<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY
ASIA-PACIFIC
FUND, INC.
- --------------------------------------------------------------------------------
FIRST QUARTER REPORT
MARCH 31, 1999
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
MORGAN STANLEY
ASIA-PACIFIC FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD
OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT AND ACTING
SECRETARY
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Joanna M. Haigney
TREASURER
Belinda A. Brady
ASSISTANT TREASURER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------------------------------
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
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- --------------------------------------------------------------------------------
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 or visit our website at
www.msdw.com/institutional/investmentmanagement.
<PAGE>
LETTER TO SHAREHOLDERS
- ----------------------
For the three months ended March 31, 1999, the Morgan Stanley Asia-Pacific Fund,
Inc. (the "Fund") had a total return, based on net asset value per share, of
9.51% compared to 9.72% for its benchmark (described below). For the period
since the Fund's commencement of operations on August 2, 1994 through March 31,
1999, the Fund's total return, based on net asset value per share, was -19.78%
compared with -27.59% for the benchmark. The benchmark for the Fund is comprised
of two Morgan Stanley Capital International (MSCI) indices; Japan and
All-Country Asia-Pacific Free ex-Japan with each index weighted equally. On
March 31, 1999, the closing price of the Fund's shares on the New York Stock
Exchange was $8.00 representing a 16.3% discount to the net asset value per
share.
The rise in Asian stock markets during the three months ended March 31, 1999 was
led by Taiwan and South Korea. All of the first quarter's gains came in March,
based on a combination of international and domestic factors. The rally in the
Japanese market improved sentiment and encouraged international capital inflows
into Asia. Most surveys suggest that international fund managers remain
underweight Asian markets relative to their benchmarks. Positive domestic
factors contributing to market strength include falling domestic interest rates,
government policy initiatives and exchange rate stability.
South Korea has shown the strongest signs of recovery from the economic
recession of the past eighteen months. The Koreans aggressively implemented
their IMF program in 1998, producing a savage contraction in domestic
consumption, investment and inventory levels. The contraction rapidly turned the
current account from deficit to surplus, stabilizing and then strengthening the
won. As mentioned in the last quarterly letter, currency strength allowed the
government to relax monetary and fiscal policy in the third quarter of last
year. After a 6% contraction in overall gross domestic product last year, the
Korean government and independent analysts have been busily upgrading growth
expectations for 1999. 1999 consensus growth estimates have moved up to the 3-4%
range. Growth drivers are expected to include a rebound in domestic consumption,
government investment spending and inventory restocking. The Korean government
has aggressively tackled the bad debt situation in its banking system, budgeting
$52.2 billion to recapitalize banks and to purchase non-performing loans. This
program has had two positive effects - some banks have become attractive
investments and financial intermediation within the economy will revive faster
than expected. Incentives offered by the Korean government encouraged HSBC to
take a control position in one of the leading Korean banks, which should enhance
competition in the entire sector. The decline in interest rates has encouraged
retail investors and institutions to switch from fixed income to equity
investments. Domestic investing fueled much of the first quarter's rally. Lower
rates have also had a beneficial effect on the corporate sector, as new
bankruptcy filings and other signs of corporate distress are falling. Finally,
we expect corporate restructuring efforts at certain market leaders, like the
Samsung group of companies, to drive returns as the year progresses.
Hong Kong slightly underperformed the Index during the first quarter but
performed very well in March when it tended to track the rally in Japan very
closely. We are cautious on Hong Kong for a number of fundamental macroeconomic
reasons, but given its size, liquidity and ease of access it has benefited and
will benefit when fresh investment allocations are made to Asia. The economy
remains weak, with rising unemployment, falling consumption, consumer price
deflation, an arguably overvalued exchange rate and high real interest rates.
