|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: BIO REFERENCE LABORATORIES INC, 10QSB, 1996-09-12 |
Next: AMERICAN WOODMARK CORP, 10-Q, 1996-09-12 |
10th Anniversary Issue
Emerging Markets Growth Fund SM
Annual Report
For the Year Ended June 30, 1996
Seeks long-term growth of capital by investing in companies operating in
developing countries around the world
Fellow Shareholders:
Fiscal 1996 -- our 10th year -- was a rewarding period for investors in
Emerging Markets Growth Fund. Stock prices in the developing world rebounded,
and the fund recorded a substantial gain for the full fiscal year after
declining in the first six months.
For the 12 months ended June 30, the value of EMGF's shares rose 15.5% assuming
reinvestment of two income dividends totaling $1.30 a share and a capital gain
distribution of $1.27 a share. Meanwhile, a basic measure of stock prices in
the fund's investment universe -- the Morgan Stanley Capital International
Emerging Markets Free (EMF) Index/1/ -- finished the period with a gain of 8.5%
including reinvestment of dividends.
Virtually all of the increase -- for EMGF and for the index -- came in the
final seven months of the fiscal year, following a period of weakness in the
Mexican peso and a devaluation of the Indian rupee. Investor confidence was
strengthened by the fact that Mexico and a number of other countries that have
experienced financial difficulties continue to pursue market-oriented policies
and economic reform.
The fund outpaced the EMF Index in fiscal 1996 chiefly because several of our
biggest investments posted extraordinarily large increases. The biggest single
holding, the Brazilian phone company known as Telebras, rose 112.0% in price
for the 12 months. Our 20 best gainers -- which together represented about 8%
of net assets at the start of the fiscal year -- went up an average of 98.1%;
the 20 weakest stocks -- which accounted for less than 4% of assets -- recorded
an average decline of 59.8%.
12-MONTH RESULTS
With Dividends Reinvested (7/1/95 - 6/30/96)
<TABLE>
<CAPTION>
<S> <C>
EMGF +15.5%
MSCI EMERGING MARKETS +8.5
FREE INDEX
</TABLE>
The fund's holdings in Telebras, and in a number of other securities where we
added to our positions, were increased starting about a year and a half ago.
This was at a time when those investments were out of favor and carried
unusually attractive valuations. We focused our purchases on securities that we
felt were fundamentally sound and could weather a difficult period in many
Latin American as well as some Asian markets.
As it often has in the past, this value-oriented approach paid off. Recently,
as prices have recovered, we have taken profits and reduced our positions in
several of these securities. At the same time, we have added to our investments
in markets where valuations appear more attractive. These include India,
Taiwan, Russia, Czech Republic and South Africa.
On June 30, about 39% of the fund's assets were in the Asia-Pacific region; 37%
were in Latin America; and approximately 15% were in markets elsewhere,
including Eastern Europe. The table on page 4 shows how these percentages
compare with previous years. It also shows that the fund's holdings of cash &
equivalents at the end of fiscal 1996 equaled nearly 10% of net assets; that
figure includes investments in short-term government securities issued by
Poland and Russia. Excluding those two fixed-income holdings, the fund's cash
position amounts to roughly 7%.
The three largest areas of concentration on June 30 were Brazil, Mexico and
India. Between them they accounted for a third of net assets. All three
recorded gains for the 12 months in both U.S. dollars and local currency.
In Brazil, we take encouragement from the fact that President Cardoso's efforts
to stabilize the currency are succeeding. Although wages and employment are
rising, inflation appears to be under control. Privatizations continue, and
restrictions against utility tariff rebalancing have been lifted, enhancing the
potential profitability of both Telebras and Eletrobras, our second-largest
investment, an electric utility holding company.
In Mexico, the rally that has taken place in stock prices mainly reflects
improving economic conditions. While the country still faces difficulties,
inflation and interest rates have declined, the peso has strengthened, and the
government continues to meet its debt obligations. Mexico stands to benefit
substantially from a $1.7 billion loan from the International Monetary Fund
later in calendar 1996.
India, our third-largest country concentration, also experienced a stock market
rally during the latter half of fiscal 1996 after a long and painful decline.
Most of the recovery in equity prices took place in the weeks leading up to
national elections in May. The voting resulted in a coalition government that
so far seems to be pursuing economic policies similar to those of the
long-ruling Congress party. Both before the elections and afterward, we added
to our Indian holdings and now own shares in 35 individual companies in India.
Although stock prices in the fund's investment universe have rebounded
impressively over the past several months, most emerging markets are still well
below the levels of early 1994. Meanwhile, corporate earnings generally have
risen since then, which means that many valuations are lower now, relatively
speaking, than they were when prices were at their peak.
As we look ahead, one area of possible concern is the interest rate outlook.
Long-term rates have moved higher in the U.S. and will bear close watching. We
are mindful that the downswing in emerging markets early in the spring of 1994
coincided with a directional change toward higher U.S. rates.
In June, EMGF's Board of Directors authorized an increase, under certain
conditions, in new shares available for sale in calendar 1996 and 1997 from 25%
to 30% of all outstanding shares available at the end of the previous year. The
Board remains sensitive to the importance of limiting the increase in available
shares so that investment results will not be adversely affected by excessive
inflows of new money.
Finally, we invite your attention to the article beginning on page 5, which
reviews Emerging Markets Growth Fund's first ten years. We hope you will find
it interesting and informative.
Sincerely,
Walter P. Stern
Chairman
Nancy Englander
President
August 9, 1996
/1/ The EMF Index, which is unmanaged, currently tracks stock prices in 22
developing countries with markets open to foreign investors.
Here are the total returns and average annual compound returns with all
distributions reinvested for periods ended June 30, 1996 -- Ten years:
+1,066.31%, or +27.84% a year; 5 years: +141.66%, or +19.30% a year; 12 months:
+15.49%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. All investments are subject
to certain risks. For example, those which include common stocks are affected
by fluctuating stock prices. Investments outside the U.S. (especially those in
developing countries) are subject to additional risks, including currency
fluctuations, political and social instability, differing securities
regulations and accounting standards, limited public information, possible
changes in taxation, and periods of illiquidity. Accordingly, investors should
maintain a long-term perspective.
WHERE THE FUND'S ASSETS ARE INVESTED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENT OF NET ASSETS
Market Value
---------------------------------------------
Market Value of
EMF Index/1/ Holdings 6/30/96
6/30/94 06/30/95 12/31/95 6/30/96 6/30/96 (in thousands)
------- -------- -------- ------- ------------ --------------
ASIA/PACIFIC
China........................... .6% 1.8% 1.4% 1.2% -% $99,362
Hong Kong....................... 1.3 1.0 1.0 .9 - 75,820
India........................... 2.6 5.7 7.0 7.7 7.8 652,448
Indonesia....................... 2.3 4.2 6.4 4.5 5.7 377,878
Malaysia........................ 4.1 4.3 4.2 4.4 17.6 373,235
New Zealand..................... .5 - - - - -
Pakistan........................ - 1.1 1.1 .9 .7 77,250
Philippines..................... 8.2 7.6 7.3 6.4 3.3 542,162
South Korea..................... 7.8 7.0 7.8 5.8 2.5 488,004
Sri Lanka....................... .3 .2 .2 .1 .1 8,934
Taiwan.......................... .8 .8 2.3 2.8 - /2/ 240,336
Thailand........................ 6.5 5.5 4.9 3.7 8.7 309,840
Vietnam......................... - .1 .1 .1 - 6,206
---- ---- ---- ---- ---- ----------
35.0 39.3 43.7 38.5 46.4 3,251,475
---- ---- ---- ---- ---- ----------
LATIN AMERICA
Argentina....................... 6.9 8.3 8.2 5.9 3.8 502,296
Brazil.......................... 20.2 13.7 15.5 14.8 12.5 1,248,775
Chile........................... 3.5 2.2 2.2 1.8 4.8 152,706
Colombia........................ 1.0 .5 .4 .3 .7 25,987
Ecuador......................... - .1 .6 .2 - 17,365
Mexico.......................... 17.7 7.6 9.6 10.3 8.6 868,002
Panama.......................... - .4 .8 .8 - 66,065
Peru............................ .4 1.8 1.9 2.3 1.2 192,154
Venezuela....................... .2 .1 .1 .5 .5 42,847
---- ---- ---- ---- ---- ----------
49.9 34.7 39.3 36.9 32.1 3,116,197
---- ---- ---- ---- ---- ----------
EASTERN EUROPE
Republic of Croatia............. - - - .3 - 24,047
Czech Republic.................. - .1 .1 .3 - 24,486
Hungary......................... - - .4 .4 - 36,590
Poland.......................... - .1 .1 .5 .5 44,399
Russia and former republics of the
Soviet Union/3/................ .2 .7 1.4 3.7 - 317,621
---- ---- ---- ---- ---- ----------
.2 .9 2.0 5.2 .5 447,143
---- ---- ---- ---- ---- ----------
OTHER MARKETS
Gabon........................... .1 - - - - -
Ghana........................... - .4 .3 .4 - 33,585
Greece.......................... 1.3 1.0 1.4 1.1 1.3 92,073
Mauritius....................... - - .1 .1 - 4,646
Morocco......................... - .1 .2 .2 - 14,674
Portugal........................ .1 .3 .3 .5 2.2 45,531
South Africa ................... - .8 2.8 3.5 13.5 294,512
Turkey.......................... 1.2 2.2 1.1 1.6 1.6 135,288
United States................... .1 .1 .1 - - 2,689
Virgin Islands.................. .6 - - - - -
---- ---- ---- ---- ---- ----------
3.4 4.9 6.3 7.4 18.6 622,998
---- ---- ---- ---- ---- ----------
Multi-National.................. .2 1.2 1.1 1.8 155,475
---- ---- ---- ---- ----------
Other/4/........................ 4.1 1.7 1.0 .8 66,432
---- ---- ---- ---- --------
Cash & Equivalents.............. 7.2 17.3 6.6 9.4 790,940
---- ---- ---- ---- --------
TOTAL........................... 100.0% 100.0% 100.0% 100.0% $8,450,660
====== ====== ====== ====== ===========
</TABLE>
/1/ Morgan Stanley Capital International Emerging Markets Free Index also
includes Israel (2.3%) and Jordan (0.1%). A dash indicates that the market is
not included in the index. Source: Morgan Stanley Capital International
Perspective.
