<PAGE>
-----------------------------------------------------------
MORGAN STANLEY
DEAN WITTER
ASIA-PACIFIC
FUND, INC.
-----------------------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
MORGAN STANLEY DEAN WITTER
ASIA-PACIFIC FUND, INC.
================================================================================
DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD OF DIRECTORS
Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR
John D. Barrett II
DIRECTOR
Gerard E. Jones
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
Andrew McNally IV
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Samuel T. Reeves
DIRECTOR
Fergus Reid
DIRECTOR
Frederick O. Robertshaw
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT
Arthur J. Lev
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Mary E. Mullin
SECRETARY
Belinda A. Brady
TREASURER
Robin L. Conkey
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
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
--------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
================================================================================
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/im.
<PAGE>
LETTER TO SHAREHOLDERS
---------
For the six months ended June 30, 2000, the Morgan Stanley Dean Witter
Asia-Pacific Fund, Inc. (the "Fund") had a total return, based on net asset
value per share, of -3.09% compared to -8.23% for its benchmark (described
below). For the period from the Fund's commencement of operations on August 2,
1994 through June 30, 2000, the Fund's total return, based on net asset value
per share, was 24.50% compared with -6.26% 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 June 30, 2000, the closing price of the Fund's shares on
the New York Stock Exchange was $10 3/16, representing a 30.9% discount to the
net asset value per share.
ASIA EX-JAPAN
Markets globally continued to be volatile as higher inflation data in the U.S.
and a subsequent 0.5% rate hike by the Federal Reserve made equity investors
nervous about the prospects of a hard landing in the U.S. Asian ex-Japan markets
continued to slide lower and the high-performing technology and telecom stocks
corrected significantly from their highs in March this year. The markets began
to stabilize towards the end of the second quarter as the Federal Reserve kept
interest rates on hold in June and economic data releases pointed to a slow down
in the U.S. economy.
The Korean market, which underperformed broader Asian markets in the first
quarter of 2000, was among the best performing markets in the second quarter of
2000. Although, at one point the market touched a 12-month low as domestic
retail investors and institutions sold down equities heavily. However, strong
policy action and several positive postures by the government, including the
injection of public funds into the ailing investment trust companies, helped the
market to bounce back strongly. In addition, the Hyundai Group's implementation
of an aggressive restructuring plan to induce foreign capital and dissolve
control by the founding family, as well as a re-capitalization plan of its
investment trust company, were viewed positively by investors. With respect to
the restructuring of the defunct Daewoo Group, preliminary bids were submitted
by potential strategic investors for Daewoo Motors with the highest bid coming
in well above market expectations. With foreign portfolio investment inflows in
the second quarter of 2000 and growing foreign direct investment (FDI), the
Korean Won continued to show strength. One of the government measures to calm
financial markets was the implementation of the second tranche of the bond
stabilization plan worth 10 trillion Won to soak up some of the supply from
illiquid bond markets. Based on new demand sources and waning redemptions at
investment trust companies which resulted in forced sells in the first quarter
of 2000, benchmark bond yields started to trend down to wards the latter half of
the second quarter of 2000. The monumental summit between the leaders of the two
Koreas did not have much impact on the stock market. We continue to retain an
extremely positive stance on Korea with our portfolio anchored in blue chips
like Samsung Electronics and Korea Telecom.
While Taiwan was the best performing market in the first quarter of 2000, it was
among the worst performing in the second quarter of 2000. Although part of this
underperformance came from a generic sell-off in technology related shares
globally, much of this was due to diminishing domestic investor confidence and
confusion over the domestic policy moves of the new DPP government. There were
indications from the government that taxes would be introduced to hi-tech
companies, which traditionally paid little or no tax. Technology companies in
Taiwan, especially in the semiconductor sector, have enjoyed significant tax
advantages while the financial and other traditional sector companies have been
fully taxed. These feelers are perhaps the first steps towards rationalization
of the taxation system and attempts to bridge the fiscal deficit, which has
become bloated. We think that investors are likely to be cautious in the long
term towards the Taiwanese technology sector and analysts are likely to start
incorporating taxation anomalies in valuations. The new President has done much
to help calm cross-strait relations and it seems that the worst is behind us.
Hong Kong was a weak performer in the second quarter of 2000, but the market
managed to recover toward the end of the second quarter of 2000 as investors
became increasingly comfortable with a soft landing scenario in the U.S.
There was increased interest in Hong Kong companies benefiting from growth
momentum in China. GDP growth rates in Hong Kong have been running ahead of
expectations for the last two quarters. With a benign outlook for interest
rates and a recent well-bided land auction, demand is returning to the Hong
Kong residential market. Although growth rates are heady, Hong Kong's
recovery has probably had its best quarter and growth is likely to be slower
in 2001 with deflation continuing to be a problem. Hutchison Whampoa, our
biggest position in Hong Kong, continues to be in the limelight with its
foray into 3G in the United Kingdom and its attractive mobile telecom assets
in the U.S. Our positive stance on global exports and supply logistics
leader, Li & Fung, performed very well this year.
China has been the star among Asian markets this year and the market continued
to do extremely well in the second quarter. While there have been substantial
portfolio inflows into China following the increased weighting in the MSCI
indexes, positive macroeconomic news flow from China continues to keep sentiment
very strong. Economic growth in China, which had been decelerating for the last
7 years,
2
<PAGE>
is now showing impressive cyclical revival. GDP growth for the first half of
this year was over 8%. Consumer spending in China has started to pick up and
with exports continuing to stay robust, the quality of growth is also changing
for the better. Political risks from Taiwan-China relations have diminished
considerably after the new Taiwanese President delivered a friendly inauguration
speech in May. The U.S. Senate is expected to approve PNTR (Permanent Normal
Trade Relations) with China. Indications from listed corporate companies in
China lead us to believe that corporate results for the first half of 2000 are
likely to exceed expectations. China has stated plans to open up the A-share
market, which when combined with the listed H-shares and red chips, would make
China the biggest stock market in Asia after Japan in the next few years. We
have been adding to the China weighting in the Fund, but the lack of liquid and
attractively priced investible ideas is a constraint in constructing a
broad-based portfolio. The current Index constituents are very skewed and top
heavy with China Mobile making up almost 60% of the China Index. We managed to
increase exposure to the growing mobile telecom sector by participating in the
highly successful listing of China Unicom, the second biggest mobile
communication services company in China.
The Indian market witnessed a huge increase in weighting for the TMT
(Technology, Media & Telecom) sector but it has been volatile in line with the
gyrations of the NASDAQ. Although data on industrial production over the last
few months demonstrated strength in the cyclical upswing of the economy, the
high fiscal deficit numbers continue to be a looming concern. An incremental
foreign portfolio inflow is a function of the perceived success of the
government's privatization program. We continue to favor high growth software
services stocks like Infosys Technologies, NIIT and SSI as these companies are
increasing market share in the global IT services market with their smooth
execution and cost competitiveness.
Singapore has been a relative laggard this year but the underlying economic
fundamentals continue to stay strong. GDP growth in the second quarter was over
7.7%, much higher than consensus estimates. New U.S. orders for electronics, a
key leading indicator for Singapore exports, have shown strong growth in the
last few quarters. In addition, the recovery in Japan and increase in
intra-Asian trade are creating impressive new demands for Singapore exports.
Over the medium term, we believe that a soft landing in the U.S. will ease off
interest rate fears in Asia and refocus attention on some of the inexpensive
growth stocks, especially in South Korea. China's strong recovery and entry into
the World Trade Organization later this year will keep sentiment on China stocks
buoyant through the rest of the year. We think that future performance will
depend on judicious stock selection, as the gap between the winners and losers
continues to widen.
