Morgan Stanley Asia-Pacific Fund, Inc. NYSE: APF · 16-01 Capital Square, ... the Morgan Stanley Asia-Pacific Fund, Inc. ... Pharmaceuticals Glenmark Pharmaceuticals Ltd. 107,706

I N V E S T M E N T M A N A G E M E N T

Morgan StanleyInvestment Management Inc.Adviser

Morgan StanleyAsia-Pacific Fund, Inc. NYSE: APFAnnual ReportDecember 31, 2015

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For additional Fund information, including the Fund’s net asset value pershare and information regarding the investments comprising the Fund’sportfolio, please call toll free 1 (800) 231-2608 or visit our website atwww.morganstanley.com/im. All investments involve risks, including thepossible loss of principal.

© 2016 Morgan Stanley.

Adviser and AdministratorMorgan Stanley Investment Management Inc.522 Fifth AvenueNew York, New York 10036

Sub-AdviserMorgan Stanley Investment Management Company23 Church Street16-01 Capital Square, Singapore 049481

CustodianState Street Bank and Trust CompanyOne Lincoln StreetBoston, Massachusetts 02111

Stockholder Servicing AgentComputershare Trust Company, N.A.211 Quality Circle, Suite 210College Station, Texas 77845

Legal CounselDechert LLP1095 Avenue of the AmericasNew York, New York 10036

Counsel to the Independent DirectorsKramer Levin Naftalis & Frankel LLP1177 Avenue of the AmericasNew York, New York 10036

Independent Registered Public Accounting FirmErnst & Young LLP200 Clarendon StreetBoston, Massachusetts 02116

CEAPFANN

1409169 EXP2.28.17

DirectorsFrank L. BowmanKathleen A. DennisNancy C. EverettJakki L. HausslerJames F. HigginsDr. Manuel H. JohnsonJoseph J. KearnsMichael F. KleinMichael E. Nugent, Chair of the BoardW. Allen ReedFergus Reid

OfficersJohn H. GernonPresident and PrincipalExecutive OfficerStefanie V. Chang YuChief Compliance OfficerJoseph C. BenedettiVice PresidentFrancis J. SmithTreasurer and PrincipalFinancial OfficerMary E. MullinSecretary

Morgan Stanley Asia-Pacific Fund, Inc.

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December 31, 2015

Table of ContentsLetter to Stockholders ................................................................................................................................................................... 3

Portfolio of Investments.................................................................................................................................................................. 5

Statement of Assets and Liabilities.................................................................................................................................................. 10

Statement of Operations ................................................................................................................................................................ 11

Statements of Changes in Net Assets.............................................................................................................................................. 12

Financial Highlights ........................................................................................................................................................................ 13

Notes to Financial Statements ........................................................................................................................................................ 14

Report of Independent Registered Public Accounting Firm................................................................................................................. 26

Portfolio Management .................................................................................................................................................................... 27

Investment Policy........................................................................................................................................................................... 28

Dividend Reinvestment and Cash Purchase Plan ............................................................................................................................... 33

U.S. Privacy Policy......................................................................................................................................................................... 34

Director and Officer Information ...................................................................................................................................................... 38

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December 31, 2015

Letter to Stockholders (unaudited)PerformanceFor the year ended December 31, 2015, the Morgan Stanley Asia-Pacific Fund, Inc. (the “Fund”) had total returns of -4.49%, basedon net asset value, and -5.78% based on market value per share (including reinvestment of distributions), compare to its benchmark,the MSCI All Country Asia Pacific ex Japan Index (the “Index”)*, which returned -9.37%. On December 31, 2015, the closing priceof the Fund’s shares on the New York Stock Exchange was $13.83, representing approximately 11.0% discount to the Fund’s net assetvalue per share. Past performance is no guarantee of future results.

Factors Affecting Performance• Asian markets underperformed global developed markets in 2015, returning -9.37%, as measured by the Index, versus the

MSCI World Index’s flat return of -0.87%. Over the course of the year, markets grew increasingly concerned about China’sslowing economy and waning liquidity with the Federal Reserve interest rate hike looming, both of which put downwardpressure on global growth. While commodity prices declined, providing a windfall to the consumer, corporate profits hitmulti-year lows.

• The Portfolio benefited from favorable stock selection in China, India, Australia, Taiwan and Hong Kong as well as combinedstock selection and underweight allocation to Singapore. Stock selection across a range of sectors, including industrials, consumerdiscretionary, materials, information technology (IT), energy and consumer staples, also contributed positively to performance.

• Detracting from relative gains was our stock selection in Korea, and to a lesser extent Thailand and the Philippines. Stockselection in health care, telecommunication services and financials was also disadvantageous to performance.

Management Strategies• The Fund seeks long-term capital appreciation and integrates top-down country allocation and bottom-up stock selection.

• Several factors are likely to contribute to continued market volatility for some time this year: comprehension of China’s trueeconomic growth trajectory; reaction to potential additional devaluation of China’s currency; and further adjustment to theconsequences of the Fed’s rate increase path.

• But we think Asian equities may be heading toward an eventual important turning point, even if precise timing is difficult todetermine. Presently, Asia valuations in aggregate appear attractive at about a 30% discount to developed equities — not as deepas the 50% discount as in the 1997-98 period, but below their 20-year average discount of over 20%.i But as a catalyst, we thinkwhat could drive Asia equities at some point, perhaps later this year, is when the market focuses on economic growth inflectionsshifting in favor of Asia and emerging markets relative to developed markets. Historically, the best time to buy Asia, as an assetclass, has been when their countries’ gross domestic product growth rates were increasing by more than those in developedcountries. We believe strongly that there will be big differences among countries for both growth rates and equity performance.Country allocation will be critical to generating excess returns in this environment.

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December 31, 2015

Letter to Stockholders (unaudited) (cont’d)• The Fund’s portfolio has long been positioned for this in terms of both country allocation and sector positioning. The Fund is

underweight to Australia/New Zealand, Hong Kong/China, Singapore and Malaysia, while maintaining overweight exposuresprimarily to India, Taiwan, the Philippines and South Korea. From a sector perspective, we have overweight exposures to the IT,consumer discretionary and telecommunication services sectors, and underweight exposures to financials, energy and utilities. Weremained focused on quality and growth.

Sincerely,

John H. GernonPresident and Principal Executive Officer January 2016

*The MSCI All Country Asia Pacific ex Japan Index is a free float-adjusted market capitalization weighted index designed to measure the equity marketperformance of developed and emerging markets in the Asia Pacific region excluding Japan. The performance of the Index is listed in U.S. dollars and assumesreinvestment of net dividends. It is not possible to invest directly in an index. The Fund changed its benchmark effective market open on April 10, 2014 toMSCI All Country Asia Pacific ex Japan Index. Benchmark returns prior to April 10, 2014 were the MSCI All Country Asia Pacific Index.

i Source: FactSet and Morgan Stanley Investment Management. Asia markets and developed markets are represented by the MSCI All Country Asia ex JapanIndex and MSCI World Index, respectively.

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December 31, 2015

Portfolio of Investments

Diversified Telecommunication ServicesChina Unicom Hong Kong Ltd. (a) 524,000 $ 635

Food ProductsChina Mengniu Dairy Co., Ltd. (a) 448,000 725

Hotels, Restaurants & LeisureShanghai Jin Jiang International

Hotels Group Co., Ltd. H Shares (a) 900,000 377

Independent Power Producers & Energy TradersHuadian Power International Corp.,

Ltd. H Shares (a) 984,000 638Insurance

China Pacific Insurance Group Co., Ltd. H Shares (a) 675,400 2,771

China Taiping Insurance Holdings Co., Ltd. (a)(b) 388,400 1,190

3,961Internet & Catalog Retail

JD.com, Inc. ADR (b) 52,342 1,689Internet Software & Services

Alibaba Group Holding Ltd. ADR (b) 11,500 935NetEase, Inc. ADR 5,455 989Tencent Holdings Ltd. (a) 574,600 11,209

13,133Machinery

CRCC High-Tech Equipment Corp., Ltd. H Shares (a)(b) 1,243,500 762

PharmaceuticalsCSPC Pharmaceutical Group Ltd. (a) 786,000 800Sihuan Pharmaceutical Holdings

Group Ltd. (a)(c)(d) 2,581,000 967 1,767

Real Estate Management & DevelopmentChina Overseas Land &

Investment Ltd. (a) 574,000 1,993Textiles, Apparel & Luxury Goods

Shenzhou International Group Holdings Ltd. (a) 204,000 1,167

Transportation InfrastructureShenzhen International Holdings Ltd. (a) 430,500 791

COMMON STOCKS (98.4%)Australia (16.2%)Banks

Commonwealth Bank of Australia 106,301 $ 6,568Westpac Banking Corp. 178,309 4,322

10,890Commercial Services & Supplies

Brambles Ltd. 341,126 2,855Food & Staples Retailing

Woolworths Ltd. 116,908 2,069Health Care Equipment & Supplies

ResMed, Inc. 525,665 2,835Information Technology Services

Computershare Ltd. 297,239 2,505Insurance

AMP Ltd. 816,758 3,443QBE Insurance Group Ltd. 278,882 2,537

5,980Oil, Gas & Consumable Fuels

Santos Ltd. 582,676 1,542Real Estate Investment Trusts (REITs)

Mirvac Group REIT 2,212,282 3,166Real Estate Management & Development

Lend Lease Group REIT 297,744 3,071 34,913

China (21.6%)Automobiles

Chongqing Changan Automobile Co., Ltd. B Shares 354,500 778

BanksBank of China Ltd. H Shares (a) 11,145,000 4,933China Construction Bank Corp.

H Shares (a) 7,355,560 4,993 9,926

Construction & EngineeringChina Machinery Engineering Corp.

H Shares (a) 796,000 580Diversified Consumer Services

TAL Education Group ADR (b) 27,388 1,273

Value Shares (000)

Value Shares (000)

The accompanying notes are an integral part of the financial statements.

