<Page>
-----------------------------
OMB APPROVAL
-----------------------------
OMB Number: 3235-0570
Expires: November 30, 2005
Estimated average burden
hours per response....... 5.0
-----------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05082
---------------------------------------------
The Malaysia Fund, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 AVENUE OF THE AMERICAS 22ND FLOOR NEW YORK, NY 10020
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
RONALD E. ROBISON
1221 AVENUE OF THE AMERICAS 34TH FLOOR NEW YORK, NY 10020
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-221-6726
----------------------------
Date of fiscal year end: 12/31
--------------------------
Date of reporting period: 6/30/03
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
<Page>
SEMI-ANNUAL REPORT
THE MALAYSIA FUND, INC.
JUNE 30, 2003
DIRECTORS
MICHAEL BOZIC RONALD E. ROBISON
CHARLES A. FIUMEFREDDO EXECUTIVE VICE PRESIDENT
EDWIN J. GARN AND PRINCIPAL EXECUTIVE
WAYNE E. HEDIEN OFFICER
JAMES F. HIGGINS
DR. MANUEL H. JOHNSON JOSEPH MCALINDEN
JOSEPH J. KEARNS VICE PRESIDENT
MICHAEL NUGENT
PHILIP J. PURCELL BARRY FINK
FERGUS REID VICE PRESIDENT [MORGAN STANLEY LOGO]
OFFICERS STEFANIE V. CHANG
CHARLES A. FIUMEFREDDO VICE PRESIDENT THE MALAYSIA FUND, INC.
CHAIRMAN OF THE BOARD
JAMES W. GARRETT
MITCHELL M. MERIN TREASURER AND CHIEF
PRESIDENT FINANCIAL OFFICER
MICHAEL LEARY
ASSISTANT TREASURER
MARY E. MULLIN
SECRETARY
U.S. INVESTMENT ADVISER
MORGAN STANLEY INVESTMENT MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
MALAYSIAN INVESTMENT ADVISER
ARAB-MALAYSIAN CONSULTANT SDN BHD
9TH FLOOR, BANGURIAN ARAB-MALAYSIAN
55 JALAN RAJA CHULAN, 50200
KUALA LUMPUR, MALAYSIA
ADMINISTRATOR
JPMORGAN INVESTOR SERVICES
73 TREMONT STREET
BOSTON, MASSACHUSETTS 02108
CUSTODIAN
JPMORGAN CHASE BANK
270 PARK AVENUE
NEW YORK, NEW YORK 10017
STOCKHOLDER SERVICING AGENT
AMERICAN STOCK TRANSFER & TRUST COMPANY
59 MAIDEN LANE
NEW YORK, NEW YORK 10030
(800) 278-4353
LEGAL COUNSEL
CLIFFORD CHANCE US 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.
MORGAN STANLEY
INVESTMENT MANAGEMENT INC.
(C) 2003 MORGAN STANLEY INVESTMENT ADVISER
<Page>
THE MALAYSIA FUND, INC.
Overview
LETTER TO STOCKHOLDERS
PERFORMANCE
For the six months ended June 30, 2003, The Malaysia Fund, Inc. (the "Fund") had
a total return of 10.43%, compared to 7.06% for the Kuala Lumpur Composite Index
(the "Index"). On June 30, 2003, the closing price of the Fund's shares on the
New York Stock Exchange was $4.56, representing a 10.1% discount to the Fund's
net asset value per share.
FACTORS AFFECTING PERFORMANCE
- The market underperformed the broader Asia region due to investors' fears
about the effects of SARS (Severe Acute Respiratory Syndrome) on the
economic performance of the country.
- The Fund maintained an overweight position in mid-capitalization and
small-capitalization stocks compared to the Index, which benefited
relative performance, as these stocks outperformed the broader market.
- In terms of sector selection, the Fund's overweight position in property
stocks contributed to performance, as the government announced favorable
off-budget measures aimed at boosting housing ownership in Malaysia.
MANAGEMENT STRATEGIES
- The Fund continues to be invested in stocks of companies that we believe
demonstrate strong balance sheets and proven managements.
