-----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, Ba2exNxr14YHvx0HK2Ldfu9GzW1MLL+yEJfhWqDAaM/AGGgqwTWmso3VVhax71Yp 8IXMb6eHMYu809rZRQzgvg== 0001047469-97-007416.txt : 19971212 0001047469-97-007416.hdr.sgml : 19971212 ACCESSION NUMBER: 0001047469-97-007416 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971211 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY ASIA PACIFIC FUND INC CENTRAL INDEX KEY: 0000919808 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-08388 FILM NUMBER: 97736174 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 N-30B-2 1 N-30B-2 MORGAN STANLEY ASIA-PACIFIC FUND, INC. - -------------------------------------------------------------------------------- DIRECTORS AND OFFICERS Barton M. Biggs William G. Morton, Jr. CHAIRMAN OF THE BOARD DIRECTOR OF DIRECTORS James W. Grisham Michael F. Klein VICE PRESIDENT PRESIDENT AND DIRECTOR Harold J. Schaaff, Jr. Peter J. Chase VICE PRESIDENT DIRECTOR Joseph P. Stadler John W. Croghan VICE PRESIDENT DIRECTOR Valerie Y. Lewis David B. Gill SECRETARY DIRECTOR Joanna M. Haigney Graham E. Jones TREASURER DIRECTOR Belinda A. Brady John A. Levin ASSISTANT TREASURER DIRECTOR - -------------------------------------------------------------------------------- INVESTMENT ADVISER Morgan Stanley Asset Management Inc. 1221 Avenue of the Americas New York, New York 10020 - -------------------------------------------------------------------------------- ADMINISTRATOR The Chase Manhattan Bank 73 Tremont Street Boston, Massachusetts 02108 - -------------------------------------------------------------------------------- CUSTODIANS Morgan Stanley Trust Company One Pierrepont Plaza Brooklyn, New York 11201 The Chase Manhattan Bank 3 Chase MetroTech Center Brooklyn, New York 11245 - -------------------------------------------------------------------------------- SHAREHOLDER SERVICING AGENT American Stock Transfer & Trust Company 40 Wall Street New York, New York 10005 (800) 278-4353 - -------------------------------------------------------------------------------- LEGAL COUNSEL Rogers & Wells 200 Park Avenue New York, New York 10166 - -------------------------------------------------------------------------------- INDEPENDENT ACCOUNTANTS Price Waterhouse LLP 1177 Avenue of the Americas New York, New York 10036 - -------------------------------------------------------------------------------- For additional Fund information, including the Fund's net asset value per share and information regarding the investments comprising the Fund's portfolio, please call 1-800-221-6726. - -------------------------------------------------------------------------------- MORGAN STANLEY ASIA-PACIFIC FUND, INC. - -------------------------------------------------------------------------------- THIRD QUARTER REPORT SEPTEMBER 30, 1997 MORGAN STANLEY ASSET MANAGEMENT INC. INVESTMENT ADVISER LETTER TO SHAREHOLDERS - --------- For the nine months ended September 30, 1997, the Morgan Stanley Asia-Pacific Fund, Inc. (the "Fund") had a total return, based on net asset value per share, of -3.85% compared to -7.76% for its benchmark (as defined below). For the one year ended September 30, 1997, the Fund had a total return, based on net asset value per share, of -6.98% compared with -14.33% for the benchmark. For the period since the Fund's commencement of operations on August 2, 1994 through September 30, 1997, the Fund's total return, based on net asset value per share, was -3.98% compared with -18.53% for the benchmark. (The benchmark for investment purposes is the weighted average of the percentage change month-on-month of each of two Morgan Stanley Capital International (MSCI) indices; Japan, and Combined Asia Free ex-Japan, where the weights are based on the respective market capitalizations of these indices at the beginning of each month). On September 30, 1997, the closing price of the Fund's shares on the New York Stock Exchange was $9 3/16 representing a 20.0% discount to the net asset value per share. The Fund suffered a pyrrhic victory for the three months ended September 30, 1997 as its total return, based on net asset value per share was -12.29% compared to -13.59% for the Index. The economic outlook for Japan dropped dramatically during the last quarter. Primarily led by declines in automobile sales, housing starts and overall