<PAGE>
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS
Michael F. Klein Stefanie V. Chang
PRESIDENT AND DIRECTOR VICE PRESIDENT
Peter J. Chase Harold J. Schaaff, Jr.
DIRECTOR VICE PRESIDENT
John W. Croghan Joseph P. Stadler
DIRECTOR VICE PRESIDENT
David B. Gill Valerie Y. Lewis
DIRECTOR SECRETARY
Graham E. Jones Joanna M. Haigney
DIRECTOR TREASURER
John A. Levin Belinda A. Brady
DIRECTOR 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
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
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, 1998
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
For the three months ended March 31, 1998, the Morgan Stanley Asia-Pacific Fund,
Inc. (the "Fund") had a total return, based on net asset value per share, of
1.60% compared to its benchmark (as defined below) of 3.92%. For the one year
period ended March 31, 1998 and the period since the Fund's commencement of
operations on August 2, 1994 through March 31, 1998, the Fund's total return,
based on net asset value per share, was -23.26% and -25.29%, respectively,
compared with -17.90% and -34.00%, respectively, for the benchmark. (The
benchmark for investment performance is the weighted average of the percentage
change month-on-month of each of two Morgan Stanley Capital International (MSCI)
indices, Japan, and All-Country Asia-Pacific Free ex-Japan, where the weights
are based on the respective market capitalization of these indices at the
beginning of each month). On March 31, 1998, the closing price of the Fund's
shares on the New York Stock Exchange was $7 5/8 representing a 14.4% discount
to the net asset value per share.
JAPAN REVIEW
During the first quarter of 1998, two important bank rescue bills were passed by
the Japanese Congress to stem a rising "Japanese Premium" resulting from a
surging sea of non-performing loans. Unfortunately, this rescue package
prompted little real change; all banks applied for the exact same amount - 100
billion yen - regardless of the magnitude of their non-performing loans! Most
investors were disappointed with the lack of initiative over true disclosure by
these banks because they did not apply for the actual required amount based on
their own loan distressed portfolios. To most investors this event became a
metaphor for faith in bank disclosure of non-performing loans. In addition,
members of Japan's elite Ministry of Finance and Bank of Japan were arrested for
accepting bribes and excessive entertainment. Both the Finance Minister Mr.
Mitsuzuka and Governor of the Bank of Japan Mr. Matsushita resigned. More doubt
regarding Japan's leading financial institutions and their trustworthiness
because of these scandals surfaced both domestically and internationally.
Almost all economic indicators such as consumption, housing starts, and auto
sales also dropped sharply during the first quarter. The effects of 1997's Asia
crisis began to hamper domestic production cycles with growing inventory levels
and clear deflationary trends taking hold. Additionally, Japanese banks became
desperate to meet BIS ratios by fiscal year end, and lending activity,
particularly to smaller companies, was dramatically curtailed which in turn
further weakened an already ailing economy.
Japan's GDP for the fourth quarter of 1997, released in early 1998, was -0.7%
(annualized) confirming the eroding economic environment. Furthermore, the Band
of Japan's quarterly "Tankan" survey of corporate business sentiment was down 20
points since the previous quarter's report to -31 and personal bankruptcy rates
also registered the highest reading on record with Japan's economy entering a
recession. Unemployment hit an all-time high of 3.6% in March.
Under such bleak domestic conditions and with Asia in turmoil the G7 meeting
held in London in February was critical towards Japan and strongly worded
messages were sent to stimulate the domestic economy and recognize that a crisis
was looming. However, Japan and, in particular, Mr. Hashimoto, are trapped in a
"catch 22"; committed to balance Japan's budget and mounting deficit by 2003, he
is left with little choice but to adopt a more liberal fiscal policy. This
conundrum is a major problem. For example, while Japan announced a 16 trillion
yen economic stimulus package in late March, details are yet unclear and
investors lack faith in the proposed package because it is still being debated
almost daily.