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December 31, 2015

Portfolio of Investments (cont’d)

MediaInox Leisure Ltd. (b) 322,750 $ 1,162

Oil, Gas & Consumable FuelsBharat Petroleum Corp., Ltd. 114,513 1,540

Personal ProductsMarico Ltd. 466,198 1,591

PharmaceuticalsGlenmark Pharmaceuticals Ltd. 107,706 1,492Sun Pharmaceutical Industries Ltd. 59,257 730

2,222Transportation Infrastructure

Gateway Distriparks Ltd. 263,211 1,281Wireless Telecommunication Services

Idea Cellular Ltd. 269,735 584 22,771

Indonesia (3.3%)Diversified Telecommunication Services

Link Net Tbk PT (b) 2,281,000 655XL Axiata Tbk PT (b) 5,181,100 1,366

2,021Food Products

Nippon Indosari Corpindo Tbk PT 4,421,700 405Machinery

United Tractors Tbk PT 290,600 353Media

Surya Citra Media Tbk PT 4,654,900 1,043Multi-line Retail

Matahari Department Store Tbk PT 1,507,400 1,903Pharmaceuticals

Kalbe Farma Tbk PT 7,245,700 687Trading Companies & Distributors

AKR Corporindo Tbk PT 1,196,500 620Transportation Infrastructure

Jasa Marga Persero Tbk PT 318,600 120 7,152

Korea, Republic of (16.4%)Aerospace & Defense

Korea Aerospace Industries Ltd. (b) 18,254 1,206LIG Nex1 Co., Ltd. (b) 10,441 910

2,116

China (cont’d)Wireless Telecommunication Services

China Mobile Ltd. (a) 569,000 $ 6,377 46,572

Hong Kong (8.8%)Banks

BOC Hong Kong Holdings Ltd. 861,500 2,614Diversified Financial Services

Hong Kong Exchanges and Clearing Ltd. 59,200 1,504

Diversified Telecommunication ServicesHKT Trust & HKT Ltd. 1,028,340 1,312

Industrial ConglomeratesCK Hutchison Holdings Ltd. 393,768 5,285

InsuranceAIA Group Ltd. 698,200 4,160

Real Estate Management & DevelopmentCheung Kong Property

Holdings Ltd. 332,768 2,147Specialty Retail

L’Occitane International SA 172,250 333Textiles, Apparel & Luxury Goods

Samsonite International SA 551,100 1,653 19,008

India (10.6%)Automobiles

Maruti Suzuki India Ltd. 31,682 2,207Banks

HDFC Bank Ltd. 107,085 2,157IndusInd Bank Ltd. 165,291 2,410

4,567Construction & Engineering

Larsen & Toubro Ltd. 68,806 1,320Construction Materials

Shree Cement Ltd. 10,599 1,840Consumer Finance

Shriram Transport Finance Co., Ltd. 145,356 1,880Machinery

Ashok Leyland Ltd. 1,950,994 2,577

Value Shares (000)

Value Shares (000)




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December 31, 2015


Philippines (3.2%)Banks

BDO Unibank, Inc. 318,060 $ 708Metropolitan Bank & Trust Co. 568,313 972Rizal Commercial Banking Corp. 521,060 364

2,044Diversified Financial Services

Ayala Corp. 53,846 863Metro Pacific Investments Corp. 8,351,800 922

1,785Industrial Conglomerates

DMCI Holdings, Inc. 3,243,800 948LT Group, Inc. 2,367,000 742SM Investments Corp. 48,610 890

2,580Transportation Infrastructure

International Container Terminal Services, Inc. 337,580 503

6,912Singapore (3.3%)Banks

DBS Group Holdings Ltd. 134,116 1,570Oversea-Chinese Banking Corp., Ltd. 122,261 756

2,326Distributors

Jardine Cycle & Carriage Ltd. 95,700 2,335Health Care Providers & Services

Raffles Medical Group Ltd. 149,622 439Multi-Utilities

Keppel Infrastructure Trust (Units) (e) 4,498,600 1,615

Specialty RetailOSIM International Ltd. 654,600 497

7,212Taiwan (13.7%)Chemicals

Formosa Plastics Corp. 447,000 1,044Diversified Financial Services

Chailease Holding Co., Ltd. 884,080 1,519Fubon Financial Holding Co., Ltd. 1,128,000 1,533

3,052

Korea, Republic of (cont’d)Automobiles

Kia Motors Corp. (b) 58,538 $ 2,608Banks

KB Financial Group, Inc. (b) 44,389 1,247Chemicals

LG Chem Ltd. (b) 7,387 2,040Commercial Services & Supplies

KEPCO Plant Service & Engineering Co., Ltd. (b) 13,450 1,016

Construction & EngineeringHyundai Development Co-Engineering &

Construction (b) 19,822 647Household Durables

Coway Co., Ltd. (b) 35,214 2,512Industrial Conglomerates

SK Holdings Co., Ltd. (b) 9,977 2,028Internet Software & Services

NAVER Corp. (b) 3,669 2,043Personal Products

Amorepacific Corp. (b) 8,303 2,916Cosmax, Inc. (b) 2,947 458

3,374Software

Nexon Co., Ltd. 109,700 1,781Specialty Retail

Hotel Shilla Co., Ltd. (b) 24,935 1,631Tech Hardware, Storage & Peripherals

Samsung Electronics Co., Ltd. 7,287 7,781Samsung Electronics Co., Ltd.

(Preference) 4,074 3,771 11,552

Wireless Telecommunication ServicesSK Telecom Co., Ltd. 4,531 831

35,426Malaysia (0.1%)Media

Astro Malaysia Holdings Bhd 171,500 110

Value Shares (000)

Value Shares (000)




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December 31, 2015


United States (0.0%)Household Durables

Nien Made Enterprise Co., Ltd. (b) 7,000 $ 48TOTAL COMMON STOCKS (Cost $195,613) 212,193SHORT-TERM INVESTMENT (2.7%)Investment Company (2.7%)

Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note E) (Cost $5,754) 5,754,268 5,754

TOTAL INVESTMENTS (101.1%) (Cost $201,367) (f)(g) 217,947LIABILITIES IN EXCESS OF OTHER ASSETS (-1.1%) (2,359)NET ASSETS (100.0%) $215,588

(a) Security trades on the Hong Kong exchange.(b) Non-income producing security.(c) At December 31, 2015, the Fund held a fair valued security

valued at approximately $967,000, representing 0.5% ofnet assets. This security has been fair valued asdetermined in good faith under procedures established byand under the general supervision of the Fund’s Directors.

(d) Security has been deemed illiquid at December 31, 2015.(e) Consists of one or more classes of securities traded

together as a unit; stocks with attached warrants.(f) The approximate fair value and percentage of net assets,

$205,436,000 and 95.3%, respectively, represent thesecurities that have been fair valued under the fair valuationpolicy for international investments as described inNote A-1 within the Notes to the Financial Statements.

(g) At December 31, 2015, the aggregate cost for Federalincome tax purposes is approximately $203,030,000. Theaggregate gross unrealized appreciation is approximately$29,057,000 and the aggregate gross unrealizeddepreciation is approximately $14,140,000 resulting in netunrealized appreciation of approximately $14,917,000.

ADR American Depositary Receipt.NVDR Non-Voting Depositary Receipt.REIT Real Estate Investment Trust.

Taiwan (cont’d)Electronic Equipment, Instruments & Components

Delta Electronics, Inc. 411,532 $ 1,931Hon Hai Precision Industry Co., Ltd. 1,193,050 2,918

4,849Food Products

Uni-President Enterprises Corp. 1,531,046 2,551Internet Software & Services

PChome Online, Inc. 94,000 935Semiconductors & Semiconductor Equipment

Advanced Semiconductor Engineering, Inc. 1,822,000 2,083

Advanced Semiconductor Engineering, Inc. ADR 25,033 142

Hermes Microvision, Inc. 17,584 636Taiwan Semiconductor

Manufacturing Co., Ltd. 1,534,592 6,622 9,483

Tech Hardware, Storage & PeripheralsCatcher Technology Co., Ltd. 272,000 2,277Pegatron Corp. 797,000 1,733

4,010Textiles, Apparel & Luxury Goods

Eclat Textile Co., Ltd. 180,456 2,485Wireless Telecommunication Services

Taiwan Mobile Co., Ltd. 385,000 1,170 29,579

Thailand (1.2%)Hotels, Restaurants & Leisure

Minor International PCL (Foreign) 1,228,920 1,228Real Estate Management & Development

Land and Houses PCL (Foreign) 1,685,480 441Wireless Telecommunication Services

Advanced Info Service PCL (Foreign) 143,700 602

Total Access Communication PCL (Foreign) 192,900 160

Total Access Communication PCL NVDR 71,600 59

821 2,490

Value Shares (000)

Value Shares (000)




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December 31, 2015


Portfolio Composition

Percentage ofClassification Total InvestmentsOther* 63.6%Banks 15.4Internet Software & Services 7.4Tech Hardware, Storage & Peripherals 7.1Insurance 6.5Total Investments 100.0%

* Industries and/or investment types representing less than 5% of totalinvestments.




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December 31, 2015

Financial Statements December 31, 2015

(000)

Assets:Investments in Securities of Unaffiliated Issuers, at Value (Cost $195,613) $212,193Investment in Security of Affiliated Issuer, at Value (Cost $5,754) 5,754

Total Investments in Securities, at Value (Cost $201,367) 217,947Foreign Currency, at Value (Cost $27) 28Dividends Receivable 52Receivable for Investments Sold 42Tax Reclaim Receivable 7Receivable from Affiliate 1Other Assets 25

Total Assets 218,102

Liabilities:Dividends Declared 2,000Payable for Advisory Fees 187Payable for Investments Purchased 154Payable for Custodian Fees 73Payable for Professional Fees 56Payable for Administration Fees 7Payable for Stockholder Servicing Agent Fees 6Other Liabilities 31

Total Liabilities 2,514

Net Assets Applicable to 13,883,397 Issued and Outstanding $0.01 Par Value Shares (200,000,000 Shares Authorized) $215,588

Net Asset Value Per Share $ 15.53

Net Assets Consist of:Common Stock $ 139Paid-in-Capital 212,348Distributions in Excess of Net Investment Income (852)Accumulated Net Realized Loss (12,626)Unrealized Appreciation (Depreciation) on:

Investments 16,580Foreign Currency Translations (1)

Net Assets $215,588

Statement of Assets and Liabilities


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December 31, 2015

Financial Statements (cont’d) Year Ended December 31, 2015

(000)

Investment Income:Dividends from Securities of Unaffiliated Issuers (Net of $532 of Foreign Taxes Withheld) $ 5,262Dividends from Security of Affiliated Issuer (Note E) 8

Total Investment Income 5,270

Expenses:Advisory Fees (Note B) 2,355Custodian Fees (Note D) 286Administration Fees (Note C) 188Professional Fees 176Stockholder Reporting Expenses 52Stockholder Servicing Agent Fees 34Directors’ Fees and Expenses 6Other Expenses 49

Total Expenses 3,146

Waiver of Administration Fees (Note C) (107)Rebate from Morgan Stanley Affiliate (Note E) (4)

Net Expenses 3,035

Net Investment Income 2,235

Realized Loss:Investments Sold (8,607)Foreign Currency Forward Exchange Contracts (459)Foreign Currency Transactions (197)

Net Realized Loss (9,263)

Change in Unrealized Appreciation (Depreciation):Investments (Net of Decrease in Deferred Capital Gain Country Tax of $355) (4,014)Foreign Currency Forward Exchange Contracts 2Foreign Currency Translations —@

Net Change in Unrealized Appreciation (Depreciation) (4,012)

Net Realized Loss and Change in Unrealized Appreciation (Depreciation) (13,275)

Net Decrease in Net Assets Resulting from Operations $(11,040)

@ Amount is less than $500.