retail sales, consumption spending slumped in July and August. Several Tokyo Stock Exchange first section listed companies such as Tokai Kogyo, Tada Construction, Daito and Yaohan declared bankruptcy. Moreover, the credibility of the overall balance sheet of many domestic companies deteriorated sharply during this period, causing severe concern regarding the viability of construction, insurance and some leading financial institutions. The termination of the previously announced merger between Hokkaido Bank and Hokkaido Takushoku Bank seemed to further amplify these concerns. Moreover, the turmoil in the Asian currencies and equity markets together with the volatility in the U.S. markets further caused a deterioration of investor sentiment. In fact, second quarter GDP for Japan showed a 11.2% decline, the steepest since the oil crisis in the mid-seventies. Additionally, the Bank of Japan "Tankan" report suggested an unexpected weakening regarding the outlook of the economy by Japanese corporations, reversing the strong previous reading in June. Nissan Life Insurance, which went bankrupt earlier in the year was reported to be a major seller in the Japanese market, liquidating their entire portfolio as part of the bankruptcy proceedings. Japan's Big 4 brokerage firms, all involved in inappropriate dealings with "Sokaiya", dealt a final blow of confidence for investors in Japan and as a result of all of the above the yield on long term Japanese government bonds fell below 2%, an unprecedented occurrence in any major economy over the last 50 years. Importantly, the brighter economic conditions during the second half of 1997 which was expected to materialize in Japanese equities reversed course. Therefore, the market declined sharply and potential buyers disappeared. Although blue chip issues were also sold, companies such as TDK, Sony and Tokyo Electron performed well relative to the overall market contributing to our outperformance. It is difficult to become optimistic on the near term outlook for the Japanese economy because of the continuing drag from non-performing loans and ill-timed changes in fiscal policy. While Japan has deregulated and reformed many industries, bureaucrats now appear frozen in their action to implement critically important changes in areas such as corporate and personnel income tax cuts as well as a more effective means of re-cycling. Japan's enormous individual wealth is held primarily in bank deposits. However, with 10 year JGB yields approaching 1.7%, considerable pessimism regarding the economy is already reflected in stock prices. Prime Minister Hashimoto has also publicly recognized the severe weakness in the economy and will likely take action with land tax reforms and pass a 2% to 3% corporate income tax cut later this year. We believe that the overall market will become less volatile as a result of the above. International blue chips involved in promising new industries such as multimedia and digital production still offer the best value and growth relative to other sectors in the Japanese market, particularly as the yen appears to be in consolidation at Y120. The stabilization of currency markets in Asia, addressed recently by G7 in Hong Kong and the announcement of the Asia Currency Fund will likely keep the volatile currency market in check. 2 Therefore, we believe that the two tier market will resume in the near future as investors flee to companies with good earnings prospect and global standards of transparency in management. We will also continue to overweight the international blue chips but may also consider switches from those which are beginning to show excess valuation into those issues which appear to offer better value and are laggards within the two-tier market. The regional markets as represented by the MSCI Combined Far East Free ex Japan Index fell 19.0% over the third quarter 1997. This represents one of the steepest ever quarterly declines in the Index, comparable to the 21.6% fall in fourth quarter 1994 and the 22.1% fall during the first quarter of 1994. The collapse was precipitated by the de-pegging of the Thai baht on July 2nd 1997, which subsequently caused the currency to collapse 46.8% over the quarter. The contagion effect of the Thai baht debacle was severe as the regional currencies succumbed one after