With Japan's economy becoming bleaker by the day, and obvious lack of political
will, the 10-year Japanese Government Bond yield traded below 1.5% during the
quarter. Because of a strong overseas equity market, particularly in Europe and
the U.S., investors are reluctant to buy Japan.
Japanese companies also began to lower earnings estimates, although the Fund's
largest holding, Sony, announced an all-time record in earnings per share during
the quarter. Despite a gloomy economic background and poor earnings outlook for
most companies, the equity market bounced during the first quarter on the back
of jawboning by authorities to prop falling equity prices before fiscal year
end. This technical "hope" rally was led by construction, air transport, steel,
paper and other low priced poor quality companies. Highly speculative stocks
such as Nippon Dry Chemical miraculously rose from 400 to 1,600 in 2 months
setting the tone for the quality of the rise in the market during the quarter.
The Fund does not hold the above sectors and relative performance for the
quarter was therefore negative.
During the second quarter of 1998 we expect to see concrete details for the 16
trillion stimulus package before the U.K. summit meeting in May. While we are
not con-
2
<PAGE>
vinced the final package will contain permanent tax cuts and 8 trillion of
"real" new money, we are hopeful that supply side measures will also be
included. Besides the mounting pressure from G7 to stimulate the economy,
recent Lower House elections in Tokyo and Nagasaki had very low voter turnout
(38% compared to 55-60% in recent years) and clearly a "no vote" lack of
confidence must be ringing in Prime Minister Hashimoto's ears. Over the last
several years, stimulus packages have largely focused on public works - roads to
nowhere, bridges to isolated islands and otherwise wasteful use of deficit
spending. We believe that the market expects productive spending including
amending the prohibitive Japanese tax system and additional deregulation to
stimulate domestic demand.
In our opinion, a "V" shaped recovery is unlikely to occur in the Japanese
economy despite fiscal stimulus and that the conservative attitude of consumers
will not magically change overnight. Capital expenditure which has already been
dropping off sharply is also expected to be reduced 46% because of Japan's
credit crunch and a stagnate Asian economy and oversupply. Therefore, we
believe that Japan's equity market will be in a trading range and the Fund will
continue to be overweight in globally competitive Japanese companies with good
valuation and fundamentals. In particular, the most recent rally in domestic
issues has allowed blue-chips to correct and they are expected to provide
superior relative returns during the coming months.
On a micro basis there are signs of positive change in Japan; SEIYU has divested
Family Mart holdings to C.Itoh, some companies began focusing on return on
equity, a record number of companies have announced share buy-backs and leading
companies are providing option related incentive schemes to their employees.
Typical of Japan, however, corporate Japan is "making haste slowly" and the
local economy remains an enigma within a highly globalized world economy.
ASIA EXCLUDING JAPAN
The devastating slide which haunted the Asian markets in the second half of 1997
was finally reversed in the first quarter of 1998, with the regional MSCI
All-Country Asia-Pacific Free ex-Japan Index climbing 9.8% in the quarter.
Although this gain pushed the Index to 318.1, it is strong evidence of the size
of the Asian collapse; the Index is at the same level which it traded at almost
five years ago in the second quarter of 1993.
The region wide index masked a vast disparity between the performance of
individual markets. Four of the nine countries covered by the MSCI All-Country
Asia-Pacific Free ex-Japan Index rose by over 30%, led by Korea (+59.1%) and
Thailand (+43.4%), two of the worst performing markets over the last two years.
Malaysia (+33.9%) and the Philippines (+34.9%) also demonstrated strong
performances. Indonesia by contrast actually fell 11.2%, while Hong Kong and
Singapore managed minor positive returns of 1.0% and 2.1%, respectively.
Although many of the problems which triggered the Asian financial crisis still
abound, it appears that both the equity and currency markets have stabilized.
In Thailand, Korea and the Philippines, announcements of IMF agreements are
finally being followed, albeit with varying levels of concrete action. This has
lent considerable strength to markets throughout the region. Sharp
appreciations in many of the regional currencies, most notably the baht, whose
depreciation triggered the crisis, has renewed the confidence of international
investors flooding into Asia.