Statement of Operations




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December 31, 2015

Financial Statements (cont’d) Year Ended Year Ended December 31, 2015 December 31, 2014

(000) (000)

Increase (Decrease) in Net Assets:Operations:

Net Investment Income $ 2,235 $ 2,225Net Realized Gain (Loss) (9,263) 20,666Net Change in Unrealized Appreciation (Depreciation) (4,012) (40,654)

Net Decrease in Net Assets Resulting from Operations (11,040) (17,763)

Distributions from and/or in Excess of:Net Investment Income (2,000) (758)Net Realized Gain — (16,286)

Total Distributions (2,000) (17,044)

Capital Share Transactions:Repurchase of Shares (126,131 and 7,664 shares) (1,811) (126)Common Stock Redeemed through Tender Offering (0 and 3,502,381 shares) — (63,358)

Net Decrease in Net Assets Resulting from Capital Share Transactions (1,811) (63,484)

Total Decrease (14,851) (98,291)

Net Assets:Beginning of Period 230,439 328,730

End of Period (Including Distributions in Excess of Net Investment Income of $(852) and $(462)) $215,588 $230,439

Statements of Changes in Net Assets




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December 31, 2015

Financial HighlightsSelected Per Share Data and Ratios Year Ended December 31,

2015 2014 2013 2012 2011Net Asset Value, Beginning of Period $ 16.45 $ 18.76 $ 17.19 $ 14.87 $ 19.23

Net Investment Income† 0.16 0.15 0.15 0.13 0.13Net Realized and Unrealized Gain (Loss) (0.96) (1.32) 1.60 2.26 (3.49)

Total from Investment Operations (0.80) (1.17) 1.75 2.39 (3.36)

Distributions from and/or in excess of:Net Investment Income (0.14) (0.05) (0.22) (0.10) —Net Realized Gain — (1.16) — — (1.12)

Total Distributions (0.14) (1.21) (0.22) (0.10) (1.12)

Anti-Dilutive Effect of Share Repurchase Program 0.02 0.00‡ 0.02 — 0.01

Anti-Dilutive Effect of Tender Offer — 0.07 0.02 0.03 0.11

Net Asset Value, End of Period $ 15.53 $ 16.45 $ 18.76 $ 17.19 $ 14.87

Per Share Market Value, End of Period $ 13.83 $ 14.85 $ 16.56 $ 14.98 $ 13.10

TOTAL INVESTMENT RETURN:Market Value (5.78)% (3.23)% 12.02% 15.10% (16.53)%Net Asset Value(1) (4.49)% (5.38)% 10.59% 16.36% (16.34)%

RATIOS, SUPPLEMENTAL DATA:

Net Assets, End of Period (Thousands) $215,588 $230,439 $328,730 $319,773 $306,334

Ratio of Expenses to Average Net Assets(2) 1.29%+ 1.32%+ 1.28%+ 1.24%+ 1.24%+Ratio of Net Investment Income to Average Net Assets(2) 0.95%+ 0.82%+ 0.82%+ 0.83%+ 0.74%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.01% 0.00%§ 0.01% 0.02%Portfolio Turnover Rate 46% 79% 42% 54% 77%

(2) Supplemental Information on the Ratios to Average Net Assets: Ratios Before Expenses Waived by Administrator:

Ratio of Expenses to Average Net Assets 1.34% 1.38% 1.33% 1.30% 1.31%Ratio of Net Investment Income to Average Net Assets 0.90% 0.76% 0.77% 0.76% 0.67%

(1) Total investment return based on net asset value per share reflects the effects of changes in net asset value on the performance of theFund during each period, and assumes dividends and distributions, if any, were reinvested. This percentage is not an indication of theperformance of a stockholder’s investment in the Fund based on market value due to differences between the market price of the stockand the net asset value per share of the Fund.

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in

Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate fromMorgan Stanley Affiliates to Average Net Assets.”

§ Amount is less than 0.005%.




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December 31, 2015

Notes to Financial StatementsThe Morgan Stanley Asia-Pacific Fund, Inc. (the “Fund”) wasincorporated in Maryland on February 28, 1994, and isregistered as a diversified, closed-end management investmentcompany under the Investment Company Act of 1940, asamended (the “Act”). The Fund applies investment companyaccounting and reporting guidance. The Fund’s investmentobjective is long-term capital appreciation through investmentsprimarily in equity securities of Asian-Pacific issuers and in debtsecurities issued or guaranteed by Asian Pacific governments orgovernmental entities. To the extent that the Fund invests inderivative instruments that the adviser, Morgan StanleyInvestment Management Inc. (the “Adviser”) and sub-adviser,Morgan Stanley Investment Management Company (“MSIMCompany”) (the “Sub-Adviser”), believe have economiccharacteristics similar to equity securities of Asian-Pacific issuersand in debt securities issued or guaranteed by Asian Pacificgovernments or governmental entities, such investments will becounted for purposes of meeting the Fund’s investmentobjective. To the extent the Fund makes such investments, theFund will be subject to the risks of such derivative instrumentsas described herein.

A. Significant Accounting Policies: The followingsignificant accounting policies are in conformity with U.S.generally accepted accounting principles (“GAAP”). Suchpolicies are consistently followed by the Fund in the preparationof its financial statements. GAAP may require management tomake estimates and assumptions that affect the reportedamounts and disclosures in the financial statements. Actualresults may differ from those estimates.

1. Security Valuation: (1) An equity portfolio securitylisted or traded on an exchange is valued at its latestreported sales price (or at the exchange official closing priceif such exchange reports an official closing price), if therewere no sales on a given day, the security is valued at themean between the last reported bid and asked prices; (2) allother equity portfolio securities for which over-the-counter

(“OTC”) market quotations are readily available are valuedat its latest reported sales price. In cases where a security istraded on more than one exchange, the security is valuedon the exchange designated as the primary market;(3) when market quotations are not readily available,including circumstances under which the Adviser or Sub-Adviser determines that the closing price, last sale price orthe mean between the last reported bid and asked prices arenot reflective of a security’s market value, portfoliosecurities are valued at their fair value as determined ingood faith under procedures established by and under thegeneral supervision of the Fund’s Board of Directors (the“Directors”). Occasionally, developments affecting theclosing prices of securities and other assets may occurbetween the times at which valuations of such securities aredetermined (that is, close of the foreign market on whichthe securities trade) and the close of business of the NewYork Stock Exchange (“NYSE”). If developments occurduring such periods that are expected to materially affectthe value of such securities, such valuations may beadjusted to reflect the estimated fair value of such securitiesas of the close of the NYSE, as determined in good faith bythe Directors or by the Adviser using a pricing serviceand/or procedures approved by the Directors;(4) quotations of foreign portfolio securities, other assetsand liabilities and forward contracts stated in foreigncurrency are translated into U.S. dollar equivalents at theprevailing market rates prior to the close of the NYSE;(5) investments in mutual funds, including the MorganStanley Institutional Liquidity Funds, are valued at the netasset value (“NAV”) as of the close of each business day;and (6) short-term debt securities with remainingmaturities of 60 days or less at the time of purchase may bevalued at amortized cost, unless the Adviser determinessuch valuation does not reflect the securities’ market value,in which case these securities will be valued at their fairmarket value determined by the Adviser.

Merrill Corp - MS Asia-Pacific Fund Annual Report [Funds] 005-45151 12-31-2015 ED [AUX] | pweakly | 24-Feb-16 21:40 | 16-1920-12.ea | Sequence: 1CHKSUM Content: 20899 Layout: 42699 Graphics: No Graphics CLEAN


15


December 31, 2015

Notes to Financial Statements (cont’d)The Directors have responsibility for determining in goodfaith the fair value of the investments, and the Directorsmay appoint others, such as the Fund’s Adviser or avaluation committee, to assist the Directors in determiningfair value and to make the actual calculations pursuant tothe fair valuation methodologies previously approved by theDirectors. Under procedures approved by the Directors, theFund’s Adviser has formed a Valuation Committee whosemembers are approved by the Directors. The ValuationCommittee provides administration and oversight of theFund’s valuation policies and procedures, which arereviewed at least annually by the Directors. Theseprocedures allow the Fund to utilize independent pricingservices, quotations from securities and financial instrumentdealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value ofsecurities and other financial instruments for which marketprices are not readily available. Under these procedures, theValuation Committee convenes on a regular and ad hocbasis to review such securities and considers a number offactors, including valuation methodologies and significantunobservable valuation inputs, when arriving at fair value.The Valuation Committee may employ a market-basedapproach which may use related or comparable assets orliabilities, recent transactions, market multiples, bookvalues, and other relevant information for the investmentto determine the fair value of the investment. Anincome-based valuation approach may also be used inwhich the anticipated future cash flows of the investmentare discounted to calculate fair value. Discounts may alsobe applied due to the nature or duration of any restrictionson the disposition of the investments. Due to the inherentuncertainty of valuations of such investments, the fairvalues may differ significantly from the values that wouldhave been used had an active market existed. The ValuationCommittee employs various methods for calibrating these

valuation approaches including a regular review ofvaluation methodologies, key inputs and assumptions,transactional back-testing or disposition analysis, andreviews of any related market activity.

2. Fair Value Measurement: Financial Accounting StandardsBoard (“FASB”) Accounting Standards CodificationTM

(“ASC”) 820, “Fair Value Measurement” (“ASC 820”),defines fair value as the value that the Fund would receive tosell an investment or pay to transfer a liability in a timelytransaction with an independent buyer in the principalmarket, or in the absence of a principal market the mostadvantageous market for the investment or liability.ASC 820 establishes a three-tier hierarchy to distinguishbetween (1) inputs that reflect the assumptions marketparticipants would use in valuing an asset or liabilitydeveloped based on market data obtained from sourcesindependent of the reporting entity (observable inputs) and(2) inputs that reflect the reporting entity’s own assumptionsabout the assumptions market participants would use invaluing an asset or liability developed based on the bestinformation available in the circumstances (unobservableinputs) and to establish classification of fair valuemeasurements for disclosure purposes. Various inputs areused in determining the value of the Fund’s investments. Theinputs are summarized in the three broad levels listed below.

• Level 1 – unadjusted quoted prices in active markets foridentical investments

• Level 2 – other significant observable inputs (includingquoted prices for similar investments, interest rates,prepayment speeds, credit risk, etc.)

• Level 3 – significant unobservable inputs including theFund’s own assumptions in determining the fair value ofinvestments. Factors considered in making thisdetermination may include, but are not limited to,information obtained by contacting the issuer, analysts,



16


December 31, 2015

Notes to Financial Statements (cont’d)or the appropriate stock exchange (for exchange-tradedsecurities), analysis of the issuer’s financial statements orother available documents and, if necessary, availableinformation concerning other securities in similarcircumstances

The inputs or methodology used for valuing securities arenot necessarily an indication of the risk associated withinvesting in those securities and the determination of thesignificance of a particular input to the fair valuemeasurement in its entirety requires judgment andconsiders factors specific to each security.

The following is a summary of the inputs used to value theFund’s investments as of December 31, 2015.