Consensus forecasters expect a slight gross domestic product contraction in
1999, although the government is forecasting 1% growth. Due to Hong Kong's
decision to maintain its currency peg to the U.S. dollar even as its neighbors
devalued, companies in Hong Kong have been forced to cut costs to remain
competitive. The resulting deflationary conditions have prevented real interest
rates from falling very far in Hong Kong; cuts in nominal interest rates have
been matched by a fall into outright deflation. The territory has not
experienced real interest rates at these levels for an extended period of time
over the last few decades and this should delay economic recovery and limit
stock market gains. We expect further reductions in nominal and real rates in
1999 but the scope for significant declines is limited given the U.S. dollar peg
and deflation. Revenue growth will be hard to come by in 1999 and much of the
earnings growth will be generated from comparisons with 1998 earnings depressed
by heavy non-recurring provisions. In addition, the HKMA is designing a program
for the disposition of a portion of its extensive stock holdings accumulated
during the market support operations in August. Positives for the market include
improved liquidity in the banking sector, as banks have repaired their
loan-to-deposit ratios, and a number of government stimulus measures announced
in their new budget. Banks have demonstrated a desire to extend more mortgages
with their improved liquidity, and aggressive mortgage lending will be
supportive of the residential property market. We have maintained a small
underweight position in Hong Kong during the first quarter but have focused the
Fund's portfolio on residential property developers and companies cutting costs
ahead of an economic recovery.
The Singapore market lagged the overall Index in the first quarter, partially
due to the 4.8% depreciation of the Singapore dollar relative to the U.S.
dollar. Although this decline negatively affected the returns of the Fund during
the first quarter, we believe that this currency weakness is a long-term
positive. This is part of a package
2
<PAGE>
designed by the Singapore government to enhance the economy's competitiveness,
and it should yield benefits in the long-term. The government's drive to cut the
cost of doing business in Singapore and efforts by numerous corporates to
enhance returns on capital should bide well for the market going forward.
The Chinese Index once again was the worst performing East Asian market in the
first quarter. This underperformance reflects the weak fundamentals of most
listed Chinese companies and the challenging economic conditions within China.
The Chinese economy is experiencing persistent deflation, oversupply of most
manufactured goods, slowing exports, high real interest rates and bank asset
quality problems. The Chinese government has responded to these problems with a
massive government-funded infrastructure program. In the first quarter, the
Chinese government also began to grapple with external debt problems, as the
decision to place GITIC, a company controlled by the Guangdong provincial
government, into bankruptcy caused foreign bank lenders to reassess risks of
lending to China. We expect the Chinese government will shift from
infrastructure spending to more reform initiatives as 1999 progresses. We
continue to maintain limited exposure to Chinese companies.
Malaysia's decision to implement capital controls in early September 1999 led to
its removal from the MSCI free Indexes in December. Shifting securities
regulations severely limited the ability of most foreign investors to trade in
Malaysia since September. In February 1999 the securities regulators relaxed
some of the new trading regulations and a new system of exit taxes were imposed
on repatriation of portfolio capital. In the first quarter, we realigned the
Fund's portfolio of Malaysian securities and generated some capital gains that
we are repatriating free of exit taxes. As of April 1, 1999, a 20% tax will be
imposed on the repatriation of any "principal" invested in the country as of
September 1, 1998. Capital gains generated since that date can be repatriated
tax-free. The Malaysian authorities will have to substantially relax these
regulations before the market will become accessible enough to attract foreign
investors and return to the Index.
Several positive themes we expect to drive equity performance in 1999 include
improvements in domestic consumption in most Asian economies and the ability of
companies to enhance their own performance through corporate restructuring.
Restructurings broadly include debt restructuring, divestitures, sale of
strategic stakes to multinationals, business unit shutdowns, mergers or staff
downsizing. We have seen all of the above announced in various forms in 1998 and
in the first quarter of 1999. The markets have clearly rewarded companies that
adopt Western style restructuring with a focus on enhancing shareholder value
and we expect to see that trend continue in the balance of 1999. We will monitor
the progress of the restructurings announced so far and will search for
management teams with the vision and ability to improve returns to shareholders
going forward. Restructuring in Japan could have a positive effect on companies
in the rest of Asia if Japanese managements follow the American model and
outsource production. We have seen growing signs of Japanese companies
outsourcing, particularly electronics components outsourced to Taiwanese
manufacturers. We have invested in a number of companies in Taiwan, Korea and
Singapore that should benefit from a continuation of this trend.
Several risk factors we will be monitoring include the performance of the
Japanese economy, the large supply of new offerings and capital raisings we
expect to see in Asia and growth in the developed economies that are the primary
markets for Asian exports. Upside surprises could include successful bank
recapitalization and economic recovery in Japan and stronger than expected
import demand from the U.S. and Europe.