/2/ In September, Taiwan will be added to the EMF Index, and South Korea's
weighting in the index will be increased to reflect 50% of that country's
market capitalization instead of 20%.
/3/ Includes investments in companies incorporated outside the region which
have significant operations in the region.
/4/ Includes investments in markets where the holdings represent a percentage
of net assets of less than .05%. Also includes stocks in initial period of
acquisition .
PERCENT CHANGE IN KEY MARKETS /1/
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Twelve months ended 6/30/96 Six months ended 6/30/96
---------------------------- ------------------------------
Expressed in Expressed in Express in Expressed in
U.S. Dollars Local Currency U.S. Dollars Local Currency
------------- -------------- ------------ --------------
Argentina 36.2% 36.2% 14.8% 14.8%
Brazil 31.2 43.3 28.4 32.6
Chile -13.6 -5.3 1.7 2.5
Colombia -17.2 0.9 2.9 11.4
Czech Republic 36.1 45.0 29.7 33.9
Greece 1.6 8.7 4.8 6.6
Hong Kong 22.3 22.3 12.7 12.8
Hungary 59.9 95.3 76.5 94.0
India 6.2 19.1 25.6 25.8
Indonesia 17.5 22.8 16.9 19.0
Jordan -18.8 -17.1 -15.2 -15.1
Malaysia 10.0 12.6 16.2 14.2
Mexico (Free)/2/ 18.9 44.4 15.7 14.1
Pakistan -5.2 7.1 15.9 18.6
Peru 19.6 30.3 8.8 14.2
Philippines (Free)/2/ 11.2 14.1 24.0 23.8
Poland 28.4 49.1 52.0 67.6
Portugal 18.2 26.5 24.5 30.6
South Africa 6.7 27.1 -7.1 10.3
South Korea(Free)/2/ -15.8 -9.9 -14.6 -10.7
Sri Lanka -26.8 -19.1 -15.6 -12.4
Taiwan 25.6 33.8 37.0 38.2
Thailand -8.7 -6.0 -0.4 0.4
Turkey -10.2 66.8 36.5 84.2
Venezuela 31.3 263.1 56.4 116.3
Emerging Markets Growth Fund 15.5 16.4
</TABLE>
/1/ With gross dividends reinvested. All indexes are compiled by Morgan
Stanley Capital International Perspective and are unmanaged.
/2/ The fund is invested in the "free" Mexican, Philippine and South Korean
stock markets, which consist of securities that can be purchased by investors
other than resident nationals.
[LOGO]
ON OUR 10TH ANNIVERSARY...
...we recall the events leading up to the fund's launching in 1986 and recap a
decade of growth and positive results.
[END LOGO]
Emerging Markets Growth Fund's record of success in its first ten years has
been truly remarkable. Net assets have grown from $50 million to more than $8
billion, making the fund the largest of its kind by a wide margin. The number
of shareholders has risen from about a dozen in 1986 to more than 500, while
the value of an investment has increased more than ten-fold. The fund's
lifetime total gain of 1,073.3% works out to an average compound return of
27.7% a year.
These results reflect, to some degree, events that drew huge amounts of capital
into the developing world and could hardly have been foreseen in 1986,
including the sudden collapse of the Soviet empire, the opening up of China,
and the rush to privatize state-owned assets in many countries. However, the
ten-year record is also importantly the product of an intensified investment
research effort, and it clearly validates the premise behind the formation of
the fund: that rapid economic growth in developing countries creates very
attractive opportunities for those who are patient and prepared to accept the
risks associated with this type of investing. The record demonstrates, too,
that a sensible way of capitalizing on those opportunities and minimizing the
risks is through a geographically diversified portfolio of securities rather
than one limited to a single region or country.
[Pull Quote]
Among institutional investors, in 1986 there was little interest in a
multi-country emerging-
markets fund.
[End Pull Quote]
It is useful to remind ourselves just how much things have changed since
Emerging Markets Growth Fund began. In 1986, the Berlin Wall was up and the
Cold War was still being waged. China was unreceptive to Western-style
investing. In Argentina, Mexico, and India, the phone systems were state-owned
bureaucracies. Through-out much of what was then called the Third World, the
generally accepted view was that development should be financed through debt
and guided by government. Equity markets in many developing countries were less
mature than they are today; disclosure requirements, accounting procedures and
mechanisms for protecting investors were less sophisticated; and restrictions
on the flow of capital were considerably more stringent.
Among institutional investors, in 1986 there was little interest in a
multi-country emerging-markets fund. "At the time it was considered a very
radical idea," recalls Nancy Englander, EMGF's current President. Support for
the idea was centered initially around a small group of people at the
International Finance Corporation, the World Bank's private sector affiliate.
For several years, they had been exploring ways to strengthen financial markets
in the developing world. David Gill, who was the IFC's Director of Capital
Markets at the time, says, "We wanted to move beyond the concept of the
single-country fund and encourage the creation of a global fund. As a first
step, we tried to put together a small group of investors who could provide $50
million of seed money."
One of the first prospects the IFC contacted was Deutsche Bank, the largest
publicly owned bank in Germany. Helmut Mader, an EMGF Director who worked in
the bank's New York office in 1985, recalls: "David Gill was like a missionary
traveling the world with zeal, pitching his proposal. When he came to see us, I
expected to just listen politely, but I ended up becoming enthusiastic. I
persuaded my colleagues that we could realize a good return on our investment,
and that this was a project our bank should be in on from the start."
A DECISION TO PROCEED
By mid-1985, Gill and his group had raised about $30 million from a handful of
institutions, and the IFC had committed to investing some of its own money.
"Although we were short of our $50 million target," says Gill, "we decided to
go ahead anyway and start interviewing investment management organizations. We
met with six of them, listened to their presentations, and chose Capital."
In the fall of 1985, Gill and his associates, including Michael Barth, the
IFC's Controller, had to defend their choice against suggestions that the IFC
should run the fund itself. While they were fighting that battle, the Capital
organization was grappling with the issue of whether it should be managing
emerging-markets investments. At the time, its experience with that type of
investment was limited chiefly to Asia. Moreover, there was concern that the
organization's half-century-old reputation for conservative investing might be
severely tarnished someday by a financial crash in a developing country.
[Pull Quote]
We needed more people -- particulary skilled analysts with a variety of
cultural backgrounds and linguistic skills -- and we had to go out and find
them.
[End Pull Quote]
Three arguments were put forth in favor of managing the new fund, according to
David Fisher, who headed Capital's international operations in 1985 and has
since become Chairman of The Capital Group Companies. "First and most
importantly," he says, "an emerging markets fund should be an excellent deal
for investors. Second, in the process of researching companies in these
markets, we would learn things that could help us invest successfully in other
parts of the world. And third, we would establish ourselves as a totally global
investment organization and raise the cost of competing with us."
Those arguments carried the day, and a decision was made at the IFC to select
Capital to manage the assets. Additional seed money was found, bringing the
total to $50 million -- and the stage was set for the launching of EMGF as a
closed-end fund in the spring of 1986.
OVERCOMING OBSTACLES
"At the beginning, we were really feeling our way," says Fisher, who has
managed a portion of EMGF's assets since the fund began. There were numerous
obstacles to contend with, including a lack of liquidity in many stocks, a
shortage of detailed financial information on companies and restrictions on the
importation of capital, as well as other legal and administrative matters. In
Brazil and Chile, separate entities had to be formed to buy local securities.
In Jordan, lists of proposed investments had to be submitted to the king for
his approval.
"Moreover," says Fisher, "we had to develop the capability of doing first-hand
research on hundreds of companies throughout the developing world. That meant
we needed more people -- particularly skilled analysts with a variety of
cultural backgrounds and linguistic skills -- and we had to go out and find
them."
Capital's analysts, new hires as well as veterans, quickly discovered that in
some developing countries they were engaged in pioneering work. One of the
first people hired, Victor Kohn, recalls that on his first Latin American
research trip, he visited 16 companies in his native Chile and in Argentina.
"At 15 of those 16 I was the first analyst they had ever seen," he says. "Some
of the people I met couldn't quite figure out what I was doing there."
Like other investment portfolios managed at Capital, EMGF's portfolio was built
in a deliberate manner, one stock at a time. At the end of calendar 1986, the
fund was 43% invested; two years later the percentage had risen to 77%. At that
point EMGF owned a few Latin American securities; it had not yet expanded into
Eastern Europe or Africa, and it had a heavy concentration in Asia. By the end
of the third year, in 1989, it was about 90% invested; and its total assets had
grown to $500 million as a result of both an inflow of new money and
appreciation in the portfolio. During those three years, the share value rose
179%.
The stepped-up research effort in emerging markets began paying off very
quickly. During EMGF's formative years, its managers were able to identify and
buy a number of high-quality, little-known stocks at attractive prices. The
inflow of new money allowed the fund to move into new markets -- at first in
Asia, and subsequently in Latin America -- without having to sell existing
holdings. Part of the early success, too, has to be credited to fortuitous
timing. Hartmut Giesecke, who manages a portion of the assets, says:
"Immediately after operations began, we started acquiring Thai stocks at a time
when the currency had been devalued and the local market was very depressed. We
were able to buy good companies at three or four times earnings. In Malaysia,
our initial purchases were made just before stock prices recovered from a
decline brought on by a recession. Later, when we began building up our
Brazilian and Chilean holdings, the delays caused by administrative
difficulties worked in our favor. In both countries it turned out that we made
our first large purchases just before the markets there rebounded from a
prolonged slump."
