-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Syj4Pikeby8Pgu99YnRT5M++pnJufopM5s7+NY9miZjcDrPZ8Wag5dOLwxlPRT3y eS3jxKb4y7ZDjqvembTu4A== 0000912057-01-531040.txt : 20010903 0000912057-01-531040.hdr.sgml : 20010903 ACCESSION NUMBER: 0000912057-01-531040 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER ASIA PACIFIC FUND INC CENTRAL INDEX KEY: 0000919808 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08388 FILM NUMBER: 1729074 BUSINESS ADDRESS: STREET 1: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 6175578742 MAIL ADDRESS: STREET 1: MORGAN STANLEY ASIA PACIFIC FUND STREET 2: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY ASIA INVESTMENT FUND INC DATE OF NAME CHANGE: 19940316 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY ASIA PACIFIC FUND INC DATE OF NAME CHANGE: 19940505 N-30D 1 a2054446zn-30d.txt N-30D SEMI-ANNUAL REPORT [MORGAN STANLEY LOGO] MORGAN STANLEY ASIA-PACIFIC FUND, INC. JUNE 30, 2001 MORGAN STANLEY INVESTMENT MANAGEMENT INC. INVESTMENT ADVISER MORGAN STANLEY ASIA-PACIFIC FUND, INC. OVERVIEW LETTER TO SHAREHOLDERS For the six months ended June 30, 2001, the Morgan Stanley Asia-Pacific Fund, Inc. (the "Fund") had a total return, based on net asset value per share, of - -5.73% compared to -6.62% for its benchmark (described below). For the period from the Fund's commencement of operations on August 2, 1994 through June 30, 2001, the Fund's cumulative total return, based on net asset value per share, was -12.03% compared with -32.84% 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, 2001, the closing price of the Fund's shares on the New York Stock Exchange was $8.43, representing a 17.4% discount to the Fund's net asset value per share. MARKET OVERVIEW AND OUTLOOK ASIA EX-JAPAN Although non-Japan Asia suffered negative returns during the first half, the region was among the better performing regions in the world. It outperformed developed markets, in Europe and the U.S. Asian economies continued to struggle in countering the global economic slowdown despite lower interest rates, with only a few pockets of strength in domestic consumption demand in China and South Korea. The Fund continues to overweight China's domestic business-oriented companies in the auto, energy and airlines sectors as domestic consumption continued to be robust. In Korea, global market share gains in the U.S. for Korean auto manufacturers caused a massive re-rating in Korean auto stocks. The Fund was overweight Korean auto companies as a result. The Fund was also overweight Korean banks as they continued to show improvement in their returns-on-equity (ROEs). During the start of 2001, there were hopes of a U.S.-led V-shaped recovery in the second half for global economies. Recent data indicated otherwise. Our strategy at this point is to take neither a defensive nor an aggressive stance. We continue to search for attractive bottom-up opportunities in companies that are restructuring and enhancing ROEs, or those companies that are gaining market shares in spite of slowing markets. We believe that an anticipated sharp recovery in the second half is unlikely to materialize and in the short term, markets are likely to be range bound. While economic indicators and corporate earnings may be disappointing over the next few months, Asian markets in our view have well discounted this and are unlikely to correct massively on the same bad news. JAPAN During the second quarter of 2001 the Japanese market at one point climbed to almost 1,450 on the TOPIX after the Japanese fiscal year end in March and the election of Prime Minister Koizumi. Since then the market returned to levels at which the quarter began as it lacked direction in the face of a confluence of events including investor's concerns about Koizumi's reforms and lack of news on individual stocks. A weakening domestic economy, the poor outlook for the U.S. economy and volatile global stock markets also contributed to the downturn. In addition, the Japanese markets are reeling from the pressure of the unwinding of cross-holdings, and therefore negative supply and demand for stocks in the absence of buyers. We believe the worst is now being discounted by the markets. First, lower U.S. interest rates and tax cuts should begin to provide a cushion for the global economy, particularly during the second half of 2001. In addition, while most high tech companies in the U.S. and Japan have cut their earnings forecasts, seasonal year-end inventory adjustments may support supply and demand as production levels have already shrunk rapidly. OTHER DEVELOPMENTS 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 trade from their net asset value. For the six months ended June 30, 2001, there were no repurchases of Fund shares. From the inception of the program through June 30, 2001, the Fund has repurchased 14,225,634 of its shares at an average discount of 20.72% 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. On March 29, 2001, the Fund completed a tender offer. The Fund accepted 14,357,219 shares for payment which represented 25% of the Fund's then outstanding shares. Final payment was made on April 9, 2001 at $9.48 per share, representing 95% of the NAV per share on March 29, 2001. As noted in the Fund's first quarter report, the Fund's financial report presents our new format. If you have any questions or comments on the new look please contact us through our website, www.morganstanley.com/im, or call us at 1-800-221-6726. We appreciate your continued support. Sincerely, /s/Ronald E. Robison Ronald E. Robison PRESIDENT AND DIRECTOR July 2001 2 MORGAN STANLEY ASIA-PACIFIC FUND, INC. JUNE 30, 2001 (UNAUDITED) INVESTMENT SUMMARY HISTORICAL INFORMATION
TOTAL RETURN (%) ---------------------------------------------------------------------------------------- MARKET VALUE(1) NET ASSET VALUE(2) INDEX(3) ---------------------------------------------------------------------------------------- AVERAGE AVERAGE AVERAGE CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL ---------- ------ ---------- ------ ---------- ------ Year to Date -2.96% -- -5.73% -- -6.62% -- One Year -15.51 -15.51% -29.34 -29.34% -28.35 -28.35% Five Year -25.59 -5.74 -19.68 -4.29 -34.32 -8.07 Since Inception* -27.29 -4.50 -12.03 -1.84 -32.84 -5.60
Past performance is not predictive of future performance and assumes that all dividend distributions, if any, were reinvested. [CHART] RETURNS AND PER SHARE INFORMATION]
SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ----------------------------------------------------------------------- JUNE 30, 1994* 1995 1996 1997 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------ Net Asset Value Per Share $13.20 $ 14.34 $ 11.95 $ 8.77 $ 8.73 $15.26 $10.82 $ 10.20 - ------------------------------------------------------------------------------------------------------------ Market Value Per Share $12.25 $ 13.33 $ 9.75 $ 7.44 $ 7.00 $11.81 $8.69 $8.43 - ------------------------------------------------------------------------------------------------------------ Premium/(Discount) -7.2% -7.0% -18.4% -15.2% -19.8% -22.6% -19.7% -17.4% - ------------------------------------------------------------------------------------------------------------ Income Dividends $ 0.04 $ 0.05 $ 0.61 $ 0.02 $ 0.01 $ 0.04 $0.22 -- - ------------------------------------------------------------------------------------------------------------ Capital Gains $ 0.01 $ 0.02 -- -- -- -- -- -- Distributions - ------------------------------------------------------------------------------------------------------------ Fund Total Return(2) -5.94% 9.24% -2.87%+ -26.36% -0.34% 75.39% -27.37% -5.73% - ------------------------------------------------------------------------------------------------------------ Index Total Return(3) -5.24% 2.88% -3.63% -29.55% -0.30% 54.79% -29.59% -6.62% - ------------------------------------------------------------------------------------------------------------
(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. 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. 3 PORTFOLIO SUMMARY [CHART OF ALLOCATION OF TOTAL INVESTMENTS] Equity Securities 98.4% Short-Term Investments 1.6
[CHART OF INDUSTRIES] Banks 8.0% Household Durables 7.3 Semiconductor Equipment & Product 6.3 Electronic Equipment & Instruments 6.1 Computers & Peripherals 6.1 Machinery 5.7 Automobiles 4.6 Real Estate 4.1 Chemicals 3.9 Pharmaceuticals 3.6 Other 44.3
[CHART OF COUNTRY WEIGHTINGS] Japan 48.2% China / Hong Kong 14.0 Taiwan 7.5 South Korea 8.7 Australia 8.5 Singapore 5.9 India 4.3 Malaysia 1.3 Other 1.6
TEN LARGEST HOLDINGS
PERCENT OF NET ASSETS - -------------------------------------------------------------------- 1. Hutchison Whampoa Ltd. (China/Hong Kong) 2.3% 2. China Mobile (Hong Kong) Ltd. (China/Hong Kong) 1.8 3. Nintendo Co., Ltd. (Japan) 1.8 4. Samsung Electronics Co., Ltd. (South Korea) 1.8 5. Ricoh Co., Ltd. (Japan) 1.7 6. Hitachi Ltd. (Japan) 1.6% 7. Taiwan Semiconductor Manufacturing Co., Ltd.(Taiwan) 1.6 8. Sony Corp. (Japan) 1.5 9. Canon, Inc. (Japan) 1.5 10. Fuji Photo Film Co., Ltd. (Japan) 1.5 ----- 17.1% =====
4 MORGAN STANLEY ASIA-PACIFIC FUND, INC. FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) STATEMENT OF NET ASSETS
VALUE SHARES (000) - ---------------------------------------------------------------------------------------------------------- COMMON STOCKS (98.2%) (Unless otherwise noted) ========================================================================================================== AUSTRALIA (8.5%) AIRLINES Qantas Airlines Ltd. 652,000 $ 1,164 - ---------------------------------------------------------------------------------------------------------- BANKS Commonwealth Bank of Australia 95,900 1,670 National Australia Bank Ltd. 209,400 3,744 Westpac Banking Corp., Ltd. 279,650 2,062 - ---------------------------------------------------------------------------------------------------------- 7,476 - ---------------------------------------------------------------------------------------------------------- BEVERAGES Foster's Brewing Group Ltd. 812,000 2,270 - ---------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES Brambles Industries Ltd. 82,750 2,026 - ---------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Telstra Corp., Ltd. 1,027,150 2,819 - ---------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS ERG, Ltd. 745,880 548 - ---------------------------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES Sonic Healthcare Ltd. 169,200 683 - ---------------------------------------------------------------------------------------------------------- MEDIA News Corp., Ltd. 648,400 5,959 - ---------------------------------------------------------------------------------------------------------- MEDICAL INSTRUMENTS Resmed Inc. 85,900(a) 455 - ---------------------------------------------------------------------------------------------------------- METALS & MINING BHP Billiton Ltd. (Bonus Shares) 479,828(a) 2,606 BHP Billiton Ltd. 450,500 2,388 Normandy Mining Ltd. 1,749,100 1,106 Rio Tinto Ltd. 254,600 4,433 - ---------------------------------------------------------------------------------------------------------- 10,533 - ---------------------------------------------------------------------------------------------------------- PHARMACEUTICALS CSL Ltd. 87,610 2,131 - ---------------------------------------------------------------------------------------------------------- REAL ESTATE Lend Lease Corp., Ltd. 137,250 879 - ---------------------------------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE Lang Corp., Ltd. 70,250 394 - ---------------------------------------------------------------------------------------------------------- 37,337 ========================================================================================================== CHINA/HONG KONG (14.0%) AIRLINES Beijing Capital International Airport Co., Ltd. 484,000 $ 152 Cathay Pacific Airways 335,000 453 China Southern Airlines Co., Ltd. 1,321,000(a) 411 - ---------------------------------------------------------------------------------------------------------- 1,016 - ---------------------------------------------------------------------------------------------------------- AUTOMOBILES Brilliance China Automotive Holdings Ltd. 1,484,000 361 Denway Motors Ltd. 1,873,900(a) 673 - ---------------------------------------------------------------------------------------------------------- 1,034 - ---------------------------------------------------------------------------------------------------------- BANKS Bank of East Asia 138,000 320 Hang Seng Bank Ltd. 221,900 2,276 HSBC Holdings plc 36,200 428 - ---------------------------------------------------------------------------------------------------------- 3,024 - ---------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES Greencool Technology Holdings Ltd. 1,250,000 497 - ---------------------------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS Legend Holdings Ltd. 1,716,000 963 - ---------------------------------------------------------------------------------------------------------- DISTRIBUTORS China Resources Enterprise Ltd. 430,000 725 Li & Fung Ltd. 1,688,000 2,770 - ---------------------------------------------------------------------------------------------------------- 3,495 - ---------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Hong Kong Exchanges and Clearing Ltd. 256,000 456 Swire Pacific Ltd. 'A' 646,600 3,349 Wharf Holdings Ltd. 126,000 264 - ---------------------------------------------------------------------------------------------------------- 4,069 - ---------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES CLP Holdings Ltd. 202,200 848 - ---------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Johnson Electric Holding Ltd. 1,316,000 1,805 - ---------------------------------------------------------------------------------------------------------- GAS UTILITIES Hong Kong & China Gas Co., Ltd. 1,709,950 2,148 - ----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 5