Sincerely,
/s/ Ronald E. Robison
Ronald E. Robison
Executive Vice President and Principal Executive Officer
July 2003
2
<Page>
THE MALAYSIA FUND, INC.
STATEMENT OF NET ASSETS
June 30, 2003 (unaudited)
STATEMENT OF NET ASSETS
<Table>
<Caption>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------------------
MALAYSIAN COMMON STOCKS: (98.7%)
(UNLESS OTHERWISE NOTED)
AUTOMOBILES (3.6%)
Perusahaan Otomobil Nasional Bhd 567,000 $ 1,208
Tan Chong Motor Holdings Bhd 1,896,000 559
- --------------------------------------------------------------------------------------------
1,767
============================================================================================
BANKS (23.4%)
Commerce Asset Holdings Bhd 2,446,000 2,227
Malayan Banking Bhd 2,125,500 4,811
Public Bank Bhd 6,530,225 4,468
- --------------------------------------------------------------------------------------------
11,506
============================================================================================
CONSTRUCTION & ENGINEERING (9.6%)
Gamuda Bhd 1,637,000 2,649
Road Builder (Malaysia) Holdings Bhd 2,229,000 2,065
- --------------------------------------------------------------------------------------------
4,714
============================================================================================
DIVERSIFIED FINANCIAL SERVICES (1.5%)
CIMB Bhd 867,000(a) 694
Palmco Holdings Bhd 39,041 61
- --------------------------------------------------------------------------------------------
755
============================================================================================
DIVERSIFIED TELECOMMUNICATION SERVICES (6.1%)
Telekom Malaysia Bhd 1,444,000 2,983
============================================================================================
ELECTRIC UTILITIES (3.1%)
YTL Corp. Bhd 1,467,500 1,545
============================================================================================
HOTELS, RESTAURANTS & LEISURE (16.1%)
Genting Bhd 591,800 2,336
Magnum Corp. Bhd 3,268,000 2,296
Resorts World Bhd 829,700 2,140
Tanjong PLC 435,000 1,145
- --------------------------------------------------------------------------------------------
7,917
============================================================================================
INDUSTRIAL CONGLOMERATES (2.5%)
Malaysian Resources Corp. Bhd 693,000(a) 197
Sime Darby Bhd 760,000 1,020
- --------------------------------------------------------------------------------------------
1,217
============================================================================================
INSURANCE (1.2%)
MAA Holdings Bhd 483,000 582
============================================================================================
IT CONSULTING & SERVICES (4.0%)
Computer Systems Advisers Bhd 718,600 681
Symphony House Bhd 4,000,000(a) 1,294
- --------------------------------------------------------------------------------------------
1,975
============================================================================================
MARINE (1.2%)
Malaysian International Shipping Bhd 296,000 $ 596
============================================================================================
MEDIA (2.2%)
Star Publications Bhd 657,000 1,072
============================================================================================
REAL ESTATE (6.3%)
IOI Properties Bhd 415,000 666
Selangor Properties Bhd 1,105,000 491
SP Setia Bhd 2,565,499 1,931
- --------------------------------------------------------------------------------------------
3,088
============================================================================================
SEMICONDUCTOR EQUIPMENT & PRODUCTS (9.3%)
Malaysian Pacific Industries Bhd 699,000 2,649
Unisem (Malaysia) Bhd 1,116,000(a) 1,909
- --------------------------------------------------------------------------------------------
4,558
============================================================================================
SPECIALTY RETAIL (2.0%)
Courts Mammoth Bhd 1,253,000 973
============================================================================================
TOBACCO (2.0%)
British American Tobacco (Malaysia) Bhd 96,000 985
============================================================================================
WIRELESS TELECOMMUNICATION SERVICES (4.6%)
Celcom (Malaysia) Bhd 3,153,400(a) 2,265
============================================================================================
TOTAL COMMON STOCKS
(Cost $42,958) 48,498
============================================================================================
<Caption>
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (1.2%)
REPURCHASE AGREEMENT (1.2%)
J.P. Morgan Securities, Inc., 1.05%, dated 6/30/03,
due 7/1/03 (Cost $593) $ 593(b) 593
============================================================================================
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.4%)
Malaysian Ringgit
(Cost $702) MYR 2,666 702
============================================================================================
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
THE MALAYSIA FUND, INC.