JAPAN
Encouraging evidence of a meaningful economic recoverybegan to emerge during the
second quarter 2000. GDP growth for the January - March period showed Japan's
economy growing at a 10% annualized rate, while the latest Tankan survey
confirmed a strong positive trend for the Large Manufacturing Diffusion Index,
at the highest level during the last 3 years. Capital expenditures at these
Large Manufacturers was announced to increase by over 11.3% in 2000, centering
on information technology (IT) investments. This is a result of a 10 trillion
yen free cash flow generated by Japanese corporations which are now bearing the
fruits of restructuring. In addition, corporate profits for non-financial Tokyo
Stock Exchange first section companies for fiscal year March 2000 rose 26% in
aggregate versus the consensus estimate of 21%. The "0%" interest rate
environment as well as the recovery in Asian economies during this year also
contributed positively to these bright statistics. Signs of more robust
consumption were also evidenced by June automobile sales which jumped 8.5%,
year-over-year.
Despite the above mentioned factors, the stock market was generally weak during
this review period and at one point fell to levels last seen in June 1999.
Reasons for the weakness included fears that Greenspan would prevail and
therefore exports to the U.S. would slow; volatility and sharp declines of the
NASDAQ and the virtual collapse of leading "New" economy Japanese stocks such as
Hikari Tsushin, Softbank and NTT DoCoMo which were the bell-cows of 1999's
Japanese equity market. Foreign investors, particularly momentum players and
sector funds, became large net sellers. The ill-timed change in 30 constituents
of the Nikkei 225 at the peak of NASDAQ volatility further confused any
potential buyers, particularly Japanese individual investors. The Fund, however,
performed well as many of our holdings were reasonably valued versus the overall
market. The key assumption to our outlook is that the U.S. will have a "soft
landing" and that Japan's economic recovery will become self sustaining during
the second half of 2000. Japan's Government leaders are expected to use the July
Summit in Okinawa as a means of show-casing concrete plans for a self sustaining
recovery and will pledge to continue Mr. Obuchi's plan for a domestic led
recovery.
Many Japanese companies, as mentioned earlier, are beginning to generate free
cash flow and IT spending as a percent of CAPEX is expected to grow
significantly during the next year. In fact, the Japanese Government actually
created a new "Minister of Information Technology" within the ruling cabinet.
Global demand for Japan's digital products is also expected to contribute to
corporate earnings where companies have become highly geared to top line growth.
3
<PAGE>
We expect earnings surprises because of this gearing in earnings.
Finally, we believe a modest rise in interest rates will actually be positive
to spur consumption and accelerate restructuring, an event that the BOJ has
hinted at for several months. We expect to maintain the current holdings in
select world class technology companies, eco-nomic sensitive stocks and deep
value cyclicals.
Sincerely,
/s/ Harold J. Schaaff, Jr.
Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR
July 2000
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.
FOREIGN INVESTING INVOLVES CERTAIN RISKS, INCLUDING CURRENCY FLUCTUATIONS AND
CONTROLS, RESTRICTIONS ON FOREIGN INVESTMENTS, LESS GOVERNMENTAL SUPERVISION AND
REGULATION, LESS LIQUIDITY AND THE POTENTIAL FOR MARKET VOLATILITY AND POLITICAL
INSTABILITY.
--------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO INFORMATION FOR
THE FUND, ARE AVAILABLE ON OUR WEBSITE AT www.msdw.com/im.
4
<PAGE>
MORGAN STANLEY DEAN WITTER ASIA-PACIFIC FUND, INC.
INVESTMENT SUMMARY AS OF JUNE 30, 2000 (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>
YEAR TO DATE -13.46% -- -3.09% -- -8.23% --
ONE YEAR 6.56 6.56% 28.35 28.35% 11.80 11.80%
FIVE YEAR 8.57 1.66 31.47 5.62 1.23 0.24
SINCE INCEPTION* -13.94 -2.51 24.50 3.77 -6.26 -1.09
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
--------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[CHART]
<TABLE>
<CAPTION>
YEARE ENDED DECEMBER 31, SIX MONTHS
ENDED
JUNE 30,
1994* 1995 1996 1997 1998 1999 2000
------- ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share ....... $13.20 $14.34 $11.95 $8.77 $8.73 $15.26 $14.74
Market Value Per Share .......... $12.25 $13.33 $ 9.75 $7.44 $7.00 $11.81 $10.19
Premium/(Discount) .............. -7.2% -7.0% -18.4% -15.2% -19.8% -22.6% -30.9%
Income Dividends ................ $ 0.04 $ 0.05 $ 0.61 $0.02 $0.01 $ 0.04 $ 0.03
Capital Gains Distribution ...... $ 0.01 $ 0.02 -- -- -- -- --
Fund Total Return (2) ........... -5.94% 9.24% -2.87%+ -26.36% -0.34% 75.39% -3.09%
Index Total Return (3) .......... -5.24% 2.88% -3.63% -29.55% -0.30% 54.79% -8.23%
</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 Dean Witter Asia-Pacific Fund, Inc.
Portfolio Summary as of June 30, 2000 (Unaudited)
================================================================================
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities (98.0%)
Short-Term Investments (2.0%)
</TABLE>
--------------------------------------------------------------------------------
INDUSTRIES
[CHART]
<TABLE>
<S> <C>
Banks (5.5%)
Computers & Peripherals (8.7%)
Diversified Financials (4.6%)
Diversified Telecommunication Services (4.7%)
Electronic Equipment & Instruments (7.6%)
Household Durables (6.2%)
Leisure Equipment & Products (3.7%)
Machinery (6.3%)
Pharmaceuticals (3.6%)
Semiconductor Equipment & Products (10.1%)
Other (39.0%)
</TABLE>
--------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[CHART]
<TABLE>
<S> <C>
Australia (7.3%)
China (2.8%)
Hong Kong (9.0%)
India (5.6%)
Japan (49.1%)
Malaysia (2.5%)
Singapore (4.2%)
South Korea (8.3%)
Taiwan (8.0%)
Thailand (0.9%)
Other (2.3%)
</TABLE>
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
------------
<S> <C>
1. Samsung Electronics (South Korea) 3.7%
2. Hutchison Whampoa Ltd. (Hong Kong) 2.4
3. Fujitsu Ltd. (Japan) 1.9
4. NEC Corp. (Japan) 1.9
5. Taiwan Semiconductor Manufacturing (Taiwan) 1.9
6. Nintendo Co., Ltd. (Japan) 1.9
7. Sony Corp. (Japan) 1.7
8. TDK Corp. (Japan) 1.7
9. Toshiba Corp. (Japan) 1.6
10. Infosys Technologies Ltd. (India) 1.6
----
20.3%
====
</TABLE>
* EXCLUDES SHORT-TERM INVESTMENTS.