VALUE SHARES (000) - ---------------------------------------------------------------------------------------------------------- CHINA/HONG KONG (CONTINUED) INDUSTRIAL CONGLOMERATES China Merchants Holdings International Co., Ltd. 1,148,000 $ 868 Citic Pacific Ltd. 698,000 2,161 Hutchison Whampoa Ltd. 1,019,950 10,298 - --------------------------------------------------------------------------------------------------------- 13,327 - --------------------------------------------------------------------------------------------------------- MEDIA Asia Satellite Telecom Holdings Ltd. 482,000 834 Television Broadcasts Ltd. 304,000 1,279 - --------------------------------------------------------------------------------------------------------- 2,113 - --------------------------------------------------------------------------------------------------------- METALS & MINING Yanzhou Coal Mining Co., Ltd. 1,644,000 759 - --------------------------------------------------------------------------------------------------------- OIL & GAS China Petroleum & Chemical Corp. 4,348,000 870 CNOOC Ltd. 2,069,000(a) 1,963 - --------------------------------------------------------------------------------------------------------- 2,833 - --------------------------------------------------------------------------------------------------------- REAL ESTATE Amoy Properties Ltd. 409,000 469 Cheung Kong (Holdings) Ltd. 445,000 4,850 Henderson Land Development Co., Ltd. 146,000 648 Hong Kong Land Holdings Ltd. 455,000 819 New World Development Co., Ltd. 722,000 879 Sino Land Co., Ltd. 984,000 410 Sun Hung Kai Properties Ltd. 405,000 3,648 - --------------------------------------------------------------------------------------------------------- 11,723 - --------------------------------------------------------------------------------------------------------- SOFTWARE Travelsky Technology Ltd. 710,000(a) 719 - --------------------------------------------------------------------------------------------------------- SPECIALTY RETAIL Esprit Holdings Ltd. 741,000 812 Giordano International Ltd. 836,000 434 - --------------------------------------------------------------------------------------------------------- 1,246 - --------------------------------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE Cosco Pacific Ltd. 496,000 327 - --------------------------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES China Mobile (Hong Kong) Ltd. 1,522,000(a) $ 8,039 China Unicom Ltd. 774,000(a) 1,350 SmarTone Telecommunications Holdings Ltd. 152,000 175 - --------------------------------------------------------------------------------------------------------- 9,564 - --------------------------------------------------------------------------------------------------------- 61,510 ========================================================================================================== INDIA (4.3%) AUTOMOBILES Hero Honda Motors Ltd. 178,805 549 - --------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES Aptech Ltd. 164,800 311 - --------------------------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT Sterlite Optical Technologies Ltd. 185,150(a) 1,335 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Morgan Stanley Growth Fund 17,158,100 2,918 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Mahanagar Telephone Nigam Ltd. 337,127(a) 905 Videsh Sanchar Nigam Ltd. 151,430 1,029 - --------------------------------------------------------------------------------------------------------- 1,934 - --------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Bharat Heavy Electricals 197,937 742 Sterlite Industries (India) Ltd. 236,750(a) 516 - --------------------------------------------------------------------------------------------------------- 1,258 - --------------------------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS Colgate-Palmolive (India) 59,000(a) 204 - --------------------------------------------------------------------------------------------------------- IT CONSULTING & SERVICES Digital Equipment (India) Ltd. 116,622 1,235 HCL Technologies Ltd. 145,170 905 Infosys Technologies Ltd. 47,850 3,826 NIIT Ltd. 53,200 431 SSI Ltd. 67,100 437 SSI Ltd. GDR 105,000 71 - --------------------------------------------------------------------------------------------------------- 6,905 - --------------------------------------------------------------------------------------------------------- MACHINERY Escorts Ltd. 180,000(a) 243 - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 6
VALUE SHARES (000) - --------------------------------------------------------------------------------------------------------- INDIA (CONTINUED) METALS & MINING Tata Iron & Steel Co., Ltd. 1,910 $ 5 - --------------------------------------------------------------------------------------------------------- OIL & GAS Bharat Petroleum Corp., Ltd. - New 78,300 313 Hindustan Petroleum Corp., Ltd. 80,000(a) 269 - --------------------------------------------------------------------------------------------------------- 582 - --------------------------------------------------------------------------------------------------------- PHARMACEUTICALS Cipla Ltd. 10,735(a) 261 Dr. Reddy's Laboratories Ltd. 32,992 1,129 - --------------------------------------------------------------------------------------------------------- 1,390 - --------------------------------------------------------------------------------------------------------- TOBACCO ITC Ltd. 67,900 1,090 - --------------------------------------------------------------------------------------------------------- 18,724 ========================================================================================================== JAPAN (48.2%) AUTO COMPONENTS Nifco, Inc. 230,000 2,377 - --------------------------------------------------------------------------------------------------------- AUTOMOBILES Nissan Motor Co., Ltd. 780,000 5,384 Suzuki Motor Corp. 379,000 5,043 Toyota Motor Corp. 144,000 5,068 - --------------------------------------------------------------------------------------------------------- 15,495 - --------------------------------------------------------------------------------------------------------- BANKS Mitsubishi Tokyo Financial Group, Inc. 85(a) 709 - --------------------------------------------------------------------------------------------------------- BUILDING PRODUCTS Sanwa Shutter Corp., Ltd. 302,000 845 - --------------------------------------------------------------------------------------------------------- CHEMICALS Daicel Chemical Industries Ltd. 840,000 2,936 Denki Kagaku Kogyo Kabushiki Kaisha 600,000 2,034 Kaneka Corp. 579,000 5,240 Lintec Corp. 240,000 2,209 Mitsubishi Chemical Corp. 894,000 2,394 Shin-Etsu Polymer Co., Ltd. 450,000 2,172 - --------------------------------------------------------------------------------------------------------- 