STATEMENT OF NET ASSETS
June 30, 2003 (unaudited)
STATEMENT OF NET ASSETS (CONT'D)
<Table>
<Caption>
VALUE
(000)
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.3%)
(Cost $44,253) $ 49,793
============================================================================================
<Caption>
AMOUNT
(000)
- --------------------------------------------------------------------------------------------
OTHER ASSETS (0.0%)
Other $ 18 18
============================================================================================
LIABILITIES (-1.3%)
Payable For:
Dividends Declared (438)
U.S. Investment Advisory Fees (36)
Bank Overdraft (36)
Malaysian Investment Advisory Fees (29)
Professional Fees (27)
Investments Purchased (21)
Directors' Fees and Expenses (18)
Stockholder Reporting Expenses (16)
Custodian Fees (14)
Administrative Fees (5)
Other Liabilities (10) (650)
============================================================================================
NET ASSETS (100.0%)
Applicable to 9,695,214, issued and outstanding
$ 0.01 par value shares (20,000,000 shares authorized) $ 49,161
============================================================================================
NET ASSET VALUE PER SHARE $ 5.07
============================================================================================
AT JUNE 30, 2003, NET ASSETS CONSISTED OF:
Common Stock $ 97
Paid-in Capital 120,609
Undistributed (Distributions in Excess of) Net
Investment Income (1,436)
Accumulated Net Realized Gain (Loss) (75,649)
Unrealized Appreciation (Depreciation) on Investments 5,540
============================================================================================
TOTAL NET ASSETS $ 49,161
============================================================================================
</Table>
(a) -- Non-income producing.
(b) -- 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.
PLC -- Public Limited Company
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
THE MALAYSIA FUND, INC.
Financial Statements
STATEMENT OF OPERATIONS
<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30, 2003
(UNAUDITED)
(000)
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of $119 of foreign taxes withheld) $ 826
========================================================================================================================
EXPENSES
U.S. Investment Advisory Fees 200
Malaysian Investment Advisory Fees 55
Professional Fees 52
Custodian Fees 24
Administrative Fees 21
Stockholder Reporting Expenses 13
Other Expenses 24
========================================================================================================================
TOTAL EXPENSES 389
========================================================================================================================
NET INVESTMENT INCOME (LOSS) 437
========================================================================================================================
NET REALIZED GAIN (LOSS) ON:
Investments 1,733
Foreign Currency Transactions (77)
========================================================================================================================
NET REALIZED GAIN (LOSS) 1,656
========================================================================================================================
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments 2,566
========================================================================================================================
NET REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 4,222
========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,659
========================================================================================================================
</Table>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30, 2003 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2002
(000) (000)
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income (Loss) $ 437 $ 333
Net Realized Gain (Loss) 1,656 2,296
Change in Unrealized Appreciation (Depreciation) 2,566 (4,720)
========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,659 (2,091)
========================================================================================================================
Distributions from and/or in excess of:
Net Investment Income (438) (1,492)
========================================================================================================================
Capital Share Transactions:
Repurchase of Shares (18,636 and 24,167 shares, respectively) (72) (108)
========================================================================================================================
TOTAL INCREASE (DECREASE) 4,149 (3,691)
========================================================================================================================
Net Assets:
Beginning of Period 45,012 48,703
========================================================================================================================
END OF PERIOD (INCLUDING UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME OF $(1,436) AND $(1,435), RESPECTIVELY) $ 49,161 $ 45,012
========================================================================================================================
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
THE MALAYSIA FUND, INC.