another, with the Indonesian rupiah, the Philippine peso and the Malaysian ringgit falling by as much as 34.5%, 30.3% and 28.6%, respectively. Even the normally stable Singapore dollar fell 8.6% over the quarter. The fallout in the regional currency markets was quickly transmitted to the equity markets as concerns about the over-leveraged economies, excessive lending, and property bubble took their toll. This dislocation in the currency and stock markets in effect marks the end of one era and the beginning of a new one for the region. The region had prospered spectacularly by offering itself as a cheap manufacturing base and then exporting itself to prosperity. This formula depended on a cheap and trainable labor force, low tax rates, and a fixed and stable exchange rate pegged to the U.S. Dollar. Unfortunately, the world has changed. Years of extremely high growth have brought the attendant problems of rising costs and labor constraints. Meanwhile, the tremendous inflow of foreign investment and loans has flooded the market with cheap money, inevitably leading to over-gearing and foolish investments. This situation has finally resulted in bad loans and over-investment. Furthermore, the rest of the emerging markets have started to mimic the success formula of Asia and are beginning to beat Asia at its own game. Many U.S. multinationals have decided to set up manufacturing bases in NAFTA member Mexico while China has proven not only to be a large potential market but also a huge competitor to the Asian economies in low-end manufacturing. In the end, what precipitated the collapse of the Asian currencies was the unsustainable practice of using cheap U.S. dollars to finance ever larger and sometimes questionable projects. Once the pegs were gone, however, easy access to credit vanished and the Asian corporates and economies have now been forced to painfully adjust to this paradigm shift. Though the Northeastern Asian markets of Hong Kong, Taiwan and Korea have outperformed the Southeast Asian market up to now, we expect the contagion effect to filter trough the whole region. It is expected that the currency rates should begin to stabilize within the next quarter or so but that the flow-through effects of such a major dislocation in exchange rates and their subsequent impact on interest rates will take at least a year to work through the system. Those who emerge as winners will be economies and companies that are best able to compete on a value added basis in an increasingly information and technology based world, rather than on pure export prowess. A further prerequisite for success would be strict financial discipline, rather than growth simply for growth's sake. In this context, we would expect service economies like Hong Kong Special Administrative Region (SAR) and Singapore to be the primary winners. Low taxes, professional management and now direct access to the Chinese growth engine will power Hong Kong, although the SAR continues to suffer from a ridiculously over-priced property market. Singapore's world class infrastructure, well-educated English-speaking populace and competent national government will provide a solid bedrock, though the disarray in its traditional interland of Southeast Asia will be a drag for the next year or so. What will prove most important in the emerging scenario will be stock selection. There is likely to be a wide disparity in performance both between markets and individual companies, as those with the discipline and flexibility to adapt to the new environment will continue to succeed; those which cannot will be relegated to stagnation and failure. Real recovery will be slow and painful. 3 In the midst of these problems, however, it is important to remember that the drivers behind economic growth in the long-term remain largely intact. Asia's superior savings rates, its large pool of flexible, well-educated labor, and general acceptance of market forces will continue to propel the Asian economies. Sincerely, /s/ Michael F. Klein Michael F. Klein PRESIDENT AND DIRECTOR October 1997 4 MORGAN STANLEY ASIA-PACIFIC FUND, INC. INVESTMENT SUMMARY AS OF SEPTEMBER 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
