<Page> 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: 811-09081 Morgan Stanley International Fund (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: October 31, 2003 Date of reporting period: October 31, 2003 Item 1 - Report to Shareholders <Page> Welcome, Shareholder: In this report, you'll learn about how your investment in Morgan Stanley International Fund performed during the annual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments. This material must be preceded or accompanied by a prospectus for the fund being offered. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund shares may be less than what you paid for them. Accordingly you can lose money investing in this Fund. <Page> Fund Report For the year ended October 31, 2003 TOTAL RETURN FOR THE 12 MONTHS ENDED OCTOBER 31, 2003 <Table> <Caption> MORGAN STANLEY LIPPER CAPITAL INTER- INTERNATIONAL NATIONAL (MSCI) EAFE FUNDS CLASS A CLASS B CLASS C CLASS D INDEX(1) INDEX(2) 21.31% 20.52% 20.40% 21.68% 27.03% 26.55% </Table> THE PERFORMANCE OF THE FUND'S FOUR SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL DISTRIBUTIONS BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES. SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SEE PERFORMANCE SUMMARY FOR STANDARDIZED PERFORMANCE INFORMATION. MARKET CONDITIONS For the 12-month period ended October 31, 2003, the overall market environment was volatile, marked by several sharp moves. After bottoming in mid-October 2002, international equity markets rallied until early December, before starting a sell-off that lasted into mid March. The low point of this downtrend came then as European markets broke through their October lows, though U.S. equities managed to remain above their mid October level. The European economy softened, and manufacturing data through March showed falling output and declining new orders. Unemployment continued to rise and consumer confidence remained at multiyear lows. While absolute equity valuations appeared attractive, earnings momentum and revisions were poor. Asian markets traded sideways, then turned negative during the first six months of the period, predominantly as a result of geopolitical concerns. However, economic data began to show signs of life, with increases in industrial production, business confidence among small- and medium-size companies, and nominal retail sales together with inventory levels hitting 15-year lows. Global equities moved sharply above their March lows primarily because of massive fiscal stimulus in the United States and military intervention in Iraq. In the second quarter of 2003, cuts in short-term interest rates, declining credit spreads, strong and steady growth in liquidity and substantial U.S. tax cuts further fueled investors' appetite for risk, and equities surged higher globally. From the market bottom on March 12, 2003, international equities made steady gains until a pause in mid June. Nearly every country and sector in the MSCI EAFE Index had double-digit returns, with information technology, financials and small-cap stocks leading the market. In the third quarter, better than expected economic growth and improving prospects for corporate earnings continued to propel the international equity markets higher. Information technology, industrials and Asia were the global leaders, while defensive areas continued to lag. September was the weakest month as the economic data showed signs of softening and the markets fell about 3 percent, but in October international equities proved resilient and regained about 6 percent by month-end. The performance of the U.S. dollar was noteworthy as it lost value against all the other major currencies in the three-month period. European consumer and business confidence surveys showed increased optimism, though this sentiment has yet to be supported by corporate earnings or GDP or industrial production data. In the U.S., the rally that began off the mid-March bottom is the fifth major rally the markets have experienced since the peak in March 2000. Four of those rallies failed and were followed by new lows. 2 <Page> Asian markets appreciated across the board over the second half of the period, with the upward momentum being reflected in increased foreign investment throughout the region. The Japanese market rallied along with the major global equity markets. A number of factors boosted the Japanese market, although the primary driver was highly attractive valuations. PERFORMANCE ANALYSIS We attribute the Fund's underperformance relative to its benchmark primarily to its defensive positioning going into the strong rally that began in March and continued into June. While we increased cyclical positions in the portfolio over this period, we did not add enough to gain ground on the benchmark. The Fund was originally overweighted relative to the MSCI EAFE Index in U.K. equities, which hampered performance. We reduced that exposure to an underweighting by the end of the period, as we believe that valuations in the U.K. may be at fair value, but rising interest rates and the predominance of defensive sectors in the market made the U.K. less attractive. Likewise dampening performance was the Fund's underweighted stance in Germany relative to the MSCI EAFE Index. However, after visiting Germany toward the end of the period we became more positive on the outlook for the market. Chancellor Schroeder's Reform Agenda 2010 is the largest package of reforms in recent German history, one increasingly believed by the German populace to be inevitable. The Fund also suffered from its underweighted position in Australia, relative to the MSCI EAFE Index, notably in regard to that country's currency. As a primarily commodity-based and cyclical economy, Australia and its currency both benefited strongly from the global resurgence of confidence during the period. The Australian dollar reached new highs, outperforming the Australian equity market during the 12-month period. Also weighing down the Fund's performance were its overweighted stances in consumer staples and energy, and underweightings in financials and technology relative to the MSCI EAFE Index during the entire period. The overweighting in staples was driven by our view that, in the absence of evidence that the economic recovery was sustainable, cash-generating companies with stable cash earnings, such as consumer staples, were attractive. Similarly, we believe that energy companies are reliable, cash-generating businesses and that analysts have underestimated the future price of oil. High levels of debt on both the corporate and personal levels and the high gearing of banks influenced our underweighting in financials. On a positive note, our overweighted stance in Asia relative to the MSCI EAFE Index, particularly Hong Kong, added to performance. An overweighting in Japan relative to the MSCI EAFE Index, particularly aided performance, as Japanese equities were buoyed during the second half of the 12-month period by highly attractive valuations, earnings releases for the fiscal year ending March 2003 confirming that past restructuring efforts were beginning to bear fruit and a decisive move by the Japanese government in April that demonstrated its willingness to resolve the financial crisis actively. The Fund also benefited from an 3 <Page> overweighted position relative to the MSCI EAFE Index in the utilities sector, which rallied strongly. TOP 10 HOLDINGS <Table> BP 2.1% HSBC Holdings 2.0 GlaxoSmithKline 1.8 Royal Dutch Petroleum 1.7 Toyota Motor 1.6 Vodafone 1.5 Novartis 1.3 Siemens 1.2 Nokia 1.1 UBS 1.1 </Table> TOP FIVE COUNTRIES <Table> Japan 28.3% United Kingdom 19.6 Germany 6.9 France 6.7 Switzerland 6.7 </Table> SUBJECT TO CHANGE DAILY. ALL PERCENTAGES ARE AS A PERCENTAGE OF NET ASSETS. PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE DEEMED A RECOMMENDATION TO BUY THE SECURITIES MENTIONED. MORGAN STANLEY IS A FULL-SERVICE SECURITIES FIRM ENGAGED IN SECURITIES TRADING AND BROKERAGE ACTIVITIES, INVESTMENT BANKING, RESEARCH AND ANALYSIS, FINANCING AND FINANCIAL ADVISORY SERVICES. INVESTMENT STRATEGY 1. THE FUND WILL NORMALLY INVEST AT LEAST 65% OF ITS ASSETS IN A DIVERSIFIED PORTFOLIO OF INTERNATIONAL COMMON STOCKS AND OTHER EQUITY SECURITIES. 2. THE INVESTMENT TEAM BEGINS WITH THE COUNTRIES AND SECTORS REPRESENTED IN THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE (EUROPE, AUSTRALASIA AND FAR EAST) INDEX. 3. COUNTRY AND SECTOR-WEIGHTING DECISIONS CENTER ON AN ASSESSMENT OF THE OVERALL GLOBAL AND REGIONAL INVESTMENT ENVIRONMENT. 4. THE PORTFOLIO MANAGERS MAY ALSO CHOOSE TO EMPHASIZE A PARTICULAR SECTOR WHEN ITS FACTORS APPEAR COMPELLING, IN AN EFFORT TO ADD VALUE. 5. WITHIN EACH COUNTRY OR SECTOR, THE PORTFOLIO MANAGERS WILL TRY TO MATCH THE PERFORMANCE OF A BROAD LOCAL MARKET INDEX BY INVESTING IN OPTIMIZED "BASKETS" OF COMMON STOCKS AND OTHER EQUITY SECURITIES. ANNUAL HOUSEHOLDING NOTICE TO REDUCE PRINTING AND MAILING COSTS, THE FUND ATTEMPTS TO ELIMINATE DUPLICATE MAILINGS TO THE SAME ADDRESS. THE FUND DELIVERS A SINGLE COPY OF CERTAIN SHAREHOLDER DOCUMENTS, INCLUDING SHAREHOLDER REPORTS, PROSPECTUSES AND PROXY MATERIALS, TO INVESTORS WITH THE SAME LAST NAME WHO RESIDE AT THE SAME ADDRESS. YOUR PARTICIPATION IN THIS PROGRAM WILL CONTINUE FOR AN UNLIMITED PERIOD OF TIME UNLESS YOU INSTRUCT US OTHERWISE. YOU CAN REQUEST MULTIPLE COPIES OF THESE DOCUMENTS BY CALLING (800) 350-6414, 8:00 A.M. TO 8:00 P.M. ET. ONCE OUR CUSTOMER SERVICE CENTER HAS RECEIVED YOUR INSTRUCTIONS, WE WILL BEGIN SENDING INDIVIDUAL COPIES FOR EACH ACCOUNT WITHIN 30 DAYS. PROXY VOTING POLICIES AND PROCEDURES A DESCRIPTION OF THE FUND'S POLICIES AND PROCEDURES WITH RESPECT TO THE VOTING OF PROXIES RELATING TO THE FUND'S PORTFOLIO SECURITIES IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY CALLING (800) 869-NEWS (6397). THIS INFORMATION IS ALSO AVAILABLE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT http://www.sec.gov. 4 <Page> (This page has been left blank intentionally.) <Page> PERFORMANCE SUMMARY [CHART] PERFORMANCE OF A $10,000 INVESTMENT <Table> <Caption> ($ IN THOUSANDS) CLASS A++ CLASS B++ CLASS C++ CLASS D++ MSCI EAFE(1) LIPPER(2) June 28, 1999 $ 9,475 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 July 31, 1999 $ 9,608 $ 10,130 $ 10,130 $ 10,140 $ 10,243 $ 10,232 October 31, 1999 $ 10,015 $ 10,550 $ 10,550 $ 10,580 $ 10,773 $ 10,707 January 31, 2000 $ 10,603 $ 11,140 $ 11,140 $ 11,200 $ 11,375 $ 12,149 April 30, 2000 $ 10,631 $ 11,150 $ 11,150 $ 11,240 $ 11,496 $ 12,160 July 31, 2000 $ 10,356 $ 10,850 $ 10,850 $ 10,960 $ 11,165 $ 11,973 October 31, 2000 $ 9,750 $ 10,190 $ 10,190 $ 10,320 $ 10,461 $ 11,077 January 31, 2001 $ 9,674 $ 10,089 $ 10,089 $ 10,250 $ 10,421 $ 11,070 April 30, 2001 $ 9,064 $ 9,435 $ 9,435 $ 9,607 $ 9,622 $ 10,152 July 31, 2001 $ 8,454 $ 8,781 $ 8,781 $ 8,964 $ 8,741 $ 9,376 October 31, 2001 $ 7,765 $ 8,042 $ 8,042 $ 8,225 $ 7,853 $ 8,408 January 31, 2002 $ 7,599 $ 7,862 $ 7,862 $ 8,066 $ 7,755 $ 8,519 April 30, 2002 $ 8,164 $ 8,422 $ 8,432 $ 8,664 $ 8,287 $ 9,160 July 31, 2002 $ 7,235 $ 7,451 $ 7,461 $ 7,682 $ 7,262 $ 8,033 October 31, 2002 $ 6,761 $ 6,944 $ 6,955 $ 7,181 $ 6,815 $ 7,546 January 31, 2003 $ 6,506 $ 6,680 $ 6,682 $ 6,918 $ 6,598 $ 7,370 April 30, 2003 $ 6,731 $ 6,892 $ 6,904 $ 7,157 $ 6,939 $ 7,667 July 31, 2003 $ 7,354 $ 7,514 $ 7,517 $ 7,817 $ 7,720 $ 8,587 October 31, 2003 $ 8,202 $ 8,210 $ 8,374 $ 8,737 $ 8,658 $ 9,549 </Table> ENDING VALUE <Table> <Caption> CLASS A++ CLASS B++ CLASS C++ CLASS D++ MSCI EAFE(1) LIPPER(2) --------- --------- --------- --------- ------------ --------- $ 8,202 $ 8,210 $ 8,374 $ 8,737 $ 8,658 $ 9,549 </Table> PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. THE GRAPH AND TABLE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. PERFORMANCE FOR CLASS A, CLASS B, CLASS C, AND CLASS D SHARES WILL VARY DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES. 6 <Page> AVERAGE ANNUAL TOTAL RETURNS--PERIOD ENDED OCTOBER 31, 2003 <Table> <Caption> CLASS A SHARES* CLASS B SHARES** CLASS C SHARES+ CLASS D SHARES^^ 06/28/99 06/28/99 06/28/99 06/28/99 SYMBOL INLAX INLBX INLCX INLDX 1 YEAR 21.31%(3) 20.52%(3) 20.40%(3) 21.68%(3) 14.94(4) 15.52(4) 19.40(4) -- SINCE INCEPTION (3.27)(3) (4.02)(3) (4.00)(3) (3.06)(3) (4.46)(4) (4.44)(4) (4.00)(4) -- </Table> - ---------- Notes on Performance (1) THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX MEASURES THE PERFORMANCE FOR A DIVERSE RANGE OF GLOBAL STOCK MARKETS WITHIN EUROPE, AUSTRALASIA, AND THE FAR EAST. THE PERFORMANCE OF THE INDEX IS LISTED IN U.S. DOLLARS AND ASSUMES REINVESTMENT OF NET DIVIDENDS. "NET DIVIDENDS" REFLECTS A REDUCTION IN DIVIDENDS AFTER TAKING INTO ACCOUNT WITHHOLDING OF TAXES BY CERTAIN FOREIGN COUNTRIES REPRESENTED IN THE INDEX. INDEXES ARE UNMANAGED AND THEIR RETURNS DO NOT INCLUDE ANY SALES CHARGES OR FEES. SUCH COSTS WOULD LOWER PERFORMANCE. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. (2) THE LIPPER INTERNATIONAL FUNDS INDEX IS AN EQUALLY WEIGHTED PERFORMANCE INDEX OF THE LARGEST QUALIFYING FUNDS (BASED ON NET ASSETS) IN THE LIPPER INTERNATIONAL FUNDS CLASSIFICATION. THE INDEX, WHICH IS ADJUSTED FOR CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS, IS UNMANAGED AND SHOULD NOT BE CONSIDERED AN INVESTMENT. THERE ARE CURRENTLY 30 FUNDS REPRESENTED IN THIS INDEX. (3) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND DOES NOT REFLECT THE DEDUCTION OF ANY SALES CHARGES. (4) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND THE DEDUCTION OF THE MAXIMUM APPLICABLE SALES CHARGE. SEE THE FUND'S CURRENT PROSPECTUS FOR COMPLETE DETAILS ON FEES AND SALES CHARGES. * THE MAXIMUM FRONT-END SALES CHARGE FOR CLASS A IS 5.25%. ** THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR CLASS B IS 5.0%. THE CDSC DECLINES TO 0% AFTER SIX YEARS. + THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C IS 1% FOR SHARES REDEEMED WITHIN ONE YEAR OF PURCHASE. ^^ CLASS D HAS NO SALES CHARGE. ++ CLOSING VALUE ASSUMING A COMPLETE REDEMPTION ON OCTOBER 31, 2003. 