELECOMMUNICATIONS
Digital Telecommunications
Philippines, Inc. 30,651,000 2,837
Philippine Long Distance Telephone 64,250 3,863
--------------
6,700
--------------
UTILITIES -- ELECTRICAL & GAS
Manila Electric Co. 564,851 4,499
--------------
28,146
--------------
- ---------------------------------------------------------
- ------------
SINGAPORE (6.4%)
BANKING
Development Bank of Singapore
(Foreign) 884,000 10,281
Oversea-Chinese Banking Corp.
(Foreign) 758,000 9,026
United Overseas Bank (Foreign) 979,200 10,033
--------------
29,340
--------------
BEVERAGES & TOBACCO
Fraser & Neave 388,400 3,173
Super Coffeemix Manufacturing Ltd. 8,518,000 6,604
--------------
9,777
--------------
BROADCASTING & PUBLISHING
Singapore Press Holdings (Foreign) 120,000 2,185
--------------
MACHINERY & ENGINEERING
Keppel Corp. 978,000 6,161
Sembawang Corp. 369,000 1,775
--------------
7,936
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
SINGAPORE (CONTINUED)
MULTI-INDUSTRY
Keppel Land Ltd. 1,469,000 U.S.$ 4,536
--------------
53,774
--------------
- ---------------------------------------------------------
- ------------
THAILAND (3.5%)
BANKING
Bangkok Bank Ltd. (Foreign) 958,300 9,304
Siam Commercial Bank Co. Ltd.
(Foreign) 632,500 3,704
Thai Farmers Bank Ltd. (Foreign) 1,024,000 6,668
Thai Farmers Bank Ltd. (Warrants),
expiring 9/15/02 128,000 62
--------------
19,738
--------------
ELECTRICAL & ELECTRONICS
Shinawatra Computer Co. Ltd. (Foreign) 234,800 1,972
--------------
FINANCIAL SERVICES
Finance One Co. Ltd. (Foreign) 1,119,527 1,024
National Finance & Securities Co. Ltd.
(Foreign) 792,400 1,061
Phatra Thanakit Co. Ltd. (Foreign) 513,135 919
--------------
3,004
--------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd.
(Foreign) 349,700 2,991
United Communications Industry
(Foreign) 235,000 1,521
--------------
4,512
--------------
29,226
--------------
- ---------------------------------------------------------
- ------------
TOTAL COMMON STOCKS
(Cost U.S. $820,842) 737,233
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FIXED INCOME SECURITIES (0.0%)
- ---------------------------------------------------------
- ------------
INDIA (0.0%)
METALS -- STEEL
Tata SSL Ltd.
14.00%, 12/6/02 INR 3 3
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Amforge Industries Ltd., Zero Coupon,
12/1/06 5 3
--------------
MULTI-INDUSTRY
Max India Part B, Zero Coupon, 12/1/06 100 558
--------------
- ---------------------------------------------------------
- ------------
TOTAL FIXED INCOME SECURITIES
(Cost U.S. $755) 564
--------------
- ---------------------------------------------------------
- ------------
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
SHORT-TERM INVESTMENT (10.0%)
- ---------------------------------------------------------
- ------------
UNITED STATES (10.0%)
REPURCHASE AGREEMENT
Chase Securities Inc, 6.00%,
dated 3/31/97, due 4/1/97, to be
repurchased at U.S. $83,227,
collateralized by United States
Treasury Notes, 5.825-6.75%, due
4/30/00-11/30/00, valued at U.S.
$84,974
(Cost U.S. $83,213) U.S.$ 83,213 U.S.$ 83,213
--------------
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.5%)
Australian Dollar AUD 460 361
Hong Kong Dollar HKD 2,037 263
Indian Rupee INR 375,364 10,469
Indonesian Rupiah IDR 720 --@
Japanese Yen JPY 150,083 1,214
South Korean Won KRW 119,063 133
Malaysian Ringgit MYR 51 21
Philippine Peso PNP 1,042 40
Singapore Dollar SGD 43 29
Thai Baht THB 1,267 49
--------------
(Cost U.S. $12,584) 12,579
--------------
- ---------------------------------------------------------
- ------------
TOTAL INVESTMENTS (99.8%)
(Cost U.S. $917,394) 833,589
--------------
- ---------------------------------------------------------
- ------------
OTHER ASSETS AND LIABILITIES (0.2%)
Other Assets U.S. $ 87,322
Liabilities (85,976) 1,346
--------------- --------------
- ---------------------------------------------------------
- ------------
NET ASSETS (100%)
Applicable to 71,654,508 issued and outstanding U.S.
$0.01 par value shares (100,000,000 shares
authorized) U.S.$ 834,935
--------------
--------------
- ---------------------------------------------------------
- ------------
NET ASSET VALUE PER SHARE U.S.$ 11.65
--------------
--------------
- ---------------------------------------------------------
- ------------
</TABLE>
@ -- Value is less than U.S. $500.
* -- Advised by an affiliate.
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
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.
10