During 1998, we constructed a fairly defensive portfolio emphasizing consumer
and technology companies and utilities while limiting our exposure to banks and
properties. During the first quarter, we increased our exposure to property
companies and cyclicals. In 1999, we are focusing more of our research time and
company visits on companies that have the ability to implement sound
restructuring programs or are sensitive to recoveries in domestic consumption.
We do not believe that all of Asia's economic problems have been solved but the
trends have certainly improved.
JAPANESE EQUITY
The Japanese equity market rallied during the first quarter, particularly during
March as investors began reevaluating their allocation to Japanese equities. The
Government's proposal to provide 7.4 trillion yen of public funds for Japanese
bank's non-performing loans was officially approved after considerable debate
during this time. Under this scheme, banks will issue preference shares to the
Japanese Government to write off non-performing loans and in turn these banks
are expected to comply with FSA (Financial Supervisory Authority) requirements
for disclosure of non-performing loans as well as definitive measures to improve
profitability. Furthermore, to alleviate the credit crunch for medium to smaller
companies the Government's 20 trillion yen loan guarantee program enacted in
1998 became available should these companies require such credit. With the above
mentioned factors investors became increasingly convinced that many of Japan's
recent credit and non-performing loan problems were sufficiently addressed by
the authorities and sentiment regarding investments in Japan greatly improved.
At the same time, full scale restructuring efforts seemed to make daily
headlines on a micro level; NEC, Sony, Mitsubishi Chemical and nu-
3
<PAGE>
merous other leading private sector companies declared unprecedented labor,
production and management changes which focused on return on equity over market
share. At the margin, all these changes were viewed positively and evidence of
this was the record 1.8 trillion yen worth of equities purchased by foreign
investors during March.
We have sold our positions in Tokyo Electron and Murata during the first quarter
of 1999. Both securities have reached our valuation targets and departed in the
cheapest third of our valuation screens for price-to-book, price-to-cash flow
and price-to-earnings ratio. We have used the proceeds to add to our existing
positions in Toshiba, Minebea, Sony and Ono Pharmaceuticals based on their
relative attractive valuations.
On September 15, 1998, the Fund commenced a share repurchase program for
purposes of enhancing shareholder value and reducing the discount at which the
Fund's shares traded from their net asset value. From that date through March
31, 1999, the Fund repurchased 6,726,934 shares or 9.39% of its Common Stock at
an average price per share of $6.89 and an average discount of 16.82% from net
asset value per share. The Fund expects to continue to repurchase its
outstanding shares at such time and in such amounts as it believes will further
the accomplishment of the foregoing objectives, subject to review by the Board.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
President and Director
April 1999
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED.
- --------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO CHARACTERISTICS,
CAN NOW BE ACCESSED AT WWW.MSDW.COM/INSTITUTIONAL/INVESTMENTMANAGEMENT.
4
<PAGE>
Morgan Stanley Asia-Pacific Fund, Inc.
Investment Summary as of March 31, 1999 (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 14.29% - 9.51% - 9.72% -
ONE YEAR 5.05 5.05% 7.43 7.43% 3.67 3.67%
SINCE INCEPTION* -32.87 -8.19 -19.78 -4.62 -27.59 -6.69
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- -------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
Year Ended December 31, THREE MONTHS
ENDED
MARCH 31,
1994* 1995 1996 1997 1998 1999
--------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share ...... $ 13.20 $ 14.34 $ 11.95 $ 8.77 $ 8.73 $ 9.56
Market Value Per Share ......... $ 12.25 $ 13.33 $ 9.75 $ 7.44 $ 7.00 $ 8.00
Premium/(Discount) ............. -7.2% -7.0% -18.4% -15.2% -19.8% -16.3%
Income Dividends ............... $ 0.04 $ 0.05 $ 0.61 $ 0.02 $ 0.01 -
Capital Gains Distributions .... $ 0.01 $ 0.02 - - - -
Fund Total Return (2) .......... -5.94% 9.24% -2.87%+ -26.36% -0.34% 9.51%
Index Total Return (3) ......... -5.24% 2.88% -3.63% -29.55% -0.30% 9.72%
</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 comprised of two Morgan Stanley
Capital International (MSCI) indices; Japan and All-Country Asia-Pacific
Free ex-Japan with each index weighted equally.