7 <Page> MORGAN STANLEY INTERNATIONAL FUND PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2003 <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- COMMON AND PREFERRED STOCKS AND RIGHTS (98.3%) AUSTRALIA (3.8%) ALUMINUM 58,508 Alumina Ltd. $ 246,432 -------------- BEVERAGES: ALCOHOLIC 102,513 Foster's Group Ltd. 331,078 35,767 Southcorp Ltd. 78,357 -------------- 409,435 -------------- BEVERAGES: NON-ALCOHOLIC 25,313 Coca-Cola Amatil Ltd. 105,364 -------------- BIOTECHNOLOGY 4,768 CSL Ltd. 57,282 -------------- BUILDING PRODUCTS 74,382 CSR Ltd. 111,439 -------------- CASINO/GAMING 19,284 TABCORP Holdings Ltd. 157,949 -------------- CHEMICALS: MAJOR DIVERSIFIED 15,398 Orica Ltd. 143,748 -------------- CONSTRUCTION MATERIALS 31,510 Boral Ltd. 122,475 54,660 Rinker Group Ltd. 245,289 -------------- 367,764 -------------- CONTAINERS/PACKAGING 42,693 Amcor Ltd. 256,455 -------------- ENGINEERING & CONSTRUCTION 12,108 Leighton Holdings Ltd. 97,290 -------------- FINANCIAL CONGLOMERATES 10,494 Macquarie Bank Ltd. 258,377 26,954 Suncorp-Metway Ltd. 247,058 -------------- 505,435 -------------- FOOD RETAIL 53,939 Coles Myer Ltd. 296,182 49,633 Woolworths Ltd. 390,041 -------------- 686,223 -------------- GAS DISTRIBUTORS 23,350 Australian Gas Light Company Ltd. $ 176,565 15,557 Origin Energy Ltd. 47,275 -------------- 223,840 -------------- HOSPITAL/NURSING MANAGEMENT 45,214 Mayne Group Ltd. 116,308 -------------- INDUSTRIAL CONGLOMERATES 9,353 Ansell Ltd.* 45,740 18,868 Wesfarmers Ltd. 386,686 -------------- 432,426 -------------- INVESTMENT TRUSTS/MUTUAL FUNDS 95,997 Macquarie Infrastructure Group (Stapled Securities)** 215,056 -------------- LIFE/HEALTH INSURANCE 66,781 AMP Ltd. 310,537 66,781 AMP Ltd. (Rights)* 3,870 -------------- 314,407 -------------- MAJOR BANKS 72,608 Australia and New Zealand Banking Group Ltd. 913,355 13,201 Australia and New Zealand Banking Group Ltd. (Rights)* 40,209 59,997 Commonwealth Bank of Australia 1,165,997 73,578 National Australia Bank Ltd. 1,590,606 84,849 Westpac Banking Corp. 968,399 -------------- 4,678,566 -------------- MAJOR TELECOMMUNICATIONS 108,395 Telstra Corp., Ltd. 363,097 -------------- MEDIA CONGLOMERATES 71,315 News Corp., Ltd. 632,499 101,399 News Corp., Ltd. (Pref. Ordinary) 743,100 -------------- 1,375,599 -------------- MEDICAL/NURSING SERVICES 6,887 Sonic Healthcare Ltd. 33,388 </Table> SEE NOTES TO FINANCIAL STATEMENTS 8 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- MISCELLANEOUS COMMERCIAL SERVICES 49,712 Brambles Industries Ltd. $ 164,064 -------------- MULTI-LINE INSURANCE 85,342 Insurance Australia Group Ltd. 268,385 -------------- OIL & GAS PRODUCTION 31,385 Santos Ltd. 135,518 23,939 Woodside Petroleum Ltd. 223,821 -------------- 359,339 -------------- OTHER METALS/MINERALS 178,989 BHP Billiton Ltd. 1,482,481 15,439 Rio Tinto Ltd. 388,968 58,769 WMC Resources Ltd.* 212,644 -------------- 2,084,093 -------------- OTHER TRANSPORTATION 9,367 Patrick Corp. Ltd. 96,647 27,025 Transurban Group 79,450 -------------- 176,097 -------------- PRECIOUS METALS 18,430 Newcrest Mining Ltd. 157,336 -------------- PROPERTY - CASUALTY INSURERS 32,209 QBE Insurance Group Ltd. 234,450 -------------- PUBLISHING: NEWSPAPERS 47,018 John Fairfax Holdings Ltd. 120,284 -------------- PULP & PAPER 21,320 Paperlinx Ltd. 76,389 -------------- REAL ESTATE DEVELOPMENT 20,822 Lend Lease Corp., Ltd. 164,954 21,468 Westfield Holdings Ltd. 215,586 -------------- 380,540 -------------- REAL ESTATE INVESTMENT TRUSTS 34,172 Centro Properties Group 91,526 75,928 CFS Gandel Retail Trust 69,219 99,421 General Property Trust (Units)++ 196,028 64,412 Investa Property Group 87,854 37,675 Mirvac Group 113,422 1,597 Stockland (New)* 5,406 55,732 Stockland (Units)++ $ 191,021 4,069 Westfield Trust (New Units)++ 9,518 110,799 Westfield Trust (Units)++ 260,744 -------------- 1,024,738 -------------- STEEL 44,196 BHP Steel Ltd. 169,285 7,883 OneSteel Ltd. 12,367 -------------- 181,652 -------------- TOTAL AUSTRALIA 16,124,870 -------------- AUSTRIA (0.0%) CONSTRUCTION MATERIALS 1,708 RHI AG* 24,230 -------------- OTHER TRANSPORTATION 1,083 Flughafen Wien AG 43,935 -------------- STEEL 700 Boehler-Uddeholm AG 40,061 -------------- TOTAL AUSTRIA 108,226 -------------- BELGIUM (0.6%) CHEMICALS: SPECIALTY 4,378 Solvay S.A. (A Shares) 324,463 -------------- FINANCIAL CONGLOMERATES 69,237 Fortis 1,228,951 -------------- MAJOR BANKS 56,677 Dexia 888,622 4,337 KBC Bankverzekeringsholding 183,119 -------------- 1,071,741 -------------- METAL FABRICATIONS 482 Bekaert NV 23,837 -------------- OTHER METALS/MINERALS 456 Umicore 27,622 -------------- PHARMACEUTICALS: OTHER 2,246 UCB S.A. 70,507 -------------- TOTAL BELGIUM 2,747,121 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 9 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- BERMUDA (0.1%) APPAREL/FOOTWEAR 76,500 Yue Yuen Industrial (Holdings) Ltd. $ 216,644 -------------- CONSTRUCTION MATERIALS 88,000 Cheung Kong Infrastructure Holdings Ltd. 190,874 -------------- TOTAL BERMUDA 407,518 -------------- CHINA (1.6%) AIRLINES 480,000 China Eastern Airlines Corp., Ltd.* 82,796 360,000 China Southern Airlines Co., Ltd. (Class H)* 142,499 -------------- 225,295 -------------- ALUMINUM 846,000 Aluminum Corp. of China Ltd. 435,605 -------------- BEVERAGES: ALCOHOLIC 106,000 Tsingtao Brewery Co., Ltd. 137,813 -------------- CHEMICALS: SPECIALTY 716,000 Sinopec Shanghai Petrochemical Co. 202,768 -------------- ELECTRIC UTILITIES 428,000 Huadian Power International Corp. 139,113 464,000 Huaneng Power International, Inc. (Class H) 722,713 -------------- 861,826 -------------- INTEGRATED OIL 5,216,000 China Petroleum & Chemical Corp. (Class H) 1,728,931 3,954,000 PetroChina Co. Ltd. 1,437,864 -------------- 3,166,795 -------------- MAJOR TELECOMMUNICATIONS 2,496,000 China Telecom Corp. Ltd. 827,341 -------------- MARINE SHIPPING 398,000 China Shipping Development Co., Ltd. 261,286 -------------- MISCELLANEOUS COMMERCIAL SERVICES 95,000 Travelsky Technology Ltd. $ 89,271 -------------- MOTOR VEHICLES 388,000 Qingling Motors Co. 71,422 -------------- OTHER METALS/MINERALS 359,000 Jiangxi Copper Co., Ltd. 128,239 -------------- OTHER TRANSPORTATION 426,000 Beijing Capital International Airport Co., Ltd. 157,656 380,000 Jiangsu Expressway Co., Ltd. 190,770 445,000 Zhejiang Expressway Co. Ltd. 279,253 -------------- 627,679 -------------- TOTAL CHINA 7,035,340 -------------- DENMARK (0.3%) BIOTECHNOLOGY 1,650 Novozymes AS (Series B) 52,903 -------------- ELECTRICAL PRODUCTS 2,800 Vestas Wind Systems AS 58,615 -------------- MAJOR BANKS 51,444 Danske Bank AS 1,032,883 -------------- MISCELLANEOUS COMMERCIAL SERVICES 2,000 Group 4 Falck AS 44,669 1,100 ISS AS 52,218 -------------- 96,887 -------------- TOTAL DENMARK 1,241,288 -------------- FINLAND (1.9%) BUILDING PRODUCTS 1,458 Uponor Oyj 38,633 -------------- ENGINEERING & CONSTRUCTION 4,607 Kone Oyj (B Shares) 239,618 -------------- FOOD RETAIL 16,110 Kesko Oyj (B Shares) 249,415 -------------- INDUSTRIAL MACHINERY 21,446 Metso Oyj 239,218 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 10 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- INFORMATION TECHNOLOGY SERVICES 11,422 TietoEnator Oyj $ 301,334 -------------- MULTI-LINE INSURANCE 21,231 Sampo Oyj (A Shares) 177,861 -------------- OIL REFINING/MARKETING 21,853 Fortum Oyj 200,519 -------------- OTHER METALS/MINERALS 14,012 Outokumpu Oyj 168,780 -------------- PULP & PAPER 50,293 Stora Enso Oyj (Registered Shares) 680,870 37,804 UPM-Kymmene Oyj 704,262 -------------- 1,385,132 -------------- TELECOMMUNICATION EQUIPMENT 288,727 Nokia Oyj 4,880,997 -------------- TRUCKS/CONSTRUCTION/FARM MACHINERY 4,537 Wartsila Oyj (B Shares) 77,434 -------------- TOTAL FINLAND 7,958,941 -------------- FRANCE (6.7%) AEROSPACE & DEFENSE 14,249 Thales S.A. 408,891 779 Zodiac S.A. 22,913 -------------- 431,804 -------------- AIRLINES 5,507 Air France 87,681 -------------- ALUMINUM 4,373 Pechiney S.A. (A Shares) 240,603 -------------- APPAREL/FOOTWEAR 21,989 LVMH (Louis Vuitton Moet Hennessy) 1,512,614 -------------- BUILDING PRODUCTS 38,989 Compagnie de Saint-Gobain 1,637,193 -------------- CHEMICALS: SPECIALTY 7,449 Air Liquide S.A. 1,098,953 -------------- CONSTRUCTION MATERIALS 967 Imerys S.A. $ 184,621 10,952 Lafarge S.A. 780,630 -------------- 965,251 -------------- ELECTRICAL PRODUCTS 4,604 Alstom* 14,597 21,821 Schneider Electric S.A. 1,271,291 -------------- 1,285,888 -------------- ENGINEERING & CONSTRUCTION 21,786 Bouygues S.A. 589,881 5,164 Vinci S.A. 372,558 -------------- 962,439 -------------- FOOD DISTRIBUTORS 6,222 Sodexho Alliance S.A. 161,988 -------------- FOOD RETAIL 18,709 Carrefour S.A. 977,632 2,465 Casino Guichard Perrachon S.A. 224,615 -------------- 1,202,247 -------------- FOOD: MAJOR DIVERSIFIED 4,046 Groupe Danone 607,675 -------------- HOTELS/RESORTS/CRUISELINES 9,036 Accor S.A. 353,711 -------------- INFORMATION TECHNOLOGY SERVICES 4,445 Cap Gemini S.A.* 222,962 -------------- INTEGRATED OIL 28,340 Total S.A. 4,384,319 -------------- INTERNET SOFTWARE/SERVICES 865 Business Objects S.A.* 28,225 5,258 Wanadoo* 38,938 -------------- 67,163 -------------- LIFE/HEALTH INSURANCE 4,001 Cnp Assurances 181,618 -------------- MAJOR BANKS 31,162 BNP Paribas S.A. 1,629,801 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 11 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 12,773 Societe Generale $ 944,419 -------------- 2,574,220 -------------- MAJOR TELECOMMUNICATIONS 41,894 France Telecom S.A.* 1,009,261 -------------- MEDIA CONGLOMERATES 31,251 Vivendi Universal S.A.* 653,421 -------------- MEDICAL SPECIALTIES 1,745 Essilor International S.A. 83,552 -------------- MOTOR VEHICLES 5,530 Peugeot S.A. 236,114 5,538 Renault S.A. 364,616 -------------- 600,730 -------------- MULTI-LINE INSURANCE 89,362 AXA 1,685,433 -------------- OILFIELD SERVICES/EQUIPMENT 270 Technip S.A. 26,555 -------------- OTHER CONSUMER SPECIALTIES 3,632 Societe BIC S.A. 149,696 -------------- PACKAGED SOFTWARE 2,485 Dassault Systemes S.A. 104,952 -------------- PHARMACEUTICALS: MAJOR 42,752 Aventis S.A. 2,253,283 40,852 Sanofi-Synthelabo S.A. 2,517,120 -------------- 4,770,403 -------------- PUBLISHING: BOOKS/MAGAZINES 6,082 Lagardere S.C.A. 304,512 -------------- REGIONAL BANKS 6,553 Credit Agricole S.A. 138,532 -------------- TELECOMMUNICATION EQUIPMENT 71,052 Alcatel S.A.* 933,132 821 Sagem S.A. 83,408 -------------- 1,016,540 -------------- TOTAL FRANCE 28,521,916 -------------- GERMANY (6.9%) AIR FREIGHT/COURIERS 29,281 Deutsche Post AG (Registered Shares) $ 560,731 -------------- AIRLINES 46,070 Deutsche Lufthansa AG* 719,120 -------------- APPAREL/FOOTWEAR 459 Adidas-Salomon AG 42,329 -------------- CHEMICALS: MAJOR DIVERSIFIED 36,779 BASF AG 1,679,298 45,255 Bayer AG 1,082,375 -------------- 2,761,673 -------------- CHEMICALS: SPECIALTY 7,443 Linde AG 339,755 -------------- CONSTRUCTION MATERIALS 2,262 HeidelbergCement AG* 96,188 -------------- DEPARTMENT STORES 3,723 KarstadtQuelle AG 92,103 6,950 Metro AG 282,912 -------------- 375,015 -------------- ELECTRIC UTILITIES 35,181 E. ON AG 1,769,981 3,928 RWE AG 108,628 -------------- 1,878,609 -------------- ELECTRONIC COMPONENTS 590 Epcos AG* 12,111 -------------- HOUSEHOLD/PERSONAL CARE 2,255 Beiersdorf AG 253,177 2,372 Henkel KGaA - Vorzug (Pref.) 173,653 1,688 Wella AG (Pref.) 133,793 -------------- 560,623 -------------- INDUSTRIAL CONGLOMERATES 6,942 MAN AG 191,497 74,367 Siemens AG 4,990,903 21,625 ThyssenKrupp AG 359,070 -------------- 5,541,470 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 12 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- INVESTMENT BANKS/BROKERS 11,348 Deutsche Boerse AG $ 627,913 -------------- MAJOR BANKS 44,796 Bayerische Hypo - und Vereinsbank AG* 982,244 53,089 Commerzbank AG 1,044,298 39,455 Deutsche Bank AG (Registered Shares) 2,590,373 -------------- 4,616,915 -------------- MAJOR TELECOMMUNICATIONS 131,088 Deutsche Telekom AG (Registered Shares)* 2,055,290 -------------- MEDICAL DISTRIBUTORS 2,051 Celesio AG 85,436 -------------- MEDICAL/NURSING SERVICES 3,627 Fresenius Medical Care AG 205,853 -------------- MOTOR VEHICLES 37,097 DaimlerChrysler AG (Registered Shares) 1,377,461 399 Porsche AG (Pref.) 195,070 11,757 Volkswagen AG 590,279 2,969 Volkswagen AG (Pref.) 100,624 -------------- 2,263,434 -------------- MULTI-LINE INSURANCE 21,121 Allianz AG (Registered Shares) 2,253,775 12,568 Muenchener Rueckver AG (Registered Shares)* 1,491,908 -------------- 3,745,683 -------------- OTHER CONSUMER SERVICES 5,633 TUI AG 97,965 -------------- PACKAGED SOFTWARE 12,438 SAP AG 1,801,160 -------------- PHARMACEUTICALS: MAJOR 3,924 Merck KGaA 136,804 6,903 Schering AG 320,856 -------------- 457,660 -------------- PHARMACEUTICALS: OTHER 753 Altana AG $ 47,233 -------------- SEMICONDUCTORS 29,388 Infineon Technologies AG* 431,182 -------------- SPECIALTY STORES 2,821 Douglas Holding AG 81,441 -------------- TOTAL GERMANY 29,404,789 -------------- GREECE (0.0%) CONSTRUCTION MATERIALS 1,600 Titan Cement Co. S.A. 61,206 -------------- HONG KONG (4.3%) AIRLINES 162,000 Cathay Pacific Airways, Ltd. 309,674 -------------- APPAREL/FOOTWEAR RETAIL 142,000 Esprit Holdings Ltd. 446,006 -------------- BROADCASTING 29,000 Television Broadcasts Ltd. 137,375 -------------- COAL 316,000 Yanzhou Coal Mining Co., Ltd. (Class H) 231,859 -------------- ELECTRIC UTILITIES 444,000 Beijing Datang Power Generation Co., Ltd. 284,341 274,300 CLP Holdings Ltd. 1,239,355 216,000 HongKong Electric Holdings Ltd. 842,479 -------------- 2,366,175 -------------- ELECTRONIC PRODUCTION EQUIPMENT 7,000 ASM Pacific Technology Ltd. 26,176 -------------- ENGINEERING & CONSTRUCTION 53,000 Hopewell Holdings Ltd. 88,009 232,252 New World Development Co., Ltd. 148,736 -------------- 236,745 -------------- FINANCIAL CONGLOMERATES 193,000 Wharf (Holdings) Ltd. (The) 485,699 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 13 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- GAS DISTRIBUTORS 603,483 Hong Kong & China Gas Co., Ltd. $ 835,096 -------------- HOTELS/RESORTS/CRUISELINES 128,000 Shangri-La Asia Ltd. 122,752 -------------- INDUSTRIAL CONGLOMERATES 343,900 Hutchison Whampoa Ltd. 2,667,178 147,500 Swire Pacific Ltd. (Class A) 899,981 -------------- 3,567,159 -------------- INVESTMENT BANKS/BROKERS 167,000 Hong Kong Exchanges & Clearing Ltd. 363,300 -------------- MAJOR BANKS 222,166 Bank of East Asia Ltd. 663,481 429,500 BOC Hong Kong (Holdings) Ltd. 743,615 108,800 Hang Seng Bank Ltd. 1,358,512 -------------- 2,765,608 -------------- MAJOR TELECOMMUNICATIONS 518,611 PCCW Ltd.