6
<PAGE>
FINANCIAL STATEMENTS
---------
STATEMENT OF NET ASSETS (UNAUDITED)
---------
JUNE 30, 2000
<TABLE>
<CAPTION>
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.6%)
(UNLESS OTHERWISE NOTED)
--------------------------------------------------------------------------------
AUSTRALIA (7.3%)
AIRLINES
Qantas Airlines 932,300 U.S.$ 1,882
-------------
BANKS
Commonwealth Bank of Australia 137,100 2,267
National Australia Bank Ltd. 299,450 4,989
Westpac Banking Corp., Ltd. 557,550 4,013
-------------
11,269
-------------
BEVERAGES
Foster's Brewing Group Ltd. 908,000 2,549
-------------
COMMERCIAL SERVICES & SUPPLIES
Davnet Ltd. 1,027,200 773
-------------
COMPUTERS & PERIPHERALS
(a)Securenet Ltd. 225,000 1,239
-------------
DIVERSIFIED FINANCIALS
Lend Lease Corp., Ltd. 246,300 3,135
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES
(a)AAPT Ltd. 505,048 1,653
(a)Macquarie Corporate
Telecommunications Holdings Ltd. 544,200 666
Telstra Corp. Ltd. (Installment Receipts) 676,500 1,536
Telstra Corp., Ltd. 924,600 3,744
-------------
7,599
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
E.R.G. Ltd. 355,560 2,754
-------------
HEALTH CARE PROVIDERS & SERVICES
Sonic Healthcare Ltd. 242,000 994
-------------
INDUSTRIAL CONGLOMERATES
Brambles Industries Ltd. 76,550 2,347
-------------
MEDIA
News Corp., Ltd. 883,350 12,134
-------------
METALS & MINING
Broken Hill Proprietary Co., Ltd. 665,150 7,846
Normandy Mining Ltd. 2,501,600 1,345
Rio Tinto Ltd. 429,750 7,089
-------------
16,280
-------------
PHARMACEUTICALS
CSL Ltd. 117,800 2,324
-------------
SOFTWARE
(a)Solution 6 Holdings Ltd. 266,750 518
-------------
65,797
-------------
--------------------------------------------------------------------------------
CHINA (2.8%)
COMMERCIAL SERVICES & SUPPLIES
Cosco Pacific Ltd. 1,472,000 1,161
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
Great Wall Technology Co., Ltd. 2,717,000 1,882
-------------
HOUSEHOLD DURABLES
(a)TCL International 1,918,000 701
-------------
INDUSTRIAL CONGLOMERATES
China Merchants Holdings
International Co. Ltd. 1,302,000 894
-------------
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES
(a)China Telecom Ltd. 1,548,000 13,652
(a)China Unicom 3,286,000 6,976
-------------
20,628
-------------
25,266
-------------
--------------------------------------------------------------------------------
HONG KONG (9.0%)
AIRLINES
Cathay Pacific Airways 1,529,000 2,834
-------------
BANKS
Dao Heng Bank Group Ltd. 211,000 934
Hang Seng Bank Ltd. 226,500 2,150
-------------
3,084
-------------
BROADCASTING & CABLE TV
(a)Phoenix Satellite TV 2,000,000 278
-------------
COMPUTERS & PERIPHERALS
Legend Holdings Ltd. 2,322,000 2,249
-------------
DIVERSIFIED FINANCIALS
Hutchison Whampoa Ltd. 1,742,950 21,911
Swire Pacific Ltd. 'A' 741,600 4,338
-------------
26,249
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES
Cable & Wireless Ltd. 3,405,900 7,493
-------------
ELECTRICAL EQUIPMENT
Johnson Electric Holdings Ltd. 275,000 2,602
-------------
GAS UTILITIES
Hong Kong & China Gas Co., Ltd. 2,018,500 2,266
-------------
INDUSTRIAL CONGLOMERATES
Citic Pacific Ltd. 181,000 947
-------------
INTERNET SOFTWARE & SERVICES
(a)chinadotcom corp. 41,200 841
Sino-i.com Ltd. 6,295,000 287
(a)Timeless Software Ltd. 2,568,000 1,161
-------------
2,289
-------------
MEDIA
Asia Satellite Telecom Holdings 606,000 2,072
Television Broadcasts Ltd. 382,000 2,548
-------------
4,620
-------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 864,000 9,559
Hong Kong Land Holdings Ltd. 572,000 915
Sino Land Co. 2,899,000 1,023
Sun Hung Kai Properties Ltd. 922,000 6,623
-------------
18,120
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
ASM Pacific Technology 350,000 1,311
-------------
TEXTILES & APPAREL
Li & Fung Ltd. 1,100,000 5,503
-------------
WIRELESS TELECOMMUNICATION SERVICES
Smartone Telecommunications 191,000 423
-------------
80,268
-------------
--------------------------------------------------------------------------------
INDIA (5.0%)
AUTOMOBILES
Hero Honda Ltd. 66,008 1,460
-------------
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
INDIA (CONTINUED)
CHEMICALS
Grasim Co. 150,000 U.S.$ 962
-------------
COMMERCIAL SERVICES & SUPPLIES
Aptech Ltd. 164,800 3,122
-------------
COMPUTERS & PERIPHERALS
Digital Equipment (India) Ltd. 108,322 1,741
-------------
CONSTRUCTION MATERIALS
Associated Cement Co., Ltd. 110 --@
Gujarat Ambuja Cements 255,000 1,114
-------------
1,114
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES
Mahanagar Telephone Nigam Ltd. 468,127 2,250
Videsh Sanchar Nigam Ltd. 75,810 2,054
-------------
4,304
-------------
ELECTRICAL EQUIPMENT
Bharat Heavy Electricals Ltd. 450,200 1,346
Sterlite Industries 126,750 2,365
-------------
3,711
-------------
GAS UTILITIES
Gas Authority of India 135,000 911
-------------
IT CONSULTING & SERVICES
(a)HCL Technologies Ltd. 34,750 1,003
Infosys Technologies Ltd. 78,150 14,560
NIIT Ltd. 56,000 2,772
(a)Ramco Sysytems Ltd 23,400 802
(a,b)SSI Ltd. GDR 105,000 688
-------------
19,825
-------------
MACHINERY
Escorts Ltd. 180,000 570
-------------
MEDIA
ZEE Telefilms Ltd. 99,000 994
-------------
METALS & MINING
Tata Iron & Steel Co., Ltd. 1,949 5
-------------
PHARMACEUTICALS
Ranbaxy Laboratories Ltd. 68,000 878
-------------
ROAD & RAIL
Container Corp. of India Ltd. 350,000 1,348
-------------
SOFTWARE
Leading Edge Systems Ltd. 8,250 163
Mastek Ltd. 1,800 65
PSI Data Systems Ltd. 31,785 615
Software Solution Integrated Ltd. 26,000 1,657
Tata Infotech Ltd. 25 --@
-------------
2,500
-------------
TEXTILES & APPAREL
(a,c)Shopper Stop 324,100 1,161
-------------
TOBACCO
ITC Ltd. 14,900 265
-------------
44,871
-------------
--------------------------------------------------------------------------------
INDONESIA (0.2%)
DIVERSIFIED TELECOMMUNICATION SERVICES
Telekomunikasi Indonesia ADR 208,356 1,446
-------------
TOBACCO
Gudang Garam 294,000 475
-------------
1,921
-------------
--------------------------------------------------------------------------------
JAPAN (49.1%)
AUTO COMPONENTS
Nifco, Inc. 375,000 4,784
-------------
AUTOMOBILES
Nissan Motor Co. 1,180,000 6,948
Suzuki Motor Corp., Ltd. 430,000 5,542
Toyota Motor Corp. 212,000 9,647
-------------
22,137
-------------
BANKS
Bank of Tokyo-Mitsubishi, Ltd. 85,000 1,026
-------------
BUILDING PRODUCTS
Sanwa Shutter Corp., Ltd. 642,000 2,081
-------------
CHEMICALS
Daicel Chemical Industries Ltd. 1,220,000 3,931
Kaneka Corp. 829,000 9,130
Lintec Corp. 413,000 4,300
Mitsubishi Chemical Industries 920,000 3,770
Shin-Etsu Polymer Co., Ltd. 637,000 5,269
-------------
26,400
-------------
COMMERCIAL SERVICES & SUPPLIES
Dai Nippon Printing Co., Ltd. 413,000 7,272
Nissha Printing Co., Ltd. 105,000 725
-------------
7,997
-------------
COMPUTERS & PERIPHERALS
Fujitsu Ltd. 505,000 17,461
Mitsumi Electric Co., Ltd. 306,000 11,243
NEC Corp. 554,000 17,380
Toshiba Corp. 1,301,000 14,671
-------------
60,755
-------------
CONSTRUCTION & ENGINEERING
Kurita Water Industries Ltd. 295,000 6,489
-------------
DISTRIBUTORS
Nissei Sangyo 165,000 2,409
-------------
DIVERSIFIED FINANCIALS
Hitachi Credit Corp. 383,400 10,367
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES
Nippon Telephone & Telegraph Corp. 932 12,380
-------------
ELECTRIC UTILITIES
Tokyo Electric Power 162,000 3,945
-------------
ELECTRICAL EQUIPMENT
Furakawa Electric Co. 268,000 5,593
Kyudenko Co., Ltd. 380,000 1,142
-------------
6,735
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
Hitachi Ltd. 955,000 13,765
Kyocera Corp. 70,000 11,864
Ryosan Co., Ltd. 173,000 3,912
TDK Corp. 104,000 14,932
-------------
44,473
-------------
FOOD & DRUG RETAILING
Family Mart Co., Ltd. 142,200 5,466
-------------
FOOD PRODUCTS
House Foods Corp. 147,000 2,271
Nippon Meat Packers, Inc. 278,000 4,060
-------------
6,331
-------------
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
HOUSEHOLD DURABLES
Aiwa Co., Ltd. 169,800 U.S.$ 2,716
Casio Computer Co., Ltd. 617,000 6,917
Matsushita Electric Industrial Co., Ltd. 481,000 12,462
Rinnai Corp. 180,700 4,026
Sangetsu Co., Ltd. 137,000 2,259
Sekisui Chemical Co. 1,043,000 4,009
Sekisui House Ltd. 655,000 6,054
Sony Corp. 173,000 16,135
-------------
54,578
-------------
LEISURE EQUIPMENT & PRODUCTS
Fuji Photo Film Ltd. 284,000 11,612
Nintendo Co., Ltd. 96,000 16,750
Yamaha Corp. 432,000 4,717
-------------
33,079
-------------
MACHINERY