HISTORICAL TOTAL RETURN (%) INFORMATION --------------------------------------------------------------------------------- MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3) ---------------------- ---------------------- ------------------------ AVERAGE AVERAGE AVERAGE CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL ---------- ------- ---------- ------- ---------- ------- FISCAL YEAR TO DATE -5.77% -- -3.85% -- -7.76% -- ONE YEAR -13.34 -13.34% -6.98 -6.98% -14.33 -14.33% SINCE INCEPTION* -23.26+ -8.03+ -3.98+ -1.28+ -18.53 -6.28
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. - -------------------------------------------------------------------------------- RETURNS AND PER SHARE INFORMATION
[BAR GRAPH] YEARS ENDED DECEMBER 31: NINE MONTHS ENDED 1994* 1995 1996 SEPTEMBER 30, 1997 ----- ---- ---- ------------------ Net Asset Value Per Share $ 13.20 $ 14.34 $ 11.95 $ 11.49 Market Value Per Share. . . $ 12.25 $ 13.33 $ 9.75 $ 9.19 Premium/(Discount). . . . . -7.2 % -7.0 % -18.4 % -20.0 % Income Dividends. . . . . . $ 0.04 $ -0.05 $ 0.61 -- Capital Gains Distributions. . . . . . . $ 0.01 $ -0.02 -- -- Fund Total Return (2) . . . -5.94% 9.24% -2.87%+ -3.85% Index Total Return (3). . . -5.90% 0.87% -9.17% -7.76%
(1) Assumes dividends and distributions, if any, were reinvested. (2) Total investment return based on net asset value per share reflects the effects of changes in net asset value on the performance of the Fund during each period, and assumes dividends and distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value due to differences between the market price of the stock and the net asset value per share of the Fund. (3) The benchmark for investment performance is the weighted average of the percentage change month-on-month of two Morgan Stanley Capital International (MSCI) indices; Japan and Combined Asia Pacific Free ex-Japan, where the weights are based on the respective market capitalizations of these indices at the beginning of the month. * The Fund commenced operations on August 2, 1994. + This return does not include the effect of the rights issued in connection with the Rights Offering. 5 MORGAN STANLEY ASIA-PACIFIC FUND, INC. PORTFOLIO SUMMARY AS OF SEPTEMBER 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- PORTFOLIO INVESTMENTS DIVERSIFICATION [PIE CHART] Equity Securities(92.1%) Short-Term Investments(7.9%) - -------------------------------------------------------------------------------- SECTORS [PIE CHART] Other(33.6%) Real Estate(7.1%) Multi-Industry(7.1%) Machinery & Engineering(5.6%) Automobiles(3.9%) Banking(15.0%) Chemicals(4.2%) Electrical & Electronics(12.4%) Electronic Components & Instruments(4.2%) Energy Equipment & Services(3.6%) Financial Services(3.3%) - -------------------------------------------------------------------------------- COUNTRY WEIGHTINGS [PIE CHART] Other(8.1%) Malaysia(0.7%) Philippines(1.2%) Indonesia(1.3%) Thailand(2.5%) Korea(2.5%) Hong Kong(7.4%) Australia(9.4%) Singapore(11.7%) Japan(42.1%) India(13.1%) - -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS*
PERCENT OF PERCENT OF NET ASSETS NET ASSETS ---------- ---------- 1. Bharat Heavy Electricals Ltd. 3.5% 6. United Overseas Bank (Foreign) 2.2% 2. Housing Development Finance Corp. Ltd. 2.6 7. Cheung Kong (Holdings) Ltd. 2.2 3. Oversea-Chinese Banking Corp. (Foreign) 2.4 8. Lend Lease Corp. Ltd. 2.1 4. Development Bank of Singapore (Foreign) 2.3 9. Amcor Ltd. 2.0 5. National Australia Bank Ltd. 2.3 10. Sony Corp. 1.7 ----- 23.3% ----- ----- * Excludes short-term investments.
6 INVESTMENTS (UNAUDITED) - ----------------------- SEPTEMBER 30, 1997 VALUE SHARES (000) - -------------------------------------------------------------------------------- COMMON STOCKS (92.4%) (Unless otherwise noted) - -------------------------------------------------------------------------------- AUSTRALIA (9.4%) BANKING Australia & New Zealand Banking Group Ltd. 991,000 U.S.