* 370,508 -------------- MISCELLANEOUS MANUFACTURING 229,500 Johnson Electric Holdings Ltd. 298,378 -------------- PUBLISHING: NEWSPAPERS 68,000 SCMP Group Ltd. 33,263 -------------- RAILROADS 216,844 MTR Corp., Ltd. 294,485 440,000 The Guangshen Railway Co., Ltd. 121,774 -------------- 416,259 -------------- REAL ESTATE DEVELOPMENT 233,000 Cheung Kong (Holdings) Ltd. 1,942,042 195,000 Hang Lung Properties Ltd. 254,779 111,000 Henderson Land Development Co., Ltd. 465,804 43,000 Hysan Development Co., Ltd. 62,271 172,111 Sino Land Co., Ltd. 89,728 206,000 Sun Hung Kai Properties Ltd. $ 1,743,515 -------------- 4,558,139 -------------- TEXTILES 428,000 Sinopec Yizheng Chemical 89,804 -------------- TOOLS/HARDWARE 74,000 Techtronic Industries Co., Ltd. 203,849 -------------- WHOLESALE DISTRIBUTORS 256,000 Li & Fung Ltd. 430,044 -------------- TOTAL HONG KONG 18,293,868 -------------- INDIA (0.5%) ALUMINUM 5,100 Hindalco Industries Ltd. 123,585 -------------- FINANCE/RENTAL/LEASING 8,200 Housing Development Finance Corp., Ltd. 94,048 -------------- GAS DISTRIBUTORS 17,400 Gail India Ltd. 62,491 -------------- HOUSEHOLD/PERSONAL CARE 51,100 Hindustan Lever Ltd. 196,825 -------------- INFORMATION TECHNOLOGY SERVICES 2,100 Infosys Technologies Ltd. 219,657 9,400 Satyam Computer Service Ltd. 63,475 1,000 Wipro Ltd. 29,636 -------------- 312,768 -------------- MOTOR VEHICLES 2,800 Bajaj Auto Ltd 56,534 7,600 Hero Honda Motors Ltd. 59,259 -------------- 115,793 -------------- OIL REFINING/MARKETING 7,600 Hindustan Petroleum Corp., Ltd. 55,193 34,900 Reliance Industries Ltd. 374,407 -------------- 429,600 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 14 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- PHARMACEUTICALS: OTHER 4,400 Dr. Reddy's Laboratories Ltd. $ 116,013 6,000 Ranbaxy Laboratories Ltd. 130,132 -------------- 246,145 -------------- REGIONAL BANKS 4,100 HDFC Bank Ltd. 28,613 19,300 ICICI Bank Ltd. 105,633 -------------- 134,246 -------------- STEEL 14,400 Tata Iron & Steel Co., Ltd. 113,869 -------------- TOBACCO 5,800 ITC Ltd. 111,151 -------------- TRUCKS/CONSTRUCTION/FARM MACHINERY 24,700 Larsen & Toubro Ltd. 221,635 8,400 Tata Motors Ltd. 69,398 -------------- 291,033 -------------- TOTAL INDIA 2,231,554 -------------- IRELAND (0.1%) CONSTRUCTION MATERIALS 15,492 CRH PLC 277,312 -------------- FINANCIAL CONGLOMERATES 6,900 Irish Life & Permanent PLC 96,207 -------------- INDUSTRIAL CONGLOMERATES 2,600 DCC PLC 34,748 -------------- WHOLESALE DISTRIBUTORS 5,600 Grafton Group PLC (Units) 34,667 -------------- TOTAL IRELAND 442,934 -------------- ITALY (1.8%) AEROSPACE & DEFENSE 157,323 Finmeccanica SpA 111,589 -------------- APPAREL/FOOTWEAR 2,647 Benetton Group SpA 31,333 -------------- BROADCASTING 13,164 Mediaset SpA 132,367 -------------- CONSTRUCTION MATERIALS 3,035 Italcementi SpA $ 36,347 -------------- ELECTRIC UTILITIES 33,862 Enel SpA 210,798 -------------- FINANCIAL CONGLOMERATES 5,001 Banca Fideuram SpA 31,248 98,106 Pirelli & Co. SpA 75,717 -------------- 106,965 -------------- INTEGRATED OIL 64,758 ENI SpA 1,023,564 -------------- LIFE/HEALTH INSURANCE 11,241 Alleanza Assicurazioni SpA 111,990 15,926 Assicurazioni Generali 364,874 3,759 Mediolanum SpA 26,141 -------------- 503,005 -------------- MAJOR BANKS 262,093 Banca Intesa SpA 879,477 12,467 Banca Intesa SpA - RNC 31,159 9,243 Banca Monte dei Paschi di Siena SpA 27,433 19,007 Banca Nazionale del Lavoro SpA* 43,106 101,988 Sanpaolo IMI SpA 1,142,340 342,401 UniCredito Italiano SpA 1,679,855 -------------- 3,803,370 -------------- MAJOR TELECOMMUNICATIONS 184,953 Telecom Italia SpA* 480,450 14,798 Telecom Italia SpA - RNC* 25,547 -------------- 505,997 -------------- MEDICAL SPECIALTIES 7,159 Snia SpA 14,911 -------------- MOTOR VEHICLES 2,589 Fiat SpA* 20,191 -------------- MULTI-LINE INSURANCE 5,129 Riunione Adriatica di Sicurta SpA 79,763 -------------- REGIONAL BANKS 3,564 Banca Popolare di Milano 18,104 </Table> SEE NOTES TO FINANCIAL STATEMENTS 15 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 27,625 Banco Popolare di Verona e Novara Scrl $ 425,133 7,836 Mediobanca SpA 78,430 -------------- 521,667 -------------- RESTAURANTS 3,435 Autogrill SpA* 43,284 -------------- SPECIALTY TELECOMMUNICATIONS 1,269 Tiscali SpA* 8,399 -------------- WIRELESS TELECOMMUNICATIONS 134,142 Telecom Italia Mobile SpA (T.I.M.) 616,206 -------------- TOTAL ITALY 7,769,756 -------------- JAPAN (28.3%) ADVERTISING/MARKETING SERVICES 3,800 Asatsu - DK Inc. 90,674 -------------- AGRICULTURAL COMMODITIES/MILLING 11,000 Nisshin Seifun Group Inc. 90,092 -------------- AIR FREIGHT/COURIERS 76,000 Nippon Express Co., Ltd. 342,660 28,000 Yamato Transport Co., Ltd. 371,857 -------------- 714,517 -------------- AIRLINES 83,000 Japan Airlines System Corp. 238,415 -------------- APPAREL/FOOTWEAR 16,000 Onward Kashiyama Co., Ltd. 179,475 6,000 Wacoal Corp. 49,577 -------------- 229,052 -------------- APPAREL/FOOTWEAR RETAIL 400 Fast Retailing Co., Ltd. 24,289 1,200 Shimamura Co., Ltd. 83,338 3,000 World Co., Ltd. 81,265 -------------- 188,892 -------------- AUTO PARTS: O.E.M. 58,450 Denso Corporation 1,107,792 26,000 NGK Spark Plug Co., Ltd. 217,907 2,000 Sanden Corp. 10,726 3,000 Stanley Electric Co., Ltd. $ 63,812 900 Toyoda Gosei Co., Ltd. 26,589 7,250 Toyota Industries Corp. 133,783 -------------- 1,560,609 -------------- AUTOMOTIVE AFTERMARKET 63,000 Bridgestone Corp. 824,652 -------------- BEVERAGES: ALCOHOLIC 32,600 Asahi Breweries, Ltd. 272,037 93,000 Kirin Brewery Co., Ltd. 743,087 9,000 Takara Holdings Inc. 70,685 -------------- 1,085,809 -------------- BROADCASTING 19 Fuji Television Network, Inc. 101,036 8,600 Tokyo Broadcasting System, Inc. 137,666 -------------- 238,702 -------------- BUILDING PRODUCTS 28,000 Nippon Sheet Glass Company, Ltd. 86,029 16,000 Tostem Inax Holding Corp. 284,920 47,000 Toto Ltd. 390,919 -------------- 761,868 -------------- CHEMICALS: AGRICULTURAL 14,000 Nissan Chemical Industries, Ltd. 121,916 -------------- CHEMICALS: MAJOR DIVERSIFIED 105,000 Asahi Kasei Corp. 500,136 23,000 Ishihara Sangyo Kaisha, Ltd.* 47,250 147,000 Mitsubishi Chemical Corp. 384,838 -------------- 932,224 -------------- CHEMICALS: SPECIALTY 13,000 Daicel Chemical Industries, Ltd. 55,068 62,000 Dainippon Ink & Chemicals, Inc. 123,425 40,000 Denki Kagaku Kogyo Kabushiki Kaisha 121,444 13,000 JSR Corp. 275,339 </Table> SEE NOTES TO FINANCIAL STATEMENTS 16 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 24,000 Kaneka Corp. $ 186,965 33,000 Kuraray Co., Ltd. 248,377 48,000 Mitsubishi Rayon Co., Ltd. 178,020 45,000 Mitsui Chemicals, Inc. 262,613 29,197 Shin-Etsu Chemical Co., Ltd. 1,085,499 8,000 Showa Denko K.K.* 15,490 14,000 Sumitomo Bakelite Co., Ltd. 85,901 117,000 Sumitomo Chemical Co., Ltd. 436,051 46,000 Tosoh Corp. 128,370 -------------- 3,202,562 -------------- COMMERCIAL PRINTING/FORMS 40,000 Dai Nippon Printing Co., Ltd. 617,398 37,000 Toppan Printing Co., Ltd. 339,024 -------------- 956,422 -------------- COMPUTER PROCESSING HARDWARE 118,000 Fujitsu Ltd.* 739,042 -------------- CONSTRUCTION MATERIALS 6,000 Taiheyo Cement Corp. 14,835 -------------- CONTAINERS/PACKAGING 20,000 Toyo Seikan Kaisha, Ltd. 233,615 -------------- DEPARTMENT STORES 6,000 Hankyu Department Stores, Inc. 43,905 8,600 Isetan Co., Ltd. 88,963 17,800 Marui Co., Ltd. 225,878 12,000 Takashimaya Co., Ltd. 87,483 -------------- 446,229 -------------- ELECTRIC UTILITIES 16,400 Chubu Electric Power Co. 328,716 84,100 Kansai Electric Power Co., Inc. 1,452,504 11,200 Kyushu Electric Power Co., Inc. 184,885 40,600 Tohoku Electric Power Co., Inc. 657,660 119,700 Tokyo Electric Power Co., Inc. (The) 2,551,554 -------------- 5,175,319 -------------- ELECTRICAL PRODUCTS 16,000 Fujikura Ltd. $ 96,137 56,000 Furukawa Electric Co., Ltd. 211,763 2,700 Mabuchi Motor Co., Ltd. 205,672 13,000 Matsushita Electric Works, Ltd. 97,609 37,000 NGK Insulators, Ltd. 252,586 2,700 Nidec Corp. 261,385 49,000 Sumitomo Electric Industries, Ltd. 420,916 1,000 Ushio Inc. 17,044 -------------- 1,563,112 -------------- ELECTRONIC COMPONENTS 12,000 Alps Electric Co. Ltd. 201,036 24,000 Citizen Watch Co., Ltd. 196,564 2,300 Hirose Electric Co., Ltd. 282,456 8,300 Hoya Corp. 750,704 16,900 Murata Manufacturing Co., Ltd. 960,140 9,000 Taiyo Yuden Co., Ltd. 130,079 7,700 TDK Corp. 503,954 -------------- 3,024,933 -------------- ELECTRONIC EQUIPMENT/INSTRUMENTS 61,000 Canon, Inc. 2,949,914 40,000 Casio Computer Co., Ltd. 355,968 2,400 Keyence Corp. 527,516 16,000 Konica Minolta Holdings, Inc. 210,163 13,000 Kyocera Corp. 782,293 178,000 Matsushita Electric Industrial Co., Ltd. 2,344,532 178,000 Mitsubishi Electric Corp. 794,455 107,000 NEC Corp. 944,432 51,000 OKI Electric Industry Co., Ltd.* 225,770 18,200 Omron Corp. 398,709 46,000 Ricoh Co., Ltd. 871,830 158,000 Sanyo Electric Co. Ltd. 723,861 203,000 Toshiba Corp. 813,771 </Table> SEE NOTES TO FINANCIAL STATEMENTS 17 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 5,000 Yokogawa Electric Corp. $ 58,404 -------------- 12,001,618 -------------- ELECTRONIC PRODUCTION EQUIPMENT 6,600 Advantest Corp. 491,355 19,000 Nikon Corporation* 288,256 10,300 Tokyo Electron Ltd. 737,787 -------------- 1,517,398 -------------- ELECTRONICS/APPLIANCE STORES 600 Yamada Denki Co., Ltd. 19,089 -------------- ELECTRONICS/APPLIANCES 30,000 Fuji Photo Film Co., Ltd. 883,556 14,854 Pioneer Corp. 369,966 86,000 Sharp Corp. 1,353,204 68,296 Sony Corp. 2,377,726 -------------- 4,984,452 -------------- ENGINEERING & CONSTRUCTION 15,000 JGC Corp. 128,852 101,000 Kajima Corp. 378,257 51,000 Obayashi Corp. 232,261 77,000 Shimizu Corporation 297,473 8,000 Taisei Corp. 27,779 -------------- 1,064,622 -------------- FINANCE/RENTAL/LEASING 9,130 Acom Co., Ltd. 408,323 1,350 Aiful Corp. 85,288 8,000 Credit Saison Co., Ltd. 167,258 6,300 Orix Corp. 529,725 8,700 Promise Co., Ltd. 390,674 9,670 Takefuji Corp. 572,236 -------------- 2,153,504 -------------- FOOD RETAIL 14,000 Aeon Co., Ltd. 461,958 12,000 Ito-Yokado Co., Ltd. 440,687 300 Lawson, Inc. 11,454 10,000 Seven - Eleven Japan Co., Ltd. 316,335 -------------- 1,230,434 -------------- FOOD: MEAT/FISH/DAIRY 20,000 Nippon Meat Packers, Inc. $ 199,436 6,000 Yakult Honsha Co., Ltd. 93,264 -------------- 292,700 -------------- FOOD: SPECIALTY/CANDY 47,000 Ajinomoto Co., Inc. 474,230 900 House Foods Corp. 9,735 11,000 Kikkoman Corp. 71,594 15,000 Meiji Seika Kaisha Ltd. 57,813 5,400 Nissin Food Products Co., Ltd. 123,943 9,000 Yamazaki Baking Co., Ltd. 66,594 -------------- 803,909 -------------- GAS DISTRIBUTORS 161,000 Osaka Gas Co., Ltd. 444,905 223,000 Tokyo Gas Co., Ltd. 764,212 -------------- 1,209,117 -------------- HOME BUILDING 11,000 Daito Trust Construction Co., Ltd. 339,969 55,000 Daiwa House Industry Co., Ltd. 592,946 28,000 Sekisui Chemical Co., Ltd. 137,697 62,000 Sekisui House, Ltd. 608,108 -------------- 1,678,720 -------------- HOUSEHOLD/PERSONAL CARE 36,000 Kao Corp. 739,569 32,000 Shiseido Company, Ltd. 335,679 3,600 Uni-Charm Corp. 167,876 -------------- 1,243,124 -------------- INDUSTRIAL CONGLOMERATES 214,000 Hitachi, Ltd. 1,256,649 66,000 Kawasaki Heavy Industries, Ltd. 83,392 -------------- 1,340,041 -------------- INDUSTRIAL MACHINERY 24,000 Amada Co., Ltd. 103,627 12,000 Daikin Industries Ltd. 255,795 16,300 Fanuc Ltd. 979,393 </Table> SEE NOTES TO FINANCIAL STATEMENTS 18 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 90,000 Ishikawajima-Harima Heavy Industries Co., Ltd. $ 122,716 307,000 Mitsubishi Heavy Industries, Ltd. 842,778 5,600 SMC Corporation 673,466 1,900 THK Co., Ltd. 38,515 -------------- 3,016,290 -------------- INDUSTRIAL SPECIALTIES 102,000 Asahi Glass Company, Ltd. 804,800 14,800 Nitto Denko Corp. 776,257 -------------- 1,581,057 -------------- INFORMATION TECHNOLOGY SERVICES 5,000 CSK Corp. 189,074 95 NTT Data Corp. 420,553 15,600 Softbank Corp. 801,200 -------------- 1,410,827 -------------- INVESTMENT BANKS/BROKERS 233,000 Daiwa Securities Group Inc. 1,702,863 82,000 Nikko Cordial Corp. 442,014 175,000 Nomura Holdings, Inc. 3,003,363 -------------- 5,148,240 -------------- MAJOR BANKS 209,000 Bank of Yokohama Ltd. (The) 902,418 56,000 Chiba Bank, Ltd. (The) 240,778 364 Mitsubishi Tokyo Financial Group, Inc. 2,613,944 141,043 Mitsui Trust Holdings, Inc.* 750,024 734,000 Resona Holdings, Inc.* 1,074,211 66,000 Shizuoka Bank, Ltd. (The) 465,558 141,000 Sumitomo Trust & Banking Co., Ltd. (The) 786,965 397 UFJ Holdings, Inc.