Amada Co., Ltd. 712,000 6,037
Daifuku Co., Ltd. 651,000 7,212
Daikin Kogyo Co. 475,000 11,031
Fuji Machine Co. 184,500 9,682
Fujitec Co., Ltd. 420,000 3,652
Minebea Co., Ltd. 540,000 6,766
Mitsubishi Heavy Industries Ltd. 1,600,000 7,085
Tsubakimoto Chain Co. 832,000 4,233
-------------
55,698
-------------
MARINE
Mitsubishi Logistics Corp. 260,000 2,351
OFFICE ELECTRONICS -------------
Canon, Inc. 289,000 14,376
Ricoh Co., Ltd. 606,000 12,817
-------------
27,193
-------------
PHARMACEUTICALS
Ono Pharmaceutical Co., Ltd. 209,000 8,959
Sankyo Co., Ltd. 397,000 8,957
Yamanouchi Pharmaceutical Co., Ltd. 202,000 11,019
-------------
28,935
-------------
REAL ESTATE
Keihanshin Real Estate Co. 164,000 533
Mitsubishi Estate Co., Ltd. 422,000 4,962
-------------
5,495
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
Rohm Co., Ltd. 31,000 9,054
-------------
440,158
-------------
--------------------------------------------------------------------------------
MALAYSIA (2.5%)
BANKS
Commerce Asset Holding Bhd 286,000 828
Malayan Banking Bhd 1,138,000 4,612
Public Bank Bhd 2,532,000 2,332
-------------
7,772
-------------
BEVERAGES
Carlsberg Brewery (Malaysia) Bhd 589,000 1,984
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES
Telekom Malaysia Bhd 877,000 3,023
-------------
ELECTRIC UTILITIES
Tenaga Nasional Bhd 449,000 1,465
-------------
HOTELS RESTAURANTS & LEISURE
Resorts World Bhd 542,000 1,483
Tanjong plc 651,000 1,559
-------------
3,042
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
Malaysian Pacific Industries Bhd 199,000 2,043
-------------
TOBACCO
British American Tobacco Bhd 192,000 1,566
-------------
WIRELESS TELECOMMUNICATION SERVICES
(a)Digi.Com Bhd 901,000 1,648
-------------
22,543
-------------
--------------------------------------------------------------------------------
NEW ZEALAND (0.3%)
DIVERSIFIED TELECOMMUNICATION SERVICES
Telecom Corp. of New Zealand Ltd. 671,100 2,346
-------------
--------------------------------------------------------------------------------
SINGAPORE (4.2%)
AIRLINES
(a)SIA Engineering Company Ltd. 671,000 753
Singapore Airlines Ltd. 448,000 4,435
-------------
5,188
-------------
BANKS
DBS Group Holdings Ltd. 629,979 8,096
Oversea-Chinese Banking Corp., Ltd. (Foreign) 607,700 4,186
Overseas Union Bank Ltd. 'F' 356,210 1,381
-------------
13,663
-------------
COMPUTERS & PERIPHERALS
Natsteel Electronics Ltd. 405,000 1,243
-------------
DIVERSIFIED FINANCIALS
Keppel Corp., Ltd. 572,000 1,238
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
Omni Industries Ltd. 594,000 980
Venture Manufacturing Ltd. 279,000 2,842
-------------
3,822
-------------
MARINE
(a)Neptune Orient Lines 688,000 637
Sembcorp Logistics Ltd. 378,200 2,124
-------------
2,761
-------------
MEDIA
Singapore Press Holdings Ltd. 315,600 4,933
-------------
REAL ESTATE
City Developments Ltd. 297,000 1,152
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
(a)Chartered Semiconductor 330,000 2,885
(a)ST Assembly Test Services 300,000 771
-------------
3,656
-------------
37,656
-------------
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
SOUTH KOREA (8.3%)
BANKS
Housing & Commercial Bank 137,566 U.S.$ 3,220
Housing & Commercial Bank GDR 7,400 165
Kookmin Bank 169,731 2,162
Shinhan Bank Co. Ltd. (Foreign) 212,330 1,999
-------------
7,546
-------------
COMMUNICATIONS EQUIPMENT
LG Information & Communication Ltd. 6,910 388
(a)Locus Corp. 7,860 638
Teleson Electronics Co., Ltd. 94,750 1,007
-------------
2,033
-------------
DIVERSIFIED FINANCIALS
Dongwon Securities Co. 28,715 207
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES
(a)Korea Telecom Corp. 3,080 271
Korea Telecom Corp., ADR 66,200 3,203
-------------
3,474
-------------
ELECTRIC UTILITIES
Korea Electric Power Corp. ADR 225,600 4,160
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
(a)Communication Network Interface Inc. 72,530 400
(a)Humax Co., Ltd. 92,400 1,280
Prochips Technology Inc. 95,685 378
Samsung Electro-Mechanics Co. 53,161 3,333
-------------
5,391
-------------
FOOD PRODUCTS
Tongyang Confectionery Co. 31,030 675
-------------
INTERNET & CATALOG RETAIL
LG Home Shopping Inc. 12,250 1,165
-------------
MEDIA
Cheil Communications Inc. 16,960 2,213
CJ39 Shopping 21,850 715
-------------
2,928
-------------
METALS & MINING
Pohang Iron & Steel Ltd. ADR 69,100 1,658
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
Hyundai Electronics Industries Co. 68,357 1,349
Samsung Electronics 100,317 33,198
-------------
34,547
-------------
WIRELESS TELECOMMUNICATION SERVICES
Korea Telecom Freetel 15,170 1,011
SK Telecom Co., Ltd. 4,610 1,509
SK Telecom Co., Ltd. ADR 233,000 8,461
-------------
10,981
-------------
74,765
-------------
--------------------------------------------------------------------------------
TAIWAN (8.0%)
BANKS
(a)Chinatrust Commercial Bank 1,278,000 1,111
Taishin International Bank 2,016,520 1,293
United World Chinese Commercial Bank 962,000 914
-------------
3,318
-------------
CHEMICALS
Nan Ya Plastic Corp. 1,705,290 3,441
-------------
COMMUNICATIONS EQUIPMENT
(a)Accton Technology Corp. 42,000 94
(a)Microelectronics Technology 284,400 944
-------------
1,038
-------------
COMPUTERS & PERIPHERALS
Acer Peripherals Inc. 812,352 2,300
(a)Acer, Inc. 432,000 808
Advantech Co. Ltd. 209,300 1,110
Asustek Computer, Inc. 495,040 4,092
Compal Electronics 559,763 1,376
(a)ProMos Technologies Inc 183,000 742
(a)Ritek Incorporation 189,750 760
-------------
11,188
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
Ambit Microsystems Corp. 85,000 844
Delta Electronic Industrial 525,000 2,486
(a)Hon Hai Precision Industry 492,200 4,454
Universal Scientific IND 369,600 902
-------------
8,686
-------------
FOOD & DRUG RETAILING
President Chain Store Corp. 349,000 1,306
-------------
INTERNET SOFTWARE & SERVICES
(a)GigaMedia Ltd. 14,600 177
-------------
METALS & MINING
China Steel Corp. 1,691,000 1,156
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS
(a)Advanced Semiconductor Engineering, Inc. 617,000 1,888
(a)ASE Test Ltd. 35,200 1,036
(a)Macronix International 510,760 1,280
(a)Siliconware Precision Industries Co. 926,000 2,079
(a)Siliconware Precision Industries Co. ADR 145,800 1,349
(a)Taiwan Semiconductor Manufacturing Co., Ltd. 3,557,120 16,903
United Micro Electronics Corp., Ltd. 4,261,400 11,858
(a)Winbond Electronics Corp. 1,097,560 3,179
-------------
39,572
-------------
TEXTILES & APPAREL
Far Eastern Textile Ltd. 1,053,040 1,309
(a,b)Far Eastern Textile Ltd. GDR 7,100 89
-------------
1,398
-------------
71,280
-------------
--------------------------------------------------------------------------------
THAILAND (0.9%)
BANKS
Thai Farmers Bank Ltd. (Foreign) 1,611,600 1,358
-------------
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
--------------------------------------------------------------------------------
<S> <C> <C>
THAILAND (CONTINUED)
CONSTRUCTION MATERIALS
(a)Siam City Cement Public Co., Ltd. (Foreign) 251,933 U.S.$ 952
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS
Delta Electronics Public Co., Ltd. (Foreign) 201,316 1,418
-------------
MEDIA
BEC World Public Co., Ltd. (Foreign) 143,500 857
-------------
REAL ESTATE
(a)Golden Land Property Development Public Co., Ltd. 2,849,000 422
-------------
WIRELESS TELECOMMUNICATION SERVICES
(a)Advanced Info. Services Public Co., Ltd. (Foreign) 207,000 2,578
(a)Total Access Communication 81,800 329
-------------
2,907
-------------
7,914
-------------
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$673,038) 874,785
-------------
--------------------------------------------------------------------------------
MUTUAL FUNDS (0.6%)
--------------------------------------------------------------------------------
INDIA (0.6%)
MUTUAL FUNDS
(d)Morgan Stanley Growth Fund 19,448,100 5,161
(Cost U.S.$3,689) -------------
--------------------------------------------------------------------------------
<CAPTION>
NO. OF
WARRANTS
--------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS (0.0%)
THAILAND (0.0%)
BANKS
(a)Siam Commercial Bank Public Co., Ltd.,
expiring 5/10/02
(Cost U.S.$136) 1,727,300 203
-------------
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (1.7%)
--------------------------------------------------------------------------------
UNITED STATES (1.7%)
REPURCHASE AGREEMENT
Chase Securities Inc., 6.15%, dated 6/31/00,
due 7/03/00, to be repurchased at U.S.$15,819,