$ 8,110 Commonwealth Bank of Australia 334,000 4,129 National Australia Bank Ltd. 1,229,384 18,925 ------------- 31,164 ------------- ENERGY SOURCES Broken Hill Proprietary Co. Ltd. 1,052,964 12,283 ------------- FOREST PRODUCTS & PAPER Amcor Ltd. 2,630,455 16,581 ------------- REAL ESTATE Lend Lease Corp. Ltd. 721,207 17,156 ------------- 77,184 ------------- - ------------------------------------------------------------------------------- HONG KONG (7.4%) AUTOMOBILES Qingling Motors Co. 2,674,000 1,693 ------------- BANKING Dao Heng Bank Group Ltd. 420,000 1,894 Hang Seng Bank Ltd. 181,000 2,228 ------------- 4,122 ------------- MULTI-INDUSTRY China Resources Enterprise Ltd. 2,590,000 10,845 Hutchison Whampoa Ltd. 922,000 9,085 Ng Fung Hong Ltd. 860,000 1,034 Shanghai Industrial Holdings Ltd. 707,000 4,395 ------------- 25,359 ------------- REAL ESTATE Cheung Kong (Holdings) Ltd. 1,573,000 17,686 Henderson Land Development Co. Ltd. 721,000 6,196 New World Development Co. Ltd. 317,000 1,917 Sun Hung Kai Properties Ltd. 373,000 4,387 ------------- 30,186 ------------- 61,360 ------------- - ------------------------------------------------------------------------------- INDIA (13.1%) APPLIANCES & HOUSEHOLD DURABLES Phillips India Ltd. 123,582 226 Supreme Industries Ltd. 178,449 785 ------------- 1,011 ------------- AUTOMOBILES Autolec Industries Ltd. 152,600 186 Autolite Ltd. 231,900 295 Autopal Industries Ltd. 62,600 13 Bajaj Auto Ltd. 2,000 30 Bajaj Tempo Ltd. 2,148 15 Bajaj Tempo Ltd. (Rights) 1,717 6 Bharat Forge Co., Ltd. 217,996 374 Ceat Ltd. 368,000 265 - -------------------------------------------------------------------------------- VALUE SHARES (000) - ------------------------------------------------------------------------------- Denso India Ltd. 71,200 U.S.$ 124 Escorts Ltd. 305,125 791 Hero Honda Ltd. 400 8 MRF Ltd. 18,000 1,468 Patheja Forgings and Auto Ltd. 677,700 187 Tata Engineering & Locomotive Ltd. 223,022 2,077 ------------- 5,839 ------------- BANKING Industrial Finance Corp. (India) Ltd. 507,400 414 State Bank of India Ltd. 954,862 7,307 ------------- 7,721 ------------- BEVERAGES & TOBACCO ITC Ltd. 16,273 265 United Breweries Ltd. 149,100 87 ------------- 352 ------------- BUILDING MATERIALS & COMPONENTS Asian Paints Ltd. 250 2 Associated Cement Co. Ltd. 2,182 73 Gujarat Ambuja Cements Ltd. 42,150 359 India Cements Ltd. 75,000 200 Murudeshwar Ceramics Ltd. 37,600 22 Panyam Cements & Minerals Ltd. 33,765 448 Saurashtra Cement & Chemicals Ltd. 50 --@ ------------- 1,104 ------------- CHEMICALS Birla VXL Ltd. 846,998 314 E.I.D. Parry Ltd. 64,300 181 Gujarat Narmada Valley Fertilizers Ltd. 275,000 963 Gujarat Narmada Valley Fertilizers Ltd. GDR 144A 303,924 204 Indian Petro Chemical Corp. Ltd. 179,010 564 Jaysynth Dyechem Ltd. 145,800 69 United Phosphorous Ltd. 97,490 431 ------------- 2,726 ------------- CONSTRUCTION & HOUSING Alacrity Housing Ltd. 381,000 74 Hindustan Construction Co. 254,675 155 Hindustan Development Corp. Ltd. 988,780 336 Nagarjuna Construction Ltd. 151,100 105 ------------- 670 ------------- ELECTRONIC COMPONENTS & INSTRUMENTS Infosys Technology Ltd. 19,200 845 Rolta India Ltd. 999,500 503 S&S Power Switchgear Ltd. 63,550 91 ------------- 1,439 ------------- ENERGY EQUIPMENT & SERVICES Bharat Heavy Electricals Ltd. 2,881,000 28,678 ------------- ENERGY SOURCES Esab India Ltd. 346,865 1,134 ------------- - ------------------------------------------------------------------------------- 7 VALUE SHARES (000) - -------------------------------------------------------------------------------- INDIA (CONTINUED) FINANCIAL SERVICES Housing Development Finance Corp. Ltd. 238,282 U.S.$ 21,501 UTI MasterShares Ltd. 2,268,170 831 ------------ 22,332 ------------ FOOD & HOUSEHOLD PRODUCTS Dhampur Sugar Mills Ltd. 141,575 295 ------------ FOREST PRODUCTS & PAPER Ballarpur Industries Ltd. 100,000 102 ------------ HEALTH & PERSONAL CARE Sun Pharmaceutical Industries Ltd. 161,200 1,348 ------------ INDUSTRIAL COMPONENTS Apollo Tyres Ltd. 686,525 1,447 Apollo Tyres Ltd. (Warrants), expiring 2/28/98 189,543 53 Essel Packaging Ltd. 146,300 496 ITW Signode India Ltd. 571,132 1,453 KEC International Ltd. 881,750 963 ------------ 4,412 ------------ LEISURE & TOURISM ITC Hotels Ltd. 212,880 680 ------------ MACHINERY & ENGINEERING Artson Engineering Ltd. 221,800 49 Crompton Greaves Ltd. 415,210 459 DGP Windsor India Ltd. 218,800 177 Flat Products Equipments (India) Ltd. 174,900 230 Hindustan Power Plus Ltd. 75,600 173 Thermax Ltd. 31,200 246 Veejay Lakshmi Engineering Ltd. 149,100 153 ------------ 1,487 ------------ METALS -STEEL Tata Iron & Steel Co., Ltd. 1,425 7 Tata SSL Ltd. - New 467,790 362 ------------ 369 ------------ MISCELLANEOUS MATERIALS & COMMODITIES Vikas WSP Ltd. 304,600 952 ------------ MULTI-INDUSTRY Century Textile & Industry Ltd. 5,866 154 Indian Rayon & Industries Ltd. 75 --@ JK Corp. Ltd. 100 --@ JK Corp. Ltd. GDR 61,140 38 JK Corp. Ltd. GDR 144A 249,240 156 Kesoram Industries Ltd. 310,238 311 Max India Ltd. - New 170,000 698 * Morgan Stanley Growth Fund 32,892,200 5,912 Voltas Ltd. 207,950 145 ------------ 7,414 ------------ RECREATION, OTHER CONSUMER GOODS Suashish Diamonds Ltd. 148,100 115 Tube Investments of India Ltd. 109,400 123 Wimco Ltd. 422,200 198 ------------ 436 ------------ TELECOMMUNICATIONS Mahanagar Telephone Nigam Ltd. 383,700 2,727 ------------ - -------------------------------------------------------------------------------- VALUE SHARES (000) - -------------------------------------------------------------------------------- TEXTILES & APPAREL Coates of India Ltd. 100,680 U.S.$ 413 G.T.N. Textiles Ltd. 243,000 331 Garware Plastics & Polyester Ltd. 275,525 261 Indo Rama Synthetics Ltd. 211,100 123 Indo Rama Synthetics Ltd. - New 46,170 24 J.K. Synthetics Ltd. 686,901 62 Mahavir Spinning Mills Ltd. 173,686 288 Morajee Goculdas Spinning Ltd. 125,000 97 Raymond Ltd. 208,627 392 Viniyoga Clothes Ltd. 5,400 --@ ------------ 1,991 ------------ TRANSPORTATION - ROAD & RAIL Container Corp. of India Ltd. 1,059,600 12,306 ------------ TRANSPORTATION - SHIPPING Great Eastern Shipping Ltd. 369,034 518 ------------ UTILITIES - ELECTRICAL & GAS Hindustan Power Plus Ltd. - New 17,400 40 ------------ 108,083 ------------ - -------------------------------------------------------------------------------- INDONESIA (1.3%) AUTOMOBILES Astra International (Foreign) 3,631,000 3,283 ------------ BANKING Bank International Indonesia (Foreign) 2,515,319 727 Bank International Indonesia (Foreign)(Warrants), expiring 1/17/00 401,362 34 Bank Negara Indonesia (Foreign) 4,000,000 1,094 ------------ 1,855 ------------ BEVERAGES & TOBACCO Gudang Garam (Foreign) 729,500 2,106 HM Sampoerna (Foreign) 389,000 798 ------------ 2,904 ------------ FOOD & HOUSEHOLD PRODUCTS Indofood Sukses Makmur (Foreign) 250,000 302 ------------ FOREST PRODUCTS & PAPER Indah Kait Pulp & Paper (Foreign) 305,955 119 Indah Kait Pulp & Paper (Warrants), expiring 7/11/02 54,391 3 ------------ 122 ------------ MERCHANDISING Matahari Putra Prima (Foreign) 372,000 127 ------------ MULTI-INDUSTRY Bimantara Citra (Foreign) 160,000 163 ------------ TELECOMMUNICATIONS Telekomunikasi Indonesia (Foreign) 1,608,000 1,772 ------------ 10,528 ------------ - -------------------------------------------------------------------------------- JAPAN (42.1%) APPLIANCES & HOUSEHOLD DURABLES Rinnai Corp. 160,700 2,688 ------------ AUTOMOBILES Asahi Tec Corp. 443,000 1,259 Nissan Motor Co. 1,000,000 5,963 Suzuki Motor Co. Ltd. 630,000 6,052 Toyota Motor Corp. 270,000 8,273 ------------ 21,547 ------------ - -------------------------------------------------------------------------------- 8 VALUE SHARES (000) - -------------------------------------------------------------------------------- JAPAN (CONTINUED) BUILDING MATERIALS & COMPONENTS Sangetsu Co. Ltd. 147,000 U.S.$ 2,374 Sanwa Shutter Corp. Ltd. 492,000 3,504 Sanwa Shutter Corp. Ltd. (Warrants), expiring 1/20/98 1,400 53 ------------ 5,931 ------------ BUSINESS & PUBLIC SERVICES Dai Nippon Printing Co. Ltd. 270,000 5,769 ------------ CHEMICALS Daicel Chemical Industries Ltd. 1,012,000 2,590 Fuji Photo Film Ltd. 222,000 9,156 Kaneka Corp. 949,000 6,051 Mitsubishi Chemical Industries 2,060,000 4,760 Nifco Inc. 330,000 2,320 Okura Industrial Co. Ltd. 434,000 1,290 Sekisui Chemical Co. 703,000 5,292 Shin-Etsu Polymer Co. Ltd. 15,000 61 ------------ 31,520 ------------ CONSTRUCTION & HOUSING Kyudenko Co. Ltd. 389,000 2,223 Obayashi Corp. 865,000 5,222 Sekisui House Ltd. 387,000 3,686 Taisei Corp. Ltd. 1,000,000 3,735 ------------ 14,866 ------------ COSMETICS & TOILETRIES Yamanouchi Pharmaceutical Co. 300,000 7,404 ------------ DATA PROCESSING & REPRODUCTION Fujitsu Ltd. 910,000 11,380 Nissha Printing 105,000 913 Ricoh Co. Ltd. 866,000 12,981 ------------ 25,274 ------------ ELECTRICAL & ELECTRONICS Canon, Inc. 450,000 13,155 Hitachi Ltd. 1,185,000 10,304 Kyocera Corp. 80,000 5,227 Matsushita Electric Industrial Co. Ltd. 562,000 10,146 NEC Corp. 925,000 11,261 Nintendo Ltd. 130,000 12,166 Sony Corp. 145,000 13,690 Stanley Electric Co. 690,000 2,994 Tokyo Electron Ltd. 214,000 13,062 Toshiba Corp. 1,730,000 8,768 ------------ 100,773 ------------ ELECTRONIC COMPONENTS & INSTRUMENTS Mitsumi Electric Co. Ltd. 423,000 8,933 Murata Manufacturing Co. 180,000 7,781 TDK Corp. 145,000 12,969 ------------ 29,683 ------------ FINANCIAL SERVICES Hitachi Credit Corp. 198,000 3,919 ------------ HEALTH & PERSONAL CARE Sankyo Co. Ltd. 326,000 11,285 ------------ INDUSTRIAL COMPONENTS Furakawa Electric Co. 1,083,000 5,426 ------------ - -------------------------------------------------------------------------------- VALUE SHARES (000) - -------------------------------------------------------------------------------- INSURANCE Sumitomo Marine & Fire Co. 542,000 U.S.