Despite this strong regional performance, we remain cautious of the markets'
ability to continue a rapid rise, at least in the short term. We are especially
wary of the banking shares, which dominate many of the exchanges. Much of the
bad news regarding corporate bankruptcy is still to emerge, and when combined
with the collapse of loan growth, many banks are likely to see their
non-performing loans as a percentage of total assets skyrocket. It will be a
difficult path to steer for banks throughout the region, and those that do
survive will require massive amounts of re-capitalization. The dilutive effects
of this exercise will make it very difficult for any regional bank to post
strong performance even in the medium term, with solid profits at least 3-4
years away. Property shares are also likely to suffer, with huge oversupply
forcing further corrections in property prices.
On a country by country basis, weaknesses in the banking and property sectors
will obviously have a negative impact on the Hong Kong market. The maintenance
of the Hong Kong dollar peg to the U.S. dollar has buoyed confidence in the Hong
Kong government, but the consequent loss of competitiveness versus its neighbors
is likely to lead to intense asset deflation as the prices of the world's most
expensive property are forced down to reasonable levels. Furthermore, the
Chinese economy continues to slow down. Though official figures are sketchy,
secondary evidence such as electricity consumption leads to the conclusion that
Chinese growth will be far below the targeted 9%. Immense debt problems in the
Chinese banking sectors will also retard development, and the net result on Hong
Kong as a
3
<PAGE>
gateway to the world's biggest market is that it is expected to suffer
accordingly. The Fund will concentrate on stocks with a strong and dependable
cash flow such as utilities, which should continue to perform as other portions
of the economy weaken.
Similarly, our outlook for the Singapore market is generally pessimistic. We
are wary of the banking stocks which dominate the exchange, due to their large
exposure to other regional economies as well as the lack of transparency which
clouds any detailed analysis of the sector. The Fund will concentrate on
certain electronics companies which supply international companies in growth
areas.
Following their recent gains, the Fund is also likely to rotate out of Korea and
Thailand. Both countries enjoyed very positive developments during the first
quarter; Korea successfully completed key discussion with its labor unions while
Thailand basked in the afterglow of the abolition of its foreign currency
controls as well as the increasing powerbase of its new prime minister.
Although these developments are very positive for the economies, the ensuing
rapid increases in both the equity and currency markets appear to be
over-stretched, and we will look to take profits in order to rotate into other,
less successful markets.
One such market is likely to be Indonesia, which has borne the worst of the
currency crisis as the rupiah depreciated by as much as 80% from its prevailing
level of the year before. Though it continues to play a dangerous game of
'chicken' with the IMF, we feel that in the end the country will have little
choice but to implement the key reforms the IMF has demanded. At its lowest
levels, the currency appears to have priced in the risk of an ignition of
hyperinflation, and a number of solid companies trade at bombed out valuations.
Taiwan also will likely command increased attention from the Fund, though it has
been the best performing East Asian market over the year. Huge foreign reserves
as well as a stable currency have enabled Taiwan to emerge from the regional
crisis relatively intact, and it should continue to enjoy strong growth relative
to its neighbors. Its economy has a diversified base of world competitive
electronics companies, whose ties with MNCs will continue to allow certain
Taiwanese companies to enjoy enviable growth.
Furthermore, the Fund is likely to overweight India which has separated itself
from the East Asian conflagration in the minds of most investors. Still in the
early stages of development, it has developed few of the economic excesses which
cut down the more advanced Asian economies, and there is little rationale for
the belief it will fall into a similar trap. The equity market itself has
traded sideways for the last four years, while companies have taken substantial
charges to restructure their operations. As those efficiency improvements begin
to take effect, rapid earnings growth should lead to increased share prices.
On a stock specific basis, the Fund will continue to emphasize stocks of well
run companies that are in non-financial businesses and whose management has
consistently achieved high returns on equity. Companies with irreplaceable
franchises, world competitive technology and/or strong links with
multinationals, as well as those which do not require external financing will
increasingly trade at a premium to the market as the effect of the Asian
financial crisis continues to impact the domestic economies of the Asian region.