collateralized by U.S.$16,760 United States
Treasury Note, 5.50%, valued at U.S.$16,160
(Cost U.S.$15,811) 15,811 15,811
-------------
--------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (0.2%)
Indian Rupee INR 600 U.S.$ 13
Japanese Yen JPY 99,983 942
Malaysian Ringgit MYR 3,209 845
Singapore Dollar SGD 25 14
South Korean Won KRW 3,871 4
Taiwan Dollar TWD 4,925 160
Thai Baht THB 629 16
--------------------------------------------------------------------------------
TOTAL FOREIGN CURRENCY
(Cost U.S.$1,995) 1,994
-------------
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.1%)
(Cost U.S.$694,669) 897,954
-------------
--------------------------------------------------------------------------------
OTHER ASSETS (0.4%)
Cash U.S.$ 45
Receivable for Investments Sold 1,503
Dividends Receivable 1,091
Foreign Withholding Tax Reclaim Receivable 47
Interest Receivable 3
Other 70 2,759
--------- -------------
--------------------------------------------------------------------------------
LIABILITIES (-0.5%)
Payable For:
Dividends Declared (2,116)
Investment Advisory Fees (715)
Investments Purchased (564)
Custodian Fees (283)
Professional Fees (174)
Administrative Fees (146)
Directors' Fees and Expenses (145)
Shareholder Reporting Expenses (116)
Other Liabilities (125) (4,384)
--------- -------------
--------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 60,804,774, issued and
outstanding U.S.$ 0.01 par value shares
(100,000 shares authorized) U.S.$896,329
=============
--------------------------------------------------------------------------------
NET ASSET VALUE U.S.$ 14.74
=============
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
(000)
--------------------------------------------------------------------------------
<S> <C>
AT JUNE 30, 2000, NET ASSETS CONSISTED OF:
--------------------------------------------------------------------------------
Common Stock U.S.$ 608
Capital Surplus 837,873
Distributions in Excess of Net Investment Income (3,555)
Accumulated Net Realized Loss (141,896)
Unrealized Appreciation on Investments and
Foreign Currency Translations 203,299
--------------------------------------------------------------------------------
TOTAL NET ASSETS U.S.$896,329
=============
--------------------------------------------------------------------------------
(a) -- Non-income producing.
(b) -- 144A Security -- certain conditions for public sale may exist.
(c) -- Security valued at fair value -- see note A-1 to financial statements.
(d) -- The fund is advised by an affiliate.
@ -- Value is less than U.S.$500.
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
--------------------------------------------------------------------------------
FOREIGN CURRENCY EXCHANGE CONTRACT INFORMATION:
Under the terms of foreign currency exchange contracts open at June 30, 2000,
the Fund is obligated to deliver foreign currency in exchange for U.S. dollars
as indicated below:
<CAPTION>
CURRENCY IN NET
TO EXCHANGE UNREALIZED
DELIVER VALUE SETTLEMENT FOR VALUE LOSS
(000) (000) DATE (000) (000) (000)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THB 629 U.S.$ 16 07/03/00 U.S.$ 16 U.S.$ 16 U.S.$ --
2,918 74 07/05/00 74 74 --
--------- --------- ---------
U.S.$ 90 U.S.$ 90 U.S.$ --
========= ========= =========
--------------------------------------------------------------------------------
<CAPTION>
JUNE 30, 2000 EXCHANGE RATES:
--------------------------------------------------------------------------------
<S> <C> <C>
INR Indian Rupee 44.650 = U.S.$1.00
JPY Japanese Yen 106.145 = U.S.$1.00
KRW South Korean Won 1,115.025 = U.S.$1.00
MYR Malaysian Ringgit 3.800 = U.S.$1.00
SGD Singapore Dollar 1.728 = U.S.$1.00
TWD Taiwan Dollar 30.725 = U.S.$1.00
THB Thai Baht 39.175 = U.S.$1.00
--------------------------------------------------------------------------------
</TABLE>
SUMMARY OF TOTAL INVESTMENTS BY INDUSTRY
CLASSIFICATION -- JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT
VALUE OF NET
INDUSTRY (000) ASSETS
--------------------------------------------------------------------------------
<S> <C> <C>
Airlines U.S.$ 9,904 1.1%
Auto Components 4,784 0.5
Automobiles 23,597 2.6
Banks 49,239 5.5
Beverages 4,533 0.5
Broadcasting & Cable TV 278 0.0
Building Products 2,081 0.2
Chemicals 30,803 3.4
Commercial Services & Supplies 13,053 1.5
Communications Equipment 3,071 0.3
Computers & Peripherals 78,415 8.7
Construction & Engineering 6,489 0.7
Construction Materials 2,066 0.2
Distributors 2,409 0.3
Diversified Financials 41,196 4.6
Diversified Telecommunication Services 42,065 4.7
Electric Utilities 9,570 1.1
Electrical Equipment 13,048 1.5
Electronic Equipment & Instruments 68,426 7.6
Food & Drug Retailing 6,772 0.8
Food Products 7,006 0.8
Gas Utilities 3,177 0.4
Health Care Providers & Services 994 0.1
Hotels Restaurants & Leisure 3,042 0.3
Household Durables 55,279 6.2
Industrial Conglomerates 4,188 0.5
Internet & Catalog Retail 1,165 0.1
Internet Software & Services 2,466 0.3
IT Consulting & Services 19,825 2.2
Leisure Equipment & Products 33,079 3.7
Machinery 56,268 6.3
Marine 5,112 0.6
Media 26,466 2.9
Metals & Mining 19,099 2.1
Mutual Funds 5,161 0.6
Office Electronics 27,193 3.0
Pharmaceuticals 32,137 3.6
Real Estate 25,189 2.8
Road & Rail 1,348 0.1
Semiconductor Equipment & Products 90,183 10.1
Software 3,018 0.3
Textiles & Apparel 8,062 0.9
Tobacco 2,306 0.3
Wireless Telecommunication Services 36,587 4.1
Other 17,805 2.0
------------ ------------
U.S.$897,954 100.1%
============ ============
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000
(UNAUDITED)
STATEMENT OF OPERATIONS (000)
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Dividends ...................................................................................... U.S.$ 6,175
Interest ....................................................................................... 361
Less: Foreign Taxes Withheld ................................................................... (548)
--------------------------------------------------------------------------------------------------------------------------
Total Income ................................................................................... 5,988
--------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees ....................................................................... 4,488
Administrative Fees ............................................................................ 446
Custodian Fees ................................................................................. 310
Shareholder Reporting Expenses ................................................................. 98
Professional Fees .............................................................................. 93
Country Tax Expense ............................................................................ 46
Transfer Agent Fees ............................................................................ 41
Directors' Fees and Expenses ................................................................... 34
Other Expenses ................................................................................. 79
--------------------------------------------------------------------------------------------------------------------------
Total Expenses ................................................................................. 5,635
--------------------------------------------------------------------------------------------------------------------------
Net Investment Income .......................................................................... 353
--------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)
Investment Securities Sold ..................................................................... 28,502
Foreign Currency Transactions .................................................................. (25)
--------------------------------------------------------------------------------------------------------------------------
Net Realized Gain .............................................................................. 28,477
--------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
Depreciation on Investments .................................................................... (65,239)
Appreciation on Foreign Currency Translations .................................................. 336