IMPORTANT ADVANCES
In its first decade, EMGF generated positive total returns in nine of ten full
fiscal years. In all nine, the returns were in double digits. The only down
year was fiscal 1995, during Mexico's financial crisis and the worldwide
selloff in emerging markets. While several of the fund's holdings suffered
steep declines during that selloff, the diversified nature of the portfolio
served EMGF very well: the share value slipped just 1.2% in fiscal 1995 with
dividends reinvested.
[Pull Quote]
In its first decade, Emerging Markets Growth Fund generated positive total
returns in nine of ten full fiscal years.
[End Pull Quote]
On a quarterly basis, the ten-year results look similarly impressive, but the
volatility that is inherent in the fund's investment universe becomes somewhat
more apparent. In the 40 quarters between June 1986 and June 1996, EMGF
recorded 29 increases and 11 declines on a reinvested basis. The average
quarterly increase was 12.9%; the average decline, 8.4%. The largest gain --
28.0% -- came in the three months ended December 31, 1993, at a time when
speculative euphoria was sweeping through the markets. The largest decline --
18.1% -- was in the October-December quarter of 1987, a period that included a
severe downturn in stock prices in the industrialized world. It is noteworthy
that throughout the ten years, the vast majority of the fund's shareholders
stayed the course, riding out the periodic downturns and participating in the
long periods of positive results. Many of them also have added to their
holdings from time to time.
[Pull Quote]
The process of growth and progress in the developing world is still in a
relatively early stage.
[End Pull Quote]
Looking back over the ten years, it is clear that EMGF's success has closely
paralleled important advances made by developing countries as a group. While
one can cite exceptions, generally speaking they have: 1) shifted the focus of
their thinking toward free markets; 2) opened their doors somewhat wider to
foreign investors; 3) strengthened their equity markets; 4) improved the
mechanisms for the disclosure of financial information and the protection of
investors; and 5) demonstrated that their economies have the ability to keep
growing even when the industrialized nations experience a slowdown. The gap
between the growth rates of the developing and the industrialized world
increased over the ten years from about 1% in 1986 to around 3 1/2% today.
In much of Asia, accelerating growth and free market policies were in evidence
when EMGF's first decade began; together with the opening up of China, they
have been the primary driving force behind the rise in stock prices in that
region. In Latin America and Eastern Europe, a key driving force has been the
privatization of state-owned assets and the gradual removal of barriers to
investment and commerce. In both places, we have been witnessing an historic
shift away from government-managed economic activity back toward a free
enterprise-oriented approach not unlike that pursued in many countries in those
regions up until the depression of the 1930s.
This process of growth and progress in the developing world is still in a
relatively early stage. In some countries, such as Russia, it is only
beginning; in others -- India, for example -- it is starting to gather serious
momentum. Looking ahead, it seems reasonable, therefore, to expect that the
general atmosphere for investing in emerging markets could remain favorable for
some time. Nonetheless, it should be kept in mind that nearly all of these
markets remain dependent on outside capital. Their financial markets are not
yet fully mature; they are vulnerable to shocks and, on the whole, still quite
volatile. That is why, as the fund enters its second decade, it is important
for shareholders to maintain a long-term perspective on their holdings.
ABOUT THE FUND'S ADVISER:
Capital International, Inc. is one of The Capital Group Companies. These
companies form one of the world's most experienced investment advisory
organizations, with roots dating back to 1931. The organization has been
involved in international investing since the 1950s.
The investment management affiliates of The Capital Group Companies employ a
value-oriented and research-driven approach. They maintain a global investment
intelligence network which employs more than 180 investment professionals based
on three continents. They include analysts and portfolio counselors, born in
more than two dozen countries, who speak a variety of languages. These
professionals travel millions of miles each year, keeping a close watch on
industry trends and government actions and scrutinizing thousands of companies,
including hundreds of firms based in the less-developed countries. This
research effort combines intensive company and industry analysis with a
political and macroeconomic overview, and we believe it has given our family of
companies -- and the funds they manage, including Emerging Markets Growth Fund
- -- an important competitive edge.
EMERGING MARKETS GROWTH FUND
Investment Portfolio - June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Equity-Type Securities
---------------------------------------
INDUSTRY DIVERSIFICATION Common Preferred Convertible Percent of
- ------------------------ Stocks Stocks Bonds Bonds Net Assets
------ --------- ----------- ------ ----------
Telecommunications 10.62% 5.44% -% 0.39% 16.45%
Utilities: Electric & Gas 7.39 2.96 - 0.03 10.38
Banking 8.86 0.60 0.25 - 9.71
Beverages & Tobacco 4.51 0.91 - - 5.42
Energy Sources 4.19 0.64 - - 4.83
Building Materials & Components 2.66 0.23 0.08 - 2.97
Equity Common Trusts 2.61 0.15 - - 2.76
Other Industries 29.51 2.43 0.77 5.41 38.12
----- ----- ----- ----- -----
70.35% 13.36% 1.10% 5.83% 90.64
====== ====== ===== ===== =====
Short-Term securities 9.68
Excess of liabilities over cash and receivables (0.32)
Net Assets 100.00%
=======
</TABLE>
******
TEN LARGEST EQUITY HOLDINGS
<TABLE>
<CAPTION>
<S> <C> <C>
Percent of Gain/Loss
for the Year Ended
Percent of 6/30/96*
Net Assets (in U.S. Dollars)
---------- --------------------
Telecomunicacoes Brasileiras (Telebras) 3.78% 112.02%
Centrais Eletricas Brasileiras (Eletrobras) 2.42 3.64
Telefonos de Mexico 2.34 13.48
Mahanagar Telephone Nigam 1.88 37.83
Philippine Long Distance Telephone 1.36 (18.50)
Korea Electric Power 1.34 4.85
Telecomunicacoes de Sao Paulo SA-Telesp 1.32 66.86
Grupo Televisa 1.31 50.95
Telefonica de Argentina 1.13 19.40
Companhia Energetica de Minas Gerais 1.12 32.88
</TABLE>
*The percent change reflects the increase or decrease in the market price per
share of equity securities held in the portfolio for the entire period. The
actual gain or loss on the total position in the fund may differ from the
percentage shown.
EMERGING MARKETS GROWTH FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Investment Portfolio - June 30, 1996
NUMBER OF
EQUITY - TYPE SECURITIES SHARES OR MARKET PERCENT
(common and preferred stocks PRINCIPAL VALUE OF NET
and convertible debentures) AMOUNT (000) ASSETS
------------ --------- -------
ARGENTINA - 5.35%
Alpargatas SA Industrial y Comercial (1) 5,333,432 $4,002 .05%
Banco Bansud SA B (1) 762,436 8,925 .10
Banco de Galicia y Buenos Aires SA, Class B
(American Depositary Receipts) 1,755,796 45,431 .69
Banco de Galicia y Buenos Aires SA,
7.00% convertible bond August 1, 2002 $12,571,000 13,262
Banco Frances del Rio de la Plata SA 644,000 6,121
Banco Frances del Rio de la Plata SA
(American Depositary Receipts) 1,951,645 56,110 .75
BI SA (acquired 10/31/93, cost: $6,130,000) 6,130 .07
Compania Naviera Perez Companc SACFIMFA, Class B 5,100,148 33,421 .40
Disco SA (American Depositary Receipts) (1) 753,000 16,660 .20
Hidroneuquen SA (acquired 11/11/93, cost: $26,649,000) (1)(2) 29,086,231.09 29,086 .34
IRSA Inversiones y Representaciones SA 26,900 90
IRSA Inversiones y Representaciones SA
(Global Depositary Receipts) 90,849 3,066 .04
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts)
(acquired 11/24/92, cost:$6,835,000) (2) 893,187 10,415
Nortel Inversora SA, Class B, preferred
(American Depositary Receipts)
(acquired 2/27/92, cost: $23,049,000) (2) 1,676,260 21,791 .38
Quilmes Industrial non-voting, preferred (American Depositary 2,150,400 22,042 .26
Shares) (1)
Siderca SAIC 2,195,180 2,987 .03
Telecom Argentina STET-France Telecom SA,
Class B 6,532,272 30,716
Telecom Argentina STET-France Telecom SA,
Class B (American Depositary Shares) 645,200 30,244 .72
Telefonica de Argentina SA, Class B 4,910,000 14,540
Telefonica de Argentina SA, Class B
(American Depositary Shares) 2,741,900 81,229 1.13
YPF SA, Class D
(American Depositary Receipts) 696,800 15,678 .19
---------- ----------
451,946 5.35
BRAZIL - 13.92%
Aracruz Celulose SA, Class B, preferred nominative
(American Depositary Receipts) 449,200 4,267 .05