Level 2 Level 1 Other Level 3 Unadjusted significant Significant quoted observable unobservable prices inputs inputs TotalInvestment Type (000) (000) (000) (000)Assets:

Common StocksAerospace &

Defense $ — $ 2,116 $ — $ 2,116Automobiles — 5,593 — 5,593Banks — 33,614 — 33,614Chemicals — 3,084 — 3,084Commercial

Services & Supplies — 3,871 — 3,871

Construction & Engineering — 2,547 — 2,547

Construction Materials — 1,840 — 1,840

Consumer Finance — 1,880 — 1,880

Distributors — 2,335 — 2,335Diversified

Consumer Services 1,273 — — 1,273

Diversified Financial Services — 6,341 — 6,341

Level 2 Level 1 Other Level 3 Unadjusted significant Significant quoted observable unobservable prices inputs inputs TotalInvestment Type (000) (000) (000) (000)Assets: (cont’d)

Common Stocks (cont’d)Diversified

Telecommunication Services $ — $ 3,968 $ — $ 3,968

Electronic Equipment, Instruments & Components — 4,849 — 4,849

Food & Staples Retailing — 2,069 — 2,069

Food Products — 3,681 — 3,681Health Care

Equipment & Supplies — 2,835 — 2,835

Health Care Providers & Services — 439 — 439

Hotels, Restaurants & Leisure — 1,605 — 1,605

Household Durables — 2,560 — 2,560

Independent Power Producers & Energy Traders — 638 — 638

Industrial Conglomerates — 9,893 — 9,893

Information Technology Services — 2,505 — 2,505

Insurance — 14,101 — 14,101Internet &

Catalog Retail 1,689 — — 1,689

Internet Software & Services 1,924 14,187 — 16,111

Machinery 762 2,930 — 3,692Media — 2,315 — 2,315



17


December 31, 2015

Notes to Financial Statements (cont’d) Level 2 Level 1 Other Level 3 Unadjusted significant Significant quoted observable unobservable prices inputs inputs TotalInvestment Type (000) (000) (000) (000)Assets: (cont’d)

Common Stocks (cont’d)Multi-line Retail $ — $ 1,903 $ — $ 1,903Multi-Utilities — 1,615 — 1,615Oil, Gas &

Consumable Fuels — 3,082 — 3,082

Personal Products — 4,965 — 4,965

Pharmaceuticals — 3,709 967 4,676Real Estate

Investment Trusts (REITs) — 3,166 — 3,166

Real Estate Management & Development — 7,652 — 7,652

Semiconductors & Semiconductor Equipment 142 9,341 — 9,483

Software — 1,781 — 1,781Specialty

Retail — 2,461 — 2,461Tech Hardware,

Storage & Peripherals — 15,562 — 15,562

Textiles, Apparel & Luxury Goods — 5,305 — 5,305

Trading Companies & Distributors — 620 — 620

Transportation Infrastructure — 2,695 — 2,695

Wireless Telecommunication Services — 9,783 — 9,783

Total Common Stocks 5,790 205,436 967 212,193

Short-Term InvestmentInvestment

Company 5,754 — — 5,754Total Assets $11,544 $205,436 $967 $217,947

Transfers between investment levels may occur as themarkets fluctuate and/or the availability of data used in aninvestment’s valuation changes. The Fund recognizestransfers between the levels as of the end of the period. Asof December 31, 2015, securities with a total value ofapproximately $967,000 transferred from Level 2 toLevel 3. Securities that were valued using other significantobservable inputs at December 31, 2014 were valued usingsignificant unobservable inputs at December 31, 2015.

Following is a reconciliation of investments in whichsignificant unobservable inputs (Level 3) were used indetermining fair value.

Common Stock (000)Beginning Balance $ —

Purchases —Sales —Amortization of discount —Transfers in 967Transfers out —Corporate actions —Change in unrealized appreciation (depreciation) —Realized gains (losses) —

Ending Balance $967

Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2015 $ —



3. Foreign Currency Translation and Foreign Investments:The books and records of the Fund are maintained in U.S.dollars. Foreign currency amounts are translated into U.S.dollars as follows:

— investments, other assets and liabilities at theprevailing rate of exchange on the valuation date;

— investment transactions and investment income at theprevailing rates of exchange on the dates of suchtransactions.

Although the net assets of the Fund are presented at theforeign exchange rates and market values at the close of theperiod, the Fund does not isolate that portion of the resultsof operations arising as a result of changes in the foreignexchange rates from the fluctuations arising from changesin the market prices of securities held at period end.Similarly, the Fund does not isolate the effect of changes inforeign exchange rates from the fluctuations arising fromchanges in the market prices of securities sold during the

period. Accordingly, realized and unrealized foreigncurrency gains (losses) on investments in securities areincluded in the reported net realized and unrealized gains(losses) on investment transactions and balances.

Net realized gains (losses) on foreign currency transactionsrepresent net foreign exchange gains (losses) from sales andmaturities of foreign currency forward exchange contracts,disposition of foreign currencies, currency gains (losses)realized between the trade and settlement dates on securitiestransactions, and the difference between the amount ofinvestment income and foreign withholding taxes recordedon the Fund’s books and the U.S. dollar equivalent amountsactually received or paid. Net unrealized currency gains(losses) from valuing foreign currency denominated assetsand liabilities at period end exchange rates are reflected as acomponent of unrealized appreciation (depreciation) ininvestments and foreign currency translations in theStatement of Assets and Liabilities. The change inunrealized currency gains (losses) on foreign currency

18


December 31, 2015

Notes to Financial Statements (cont’d)The following table presents additional information about valuation techniques and inputs used for investments that aremeasured at fair value and categorized within Level 3 as of December 31, 2015. Various valuation techniques were used in thevaluation of certain investments and weighted based on the level of significance.

Fair Value at Impact to December 31, 2015 Valuation Unobservable Selected Valuation from an (000) Technique Input Range Value Increase in InputPharmaceuticals

Market Transaction Common Stock $967 Method Precedent Transaction $0.23 $0.23 $0.23 Increase Weighted Average Discounted Cash Flow Cost of Capital 16.5% 16.5% 16.5% Decrease Long-Term Growth Rate 2.0% 3.0% 2.5% Increase Market Comparable Companies Enterprise Value/EBITDA 11.5x 15.8x 11.5x Increase Discount for Lack of Marketability/Company Specific Risk 30.0% 30.0% 30.0% Decrease



19


December 31, 2015

Notes to Financial Statements (cont’d)translations for the period is reflected in the Statement ofOperations.

A significant portion of the Fund’s net assets consist ofsecurities of issuers located in Asia which are denominatedin foreign currencies. Changes in currency exchange rateswill affect the value of and investment income from suchsecurities. In general, Asian securities are subject to greaterprice volatility, limited capitalization and liquidity, andhigher rates of inflation than securities of companies basedin the United States. In addition, Asian securities may besubject to substantial governmental involvement in theeconomy and greater social, economic and politicaluncertainty. Such securities may be concentrated in alimited number of countries and regions and may varythroughout the year.

Governmental approval for foreign investments may berequired in advance of making an investment under certaincircumstances in some countries, and the extent of foreigninvestments in domestic companies may be subject tolimitation in other countries. Foreign ownershiplimitations also may be imposed by the charters ofindividual companies to prevent, among other concerns,violations of foreign investment limitations. As a result, anadditional class of shares (identified as “Foreign” in thePortfolio of Investments) may be created and offered forinvestment. The “local” and “foreign shares” market valuesmay differ. In the absence of trading of the foreign shares insuch markets, the Fund values the foreign shares at theclosing exchange price of the local shares.

4. Derivatives: The Fund may, but is not required to, usederivative instruments for a variety of purposes, includinghedging, risk management, portfolio management or to earnincome. Derivatives are financial instruments whose value isbased, in part, on the value of an underlying asset, interest

rate, index or financial instrument. Prevailing interest ratesand volatility levels, among other things, also affect the valueof derivative instruments. A derivative instrument often hasrisks similar to its underlying asset and may have additionalrisks, including imperfect correlation between the value ofthe derivative and the underlying asset, risks of default by thecounterparty to certain transactions, magnification of lossesincurred due to changes in the market value of the securities,instruments, indices or interest rates to which the derivativeinstrument relates, risks that the transactions may not beliquid and risks arising from margin requirements. The useof derivatives involves risks that are different from, andpossibly greater than, the risks associated with other portfolioinvestments. Derivatives may involve the use of highlyspecialized instruments that require investment techniquesand risk analyses different from those associated with otherportfolio investments. All of the Fund’s holdings, includingderivative instruments, are marked-to-market each day withthe change in value reflected in unrealized appreciation(depreciation). Upon disposition, a realized gain or loss isrecognized.

Certain derivative transactions may give rise to a form ofleverage. Leverage magnifies the potential for gain and therisk of loss. Leverage associated with derivative transactionsmay cause the Fund to liquidate portfolio positions when itmay not be advantageous to do so to satisfy its obligations orto meet earmarking or segregation requirements, pursuant toapplicable Securities and Exchange Commission rules andregulations, or may cause the Fund to be more volatile thanif the Fund had not been leveraged. Although the Adviserand/or Sub-Adviser seek to use derivatives to further theFund’s investment objectives, there is no assurance that theuse of derivatives will achieve this result.



20


December 31, 2015

Notes to Financial Statements (cont’d)Following is a description of the derivative instruments andtechniques that the Fund used during the period and theirassociated risks:

Foreign Currency Forward Exchange Contracts: Inconnection with its investments in foreign securities, theFund also entered into contracts with banks, brokers ordealers to purchase or sell securities or foreign currencies ata future date. A foreign currency forward exchange contract(“currency contract”) is a negotiated agreement between thecontracting parties to exchange a specified amount ofcurrency at a specified future time at a specified rate. Therate can be higher or lower than the spot rate between thecurrencies that are the subject of the contract. Currencycontracts may be used to protect against uncertainty in thelevel of future foreign currency exchange rates or to gain ormodify exposure to a particular currency. To the extenthedged by the use of currency contracts, the precisematching of the currency contract amounts and the value ofthe securities involved will not generally be possible becausethe future value of such securities in foreign currencies willchange as a consequence of market movements in the valueof those securities between the date on which the contract isentered into and the date it matures. Furthermore, suchtransactions may reduce or preclude the opportunity forgain if the value of the currency should move in thedirection opposite to the position taken. There is additionalrisk to the extent that currency contracts create exposure tocurrencies in which the Fund’s securities are notdenominated. Unanticipated changes in currency pricesmay result in poorer overall performance for the Fund thanif it had not entered into such contracts. The use ofcurrency contracts involves the risk of loss from theinsolvency or bankruptcy of the counterparty to thecontract or the failure of the counterparty to makepayments or otherwise comply with the terms of thecontract. A currency contract is marked-to-market daily andthe change in market value is recorded by the Fund as

unrealized gain or loss. The Fund records realized gains(losses) when the currency contract is closed equal to thedifference between the value of the currency contract at thetime it was opened and the value at the time it was closed.

FASB ASC 815, “Derivatives and Hedging” (“ASC 815”),is intended to improve financial reporting about derivativeinstruments by requiring enhanced disclosures to enableinvestors to better understand how and why the Fund usesderivative instruments, how these derivative instrumentsare accounted for and their effects on the Fund’s financialposition and results of operations.

The following tables set forth by primary risk exposure theFund’s realized gains (losses) and change in unrealizedappreciation (depreciation) by type of derivative contractfor the year ended December 31, 2015 in accordance withASC 815.