--------------------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation/Depreciation ................................................. (64,903)
--------------------------------------------------------------------------------------------------------------------------
Total Net Realized Gain and Change in Unrealized Appreciation/Depreciation ..................... (36,426)
--------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................... U.S.$ (36,073)
==========================================================================================================================
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income ...................................................... U.S.$ 353 U.S.$ 735
Net Realized Gain .......................................................... 28,477 86,741
Change in Unrealized Appreciation/Depreciation ............................. (64,903) 319,045
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations ............ (36,073) 406,521
--------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income ...................................................... (2,116) (593)
In Excess of Net Investment Income ......................................... -- (1,791)
--------------------------------------------------------------------------------------------------------------------------
Total Distributions ........................................................ (2,116) (2,384)
--------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Repurchase of Shares (1,429,200 and 5,040,600 shares, respectively) ........ (15,023) (41,752)
--------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) .................................................. (53,212) 362,385
Net Assets:
Beginning of Period ........................................................ 949,541 587,156
--------------------------------------------------------------------------------------------------------------------------
End of Period (including distributions in excess of net investment
income of U.S. ($3,555) and U.S.($1,792), respectively) .................... U.S.$ 896,329 U.S.$ 949,541
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED PER SHARE DATA SIX MONTHS
AND RATIOS: ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 2000 --------------------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ..... U.S.$ 15.26 U.S.$ 8.73 U.S.$ 8.77 U.S.$ 11.95 U.S.$ 14.34 U.S.$ 13.20
------------------------------------------------------------------------------------------------------------------------------------
Offering Costs ........................... -- -- -- -- (0.01) --
------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income .................... 0.01 0.01 0.06 0.03 0.02 0.05
Net Realized and Unrealized Gain (Loss)
on Investments ........................... (0.59) 6.44 (0.17) (3.19) (0.33) 1.16
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations ......... (0.58) 6.45 (0.11) (3.16) (0.31) 1.21
------------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income .................... (0.03) (0.01) -- (0.02) (0.60) (0.05)
In Excess of Net Investment Income ....... -- (0.03) (0.01) -- (0.01) (0.00)#
In Excess of Net Realized Gain ........... -- -- -- -- -- (0.02)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions ...................... (0.03) (0.04) (0.01) (0.02) (0.61) (0.07)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Asset Value due to Shares
Issued through Rights Offering ........... -- -- -- -- (1.46) --
Anti-Dilutive Effect of Shares
Repurchased .............................. 0.09 0.12 0.08 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ........... U.S.$ 14.74 U.S.$ 15.26 U.S.$ 8.73 U.S.$ 8.77 U.S.$ 11.95 U.S.$ 14.34
====================================================================================================================================
PER SHARE MARKET VALUE, END OF PERIOD .... U.S.$ 10.19 U.S.$ 11.81 U.S.$ 7.00 U.S.$ 7.44 U.S.$ 9.75 U.S.$ 13.33
====================================================================================================================================
TOTAL INVESTMENT RETURN:
Market Value ............................. (13.46)% 69.32% (5.77)% (23.46)% (14.72)% 9.38%
Net Asset Value (1) ...................... (3.09)% 75.39% (0.34)% (26.36)% (2.87)% 9.24%
====================================================================================================================================
RATIOS, SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS) .... U.S.$896,329 U.S.$949,541 U.S.$587,156 U.S.$628,173 U.S.$856,397 U.S.$769,414
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets .. 1.25%* 1.29% 1.42% 1.34% 1.39% 1.36%
Ratio of Net Investment Income to Average
Net Assets ............................... 0.08%* 0.10% 0.80% 0.25% 0.16% 0.36%
Portfolio Turnover Rate .................. 21% 65% 42% 66% 28% 21%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
# Amount is less than U.S.$0.01.
+ This return does not include the effect of the rights issued in connection
with the Rights Offering.
(1) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. This percentage is 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 of
the Fund.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
---------
The Morgan Stanley Dean Witter Asia-Pacific Fund, Inc. (the "Fund") was
incorporated in Maryland on February 28, 1994, and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is long-term
capital appreciation through investments primarily in equity securities.
A. The following significant accounting policies, which are in conformity
with generally accepted accounting principles for investment companies, are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: In valuing the Fund's assets, all listed securities for
which market quotations are readily available are valued at the last sale
price on the valuation date, or if there was no sale on such date, at the
mean between the current bid and asked prices. Securities that are traded
over-the-counter are valued at the average of the mean of current bid and
asked prices obtained from reputable brokers. Short-term securities which
mature in 60 days or less are valued at amortized cost. All other
securities and assets for which market values are not readily available
(including investments which are subject to limitations as to their sale)
are valued at fair value as determined in good faith under the procedures
approved by the Board of Directors, although the actual calculations may be
done by others.
Events affecting the values of certain Fund securities that occur between
the close of regular trading on the principal market for such securities
(foreign ex changes and over-the-counter markets) and the regular close of
the Exchange will not be reflected in the Fund's calculation of net asset
value unless the Adviser believes that the particular event would
materially affect net asset value, in which case an adjustment would be
made.
2. TAXES: It is the Fund's intention to continue to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly,
no provision for U.S. Federal income taxes is required in the financial
statements.
The Fund may be subject to taxes imposed by countries in which it invests.
Such taxes are generally based on income and/or capital gains earned or re-
patriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation as such income and/or gains
are earned.
3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying securities, with a market value at least equal to the amount of
the repurchase transaction, including principal and accrued interest. To
the extent that any repurchase transaction exceeds one business day, the
value of the collateral is marked-to-market on a daily basis to determine
the adequacy of the collateral. In the event of default on the obligation
to repurchase, the Fund has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the counterparty to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal
proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into
U.S. dollars at the mean of the bid and asked prices of such currencies
against U.S. dollars last quoted by a major bank as follows:
- investments, other assets and liabilities - at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income - at the prevailing
rates of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not
isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of the securities held at period end.