On a long term basis, these companies will have the capability and the
opportunity to reap the eventual rewards of the bombed out Asian markets.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
/s/ Vinod Sethi
Vinod Sethi
PORTFOLIO MANAGER
/s/ John R. Alkire
John R. Alkire
PORTFOLIO MANAGER
April 1998
4
<PAGE>
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
INVESTMENT SUMMARY AS OF MARCH 31, 1998 (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 2.52% -- 1.60% -- 3.92% --
ONE YEAR -21.53 -21.53% -23.26 -23.26% -17.90 -17.90%
SINCE INCEPTION* -36.09+ -11.51+ -25.29+ -7.65+ -34.00 -10.73
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31: ENDED
------------------------ MARCH 31,
1994* 1995 1996 1997 1998
---------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Per Share. . . $ 13.20 $ 14.34 $ 11.95 $ 8.77 $ 8.91
Market Value Per Share . . . . $ 12.25 $ 13.33 $ 9.75 $ 7.44 $ 7.63
Premium/(Discount) . . . . . . -7.2% -7.0% -18.4% -15.2% -14.4%
Income Dividends . . . . . . . $ 0.04 $ 0.05 $ 0.61 $ 0.02 --
Capital Gains Distributions. . $ 0.01 $ 0.02 -- -- --
Fund Total Return (2). . . . . -5.94% 9.24% -2.87%+ -26.36% 1.60%
Index Total Return (3) . . . . -5.90% 0.87% -9.17% -28.09% 3.92%
</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 All-Country 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.
5
<PAGE>
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
PORTFOLIO SUMMARY AS OF MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities 93.3%
Short-Term Investments 6.7%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
[CHART]
<TABLE>
<S> <C>
Banking 6.2%
Beverages & Tobacco 5.6%
Chemicals 5.7%
Electrical & Electronics 13.2%
Electronic Components &
Instruments 6.3%
Energy Equipment & Servcies 4.1%
Health & Personal Care 4.8%
Machinery & Engineering 5.2%
Telecommunications 6.2%
Utilities -- Electrical & Gas 4.1%
Other 38.6%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
<TABLE>
<S> <C>
Other 8.5%
Philippines 1.3%
Indonesia 3.1%
Thailand 3.5%
Pakistan 4.0%
Australia 4.5%
Malaysia 5.1%
Singapore 5.4%
Hong Kong 7.9%
Japan 42.9%
India 13.8%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
-----------
<S> <C>
1. Bharat Heavy Electricals Ltd. (India) 4.1%
2. Housing Development Finance Corp. Ltd. (India) 3.0
3. Lever Brothers (Pakistan) 2.2
4. Hong Kong Telecommunications Ltd. (Hong Kong) 2.1
5. Unilever Indonesia (Indonesia) 2.0
6. CLP Holdings Ltd. (Hong Kong) 1.9
7. Sony Corp. (Japan) 1.8
8. Container Corp. of India Ltd. (India) 1.8
9. Nintendo Ltd. (Japan) 1.8
10. TDK Corp. (Japan) 1.6
----
22.3%
----
----
</TABLE>
* Excludes short-term investments.