* 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, 1999 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Equity Securities (96.8%)
Short-Term Investments (2.8%)
Fixed Income Securities (0.4%)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTORS
[PIE CHART]
<TABLE>
<S> <C>
Appliances & Household Durables (4.9%)
Automobiles (4.9%)
Banking (4.9%)
Data Processing & Reproduction (5.2%)
Electrical & Electronics (8.9%)
Electronic Components, Instruments (4.4%)
Food & Household Products (4.8%)
Machinery & Engineering (5.5%)
Real Estate (4.8%)
Telecommunications (4.5%)
Other (47.2%)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[PIE CHART]
<TABLE>
<S> <C>
Australia (11.6%)
Hong Kong (9.9%)
India (6.1%)
Singapore (6.0%)
Korea (4.9%)
Indonesia (2.1%)
Malaysia (2.1%)
Pakistan (2.0%)
Philippines (1.3%)
Other (5.2%)
Japan (48.8%)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <C>
1. Samsung Electronics Co. (Korea) 2.2%
2. National Australia Bank Ltd. (Australia) 2.0
3. Fujitsu Ltd. (Japan) 2.0
4. Sony Corp. (Japan) 1.9
5. Hutchison Whampoa Ltd. (Hong Kong) 1.8
6. NEC Corp. (Japan) 1.8
7. Nintendo Ltd. (Japan) 1.7
8. Toshiba Corp. (Japan) 1.6
9. Hitachi, Ltd. (Japan) 1.5
10. Matsushita Electric Industrial Co., Ltd. (Japan) 1.5
----
18.0%
----
----
</TABLE>
* Excludes short-term investments.
6
<PAGE>
FINANCIAL STATEMENTS
- ----------
STATEMENT OF NET ASSETS (UNAUDITED)
- ----------
MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.0%)
(Unless otherwise noted)
- -------------------------------------------------------------
AUSTRALIA (11.6%)
BANKING
National Australia Bank Ltd. 678,900 U.S.$ 12,342
Westpac Banking Corp., Ltd. 840,600 6,134
-------------
18,476
-------------
BEVERAGES & TOBACCO
Coca-Cola Amatil Ltd. 700,850 3,042
Foster's Brewing Group Ltd. 1,426,300 4,200
-------------
7,242
-------------
BROADCASTING & PUBLISHING
News Corp., Ltd. 838,200 6,208
-------------
BUSINESS & PUBLIC SERVICES
Brambles Industries Ltd. 166,900 4,245
-------------
ENERGY SOURCES
Broken Hill Proprietary Co. Ltd. 690,550 5,893
Santos Ltd. 637,900 1,846
-------------
7,739
-------------
FOOD & HOUSEHOLD PRODUCTS
Woolworths Ltd. 1,003,150 3,215
-------------
METALS - NON FERROUS
WMC Ltd. 851,200 2,712
-------------
MISC. MATERIALS & COMMODITIES
Rio Tinto Ltd. 506,850 7,088
-------------
REAL ESTATE
Lend Lease Corp., Ltd. 342,000 4,360
-------------
TELECOMMUNICATIONS
Telstra Corp., Ltd. 1,581,100 8,282
-------------
TRANSPORTATION - AIRLINES
Airways Ltd. 1,049,800 2,776
-------------
72,343
-------------
- -------------------------------------------------------------
HONG KONG (9.9%)
BANKING
HSBC Holdings plc 68,400 2,145
-------------
BROADCASTING & PUBLISHING
Television Broadcasts Ltd. 832,000 3,033
-------------
FOOD & HOUSEHOLD PRODUCTS
Dairy Farm International
Holdings Ltd. 2,009,000 2,330
-------------
HEALTH & PERSONAL CARE
Hengan International Group Co.