Realized Gain (Loss)

Primary Risk Derivative ValueExposure Type (000)

Foreign Currency Currency Risk Forward Exchange Contracts $(459)

Change in Unrealized Appreciation (Depreciation)

Primary Risk Derivative ValueExposure Type (000)

Foreign Currency Currency Risk Forward Exchange Contracts $2

For the year ended December 31, 2015, the approximateaverage monthly amount outstanding for each derivativetype is as follows:

Foreign Currency Forward Exchange Contracts:Average monthly principal amount .....................$3,135,000

5. Indemnifications: The Fund enters into contracts thatcontain a variety of indemnifications. The Fund’s maximumexposure under these arrangements is unknown. However,



21


December 31, 2015

Notes to Financial Statements (cont’d)the Fund has not had prior claims or losses pursuant tothese contracts and expects the risk of loss to be remote.

6. Dividends and Distributions to Stockholders:Dividend income and distributions to stockholders arerecorded on the ex-dividend date. Dividends from netinvestment income, if any, are declared and paid annually.Net realized capital gains, if any, are distributed at leastannually.

7. Other: Security transactions are accounted for on thedate the securities are purchased or sold. Investments innew Indian securities are made by making applications inthe public offerings. The issue price, or a portion thereof, ispaid at the time of application and reflected as shareapplication money on the Statement of Assets andLiabilities, if any. Upon allotment of the securities, thisamount plus any remaining amount of issue price isrecorded as cost of investments. Realized gains (losses) onthe sale of investment securities are determined on thespecific identified cost basis. Interest income is recognizedon the accrual basis. Dividend income and distributions arerecorded on the ex-dividend date (except certain dividendswhich may be recorded as soon as the Fund is informed ofsuch dividends) net of applicable withholding taxes.

The Fund owns shares of real estate investment trusts(“REITs”) which report information on the source of theirdistributions annually in the following calendar year. Aportion of distributions received from REITs during theyear is estimated to be a return of capital and is recorded asa reduction of their cost.

B. Advisory/Sub-Advisory Fees: The Adviser, awholly-owned subsidiary of Morgan Stanley, provides the Fundwith advisory services under the terms of an InvestmentAdvisory Agreement, calculated weekly and payable monthly, atan annual rate of 1.00% of the Fund’s average weekly net assets.

The Adviser has entered into a Sub-Advisory Agreement withthe Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley.The Sub-Adviser provides the Fund with advisory servicessubject to the overall supervision of the Adviser and the Fund’sOfficers and Directors. The Adviser pays the Sub-Adviser on amonthly basis a portion of the net advisory fees the Adviserreceives from the Fund.

C. Administration Fees: The Adviser also serves asAdministrator to the Fund and provides administrative servicespursuant to an Administration Agreement for an annual fee,accrued daily and paid monthly, of 0.08% of the Fund’s averageweekly net assets. The Adviser has agreed to limit theadministration fee through a waiver so that it will be no greaterthan the previous administration fee of 0.02435% of the Fund’saverage weekly net assets plus $24,000 per annum. This waivermay be terminated at any time. For the year endedDecember 31, 2015, approximately $107,000 of administrationfees were waived pursuant to this arrangement.

Under a Sub-Administration Agreement between theAdministrator and State Street Bank and Trust Company (“StateStreet”), State Street provides certain administrative services tothe Fund. For such services, the Administrator pays State Streeta portion of the fee the Administrator receives from the Fund.

D. Custodian Fees: State Street (the “Custodian”) and itsaffiliates serve as Custodian for the Fund. The Custodian holdscash, securities, and other assets of the Fund as required by theAct. Custody fees are payable monthly based on assets held incustody, investment purchases and sales activity and accountmaintenance fees, plus reimbursement for certain out-of-pocketexpenses.

E. Security Transactions and Transactions with Affiliates:For the year ended December 31, 2015, purchases and sales ofinvestment securities for the Fund, other than long-term U.S.Government securities and short-term investments, wereapproximately $106,523,000 and $119,007,019, respectively.



22


December 31, 2015

Notes to Financial Statements (cont’d)There were no purchases and sales of long-term U.S.Government securities for the year ended December 31, 2015.

The Fund invests in the Institutional Class of the MorganStanley Institutional Liquidity Funds — Money MarketPortfolio (the “Liquidity Funds”), an open-end managementinvestment company managed by the Adviser. Advisory fees paidby the Fund are reduced by an amount equal to its pro-ratashare of the advisory and administration fees paid by the Funddue to its investments in the Liquidity Funds. For the yearended December 31, 2015, advisory fees paid were reduced byapproximately $4,000 relating to the Fund’s investment in theLiquidity Funds.

A summary of the Fund’s transactions in shares of the LiquidityFunds during the year ended December 31, 2015 is as follows:

Value ValueDecember 31, Purchases Dividend December 31, 2014 at Cost Sales Income 2015 (000) (000) (000) (000) (000)

$9,777 $46,946 $50,969 $8 $5,754

During the year ended December 31, 2015, the Fund incurredapproximately $60,000 in brokerage commissions with MorganStanley & Co., LLC, an affiliate of the Adviser/Administratorand Sub-Adviser, for portfolio transactions executed on behalf ofthe Fund.

The Fund has an unfunded Deferred Compensation Plan (the“Compensation Plan”), which allows each independent Directorto defer payment of all, or a portion, of the fees he or she receivesfor serving on the Board of Directors. Each eligible Directorgenerally may elect to have the deferred amounts credited with areturn equal to the total return on one or more of the MorganStanley funds that are offered as investment options under theCompensation Plan. Appreciation/depreciation and distributionsreceived from these investments are recorded with an offsettingincrease/decrease in the deferred compensation obligation and donot affect the NAV of the Fund.

F. Federal Income Taxes: It is the Fund’s intention tocontinue to qualify as a regulated investment company anddistribute all of its taxable income. Accordingly, no provision forFederal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries inwhich it invests. Such taxes are generally based on incomeand/or capital gains earned or repatriated. Taxes are accruedbased on net investment income, net realized gains and netunrealized appreciation as such income and/or gains are earned.Taxes may also be based on transactions in foreign currency andare accrued based on the value of investments denominated insuch currency.

FASB ASC 740-10, “Income Taxes — Overall”, sets forth aminimum threshold for financial statement recognition of thebenefit of a tax position taken or expected to be taken in a taxreturn. Management has concluded there are no significantuncertain tax positions that would require recognition in thefinancial statements. If applicable, the Fund recognizes interestaccrued related to unrecognized tax benefits in “InterestExpense” and penalties in “Other Expenses” in the Statement ofOperations. The Fund files tax returns with the U.S. InternalRevenue Service, New York and various states. Each of the taxyears in the four-year period ended December 31, 2015, remainssubject to examination by taxing authorities.

The tax character of distributions paid may differ from thecharacter of distributions shown in the Statements of Changes inNet Assets due to short-term capital gains being treated asordinary income for tax purposes. The tax character ofdistributions paid during fiscal years 2015 and 2014 was asfollows:

2015 Distributions 2014 Distributions Paid From: Paid From:

Ordinary Long-Term Ordinary Long-Term Income Capital Gain Income Capital Gain (000) (000) (000) (000)

$2,000 — $758 $16,286



23


December 31, 2015

Notes to Financial Statements (cont’d)The amount and character of income and gains to be distributedare determined in accordance with income tax regulations whichmay differ from GAAP. These book/tax differences are eitherconsidered temporary or permanent in nature.

Temporary differences are attributable to differing book and taxtreatments for the timing of the recognition of gains (losses) oncertain investment transactions and the timing of thedeductibility of certain expenses.

Permanent differences, primarily due to differing treatments ofgains (losses) related to foreign currency transactions and oncertain equity securities designated as issued by passive foreigninvestment companies, resulted in the following reclassificationsamong the components of net assets at December 31, 2015:

Distributions in Excess of Accumulated Net Investment Net Realized Paid-in- Income Loss Capital (000) (000) (000)

$(625) $625 $(—@)

@ Amount is less than $500.

At December 31, 2015, the Fund had no distributable earningson a tax basis.

At December 31, 2015, the Fund had available for Federalincome tax purposes unused short term and long term capitallosses of approximately $9,431,000 and $1,896,000,respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offsetany future capital gains realized, no capital gains tax liability willbe incurred by the Fund for gains realized and not distributed.To the extent that capital gains are offset, such gains will not bedistributed to the stockholders.

Capital losses and specified ordinary losses, including currencylosses, incurred after October 31 but within the taxable year aredeemed to arise on the first day of the Fund’s next taxable year.

For the year ended December 31, 2015, the Fund deferred toJanuary 1, 2016 for U.S. Federal income tax purposes thefollowing losses:

Post-October Currency And Specified Post-October Ordinary Capital Losses Losses (000) (000)

$17 —

G. Other: On January 23, 1998, the Fund commenced ashare repurchase program for purposes of enhancing stockholdervalue and reducing the discount at which the Fund’s shares tradefrom their NAV. During the year ended December 31, 2015, theFund repurchased 126,131 of its shares at an average discount of12.64% from NAV. Since the inception of the program, theFund has repurchased 22,295,577 of its shares at an averagediscount of 17.04% from NAV. The Directors regularly monitorthe Fund’s share repurchase program as part of their review andconsideration of the Fund’s premium/discount history. TheFund expects to continue to repurchase its outstanding shares atsuch time and in such amounts as it believes will further theaccomplishment of the foregoing objectives, subject to review bythe Directors.

On March 6, 2014, the Fund announced the commencement ofa tender offer by the Fund to acquire in exchange for cash up to20% of the Fund’s outstanding shares at a price equal to 98.5%of the Fund’s NAV as of the close of regular trading on the NewYork Stock Exchange on the business day immediately followingthe day the offer expires. On April 2, 2014, the Fund completedthe tender offer. The Fund accepted 3,502,381 shares forpayment which represented 20% of the Fund’s then outstandingshares. Final payment was made on April 10, 2014 at $18.09 pershare, representing 98.5% of the NAV on April 3, 2014.

At December 31, 2015, the Fund record owners of 10% orgreater. Investment activities of these stockholders can have a



24


December 31, 2015

Notes to Financial Statements (cont’d)material impact on the Fund. The aggregate percentage of suchowners was 35.4%.

H. Results of Annual Meeting of Stockholders (unaudited):On June 16, 2015, an annual meeting of the Fund’sstockholders was held for the purpose of voting on the followingmatter, the results of which were as follows:

Election of Directors by all stockholders:

For Against

Nancy C. Everett 10,096,034 1,607,516Michael F. Klein 8,689,079 3,014,471W. Allen Reed 8,694,612 3,008,938

Federal Tax Notice (unaudited)

For Federal income tax purposes, the following information isfurnished with respect to the distributions paid by the Fundduring its taxable year ended December 31, 2015. For corporateshareholders 3.10% of the dividends qualified for the dividendsreceived deduction.

For Federal income tax purposes, the following information isfurnished with respect to the Fund’s earnings for its taxable yearended December 31, 2015. When distributed, certain earningsmay be subject to a maximum tax rate of 15% as provided forby the Jobs and Growth Tax Relief Reconciliation Act of 2003.The Fund designated up to a maximum of approximately$2,515,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits ofapproximately $515,000 and has derived net income fromsources within foreign countries amounting to approximately$5,645,000.