Banco Bradesco SA, preferred nominative 4,464,622,335 36,468 .43
Banco Itau SA, preferred nominative 34,758,700 14,126 .17
Banco Nacional SA, preferred nominative (1) 215,940,814 -
Banco Nacional SA, ordinary nominative (1) 2,500,000 - -
Brasmotor SA, preferred nominative 141,951,974 44,400 .53
Centrais Eletricas Brasileiras SA (Eletrobras), Class B,
preferred nominative
(American Depositary Receipts) 7,634,263 108,788
Centrais Eletricas Brasileiras SA (Eletrobras), ordinary nominative 16,480,000 4,432
Centrais Eletricas Brasileiras SA (Eletrobras), ordinary nominative
(American Depositary Receipts) 6,775,971 91,476 2.42
CESP-Companhia EnergEtica de SAo Paulo,
preferred nominative (1) 154,300,000 5,380
CESP-Companhia Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts)
(acquired 8/30/94, cost: $53,275,000)(1)(2) 4,059,080 41,606
CESP-Companhia Energetica de Sao Paulo, ordinary
nominative (1) 400,767,854 13,174 .71
COFAP-Companhia Fabricadora de Pecas,
preferred nominative (1) 285,116 1,647 .02
Companhia Cervejaria Brahma, preferred nominative 91,622,437 54,669
Companhia Cervejaria Brahma, ordinary nominative 224,483 140 .65
Companhia Cimento Portland Itau, preferred nominative 70,137,100 19,841 .23
Companhia de Tecidos Norte de Minas-COTEMINAS,
preferred nominative 43,298,500 17,079 .20
Companhia Energetica de Minas Gerais-CEMIG,
preferred nominative (American Depositary Receipts)(1) 3,219,629 84,515
Companhia Energetica de Minas Gerais-CEMIG,
preferred nominative (American Depositary Receipts)
(acquired 9/22/94, cost: $9,698,000) (1) (2) 373,906 9,815 1.12
Companhia Siderurgica Belgo-Mineira, preferred nominative 13,001,892 829
Companhia Siderurgica Belgo-Mineira, ordinary nominative 2,086,180 150 .01
Companhia Suzano de Papel e Celulose
Class B, preferred nominative(American Depositary Receipts) (1) 316,633 3,483 .04
Companhia Vale Do Rio Doce, preferred nominative
(American Depositary Receipts) 911,734 17,551 .21
Companhia Vidrararia Santa Marina, ordinary nominative 2,133,072 8,393 .10
Dixie-TOGA, preferred nominative 1,710,000 1,652 .02
GP Capital Partners, LP
(acquired 1/28/94, cost: $23,408,000) (1) (2) (3) 27,000 26,334 .31
Industrias Klabin de Papel e Celulose SA,
preferred nominative (American Depositary Receipts) 1,259,605 15,745 .19
Iochpe-Maxion SA
(American Depositary Receipts) (1) 163,004 469 .01
Lojas Americanas SA, preferred nominative 279,219,055 5,507
Lojas Americanas SA, ordinary nominative 53,594,800 956 .08
Lojas Arapua, preferred nominative
(Global Depositary Receipts) 104,000 1,092 .01
Mecanica Pesada, preferred nominative 190,000 212
Mecanica Pesada, ordinary nominative 70,000 488 .01
Mesbla SA, preferred nominative (1) 111,674,640 612 .01
Metal Leve SAIC,
preferred nominative 157,884,489 1,557 .02
Morgan Stanley Perqs (Telebras) 6.00%, February 16, 1999 $90,000 5,411 .07
Osa, preferred nominative 90,000,000 870 .01
Petrobras Distribuidora SA-BR, preferred nominative 52,393,500 1,104 .01
Petroleo Brasileiro SA-PETROBRAS, preferred nominative 428,960,000 52,771 .62
Refrigeracao Parana SA, preferred nominative
(American Depositary Receipts) 410,000 4,971 .06
Rhodia-Ster SA (Global Depositary Receipts) 113,100 622 .01
SA White Martins, ordinary nominative 10,062,149,000 14,132 .17
Sadia Concordia SAIC, preferred nominative 1,163,000 811 .01
Souza Cruz SA, ordinary nominative 1,217,000 10,607 .12
Telecomunicacoes Brasileiras SA (Telebras), preferred 59,500,000 4,155
nominative
Telecomunicacoes Brasileiras SA (Telebras), preferred 552,090 - -
nominative,blocked
Telecomunicacoes Brasileiras (Telebras), preferred nominative
(American Depositary Receipts) 4,530,446 315,432 3.78
Telecomunicacoes de Minas Gerais SA, ordinary nominative 64,122 5 -
Telecomunicacoes de SAo Paulo SA-Telesp,
preferred nominative 405,285,091 86,798
Telecomunicacoes de SAo Paulo SA-Telesp,
ordinary nominative 140,648,944 24,798 1.32
Usinas Siderurgicas de Minas Gerais SA, preferred nominative
(American Depositary Receipts)(acquired 9/1/93; cost: $9,774,000) (2) 1,550,305 16,472 .19
---------- ----------
1,175,812 13.92
---------- ----------
CHILE - 1.81%
CAP SA 1,347,599 5,193 .06
Chilgener SA (American Depositary Receipts) 1,160,357 27,849 .33
Compania de Telecomunicaciones de Chile SA
(American Depositary Receipts) 63,700 6,251 .08
CTI Compania Tecno Industrial SA 89,965,285 3,675 .04
Empresa Nacional de Electricidad SA
(American Depositary Receipts) 1,458,009 31,348 .37
Enersis SA (American Depositary Receipts) 2,249,682 69,740 .83
Forestal Terranova 550,000 724 .01
Invercap SA 1,100,000 1,194 .01
Sociedad Quimica y Minera de Chile SA, Class A 1,277,900 6,732 .08
---------- ----------
152,706 1.81
---------- ----------
CHINA - 1.18%
China North Industries Investment Ltd.
(acquired 9/30/94, cost: $5,727,000) (1)(2) 5,500,000 3,575 .04
China Yuchai International Ltd. 1,015,500 7,743 .09
Guang Dong Electric Power Development Co. Ltd., Class B 15,275,000 9,769 .12
Harbin Power Equipment Co. Ltd Class H 44,999,000 6,744
Harbin Power Equipment Co. Ltd Class H
(American Depositary Receipts)
(acquired 11/30/94, cost: $3,336,000)(2) 99,000 1,484 .10
Huaneng Power International Inc., Class N
(American Depositary Receipts) (1) 1,393,100 24,902 .30
Maanshan Iron & Steel Co. Ltd., Class H
(acquired 10/14/93, cost: $1,279,000)(2) 4,332,000 761 .01
Shanghai Diesel Engine Co. Ltd., Class B (1) 6,085,200 2,556 .03
Shanghai Petrochemical Co. Ltd., Class H 93,828,600 26,669
Shanghai Petrochemical Co. Ltd., Class H
(American Depositary Receipts) 7,000 199 .32
Tingyi (Cayman Islands) Holding Corp. (1) 20,729,000 5,691 .07
Want Want Holdings (acquired 5/16/96; cost: $1,233,000) (1)(2) 729,000 1,961 .02
Zhenhai Refining & Chemical Co. Ltd., Class H 25,710,000 7,308 .08
---------- ----------
99,362 1.18
---------- ----------
COLOMBIA - 0.29%
Banco de Colombia SA 42,333,121 16,070
Banco de Colombia SA (Global Depositary Receipts)(1) 955,000 8,117 .29
Comunicacion Celular SA, Class B, warrants, expire November 3,000 15 -
15, 2003(1)
---------- ----------
24,202 .29
---------- ----------
REPUBLIC OF CROATIA - 0.28% ---------- ----------
Pliva (Global Depositary Receipts) (1) 604,955 24,047 .28
---------- ----------
CZECH REPUBLIC - 0.29% ---------- ----------
SPT Telecom (1) 200,400 24,486 .29
---------- ----------
ECUADOR - 0.16% ---------- ----------
La Cemento Nacional CA (Global Depositary Receipts) 76,330 13,510 .16
---------- ----------
GHANA - 0.40%
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts) 946,500 18,693
Ashanti Goldfields Co. Ltd.,
5.50% exchangable note March 15, 2003 $15,970,000 14,892 .40
---------- ----------
33,585 .40
---------- ----------
GREECE - 1.09%
Aluminum of Grece SAIC 276,840 11,800 .14
Hellenic Bottling Co. SA 1,417,945 47,113 .56
Hellenic Telecommunicatons Organization (OTE) 363,000 6,023 .07
Intracom SA, preferred 20,000 212
Intracom SA, ordinary 476,620 8,449 .10
Katselis SA, ordinary 45,000 314 -
Michaniki SA, preferred 252,540 2,100
Michaniki SA, ordinary 652,220 7,581 .12
Titan Cement Co. SA, ordinary 171,522 8,481 .10
---------- ----------
92,073 1.09
---------- ----------
HONG KONG - 0.90%
China-Hongkong Photo Products Holdings Ltd. 11,996,000 6,858 .08
Consolidated Electric Power Asia Ltd. 24,349,400 40,267
Consolidated Electric Power Asia Ltd.
(American Depositary Shares)
(acquired 11/29/93, cost: $868,000) (2) 53,600 886 .49
New World Infrastructure Ltd. (1) 11,468,497 24,448 .29
Siu-Fung Ceramics Holdings Ltd. 7,869,409 1,515 .02
Tian An China Investments Co. Ltd. 13,610,700 1,846 .02
---------- ----------
75,820 .90
---------- ----------
HUNGARY - 0.43%
Graboplast Textiles Muborgyarto RT (1) 15,200 346 -
MOL Magyar Olaj Es Gazipari RT
(Global Depositary Receipts) (1) (2) 1,481,900 16,005 .19
Richter Gedeon Vegyeszeti 397,000 20,239 .24
---------- ----------
36,590 .43
---------- ----------
INDIA - 7.71%
Asian Paints (India) Ltd 564,600 7,031 .08
Bajaj Auto Ltd. 525,500 14,848 .18
Bharat Forge Co. Ltd. 3,250 17 -
Bombay Dyeing and Manufacturing Co. Ltd.
(Global Depositary Receipts) 90,000 720 .01
East India Hotels Ltd. 664,777 13,664 .16
Essar Gujarat Ltd. 3,367,000 2,691 .03
Flex Industries Ltd. 393,800 1,641
Flex Industries Ltd., units (1 unit = 1 share + 1/2 warrant) 157,520 657 .03
Grasim Industries Ltd. 545,300 8,908
Grasim Industries Ltd.
(Global Depositary Receipts) 1,160,965 21,478 .36
Hindalco Industries Ltd. 1,072,650 38,437
Hindalco Industries Ltd. (Global Depositary Receipts) (1) 579,520 22,022 .72
Hindustan Lever Ltd. 514,500 12,066 .14
Housing Development Finance Corp. Ltd. 272,800 22,880 .27
India Fund, Class B 3,306,718.13 6,214 .07
India Magnum Fund , Class B, nonvoting shares (1) 20,000 1,040 .01
Indian Aluminium Co., Ltd. 1,288,600 7,651
Indian Aluminium Co., Ltd. (Global Depositary Receipts) 1,308,771 9,161 .20
Indian Rayon & Industries, Ltd. 830,900 11,694
Indian Rayon & Industries, Ltd.