Ltd. 6,616,700 2,562
--------------
INSURANCE
Axa China Region Ltd. 787,900 554
--------------
MULTI-INDUSTRY
Hutchison Whampoa Ltd. 1,423,500 11,205
Swire Pacific Ltd. 'A' 1,155,600 5,368
--------------
16,573
--------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 373,000 2,840
New World Development Co. Ltd. 830,000 1,633
--------------
Sun Hung Kai Properties Ltd. 982,000 U.S.$7,350
--------------
11,823
--------------
TELECOMMUNICATIONS
Smartone Telecommunications 786,000 2,277
-------------
TELECOMMUNICATIONS - INTEGRATED
Hong Kong Telecommunications
Ltd. 2,438,500 4,814
-------------
TELECOMMUNICATIONS - WIRELESS
China Telecom Ltd. 2,091,000 3,481
-------------
TRANSPORTATION - AIRLINES
Cathay Pacific Airways 1,420,000 1,631
-------------
UTILITIES - ELECTRICAL & GAS
CLP Holdings Ltd. 816,000 3,917
Hong Kong & China Gas Co.,
Ltd. 2,803,300 3,961
-------------
7,878
-------------
WHOLESALE & INTERNATIONAL TRADE
Li & Fung Ltd. 1,060,000 2,243
-------------
61,344
-------------
- -------------------------------------------------------------
INDIA (6.1%)
AUTOMOBILES
Escorts Ltd. 1,450 2
Hero Honda Ltd. 190,556 3,931
-------------
3,933
-------------
BANKING
State Bank of India Ltd. 1,112 6
-------------
BEVERAGES
ITC Ltd. 16,955 385
-------------
BUILDING MATERIALS & COMPONENTS
Associated Cement Co., Ltd. 770 26
-------------
CHEMICALS
(a)Gujarat Narmada Valley
Fertilizers Ltd. GDR 49 - @
Supreme Industries Ltd. 50 - @
-------------
- @
-------------
DATA PROCESSING & REPRODUCTION
NIIT Ltd. 26,000 1,149
Satyam Computer Services Ltd. 15,000 574
Tata Infotech Ltd. 27,200 1,081
-------------
2,804
-------------
ELECTRIC COMPONENTS
Infosys Technology Ltd. 79,400 5,474
-------------
ELECTRICAL & ELECTRONICS
Bharat Heavy Electricals Ltd. 1,215,200 6,803
-------------
FINANCIAL SERVICES
Housing Development Finance
Corp., Ltd. 86,742 4,662
UTI-MasterShares Ltd. 600 - @
-------------
4,662
-------------
HEALTH & PERSONAL CARE
Reckitt & Coleman of India Ltd. 12,150 140
-------------
INDUSTRIAL COMPONENTS
Apollo Tyres Ltd. 6,475 8
-------------
- -------------------------------------------------------------
7
<PAGE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------
<S> <C> <C>
INDIA (CONTINUED)
LEISURE & TOURISM
ITC Hotels Ltd. 350 U.S.$ 1
-------------
MACHINERY & ENGINEERING
Punjab Tractors Ltd. 80,900 2,658
-------------
METALS - STEEL
Tata Iron & Steel Co., Ltd. 39 -
-------------
MULTI-INDUSTRY
Morgan Stanley Growth Fund 32,888,250 5,620
-------------
SOFTWARE SERVICES
Leading Edge Systems Ltd. 15,000 171
-------------
TELECOMMUNICATIONS
Mahanagar Telephone Nigam Ltd. 190,600 793
-------------
TEXTILES & APPAREL
J.K. Synthetics Ltd. 674 - @
Raymond Ltd. 50 - @
Viniyoga Clothes Ltd. 5,300 -
-------------
- @
-------------
TRANSPORTATION - ROAD & RAIL
Container Corp. of India Ltd. 1,059,600 4,393
-------------
37,877
-------------
- -------------------------------------------------------------
INDONESIA (2.1%)
BEVERAGES & TOBACCO
Bat Indonesia 294,500 579
Gudang Garam 3,790,500 5,050
-------------
5,629
-------------
BUILDING MATERIALS & COMPONENTS
Semen Gresik 568,000 647
-------------