In January, the Fund provides tax information to stockholdersfor the preceding calendar year.



25


December 31, 2015

Notes to Financial Statements (cont’d)For More Information About Portfolio Holdings(unaudited)

The Fund provides a complete schedule of portfolio holdings inits semi-annual and annual reports within 60 days of the end ofthe Fund’s second and fourth fiscal quarters. The semi-annualreports and the annual reports are filed electronically with theSecurities and Exchange Commission (SEC) on Form N-CSRSand Form N-CSR, respectively. Morgan Stanley also delivers thesemi-annual and annual reports to Fund stockholders and makesthese reports available on its public website,www.morganstanley.com/im. Each Morgan Stanley fund alsofiles a complete schedule of portfolio holdings with the SEC forthe Fund’s first and third fiscal quarters on Form N-Q. MorganStanley does not deliver the reports for the first and third fiscalquarters to stockholders, nor are the reports posted to theMorgan Stanley public website. You may, however, obtain theForm N-Q filings (as well as the Form N-CSR and N-CSRSfilings) by accessing the SEC’s website, www.sec.gov. You mayalso review and copy them at the SEC’s Public ReferenceRoom in Washington, DC. Information on the operation of theSEC’s Public Reference Room may be obtained by calling theSEC toll free at 1(800) SEC-0330. You can also request copiesof these materials, upon payment of a duplicating fee, byelectronic request at the SEC’s e-mail address([email protected]) or by writing the public reference sectionof the SEC, Washington, DC 20549-0102.

In addition to filing a complete schedule of portfolio holdingswith the SEC each fiscal quarter, the Fund makes portfolioholdings information available by providing the information onits public website, www.morganstanley.com/im. The Fundprovides a complete schedule of portfolio holdings on the publicwebsite on a monthly basis at least 15 calendar days aftermonth-end and under other conditions as described in theFund’s policy on portfolio holdings disclosure. You may obtaincopies of the Fund’s monthly website postings, by calling tollfree 1(800) 231-2608.

Proxy Voting Policy and Procedures and Proxy VotingRecord (unaudited)

A copy of (1) the Fund’s policies and procedures with respect tothe voting of proxies relating to the Fund’s portfolio securities;and (2) how the Fund voted proxies relating to portfoliosecurities during the most recent twelve-month period endedJune 30, is available without charge, upon request, by calling tollfree 1(800) 231-2608 or by visiting our website atwww.morganstanley.com/im. This information is also availableon the SEC’s web site at www.sec.gov.



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December 31, 2015

Report of Independent Registered Public Accounting FirmTo the Stockholders and Board of Directors ofMorgan Stanley Asia-Pacific Fund, Inc.

We have audited the accompanying statement of assets and liabilities of Morgan Stanley Asia-Pacific Fund, Inc. (the “Fund”),including the portfolio of investments, as of December 31, 2015, and the related statement of operations for the year then ended, thestatements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the fiveyears in the period then ended. 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 the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements andfinancial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control overfinancial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theFund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accountingprinciples used and significant estimates made by management, and evaluating the overall financial statement presentation. Ourprocedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodian and others orby other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonablebasis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financialposition of Morgan Stanley Asia-Pacific Fund, Inc. at December 31, 2015, the results of its operations for the year then ended, thechanges in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in theperiod then ended, in conformity with U.S. generally accepted accounting principles.

Boston, MassachusettsFebruary 26, 2016

Merrill Corp - MS Asia-Pacific Fund Annual Report [Funds] 005-45151 12-31-2015 ED [AUX] | pweakly | 24-Feb-16 21:40 | 16-1920-12.fa | Sequence: 1CHKSUM Content: 625 Layout: 65155 Graphics: 63324 CLEAN

JOB: 16-1920-12 CYCLE#;BL#: 5; 0 TRIM: 7.5" x 8.75" COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: Ernst_Young_sig.eps V1.5

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December 31, 2015

Portfolio Management (unaudited)The Fund is managed within the Emerging Markets Equity team. The team consists of portfolio managers and analysts. Currentmembers of the teams jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are May Yu, an ExecutiveDirector of the Adviser, Munib Madni, a Managing Director of MSIM Company, and Samuel Rhee, a Managing Director of MSIMCompany.

Ms. Yu has been associated with the Adviser in an investment management capacity since June 2013. Prior to June 2013, Ms. Yu hadbeen associated with MSIM Company in an investment management capacity. She began managing the Fund in August 2012. Prior toAugust 2012, Ms. Yu was lead portfolio manager at China International Capital Corporation from February 2011 to August 2012.From September 2006 to February 2011, Ms. Yu was associated with MSIM Company in an investment management capacity.Mr. Madni has been associated with MSIM Company in an investment management capacity since February 2005 and began managingthe Fund in May 2012. Mr. Rhee has been associated with MSIM Company in an investment management capacity since July 2005and began managing the Fund in May 2012.

Merrill Corp - MS Asia-Pacific Fund Annual Report [Funds] 005-45151 12-31-2015 ED [AUX] | pweakly | 24-Feb-16 21:40 | 16-1920-12.fa | Sequence: 2CHKSUM Content: 1496 Layout: 6193 Graphics: No Graphics CLEAN


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December 31, 2015

Investment Policy (unaudited)DerivativesThe Fund may, but it is not required to, use derivative instruments for a variety of purposes, including hedging, risk management,portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of anunderlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, alsoaffect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may haveadditional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by thecounterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments,indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising frommargin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated withother portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques andrisk analyses different from those associated with other portfolio investments. In addition, proposed regulatory changes by the SECrelating to a mutual fund’s use of derivatives could potentially limit or impact the Fund’s ability to invest in derivatives and adverselyaffect the value or performance of the Fund or its derivative investments.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss.Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageousto do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable SEC rules and regulations,or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives tofurther the Fund’s investment objective, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Fund may use and their associated risks:

Foreign Currency Forward Exchange Contracts. In connection with its investments in foreign securities, the Fund also may enter intocontracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forwardexchange contract (“currency contract”) is a negotiated agreement between the contracting parties to exchange a specified amount ofcurrency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that arethe subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currencyexchange rates or to gain or modify exposure to a particular currency. The Fund may also invest in non-deliverable foreign currencyforward exchange contracts (“NDFs”). NDFs are similar to other foreign currency forward exchange contracts, but do not require orpermit physical delivery of currency upon settlement. Instead, settlement is made in cash based on the difference between thecontracted exchange rate and the spot foreign exchange rate at settlement. In addition, the Fund may use cross currency hedging orproxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currencyhedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes orto establish an active exposure to the exchange rate between any two currencies. To the extent hedged by the use of currency contracts,the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible becausethe future value of such securities in foreign currencies will change as a consequence of market movements in the value of those



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Investment Policy (unaudited) (cont’d)securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduceor preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There isadditional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in thedirection opposite to the position taken and that currency contracts create exposure to currencies in which the Fund’s securities are notdenominated. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to thecontract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract.

Futures. A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset,reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease intandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settledthrough either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount onthe settlement date. A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment andeven a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to thederivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return,and the potential loss from futures contracts can exceed the Fund’s initial investment in such contracts. No assurance can be given thata liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Fund of margindeposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

Structured Investments. The Fund also may invest a portion of its assets in structured investments. A structured investment is aderivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structuredinvestments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities.The Fund will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity ormarket when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structuredinvestments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investmentsin structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bearrisks of the underlying investment and are subject to issuer or counterparty risk because the Fund is relying on the creditworthiness ofsuch issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinlytraded or have a limited trading market and may have the effect of increasing the Fund’s illiquidity to the extent that the Fund, at aparticular point in time, may be unable to find qualified buyers for these securities.

Special Risks Related to Cyber SecurityThe Fund and its service providers are susceptible to cyber security risks that include, among other things, theft, unauthorizedmonitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks;unauthorized access to relevant systems; compromises to networks or devices that the Fund and its service providers use to service theFund’s operations; or operational disruption or failures in the physical infrastructure or operating systems that support the Fund andits service providers. Cyber attacks against or security breakdowns of the Fund or its service providers may adversely impact the Fund



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Investment Policy (unaudited) (cont’d)and its stockholders, potentially resulting in, among other things, financial losses; the inability of Fund stockholders to transactbusiness and the Fund to process transactions; inability to calculate the Fund’s NAV; violations of applicable privacy and other laws;regulatory fines, penalties, reputational damage, reimbursement or other compensation costs; and/or additional compliance costs. TheFund may incur additional costs for cyber security risk management and remediation purposes. In addition, cyber security risks mayalso impact issuers of securities in which the Fund invests, which may cause the Fund’s investment in such issuers to lose value. Therecan be no assurance that the Fund or its service providers will not suffer losses relating to cyber attacks or other information securitybreaches in the future.

Foreign and Emerging Market SecuritiesInvesting in the securities of foreign issuers, particularly those located in emerging market or developing countries, entails the risk thatnews and events unique to a country or region will affect those markets and their issuers. The value of the Fund’s shares may varywidely in response to political and economic factors affecting companies in foreign countries. These same events will not necessarilyhave an effect on the U.S. economy or similar issuers located in the United States. In addition, investments in certain foreign markets,which have historically been considered stable, may become more volatile and subject to increased risk due to ongoing developmentsand changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets hasincreased the probability that adverse developments and conditions in one country or region will affect the stability of economies andfinancial markets in other countries or regions.

Investments in foreign markets entail special risks such as currency, political, economic and market risks. There also may be greatermarket volatility, less reliable financial information, higher transaction and custody costs, decreased market liquidity and lessgovernment and exchange regulation associated with investments in foreign markets. In addition, investments in certain foreignmarkets, which have historically been considered stable, may become more volatile and subject to increased risk due to ongoingdevelopments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financialmarkets has increased the probability that adverse developments and conditions in one country or region will affect the stability ofeconomies and financial markets in other countries or regions. Certain foreign markets may rely heavily on particular industries orforeign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular countryor countries, organizations, entities and/or individuals, changes in international trading patterns, trade barriers, and other protectionistor retaliatory measures. Economic sanctions could, among other things, effectively restrict or eliminate the Fund’s ability to purchaseor sell securities or groups of securities for a substantial period of time, and may make the Fund’s investments in such securities harderto value. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capitalcontrols, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments ofcertain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors orindustries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which wouldadversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Certain foreign investments maybecome less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund,particularly during periods of market turmoil. When the Fund holds illiquid investments, its portfolio may be harder to value. The



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Investment Policy (unaudited) (cont’d)risks of investing in emerging market countries are greater than risks associated with investments in foreign developed countries. Inaddition, the Fund’s investments in foreign issuers may be denominated in foreign currencies and therefore, to the extent unhedged,the value of the investment will fluctuate with the U.S. dollar exchange rates.