(Global Depositary Receipts) 398,000 5,871 .21
Indo Gulf Fertilisers and Chemicals Corp. Ltd. 2,155,200 3,061
Indo Gulf Fertilisers and Chemicals Corp. Ltd.
(Global Depositary Receipts) (2) 1,770,900 2,745 .07
I.T.C. Ltd. 1,214,600 10,809 .13
Madras Cement Ltd. 22,000 7,725 .09
Mahanagar Telephone Nigam Ltd. 21,971,000 159,153 1.88
Mahindra & Mahindra Ltd. 2,229,416 22,943
Mahindra & Mahindra Ltd.
(Global Depositary Receipts) 908,333 9,765 .39
Mastergain Scheme (1) 4,001,700 1,479 .02
Max India Ltd. 411,860 3,762
Max India, 12.50% nonconvertible debenture Part B, January INR82,372 588 .05
1998 (1)
Motor Industries Co. Ltd. 176,405 38,519 .46
Nicholas Piramal India Ltd. 325,000 2,009 .02
Nippon Denro Ispat Ltd., 3.00% convertible Eurobonds April 1, $1,750,000 884
2001
Nippon Denro Ispat Ltd., 3.00% convertible bond April 1, 2001
(acquired 3/1/94, cost: $6,754,000) (2) $7,000,000 3,535 .05
Ranbaxy Laboratories Ltd. 1,106,150 19,254
Ranbaxy Laboratories Ltd.
(Global Depositary Receipts) 874,525 17,928 .44
Raymond Woollen Mills Ltd. 505,800 4,891
Raymond Woollen Mills Ltd.
(Global Depositary Receipts) 758,600 15,460 .24
SCICI Ltd. 7,941,900 9,806
SCICI Ltd., 3.50% convertible Eurobonds
April 4, 2004 $3,620,000 3,679 .16
Sundaram Finance Ltd. 153,000 1,424 .02
Tata Engineering and Locomotive Co. Ltd. 816,000 12,113
Tata Engineering and Locomotive Co. Ltd.
(Global Depositary Receipts) (1) 3,415,261 61,475 .87
United Phosphorous Ltd. 1,227,800 11,251
United Phosphorous Ltd.
(Global Depositary Receipts) 423,564 4,871 .19
Videocon International Ltd. 20,100 42
Videocon International Ltd.
(Global Depositary Receipts) 62,200 190 -
Videsh Sanchar Nigam Ltd. 250,000 9,635 .11
Zee Telefilms Ltd. 934,200 3,907 .05
---------- ----------
651,594 7.71
---------- ----------
INDONESIA - 4.47%
Asia Pacific Resources International Holdings Ltd.(1) 1,217,000 9,128 .11
PT Astra International 13,582,400 19,708 .23
PT Bakrie & Brothers 272,000 386 -
PT Bank Internasional Indonesia 1,998,000 9,878 .12
PT Fajar Surya Wiesea 630,000 291 -
PT Gudang Garam 2,940,000 12,608 .15
PT Hanjaya Mandala Sampoerna 5,695,000 64,883 .77
PT Indofood Sukses Makmur 18,875,250 85,206 1.01
PT Indo-Rama Synthetics 5,670,000 14,382 .17
PT International Nickel Indonesia 5,069,500 11,333 .13
PT Japfa Comfeed Indonesia 700,000 406 -
PT Jaya Real Property 2,768,500 8,748 .10
PT Kabelmetal Indonesia 1,200,000 542 .01
PT Kalbe Farma 284,500 636 .01
PT Lippo Bank 11,405,000 19,368
PT Lippo Bank, rights, expire July 24, 1996 (1) 5,702,500 4,536 .28
PT Mayora Indah 10,380,000 5,801 .07
PT Modern Photo Film Co. 5,049,900 21,711 .26
PT Mulia Industrindo 5,445,919 8,078 .10
PT Pabrik Kertas Tjiwi Kimia 1,355,961 1,385 .02
Perusahaan Perseroan (Persero)PT Indonesian
Satellite Corp. (American Depositary Receipts) 1,191,500 39,915 .47
PT Praxair Indonesia (1) 142,700 32 -
PT Sorini Corp 112,500 619 .01
PT Supreme Cable Manufacturing Corp. 900,500 939 .01
PT Tambang Timah 8,965,500 16,574
PT Tambang Timah, Class B (Global Depositary Receipts) (1) 836,270 15,179 .38
PT Tigaraksa Satria 2,173,140 5,606 .06
---------- ----------
377,878 4.47
---------- ----------
MALAYSIA - 4.42%
Arab Malaysian Finance Bhd. 1,805,000 7,890 .09
Commerce Asset-Holding Bhd. 1,023,000 6,236 .07
Eastern & Oriental Bhd. 4,000,000 9,465 .11
Genting Bhd. 2,669,100 20,873 .24
Genting International PLC 8,301,000 14,526 .18
Guinness Anchor Bhd. 3,302,000 6,820 .09
Hong Leong Credit Bhd. 1,593,000 7,539 .09
IJM Corp. Bhd. (MR) 8,075,714 13,991 .17
IOI Corp. Bhd. 9,846,000 13,662 .16
Leader Universal Holdings Bhd. 8,920,000 25,220 .30
Malaysian Airline System Bhd. (2) 2,144,000 6,836 .08
Malaysian International Shipping Corp. Bhd. 2,210,000 6,869 .08
Nestle (Malaysia) Sdn. Bhd. 4,765,000 38,410 .46
New Straits Times Press (Malaysia )Bhd 3,769,000 19,650 .23
O.Y.L. Industries Bhd. 1,165,437 12,152
O.Y.L. Industries Bhd., rights, expire August 6, 1996 (1) 116,543 514 .15
Renong Bhd. 23,453,000 37,435
Renong Bhd., 2.50% convertible bond January 15, 2005
(acquired 10/20/94, cost:$2,554,000) (2) $2,550,000 2,856
Renong Bhd., 2.50% convertible Eurobonds
January 15, 2005 $2,855,000 3,198
Renong Bhd., warrants, expire November 21, 2000 (1) 2,189,500 992
Renong Bhd. Iculs, 4.00% May 21, 2001 MYR3503200 1,321 .54
Resorts World Bhd. 1,267,000 7,266 .09
Sime Darby Bhd. 16,217,000 44,876 .53
Sime UEP Properties Bhd. 3,344,000 6,705 .08
Technology Resources Industries Bhd. (1) 9,073,000 31,656 .37
UMW Holdings Bhd. 7,107,359 25,368
UMW Holdings Bhd., warrants, expire January 26, 2000 (1) 736,159 909 .31
---------- ----------
373,235 4.42
---------- ----------
MAURITIUS - 0.05% ---------- ----------
State Bank of Mauritius 10,927,000 4,646 .05
---------- ----------
MEXICO - 9.78%
Apasco, SA de CV 7,542,402 41,781 .49
CEMEX, SA de CV, Class A 3,024,262 10,909
CEMEX, SA de CV, Class B 10,245,351 40,471
CEMEX, SA de CV, ordinary participation certificates 9,505,620 34,100
CEMEX, SA de CV, Class A, ordinary participation certificates
(American Depositary Receipts) (2) 1,183 8
CEMEX, SA, Class B (American Depositary Receipts) 439,792 3,353
CEMEX, SA, Class B, 4.25% convertible bond November 1, 1997
(acquired 9/28/94, cost: $2,801,000) (2) $3,000,000 2,753 1.08
Cifra, SA de CV, Class A (1) 8,694,000 12,843
Cifra, SA de CV, Class B (1) 13,790,510 19,971
Cifra, SA de CV, Class C (1) 18,706,334 26,695 .70
Corporacion Geo, SA de CV, Class B
(aquired 8/29/95,cost: $6,596,000)(1)(2) 1,751,568 7,785 .09
Gruma, SA de CV, Class B (1) 908,208 4,204 .05
Grupo Carso, SA de CV, Class A1 (1) 5,038,200 35,816 .43
Grupo Financiero Banamex Accival, SA de CV, Class B (1) 31,893,850 66,295
Grupo Financiero Banamex Accival, SA de CV, Class L (1) 12,414,067 24,560
Grupo Financiero Banamex Accival, SA de CV,
7.00% convertible bond December 15, 1999
(acquired 7/12/95, cost:$854,000) (2) $1,040,000 954
Grupo Financiero Banamex Accival, SA de CV,
7.00% convertible Eurobonds December 15, 1999 $1,674,000 1,536 1.10
Grupo Financiero Bancomer, SA de CV, Series L
34.9676% convertible subordinated debentures May 16, 2002 MXP5,750,000 792 .01
Grupo Financiero Banorte, SA de CV, Class B (1) 6,997,394 6,682 .08
Grupo Industrial Maseca, SA de CV, Class B
(American Depositary Receipts) 5,700 90 -
Grupo Televisa, SA, ordinary participation certificates (1) 481,000 7,461
Grupo Televisa, SA, ordinary participation certificates
(American Depositary Receipts) (1) 3,361,499 103,366 1.31
Kimberly-Clark de Mexico, SA de CV, Class A 2,719,100 49,670
Kimberly-Clark de Mexico, SA de CV, Class B 70,000 1,274 .60
Panamerican Beverages, Inc., Class A 2,031,400 90,905 1.08
Sigma Alimentos, SA de CV. Class B 566,100 5,040 .06
Telefonos de Mexico, SA de CV, Class A 9,137,500 15,450
Telefonos de Mexico, SA de CV, Class L 13,706,250 23,211
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) 4,725,475 158,303 2.34
Tubos de Acero de MExico, SA (1) 1,163,200 11,153
Tubos de Acero de MExico, SA
(American Depositary Receipts) (1) 2,024,400 19,106 .36
---------- ----------
826,537 9.78
---------- ----------
MOROCCO - 0.17%
Banque Commercial du Maroc 35,443.125 2,396 .03
Cimenterie de l'Oriental, Class A (1) 92,503 3,289 .04
ONA SA 56,000 2,569 .03
Societe des Brasserie du Maroc 20,500 3,092 .03
Wafabank, Class A 72,000 3,328 .04
---------- ----------
14,674 .17
---------- ----------
PAKISTAN - 0.91%
Chakwal Cement Co. Ltd. (Global Depository Receipts)(1) 891,111 4,010 .05
Hub Power Co. Ltd. (Global Depositary Receipts) (1) 1,871,528 45,852 .54
Pakistan Telecommunication Corp.