FOOD & HOUSEHOLD PRODUCTS
Unilever Indonesia 1,913,500 6,636
-------------
HEALTH & PERSONAL CARE
Squibb Indonesia 49,000 -
-------------
12,912
-------------
- -------------------------------------------------------------
JAPAN (48.8%)
APPLIANCES & HOUSEHOLD DURABLES
Matsushita Electric Industrial
Co., Ltd. 482,000 9,404
Sony Corp. 130,000 12,022
-------------
21,426
-------------
AUTOMOBILES
Autobacs Seven Co. 50,000 2,048
Nifco, Inc. 330,000 3,113
Nissan Motor Co. 1,770,000 6,876
Suzuki Motor Co., Ltd. 490,000 6,501
Toyota Motor Corp. 270,000 7,822
-------------
26,360
-------------
BROADCASTING & PUBLISHING
Nissha Printing Co., Ltd. 105,000 711
-------------
BUILDING MATERIALS & COMPONENTS
Fujitec Co., Ltd. 460,000 3,737
Rinnai Corp. 160,700 3,230
Sanwa Shutter Corp., Ltd. 582,000 2,999
-------------
9,966
-------------
BUSINESS & PUBLIC SERVICES
Dai Nippon Printing Co., Ltd. 270,000 U.S.$ 4,105
-------------
CHEMICALS
Daicel Chemical Industries Ltd. 1,290,000 4,249
Kaneka Corp. 939,000 7,455
Mitsubishi Chemical Industries 1,360,000 3,859
Nippon Pillar Packing Co. 99,000 432
Okura Industrial Co., Ltd. 247,000 574
Sekisui Chemical Co. 563,000 4,008
Shin-Etsu Polymer Co., Ltd. 15,000 86
-------------
20,663
-------------
CONSTRUCTION & HOUSING
Kyudenko Co., Ltd. 380,000 2,327
Sekisui House Ltd. 347,000 3,692
-------------
6,019
-------------
DATA PROCESSING & REPRODUCTION
Canon, Inc. 362,000 8,958
Fujitsu Ltd. 760,000 12,208
Ricoh Co. Ltd. 816,000 8,525
-------------
29,691
-------------
ELECTRICAL & ELECTRONICS
Hitachi Ltd. 1,285,000 9,518
Minebea Co., Ltd. 320,000 3,308
Mitsumi Electric Co., Ltd. 403,000 8,066
NEC Corp. 920,000 11,072
Toshiba Corp. 1,475,000 10,078
-------------
42,042
-------------
ELECTRONIC COMPONENTS, INSTRUMENTS
Kyocera Corp. 108,000 5,820
Rohm Co., Ltd. 30,000 3,585
Ryosan Co., Ltd. 50,000 814
TDK Corp. 103,000 8,342
-------------
18,561
-------------
ENERGY EQUIPMENT & SERVICES
Kurita Water Industries Ltd. 304,000 4,976
-------------
FINANCIAL SERVICES
Hitachi Credit Corp. 243,000 4,823
-------------
FOOD & HOUSEHOLD PRODUCTS
Aiwa Co., Ltd. 75,000 1,729
Sangetsu Co., Ltd. 137,000 2,198
Yamaha Corp. 299,000 3,167
-------------
7,094
-------------
HEALTH & PERSONAL CARE
Ono Pharmaceutical Co., Ltd. 160,000 6,459
Sankyo Co., Ltd. 378,000 8,109
Yamanouchi Pharmaceutical
Co., Ltd. 270,000 8,551
-------------
23,119
-------------
INDUSTRIAL COMPONENTS
Furakawa Electric Co. 1,083,000 4,482
-------------
INSURANCE
Sumitomo Marine & Fire Co. 342,000 2,190
-------------
MACHINERY & ENGINEERING
Amada Co., Ltd. 842,000 4,480
Daifuku Co., Ltd. 626,000 4,150
- -------------------------------------------------------------
8
<PAGE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
MACHINERY & ENGINEERING (CONTINUED)
Daikin Kogyo Co. 603,000 U.S.$ 5,974
Fuji Machine Co. 243,000 8,722
Mitsubishi Heavy Industries
Ltd. 1,300,000 5,874
Tsubakimoto Chain Co. 872,000 2,025
-------------
31,225
-------------
MERCHANDISING
Family Mart Co., Ltd. 87,200 4,426
-------------
MULTI - INDUSTRY
Lintec Corp. 215,000 2,088
-------------
REAL ESTATE
Keihanshin Real Estate Co. 205,000 788
Mitsubishi Estate Co. Ltd. 415,000 4,223