$ 3,748 ------------ MACHINERY & ENGINEERING Amada Co. Ltd. 817,000 4,729 Daifuku Co. Ltd. 531,000 3,742 Daikin Kogyo Co. 600,000 3,781 Fuji Machine Co. 329,000 11,934 Fujitec Co. Ltd. 400,000 4,174 Kurita Water Industries Ltd. 274,000 5,469 Mitsubishi Heavy Industries Ltd. 1,300,000 7,116 Nishio Rent All Co. 57,000 496 Nishio Rent All Co. (Warrants), expiring 2/20/98 1,055 7 Tsubakimoto Chain Co. 872,000 3,553 ------------ 45,001 ------------ MERCHANDISING FamilyMart 87,200 3,813 ------------ MISCELLANEOUS MATERIALS & COMMODITIES Nippon Pillar Packing Co. 157,000 1,144 ------------ MULTI-INDUSTRY Lintec 150,000 2,609 ------------ REAL ESTATE Daibiru Corp. 38,000 441 Keihanshin Real Estate Co. 205,000 1,044 Mitsubishi Estate Co. Ltd. 390,000 5,684 ------------ 7,169 ------------ RECREATION, OTHER CONSUMER GOODS Yamaha Corp. 199,000 3,098 ------------ TELECOMMUNICATIONS Nippon Telephone & Telegraph Corp. 1,032 9,487 ------------ TEXTILES & APPAREL Shimamura Co. Ltd. 78,900 2,287 ------------ WHOLESALE & INTERNATIONAL TRADE Inabata & Co. 406,000 2,256 ------------ 346,697 ------------ - -------------------------------------------------------------------------------- KOREA (2.5%) APPLIANCES & HOUSEHOLD DURABLES Samsung Electronics Co. (Foreign) 57,197 5,529 ------------ BANKING Housing & Commercial Bank, Korea 89,340 1,514 Kookmin Bank GDR 90,309 1,129 ------------ 2,643 ------------ METALS - STEEL Pohang Iron & Steel Ltd. (Foreign) 500 39 Pohang Iron & Steel Ltd. ADR 61,690 1,588 ------------ 1,627 ------------ TELECOMMUNICATIONS LG Information & Communication Ltd. 61,757 5,973 ------------ UTILITIES - ELECTRICAL & GAS Korea Electric Power Corp. (Foreign) 201,920 4,480 ------------ 20,252 ------------ - -------------------------------------------------------------------------------- 9 VALUE SHARES (000) - -------------------------------------------------------------------------------- MALAYSIA (0.7%) BANKING Malayan Banking Bhd 635,000 U.S.$ 3,190 ------------ ELECTRICAL & ELECTRONICS Lityan Holdings Bhd 104,000 542 ------------ ENERGY EQUIPMENT & SERVICES Dialog Group Bhd 132,000 724 ------------ LEISURE & TOURISM Genting Bhd 522,000 1,625 ------------ REAL ESTATE Malaysian Resources Corp. Bhd 53,333 47 ------------ 6,128 ------------ - -------------------------------------------------------------------------------- NEW ZEALAND (0.5%) FOREST PRODUCTS & PAPER Fletcher Challenge Forests 79,520 99 Fletcher Challenge Paper 1,988,000 3,923 ------------ 4,022 ------------ - -------------------------------------------------------------------------------- PHILIPPINES (1.2%) CONSTRUCTION & HOUSING DMCI Holdings, Inc. 9,894,000 788 ------------ MULTI-INDUSTRY JG Summit Holdings 'B' 4,390,100 662 ------------ REAL ESTATE Ayala Land, Inc. 'B' 3,273,631 1,589 Fil-Estate Land Inc. 'B' 1,837,000 107 SM Prime Holdings, Inc. 'B' 9,637,680 1,788 ------------ 3,484 ------------ TELECOMMUNICATIONS Digital Telecommunications Philippines, Inc. 30,651,000 2,043 ------------ UTILITIES - ELECTRICAL & GAS Manila Electric Co. 'B' 734,306 2,533 ------------ 9,510 ------------ - -------------------------------------------------------------------------------- SINGAPORE (11.7%) AEROSPACE & MILITARY TECHNOLOGY Singapore Technologies Aerospace Ltd. 374,000 1,115 ------------ BANKING Development Bank of Singapore (Foreign) 1,868,000 19,053 Oversea-Chinese Banking Corp. (Foreign) 2,789,200 19,330 United Overseas Bank (Foreign) 2,417,200 17,858 ------------ 56,241 ------------ BROADCASTING & PUBLISHING Singapore Press Holdings (Foreign) 439,000 6,458 ------------ ELECTRICAL & ELECTRONICS SM Summit Holdings Ltd. 918,000 435 Venture Manufacturing Ltd. 115,000 489 ------------ 924 ------------ ELECTRONIC COMPONENTS & INSTRUMENTS Advanced Systems Automation 42,000 120 Electronic Resources Ltd. 1,648,500 2,996 ------------ 3,116 ------------ - -------------------------------------------------------------------------------- VALUE SHARES (000) - -------------------------------------------------------------------------------- FOOD & HOUSEHOLD PRODUCTS Super Coffeemix Manufacturing Ltd. 1,932,000 U.S.