16,985 - --------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES Dai Nippon Printing Co., Ltd. 313,000 $ 3,819 Nissha Printing Co., Ltd. 63,000 452 - --------------------------------------------------------------------------------------------------------- 4,271 - --------------------------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS Fujitsu Ltd. 493,000 5,178 Mitsumi Electric Co., Ltd. 226,000 4,212 NEC Corp. 418,000 5,646 Toshiba Corp. 1,086,000 5,737 - --------------------------------------------------------------------------------------------------------- 20,773 - --------------------------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING Kurita Water Industries Ltd. 327,000 4,498 - --------------------------------------------------------------------------------------------------------- DISTRIBUTORS Nissei Sangyo Co., Ltd. 95,000 1,260 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Hitachi Credit Corp. 237,900 5,702 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Nippon Telephone & Telegraph Corp. 934 4,867 - --------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES Tokyo Electric Power Co., Inc. 118,000 3,055 - --------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Furakawa Electric Co., Ltd. 278,000 2,217 Kyudenko Co. 290,000 986 - --------------------------------------------------------------------------------------------------------- 3,203 - --------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Hitachi Ltd. 700,000 6,874 Kyocera Corp. 70,000 6,172 Ryosan Co., Ltd. 143,000 2,116 TDK Corp. 90,000 4,192 - --------------------------------------------------------------------------------------------------------- 19,354 - --------------------------------------------------------------------------------------------------------- FOOD & DRUG RETAILING FamilyMart Co., Ltd. 142,200 2,320 - --------------------------------------------------------------------------------------------------------- FOOD PRODUCTS House Foods Corp. 111,000 1,215 Nippon Meat Packers, Inc. 178,000 2,156 - --------------------------------------------------------------------------------------------------------- 3,371 - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 7
VALUE SHARES (000) - ---------------------------------------------------------------------------------------------------------- JAPAN (CONTINUED) HOUSEHOLD DURABLES Aiwa Co., Ltd. 78,800(a) $ 398 Casio Computer Co., Ltd. 450,000 2,615 Matsushita Electric Industrial Co., Ltd. 367,000 5,743 Nintendo Co., Ltd. 44,000 8,007 Rinnai Corp. 108,700 2,117 Sangetsu Co., Ltd. 17,000 252 Sekisui Chemical Co., Ltd. 443,000 1,832 Sekisui House Ltd. 390,000 3,311 Sony Corp. 103,000 6,771 - --------------------------------------------------------------------------------------------------------- 31,046 - --------------------------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS Fuji Photo Film Co., Ltd. 151,000 6,512 Yamaha Corp. 292,000 2,943 - --------------------------------------------------------------------------------------------------------- 9,455 - --------------------------------------------------------------------------------------------------------- MACHINERY Amada Co., Ltd. 592,000 2,995 Daifuku Co., Ltd. 623,000 3,086 Daikin Industries Ltd. 279,000 5,166 Fuji Machine Manufacturing Co., Ltd. 186,000 3,407 Fujitec Co., Ltd. 170,000 793 Minebea Co., Ltd. 500,000 3,291 Mitsubishi Heavy Industries Ltd. 932,000 4,251 Tsubakimoto Chain Co. 532,000 1,719 - --------------------------------------------------------------------------------------------------------- 24,708 - --------------------------------------------------------------------------------------------------------- MARINE Mitsubishi Logistics Corp. 135,000 1,229 - --------------------------------------------------------------------------------------------------------- OFFICE ELECTRONICS Canon, Inc. 164,000 6,626 Ricoh Co., Ltd. 351,000 7,569 - --------------------------------------------------------------------------------------------------------- 14,195 - --------------------------------------------------------------------------------------------------------- PHARMACEUTICALS Ono Pharmaceutical Co., Ltd. 128,000 4,063 Sankyo Co., Ltd. 210,000 3,788 Yamanouchi Pharmaceutical Co., Ltd. 159,000 4,461 - --------------------------------------------------------------------------------------------------------- 12,312 - --------------------------------------------------------------------------------------------------------- REAL ESTATE Mitsubishi Estate Co., Ltd. 362,000 3,328 - --------------------------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS Rohm Co., Ltd. 30,000 4,661 - --------------------------------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS Mitsubishi Corp. 100,000 806 Nagase & Co., Ltd. 197,000 955 - --------------------------------------------------------------------------------------------------------- 1,761 - --------------------------------------------------------------------------------------------------------- 211,780 ========================================================================================================= MALAYSIA (1.3%) BANKS Malayan Banking Bhd 677,000 1,835 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Telekom Malaysia Bhd 556,000 1,288 - --------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES Tenaga Nasional Bhd , 382,000 880 - --------------------------------------------------------------------------------------------------------- TOBACCO British American Tobacco (Malaysia) Bhd 190,000 1,737 ========================================================================================================== 5,740 ========================================================================================================== SINGAPORE (5.9%) AEROSPACE & DEFENSE SIA Engineering Co., Ltd. 544,000 421 Singapore Technologies Engineering Ltd. 714,000 1,011 - --------------------------------------------------------------------------------------------------------- 1,432 - --------------------------------------------------------------------------------------------------------- AIRLINES Singapore Airlines Ltd. 328,000 2,268 - --------------------------------------------------------------------------------------------------------- BANKS DBS Group Holdings Ltd. 559,979 4,118 Oversea-Chinese Banking Corp., Ltd. 596,700 3,897 Overseas Union Bank Ltd. 289,210 1,500 United Overseas Bank Ltd. 409,000 2,582 - --------------------------------------------------------------------------------------------------------- 12,097 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Keppel Corp., Ltd. 466,000 926 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Singapore Telecommunications Ltd. 654,000 682 - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 8