-------------
5,011
-------------
RECREATION, OTHER CONSUMER GOODS
Casio Computer Co., Ltd. 522,000 3,540
Fuji Photo Film Ltd. 222,000 8,400
Nintendo Co., Ltd. 120,000 10,358
-------------
22,298
-------------
TELECOMMUNICATIONS
Nippon Telephone & Telegraph Corp. 932 9,131
NTT Data Corp. 200 1,547
-------------
10,678
-------------
WHOLESALE & INTERNATIONAL TRADE
Inabata & Co. 406,000 1,094
-------------
303,048
-------------
- -------------------------------------------------------------
KOREA (4.9%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics 112,332 8,697
-------------
BANKING
Housing & Commercial Bank 87,250 1,742
Housing & Commercial Bank,
Korea GDR 7,400 137
-------------
1,879
-------------
ELECTRONIC COMPONENTS, INSTRUMENTS
Samsung Electro-Mechanics Co. 212,838 4,874
-------------
ENERGY
Korea Electric Power Corp. ADR 496,500 6,300
-------------
METALS - STEEL
Pohang Iron & Steel Ltd. ADR 234,000 4,183
-------------
TELECOMMUNICATIONS - INTEGRATED
Korea Telecom Corp. 117,500 4,641
-------------
30,574
-------------
- -------------------------------------------------------------
MALAYSIA (2.1%)
BEVERAGES & TOBACCO
Carlsberg Brewery (Malaysia)
Bhd 1,380,000 3,613
Guinness Anchor Bhd 167,000 161
R.J. Reynolds Bhd 1,714,000 1,561
Rothmans of Pall Mall Bhd 705,000 4,174
-------------
9,509
-------------
FOOD & HOUSEHOLD PRODUCTS
Nestle Bhd 953,000 U.S.$ 3,336
-------------
12,845
-------------
- -------------------------------------------------------------
NEW ZEALAND (1.2%)
BUILDING MATERIALS & COMPONENTS
Fletcher Challenge Building 899,000 1,217
-------------
ENERGY SOURCES
Fletcher Challenge Energy 376,600 722
-------------
FOREST PRODUCTS & PAPER
Fletcher Challenge Forests 79,520 31
Fletcher Challenge Paper 1,988,000 1,277
-------------
1,308
-------------
TELECOMMUNICATIONS
Telecom Corp. of New Zealand
Ltd. 1,134,700 3,048
-------------
TRANSPORTATION - AIRLINES
Air New Zealand Ltd. 'B' 505,000 878
-------------
7,173
-------------
- -------------------------------------------------------------
PAKISTAN (2.0%)
BANKING
Askari Bank 50,445 13
-------------
ENERGY SOURCES
Shell Pakistan Ltd. 499,600 1,539
-------------
FOOD & HOUSEHOLD PRODUCTS
Lever Brothers Pakistan Ltd. 442,880 7,164
-------------
TELECOMMUNICATIONS
Pakistan Telecommunications
Co., Ltd. 7,628,500 2,733
-------------
UTILITIES - ELECTRICAL & GAS
Hub Power Co., Ltd. 2,700,000 848
-------------
12,297
-------------
- -------------------------------------------------------------
PHILIPPINES (1.3%)
BEVERAGES & TOBACCO
LA Tondena Distillers, Inc. 2,323,750 2,039
San Miguel Corp. 'B' 891,200 1,483
-------------
3,522
-------------
REAL ESTATE
Ayala Land, Inc. 'B' 1
SM Prime Holdings, Inc. 'B' 8,646,180 1,785
-------------
1,785
-------------
TELECOMMUNICATIONS - INTEGRATED
Philippine Long Distance
Telephone Co. 54,730 1,441
-------------
UTILITIES - ELECTRICAL & GAS
Manila Electric Co. 'B' 394,650 1,304
-------------
8,052
-------------
- -------------------------------------------------------------
SINGAPORE (5.6%)
BANKING
Oversea-Chinese Banking
Corp., Ltd. (Foreign) 491,000 3,326
United Overseas Bank Ltd.