6
<PAGE>
INVESTMENTS (UNAUDITED)
MARCH 31, 1998
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (93.4%)
(Unless otherwise noted)
- --------------------------------------------------------------------------------
AUSTRALIA (4.5%)
BANKING
National Australia Bank Ltd. 636,000 U.S.$ 9,049
Westpac Banking Corp. Ltd. 1,054,000 7,055
------------
16,104
------------
BROADCASTING & PUBLISHING
News Corp. Ltd. 527,600 3,479
------------
REAL ESTATE
Lend Lease Corp. Ltd. 109,000 2,538
------------
TELECOMMUNICATIONS
Telstra Corp. Ltd. 1,798,000 4,626
------------
TRANSPORTATION -- ROAD & RAIL
Brambles Industries Ltd. 104,200 2,168
------------
28,915
------------
- -------------------------------------------------------------------------------
HONG KONG (7.9%)
BROADCASTING & PUBLISHING
Television Broadcasts Ltd. 1,207,000 3,178
------------
MULTI-INDUSTRY
Hutchison Whampoa Ltd. 750,200 5,276
------------
REAL ESTATE
Li & Fung Ltd. 1,060,000 1,683
------------
TELECOMMUNICATIONS
Hong Kong Telecommunications Ltd. 6,617,800 13,665
------------
UTILITIES -- ELECTRICAL & GAS
CLP Holdings Ltd. 2,346,000 11,808
Hong Kong and China Gas Co. Ltd. 4,860,000 8,154
Hongkong Electric Holdings Ltd. 1,875,000 6,437
------------
26,399
------------
50,201
------------
- --------------------------------------------------------------------------------
INDIA (13.8%)
APPLIANCES & HOUSEHOLD DURABLES
Supreme Industries Ltd. 250 1
------------
AUTOMOBILES
Autolite Ltd. 61,500 43
Autopal Industries Ltd. 100 --@
Bajaj Auto Ltd. 250 4
Bajaj Tempo Ltd. 707 4
Bajaj Tempo Ltd. (Rights) 1,717 5
Bharat Forge Co., Ltd. 210 --@
Ceat Ltd. 21,600 13
Escorts Ltd. 1,925 4
Hero Honda Ltd. 263,550 5,829
MRF Ltd. 18,000 916
------------
6,818
------------
BANKING
Industrial Finance Corp. (India) Ltd. 1,800 2
State Bank of India Ltd. 1,174,112 8,262
------------
8,264
------------
- --------------------------------------------------------------------------------
BEVERAGES & TOBACCO
ITC Ltd. 46,273 U.S.$ 836
------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co. Ltd. 935 35
Panyam Cements and Mineral Industries Ltd. 15 --@
Saurashtra Cement & Chemicals Ltd. 50 --@
------------
35
------------
CHEMICALS
Birla VXL Ltd. 23,225 8
Gujarat Narmada Valley Fertilizers Ltd. GDR 275,000 550
Gujarat Narmada Valley Fertilizers Ltd. 324 --@
Indian Petro Chemical Corp. Ltd. 1,710 3
Jaysynth Dyechem Ltd. 400 --@
------------
561
------------
CONSTRUCTION & HOUSING
Alacrity Housing Ltd. 381,000 43
Hindustan Construction Ltd. 2,300 1
Hindustan Development Corp. Ltd. 66,580 18
------------
62
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Infosys Technology Ltd. 44,200 2,045
Rolta India Ltd. 207,900 129
------------
2,174
------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 2,881,000 26,035
------------
ENERGY SOURCES
Esab India Ltd. 346,865 1,023
------------
FINANCIAL SERVICES
Housing Development
Finance Corp. Ltd. 238,282 19,175
UTI MasterShares Ltd. 329,330 106
------------
19,281
------------
FOOD & HOUSEHOLD PRODUCTS
Smithkline Beecham Consumer Health Care Ltd. 384,600 4,306
------------
HEALTH & PERSONAL CARE
Sun Pharmaceutical Industries Ltd. 600 4
------------
INDUSTRIAL COMPONENTS
Apollo Tyres Ltd. 667,025 1,375
Essel Packaging Ltd. 135 --@
ITW Signode India Ltd. 1,132 2
KEC International Ltd. 60,950 58
------------
1,435
------------
LEISURE & TOURISM
ITC Hotels Ltd. 950 3
------------