VALUE SHARES (000) - --------------------------------------------------------------------------------------------------------- SINGAPORE (CONTINUED) ELECTRONIC EQUIPMENT & INSTRUMENTS Omni Industries Ltd. 595,000 $ 1,319 Venture Manufacturing (Singapore) Ltd. 388,000 2,577 - --------------------------------------------------------------------------------------------------------- 3,896 - --------------------------------------------------------------------------------------------------------- MEDIA Singapore Press Holdings Ltd. 149,600 1,642 - --------------------------------------------------------------------------------------------------------- REAL ESTATE Capitaland, Ltd. 651,000 893 City Developments Ltd. 240,000 929 - --------------------------------------------------------------------------------------------------------- 1,822 - --------------------------------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE Sembcorp Logistics Ltd. 860,800 1,101 - --------------------------------------------------------------------------------------------------------- 25,866 ========================================================================================================== SOUTH KOREA (8.5%) AUTO COMPONENTS Hyundai Mobis 104,860 1,129 - --------------------------------------------------------------------------------------------------------- AUTOMOBILES Hyundai Motor Co., Ltd. 139,410 3,034 - --------------------------------------------------------------------------------------------------------- BANKS H&CB 68,641 1,536 Hana Bank 81,200 593 Kookmin Bank 167,101 2,242 Shinhan Bank 286,180 2,938 - --------------------------------------------------------------------------------------------------------- 7,309 - --------------------------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING LG Engineering & Construction Co., Ltd. 66,460 552 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Kookmin Credit Card Co., Ltd. 17,470 497 Samsung Securities Co., Ltd. 29,910(a) 851 - --------------------------------------------------------------------------------------------------------- 1,348 - --------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Korea Telecom Corp. 2,440 98 Korea Telecom Corp. ADR 128,000 2,813 - --------------------------------------------------------------------------------------------------------- 2,911 - --------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES Korea Electric Power Corp. 39,330 732 Korea Electric Power Corp. ADR 121,200 1,151 - --------------------------------------------------------------------------------------------------------- 1,883 - --------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Samsung Electro Mechanics Co., Ltd. 14,141 508 - --------------------------------------------------------------------------------------------------------- FOOD PRODUCTS Tongyang Confectionery Corp. 24,610 420 - --------------------------------------------------------------------------------------------------------- HOUSEHOLD DURABLES Humax Co., Ltd. 73,290 1,076 - --------------------------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS LG Household & Health Care Ltd. 21,560(a) 488 - --------------------------------------------------------------------------------------------------------- MEDIA Cheil Communications, Inc. 15,140 1,316 - --------------------------------------------------------------------------------------------------------- METALS & MINING Pohang Iron & Steel Co., Ltd. 20,060 1,604 Pohang Iron & Steel Co., Ltd. ADR 38,900 767 - --------------------------------------------------------------------------------------------------------- 2,371 - --------------------------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS Samsung Electronics Co., Ltd. 53,337 7,874 - --------------------------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Korea Telecom Freetel 19,660 567 SK Telecom Co., Ltd. 12,590 1,854 SK Telecom Co., Ltd. ADR 160,600 2,714 - --------------------------------------------------------------------------------------------------------- 5,135 - --------------------------------------------------------------------------------------------------------- 37,354 ========================================================================================================== TAIWAN (7.5%) BANKS Bank Sinopac 850,000(a) 392 Chinatrust Commercial Bank 1,651,480 1,156 Taipei Bank 873,000 474 Taishin International Bank 1,841,520(a) 840 - --------------------------------------------------------------------------------------------------------- 2,862 - --------------------------------------------------------------------------------------------------------- CHEMICALS Nan Ya Plastic Corp. 252,419 255 - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 9
VALUE SHARES (000) - --------------------------------------------------------------------------------------------------------- TAIWAN (CONTINUED) COMPUTERS & PERIPHERALS Ambit Microsystems Corp. 116,191 $ 486 Asustek Computer, Inc. 453,800 1,918 Compal Electronics, Inc. GDR 2,700(a) 15 Compal Electronics, Inc. 515,954 554 Quanta Computer, Inc. 572,000 1,944 - --------------------------------------------------------------------------------------------------------- 4,917 - --------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Delta Electronics, Inc. 760,250 1,877 - --------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Hon Hai Precision Industry Co., Ltd. 508,860 2,675 - --------------------------------------------------------------------------------------------------------- FOOD & DRUG RETAILING President Chain Store Corp. 370,632 802 - --------------------------------------------------------------------------------------------------------- FOOD PRODUCTS Uni-President Enterprises Co. 1,882,000 793 - --------------------------------------------------------------------------------------------------------- INSURANCE Cathay Life Insurance Co., Ltd. 409,000 493 Fubon Insurance Co. 816,000 675 - --------------------------------------------------------------------------------------------------------- 1,168 - --------------------------------------------------------------------------------------------------------- METALS & MINING China Steel Corp. 1,789,000 894 - --------------------------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS ASE Test Ltd. 48,300(a) 618 Elan Microelectronics Corp. 143,000 276 Faraday Technology Corp. 54,000 428 Macronix International Co., Ltd. 24,088(a) 25 ProMos Technologies, Inc. 742,046(a) 565 Realtek Semiconductor Corp. 81,000 367 Siliconware Precision Industries Co. 2,307,640(a) 1,307 Sunplus Technology Co., Ltd. 87,000 369 Taiwan Semiconductor Manufacturing Co., Ltd. 3,674,168(a) 6,830 United Microelectronics Corp. 2,623,400(a) 3,482 Winbond Electronics Corp. 867,044 728 - --------------------------------------------------------------------------------------------------------- 14,995 - --------------------------------------------------------------------------------------------------------- TEXTILES & APPAREL Far Eastern Textile Ltd. 1,073,724 599 Far Eastern Textile Ltd. GDR 6,729(b) 35 Formosa Chemicals & Fibre Corp. 721,440 505 - --------------------------------------------------------------------------------------------------------- 1,139 - --------------------------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Taiwan Cellular Corp. 393,426(a) 513 - --------------------------------------------------------------------------------------------------------- 32,890 - --------------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $468,012) 431,201 ========================================================================================================= PREFERRED STOCK (0.2%) ========================================================================================================= SOUTH KOREA (0.2%) SEMICONDUCTOR EQUIPMENT & PRODUCTS Samsung Electronics Co., Ltd. (Cost $1,657) 14,240 881 =========================================================================================================