(Foreign) 583,000 3,646
-------------
6,972
-------------
- -------------------------------------------------------------
9
<PAGE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------
<S> <C> <C>
SINGAPORE (CONTINUED)
BROADCASTING & PUBLISHING
Singapore Press Holdings Ltd. 313,600 U.S.$ 3,468
ELECTRICAL & ELECTRONICS
Natsteel Electronics Ltd. 2,024,000 5,532
-------------
ELECTRONIC COMPONENTS, INSTRUMENTS
Venture Manufacturing Ltd. 841,000 3,799
-------------
REAL ESTATE
City Developments Ltd. 975,000 5,081
-------------
TOBACCO
Rothmans Industries Ltd. 838,000 4,319
-------------
TRANSPORTATION - AIRLINES
Singapore Airlines Ltd. 665,000 4,813
-------------
TRANSPORTATION - SHIPPING
Sembcorp Logistics Ltd. 353,200 781
-------------
34,765
-------------
- -------------------------------------------------------------
SRI LANKA (0.2%)
INDUSTRIAL COMPONENTS
Lanka Lubricants Ltd. 1,800,000 1,556
-------------
- -------------------------------------------------------------
THAILAND (1.2%)
BANKING
Thai Farmers Bank Ltd. (Foreign) 417,800 846
-------------
BROADCASTING & PUBLISHING
BEC World Public Co., Ltd.
(Foreign) 316,000 1,531
-------------
BUILDING MATERIALS & COMPONENTS
Siam Cement Public Co. Ltd.
(Foreign) 18,200 368
Siam City Cement Public Co.,
Ltd. (Foreign) 99,800 338
-------------
706
-------------
ELECTRICAL & ELECTRONICS
Delta Electronics Public Co.,
Ltd. (Foreign) 174,300 766
Shinawatra Computer Public
Co., Ltd. (Foreign) 111,000 289
-------------
1,055
-------------
ENERGY SOURCES
PTT Exploration & Production
Public Co., Ltd.
(Foreign) 60,500 470
-------------
REAL ESTATE
Golden Land Property Development
Public Co., Ltd. 5,231,700 1,672
-------------
TELECOMMUNICATIONS - WIRELESS
Advanced Info. Services
Public Co., Ltd.
(Foreign) 164,300 1,190
-------------
7,470
-------------
- -------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$603,282) 602,256
-------------
- -------------------------------------------------------------
WARRANTS (0.0%)
- -------------------------------------------------------------
INDIA (0.0%)
Apollo Tyres Ltd. (Cost
U.S.$4) 2,150 U.S.$
-------------
- -------------------------------------------------------------
FACE
AMOUNT
(000)
- -------------------------------------------------------------
FIXED INCOME SECURITIES (0.4%)
- -------------------------------------------------------------
SINGAPORE (0.4%)
FINANCIAL SERVICES
Finlayson Global Corp., Ltd.
Zero Coupon, 2/19/04
(Cost U.S.$2,400) U.S.$ 2,400 2,464
-------------
- -------------------------------------------------------------
SHORT-TERM INVESTMENTS (2.0%)
- -------------------------------------------------------------
REPURCHASE AGREEMENT (2.0%)
Chase Securities, Inc. 4.65%,
dated 3/31/99, due
4/1/99, to be
repurchased at
U.S.$12,184,
collateralized by
U.S.$9,275 United States
Treasury Bonds, 8.875%,
due 8/15/17, valued at
U.S.$12,284
(Cost U.S.$12,182) 12,182 12,182
-------------
- -------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.8%)
Indian Rupee INR 9,907 234
Malaysian Ringgit MYR 9,231 2,429
Pakistani Rupee PKR 49,356 951
Singapore Dollar SGD 2,280 1,320
-------------
(Cost U.S.$4,394) 4,934
-------------
- -------------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(Cost U.S.$622,262) 621,836
-------------
- -------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.2%)
Other Assets U.S.$ 14,389
Liabilities (15,455) (1,066)
-------------- ------------
- -------------------------------------------------------------
NET ASSETS (100%)
Applicable to 64,935,574 issued and
outstanding U.S.$0.01 par value
shares (100,000,000 shares
authorized) U.S.$ 620,770
---------------
- -------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 9.56
---------------
- -------------------------------------------------------------
</TABLE>
(a) - 144A Security - Certain conditions for public sale
may exist.
@ - Value is less than U.S.$500.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
10