Similarly, the Fund does not isolate the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market
prices of securities sold during the period. Accordingly, realized and
unrealized foreign currency gains (losses) due to securities transactions
are included in the reported net realized and unrealized gains (losses) on
investment transactions and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of foreign
currency exchange contracts, disposition of foreign currencies, currency
gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amount of
investment income and foreign withholding taxes recorded on the Fund's
books and the U.S. dollar equivalent amounts actually received or paid. Net
unrealized currency
15
<PAGE>
gains (losses) from valuing foreign currency denominated assets and
liabilities and foreign currency contracts at period end exchange rates are
reflected as a component of unrealized appreciation (depreciation) on
investments and foreign currency translations in the Statement of Net
Assets. The change in net unrealized currency gains (losses) on foreign
currency translations for the period is reflected in the Statement of
Operations.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S. dollar
denominated transactions as a result of, among other factors, the
possibility of lower levels of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability.
The Fund may use derivatives to achieve its investment objective. The Fund may
engage in transactions in futures contracts on foreign currencies, stock
indices, as well as in options, swaps and structured notes. Consistent with the
Fund's investment objectives and policies, the Fund may use derivatives for
non-hedging as well as hedging purposes.
Following is a description of derivative instruments that the Fund may utilize
and their associated risks:
5. FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into foreign
currency exchange contracts generally to attempt to protect securities and
related receivables and payables against changes in future foreign exchange
rates and, in certain situations, to gain exposure to a foreign currency. A
foreign currency exchange contract is an agreement between two parties to
buy or sell currency at a set price on a future date. The market value of
the contract will fluctuate with changes in currency exchange rates. The
contract is marked-to-market daily and the change in market value is
recorded by the Fund as unrealized gain or loss. The Fund records realized
gains or losses when the contract is closed equal to the difference between
the value of the contract at the time it was opened and the value at the
time it was closed. Risk may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their
contracts and is generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
6. FORWARD COMMITMENTS AND WHEN-ISSUED/DELAYED DELIVERY SECURITIES: The Fund
may make forward commitments to purchase or sell securities. Payment and
delivery for securities which have been purchased or sold on a forward
commitment basis can take place a month or more (not to exceed 120 days)
after the date of the transaction. Additionally, the Fund may purchase
securities on a when-issued or delayed delivery basis. Securities purchased
on a when-issued or delayed delivery basis are purchased for delivery
beyond the normal settlement date at a stated price and yield, and no
income accrues to the Fund on such securities prior to delivery. When the
Fund enters into a purchase transaction on a when-issued or delayed
delivery basis, it either establishes a segregated account in which it
maintains liquid assets in an amount at least equal in value to the Fund's
commitments to purchase such securities or denotes such assets as
segregated on the Fund's records. Purchasing securities on a forward
commitment or when-issued or delayed-delivery basis may involve a risk that
the market price at the time of delivery may be lower than the agreed upon
purchase price, in which case there could be an unrealized loss at the time
of delivery.
7. SWAP AGREEMENTS: The Fund may enter into swap agreements to exchange the
return generated by one security, instrument or basket of instruments for
the return generated by another security, instrument or basket of
instruments. The following summarizes swaps which may be entered into by
the Fund:
INTEREST RATE SWAPS: Interest rate swaps involve the exchange of
commitments to pay and receive interest based on a notional principal
amount. Net periodic interest payments to be received or paid are accrued
daily and are recorded in the Statement of Operations as an adjustment to
interest income. Interest rate swaps are marked-to-market daily based upon
quotations from market makers and the change, if any, is recorded as
unrealized appreciation or depreciation in the Statement of Operations.
TOTAL RETURN SWAPS: Total return swaps involve commitments to pay interest
in exchange for a market-linked return based on a notional amount. To the
extent the total return of the security, instrument or basket of
instruments underlying the transaction exceeds or falls short of the
offsetting interest obligation, the Fund will receive a payment from or
make a payment to the counterparty, respectively. Total return swaps are
marked-to-market daily based upon quotations from market makers and the
change, if any, is recorded as unrealized gains or losses in the Statement
of Operations. Periodic payments received or made at the end of each
measurement period, but prior to termination, are recorded as realized
gains or losses in the Statement of Operations.
Realized gains or losses on maturity or termination of interest rate and
total return swaps are presented in the Statement of Operations. Because
there is no organized market for these swap agreements, the value reported
in the Statement of Net Assets may differ from that which would be realized
in the event the Fund terminated its position in the agreement. Risks
16
<PAGE>
may arise upon entering into these agreements from the potential inability
of the counterparties to meet the terms of the agreements and are generally
limited to the amount of net interest payments to be received and/or
favorable movements in the value of the underlying security, instrument or
basket of instruments, if any, at the date of default.
Risks also arise from potential losses from adverse market movements, and
such losses could exceed the related amounts shown in the Statement of Net
Assets.
8. STRUCTURED SECURITIES: The Fund may invest in interests in entities
organized and operated solely for the purpose of restructuring the
investment characteristics of sovereign debt obligations. This type of
restructuring involves the deposit with or purchase by an entity of
specified instruments and the issuance by that entity of one or more
classes of securities ("Structured Securities") backed by, or representing
interests in, the underlying instruments. Structured Securities generally
will expose the Fund to credit risks of the underlying instruments as well
as of the issuer of the Structured Security. Structured Securities are
typically sold in private placement transactions with no active trading
market. Investments in Structured Securities may be more volatile than
their underlying instruments, however, any loss is limited to the amount of
the original investment.
9. OVER-THE-COUNTER TRADING: Securities and other derivative instruments that
may be purchased or sold by the Fund may consist of instruments not traded
on an exchange. The risk of nonperformance by the obligor on such an
instrument may be greater, and the ease with which the Fund can dispose of
or enter into closing transactions with respect to such an instrument may
be less, than in the case of an exchange-traded instrument. In addition,
significant disparities may exist between bid and asked prices for
derivative instruments that are not traded on an exchange. Derivative
instruments not traded on exchanges are also not subject to the same type
of government regulation as exchange traded instruments, and many of the
protections afforded to participants in a regulated environment may not be
available in connection with such transactions.
During the six month period ended June 30, 2000, the Fund's investments in the
derivative instruments described above only included foreign currency exchange
contracts.
10. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Investments in new Indian securities are made by
making applications in the public offerings. The issue price, or a portion
thereof, is paid at the time of application and is reflected as share
application money on the Statement of Net Assets, if any. Upon allotment of
the securities, this amount plus any remaining amount of issue price is
recorded as cost of investments. Realized gains and losses on the sale of
investment securities are determined on the specific identified cost basis.
Interest income is recognized on the accrual basis. Dividend income is
recorded on the ex-dividend date (except certain dividends which may be
recorded as soon as the Fund is informed of such dividend) net of
applicable withholding taxes where recovery of such taxes is not reasonably
assured. Distributions to shareholders are recorded on the ex-dividend
date.
The amount and character of income and capital gain distributions to be
paid by the Fund are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting
principles. The book/tax differences are either considered temporary or
permanent in nature.
Temporary differences are attributable to differing book and tax treatments
for the timing of the recognition of gains and losses on certain investment
transactions and the timing of the deductibility of certain expenses.
Permanent book and tax basis differences may result in reclassifications
among undistributed net investment income (loss), accumulated net realized
gain (loss) and paid in capital.
Adjustments for permanent book-tax differences, if any, are not reflected
in ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
B. Morgan Stanley Dean Witter Investment Management Inc. (the "Adviser")
provides investment advisory services to the Fund under the terms of an
Investment Advisory and Management Agreement (the "Agreement"). Under the
Agreement, the Adviser is paid a fee computed weekly and payable monthly at an
annual rate of 1.00% of the Fund's average weekly net assets.
C. The Chase Manhattan Bank, through its corporate affiliate Chase Global
Funds Services Company (the "Administrator"), provides administrative services
to the Fund under an Administration Agreement. Under the Administration
Agreement, the Administrator is paid a fee computed weekly and payable monthly
at an annual rate of 0.09% of the Fund's average weekly net assets, plus $65,000
per annum. In addition, the Fund is charged certain out-of-pocket expenses by
the Administrator.
D. The Chase Manhattan Bank serves as custodian for the Fund. Custody fees are
payable monthly based on assets held in custody, investment purchase and sales
activity and account maintenance fees, plus reimbursement for certain
out-of-pocket expenses.