FACE AMOUNT (000) - --------------------------------------------------------------------------------------------------------- RIGHTS (0.0%) ========================================================================================================= JAPAN (0.0%) Aiwa Co., Ltd. (Cost $--@) $ 78,800(a) 63 ========================================================================================================= SHORT-TERM INVESTMENT (1.1%) ========================================================================================================= REPURCHASE AGREEMENT J.P. Morgan Securities Inc., 3.70%, dated 06/29/01, due 07/02/01 (Cost $5,030) $ 5,030(c) 5,030 ========================================================================================================= FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.8%) ========================================================================================================= Australian Dollar AUD 10 5 Hong Kong Dollar HKD 268 35 Indian Rupee INR 2,321 49 Japanese Yen JPY 38,406 308 Singapore Dollar SGD 10 5 Taiwan Dollar TWD 99,592 2,893 - --------------------------------------------------------------------------------------------------------- TOTAL FOREIGN CURRENCY (Cost $3,309) 3,295 =========================================================================================================
The accompanying notes are an integral part of the financial statements. 10
VALUE (000) - --------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (100.3%) (Cost $478,008) $ 440,470 ========================================================================================================= AMOUNT (000) - --------------------------------------------------------------------------------------------------------- OTHER ASSETS (0.3%) Dividends Receivable $999 Receivable for Investments Sold 169 Interest Receivable 1 Other 80 1,249 ========================================================================================================= LIABILITIES (-0.6%) Payable For: Investments Purchased (1,350) Investment Advisory Fees (354) Custodian Fees (226) Professional Fees (159) Directors' Fees and Expenses (98) Shareholder Reporting Expenses (91) Administrative Fees (57) Net unrealized Loss on Foreign Currency Exchange Contracts (3) Other Liabilities (199) (2,537) ========================================================================================================= NET ASSETS (100%) Applicable to 43,071,656, issued and outstanding $ 0.01 par value shares (100,000,000 shares authorized) $ 439,182 ========================================================================================================= NET ASSET VALUE PER SHARE $ 10.20 ========================================================================================================= AT JUNE 30, 2001, NET ASSETS CONSISTED OF: Common Stock $ 431 Paid-in Capital 665,895 Accumulated Distributions in Excess of Net Investment Income (6,427) Accumulated Net Realized Loss (183,167) Unrealized Depreciation on Investments and Foreign Currency Translations (37,550) ========================================================================================================= TOTAL NET ASSETS $ 439,182 =========================================================================================================
(a) -- Non-income producing. (b) -- 144A Security - certain conditions for public sale may exist. (c) -- The repurchase agreement is fully collateralized by U.S. government and/or agency obligations based on market prices at the date of this statement of net assets. The investment in the repurchase agreement is through participation in a joint account with affiliated funds. @ -- Value is less than $500. GDR -- Global Depositary Receipt ADR -- American Depositary Receipt
================================================================================ JUNE 30, 2001 EXCHANGE RATES: - -------------------------------------------------------------------------------- AUD Australian Dollar 1.953=U.S.$1.00 HKD Hong Kong Dollar 7.800=U.S.$1.00 INR Indian Rupee 47.040=U.S.$1.00 JPY Japanese Yen 124.650=U.S.$1.00 SGD Singapore Dollar 1.823=U.S.$1.00 TWD Taiwan Dollar 34.430=U.S.$1.00 ================================================================================
FOREIGN CURRENCY EXCHANGE CONTRACT INFORMATION: Under the terms of a foreign currency exchange contract open at June 30, 2001, the Fund is obligated to deliver U.S. dollars in exchange for foreign currency as indicated below:
CURRENCY IN NET TO EXCHANGE UNREAL DELIVER VALUE SETTLEMENT FOR VALUE LOSS (000) (000) DATE (000) (000) (000) ========================================================================================================= U.S. $206 $206 07/02/01 AUD 398 $203 $(3) =========================================================================================================
The accompanying notes are an integral part of the financial statements. 11 SUMMARY OF TOTAL INVESTMENTS BY INDUSTRY CLASSIFICATION -- JUNE 30, 2001
PERCENT VALUE OF NET INDUSTRY (000) ASSETS - -------------------------------------------------------------------------------- Aerospace & Defense $1,432 0.3% Airlines 4,448 1.0 Auto Components 3,505 0.8 Automobiles 20,112 4.6 Banks 35,313 8.0 Beverages 2,270 0.5 Building Products 845 0.2 Chemicals 17,240 3.9 Commercial Services & Supplies 7,105 1.6 Communications Equipment 1,335 0.3 Computers & Peripherals 26,652 6.1 Construction & Engineering 5,050 1.2 Distributors 4,755 1.1 Diversified Financials 14,700 3.4 Diversified Telecommunication Services 14,500 3.3 Electric Utilities 6,666 1.5 Electrical Equipment 8,144 1.9 Electronic Equipment & Instruments 26,981 6.1 Food & Drug Retailing 3,122 0.7 Food Products 4,583 1.0 Gas Utilities 2,148 0.5 Health Care Providers & Services 683 0.2 Household Durables 32,122 7.3 Household Products 693 0.2 Industrial Conglomerates 13,327 3.0 Insurance 1,168 0.3 IT Consulting & Services 6,905 1.6 Leisure Equipment & Products 9,455 2.2 Machinery 24,951 5.7 Marine 2,330 0.5 Media 11,030 2.5 Medical Instruments 455 0.1 Metals & Mining 14,562 3.3 Office Electronics 14,195 3.2 Oil & Gas 3,414 0.8 Pharmaceuticals 15,834 3.6 Real Estate 18,015 4.1 Semiconductor Equipment & Products 27,530 6.3 Software 719 0.2 Specialty Retail 1,246 0.3 Textiles & Apparel 1,139 0.3 Tobacco 2,827 0.6 Trade Companies & Distributors 1,761 0.4 Transportation Infrastructure 722 0.2 Wireless Telecommunication Services 15,212 3.5 Other 9,269 1.9 - -------------------------------------------------------------------------------- $440,470 100.3% ================================================================================