* 1,696,119 -------------- 8,530,017 -------------- MAJOR TELECOMMUNICATIONS 641 Nippon Telegraph & Telephone Corp. (NTT) 2,860,931 -------------- MARINE SHIPPING 3,000 Kamigumi Co. Ltd. $ 19,526 5,000 Kawasaki Kisen Kaisha, Ltd. 20,044 8,000 Mitsui O.S.K. Lines, Ltd. 32,506 86,000 Nippon Yusen Kabushiki Kaisha 365,858 -------------- 437,934 -------------- MEDICAL SPECIALTIES 13,000 Olympus Corp. 284,792 18,800 Terumo Corp. 357,168 -------------- 641,960 -------------- METAL FABRICATIONS 24,000 Minebea Co., Ltd. 136,569 55,000 Mitsui Mining & Smelting Co., Ltd. 219,980 62,000 NSK Ltd. 255,304 36,000 NTN Corp. 187,510 -------------- 799,363 -------------- MISCELLANEOUS COMMERCIAL SERVICES 230 Bellsystem 24, Inc. 52,268 13,000 Secom Co., Ltd. 508,136 -------------- 560,404 -------------- MISCELLANEOUS MANUFACTURING 28,000 Ebara Corp. 112,244 6,600 Kurita Water Industries Ltd. 80,033 12,000 Takuma Co., Ltd. 61,740 -------------- 254,017 -------------- MOTOR VEHICLES 75,604 Honda Motor Co., Ltd. 2,982,650 228,400 Nissan Motor Co., Ltd. 2,557,847 247,300 Toyota Motor Corp. 7,036,169 2,000 Yamaha Motor Co., Ltd. 22,671 -------------- 12,599,337 -------------- MOVIES/ENTERTAINMENT 600 Namco Ltd. 16,526 3,700 Oriental Land Co. Ltd. 203,145 </Table> SEE NOTES TO FINANCIAL STATEMENTS 19 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 7,100 TOHO Co., Ltd. $ 87,387 -------------- 307,058 -------------- OFFICE EQUIPMENT/SUPPLIES 5,400 Kokuyo Co., Ltd. 56,106 -------------- OIL & GAS PRODUCTION 13,000 Teikoku Oil Co., Ltd. 59,795 -------------- OIL REFINING/MARKETING 155,000 Nippon Oil Corp. 765,067 18,000 Showa Shell Sekiyu K.K. 144,478 9,000 TonenGeneral Sekiyu K.K. 73,466 -------------- 983,011 -------------- OTHER CONSUMER SERVICES 5,600 Benesse Corporation 137,442 -------------- OTHER METALS/MINERALS 23,000 Dowa Mining Co., Ltd. 124,189 34,500 Nippon Mining Holdings, Inc. 126,070 42,000 Sumitomo Metal Mining Co., Ltd. 287,865 -------------- 538,124 -------------- OTHER TRANSPORTATION 6,000 Mitsubishi Logistics Corp. 52,195 -------------- PACKAGED SOFTWARE 3,400 Oracle Corp. 199,346 3,200 Trend Micro Inc.* 88,137 -------------- 287,483 -------------- PERSONNEL SERVICES 2,300 Meitec Corp. 82,165 -------------- PHARMACEUTICALS: MAJOR 53,400 Sankyo Co., Ltd. 854,322 89,600 Takeda Chemical Industries, Ltd. 3,168,294 -------------- 4,022,616 -------------- PHARMACEUTICALS: OTHER 32,600 Chugai Pharmaceutical Co., Ltd. 464,063 24,100 Daiichi Pharmaceutical Co., Ltd. 368,039 25,300 Eisai Co., Ltd. 593,346 15,400 Fujisawa Pharmaceutical Co., Ltd. (Japan) $ 317,771 2,000 Kaken Pharmaceutical Co., Ltd. 10,072 35,000 Kyowa Hakko Kogyo Co., Ltd 206,163 32,000 Shionogi & Co., Ltd. 536,679 35,000 Taisho Pharmaceutical Co., Ltd. 603,536 29,600 Yamanouchi Pharmaceutical Co., Ltd. 742,623 -------------- 3,842,292 -------------- PROPERTY - CASUALTY INSURERS 114 Millea Holdings, Inc. 1,357,513 208,000 Mitsui Sumitomo Insurance Co., Ltd. 1,713,008 75,000 Sompo Japan Insurance Inc. 620,398 -------------- 3,690,919 -------------- PULP & PAPER 72 Nippon Unipac Holding 339,024 98,000 Oji Paper Co. Ltd. 521,134 -------------- 860,158 -------------- RAILROADS 135 Central Japan Railway Co. 1,180,529 309 East Japan Railway Co. 1,398,800 34,000 Keihin Electric Express Railway Co., Ltd. 198,727 16,000 Keio Electric Railway Co., Ltd. 84,501 142,000 Kinki Nippon Railway Co., Ltd.* 427,252 86,000 Tobu Railway Co., Ltd. 300,973 99,000 Tokyu Corp. 490,455 29 West Japan Railway Co. 107,817 -------------- 4,189,054 -------------- REAL ESTATE DEVELOPMENT 86,000 Mitsubishi Estate Co., Ltd. 823,961 57,000 Mitsui Fudosan Co., Ltd. 530,052 </Table> SEE NOTES TO FINANCIAL STATEMENTS 20 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 3,000 Sumitomo Realty & Development Co., Ltd. $ 27,816 -------------- 1,381,829 -------------- RECREATIONAL PRODUCTS 8,600 Konami Corp. 261,885 9,900 Nintendo Co., Ltd. 764,031 9,400 Shimano, Inc. 179,438 12,400 Yamaha Corp. 249,668 -------------- 1,455,022 -------------- REGIONAL BANKS 70,000 Bank of Fukuoka, Ltd. (The) 292,064 -------------- RESTAURANTS 12,800 Skylark Co., Ltd. 210,715 -------------- SEMICONDUCTORS 7,300 Rohm Co., Ltd. 983,420 -------------- SPECIALTY STORES 1,000 UNY Co., Ltd. 10,399 -------------- STEEL 42,400 JFE Holdings, Inc. 1,083,029 548,000 Nippon Steel Corp. 1,125,789 27,000 Sumitomo Metal Industries, Ltd. 25,034 -------------- 2,233,852 -------------- TEXTILES 12,000 Nisshinbo Industries, Inc. 59,885 72,000 Teijin Ltd. 213,362 107,000 Toray Industries, Inc. 444,496 -------------- 717,743 -------------- TOBACCO 48 Japan Tobacco, Inc. 320,262 -------------- TRUCKS/CONSTRUCTION/FARM MACHINERY 98,000 Komatsu Ltd. 530,043 98,000 Kubota Corp. 352,768 -------------- 882,811 -------------- WHOLESALE DISTRIBUTORS 107,000 Itochu Corp. 360,849 112,000 Marubeni Corporation 201,582 74,000 Mitsubishi Corp. $ 767,512 11,000 Mitsui & Co., Ltd. 79,993 70,000 Sumitomo Corporation 485,501 -------------- 1,895,437 -------------- WIRELESS TELECOMMUNICATIONS 648 NTT DoCoMo, Inc. 1,401,909 -------------- TOTAL JAPAN 120,706,477 -------------- LUXEMBOURG (0.1%) STEEL 26,498 Arcelor 376,208 -------------- NETHERLANDS (5.6%) AEROSPACE & DEFENSE 20,862 European Aeronautic Defense and Space Co.* 422,440 -------------- AIR FREIGHT/COURIERS 42,311 TPG NV 908,172 -------------- BEVERAGES: ALCOHOLIC 33,353 Heineken NV 1,184,798 -------------- CHEMICALS: SPECIALTY 3,384 DSM NV 154,432 -------------- CONSTRUCTION MATERIALS 24,986 James Hardie Industries NV 126,605 -------------- ELECTRONIC EQUIPMENT/INSTRUMENTS 1,555 OCE NV 20,548 -------------- ELECTRONIC PRODUCTION EQUIPMENT 34,317 ASML Holding NV* 592,843 -------------- FINANCIAL CONGLOMERATES 85,595 ING Groep NV (Share Certificates) 1,768,890 -------------- FOOD: MAJOR DIVERSIFIED 40,574 Unilever NV (Share Certificates) 2,346,000 -------------- INDUSTRIAL CONGLOMERATES 91,335 Koninklijke (Royal) Philips Electronics NV 2,450,806 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 21 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- INDUSTRIAL SPECIALTIES 19,074 Akzo Nobel NV $ 600,318 -------------- INTEGRATED OIL 161,781 Royal Dutch Petroleum Co. 7,145,302 -------------- INVESTMENT BANKS/BROKERS 6,787 Euronext NV 165,311 -------------- LIFE/HEALTH INSURANCE 115,287 Aegon NV 1,504,736 -------------- MAJOR BANKS 99,201 ABN AMRO Holding NV 2,071,878 -------------- MAJOR TELECOMMUNICATIONS 91,423 Koninklijke (Royal) KPN NV* 691,838 -------------- PERSONNEL SERVICES 13,701 Vedior NV 196,582 -------------- PUBLISHING: BOOKS/MAGAZINES 28,536 Reed Elsevier NV 316,322 13,681 Wolters Kluwer NV 191,388 -------------- 507,710 -------------- SEMICONDUCTORS 44,662 STMicroelectronics NV 1,183,435 -------------- WHOLESALE DISTRIBUTORS 8,060 Hagemeyer NV 23,222 -------------- TOTAL NETHERLANDS 24,065,866 -------------- NEW ZEALAND (0.0%) FOREST PRODUCTS 62,696 Carter Holt Harvey Ltd. 70,320 -------------- MAJOR TELECOMMUNICATIONS 22,779 Telecom Corporation of New Zealand Ltd. 67,573 -------------- TOTAL NEW ZEALAND 137,893 -------------- NORWAY (0.3%) FOOD: SPECIALTY/CANDY 11,900 Orkla ASA 247,878 -------------- INDUSTRIAL CONGLOMERATES 10,967 Norsk Hydro ASA 613,293 -------------- INTEGRATED OIL 4,200 Statoil ASA $ 39,244 -------------- MISCELLANEOUS MANUFACTURING 8,315 Tomra Systems ASA 47,550 -------------- PULP & PAPER 8,600 Norske Skogindustrier ASA 162,524 -------------- REGIONAL BANKS 21,400 DnB Holding ASA 124,183 557 Gjensidige NOR ASA 22,696 -------------- 146,879 -------------- TELECOMMUNICATION EQUIPMENT 5,800 Tandberg ASA* 40,584 -------------- TOTAL NORWAY 1,297,952 -------------- RUSSIA (1.0%) ELECTRIC UTILITIES 30,000 AO Mosenergo (Sponsored ADR) 206,250 49,000 RAO Unified Energy Systems (Sponsored ADR) 1,249,500 -------------- 1,455,750 -------------- INTEGRATED OIL 9,500 Lukoil (Sponsored ADR) 775,437 10,616 YUKOS (ADR) 497,625 -------------- 1,273,062 -------------- OIL & GAS PIPELINES 5,800 OAO Gazprom (Sponsored ADR) (Registered Shares) 139,200 -------------- OIL & GAS PRODUCTION 25,400 Surgutneftegaz (ADR) 638,175 -------------- OTHER METALS/MINERALS 13,100 JSC MMC Norilsk Nickel (ADR) 681,200 -------------- SPECIALTY TELECOMMUNICATIONS 8,110 Rostelecom (Sponsored ADR) 92,454 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 22 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- WIRELESS TELECOMMUNICATIONS 1,900 AO VimpelCom (Sponsored ADR)* $ 123,690 -------------- TOTAL RUSSIA 4,403,531 -------------- SINGAPORE (1.8%) AEROSPACE & DEFENSE 291,000 Singapore Technologies Engineering Ltd. 322,776 -------------- AIRLINES 117,000 Singapore Airlines Ltd. 813,621 -------------- BEVERAGES: ALCOHOLIC 29,880 Fraser & Neave Ltd. 211,221 -------------- ELECTRONIC COMPONENTS 16,000 Venture Corp., Ltd. 173,793 -------------- FINANCIAL CONGLOMERATES 91,000 Keppel Corp., Ltd. 311,178 -------------- HOTELS/RESORTS/CRUISELINES 15,000 Overseas Union Enterprise Ltd. 60,345 84,000 United Overseas Land, Ltd. 92,690 -------------- 153,035 -------------- MAJOR BANKS 154,115 DBS Group Holdings Ltd. 1,266,577 -------------- MAJOR TELECOMMUNICATIONS 819,100 Singapore Telecommunications Ltd. 809,685 -------------- MISCELLANEOUS MANUFACTURING 6,099 Haw Par Corp., Ltd. 15,353 -------------- PUBLISHING: NEWSPAPERS 49,000 Singapore Press Holdings Ltd. 554,770 -------------- REAL ESTATE DEVELOPMENT 190,750 Capitaland Ltd. 178,691 94,000 City Developments Ltd. 326,839 -------------- 505,530 -------------- REGIONAL BANKS 147,950 Oversea - Chinese Banking Corp., Ltd. $ 1,028,848 -------------- 151,104 United Overseas Bank, Ltd. 1,181,043 -------------- 2,209,891 -------------- SEMICONDUCTORS 40,000 Chartered Semiconductor Manufacturing Ltd.* 39,310 -------------- SPECIALTY STORES 20,024 Cycle & Carriage Ltd. 69,048 -------------- TRUCKS/CONSTRUCTION/FARM MACHINERY 173,000 SembCorp Industries Ltd. 131,241 -------------- TOTAL SINGAPORE 7,587,029 -------------- SPAIN (2.5%) AIRLINES 89,431 Iberia Lineas Aereas de Espana S.A. 217,309 -------------- BROADCASTING 613 Antena 3 Television, S.A.* 19,920 -------------- ELECTRIC UTILITIES 40,013 Endesa S.A. 631,982 34,626 Iberdrola S.A. 574,943 8,933 Union Fenosa, S.A. 143,676 -------------- 1,350,601 -------------- ENGINEERING & CONSTRUCTION 3,898 Acciona S.A. 203,643 6,391 ACS, Actividades de Construccion y Servicios, S.A. 267,848 9,659 Fomento de Construcciones y Contratas S.A. 313,611 14,902 Grupo Dragados, S.A. 302,961 10,264 Grupo Ferrovial, S.A. 291,686 -------------- 1,379,749 -------------- GAS DISTRIBUTORS 76,001 Gas Natural SDG, S.A. 1,453,661 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 23 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- INFORMATION TECHNOLOGY SERVICES 1,877 Indra Sistemas S.A. $ 21,024 -------------- MAJOR BANKS 62,910 Banco Bilbao Vizcaya Argentaria, S.A. 718,468 88,515 Banco Santander Central Hispano, S.A. 844,971 -------------- 1,563,439 -------------- MAJOR TELECOMMUNICATIONS 181,100 Telefonica S.A. (Spain)* 2,242,194 -------------- MISCELLANEOUS COMMERCIAL SERVICES 56,225 Amadeus Global Travel Distribution S.A. (A Shares) 351,313 -------------- OIL REFINING/MARKETING 50,278 Repsol YPF, S.A. 872,650 -------------- OTHER TRANSPORTATION 18,678 Abertis Infraestructuras, S.A. 250,703 -------------- REAL ESTATE DEVELOPMENT 10,272 Sacyr Vallehermoso S.A. 136,210 -------------- REGIONAL BANKS 2,570 Banco Popular Espanol S.A. 133,016 -------------- STEEL 2,960 Acerinox S.A. 128,267 -------------- TOBACCO 14,458 Altadis, S.A. 348,974 -------------- WATER UTILITIES 9,850 Sociedad General de Aguas de Barcelona, S.A. 129,133 -------------- TOTAL SPAIN 10,598,163 -------------- SWEDEN (2.8%) AIRLINES 5,181 SAS AB 45,194 -------------- APPAREL/FOOTWEAR RETAIL 37,700 Hennes & Mauritz AB (B Shares) 794,538 -------------- ELECTRONICS/APPLIANCES 30,400 Electrolux AB (Series B) $ 619,397 -------------- ENGINEERING & CONSTRUCTION 58,930 Skanska AB (B Shares)* 405,234 -------------- HOUSEHOLD/PERSONAL CARE 14,786 Svenska Cellulosa AB (B Shares) 554,513 -------------- INDUSTRIAL MACHINERY 1,600 Alfa Laval AB 20,986 19,000 Assa Abloy AB (B Shares) 186,303 16,970 Atlas Copco AB (A Shares) 592,117 9,169 Atlas Copco AB (B Shares) 297,740 33,109 Sandvik AB 978,159 -------------- 2,075,305 -------------- INFORMATION TECHNOLOGY SERVICES 28,200 WM-Data AB (B Shares)* 54,584 -------------- LIFE/HEALTH INSURANCE 77,562 Skandia Forsakrings AB 282,482 -------------- MAJOR BANKS 30,200 Skandinaviska Enskilda Banken AB 361,502 53,000 Svenska Handelsbanken AB (A Shares) 928,013 -------------- 1,289,515 -------------- MAJOR TELECOMMUNICATIONS 2,785 Tele2 AB (B Shares)* 139,200 115,848 TeliaSonera AB 503,058 -------------- 642,258 -------------- METAL FABRICATIONS 10,777 SKF AB (B Shares) 378,776 -------------- MISCELLANEOUS COMMERCIAL SERVICES 43,200 Securitas AB (B Shares) 528,117 -------------- PULP & PAPER 7,300 Holmen AB (B Shares) 243,092 -------------- REGIONAL BANKS 172,184 Nordea AB 1,061,240 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 24 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- STEEL 8,400 SSAB Svenskt Stal AB (Series A) $ 121,944 -------------- TELECOMMUNICATION EQUIPMENT 886,298 Telefonaktiebolaget LM Ericsson (B Shares)* 1,512,377 -------------- TOBACCO 25,600 Swedish Match AB 207,009 -------------- TRUCKS/CONSTRUCTION/FARM MACHINERY 8,190 Volvo AB (A Shares) 218,496 27,730 Volvo AB (B Shares) 769,807 -------------- 988,303 -------------- TOTAL SWEDEN 11,803,878 -------------- SWITZERLAND (6.7%) BUILDING PRODUCTS 110 Geberit AG 45,075 226 Schindler Holding AG* 50,514 -------------- 95,589 -------------- CHEMICALS: AGRICULTURAL 6,923 Syngenta AG 369,051 -------------- CHEMICALS: SPECIALTY 4,518 Ciba Specialty Chemicals AG (Registered Shares)* 297,396 8,859 Clariant AG (Registered Shares)* 124,087 2,550 Lonza Group AG (Registered Shares) 124,441 -------------- 545,924 -------------- COMPUTER PERIPHERALS 1,718 Logitech International S.A. (Registered Shares)* 68,479 -------------- CONSTRUCTION MATERIALS 9,650 Holcim Ltd. (Regular Shares) 404,060 -------------- ELECTRONIC EQUIPMENT/INSTRUMENTS 954 Kudelski S.A. - Bearer* 27,649 -------------- FINANCIAL CONGLOMERATES 75,952 UBS AG (Registered Shares) $ 4,640,191 -------------- FOOD: MAJOR DIVERSIFIED 18,653 Nestle S.A. (Registered Shares) 4,085,816 -------------- HOUSEHOLD/PERSONAL CARE 699 Givaudan S.A. (Registered Shares) 313,514 -------------- INDUSTRIAL CONGLOMERATES 57,445 ABB Ltd.