Financial Highlights
SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 -------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 4.63 $ 5.00 $ 4.73 $ 5.62 $ 3.02 $ 5.04
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.05++ 0.03++ 0.04 0.03 0.01 0.01
Net Realized and Unrealized Gain (Loss) on
Investments 0.44 (0.25) 0.27 (0.81) 2.59 (2.00)
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.49 (0.22) 0.31 (0.78) 2.60 (1.99)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from and/or in excess of:
Net Investment Income (0.05) (0.15) (0.04) (0.11) -- (0.03)
- --------------------------------------------------------------------------------------------------------------------------------
Anti-Dilutive Effect of Share Repurchase Program 0.00# 0.00# -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 5.07 $ 4.63 $ 5.00 $ 4.73 $ 5.62 $ 3.02
================================================================================================================================
PER SHARE MARKET VALUE, END OF PERIOD $ 4.56 $ 3.85 $ 3.92 $ 3.75 $ 7.06 $ 4.00
================================================================================================================================
TOTAL INVESTMENT RETURN:
Market Value 19.58%** 1.86% 5.64% (45.77)% 76.56% (38.66)%
Net Asset Value (1) 10.43%** (3.89)% 6.83% (14.04)% 86.09%+ (39.70)%+
================================================================================================================================
RATIOS, SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS) $ 49,161 $ 45,012 $ 48,703 $ 46,020 $ 54,740 $ 29,400
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.75%* 1.67% 2.03% 1.78% 2.24% 2.32%
Ratio of Net Investment Income (Loss) to Average
Net Assets 1.97%* 0.65% 0.93% 0.44% 0.27% 0.31%
Portfolio Turnover Rate 16%** 35% 21% 21% 37% 124%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
# Amount is less than $0.005 per share.
(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
stockholder'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.
+ During the period from September 1998 to February 1999, the Fund adjusted
its net asset value in reaction to the imposition of capital controls by
the Malaysian government. During February 1999, the Fund's net asset value
was again modified to reflect the relaxation of these capital controls.
The result of such adjustment was a decrease to the total return in 1998
and an increase to the total return in 1999.
++ Per share amounts are based on average shares outstanding.
* Annualized
** Not Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
THE MALAYSIA FUND, INC.
June 30, 2003 (unaudited)
NOTES TO FINANCIAL STATEMENTS
The Malaysia Fund, Inc. (the "Fund") was incorporated on March 12, 1987 and
is registered as a 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 investment primarily in equity
securities.
A. ACCOUNTING POLICIES: The following significant accounting policies are in
conformity with accounting principles generally accepted in the United States of
America. Such policies are consistently followed by the Fund in the preparation
of its financial statements. Accounting principles generally accepted in the
United States of America 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 sales
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 which 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. For all other securities and
investments for which market values are not readily available, including
restricted securities, and where prices determined in accordance with the
aforementioned procedures are not reflective of fair market value, values
are determined in good faith, under fair valuation procedures adopted by
the Board of Directors, although actual calculations may be done by others.
2. REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements under
which the Fund lends excess cash and takes possession of securities with an
agreement that the counterparty will repurchase such securities. In
connection with transactions in repurchase agreements, a bank as custodian
for the Fund takes possession of the underlying securities (collateral),
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.
3. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currency 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 rate of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not
isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of the securities held at period end.
Similarly, the Fund does not isolate the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market
prices of securities sold during the period. Accordingly, realized and
unrealized foreign currency gains (losses) due to securities transactions
are included in the reported net realized and unrealized gains (losses) on
investment transactions and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of foreign
currency exchange contracts, disposition of foreign currencies, currency
gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amount of
investment income and foreign withholding taxes recorded on the Fund's
books and the U.S. dollar equivalent amounts actually received or paid. Net
unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period end exchange rates are
reflected as a component of unrealized
7
<Page>
THE MALAYSIA FUND, INC.
June 30, 2003 (unaudited)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
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.
A significant portion of the Fund's net assets consist of Malaysian equity
securities and foreign currency. Future economic and political developments
in Malaysia could adversely affect the liquidity or value, or both, of
securities in which the Fund is invested. Changes in currency exchange
rates will affect the value of and investment income from such investments.
Foreign securities may be subject to greater price volatility, lower
liquidity and less diversity than equity securities of companies based in
the United States. In addition, foreign securities may be subject to
substantial governmental involvement in the economy and greater social,
economic and political uncertainty.
The Fund may use derivatives to achieve its investment objectives. 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 has utilized
and their associated risks:
4. 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.
5. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. 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 dividends) net of applicable
withholding taxes. Distributions to shareholders are recorded on the
ex-dividend date.