The accompanying notes are an integral part of the financial statements. 12 MORGAN STANLEY ASIA-PACIFIC FUND, INC. FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2001 STATEMENT OF OPERATIONS (UNAUDITED) (000) - ------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME Dividends (net of $388 of foreign taxes withheld) $ 3,615 Interest 591 - ------------------------------------------------------------------------------------------------------------ Total Income 4,206 ============================================================================================================ EXPENSES Investment Advisory Fees 2,619 Administrative Fees 281 Custodian Fees 229 Professional Fees 113 Shareholder Reporting Expenses 90 Transfer Agent Fees 62 Country Tax Expense 22 Directors' Fees and Expenses 7 Other Expenses 164 - ------------------------------------------------------------------------------------------------------------ Total Expenses 3,587 ============================================================================================================ Net Investment Income 619 ============================================================================================================ NET REALIZED LOSS ON: Investments (45,232) Foreign Currency Transactions (99) - ------------------------------------------------------------------------------------------------------------ Net Realized Loss (45,331) ============================================================================================================ CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON: Investments (1,479) Foreign Currency Translations (26) - ------------------------------------------------------------------------------------------------------------ Change in Unrealized Appreciation/Depreciation (1,505) ============================================================================================================ Total Net Realized Loss and Change in Unrealized Appreciation/Depreciation (46,836) ============================================================================================================ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (46,217) ============================================================================================================
SIX MONTHS ENDED JUNE 30, 2001 YEAR ENDED (UNAUDITED) DECEMBER 31,2000 STATEMENT OF CHANGES IN NET ASSETS (000) (000) - --------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net Investment Income (Loss) $ 619 $ (540) Net Realized Gain (Loss) (45,331) 39,181 Change in Unrealized Appreciation/Depreciation (1,505) (304,247) - --------------------------------------------------------------------------------------------------------------------- Net Decrease in Net Assets Resulting from Operations (46,217) (265,606) - --------------------------------------------------------------------------------------------------------------------- Distributions: Net Investment Income -- (5,936) In Excess of Net Investment Income -- (7,046) - --------------------------------------------------------------------------------------------------------------------- Total Distributions -- (12,982) - --------------------------------------------------------------------------------------------------------------------- Capital Share Transactions: Repurchase of Shares (14,357,219 and 4,805,100 shares, respectively) (136,106) (49,448) - --------------------------------------------------------------------------------------------------------------------- Total Decrease (182,323) (328,036) Net Assets: Beginning of Period 621,505 949,541 - --------------------------------------------------------------------------------------------------------------------- End of Period (including accumulated distributions in excess of net investment income of $6,427 and $7,046, respectively) $ 439,182 $ 621,505 =====================================================================================================================
The accompanying notes are an integral part of the financial statements. 13 SELECTED PER SHARE DATA AND RATIOS
SIX MONTHS ENDED JUNE 30, 2001 YEARS ENDED DECEMBER 31, (UNAUDITED) ------------------------------------------------------------------------ (UNAUDITED) 2000 1999 1998 1997 1996 - --------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.82 $ 15.26 $ 8.73 $ 8.77 $ 11.95 $ 14.34 - -------------------------------------------------------------------------------------------------------------------- Offering Costs -- -- -- -- -- (0.01) - -------------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) 0.01* (0.01) 0.01 0.06 0.03 0.02 Net Realized and Unrealized Gain (Loss) on Investments (0.80) (4.50) 6.44 (0.17) (3.19) (0.33) - -------------------------------------------------------------------------------------------------------------------- Total from Investment Operations (0.79) (4.51) 6.45 (0.11) (3.16) (0.31) - -------------------------------------------------------------------------------------------------------------------- Distributions: Net Investment Income -- (0.10) (0.01) -- (0.02) (0.60) In Excess of Net Investment Income -- (0.12) (0.03) (0.01) -- (0.01) - -------------------------------------------------------------------------------------------------------------------- Total Distributions -- (0.22) (0.04) (0.01) (0.02) (0.61) - -------------------------------------------------------------------------------------------------------------------- Decrease in Net Asset Value due to Shares Issued through Rights Offering -- -- -- -- -- (1.46) Anti--Dilutive Effect of Shares Repurchased 0.17 0.29 0.12 0.08 -- -- - -------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 10.20 $ 10.82 $ 15.26 $ 8.73 $ 8.77 $ 11.95 ==================================================================================================================== PER SHARE MARKET VALUE, END OF PERIOD $ 8.43 $ 8.69 $ 11.81 $ 7.00 $ 7.44 $ 9.75 ==================================================================================================================== TOTAL INVESTMENT RETURN: Market Value (2.96)% (24.66)% 69.32% (5.77)% (23.46)% (14.72)%+ Net Asset Value (1) (5.73)% (27.37)% 75.39% (0.34)% (26.36)% (2.87)%+ ==================================================================================================================== RATIOS, SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------- NET ASSETS, END OF PERIOD (THOUSANDS) $ 439,182 $621,505 $ 949,541 $587,156 $ 628,173 $ 856,397 - --------------------------------------------------------------------------------------------------------------------- Ratio of Expenses to Average Net Assets 1.36%** 1.26% 1.29% 1.42% 1.34% 1.39% Ratio of Net Investment Income (Loss) to Average Net Assets 0.23%** (0.07)% 0.10% 0.80% 0.25% 0.16% Portfolio Turnover Rate 13% 35% 65% 42% 66% 28% - ---------------------------------------------------------------------------------------------------------------------