MACHINERY & ENGINEERING
Crompton Greaves Ltd. 7,460 8
DGP Windsor India Ltd. 203,900 121
Veejay Lakshmi Engineering Ltd. 149,100 99
------------
228
------------
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
METALS -- STEEL
Tata Iron & Steel Co., Ltd. 250 U.S.$ 1
Tata SSL Ltd. - New 49,150 18
------------
19
------------
MISCELLANEOUS MATERIALS & COMMODITIES
Vikas WSP Ltd. 115,000 328
------------
MULTI-INDUSTRY
Century Textiles & Industries Ltd. 6,100 11
J.K. Corp. Ltd. 100 --@
J.K. Corp. Ltd. GDR 249,240 95
Kesoram Industries Ltd. 30 --@
*Morgan Stanley Growth Fund 32,892,200 4,995
Voltas Ltd. 920 1
------------
5,102
------------
RECREATION, OTHER CONSUMER GOODS
Tube Investments of India Ltd. 50 --@
------------
TEXTILES & APPAREL
Coates of India Ltd. 9,550 29
G.T.N. Textiles Ltd. 22,700 17
Garware Plastics & Polyester Ltd. 75 --@
J.K. Synthetics Ltd. 2,984 --@
Mahavir Spinning Mills Ltd. 150 --@
Raymond Ltd. 140 --@
Viniyoga Clothes Ltd. 5,400 --@
------------
46
------------
TRANSPORTATION -- ROAD & RAIL
Container Corp. of India Ltd. 1,059,600 11,265
------------
TRANSPORTATION -- SHIPPING
Great Eastern Shipping Ltd. 2,820 3
------------
87,829
------------
- ------------------------------------------------------------------------------
INDONESIA (3.1%)
BEVERAGES & TOBACCO
Bat Indonesia 294,500 1,004
Gudang Garam (Foreign) 4,441,500 6,149
------------
7,153
------------
FOOD & HOUSEHOLD PRODUCTS
Mayora Indah 1,643,000 138
Unilever Indonesia 2,413,500 12,556
------------
12,694
------------
HEALTH & PERSONAL CARE
SQUIBB Indonesia 49,000 41
------------
19,888
------------
- ------------------------------------------------------------------------------
JAPAN (42.9%)
APPLIANCES & HOUSEHOLD DURABLES
Aiwa Co., Ltd. 45,000 1,262
Rinnai Corp. 160,700 2,531
------------
3,793
------------
AUTOMOBILES
Nissan Motor Co. 1,000,000 3,825
Suzuki Motor Co. Ltd. 630,000 5,905
Toyota Motor Corp. 270,000 7,188
------------
16,918
------------
- --------------------------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS
Sangetsu Co. Ltd. 147,000 U.S.$ 1,929
Sanwa Shutter Corp. Ltd. 552,000 2,894
------------
4,823
------------
BUSINESS & PUBLIC SERVICES
Dai Nippon Printing Co. Ltd. 270,000 4,454
------------
CHEMICALS
Daicel Chemical Industries Ltd. 1,140,000 2,274
Fuji Photo Film Ltd. 232,000 8,629
Kaneka Corp. 949,000 4,974
Mitsubishi Chemical Industries 2,060,000 3,785
Nifco Inc. 330,000 2,376
Okura Industrial Co. Ltd. 419,000 1,100
Sekisui Chemical Co. 653,000 3,697
Shin-Etsu Polymer Co. Ltd. 15,000 55
------------
26,890
------------
CONSTRUCTION & HOUSING
Kyudenko Co. Ltd. 389,000 2,579
Sekisui House Ltd. 387,000 3,163
------------
5,742
------------
DATA PROCESSING & REPRODUCTION
Fujitsu Ltd. 910,000 9,486
Nissha Printing 105,000 639
Ricoh Co. Ltd. 866,000 8,702
------------
18,827
------------
ELECTRICAL & ELECTRONICS
Canon, Inc. 420,000 9,480
Hitachi Ltd. 1,185,000 8,620
Kyocera Corp. 100,000 5,249
Matsushita Electric
Industrial Co. Ltd. 562,000 9,019
NEC Corp. 925,000 9,295
Nintendo Ltd. 130,000 11,211
Sony Corp. 135,000 11,440
Stanley Electric Co. 289,000 936
Tokyo Electron Ltd. 163,000 5,488
Toshiba Corp. 2,130,000 8,626
------------
79,364
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Mitsumi Electric Co. Ltd. 423,000 6,059
Murata Manufacturing Co. 180,000 4,967
TDK Corp. 135,000 10,428
------------
21,454
------------
FINANCIAL SERVICES