* 335,973 118 Sulzer AG (Registered Shares) 27,913 700 Unaxis Holding AG (Registered Shares) 91,007 -------------- 454,893 -------------- MAJOR BANKS 73,383 Credit Suisse Group 2,572,396 -------------- MAJOR TELECOMMUNICATIONS 1,627 Swisscom AG (Registered Shares) 470,935 -------------- MISCELLANEOUS COMMERCIAL SERVICES 591 SGS Societe Generale de Surveillance Holding S.A. 332,003 -------------- MULTI-LINE INSURANCE 7,642 Zurich Financial Services AG* 973,612 -------------- OTHER CONSUMER SPECIALTIES 1,979 Swatch Group AG (B Shares) 209,740 2,208 Swatch Group AG (Registered Shares) 46,884 -------------- 256,624 -------------- PERSONNEL SERVICES 13,524 Adecco S.A. (Registered Shares) 793,485 -------------- PHARMACEUTICALS: MAJOR 149,576 Novartis AG (Registered Shares) 5,672,343 39,563 Roche Holding AG 3,257,124 </Table> SEE NOTES TO FINANCIAL STATEMENTS 25 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 12,159 Roche Holding AG - Bearer $ 1,508,325 -------------- 10,437,792 -------------- PROPERTY - CASUALTY INSURERS 24,602 Swiss Re (Registered Shares) 1,540,604 -------------- SPECIALTY STORES 192 Valora Holding AG 44,202 -------------- TOTAL SWITZERLAND 28,426,819 -------------- THAILAND (1.0%) AGRICULTURAL COMMODITIES/MILLING 626,472 Charoen Pokphand Foods PCL (Alien Shares) 74,550 -------------- BROADCASTING 25,100 BEC World PCL (Alien Shares) 151,855 -------------- CONSTRUCTION MATERIALS 28,000 Siam City Cement PCL (Alien Shares) 147,000 47,994 The Siam Cement PCL 242,370 86,000 The Siam Cement PCL (Alien Shares) 485,900 -------------- 875,270 -------------- ELECTRIC UTILITIES 48,576 Electricity Generating PCL 75,293 -------------- ELECTRONIC COMPONENTS 88,700 Delta Electronics PCL (Alien Shares) 62,644 10,956 Hana Microelectronics PCL (Alien Shares) 27,390 -------------- 90,034 -------------- FINANCE/RENTAL/LEASING 107,500 TISCO Finance PCL (Alien Shares)* 89,359 -------------- FINANCIAL CONGLOMERATES 179,200 National Finance PCL (Alien Shares) 73,472 -------------- HOME BUILDING 495,533 Land & Houses PCL 149,899 372,708 Land & Houses PCL (Alien Shares) $ 125,789 -------------- 275,688 -------------- MAJOR BANKS 158,800 Kasikornbank PCL* 167,732 238,922 Kasikornbank PCL (Alien Shares)* 265,801 -------------- 433,533 -------------- OIL & GAS PRODUCTION 29,239 PTT Exploration & Production PCL (Alien Shares) 137,423 -------------- OIL REFINING/MARKETING 207,900 PTT PCL (Alien Shares) 493,763 -------------- REGIONAL BANKS 98,600 Bangkok Bank PCL* 211,990 189,700 Bangkok Bank PCL (Alien Shares)* 443,424 140,600 Siam Commercial Bank PCL (Alien Shares)* 144,994 66,939 Siam Commercial Bank PCL (Conv Pfd) (Alien Shares)* 69,868 -------------- 870,276 -------------- STEEL 118,100 Sahaviriya Steel Industries PCL (Alien Shares)* 114,409 -------------- TELECOMMUNICATION EQUIPMENT 323,300 Shin Corp. PCL (Alien Shares) 187,514 -------------- WIRELESS TELECOMMUNICATIONS 249,400 Advanced Info Service PCL (Alien Shares) 386,570 -------------- TOTAL THAILAND 4,329,009 -------------- UNITED KINGDOM (19.6%) ADVERTISING/MARKETING SERVICES 39,704 WPP Group PLC 377,479 -------------- AEROSPACE & DEFENSE 425,296 BAE Systems PLC 1,317,803 </Table> SEE NOTES TO FINANCIAL STATEMENTS 26 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 3,054 Cobham PLC $ 60,915 201,129 Rolls-Royce Group PLC 646,197 -------------- 2,024,915 -------------- AIR FREIGHT/COURIERS 20,746 Exel PLC 266,439 -------------- AIRLINES 137,518 British Airways PLC* 484,319 -------------- AUTO PARTS: O.E.M. 48,219 GKN PLC 225,339 -------------- BEVERAGES: ALCOHOLIC 176,874 Diageo PLC 2,075,418 -------------- BROADCASTING 179,996 Granada PLC 357,342 -------------- CABLE/SATELLITE TV 78,165 British Sky Broadcasting Group PLC* 847,033 -------------- CATALOG/SPECIALTY DISTRIBUTION 83,739 GUS PLC 1,020,865 -------------- CHEMICALS: MAJOR DIVERSIFIED 78,933 Imperial Chemical Industries PLC 258,946 -------------- CHEMICALS: SPECIALTY 32,612 BOC Group PLC 443,682 -------------- COMMERCIAL PRINTING/FORMS 37,374 De La Rue PLC 177,505 -------------- CONSTRUCTION MATERIALS 26,707 BPB PLC 150,471 48,516 Hanson PLC 335,161 15,151 RMC Group PLC 157,770 -------------- 643,402 -------------- CONTAINERS/PACKAGING 31,615 Rexam PLC 230,181 -------------- DEPARTMENT STORES 174,251 Marks & Spencer Group PLC* 848,983 -------------- DRUGSTORE CHAINS 30,447 Boots Group PLC 367,314 -------------- ELECTRIC UTILITIES 187,206 National Grid Transco PLC $ 1,192,627 38,099 Scottish & Southern Energy PLC 395,764 98,297 Scottish Power PLC 582,528 -------------- 2,170,919 -------------- ELECTRONIC EQUIPMENT/INSTRUMENTS 92,350 Invensys PLC 46,910 -------------- ELECTRONICS/APPLIANCE STORES 130,322 Dixons Group PLC 299,548 18,193 Kesa Electricals PLC* 75,162 -------------- 374,710 -------------- ENGINEERING & CONSTRUCTION 18,285 AMEC PLC 78,794 12,451 Balfour Beatty PLC 40,372 -------------- 119,166 -------------- FINANCIAL CONGLOMERATES 290,513 Lloyds TSB Group PLC 2,013,087 -------------- FINANCIAL PUBLISHING/SERVICES 64,062 Reuters Group PLC 278,496 -------------- FOOD RETAIL 71,241 Sainsbury (J.) PLC 341,671 273,933 Tesco PLC 1,095,783 -------------- 1,437,454 -------------- FOOD: MAJOR DIVERSIFIED 149,281 Unilever PLC 1,270,132 -------------- FOOD: SPECIALTY/CANDY 93,395 Cadbury Schweppes PLC 597,360 -------------- GAS DISTRIBUTORS 123,089 Centrica PLC 384,524 -------------- HOME BUILDING 1,934 Taylor Woodrow PLC 7,335 -------------- HOME IMPROVEMENT CHAINS 79,590 Kingfisher PLC 380,702 -------------- HOUSEHOLD/PERSONAL CARE 55,004 Reckitt Benckiser PLC 1,154,846 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 27 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- INDUSTRIAL CONGLOMERATES 26,786 Smiths Group PLC $ 318,159 25,395 Tomkins PLC 120,827 -------------- 438,986 -------------- INDUSTRIAL SPECIALTIES 42,472 Pilkington PLC 62,565 -------------- INFORMATION TECHNOLOGY SERVICES 30,115 LogicaCMG PLC 156,541 44,035 Misys PLC 223,680 -------------- 380,221 -------------- INTEGRATED OIL 196,124 BG Group PLC 892,457 1,318,661 BP PLC 9,131,975 279,232 Shell Transport & Trading Co. PLC 1,739,888 -------------- 11,764,320 -------------- LIFE/HEALTH INSURANCE 40,176 Friends Provident PLC 93,366 83,406 Prudential PLC 645,742 -------------- 739,108 -------------- MAJOR BANKS 362,148 Barclays PLC 3,047,549 194,919 HBOS PLC 2,262,403 583,924 HSBC Holdings PLC 8,749,996 140,669 Royal Bank of Scotland Group PLC 3,760,874 -------------- 17,820,822 -------------- MAJOR TELECOMMUNICATIONS 442,194 BT Group PLC 1,388,881 -------------- MARINE SHIPPING 47,054 Peninsular & Oriental Steam Navigation Co. (The) 220,293 -------------- MEDICAL SPECIALTIES 49,866 Amersham PLC 619,317 32,198 Smith & Nephew PLC 255,279 -------------- 874,596 -------------- MISCELLANEOUS COMMERCIAL SERVICES 69,115 Brambles Industries PLC $ 208,891 5,488 Davis Service Group PLC (The) 35,218 178,504 Hays PLC 368,736 202,948 Rentokil Initial PLC 767,157 12,884 Securicor PLC 19,034 51,166 Serco Group PLC 154,105 -------------- 1,553,141 -------------- MISCELLANEOUS MANUFACTURING 13,502 Fki PLC 26,405 21,011 IMI PLC 123,092 33,590 Kidde PLC 57,301 2,840 Novar PLC 6,371 -------------- 213,169 -------------- MOVIES/ENTERTAINMENT 33,399 Carlton Communications PLC 122,151 36,946 EMI Group PLC 109,475 -------------- 231,626 -------------- MULTI-LINE INSURANCE 38,702 Aviva PLC 316,839 276,056 Legal & General Group PLC 486,115 27,012 Royal & Sun Alliance Insurance Group PLC 40,134 -------------- 843,088 -------------- OTHER METALS/MINERALS 157,512 BHP Billiton PLC 1,234,151 69,542 Rio Tinto PLC 1,682,626 -------------- 2,916,777 -------------- OTHER TRANSPORTATION 82,973 BAA PLC 654,683 -------------- PACKAGED SOFTWARE 83,904 Sage Group (The) PLC 264,954 -------------- PERSONNEL SERVICES 74,241 Capita Group PLC 310,805 -------------- PHARMACEUTICALS: MAJOR 88,017 AstraZeneca PLC 4,125,161 </Table> SEE NOTES TO FINANCIAL STATEMENTS 28 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - ----------------------------------------------------------------- 359,995 GlaxoSmithKline PLC $ 7,692,439 -------------- 11,817,600 -------------- PRECIOUS METALS 15,782 Johnson Matthey PLC 262,411 -------------- PUBLISHING: BOOKS/MAGAZINES 25,987 Pearson PLC 268,407 46,957 Reed Elsevier PLC 364,145 -------------- 632,552 -------------- PULP & PAPER 24,672 Bunzl PLC 192,163 -------------- SEMICONDUCTORS 88,301 ARM Holdings PLC* 170,069 -------------- TOBACCO 76,751 British American Tobacco PLC 925,928 32,426 Imperial Tobacco Group PLC 536,409 -------------- 1,462,337 -------------- WATER UTILITIES 30,503 Kelda Group PLC 229,445 26,983 Severn Trent PLC 323,468 -------------- 552,913 -------------- WHOLESALE DISTRIBUTORS 14,860 Electrocomponents PLC 87,560 49,278 Wolseley PLC 602,627 -------------- 690,187 -------------- WIRELESS TELECOMMUNICATIONS 3,107,612 Vodafone Group PLC 6,511,488 -------------- TOTAL UNITED KINGDOM 83,854,558 -------------- <Caption> PRINCIPAL AMOUNT IN THOUSANDS VALUE - ----------------------------------------------------------------- TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS (COST $418,395,184) $ 419,936,710 -------------- SHORT-TERM INVESTMENT (0.6%) REPURCHASE AGREEMENT $ 2,427 Joint repurchase agreement account 1.05% due 11/03/03 (dated 10/31/03; proceeds $2,427,212) (a) (COST $2,427,000) $ 2,427,000 -------------- <Caption> TOTAL INVESTMENTS (COST $420,822,184) (b)(c) 98.9% 422,363,710 OTHER ASSETS IN EXCESS OF LIABILITIES 1.1 4,616,168 ----- -------------- NET ASSETS 100.0% $ 426,979,878 ===== ============== </Table> - ---------- ADR AMERICAN DEPOSITORY RECEIPT. ++ CONSISTS OF ONE OR MORE CLASS OF SECURITIES TRADED TOGETHER AS A UNIT; STOCK WITH ATTACHED WARRANTS. * NON-INCOME PRODUCING SECURITY. ** COMPRISED OF SECURITIES IN SEPARATE ENTITIES THAT ARE TRADED AS A SINGLE STAPLED SECURITY. (a) COLLATERALIZED BY FEDERAL AGENCY AND U.S. TREASURY OBLIGATIONS. (b) SECURITIES HAVE BEEN DESIGNATED AS COLLATERAL IN AN AMOUNT EQUAL TO $87,919,803 IN CONNECTION WITH FORWARD FOREIGN CURRENCY CONTRACTS AND OPEN FUTURES CONTRACTS. (c) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $433,618,361. THE AGGREGATE GROSS UNREALIZED APPRECIATION IS $45,295,284 AND THE AGGREGATE GROSS UNREALIZED DEPRECIATION IS $56,549,935, RESULTING IN NET UNREALIZED DEPRECIATION OF $11,254,651. FUTURES CONTRACTS OPEN AT OCTOBER 31, 2003: <Table> <Caption> NUMBER OF LONG/ DESCRIPTION, DELIVERY MONTH, UNDERLYING FACE UNREALIZED CONTRACTS SHORT AND YEAR AMOUNT AT VALUE APPRECIATION - --------------------------------------------------------------------------------------------------------- 15 Long EURX DAX Index Future December/2003 $ 1,587,686 $ 100,443 16 Long EURX IBEX 35 Index Future November/2003 1,320,853 11,663 66 Long EURX CAC40 10 EURO Future December/2003 2,584,313 127,022 ---------- Total unrealized appreciation $ 239,129 ========== </Table> SEE NOTES TO FINANCIAL STATEMENTS 29 <Page> FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 2003: <Table> <Caption> UNREALIZED CONTRACTS IN EXCHANGE DELIVERY APPRECIATION TO DELIVER FOR DATE (DEPRECIATION) - ---------------------------------------------------------------------------------------------------------- GBP 3,431,518 $ 5,835,673 11/03/03 $ 25,427 $ 5,377,085 EUR 4,607,456 11/03/03 (45,798) HKD 30,035 $ 3,867 11/04/03 1 EUR 3,586,664 $ 3,957,884 12/11/03 (187,344) $ 6,501,175 EUR 5,890,880 12/11/03 307,111 EUR 49,509,778 $ 54,609,286 12/11/03 (2,610,816) $ 22,294,818 EUR 20,300,022 12/11/03 1,166,594 $ 18,754,534 EUR 17,020,333 12/11/03 916,432 $ 13,978,869 EUR 12,775,728 12/11/03 786,465 EUR 12,147,483 $ 13,472,480 12/11/03 (566,770) $ 17,338,565 EUR 15,519,039 12/11/03 597,305 EUR 1,732,790 $ 1,933,635 12/11/03 (69,008) ------------ Net unrealized appreciation $ 319,599 ============ </Table> CURRENCY ABBREVIATIONS: GBP British Pound. EUR Euro. HKD Hong Kong Dollar. SEE NOTES TO FINANCIAL STATEMENTS 30 <Page> MORGAN STANLEY INTERNATIONAL FUND SUMMARY OF INVESTMENTS - OCTOBER 31, 2003 <Table> <Caption> PERCENT OF INDUSTRY VALUE NET ASSETS - ----------------------------------------------------------- Advertising/ Marketing Services $ 468,153 0.1% Aerospace & Defense 3,313,524 0.8 Agricultural Commodities/ Milling 164,642 0.0 Air Freight/Couriers 2,449,859 0.6 Airlines 3,140,628 0.7 Aluminum 1,046,225 0.2 Apparel/Footwear 2,031,972 0.5 Apparel/Footwear Retail 1,429,436 0.3 Auto Parts: O.E.M. 1,785,948 0.4 Automotive Aftermarket 824,652 0.2 Beverages: Alcoholic 5,104,494 1.2 Beverages: Non-Alcoholic 105,364 0.0 Biotechnology 110,185 0.0 Broadcasting 1,037,561 0.2 Building Products 2,644,722 0.6 Cable/Satellite TV 847,033 0.2 Casino/Gaming 157,949 0.0 Catalog/ Specialty Distribution 1,020,865 0.2 Chemicals: Agricultural 490,967 0.1 Chemicals: Major Diversified 4,096,591 1.0 Chemicals: Specialty 6,312,539 1.5 Coal 231,859 0.1 Commercial Printing/Forms 1,133,927 0.3 Computer Peripherals 68,479 0.0 Computer Processing Hardware 739,042 0.2 Construction Materials 4,083,344 1.0 Containers/Packaging 720,251 0.2 Department Stores 1,670,227 0.4 Drugstore Chains 367,314 0.1 Electric Utilities 15,545,290 3.6 Electrical Products 2,907,615 0.7 Electronic Components 3,300,871 0.8 Electronic Equipment/ Instruments 12,096,725 2.8 Electronic Production Equipment 2,136,417 0.5 Electronics/Appliance Stores 393,799 0.1 Electronics/Appliances 5,603,849 1.3 Engineering & Construction $ 4,504,863 1.1% Finance/Rental/Leasing 2,336,911 0.6 Financial Conglomerates 11,230,074 2.6 Financial Publishing/Services 278,496 0.1 Food Distributors 161,988 0.0 Food Retail 4,805,773 1.1 Food: Major Diversified 8,309,623 1.9 Food: Meat/Fish/Dairy 292,700 0.1 Food: Specialty/Candy 1,649,147 0.4 Forest Products 70,320 0.0 Gas Distributors 4,168,729 1.0 Home Building 1,961,743 0.5 Home Improvement Chains 380,702 0.1 Hospital/ Nursing Management 116,308 0.0 Hotels/Resorts/Cruiselines 629,498 0.1 Household/Personal Care 4,023,445 0.9 Industrial Conglomerates 14,873,822 3.5 Industrial Machinery 5,330,813 1.3 Industrial Specialties 2,243,940 0.5 Information Technology Services 2,703,720 0.6 Integrated Oil 28,796,607 6.7 Internet Software/Services 67,163 0.0 Investment Banks/Brokers 6,304,764 1.5 Investment Trusts/ Mutual Funds 215,056 0.1 Life/Health Insurance 3,525,356 0.8 Major Banks 56,091,480 13.1 Major Telecommunications 14,305,789 3.4 Marine