* Per share amount is based on the average number of shares outstanding. ** Annualized + 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 MORGAN STANLEY ASIA-PACIFIC FUND, INC. JUNE 30, 2001 (UNAUDITED) NOTES TO FINANCIAL STATEMENTS The Morgan Stanley 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. ACCOUNTING POLICIES: 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 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, if any) are valued at fair value as determined in good faith under the procedures approved by the Board of Directors. Events affecting the values of certain Fund securities that occur between the close of regular trading on the principal market for such securities (foreign exchanges 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 it is believed that the particular event would materially affect net asset value per share, 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 repatriated. 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. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements. 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. 15 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 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 16 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 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 months ended June 30, 2001, the Fund's investments in derivative instruments described above included foreign currency exchange contracts only. 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. 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. 17 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. ADVISER: Morgan Stanley Investment Management Inc. (formerly 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. ADMINISTRATOR: The Chase Manhattan Bank, through its corporate affiliate J.P.Morgan Investor 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 for certain out-of-pocket expenses incurred by the Administrator on its behalf. D. CUSTODIAN: Chase 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. E. OTHER: During the six months ended June 30, 2001, the Fund made purchases and sales totaling $64,394,000 and $191,976,000, 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, 2001, the U.S. Federal income tax cost basis of securities was $474,699,000 and, accordingly, net unrealized depreciation was $37,524,000 of which $52,072,000 related to appreciated securities and $89,596,000 related to depreciated securities. At December 31, 2000, the Fund had a capital loss carryforward for U.S. Federal income tax purposes of approximately $131,375,000 available to offset future capital gains which will expire on December 31, 2006. To the extent that capital gains are offset, such gains will not be distributed to shareholders. Net capital and currency losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the year ended December 31, 2000, the Fund deferred to January 1, 2001, for U.S. Federal income tax purposes, post-October currency losses of $248,000 and post-October capital losses of $9,281,000. For the six month period ended June 30, 2001, the Fund incurred brokerage commissions of $84,000 with Morgan Stanley & Co., Incorporated, an affiliate of the Adviser. 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. 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, 2001, the deferred fees payable, under the Plan, totaled $98,000 and are included in Payable for Directors' Fees and Expenses on the Statement of Net Assets. 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, 2001, no shares were repurchased by the Fund. Since the inception of the program, the Fund has repurchased 14,225,634 of its shares at an average discount of 20.72% 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. On December 14, 2000, with the aim of enhancing stockholder value and reducing the discount at which the Fund's shares have been trading, the Board of Directors authorized the Fund to conduct a tender offer during the first quarter of 2001 for up to 25% of the Fund's outstanding shares of common stock at a price equal to 95% of the Fund's net asset value per share ("NAV") on the last day 18 of the tender period, or such later date as to which the offer is extended. On March 29, 2001, the Fund completed the tender offer. The Fund accepted 14,357,219 shares for payment which represented 25% of the Fund's then outstanding shares. Final payment was made on April 9, 2001 at $9.48 per share, representing 95% of the NAV per share on March 29, 2001. F. SUPPLEMENTAL PROXY INFORMATION: The Annual Meeting of the Stockholders of the Fund was held on June 14, 2001. The following is a summary of the proposal presented and the total number of shares voted: PROPOSAL: - --------- 1. To elect the following Directors:
VOTES IN VOTES VOTES FAVOR OF AGAINST ABSTAINED -------- ------- --------- Ronald E. Robison 35,760,074 577,263 -- Gerard E. Jones 35,731,106 606,231 -- Barton M. Biggs 33,760,379 2,576,958 -- William G. Morton, Jr. 35,731,106 606,231 -- John A. Levin 33,731,412 2,605,925 --
PROPOSAL: - --------- 2. To approve or reject an amendment to the Fund's fundamental investment policies removing the 50% limit on the amount of the Fund's assets that may be invested in Japan.
VOTES IN VOTES VOTES FAVOR OF AGAINST ABSTAINED -------- ------- --------- 33,101,881 3,110,801 124,655
19 MORGAN STANLEY ASIA-PACIFIC FUND, INC. 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. Participants who wish to withdraw from the Plan 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 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 MORGAN STANLEY ASIA-PACIFIC FUND, INC. DIRECTORS AND OFFICERS Barton M. Biggs Fergus Reid CHAIRMAN OF THE BOARD OF DIRECTOR DIRECTORS Ronald E. Robison Frederick O. Robertshaw PRESIDENT AND DIRECTOR DIRECTOR John D. Barrett II Stefanie V. Chang DIRECTOR VICE PRESIDENT Gerard E. Jones Arthur J. Lev DIRECTOR VICE PRESIDENT Graham E. Jones Joseph P. Stadler DIRECTOR VICE PRESIDENT John A. Levin Mary E. Mullin DIRECTOR SECRETARY Andrew McNally IV Belinda A. Brady DIRECTOR TREASURER William G. Morton, Jr. Robin L. Conkey DIRECTOR ASSISTANT TREASURER INVESTMENT ADVISER Morgan Stanley 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 AUDITORS Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116 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.morganstanley.com/im. -----END PRIVACY-ENHANCED MESSAGE-----