Hitachi Credit Corp. 218,000 3,711
------------
HEALTH & PERSONAL CARE
Ono Pharmaceutical Co., Ltd. 90,000 1,951
Sankyo Co. Ltd. 341,000 9,462
Yamanouchi Pharmaceutical Co., Ltd. 315,000 7,228
------------
18,641
------------
INDUSTRIAL COMPONENTS
Furukawa Electric Co. 1,083,000 4,272
------------
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE
Sumitomo Marine & Fire Co. 542,000 U.S.$ 3,349
------------
MACHINERY & ENGINEERING
Amada Co. Ltd. 932,000 4,158
Daifuku Co. Ltd. 626,000 2,591
Daikin Kogyo Co. 673,000 3,099
Fuji Machine Co. 329,000 8,709
Fujitec Co. Ltd. 510,000 3,339
Kurita Water Industries Ltd. 304,000 3,192
Mitsubishi Heavy Industries Ltd. 1,300,000 4,943
Tsubakimoto Chain Co. 872,000 2,995
------------
33,026
------------
MERCHANDISING
FamilyMart 87,200 3,270
------------
MISCELLANEOUS MATERIALS & COMMODITIES
Autobacs Seven Co. 50,000 1,788
Nippon Pillar Packing Co. 157,000 821
------------
2,609
------------
MULTI-INDUSTRY
Lintec 150,000 1,912
------------
REAL ESTATE
Keihanshin Real Estate Co. 205,000 876
Mitsubishi Estate Co. Ltd. 390,000 3,802
------------
4,678
------------
RECREATION, OTHER CONSUMER GOODS
Casio Computer Co., Ltd. 270,000 2,329
Yamaha Corp. 199,000 1,940
------------
4,269
------------
TELECOMMUNICATIONS
Nippon Telephone &
Telegraph Corp. 1,032 8,590
------------
TEXTILES & APPAREL
Shimamura Co. Ltd. 78,900 1,757
------------
WHOLESALE & INTERNATIONAL TRADE
Inabata & Co. 406,000 1,522
------------
273,871
------------
- --------------------------------------------------------------------------------
MALAYSIA (5.1%)
BEVERAGES & TOBACCO
Carlsberg Brewery Malaysia Bhd 1,600,000 6,225
Guinness Anchor Bhd 3,223,000 5,298
R.J. Reynolds Bhd 1,714,000 3,146
Rothmans of Pall Mall Bhd 616,600 5,152
------------
19,821
------------
ENERGY SOURCES
Petronas Gas Bhd 2,352,000 6,251
------------
FOOD & HOUSEHOLD PRODUCTS
Nestle Bhd 1,194,000 6,608
------------
32,680
------------
- --------------------------------------------------------------------------------
NEW ZEALAND (0.4%)
FOREST PRODUCTS & PAPER
Fletcher Challenge Forests 79,520 56
Fletcher Challenge Paper 1,988,000 2,802
------------
2,858
------------
- --------------------------------------------------------------------------------
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PAKISTAN (4.0%)
BANKING
Askari Bank
2,843,925 U.S.$ 1,465
------------
CHEMICALS
Engro Chemicals Ltd. 1,092,600 2,524
Fauji Fertilizer Co. Ltd. 1,124,000 2,090
ICI Pakistan Ltd. 6,000,000 2,323
------------
6,937
------------
ENERGY SOURCES
Shell Pakistan Ltd. 459,400 3,017
------------
HEALTH & PERSONAL CARE
Lever Brothers 426,680 14,029
------------
25,448
------------
- --------------------------------------------------------------------------------
PHILIPPINES (1.3%)
BEVERAGES & TOBACCO
LA Tondena Distillers Inc. 2,652,600 2,129
San Miguel Corp. 'B' 990,200 1,720
------------
3,849
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Ionics Circuit Inc. 1,221,300 635
Music Corp. 4,278,400 1,660
------------
2,295
------------
REAL ESTATE
Ayala Land, Inc. 'B' 1 --@
SM Prime Holdings, Inc. 'B' 9,637,680 1,877
------------
1,877
------------
8,021
------------
- --------------------------------------------------------------------------------
SINGAPORE (5.4%)
BANKING
United Overseas Bank (Foreign) 1,108,200 6,142
------------
BEVERAGES & TOBACCO
Rothmans Industries Ltd. 838,000 3,737