17
<PAGE>
E. During the six month period ended June 30, 2000, the Fund made purchases
and sales totaling $188,844,000 and $193,575,000, respectively, of investment
securities other than long-term U.S. Government securities and short-term
investments. There were no purchases or sales of long-term U.S. Government
securities. At June 30, 2000, the U.S. Federal income tax cost basis of
securities was $692,674,000 and, accordingly, net unrealized appreciation was
$203,286,000 of which $259,743,000 related to appreciated securities and
$56,457,000 related to depreciated securities. At December 31, 1999, the Fund
had a capital loss carryforward for U.S. Federal income tax purposes of
approximately $169,662,000 available to offset future capital gains of which
$24,788,000 will expire on December 31, 2005 and $144,874,000 will expire on
December 31, 2006. To the extent that capital gains are offset, such gains will
not be distributed to the shareholders.
F. For the six month period ended June 30, 2000, the Fund incurred $45,000 of
brokerage commissions with Morgan Stanley & Co. Incorporated, an affiliate of
the Adviser.
G. A significant portion of the Fund's net assets consist of securities of
issuers located in Asia which are denominated in foreign currencies. Changes in
currency exchange rates will affect the value of and investment income from such
securities. Asian securities are subject to greater price volatility, limited
capitalization and liquidity, and higher rates of inflation than securities of
companies based in the United States. In addition, Asian securities may be
subject to substantial governmental involvement in the economy and greater
social, economic and political uncertainty. Such securities may be concentrated
in a limited number of countries and regions and may vary throughout the year.
H. Each Director of the Fund who is not an officer of the Fund or an
affiliated person as defined under the Investment Company Act of 1940, as
amended, may elect to participate in the Director's Deferred Compensation Plan
(the "Plan"). Under the Plan, such Directors may elect to defer payment of a
percentage of their total fees earned as a Director of the Fund. These deferred
portions are treated, based on an election by the Director, as if they were
either invested in the Fund's shares or invested in U.S. Treasury Bills, as
defined under the Plan. At June 30, 2000, the deferred fees payable, under the
Plan, totaled $145,000 and are included in Payable for Directors' Fees and
Expenses on the Statement of Net Assets.
I. On January 23, 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. For the six month period ended
June 30, 2000, the Fund repurchased 1,429,200 shares or 2.30% of its Common
Stock at an average price per share of $10.46, excluding $71,000 in commissions
paid, and an average discount of 27.78% from net asset value per share. For the
year ended December 31, 1999, the Fund repurchased 5,040,600 shares or 7.49% of
it's Common Stock at an average price per share of $8.23, excluding $252,000 in
commissions paid, and an average discount of 15.81% from net asset value per
share. Since the inception of the program, the Fund has repurchased 10,849,734
shares or 15.14% of its Common Stock at an average price per share of $7.85,
excluding $506,000 in commissions paid, and an average discount of 17.83% 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
of Directors.
J. During June 2000, the Board of Directors declared a distribution of $0.0348
per share, derived from net investment income, payable on July 11, 2000, to
shareholders of record on June 30, 2000.
18
<PAGE>
K. Supplemental Proxy Information
The Annual Meeting of the Stockholders of the Fund was held on June 15, 2000.
The following is a summary of the proposal presented and the total number of
shares voted:
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
PROPOSAL: FAVOR OF AGAINST ABSTAINED
--------- ---------- --------- -----------
<S> <C> <C> <C>
1. To elect the following Directors: Andrew McNally IV... ......... 47,523,839 3,402,754 --
Frederick O. Robertshaw....... 47,523,738 3,402,855 --
Harold J. Schaaff, Jr......... 47,524,569 3,402,024 --
Fergus Reid................... 47,523,839 3,402,754 --
Graham E. Jones............... 47,524,569 3,402,024 --
John D. Barrett II............ 47,524,569 3,402,024 --
Samuel T. Reeves.............. 47,459,869 3,466,724 --
Gerard E. Jones............... 47,524,569 3,402,024 --
</TABLE>
The Annual Meeting of the Stockholders of the Fund was reconvened on August 1,
2000. The following is a summary of the proposal presented and the total number
of shares voted:
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
PROPOSAL: FAVOR OF AGAINST ABSTAINED
--------- ---------- --------- -----------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as independent
accountants of the Fund ......................................... 48,953,330 2,993,705 56,325
</TABLE>
--------------------------------------------------------------------------------
CHANGE IN INDEPENDENT ACCOUNTANTS:
ON JULY 5, 2000, PRICEWATERHOUSECOOPERS LLP RESIGNED AS INDEPENDENT ACCOUNTANTS
OF THE FUND. THE REPORTS OF PRICEWATERHOUSECOOPERS LLP ON THE FINANCIAL
STATEMENTS OF THE FUND FOR THE PAST TWO FISCAL YEARS CONTAINED NO ADVERSE
OPINION OR DISCLAIMER OF OPINION AND WERE NOT QUALIFIED OR MODIFIED AS TO
UNCERTAINTY, AUDIT SCOPE OR ACCOUNTING PRINCIPLE. IN CONNECTION WITH ITS AUDITS
FOR THE TWO MOST RECENT FISCAL YEARS AND THROUGH JULY 5, 2000, THERE HAVE BEEN
NO DISAGREEMENTS WITH PRICEWATERHOUSECOOPERS LLP ON ANY MATTER OF ACCOUNTING
PRINCIPLES OR PRACTICES, FINANCIAL STATEMENT DISCLOSURE, OR AUDITING SCOPE OR
PROCEDURE, WHICH DISAGREEMENTS, IF NOT RESOLVED TO THE SATISFACTION OF
PRICEWATERHOUSECOOPERS LLP, WOULD HAVE CAUSED THEM TO MAKE REFERENCE THERETO IN
THEIR REPORT ON THE FINANCIAL STATEMENTS FOR SUCH YEARS. THE FUND, WITH THE
APPROVAL OF ITS BOARD OF DIRECTORS, AUDIT COMMITTEE AND SHAREHOLDERS, ENGAGED
ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS AS OF AUGUST 1, 2000.
19
<PAGE>
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
each shareholder will be deemed to have elected, unless American Stock Transfer
& Trust Company (the "Plan Agent") is otherwise instructed by the shareholder in
writing, to have all distributions automatically reinvested in Fund shares.
Participants in the Plan have the option of making additional voluntary cash
payments to the Plan Agent, annually, in any amount from $100 to $3,000, for
investment in Fund shares.
Dividend and capital gain distributions will be reinvested on the
reinvestment date. If the market price per share equals or exceeds net asset
value per share on the reinvestment date, the Fund will issue shares to
participants at net asset value. If net asset value is less than 95% of the
market price on the reinvestment date, shares will be issued at 95% of the
market price. If net asset value exceeds the market price on the reinvestment
date, participants will receive shares valued at market price. The Fund may
purchase shares of its Common Stock in the open market in connection with
dividend reinvestment requirements at the discretion of the Board of Directors.
Should the Fund declare a dividend or capital gain distribution payable only in
cash, the Plan Agent will purchase Fund shares for participants in the open
market as agent for the participants.
The Plan Agent's fees for the reinvestment of dividends and distributions
will be paid by the Fund. However, each participant's account will be charged a
pro rata share of brokerage commissions incurred on any open market purchases
effected on such participant's behalf. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. Although
shareholders in the Plan may receive no cash distributions, participation in the
Plan will not relieve participants of any income tax which may be payable on
such dividends or distributions.
In the case of shareholders, such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Shareholders who do not wish to have distributions automatically reinvested
should notify the Plan Agent in writing. There is no penalty for
non-participation or withdrawal from the Plan, and shareholders who have
previously withdrawn from the Plan may rejoin at any time. Requests for
additional information or any correspondence concerning the Plan should be
directed to the Plan Agent at:
Morgan Stanley Dean Witter Asia-Pacific Fund, Inc.
American Stock Transfer & Trust Company
Dividend Reinvestment and Cash Purchase Plan
40 Wall Street
New York, NY 10005
1-800-278-4353
20