B. ADVISERS: Morgan Stanley Investment Management Inc. (the "U.S. Adviser")
provides investment advisory services to the Fund under the terms of an
Investment Advisory Agreement (the "Agreement"). Under the Agreement, the U.S.
Adviser is paid a fee computed weekly and payable monthly at an annual rate of
0.90% of the Fund's first $50 million of average weekly net assets, 0.70% of the
Fund's next $50 million of average weekly net assets and 0.50% of the Fund's
average weekly net assets in excess of $100 million.
Arab-Malaysian Consultant Sdn Bhd (the "Malaysian Adviser") provides investment
advice, research and assistance on behalf of the Fund to Morgan Stanley
Investment Management Inc. under terms of a contract. Under the contract, the
Malaysian Adviser is paid a fee computed weekly and payable monthly at an annual
rate of 0.25% of the Fund's first $50 million of average weekly net assets,
0.15% of the Fund's next $50 million of average weekly net assets and 0.10% of
the Fund's average weekly net assets in excess of $100 million.
C. ADMINISTRATOR: JPMorgan Chase Bank, through its corporate affiliate J.P.
Morgan Investor Services Company (the "Administrator"), provides administrative
services to the Fund under an Administration Agreement. The Administrator is
paid a fee computed weekly and payable monthly at an annual rate of 0.02435% of
the Fund's average weekly net assets, plus $24,000 per annum. In addition, the
Fund is charged certain out of pocket expenses incurred by the Administrator on
its behalf.
D. CUSTODIAN: JPMorgan Chase Bank serves as custodian for the Fund. Custody
fees are payable monthly based on assets held in custody, investment purchase
and sales activity and account maintenance fees, plus reimbursement for certain
out-of-pocket expenses.
8
<Page>
THE MALAYSIA FUND, INC.
June 30, 2003 (unaudited)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
E. FEDERAL INCOME 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 Federal income taxes is required in the financial
statements. Dividend income and distributions to stockholders are recorded on
the ex-dividend date.
The tax character of distributions paid may differ from the character of
distributions shown on the Statements of Changes in Net Assets due to short-term
capital gains being treated as ordinary income for tax purposes. The tax
character of distributions paid during 2002 and 2001 were as follows:
<Table>
<Caption>
2002 DISTRIBUTIONS 2001 DISTRIBUTIONS
PAID FROM: PAID FROM:
(000) (000)
- ---------------------------- --------------------------
LONG-TERM LONG-TERM
ORDINARY CAPITAL ORDINARY CAPITAL
INCOME GAIN INCOME GAIN
- ---------------------------------------------------------
$ 1,492 $ -- $ 432 $ --
</Table>
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 accounting principles generally accepted in the United States of
America. The book/tax differences are considered either 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 differences may result in reclassifications among undistributed net
investment income (loss), accumulated net realized gain (loss) and paid-in
capital. Adjustments for permanent book-tax differences, if any, are not
reflected in ending undistributed net investment income (loss) for the purpose
of calculating net investment income (loss) per share in the financial
highlights.
At December 31, 2002, the components of distributable earnings on a tax basis
were as follows:
<Table>
<Caption>
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY INCOME LONG-TERM CAPITAL GAIN
(000) (000)
- -------------------------------------------------------
$ 438 $ --
- -------------------------------------------------------
</Table>
At June 30, 2003, the U.S. Federal income tax cost basis of investments
(excluding foreign currency if applicable) was $43,551,000 and, accordingly, net
unrealized appreciation for U.S. Federal income tax purposes was $5,540,000, of
which $8,548,00 related to appreciated securities and $3,008,000 related to
depreciated securities.
At December 31, 2002, the Fund had a capital loss carryforward for U.S. Federal
income tax purposes of approximately $75,824,000 available to offset future
capital gains of which $5,416,000 will expire on December 31, 2005, $65,683,000
will expire on December 31, 2006, $2,720,000 will expire on December 31, 2007,
and $2,005,000 will expire on December 31, 2009. To the extent that capital
gains are offset, such gains will not be distributed to the stockholders. During
the year ended December 31, 2002, the Fund utilized capital loss carryforwards
for U.S. Federal income tax purposes of approximately $2,720,000.