Shanghai-Hong Kong Stock Connect ProgramThe Shanghai-Hong Kong Stock Connect program (“Stock Connect”) allows non-Chinese investors (such as the Fund) to purchasecertain Shanghai Stock Exchange-listed equities via brokers in Hong Kong. Although Stock Connect is the first program allowing non-Chinese investors to trade Chinese equities without a license, purchases of securities through Stock Connect are subject to market-wide quota limitations, which may prevent the Fund from purchasing Stock Connect securities when it is otherwise advantageous todo so. An investor cannot purchase and sell the same security on the same trading day, which may restrict the Fund’s ability to investin China A-shares through Stock Connect and to enter into or exit trades where it is advantageous to do so on the same trading day.Because Stock Connect trades are routed through Hong Kong brokers and the Hong Kong Stock Exchange, Stock Connect is affectedby trading holidays in either Shanghai or Hong Kong, and there are trading days in Shanghai when Stock Connect investors will notbe able to trade. As a result, prices of securities purchased through Stock Connect may fluctuate at times when the Fund is unable toadd to or exit its position. Only certain China A-shares are eligible to be accessed through Stock Connect. Such securities may losetheir eligibility at any time, in which case they may be sold but may no longer be purchased through Stock Connect. Because StockConnect is relatively new, its effects on the market for trading China A-shares are uncertain. In addition, the trading, settlement andIT systems required to operate Stock Connect are relatively new and continuing to evolve. In the event that the relevant systems donot function properly, trading through Stock Connect could be disrupted.

Stock Connect is subject to regulation by both Hong Kong and China. There can be no assurance that further regulations will notaffect the availability of securities in the program, the frequency of redemptions or other limitations. Stock Connect transactions arenot covered by investor protection programs of either the Hong Kong or Shanghai Stock Exchanges, although any default by a HongKong broker should be subject to established Hong Kong law. In China, Stock Connect securities are held on behalf of ultimateinvestors (such as the Fund) by the Hong Kong Securities Clearing Company Limited (“HKSCC”) as nominee. While Chineseregulators have affirmed that the ultimate investors hold a beneficial interest in Stock Connect securities, the law surrounding suchrights is in its early stages and the mechanisms that beneficial owners may use to enforce their rights are untested and therefore poseuncertain risks. Further, courts in China have limited experience in applying the concept of beneficial ownership and the lawsurrounding beneficial ownership will continue to evolve as they do so. There is accordingly a risk that as the law is tested anddeveloped, the Fund’s ability to enforce its ownership rights may be negatively impacted. The Fund may not be able to participate incorporate actions affecting Stock Connect securities due to time constraints or for other operational reasons. Similarly, the Fund willnot be able to vote in shareholders’ meetings except through HKSCC and will not be able to attend shareholders’ meetings. StockConnect trades are settled in Renminbi (RMB), the Chinese currency, and investors must have timely access to a reliable supply ofRMB in Hong Kong, which cannot be guaranteed.

Stock Connect trades are either subject to certain pre-trade requirements or must be placed in special segregated accounts that allowbrokers to comply with these pre-trade requirements by confirming that the selling shareholder has sufficient Stock Connect securities



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Investment Policy (unaudited) (cont’d)to complete the sale. If the Fund does not utilize a special segregated account, the Fund will not be able to sell the shares on anytrading day where it fails to comply with the pre-trade checks. In addition, these pre-trade requirements may, as a practical matter,limit the number of brokers that the Fund may use to execute trades. While the Fund may use special segregated accounts in lieu ofthe pre-trade check, many market participants have yet to fully implement IT systems necessary to complete trades involving securitiesin such accounts in a timely manner. Market practice with respect to special segregated accounts is continuing to evolve.

Determination of NAVThe Fund determines the NAV per share as of the close of the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE isopen for business. Shares generally will not be priced on days that the NYSE is closed. If the NYSE is closed due to inclement weather,technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled earlyclosing on a day it has opened for business, the Fund reserves the right to treat such day as a business day and calculate its NAV as ofthe normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains anadequate market to obtain reliable and accurate market quotations. The Fund may elect to price its shares on days when the NYSE isclosed but the primary securities markets on which the Fund’s securities trade remain open.



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Dividend Reinvestment and Cash Purchase Plan (unaudited)Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the Plan), each stockholder will be deemed to have elected, unlessComputershare Trust Company, N.A. (the Plan Agent) is otherwise instructed by the stockholder in writing, to have all distributionsautomatically reinvested in Fund shares. Participants in the Plan have the option of making additional voluntary cash payments to thePlan Agent, annually, in any amount from $100 to $3,000, for investment in Fund shares.

Dividend and capital gain distributions (Distributions) will be reinvested on the reinvestment date in full and fractional shares. If themarket price per share equals or exceeds net asset value per share on the reinvestment date, the Fund will issue shares to participants atnet asset value or, if net asset value is less than 95% of the market price on the reinvestment date, shares will be issued at 95% of themarket price. If net asset value exceeds the market price on the reinvestment date, participants will receive shares valued at marketprice. The Fund may purchase shares of its Common Stock in the open market in connection with dividend reinvestmentrequirements at the discretion of the Board of Directors. Should the Fund declare a Distribution payable only in cash, the Plan Agentwill purchase Fund shares for participants in the open market as agent for the participants.

The Plan Agent’s fees for the reinvestment of a Distribution will be paid by the Fund. However, each participant’s account will becharged a pro rata share of brokerage commissions incurred on any open market purchases effected on such participant’s behalf. Aparticipant will also pay brokerage commissions incurred on purchases made by voluntary cash payments. Although stockholders inthe Plan may receive no cash distributions, participation in the Plan will not relieve participants of any income tax which may bepayable on such dividends or distributions.

In the case of stockholders, such as banks, brokers or nominees, that hold shares for others who are the beneficial owners, the PlanAgent will administer the Plan on the basis of the number of shares certified from time to time by the stockholder as representing thetotal amount registered in the stockholder’s name and held for the account of beneficial owners who are participating in the Plan.

Stockholders who do not wish to have distributions automatically reinvested should notify the Plan Agent in writing. There is nopenalty for non-participation or withdrawal from the Plan, and stockholders who have previously withdrawn from the Plan may rejoinat any time. Requests for additional information or any correspondence concerning the Plan should be directed to the Plan Agent at:

Morgan Stanley Asia-Pacific Fund, Inc.Computershare Trust Company, N.A.P.O. Box 30170College Station, Texas 778421(800) 231-2608



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U.S. Privacy Policy (unaudited)An Important Notice Concerning Our U.S. Privacy PolicyThis privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds(“us”, “our”, “we”).

We are required by federal law to provide you with notice of our U.S. privacy policy (“Policy”). This Policy applies to both our currentand former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from usfor personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individualclients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve astrustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individualswho select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to theUniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and howyou can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you ofany changes to our Policy as required by law.

We Respect Your PrivacyWe appreciate that you have provided us with your personal financial information and understand your concerns about yourinformation. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of clientinformation is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and howcertain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliatedcompanies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloseshow you may limit our affiliates’ use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as “personal information.” We also use theterm “affiliated company” in this notice. An affiliated company is a company in our family of companies and includes companies withthe Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers andcredit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personalinformation by our affiliated companies.

1. What Personal Information Do We Collect From You?We may collect the following types of information about you: (i) information provided by you, including information fromapplications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information



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U.S. Privacy Policy (unaudited) (cont’d)about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtainedfrom our websites, and (vi) information obtained from other sources. For example:

• We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investmentobjectives through applications and other forms you submit to us.

• We may obtain information about account balances, your use of account(s) and the types of products and services you prefer toreceive from us through your dealings and transactions with us and other sources.

• We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

• We may collect background information from and through third-party vendors to verify representations you have made and tocomply with various regulatory requirements.

2. When Do We Disclose Personal Information We Collect About You?We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

a. Information We Disclose to Affiliated Companies. We may disclose personal information that we collect about you to ouraffiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know aboutproducts and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted bylaw. Offers for products and services from affiliated companies are developed under conditions designed to safeguard yourpersonal information.

b. Information We Disclose to Third Parties. We may disclose personal information that we collect about you to nonaffiliatedthird parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketingagreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday businesspurposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to creditbureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on ourbehalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personalinformation about you to the particular purpose for which it was shared and they are not allowed to share personal information aboutyou with others except to fulfill that limited purpose or as may be permitted or required by law.

3. How Do We Protect the Security and Confidentiality of Personal Information We Collect About You?We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguardthe personal information we collect about you. We have internal policies governing the proper handling of client information by



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U.S. Privacy Policy (unaudited) (cont’d)employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you,and we require them to adhere to appropriate security standards with respect to such information.

4. How Can You Limit Our Sharing Certain Personal Information About You With Our AffiliatedCompanies for Eligibility Determination?By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies,personal information that was collected to determine your eligibility for products and services such as your credit reports and otherinformation that you have provided to us or that we may obtain from third parties (“eligibility information”). Eligibility informationdoes not include your identification information or personal information pertaining to our transactions or experiences with you.Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share yourpersonal information, including eligibility information, with our affiliated companies under circumstances that are permitted underapplicable law, such as to process transactions or to service your account.

5. How Can You Limit the Use of Certain Personal Information About You by Our AffiliatedCompanies for Marketing?By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or servicesto you based on personal information we disclose to them. This information may include, for example, your income and account historywith us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we mayshare with them for marketing their products and services to you, our affiliated companies may use your personal information that theyobtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

6. How Can You Send Us an Opt-Out Instruction?If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies’ use ofpersonal information for marketing purposes, as described in this notice, you may do so by:

• Calling us at (800) 231-2608Monday–Friday between 8:30a.m. and 6p.m. (EST)

• Writing to us at the following address:

Computershare Trust Company, N.A.c/o Privacy CoordinatorP.O. Box 30170College Station, Texas 77842

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which theopt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or informationused for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to



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U.S. Privacy Policy (unaudited) (cont’d)process your request, we require that the request be provided by you directly and not through a third party. Once you have informedus about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) untilyou notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructionsto the entire account.

Please understand that if you limit our sharing or our affiliated companies’ use of personal information, you and any joint accountholder(s) may not receive information about our affiliated companies’ products and services, including products or services that couldhelp you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply yourprivacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and willneed to separately notify those companies of your privacy choices for those accounts or relationships.

7. What if an Affiliated Company Becomes a Nonaffiliated Third Party?If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal informationmade to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. Ifyou elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliatedcompanies, your election will not apply to use by any former affiliated company of your personal information in their possession onceit becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONTThe following section supplements our Policy with respect to our individual clients who have a Vermont address andsupersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collectabout you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limitedcircumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third partiesor eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIAThe following section supplements our Policy with respect to our individual clients who have a California address andsupersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed tononaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal informationwith our affiliates to comply with California privacy laws that apply to us.