Shipping 919,513 0.2 Media Conglomerates 2,029,020 0.5 Medical Distributors 85,436 0.0 Medical Specialties 1,615,019 0.4 Medical/Nursing Services 239,241 0.1 Metal Fabrications 1,201,976 0.3 Miscellaneous Commercial Services 3,675,200 0.9 Miscellaneous Manufacturing 828,467 0.2 Motor Vehicles 15,670,907 3.7 Movies/Entertainment 538,684 0.1 Multi-Line Insurance 7,773,825 1.8 </Table> SEE NOTES TO FINANCIAL STATEMENTS 31 <Page> <Table> <Caption> PERCENT OF INDUSTRY VALUE NET ASSETS - ----------------------------------------------------------- Office Equipment/Supplies $ 56,106 0.0% Oil & Gas Pipelines 139,200 0.0 Oil & Gas Production 1,194,732 0.3 Oil Refining/Marketing 2,979,543 0.7 Oilfield Services/ Equipment 26,555 0.0 Other Consumer Services 235,407 0.1 Other Consumer Specialties 406,320 0.1 Other Metals/Minerals 6,544,835 1.5 Other Transportation 1,805,292 0.4 Packaged Software 2,458,549 0.6 Personnel Services 1,383,037 0.3 Pharmaceuticals: Major 31,506,071 7.4 Pharmaceuticals: Other 4,206,177 1.0 Precious Metals 419,747 0.1 Property - Casualty Insurers 5,465,973 1.3 Publishing: Books/ Magazines 1,444,774 0.3 Publishing: Newspapers 708,317 0.2 Pulp & Paper 2,919,458 0.7 Railroads 4,605,313 1.1 Real Estate Development 6,962,248 1.6 Real Estate Investment Trusts 1,024,738 0.2 Recreational Products 1,455,022 0.3 Regional Banks 5,507,811 1.3 Repurchase Agreement 2,427,000 0.6 Restaurants 253,999 0.1 Semiconductors 2,807,416 0.7 Specialty Stores 205,090 0.1 Specialty Telecommunications 100,853 0.0 Steel 3,310,262 0.8 Telecommunication Equipment 7,638,012 1.8 Textiles 807,547 0.2 Tobacco 2,449,733 0.6 Tools/Hardware 203,849 0.0 Trucks/Construction/ Farm Machinery 2,370,822 0.6 Water Utilities 682,046 0.2 Wholesale Distributors 3,073,557 0.7 Wireless Telecommunications 9,039,863 2.1 --------------- ---- $ 422,363,710 98.9% =============== ==== </Table> <Table> <Caption> PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ----------------------------------------------------------- Common Stocks $ 419,219,623 98.2% Preferred Stocks 673,008 0.1 Rights 44,079 0.0 Short-Term Investments 2,427,000 0.6 --------------- ---- $ 422,363,710 98.9% =============== ==== </Table> SEE NOTES TO FINANCIAL STATEMENTS 32 <Page> MORGAN STANLEY INTERNATIONAL FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 2003 <Table> ASSETS: Investments in securities, at value (cost $420,822,184) $ 422,363,710 Cash (including $456,528 in foreign currency and $3,048,134 segregated in connection with open futures contracts) 3,504,702 Unrealized appreciation on open forward foreign currency contracts 319,599 Receivable for: Investments sold 8,854,504 Dividends 663,955 Shares of beneficial interest sold 655,902 Foreign withholding taxes reclaimed 393,229 Variation margin 239,435 Prepaid expenses and other assets 53,574 ---------------- TOTAL ASSETS 437,048,610 ---------------- LIABILITIES: Payable for: Investments purchased 8,512,694 Shares of beneficial interest redeemed 490,153 Investment management fee 363,133 Compensated forward foreign currency contracts 322,814 Distribution fee 210,475 Accrued expenses and other payables 169,463 ---------------- TOTAL LIABILITIES 10,068,732 ---------------- NET ASSETS $ 426,979,878 ================ COMPOSITION OF NET ASSETS: Paid-in-capital $ 617,872,569 Net unrealized appreciation 2,162,529 Accumulated undistributed net investment income 3,089,884 Accumulated net realized loss (196,145,104) ---------------- NET ASSETS $ 426,979,878 ================ CLASS A SHARES: Net Assets $ 63,421,570 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 7,895,842 NET ASSET VALUE PER SHARE $ 8.03 ================ MAXIMUM OFFERING PRICE PER SHARE, (NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE) $ 8.47 ================ CLASS B SHARES: Net Assets $ 205,543,974 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 25,928,548 NET ASSET VALUE PER SHARE $ 7.93 ================ CLASS C SHARES: Net Assets $ 25,470,818 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 3,214,379 NET ASSET VALUE PER SHARE $ 7.92 ================ CLASS D SHARES: Net Assets $ 132,543,516 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 16,432,599 NET ASSET VALUE PER SHARE $ 8.07 ================ </Table> SEE NOTES TO FINANCIAL STATEMENTS 33 <Page> STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2003 <Table> NET INVESTMENT INCOME: INCOME Dividends (net of $864,656 foreign withholding tax) $ 10,207,923 Interest 103,976 ---------------- TOTAL INCOME 10,311,899 ---------------- EXPENSES Investment management fee 3,971,394 Distribution fee (Class A shares) 114,063 Distribution fee (Class B shares) 1,982,703 Distribution fee (Class C shares) 241,005 Transfer agent fees and expenses 920,326 Custodian fees 236,374 Shareholder reports and notices 121,995 Registration fees 66,908 Professional fees 56,881 Trustees' fees and expenses 12,127 Other 67,163 ---------------- TOTAL EXPENSES 7,790,939 ---------------- NET INVESTMENT INCOME 2,520,960 ---------------- NET REALIZED AND UNREALIZED GAIN (LOSS): NET REALIZED GAIN/LOSS ON: Investments (53,969,214) Futures contracts 1,449,163 Foreign exchange transactions 316,546 ---------------- NET REALIZED LOSS (52,203,505) ---------------- NET CHANGE IN UNREALIZED DEPRECIATION ON: Investments 126,994,053 Futures contracts 506,944 Translation of forward currency contracts and other assets and liabilities denominated in foreign currencies 503,800 ---------------- NET APPRECIATION 128,004,797 ---------------- NET GAIN 75,801,292 ---------------- NET INCREASE $ 78,322,252 ================ </Table> SEE NOTES TO FINANCIAL STATEMENTS 34 <Page> STATEMENT OF CHANGES IN NET ASSETS <Table> <Caption> FOR THE YEAR FOR THE YEAR ENDED ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 2,520,960 $ 587,395 Net realized loss (52,203,505) (88,740,632) Net change in unrealized depreciation 128,004,797 23,648,444 ---------------- ---------------- NET INCREASE (DECREASE) 78,322,252 (64,504,793) ---------------- ---------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A shares (569,363) (364,072) Class C shares (47,598) -- Class D shares (1,783,043) (1,503,216) ---------------- ---------------- TOTAL DIVIDENDS (2,400,004) (1,867,288) ---------------- ---------------- Net decrease from transactions in shares of beneficial interest (57,055,643) (66,791,171) ---------------- ---------------- NET INCREASE (DECREASE) 18,866,605 (133,163,252) NET ASSETS: Beginning of period 408,113,273 541,276,525 ---------------- ---------------- END OF PERIOD (Including accumulated undistributed net investment income of $3,089,884 and $1,896,981, respectively) $ 426,979,878 $ 408,113,273 ================ ================ </Table> SEE NOTES TO FINANCIAL STATEMENTS 35 <Page> MORGAN STANLEY INTERNATIONAL FUND NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2003 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley International Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund's investment objective is long-term capital growth. The Fund seeks to achieve its objective by investing, under normal circumstances, at least 65% of its total assets in a diversified portfolio of international common stocks and other equity securities. The Fund was organized as a Massachusetts business trust on October 23, 1998 and commenced operations June 28, 1999. The Fund offers Class A shares, Class B shares, Class C shares and Class D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within one year, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses. The following is a summary of significant accounting policies: A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or traded on the New York or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) all other equity portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) when market quotations are not readily available or Morgan Stanley Investment Advisors Inc. (the "Investment Manager") or Morgan Stanley Investment Management Inc. (the "Sub-Advisor"), an affiliate of the Investment Manager, determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees; (7) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; and (8) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their 36 <Page> value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost. B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date except for certain dividends on foreign securities which are recorded as soon as the Fund is informed after the ex-dividend date. Discounts are accreted and premiums are amortized over the life of the respective securities. Interest income is accrued daily. C. REPURCHASE AGREEMENTS -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated entities managed by the Investment Manager, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements and are collateralized by cash, U.S. Treasury or federal agency obligations. The Fund may also invest directly with institutions in repurchase agreements. The Fund's custodian receives the collateral, which is marked-to-market daily to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest. D. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class. E. FUTURES CONTRACTS -- A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Fund as unrealized gains and losses. Upon closing of the contract, the Fund realizes a gain or loss 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. F. FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS -- The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal income tax regulations, certain 37 <Page> foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. 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 changes in the market prices of the securities. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery. G. FEDERAL INCOME TAX POLICY -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to shareholders are recorded on the ex-dividend date. I. USE OF ESTIMATES -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. 2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS Pursuant to an Investment Management Agreement, the Fund pays the Investment Manager a management fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined at the close of each business day: 1.0% to the portion of daily net assets not exceeding $1 billion and 0.95% to the portion of daily net assets in excess of $1 billion. Under a Sub-Advisory Agreement between the Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund with investment advice and portfolio management relating to the Fund's investments in securities, subject to the overall supervision of the Investment Manager. As compensation for its services provided pursuant to the Sub-Advisory Agreement, the Investment Manager paid the Sub-Advisor compensation of $1,588,558 for the year ended October 31, 2003. On October 23, 2003, the Board of Trustees of the Fund determined to terminate the Sub-Advisory Agreement. Therefore, effective on or about December 30, 2003, the Investment Manager will assume direct responsibility for investment of the Fund's portfolio. 3. PLAN OF DISTRIBUTION Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager and Sub-Advisor. The Fund has adopted a Plan of Distribution (the "Plan") 38 <Page> pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the average daily net assets of Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of Class C. In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $22,231,401 at October 31, 2003. In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the year ended October 31, 2003, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.21% and 1.0%, respectively. The Distributor has informed the Fund that for the year ended October 31, 2003, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $33,775, $562,688 and $2,575, respectively and received $24,699 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended October 31, 2003 aggregated $167,508,945 and $219,400,357, respectively. Morgan Stanley Trust, an affiliate of the Investment Manager, Sub-Advisor and Distributor, is the Fund's transfer agent. At October 31, 2003, the Fund had transfer agent fees and expenses payable of approximately $3,000. 39 <Page> 5. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows: <Table> <Caption> FOR THE YEAR FOR THE YEAR ENDED ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 --------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ----------- ------------- ----------- ------------- CLASS A SHARES Sold 33,698,871 $ 228,777,057 14,014,187 $ 103,437,631 Reinvestment of dividends 83,954 552,418 44,953 347,486 Redeemed (32,511,231) (223,778,567) (12,323,831) (91,196,477) ----------- ------------- ----------- ------------- Net increase -- Class A 1,271,594 5,550,908 1,735,309 12,588,640 ----------- ------------- ----------- ------------- CLASS B SHARES Sold 2,174,402 14,869,053 7,782,148 59,007,084 Redeemed (9,245,751) (62,480,968) (19,433,255) (145,843,044) ----------- ------------- ----------- ------------- Net decrease -- Class B (7,071,349) (47,611,915) (11,651,107) (86,835,960) ----------- ------------- ----------- ------------- CLASS C SHARES Sold 1,380,301 9,030,658 3,153,039 23,108,929 Reinvestment of dividends 6,602 43,180 -- -- Redeemed (2,146,478) (14,221,194) (4,307,755) (31,840,343) ----------- ------------- ----------- ------------- Net decrease -- Class C (759,575) (5,147,356) (1,154,716) (8,731,414) ----------- ------------- ----------- ------------- CLASS D SHARES Sold 11,129,166 73,840,652 13,331,817 100,332,174 Reinvestment of dividends 222,220 1,466,651 162,573 1,259,940 Redeemed (12,802,046) (85,154,583) (11,515,228) (85,404,551) ----------- ------------- ----------- ------------- Net increase (decrease) -- Class D (1,450,660) (9,847,280) 1,979,162 16,187,563 ----------- ------------- ----------- ------------- Net decrease in Fund (8,009,990) $ (57,055,643) (9,091,352) $ (66,791,171) =========== ============= =========== ============= </Table> 6. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS The Fund may enter into forward contracts to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. The Fund may also purchase and sell interest rate, currency and index futures contracts ("futures contracts") that are traded on U.S. and foreign commodity exchanges on such underlying securities as U.S. Treasury bonds, notes, bills and GNMA certificates and/or any foreign government fixed-income security, on various currencies and on such indexes of U.S. and foreign securities as may exist or come into existence. Forward contracts and futures contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rates underlying the forward contracts or an unfavorable change in the value of the underlying securities. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. 40 <Page> At October 31, 2003, there were outstanding forward contracts and outstanding index futures contracts. At October 31, 2003, investments in securities of issuers in Japan represented 28.3% of the Fund's net assets. These investments, as well as other non-U.S. investments, which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developments in this region. At October 31, 2003, the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian. 7. FEDERAL INCOME TAX STATUS The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital. The tax character of distributions paid was as follows: <Table> <Caption> FOR THE YEAR FOR THE YEAR ENDED ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------- ---------------- Ordinary income $ 2,400,004 $ 1,867,288 </Table> As of October 31, 2003, the tax-basis components of accumulated losses were as follows: <Table> Undistributed ordinary income $ 3,844,581 Undistributed long-term gains -- ---------------- Net accumulated earnings 3,844,581 Foreign tax credit pass-through 814,407 Capital loss carryforward* (183,733,776) Temporary differences (864,656) Net unrealized depreciation (10,953,247) ---------------- Total accumulated losses $ (190,892,691) ================ </Table> *As of October 31, 2003, the Fund had a net capital loss carryforward of $183,733,776 of which $35,159,161 will expire on October 31, 2009, $93,856,873 will expire on October 31, 2010 and $54,717,742 will expire on October 31, 2011 to offset future capital gains to the extent provided by regulations. 41 <Page> As of October 31, 2003, the Fund had temporary book/tax differences primarily attributable to the mark-to-market of passive foreign investment companies ("PFICs"), foreign tax credit pass-through and capital loss deferrals on wash sales and permanent book/tax differences attributable to foreign currency gains and tax adjustments on PFICs sold by the Fund. To reflect reclassifications arising from the permanent differences, accumulated net realized loss was charged and accumulated undistributed net investment income was credited $1,071,947. 42 <Page> MORGAN STANLEY INTERNATIONAL FUND FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period: <Table> <Caption> FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31, JUNE 28, 1999* ------------------------------------------------------------ THROUGH 2003 2002 2001 2000 OCTOBER 31, 1999 ------------ ------------ ------------ ------------ ---------------- CLASS A SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 6.70 $ 7.77 $ 10.29 $ 10.57 $ 10.00 ------------ ------------ ------------ ------------ ------------ Income (loss) from investment operations: Net investment income++ 0.08 0.04 0.06 0.11 0.01 Net realized and unrealized gain (loss) 1.33 (1.03) (2.07) (0.39) 0.56 ------------ ------------ ------------ ------------ ------------ Total income (loss) from investment operations 1.41 (0.99) (2.01) (0.28) 0.57 ------------ ------------ ------------ ------------ ------------ Less dividends and distributions from: Net investment income (0.08) (0.08) - - - Net realized gain - - (0.51) - - ------------ ------------ ------------ ------------ ------------ Total dividends and distributions (0.08) (0.08) (0.51) - - ------------ ------------ ------------ ------------ ------------ Net asset value, end of period $ 8.03 $ 6.70 $ 7.77 $ 10.29 $ 10.57 ============ ============ ============ ============ ============ TOTAL RETURN+ 21.31% (12.93)% (20.36)% (2.65)% 5.70%(1) RATIOS TO AVERAGE NET ASSETS(3): Expenses 1.58% 1.56% 1.46%(4) 1.47% 1.81%(2) Net investment income 1.02% 0.54% 0.73% 0.95% 0.31%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 63,422 $ 44,373 $ 37,974 $ 46,535 $ 38,506 Portfolio turnover rate 43% 39% 37% 84% 14%(1) </Table> - ---------- * COMMENCEMENT OF OPERATIONS. ++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD. + DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD. (1) NOT ANNUALIZED. (2) ANNUALIZED. (3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC EXPENSES. (4) DOES NOT REFLECT THE EFFECT OF EXPENSE OFFSET OF 0.01%. SEE NOTES TO FINANCIAL STATEMENTS 43 <Page> <Table> <Caption> FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31, JUNE 28, 1999* -------------------------------------------------------------- THROUGH 2003 2002 2001 2000 OCTOBER 31, 1999 ------------ ------------ ------------ ------------ ---------------- CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 6.58 $ 7.62 $ 10.19 $ 10.55 $ 10.00 ------------ ------------ ------------ ------------ ------------ Income (loss) from investment operations: Net investment income (loss)++ 0.01 (0.02) 0.00 0.02 (0.02) Net realized and unrealized gain (loss) 1.34 (1.02) (2.06) (0.38) 0.57 ------------ ------------ ------------ ------------ ------------ Total income (loss) from investment operations 1.35 (1.04) (2.06) (0.36) 0.55 ------------ ------------ ------------ ------------ ------------ Less distributions from net realized gain - - (0.51) - - ------------ ------------ ------------ ------------ ------------ Net asset value, end of period $ 7.93 $ 6.58 $ 7.62 $ 10.19 $ 10.55 ============ ============ ============ ============ ============ TOTAL RETURN+ 20.52% (13.65)% (21.08)% (3.41)% 5.50%(1) RATIOS TO AVERAGE NET ASSETS(3): Expenses 2.37% 2.32% 2.24%(4) 2.22% 2.56%(2) Net investment income (loss) 0.23% (0.22)% (0.06)% 0.20% (0.44)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 205,544 $ 217,216 $ 340,158 $ 561,375 $ 465,258 Portfolio turnover rate 43% 39% 37% 84% 14%(1) </Table> - ---------- * COMMENCEMENT OF OPERATIONS. ++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD. + DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD. (1) NOT ANNUALIZED. (2) ANNUALIZED. (3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC EXPENSES. (4) DOES NOT REFLECT THE EFFECT OF EXPENSE OFFSET OF 0.01%. SEE NOTES TO FINANCIAL STATEMENTS 44 <Page> <Table> <Caption> FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31, JUNE 28, 1999* -------------------------------------------------------------- THROUGH 2003 2002 2001 2000 OCTOBER 31, 1999 ------------ ------------ ------------ ------------ ---------------- CLASS C SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 6.59 $ 7.62 $ 10.19 $ 10.55 $ 10.00 ------------ ------------ ------------ ------------ ------------ Income (loss) from investment operations: Net investment income (loss)++ 0.01 (0.01) (0.01) 0.02 (0.02) Net realized and unrealized gain (loss) 1.33 (1.02) (2.05) (0.38) 0.57 ------------ ------------ ------------ ------------ ------------ Total income (loss) from investment operations 1.34 (1.03) (2.06) (0.36) 0.55 ------------ ------------ ------------ ------------ ------------ Less dividends and distributions from: Net investment income (0.01) - - - - Net realized gain - - (0.51) - - ------------ ------------ ------------ ------------ ------------ Total dividends and distributions (0.01) - (0.51) - - ------------ ------------ ------------ ------------ ------------ Net asset value, end of period $ 7.92 $ 6.59 $ 7.62 $ 10.19 $ 10.55 ============ ============ ============ ============ ============ TOTAL RETURN+ 20.40% (13.52)% (21.08)% (3.41)% 5.50%(1) RATIOS TO AVERAGE NET ASSETS(3): Expenses 2.37% 2.18% 2.24%(4) 2.22% 2.56%(2) Net investment income (loss) 0.23% (0.08)% (0.06)% 0.20% (0.44)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 25,471 $ 26,195 $ 39,079 $ 69,640 $ 69,811 Portfolio turnover rate 43% 39% 37% 84% 14%(1) </Table> - ---------- * COMMENCEMENT OF OPERATIONS. ++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD. + DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD. (1) NOT ANNUALIZED. (2) ANNUALIZED. (3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC EXPENSES. (4) DOES NOT REFLECT THE EFFECT OF EXPENSE OFFSET OF 0.01%. SEE NOTES TO FINANCIAL STATEMENTS 45 <Page> <Table> <Caption> FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31, JUNE 28, 1999* -------------------------------------------------------------- THROUGH 2003 2002 2001 2000 OCTOBER 31, 1999 ------------ ------------ ------------ ------------ ---------------- CLASS D SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 6.73 $ 7.80 $ 10.32 $ 10.58 $ 10.00 ------------ ------------ ------------ ------------ ------------ Income (loss) from investment operations: Net investment income++ 0.08 0.06 0.08 0.15 0.01 Net realized and unrealized gain (loss) 1.36 (1.04) (2.09) (0.41) 0.57 ------------ ------------ ------------ ------------ ------------ Total income (loss) from investment operations 1.44 (0.98) (2.01) (0.26) 0.58 ------------ ------------ ------------ ------------ ------------ Less dividends and distributions from: Net investment income (0.10) (0.09) - - - Net realized gain - - (0.51) - - ------------ ------------ ------------ ------------ ------------ Total dividends and distributions (0.10) (0.09) (0.51) - - ------------ ------------ ------------ ------------ ------------ Net asset value, end of period $ 8.07 $ 6.73 $ 7.80 $ 10.32 $ 10.58 ============ ============ ============ ============ ============ TOTAL RETURN+ 21.68% (12.70)% (20.30)% (2.46)% 5.80%(1) RATIOS TO AVERAGE NET ASSETS(3): Expenses 1.37% 1.32% 1.24%(4) 1.22% 1.56%(2) Net investment income 1.23% 0.78% 0.94% 1.20% 0.56%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 132,544 $ 120,329 $ 124,065 $ 98,465 $ 1,336 Portfolio turnover rate 43% 39% 37% 84% 14%(1) </Table> - ---------- * COMMENCEMENT OF OPERATIONS. ++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD. + CALCULATED BASED ON THE NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD. (1) NOT ANNUALIZED. (2) ANNUALIZED. (3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC EXPENSES. (4) DOES NOT REFLECT THE EFFECT OF EXPENSE OFFSET OF 0.01%. SEE NOTES TO FINANCIAL STATEMENTS 46 <Page> MORGAN STANLEY INTERNATIONAL FUND INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY INTERNATIONAL FUND: We have audited the accompanying statement of assets and liabilities of Morgan Stanley International Fund (the "Fund"), including the portfolio of investments, as of October 31, 2003, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2003, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley International Fund as of October 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP NEW YORK, NEW YORK DECEMBER 19, 2003 47 <Page> MORGAN STANLEY INTERNATIONAL FUND TRUSTEE AND OFFICER INFORMATION INDEPENDENT TRUSTEES: <Table> <Caption> NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION(S) OFFICE AND COMPLEX NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS INDEPENDENT TRUSTEE REGISTRANT TIME SERVED* DURING PAST 5 YEARS** BY TRUSTEE*** HELD BY TRUSTEE - ------------------------------------ ------------ ------------ --------------------------- -------------- --------------------- Michael Bozic (62) Trustee Since Retired; Director or Trustee 211 Director of Weirton c/o Mayer, Brown, Rowe & Maw LLP April 1994 of the Retail Funds and Steel Corporation. Counsel to the Independent TCW/DW Term Trust 2003 Directors (since April 1994) and the 1675 Broadway Institutional Funds (since New York, NY July 2003); formerly Vice Chairman of Kmart Corporation (December 1998- October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991- July 1995); formerly variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck& Co. Edwin J. Garn (71) Trustee Since Director or Trustee of the 211 Director of Franklin c/o Summit Ventures LLC January Retail Funds and TCW/DW Covey (time 1 Utah Center 1993 Term Trust 2003 (since management systems), 201 S. Main Street January 1993) and the BMW Bank of North Salt Lake City, UT Institutional Funds (since America, Inc. July 2003); member of the (industrial loan Utah Regional Advisory corporation), United Board of Pacific Corp.; Space Alliance formerly United States (joint venture Senator (R-Utah) between Lockheed (1974-1992) and Chairman, Martin and the Senate Banking Committee Boeing Company) and (1980-1986), Mayor of Salt Nuskin Asia Pacific Lake City, Utah (multilevel (1971-1974), Astronaut, marketing); member Space Shuttle Discovery of the board of (April 12-19, 1985), and various civic and Vice Chairman, Huntsman charitable Corporation (chemical organizations. company). Wayne E. Hedien (69) Trustee Since Retired; Director or Trustee 211 Director of The PMI c/o Mayer, Brown, Rowe & Maw LLP September of the Retail Funds and Group Inc. (private Counsel to the Independent 1997 TCW/DW Term Trust 2003; mortgage insurance); Directors (Since September 1997) and Trustee and Vice 1675 Broadway the Institutional Funds Chairman of The New York, NY (since July 2003); formerly Field Museum of associated with the Allstate Natural History; Companies (1966-1994), most director of various recently as Chairman of The other business and Allstate Corporation charitable (March 1993-December 1994) organizations. and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994). </Table> 48 <Page> <Table> <Caption> NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION(S) OFFICE AND COMPLEX NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS INDEPENDENT TRUSTEE REGISTRANT TIME SERVED* DURING PAST 5 