(Global Depositary Receipts) (1) 236,100 27,388 .32
---------- ----------
77,250 .91
---------- ----------
PERU - 1.20%
Cementos Lima SA 598,082 8,404 .10
Cementos Norte Pacasmyo SA, Class C 234,952 398 -
Compania de Minas Buenaventura SA, Class A 1,002,687 9,037
Compania de Minas Buenaventura SA, Class B (1) 111,975 1,101
Compania de Minas Buenaventura SA, Class B (American 423,500 8,417 .22
Depositary Receipts) (1)
Credicorp Ltd. (1) 2,772,389 55,101 .65
Minsur SA-T 803,700 7,194 .08
Ontario-Quinta (acquired 8/15/94, cost: $12,877,000) (2) 12,571,524 12,572 .15
---------- ----------
102,224 1.20
---------- ----------
PHILIPPINES - 6.25%
Ayala Corp., Class B 22,545,827 42,599
Ayala Corp., Class B (Global Depositary Shares) (2) 514,976 7,725 .60
Ayala Land, Inc., Class B 18,285,960 32,806 .39
Bacnotan Consolidated Industries, Inc. 459,508 2,157
Bacnotan Consolidated Industries, Inc., 5.50% convertible
bond June 21, 2004 (acquired 6/8/94, cost: $4,480,000) (2) $4,500,000 4,230 .08
Benpres Holdings Corp.
(Global Depositary Receipts) (1) 2,293,210 17,772 .21
C&P Homes Inc., (1) 22,668,100 19,685 .23
Fortune Cement Corp. 17,579,000 9,226 .11
Hi Cement Corp (1) 12,580,000 4,754
Hi Cement Corp (1) (2) 3,870,000 1,462 .07
International Container Terminal Services Inc. (1) 5,787,730 3,921
International Container Terminal Services Inc., 6.00%
convertible bond, February 19, 2000 (acquired 2/18/93, cost: $4,000,000 4,800 .10
$4,000,000) (1) (2)
JG Summit Holdings, Inc., Class B 39,516,600 14,782
JG Summit Holdings, Inc., Class B
(Global Depositary Shares) 20,000 650
JG Summit Holdings, Inc.,
3.00% convertible Eurobonds December 23, 2003 $5,400,000 4,442
JG Summit Holdings, Inc.,
3.50% convertible bond December 23, 2003
(acquired 12/9/93, cost: $9,870,000) (2) $9,870,000 8,118 .33
Keppel Philippines Holdings,Inc., Class B (1) 226,737 67 -
Manila Electric Co., Class B 1,979,590 20,780 .25
Metropolitan Bank and Trust Co. 1,824,490 51,187 .60
Petron Corp. 7,589,062 3,476
Petron Corp. (Global Depositary Receipts) 215,275 3,875 .09
Philippine Commercial International Bank, Inc. 1,066,200 13,329 .16
Philippine Long Distance Telephone Co., ordinary 86,250 5,136
Philippine Long Distance Telephone Co.
(American Depositary Receipts)(1) 1,531,305 89,007
Philippine Long Distance Telephone Co., convertible preferred,
Series II (Global Depositary Receipts) 484,000 16,214
Philippine Long Distance Telephone Co., convertible
preferred, Series III (Global Depositary Shares) 87,000 4,742 1.36
Philippine National Bank (1) 919,071 15,348 .18
Pilipino Telephone Corp. (1) 8,482,100 12,951 .15
PR Holdings Inc., subscription rights (aquired 7/8/92,
cost: $9,835,000)(1)(2) 2,236,600 9,441 .11
San Miguel Corp., Class B 23,048,048 79,619 .94
Southeast Asia Cement Holdings (1) 64,234,700 8,336 .10
Universal Robina Corp. 29,809,400 15,930 .19
---------- ----------
528,567 6.25
---------- ----------
POLAND - 0.39%
Bank Rozwoju Exportu SA 574,000 15,012 .19
Bank Rozwoju Eksportu SA 6,089,757 7,627 .09
Zaklady Piwowarskie w Zywcu SA 119,811 9,268 .11
---------- ----------
31,907 .39
---------- ----------
PORTUGAL - 0.54%
Portugal Telecom ,SA 773,000 20,242
Portugal Telecom SA (American Depositary Receipts)(1) 951,500 24,977 .54
Televisao Independente SA (1) 105,500 312 -
---------- ----------
45,531 .54
---------- ----------
RUSSIA AND FORMER REPUBLICS OF THE SOVIET UNION - 3.13%
Abacan Resource Corp. (1) C$3,000,000 12,534
Abacan Resource Corp. (1) 2,803,000 11,694 .29
Ao Torgovy Dom G (Russian Depoitary Trust Certificate) (1) 265 4,836 .06
Chernogorneft (Russian Depositary Trust Certificate) (1) 105 10,101
Chernogorneft (American Depositary Receipts) 1,130,000 11,018 .25
Gez Investment Holding Ltd.,Class A
(aquired 9/11/95,Cost: $230,000)(1)(2) 2,870 230
Gez Investment Holding Ltd.,Class B
(aquired 9/11/95,Cost: $12,623,000)(1)(2) 157,793 12,623 .15
JKX Oil & Gas PLC (1) 6,138,140 17,016 .20
Kamaz (1) 1,950,000 3,608 .04
LUKoil Holding (Russian Depositary Trust Certificate) (1) 60 3,000
LUKoil Holding (American Depositary Receipts) 1,895,000 81,011 .99
Moscow City Telephone Network (MGTS)
(Russian Depositary Trust Certificate) (1) 909 14,203 .17
Mosenergo Power Generation and Electrification
(Russian Depositary Trust Certificate) (1) 1,900 16,910
Mosenergo Power Generation and Electrification
(American Depositary Shares) 1,247,800 35,562 .62
New Century Capital Partners,L.P.
(acquired 12/7/95,cost: $18,198,000)(1)(2)(3) 18,193,350 18,193 .22
Russian Telecommunications Development Corp.
(acquired 12/22/93, cost: $3,800,000) (1) (2) 380,000 3,800
Russian Telecommunications Development Corp.,
nonvoting ordinary (acquired 12/22/93, cost:$6,200,000)(1)(2) 620,000 6,200 .12
Star Mining Corp. NL (1) 19,740,000 2,095 .02
---------- ----------
264,634 3.13
---------- ----------
SOUTH AFRICA - 3.14%
AECI Ltd. 482,700 2,622 .03
Bidvest Group Ltd. 1,252,280 7,497 .09
Gold Fields of South Africa Ltd. 200,000 6,056 .07
International Pepsi-Cola Bottling Investments
(aquired 12/18/95,cost:$10,000,000)(1)(2)(3) 100,000 10,000 .12
Iscor Ltd. 32,527,787 25,490 .30
Malbak Ltd. 6,329,400 31,457 .37
Metro Cash & Carry 7,320,800 28,346 .34
MIH Holdings (1) 1,277,600 7,265 .08
Nedcor Ltd. 83,700 1,267
Nedcor Ltd.,
(Global Depositary Receipts) 1,245,931 18,377
Nedcor Ltd., warrants, expire September 30, 1997 (1) 306,934 1,074 .25
Rembrandt Group Ltd. 1,583,000 14,893 .18
Sage Group Ltd. 1,570,000 7,549 .09
Sasol Ltd. 8,090,861 87,903 1.04
South Africa Capital Growth Fund, LP,Class A
(acquired 8/25/95,cost:$1,900,000)(1)(2)(3) 1,900 1,900
South Africa Capital Growth Fund, LP, Class D
(acquired 8/25/95,cost:$13,650,000)(1)(2)(3) 13,650 13,650 .18
---------- ----------
265,346 3.14
---------- ----------
SOUTH KOREA - 5.77%
Cheil Foods & Chemicals, Inc., ordinary 1,410 92 -
Cheil Foods & Chemicals, Inc., 3.00% convertible
Eurobonds December 31, 2006 $2,365,000 2,909 .04
Daegu Bank Ltd. 275,000 4,100 .05
Daehan Asia Trust (International Depositary Receipts) (1) 2,820 3,280 .04
Daehan Korea Trust (International Depositary Receipts) 500 413 -
Daewoo Corp. 257,738 2,501 .03
Daewood Securities Co., Ltd., nonvoting preferred 421,270 6,181
Daewood Securities Co., Ltd.,ordinary (1) 1,394,012 33,137 .47
Haitai Stores Co., Ltd. 16,747 134 -
Hanil Bank 4,052,280 45,679 .54
Hyundai Motor Co. 11,400 508
Hyundai Motor Co., nonvoting preferred
(Global Depositary Receipts) 1,169,800 14,774 .17
Korea Asia Fund Ltd.
(International Depositary Receipts) (1) 300 3,488 .04
Korea Electric Power Corp. 2,670,290 107,865
Korea Electric Power Corp.
(American Depositary Receipts) 225,000 5,456 1.34
Korea First Bank (1) 2,047,350 17,846 .21
Korea Industrial Leasing Co., Ltd. 241,000 4,101 .05
Korea Long Term Credit Bank 349,841 9,512 .11
Korea Mobile Telecommunications Corp. 23,480 28,535
Korea Mobile Telecommunications Corp.
(American Depositary Receipts) (1) 135,900 2,327 .37
Korea Pacific Trust (International Depositary Receipts) (1) 3,000 3,789 .04
Korea Zinc Co. 215,000 4,931 .06
Kyongnam Bank 733,607 9,498 .11
LG Chemical Ltd., preferred 330,000 2,604 .03
LG Electronics Inc. 34,244 752
LG Electronics Inc., nonvoting preferred 542,500 7,567
LG Electronics Inc., nonvoting preferred
(Global Depositary Receipts) 731,600 5,487
LG Electronics Inc.