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Director and Officer Information (unaudited)Independent Directors:

Number of Portfolios in Fund Complex Positions(s) Length of OverseenName, Age and Address of Held with Time Principal Occupation(s) During Past 5 Years by Other Directorships Held byIndependent Director Registrant Served* and Other Relevant Professional Experience Director** Independent Director***

Frank L. Bowman (71)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors1177 Avenue of theAmericasNew York, NY 10036

Director SinceAugust 2006

President, Strategic Decisions, LLC (consulting)(since February 2009); Director or Trustee ofvarious Morgan Stanley Funds (since August2006); Chairperson of the Compliance andInsurance Committee (since October 2015);Formerly, Chairperson of the InsuranceSub-Committee of the Compliance and InsuranceCommittee (February 2007-December 2015);served as President and Chief Executive Officerof the Nuclear Energy Institute (policy organization)(February 2005-November 2008); retired asAdmiral, U.S. Navy after serving over 38 yearson active duty including 8 years as Director ofthe Naval Nuclear Propulsion Program in theDepartment of the Navy and the U.S. Departmentof Energy (1996-2004); served as Chief of NavalPersonnel (July 1994-September 1996); and onthe Joint Staff as Director of Political MilitaryAffairs (June 1992-July 1994); knighted asHonorary Knight Commander of the MostExcellent Order of the British Empire; awardedthe Officier de l’Orde National du Mérite by theFrench Government; elected to the NationalAcademy of Engineering (2009).

98 Director of BP p.l.c.; Director ofNaval and Nuclear Technologies LLP;Director Emeritus of the ArmedServices YMCA; Director of the U.S.Naval Submarine League; Member ofNational Security Advisory Council ofthe Center for U.S. GlobalEngagement and a member of theCNA Military Advisory Board;Chairman of the Charity, J Street CupGolf, Trustee of Fairhaven UnitedMethodist Church; and Director ofother various non-profitorganizations.

Kathleen A. Dennis (62)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors1177 Avenue of theAmericasNew York, NY 10036

Director SinceAugust2006

President, Cedarwood Associates (mutual fundand investment management consulting) (sinceJuly 2006); Chairperson of the Money Market andAlternatives Sub-Committee of the InvestmentCommittee (since October 2006) and Director orTrustee of various Morgan Stanley Funds (sinceAugust 2006); formerly, Senior ManagingDirector of Victory Capital Management(1993-2006).

98 Director of various nonprofitorganizations.



39


December 31, 2015

Director and Officer Information (unaudited) (cont’d)Independent Directors (cont’d):


Director of Cincinnati Bell Inc. andMember, Audit Committee andCompensation Committee; Director ofNorthern Kentucky UniversityFoundation and Member, InvestmentCommittee; Member of ChaseCollege of Law Transactional LawPractice Center Board of Advisors;Director of Best Transport; ChaseCollege of Law Board of Visitors;formerly Member, University ofCincinnati Foundation InvestmentCommittee; Member, Miami UniversityBoard of Visitors (2008-2011);Trustee of Victory Funds (2005-2008)and Chairman, Investment Committee(2007-2008) and Member, ServiceProvider Committee (2005-2008).

98Chairman and Chief Executive Officer, OpusCapital Group (since January 1996); andformerly, Director, Capvest Venture Fund, LP(May 2000-December 2011); Partner, AdenaVentures, LP (July 1999-December 2010);Director, The Victory Funds (February 2005-July 2008).

SinceJanuary 2015

DirectorJakki L. Haussler (58)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors1177 Avenue of theAmericasNew York, NY 10036

Member of Virginia CommonwealthUniversity School of BusinessFoundation; formerly, Member ofVirginia Commonwealth UniversityBoard of Visitors (2013-2015);Member of Committee on Directorsfor Emerging Markets Growth Fund,Inc. (2007-2010); Chairperson ofPerformance Equity Management,LLC (2006-2010); and Chairperson,GMAM Absolute Return StrategiesFund, LLC (2006-2010).

98Chief Executive Officer, Virginia CommonwealthUniversity Investment Company (since November2015); Owner, OBIR, LLC (investmentmanagement consulting) (since June 2014);formerly, Managing Director, BlackRock Inc.(February 2011-December 2013); and ChiefExecutive Officer, General Motors AssetManagement (a/k/a Promark Global Advisors,Inc.) (June 2005-May 2010).

SinceJanuary 2015

DirectorNancy C. Everett (61)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors1177 Avenue of theAmericasNew York, NY 10036

Director of NVR, Inc. (homeconstruction).

100Senior Partner, Johnson Smick International, Inc.(consulting firm); Chairperson of the InvestmentCommittee (since October 2006) and Director orTrustee of various Morgan Stanley Funds (sinceJuly 1991); Co-Chairman and a founder of theGroup of Seven Council (G7C) (internationaleconomic commission); formerly Chairperson ofthe Audit Committee (July 1991-September 2006),Vice Chairman of the Board of Governors of theFederal Reserve System and Assistant Secretaryof the U.S. Treasury.

SinceJuly 1991

DirectorDr. Manuel H. Johnson (67)c/o Johnson SmickInternational, Inc.220 I Street, N.E. —Suite 200Washington, D.C. 20002



40


December 31, 2015



Director of Electro Rent Corporation(equipment leasing). Prior toDecember 31, 2013, Director of TheFord Family Foundation.

101President, Kearns & Associates LLC (investmentconsulting); Chairperson of the Audit Committee(since October 2006) and Director or Trustee ofvarious Morgan Stanley Funds (since August1994); formerly, Deputy Chairperson of the AuditCommittee (July 2003-September 2006) andChairperson of the Audit Committee of variousMorgan Stanley Funds (since August 1994); CFOof the J. Paul Getty Trust.

SinceAugust1994

DirectorJoseph J. Kearns (73)c/o Kearns & AssociatesLLC23823 Malibu RoadS-50-440Malibu, CA 90265

Director of certain investment fundsmanaged or sponsored by AetosCapital, LLC. Director of SanitizedAG and Sanitized Marketing AG(specialty chemicals).

97Managing Director, Aetos Capital, LLC (sinceMarch 2000); Co-President, Aetos AlternativesManagement, LLC (since January 2004); andCo-Chief Executive Officer of Aetos Capital LLC(since August 2013); Chairperson of the FixedIncome Sub-Committee of the InvestmentCommittee (since October 2006) and Director orTrustee of various Morgan Stanley Funds (sinceAugust 2006); formerly, Managing Director,Morgan Stanley & Co. Inc. and Morgan StanleyDean Witter Investment Management, President,various Morgan Stanley Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co.Inc. and Morgan Stanley Dean Witter InvestmentManagement (August 1997-December 1999).

SinceAugust2006

DirectorMichael F. Klein (57)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors1177 Avenue of theAmericasNew York, NY 10036

None.100Chair of the Boards of various Morgan StanleyFunds (since July 2006); Chairperson of theClosed-End Fund Committee (since June 2012)and Director or Trustee of various MorganStanley Funds (since July 1991); formerly,Chairperson of the Insurance Committee (untilJuly 2006), General Partner, TriumphCapital, L.P.(private investment partnership) (1988-2013).

Chair of theBoardssinceJuly 2006andDirectorsinceJuly 1991

Chair of theBoard andDirector

Michael E. Nugent (79)522 Fifth AvenueNew York, NY 10036


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December 31, 2015



Formerly, Trustee and Director ofcertain investment companies in theJP Morgan Fund Complex managedby JP Morgan InvestmentManagement Inc. (1987-2012).

100Chairman, Joe Pietryka, Inc.; Chairperson of theGovernance Committee and Director or Trusteeof various Morgan Stanley Funds (sinceJune 1992).

SinceJune 1992

DirectorFergus Reid (83)c/o Joe Pietryka, Inc.85 Charles Colman Blvd.Pawling, NY 12564

Director of Legg Mason, Inc.;formerly Director of the AuburnUniversity Foundation (2010-2015).

98Chairperson of the Equity Sub-Committee of theInvestment Committee (since October 2006) andDirector or Trustee of various Morgan StanleyFunds (since August 2006); formerly, Presidentand CEO of General Motors Asset Management;Chairman and Chief Executive Officer of the GMTrust Bank and Corporate Vice President ofGeneral Motors Corporation (August 1994-December 2005).

SinceAugust 2006

DirectorW. Allen Reed (68)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors1177 Avenue of theAmericasNew York, NY 10036



42


December 31, 2015

Director and Officer Information (unaudited) (cont’d)Interested Director:

Number of Portfolios in Fund Complex Overseen Positions(s) Length of by Name, Age and Address of Held with Time Interested Other Directorships Held byInterested Director Registrant Served* Principal Occupation(s) During Past 5 Years Director** Interested Director***

* This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.** The Fund Complex includes (as of December 31, 2015) all open-end and closed-end funds (including all of their portfolios) advised by Morgan Stanley

Investment Management Inc. (the “Adviser”) and any funds that have an adviser that is an affiliated person of the Adviser (including, but not limited to,Morgan Stanley AIP GP LP).

*** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

James F. Higgins (68)One New York Plaza,New York, NY 10004

Director SinceJune 2000

Director or Trustee of various Morgan StanleyFunds (since June 2000); Senior Advisor ofMorgan Stanley (since August 2000).

99 Formerly, Director of AXAFinancial, Inc. and AXAEquitable Life InsuranceCompany (2002-2011) andDirector of AXA MONY LifeInsurance Company and AXAMONY Life Insurance Companyof America (2004-2011).



43


December 31, 2015

Director and Officer Information (unaudited) (cont’d)Executive Officers:

Position(s) Held with Length ofName, Age and Address of Executive Officer Registrant Time Served* Principal Occupation(s) During Past 5 Years

* This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves a one-year term, until his or her successor is elected andhas qualified.

John H. Gernon (52)522 Fifth AvenueNew York, NY 10036

President andPrincipalExecutiveOfficer

Since September 2013

President and Principal Executive Officer of the Equity and FixedIncome Funds and the Morgan Stanley AIP Funds (sinceSeptember 2013) and the Liquidity Funds and various moneymarket funds (since May 2014) in the Fund Complex, ManagingDirector of the Adviser; Head of Product (since 2006).

Stefanie V. Chang Yu (49)522 Fifth AvenueNew York, NY 10036

ChiefComplianceOfficer

Since December 1997

Managing Director of the Adviser and various entities affiliatedwith the Adviser; Chief Compliance Officer of various MorganStanley Funds and the Adviser (since January 2014); formerly,Vice President of various Morgan Stanley Funds (December 1997-January 2014).

Managing Director of the Adviser and various entities affiliatedwith the Adviser; Vice President of various Morgan Stanley Funds(since January 2014); formerly, Assistant Secretary of variousMorgan Stanley Funds (October 2004-January 2014).

Since January 2014

Vice PresidentJoseph C. Benedetti (50)522 Fifth AvenueNew York, NY 10036

Executive Director of the Adviser and various entities affiliatedwith the Adviser; Treasurer (since July 2003) and PrincipalFinancial Officer of various Morgan Stanley Funds (sinceSeptember 2002).

Treasurer sinceJuly 2003 andPrincipalFinancial Officersince September2002

Treasurer andPrincipalFinancialOfficer

Francis J. Smith (50)522 Fifth AvenueNew York, NY 10036

Executive Director of the Adviser; Secretary of various MorganStanley Funds (since June 1999).

Since June 1999

SecretaryMary E. Mullin (48)522 Fifth AvenueNew York, NY 10036



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