YEARS** BY TRUSTEE*** HELD BY TRUSTEE - ------------------------------------ ------------ ------------ --------------------------- -------------- --------------------- Dr. Manuel H. Johnson (54) Trustee Since Chairman of the Audit 211 Director of NVR, c/o Johnson Smick International, July 1991 Committee and Director or Inc. (home Inc. Trustee of the Retail Funds construction); 2099 Pennsylvania Avenue, N.W. and TCW/DW Term Trust 2003 Chairman and Trustee Suite 950 (since July 1991) and the of the Financial Washington, D.C. Institutional Funds (since Accounting July 2003); Senior Partner, Foundation Johnson Smick International, (oversight Inc., a consulting firm; organization of the Co-Chairman and a founder of Financial Accounting the Group of Seven Council Standards Board); (G7C), an international Director of RBS economic commission; Greenwich Capital formerly Vice Chairman of Holdings (financial the Board of Governors of holding company). the Federal Reserve System and Assistant Secretary of the U.S. Treasury. Joseph J. Kearns (61) Trustee Since Deputy Chairman of the Audit 212 Director of Electro PMB754 July 2003 Committee and Director or Rent Corporation 23852 Pacific Coast Highway Trustee of the Retail Funds (equipment leasing), Malibu, CA and TCW/DW Term Trust 2003 The Ford Family (since July 2003) and the Foundation, and the Institutional Funds (since UCLA Foundation. August 1994); previously Chairman of the Audit Committee of the Institutional Funds (October 2001-July 2003); President, Kearns & Associates LLC (investment consulting); formerly CFO of the J. Paul Getty Trust. Michael E. Nugent (67) Trustee Since Chairman of the Insurance 211 Director of various c/o Triumph Capital, L.P. July 1991 Committee and Director or business 445 Park Avenue Trustee of the Retail Funds organizations. New York, NY and TCW/DW Term Trust 2003 (since July 1991) and the Institutional Funds (since July 2001); General Partner of Triumph Capital, L.P., a private investment partnership; formerly Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988). Fergus Reid (71) Trustee Since Chairman of the Governance 212 Trustee and Director 85 Charles Colman Blvd. July 2003 Committee and Director or of certain Pawling, NY Trustee of the Retail Funds investment companies and TCW/DW Term Trust 2003 in the JPMorgan (since July 2003) and the Funds complex Institutional Funds (since managed by JP Morgan June 1992); Chairman of Investment Lumelite Plastics Management Inc. Corporation. </Table> 49 <Page> INTERESTED TRUSTEES: <Table> <Caption> NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION(S) OFFICE AND COMPLEX NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS INDEPENDENT TRUSTEE REGISTRANT TIME SERVED* DURING PAST 5 YEARS** BY TRUSTEE*** HELD BY TRUSTEE - ------------------------------------ ------------ ------------ --------------------------- -------------- --------------------- Charles A. Fiumefreddo (70) Chairman of Since Chairman and Director or 211 None c/o Morgan Stanley Trust the Board July 1991 Trustee of the Retail Funds Harborside Financial Center, and Trustee and TCW/DW Term Trust 2003 Plaza Two, (since July 1991) and the Jersey City, NJ Institutional Funds (since July 2003); formerly Chief Executive Officer of the Retail Funds and the TCW/DW Term Trust 2003 (until September 2002). James F. Higgins (55) Trustee Since Director or Trustee of the 211 Director of AXA c/o Morgan Stanley Trust June 2000 Retail Funds and TCW/DW Term Financial, Inc. and Harborside Financial Center, Trust 2003 (since June 2000) The Equitable Life Plaza Two, and the Institutional Funds Assurance Society of Jersey City, NJ (since July 2003); Senior the United States Advisor of Morgan Stanley (financial (since August 2000); Director services). of the Distributor and Dean Witter Realty Inc.; previously President and Chief Operating Officer of the Private Client Group of Morgan Stanley (May 1999-August 2000), and President and Chief Operating Officer of Individual Securities of Morgan Stanley (February 1997-May 1999). Philip J. Purcell (60) Trustee Since Director or Trustee of the 211 Director of American 1585 Broadway April 1994 Retail Funds and TCW/DW Term Airlines, Inc. and New York, NY Trust 2003 (since April 1994) its parent company, and the Institutional Funds AMR Corporation. (since July 2003); Chairman of the Board of Directors and Chief Executive Officer of Morgan Stanley and Morgan Stanley DW Inc.; Director of the Distributor; Chairman of the Board of Directors and Chief Executive Officer of Novus Credit Services Inc.; Director and/or officer of various Morgan Stanley subsidiaries. </Table> - ---------- * THIS IS THE EARLIEST DATE THE TRUSTEE BEGAN SERVING THE FUNDS ADVISED BY MORGAN STANLEY INVESTMENT ADVISORS INC. (THE "INVESTMENT MANAGER") (THE "RETAIL FUNDS"). ** THE DATES REFERENCED BELOW INDICATING COMMENCEMENT OF SERVICES AS DIRECTOR/TRUSTEE FOR THE RETAIL FUNDS AND THE FUNDS ADVISED BY MORGAN STANLEY INVESTMENT MANAGEMENT INC., MORGAN STANLEY INVESTMENTS LP AND MORGAN STANLEY AIP GP LP (THE "INSTITUTIONAL FUNDS") REFLECT THE EARLIEST DATE THE DIRECTOR/TRUSTEE BEGAN SERVING THE RETAIL OR INSTITUTIONAL FUNDS AS APPLICABLE. *** THE FUND COMPLEX INCLUDES ALL OPEN-END AND CLOSED-END FUNDS (INCLUDING ALL OF THEIR PORTFOLIOS) ADVISED BY THE INVESTMENT MANAGER AND ANY FUNDS THAT HAVE AN INVESTMENT ADVISOR THAT IS AN AFFILIATED PERSON OF THE INVESTMENT MANAGER (INCLUDING BUT NOT LIMITED TO MORGAN STANLEY INVESTMENT MANAGEMENT INC. AND MORGAN STANLEY INVESTMENTS LP). 50 <Page> OFFICERS <Table> <Caption> TERM OF POSITION(S) OFFICE AND NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF EXECUTIVE OFFICER REGISTRANT TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS** - ------------------------------------ ------------ ---------------- ------------------------------------------------------------ Mitchell M. Merin (50) President Since May 1999 President and Chief Operating Officer of Morgan Stanley 1221 Avenue of the Americas Investment Management Inc.; President, Director and Chief New York, NY Executive Officer of the Investment Manager and Morgan Stanley Services; Chairman, Chief Executive Officer and Director of the Distributor; Chairman and Director of the Transfer Agent; Director of various Morgan Stanley subsidiaries; President Morgan Stanley Investments LP (since February 2003); President of the Institutional Funds (since July 2003) and President of the Retail Funds and TCW/DW Term Trust 2003 (since May 1999); Trustee (since July 2003) and President (since December 2002) of the Van Kampen Closed-End Funds; Trustee (since May 1999) and President (since October 2002) of the Van Kampen Open-End Funds. Ronald E. Robison (64) Executive Since Chief Global Operations Officer and Managing Director of 1221 Avenue of the Americas Vice April 2003 Morgan Stanley Investment Management Inc.; Managing New York, NY President Director of Morgan Stanley & Co. Incorporated; Managing and Director of Morgan Stanley; Managing Director, Chief Principal Administrative Officer and Director of the Investment Executive Manager and Morgan Stanley Services; Chief Executive Officer Officer and Director of the Transfer Agent; Executive Vice President and Principal Executive Officer of the Institutional Funds (since July 2003); and the TCW/DW Term Trust 2003 (since April 2003); previously President of the Institutional Funds (March 2001-July 2003) and Director of the Institutional Funds (March 2001-July 2003). Barry Fink (48) Vice Since General Counsel (since May 2000) and Managing Director 1221 Avenue of the Americas President February 1997 (since December 2000) of Morgan Stanley Investment New York, NY and Management; Managing Director (since December 2000), General Secretary (since February 1997) and Director (since Counsel July 1998) of the Investment Manager and Morgan Stanley Services; Assistant Secretary of Morgan Stanley DW; Chief Legal Officer of Morgan Stanley Investments LP (since July 2002); Vice President of the Institutional Funds (since July 2003); Vice President and Secretary of the Distributor; previously Secretary of the Retail Funds (February 1997-July 2003); previously Vice President and Assistant General Counsel of the Investment Manager and Morgan Stanley Services (February 1997-December 2001). Joseph J. McAlinden (60) Vice Since July 1995 Managing Director and Chief Investment Officer of the 1221 Avenue of the Americas President Investment Manager, Morgan Stanley Investment Management New York, NY Inc. and Morgan Stanley Investments LP; Director of the Transfer Agent, Chief Investment Officer of the Van Kampen Funds; Vice President of the Institutional Funds (since July 2003) and the Retail Funds (since July 1995). Stefanie V. Chang (36) Vice Since July 2003 Executive Director of Morgan Stanley & Co. and Morgan 1221 Avenue of the Americas President Stanley Investment Management Inc. and Vice President of New York, NY the Institutional Funds (since December 1997) and the Retail Funds (since July 2003); formerly practiced law with the New York law firm of Rogers & Wells (now Clifford Chance LLP). </Table> 51 <Page> <Table> <Caption> TERM OF POSITION(S) OFFICE AND NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF EXECUTIVE OFFICER REGISTRANT TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS** - ------------------------------------ ------------ ---------------- ------------------------------------------------------------ Francis J. Smith (38) Treasurer Treasurer since Executive Director of the Investment Manager and Morgan c/o Morgan Stanley Trust and July 2003 and Stanley Services (since December 2001); previously Vice Harborside Financial Center, Chief Chief Financial President of the Retail Funds (September 2002-July 2003); Plaza Two, Financial Officer since previously Vice President of the Investment Manager and Jersey City, NJ Officer September 2002 Morgan Stanley Services (August 2000-November 2001) and Senior Manager at PricewaterhouseCoopers LLP (January 1998-August 2000). Thomas F. Caloia (57) Vice Since July 2003 Executive Director (since December 2002) and Assistant c/o Morgan Stanley Trust President Treasurer of the Investment Manager, the Distributor and Harborside Financial Center, Morgan Stanley Services; previously Treasurer of the Plaza Two, Retail Funds (April 1989-July 2003); formerly First Vice Jersey City, NJ President of the Investment Manager, the Distributor and Morgan Stanley Services. Mary E. Mullin (36) Secretary Since July 2003 Vice President of Morgan Stanley & Co. Incorporated and 1221 Avenue of the Americas Morgan Stanley Investment Management Inc.; Secretary of New York, NY the Institutional Funds (since June 1999) and the Retail Funds (since July 2003); formerly practiced law with the New York law firms of McDermott, Will & Emery and Skadden, Arps, Slate, Meagher & Flom LLP. </Table> - ---------- * THIS IS THE EARLIEST DATE THE OFFICER BEGAN SERVING THE RETAIL FUNDS. EACH OFFICER SERVES AN INDEFINITE TERM, UNTIL HIS OR HER SUCCESSOR IS ELECTED. ** THE DATES REFERENCED BELOW INDICATING COMMENCEMENT OF SERVICE AS AN OFFICER FOR THE RETAIL AND INSTITUTIONAL FUNDS REFLECT THE EARLIEST DATE THE OFFICER BEGAN SERVING THE RETAIL OR INSTITUTIONAL FUNDS AS APPLICABLE. 52 <Page> TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Philip J. Purcell Fergus Reid OFFICERS Charles A. Fiumefreddo CHAIRMAN OF THE BOARD Mitchell M. Merin PRESIDENT Ronald E. Robison EXECUTIVE VICE PRESIDENT and PRINCIPAL EXECUTIVE OFFICER Barry Fink VICE PRESIDENT and GENERAL COUNSEL Joseph J. McAlinden VICE PRESIDENT Stefanie V. Chang VICE PRESIDENT Francis J. Smith TREASURER and CHIEF FINANCIAL OFFICER Thomas F. Caloia VICE PRESIDENT Mary E. Mullin SECRETARY TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT AUDITORS Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT MANAGER Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 SUB ADVISOR Morgan Stanley Investment Management Inc. 1221 Avenue of the Americas New York, New York 10020 This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. (C) 2003 Morgan Stanley [MORGAN STANLEY LOGO] 36075RPT-00-13015K03-OP-11/03 [MORGAN STANLEY FUNDS LOGO] MORGAN STANLEY INTERNATIONAL FUND ANNUAL REPORT OCTOBER 31, 2003 [MORGAN STANLEY LOGO] <Page> Item 2. Code of Ethics. (a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party. (b) No information need be disclosed pursuant to this paragraph. (c) Not applicable. (d) Not applicable. (e) Not applicable. (f) (1) The Fund's Code of Ethics is attached hereto as Exhibit A. (2) Not applicable. (3) Not applicable. Item 3. Audit Committee Financial Expert. The Fund's Board of Trustees has determined that it has two "audit committee financial experts" serving on its audit committee, each of whom are "independent" Trustees: Dr. Manuel H. Johnson and Joseph J. Kearns. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification. Item 4. Principal Accountant Fees and Services Applicable only for reports covering fiscal years ending on or after December 15, 2003. <Page> Item 5. Audit Committee of Listed Registrants. Applicable only for reports covering periods ending on or after the earlier of (i) the first annual shareholder meeting after January 15, 2004 or (ii) October 31, 2004. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Applicable only to annual reports filed by closed-end funds. Item 8. [Reserved.] Item 9 - Controls and Procedures (a) 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. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. <Page> Item 10 Exhibits (a) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. 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. Morgan Stanley International Fund /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer December 18, 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. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer December 18, 2003 /s/ Francis Smith Francis Smith Principal Financial Officer December 18, 2003