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, 2002, the Fund deferred to January
1, 2003, for U.S. Federal income tax purposes, post-October currency losses of
$11,000 and post-October capital losses of $640,000.
F. OTHER: During the six months ended June 30, 2003, the Fund made purchases
and sales totaling approximately $6,935,000 and $7,382,000, 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.
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 Directors' 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, 2003, the deferred fees payable, under the Plan, totaled
$18,100 and are included in Payable for Directors' Fees and Expenses on the
Statement of Net Assets. The deferred portion of Directors' Fees and Expenses
shown on the Statement of Operations is impacted by fluctuations in the market
value of the investments selected by each Director. For the six months ended
June 30, 2003, Directors' Fees and Expenses were decreased by $650 due to these
fluctuations.
On July 15, 2002, the Fund commenced a share repurchase program for purposes of
enhancing stockholder value and reducing the discount at which the Fund's shares
traded from
9
<Page>
THE MALAYSIA FUND, INC.
June 30, 2003 (unaudited)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
their net asset value. During the six months ended June 30, 2003, the Fund
repurchased 18,636 of its shares at an average discount of 17.74% from net asset
value per share. Since the inception of the program, the Fund has repurchased
42,803 of its shares at an average discount of 17.13% 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 June 17, 2003 the Officers of the Fund, pursuant to authority granted by the
Board of Directors declared a distribution of $0.0452 per share, derived from
net investment income, payable on July 15, 2003 to stockholders of record on
June 30, 2003.
PROPOSAL:
1. To elect the following Directors, effective July 31, 2003:
<Table>
<Caption>
VOTES IN VOTES
FAVOR OF AGAINST
-----------------------------
1) Michael Bozic 6,555,717 342,926
2) Charles A. Fiumefreddo 6,554,957 343,686
3) Edwin J. Garn 6,555,839 342,803
4) Wayne E. Hedien 6,556,067 342,575
5) James F. Higgins 6,555,492 343,150
6) Dr. Manuel H. Johnson 6,555,576 343,067
7) Philip J. Purcell 6,555,201 343,442
</Table>
1. To promptly take the steps necessary to liquidate the Fund or otherwise
enable stockholders to realize net asset value (NAV) for their shares:
<Table>
<Caption>
VOTES IN VOTES VOTES
FAVOR OF AGAINST ABSTAINED
1,999,830 2,228,966 40,324
</Table>
Also effective July 31, 2003, John D. Barrett II, Thomas P. Gerrity,
Gerard E. Jones, Vincent R. McLean, C. Oscar Morong, Jr. and
William G. Morton, Jr. have resigned from the Board of Directors.
10
<Page>
THE MALAYSIA FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
each stockholder will be deemed to have elected, unless American Stock Transfer
& Trust Company (the "Plan Agent") is otherwise instructed by the stockholder 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 in full and fractional shares. 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
stockholders 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 stockholders, such as banks, brokers or nominees, that 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
stockholder as representing the total amount registered in the stockholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Stockholders who do not wish to have distributions automatically reinvested
should notify the Plan Agent in writing. There is no penalty for
non-participation or withdrawal from the Plan, and stockholders 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:
The Malaysia Fund, Inc.
American Stock Transfer & Trust Company
Dividend Reinvestment and Cash Purchase Plan
59 Maiden Lane
New York, New York 10030
1-800-278-4353
<Page>
ITEM 2. CODE OF ETHICS. Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual
reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual
reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable for semi-annual
reports.
ITEM 6. [RESERVED.]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. Not applicable for semi-annual reports.
ITEM 8. [RESERVED.]
ITEM 9. CONTROLS AND PROCEDURES.
The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Fund's internal controls
or in other factors that could significantly affect the Fund's internal controls
subsequent to the date of their evaluation.
ITEM 10. EXHIBITS.
(a) Code of Ethics - Not applicable for semi-annual reports.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer attached hereto as part of EX-99.CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Malaysia Fund, Inc.
By: Ronald E. Robison
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: Ronald E. Robison
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: August 19, 2003
By: James W. Garrett
Name: James W. Garrett
Title: Principal Financial Officer
Date: August 19, 2003