(Global Depositary Receipts) (1) 15,446 152 .17
LG Securities Co. Ltd. (1) 1,185,948 21,350
LG Securities Co. Ltd., preferred (1) 590,460 5,817 .32
Pacific Chemical Industrial Co. Ltd. 165,440 3,121 .04
Pohang Iron & Steel Co., Ltd. 400,650 32,186
Pohang Iron & Steel Co., Ltd.
(American Depositary Receipts) 201,000 4,899 .44
Samsung Electronics Co., Ltd. 295,065 24,777
Samsung Electronics Co., Ltd., nonvoting preferred 87,710 3,725
Samsung Electronics Co., Ltd., nonvoting preferred, new 3/96 26,433 1,044
(1)
Samsung Electronics Co., Ltd., ordinary, new 3/96 84,736 6,739
Samsung Electronics Co., Ltd., nonvoting preferred
(Global Depositary Shares) 335,237 8,046
Samsung Electronics Co., Ltd., nonvoting preferred, new 3/96
(Global Depositary Shares) 101,033 1,818
Samsung Electronics Co., Ltd., ordinary
(Global Depositary Shares) 70,821 3,630
Samsung Electronics Co., Ltd., ordinary, new 3/96
(Global Depositary Shares) 18,610 726 .59
Seoul Asia Index Trust (International Depositary Receipts) 80 880 .01
Shinhan Bank 502,780 11,469 .14
Ssangyong Investments & Securities Co., Ltd. (1) 52,140 939
Ssangyong Investments & Securities Co., Ltd., nonvoting 61,090 566 .02
preferred (1)
SsangYong Oil Refining Co. Ltd. 298,000 6,908 .08
Yukong Ltd. 630,861 18,514
Yukong Ltd., nonvoting preferred,
(Global Depositary Receipts) 230,000 1,932
Yukong Ltd., ordinary
(Global Depositary Receipts) 27,558 364
Yukong Chf, warrants, expire June 18, 1999 (1) 10,000 936 .26
---------- ----------
488,004 5.77
---------- ----------
SRI LANKA - 0.11%
Asian Hotel Corp. (1) 12,215,000 1,763 .02
Development Finance Corp. of Ceylon 1,258,310 6,833 .08
National Development Bank of Sri Lanka 96,200 338 .01
---------- ----------
8,934 .11
---------- ----------
TAIWAN - 2.84%
Acer Inc. (1) 8,442,000 12,589
Acer Inc.(Global Depositary Receipts) (1) 999,600 7,597
Acer Inc., 4.00% convertible Eurobonds June 10, 2001 $2,380,000 6,057 .31
Advance Semiconductor Engineering, Inc. (1) 7,401,600 12,222
Advance Semiconductor Engineering, Inc.
(Global Depositary Receipts)(1) 1,824,100 15,733 .32
Asia Corporate Partners Fund, Class B
(acquired 03/12/96; cost:$15,555,000) (1)(2)(3) 31,110 15,555 .18
Chia Hsin Cement Corp.
(Global Depositary Receipts) (1) 645,700 6,247 .07
China Steel Corp. 13,700,000 14,350
China Steel Corp. (American Depositary Receipts)
(acquired 05/21/92; cost:$6,354,000) (2) 407,000 10,379
China Steel Corp .
(Global Depositary Shares) 586,000 14,943 .48
Hocheng Corp. (Global Depositary Receipts) 112,361 1,390 .02
R.O.C. Taiwan Fund (1) 26,000 296 -
Seres Capital (Cayman Islands) (acquired 03/12/96; 1.66 25
cost:$25,000) (1) (2)
Seres Capital (Cayman Islands) nonvoting
(acquired 03/12/96; cost:$125,000) (1) (2) 8.34 125 .01
Siliconware Precision Industries Co.,Ltd.(1) 3,364,800 4,907
Siliconware Precision Industries Co.,Ltd
(Global Depositary Receipts)(1) 526,996 4,150 .11
Sin-Yih Ceramics Co. Ltd. (1) 1,500,000 2,433 .03
Taiwan American Fund, nonvoting preferred (1) 600,000 6,822 .08
Taiwan Opportunities Fund Ltd., Series C (1) 251,492 2,294 .03
Taiwan Semiconductor Manufacturing Co. Ltd.(1) 40,610,800 84,929 1.00
Ton Yi Industrial Corp.(1) 6,177,640 9,864 .11
U-Ming Marine Transport Corp. 1,687,750 1,670 .02
Yangming Marine Transport Corp. 3,900,000 5,759 .07
---------- ----------
240,336 2.84
---------- ----------
THAILAND - 3.67%
Alphatec Electronics Public Co. Ltd. 791,000 9,412 .11
Ayudhya Jardine CMG Life Assurance 84,547 383 -
Bangkok Bank Public Co. Ltd. 5,877,340 79,658
Bangkok Bank Public Co.Ltd., 3.25% convertible bond
March 3, 2004 (acquired 8/4/94, cost: $966,000) (2) $1,000,000 1,137
Bangkok Bank Public Co. Ltd., 3.25% convertible
Eurobond March 3, 2004 $3,630,000 4,127 1.00
Bangkok Metropolitan Bank Public Co. Ltd. 768,181 567 .01
Bank of Ayudhya Co. Ltd. 4,224,240 23,301 .28
Charoen Pokphand Feedmill Public Co. Ltd. 1,575,600 9,001 .11
Dusit Thani Public Corp. Ltd. 990,000 1,472 .02
Electricity Generating Authority of Thailand 10,375,217 36,177
Electricity Generating Authority of Thailand,
local registered (1) 22,530 75 .43
Industrial Finance Corp. of Thailand 4,138,500 18,588 .22
MBK Properties & Development Co. Ltd. 4,000,000 4,689 .06
Nakhornthai Integrated Steels Co., Ltd. 11,213,400 6,185 .07
Post Publishing Public Co. Ltd. 505,000 1,870
Post Publishing Public Co.Ltd.,nonrenouncable rights, expire 2,020,000 6,685 .10
July 5, 1996(1)
Serm Suk PLC 210,166 6,459
Serm Suk PLC, local registered 64,960 1,505 .09
Siam City Bank Public Co. Ltd. 3,363,710 3,611 .04
Siam Commercial Bank Public Co.Ltd. 1,340,200 19,432 .23
Swedish Motors Corp. Public Co. Ltd. 1,608,100 5,702 .07
Thai Farmers Bank Public Co. Ltd. 3,691,600 40,434 .48
Thai Glass Industries Ltd. 1,272,200 6,266 .07
Thai Military Bank Public Co., Ltd. 4,243,684 16,720 .20
Wattachak Public Co. Ltd.,
3.50% convertible bond December 6, 2003 $6,400,000 6,384 .08
---------- ----------
309,840 3.67
---------- ----------
TURKEY - 1.60%
Adana Cimento Sanayii TAS, Class A 63,984,854 3,892
Adana Cimento Sanayii TAS, Class C 25,469,510 341 .05
Ege Biracilik ve Malt Sanayii AS 27,959,940 12,757 .15
Koc Holding AS, ordinary 69,121,018 16,820 .20
Migros Turk 13,529,350 11,852 .14
Netas Northern Electric Telekomunikasyon AS 32,441,400 7,697 .09
Petrol Ofisi 48,255,100 13,210 .16
Turkiye Garanti Bankasi AS 59,173,278 4,032
Turkiye Garanti Bankasi AS (American Depositary Receipts)
acquired 10/29/93; cost: $ 253,000) (1) (2) 143,136 930 .06
Turkiye Sise ve Cam Fabrikalari AS 322,957,548 25,541 .30
Yapi ve Kredi Bankasi AS 1,350,954,270 38,216 .45
---------- ----------
135,288 1.60
---------- ----------
UNITED STATES - 0.03% ---------- ----------
Freeport-McMoRan Copper & Gold Inc., Class A 90,000 2,689 .03
--------- --------
VENEZUELA - 0.13%
Compania de Inmuebles Y Valores Caracas (1) 93,149,270 - -
Fabrica Nacional de Cementos SACA 18,529,854 3,755 .04
Mavesa SA (American Depositary Receipts)
(acquired 10/7/93, cost:$4,385,000) (2) 867,661 3,254 .04
Venezolana de Cementos, SACA I 1,773,519 3,388
Venezolana de Cementos, SACA II 494,286 845 .05
---------- ----------
11,242 .13
---------- ----------
VIETNAM - 0.07%
Vietnam Frontier Fund
(acquired 7/21/94, cost: $3,000,000) (1) (2) 291,300 3,000 .03
Vietnam Investment Fund, preferred, units
(acquired 8/4/94, cost: $3,206,000) (1) (2) (3) 30 3,206
Vietnam Investment Fund, ordinary, units
(acquired 8/4/94, cost: less than $1,000) (1) (2) (3) 6 - .04
---------- ----------
6,206 .07
---------- ----------
MULTI NATIONAL - 1.54%
Armada Gold Corp., Class A 2,600,000 4,002 .05
Emerging Markets Gold Fund, preferred
(acquired 1/28/94; cost: $7,876,000) (1)(2)(3) 79,560 7,876
Emerging Markets Gold Fund, ordinary
(acquired 1/28/94; cost: $7,876,000) (1)(2)(3) 76,500 799 .11
Golden Shamrock Mines Ltd. (1) 15,550,000 13,937 .16
New Asia East Investment Fund, Class A, 293,600 2,934
(acquired 5/23/96, cost $2,936,000)(1)(2)(3)
New Asia East Investment Fund, Class B, non-voting 4,006,400 40,046 .51
(acquired 5/23/96, cost $40,064,000)(1)(2)(3)
New Europe East Investment Fund, Class B
(acquired 6/4/93, cost $54,500,000)(1)(2)(3) 436 56,668 .67
Sutton Resources Ltd., Special Warrants,
expire July 31, 1996 (1) 310,000 3,488 .04
--------- -------
129,750 1.54
MISCELLANEOUS - 0.79% ---------- ----------
Equity-type securities in initial period of acquisition(5) 66,432 .79
---------- ----------
TOTAL EQUITY-TYPE SECURITIES (cost: $5,560,824,000) ---------- ----------
7,166,883 84.81
---------- ----------
PRINCIPAL MARKET PERCENT
AMOUNT VALUE OF NET
(000) (000) ASSETS