------------
BROADCASTING & PUBLISHING
Singapore Press Holdings Ltd. 287,100 3,289
------------
BUSINESS & PUBLIC SERVICES
Informatics Holdings Ltd. 644,000 279
------------
CONSTRUCTION & HOUSING
Jurong Shipyard Ltd. 184,000 957
------------
ELECTRICAL & ELECTRONICS
Venture Manufacturing Ltd. 643,000 2,389
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Creative Technology Ltd. 338,000 7,605
Natsteel Electronics Ltd. 3,201,000 6,225
------------
13,830
------------
TELECOMMUNICATIONS
Singapore Telecommunications, Ltd. 2,053,000 3,611
------------
34,234
------------
- --------------------------------------------------------------------------------
SRI LANKA (0.3%)
CHEMICALS
Lanka Lubricants Ltd. 1,800,000 1,659
------------
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
THAILAND (3.5%)
BROADCASTING & PUBLISHING
BEC World Public Co., Ltd. (Foreign) 1,629,400 U.S.$ 8,944
Grammy Entertainment Public Co. Ltd. 259,200 1,331
------------
10,275
------------
ELECTRICAL & ELECTRONICS
GSS Array Technology Public Co., Ltd. (Foreign) 466,200 2,132
------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Delta Electronics Public Co., Ltd. (Foreign) 55,000 730
------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd.
(Foreign) 1,201,900 9,346
------------
22,483
------------
- --------------------------------------------------------------------------------
UNITED KINGDOM (1.2%)
BANKING
HSBC Holdings plc 252,600 7,726
------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$654,733) 595,813
------------
- --------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FIXED INCOME SECURITIES (0.0%)
- --------------------------------------------------------------------------------
INDIA (0.0%)
METALS -- STEEL
Tata SSL Ltd. - New 14.00%,
12/6/02 (Cost U.S.$2) INR 2 2
------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (5.4%)
- --------------------------------------------------------------------------------
UNITED STATES (5.4%)
REPURCHASE AGREEMENT
Chase Securities, Inc., 5.60%,
dated 3/31/98, due 4/1/98,
to be repurchased at
U.S.$34,528, collateralized by
U.S.$35,435 United States
Treasury Notes, 5.50%, due
3/31/03, valued at
U.S.$35,263
(Cost U.S.$34,523) U.S.$34,523 34,523
------------
- --------------------------------------------------------------------------------
<CAPTION>
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.3%)
Australian Dollar AUD 58 U.S.$ 38
Hong Kong Dollar HKD 845 109
Indian Rupee INR 300,343 7,603
Indonesian Rupiah IDR 240 --@
Japanese Yen JPY 8,520 64
Malaysian Ringgit MYR 757 207
Pakistani Rupee PKR 11,903 270
Philippine Peso PHP 346 9
Singapore Dollar SGD 70 43
------------
(Cost U.S.$8,375) 8,343
------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.1%)
(Cost U.S.$697,633) 638,681
------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.1)%
Other Assets U.S.$40,459
Liabilities (41,329) (870)
----------- ------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 71,594,508 issued and
outstanding U.S.$0.01 par value shares
(100,000,000 shares authorized) U.S.$637,811
------------
------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 8.91
- --------------------------------------------------------------------------------
</TABLE>
@-- Value is less than U.S.$500.
*-- The Fund is advised by an affiliate.
GDR -- Global Depositary Receipt
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.
10