$ 840 Want Want Holdings 1,474,800 3,746 ------------ 4,586 ------------ MULTI-INDUSTRY Natsteel Ltd. 3,665,000 10,016 Parkway Holdings 2,218,000 8,991 Wing Tai Holdings Ltd. 1,553,000 3,209 ------------ 22,216 ------------ TRANSPORTATION - SHIPPING Singapore Technologies Shipbuilding & Engineering Ltd. 1,103,000 2,026 ------------ 96,682 ------------ - -------------------------------------------------------------------------------- THAILAND (2.5%) BANKING Bangkok Bank Ltd. (Foreign) 1,901,800 9,693 Thai Farmers Bank Ltd. (Foreign) 1,924,000 6,731 ------------ 16,424 ------------ BROADCASTING & PUBLISHING Nation Multimedia Group (Foreign) 545,000 473 ------------ CHEMICALS National Petrochemical Ltd. (Foreign) 107,600 68 ------------ FINANCIAL SERVICES Industrial Finance Corp. (Foreign) 601,000 782 ------------ REAL ESTATE Central Pattana Co. Ltd. (Foreign) 25,834 44 Central Pattana Co., Ltd. 22,066 36 ------------ 80 ------------ TELECOMMUNICATIONS United Communications Industry Ltd. (Foreign) 701,000 2,047 ------------ UTILITIES - ELECTRICAL & GAS Eastern Water Resources Development and Management 257,000 347 ------------ 20,221 ------------ - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost U.S.$805,910) 760,667 ------------ - -------------------------------------------------------------------------------- FACE AMOUNT (000) - -------------------------------------------------------------------------------- FIXED INCOME SECURITIES (0.0%) - -------------------------------------------------------------------------------- INDIA (0.0%) METALS - STEEL Tata SSL Ltd. - New 14.00%, 12/6/02 (Cost U.S.$5) INR 3 3 ------------ - -------------------------------------------------------------------------------- 10 FACE AMOUNT VALUE (000) (000) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS (6.7%) - -------------------------------------------------------------------------------- UNITED STATES (6.7%) REPURCHASE AGREEMENT Chase Securities, Inc., 5.75%, dated 9/30/97, due 10/1/97, to be repurchased at U.S.$54,674, collateralized by United States Treasury Notes, 5.875%, 11/15/05, valued at U.S.$56,083 (Cost U.S.$54,665) U.S.$ 54,665 U.S.$ 54,665 ------------ - -------------------------------------------------------------------------------- FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.2%) Australian Dollar AUD 361 262 Hong Kong Dollar HKD 275 36 Indian Rupee INR 300,970 8,322 Indonesian Rupiah IDR 50,365 15 Japanese Yen JPY 99,274 822 Malaysian Ringgit MYR 273 84 Philippine Peso PHP 4,085 118 Singapore Dollar SGD 148 97 South Korean Won KRW 200,658 219 Thai Baht THB 6,369 176 ------------ (Cost U.S.$10,268) 10,151 ------------ - -------------------------------------------------------------------------------- TOTAL INVESTMENTS (100.3%) (Cost U.S.$870,848) 825,486 ------------ - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-0.3%) Other Assets U.S.$ 63,802 Liabilities (66,136) (2,334) ------------ - -------------------------------------------------------------------------------- NET ASSETS (100%) Applicable to 71,654,508 issued and outstanding U.S.$0.01 par value shares (100,000,000 shares authorized) U.S.$823,152 ------------ - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE U.S.$ 11.49 ------------ - -------------------------------------------------------------------------------- @ -- Value is less than U.S.$500. * -- Advised by an affiliate. ADR -- American Depositary Receipt. GDR -- Global Depositary Receipt. NOTE: Prior government approval for foreign investments may be required under certain circumstances in some emerging markets, and foreign ownership limitations may also be imposed by the charters of individual companies in emerging markets. As a result, an additional class of shares designated as "foreign" may be created and offered for investment. The "local" and "foreign" shares' market values may vary. 11 -----END PRIVACY-ENHANCED MESSAGE-----