BOND & NOTES -------------- ---------- ---------
ARGENTINA - 0.60%
Republic of Argentina
9.25% February 23, 2001 $6,000 5,775 .07
Republic of Argentina Bocon PIK
4.805% April 1, 2001(4) ARP2,000 1,423 .02
Republic of Argentina Bearer Bond Series L 6.3125%
March 31, 2005(4) $28,463 22,272 .26
Republic of Argentina Eurobond Series L
5.25% March 31, 2023 (4) 26,750 14,713 .18
Telecom Argentina
12.00% November 15, 2002 5,750 6,167 .07
---------- ----------
50,350 .60
---------- ----------
BRAZIL - 0.86%
Abril SA 12.00% October 25, 2003 250 257 -
Federal Republic of Brazil Capitalization Bond PIK
8.00% April 15, 2014 23,002 14,232 .17
Federal Republic of Brazil Debt Conversion Bond Series LI
6.5625% April 15, 2012 (4) 43,000 29,401 .34
Federal Republic of Brazil Bond Series Z
5.00% April 15, 2024 (4) 1,250 689 .01
Federal Republic of Brazil Bearer Bond Series EI-L
6.50% April 15, 2006 (4) 18,000 14,445
Federal Republic of Brazil Registered Bond Series EI-L
6.50% April 15, 2006 (4) 750 602 .18
Republic of Minas Gerais Series A
7.875% February 10, 1999 2,500 2,325 .03
Republic of Minas Gerais Series B
8.250% February 10, 2000 500 455 .01
Multicanal Particiipacoes S.A. 12.625% June 18, 2004 10,200 10,557 .12
---------- ----------
72,963 .86
---------- ----------
COLOMBIA - 0.02%
Communicacion Celular SA
0%/13.125% November 15, 2003 (1)(5) 3,000 1,785 .02
---------- ----------
ECUADOR - 0.05%
Republic of Ecuador Discount Bond
6.0625% February 28, 2005(4) 4,750 2,684 .03
Republic of Ecuador Bearer Past Due Interest Bonds
6.0625% February 27, 2015(4) 2,603 1,171 .02
---------- ----------
3,855 .05
---------- ----------
INDIA - 0.01%
Flex Industries 13.50% December 31, 2004 INR 29,929 854 .01
---------- ----------
MEXICO - 0.49%
Banco Nacional de Comercio Exterior International Finance
7.250% February 2, 2004 $2,250 1,837 .02
Mc-Cuernavaca Toll Road Trust
9.250% July 25, 2001 2,233 1,535 .02
Tubos de Acero de Mexico,
13.75% December 8, 1999 8,500 9,286 .11
United Mexican States Discount Bond Series A
6.39844% December 31, 2019(4) 1,250 984 .01
United Mexican States Discount Bond Series D
6.45313% December 31, 2019(4) 1,000 788 .01
United Mexican States Government Bond
10.8047% July 21, 1997(4) 10,500 10,946 .13
United Mexican States Government Bond
9.75% February 6, 2001(4) 16,150 16,089 .19
---------- ----------
41,465 .49
---------- ----------
PANAMA - 0.78%
Republic of Panama/Agent-Bank of America NTSA
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA)(4)(6)(7)(8) 29,346 17,405 .21
Republic of Panama/Agent-Bank of America NTSA/
Loan Participation Agreements
(Participation-Citibank, NA)(4)(6)(7)(8) 56,643 33,466 .40
Republic of Panama/Agent-Bank of America NTSA/
Loan Participation Agreements
(Participation-Chase Manhattan Bank NA (4)(6)(7)(8) 6,993 4,020 .04
Republic of Panama/Agent-Chase Manhattan Bank NA/
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA)(4)(6)(7)(8) 6,660 3,947 .04
Republic of Panama/Agent-First Chicago Ltd./
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA)(4)(6)(7)(8) 1,482 873 .01
Republic of Panama/Agent-Generale Bank NV SA /
Loan Participation Agreements
(Participation-Citibank, NA)(4)(6)(7)(8) 848 502 .01
Republic of Panama/Agent-Generale Bank NV SA/
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA)(4)(6)(7)(8) 3,279 1,960 .02
Republic of Panama/Agent-Lloyds Bank International Ltd./
Loan Participation Agreements
(Participation-Chase Manhattan Bank NA)(4)(6)(7)(8) 875 503 .01
Republic of Panama Interest Reduction Bond
3.50% due December, 29, 2049 (4)(6)(7)(8)(9) 5,000 2,775 .03
Republic of Panama Past Due Interest Bond
0.00% due December, 29, 2049 (4)(6)(7)(8)(9) 1,000 614 .01
---------- ----------
66,065 .78
---------- ----------
PERU - 1.06%
Republic of Peru /Agent-Bankers Trust Company/
Loan Participation Agreements
(Participation-Citibank, NA.) (1)(4)(7)(8) 11,739 5,267 .06
Republic of Peru /Agent-Chemical Bank/
Loan Participation Agreements
(Participation-Citibank, NA)(1)(4)(7)(8) 3,544 1,610 .02
Republic of Peru/Agent-Chemical Bank/
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA) (1)(4)(7)(8) 4,085 1,840 .02
Republic of Peru/Agent-Citibank, NA/
Loan Participation Agreements
(Participation-Salomon Brothers) (1)(4)(7)(8) 22,129 9,062 .10
Republic of Peru/Agent-Citibank, NA/
Loan Participation Agreements
(Participation-Citibank, NA) (1)(4)(7)(8) 23,554 10,120 .12
Republic of Peru/Agent-Citibank, NA/
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA) (1)(4)(7)(8) 44,026 19,803 .23
Republic of Peru/Agent-Morgan Guaranty Trust/NA/
Loan Participation Agreements
(Participation- Chase Manhattan Bank, NA) (1)(4)(7)(8) 491 230 -
Republic of Peru/Agent-Morgan Guaranty Trust/NA/
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA) (1)(4)(7)(8) 32,233 14,720 .18
Republic of Peru/Agent-Wells Fargo Bank
Loan Participation Agreements
(Participation-Citibank, NA) (1)(4)(7)(8) 21,476 9,729 .12
Republic of Peru/Agent-Wells Fargo Bank/
Loan Participation Agreements
(Participation-Morgan Guaranty Trust, NA) (1)(4)(7)(8) 38,941 17,549 .21
---------- ----------
89,930 1.06
---------- ----------
PHILIPPINES - 0.16%
Republic of Philippines Front Loaded Interest Reduction Bond
Series B 5.00% due June 1, 2008 12,250 11,025 .13
Subic Power Corp. 9.50% December 28, 2008 2,586 2,570 .03
---------- ----------
13,595 .16
---------- ----------
POLAND - 0.15%
Republic of Poland Past Due Interest Bond (PDI) ---------- ----------
3.75% due October 27, 2014(4) 16,250 12,492 .15
---------- ----------
RUSSIA AND FORMER REPUBLICS OF THE SOVIET UNION - 0.63% ---------- ----------
VNESH Loan Participation Agreements
8.0% December 15, 2020(4) 109,250 52,987 .63
---------- ----------
SOUTH AFRICA - 0.35%
Republic of South Africa 13.00% August 31, 2010 ZAR110,500 22,562 .27
Republic of South Africa 11.5% May 30, 2000 ZAR31,000 6,604 .08
---------- ----------
29,166 .35
---------- ----------
VENEZUELA - 0.37% ---------- ----------
Republic of Venezuela Debt Conversion Bond (DCB)
6.625% due December 18, 2007(4) $44,750 31,605 .37
---------- ----------
MULTI-NATIONAL - 0.30%
Global Telesystems Group Loan with Warrants
10.0% February 1, 2001 26,673 25,725 .30
---------- ----------
TOTAL BONDS AND NOTES (cost: $389,103,000) 492,837 5.83
---------- ----------
SHORT-TERM SECURITIES
CORPORATE SHORT-TERM NOTES - 5.73%
Canadian Imperial Holdings, Inc.5.32% due 8/2-8/6/96 33,400 33,233 .39
Dailmer-Benz North America Corp. 5.36%-5.40% due 8/9-9/9/96 25,000 24,781 .29
Ford Credit Europe PLC 5.30% due 7/9/96 33,200 33,156 .39
France Telecom 5.35% due 8/20/96 6,000 5,954 .07
International Lease Finance Corp. 5.30% due 9/4/96 50,000 49,501 .59
Mobile Australia Finance Co., Inc. 5.36%-5.38% due 7/19- 37,411 37,144 .44
8/23/96
National Australia Funding (Delaware) Inc., 5.25%-5.35% due 64,800 64,569 .77
7/2-8/14/96
Sandoz Corp. 5.28%-5.39% due 7/12-8/15/96 30,900 30,771 .36
Siemens Corp. 5.27%-5.37% due 7/8-8/23/96 18,000 17,876 .21
SmithKline Beecham PLC 5.27%-5.37% due 7/11-8/22/96 94,122 93,585 1.11
Toronto Dominion Holdings Inc., Euronote 5.29% due 7/15/96 50,000 49,890 .59
Toyota Motor Credit Corp. 5.28%-5.31% due 7/1-8/5/96 30,200 30,046 .36
Xerox Corp. 5.36% due 8/21/96 14,000 13,890 .16
---------- ----------
484,396 5.73
---------- ----------
Federal Agency Discount Notes - 0.47%
Federal National Mortgage Note 8/12-8/13/96 40,100 39,844 .47
---------- ----------
Certificates of Deposit - 0.56%
Barclays Bank YNK 5.34% due 8/26/96 47,600 47,591 .56
---------- ----------
Non-U.S. Government Short-Term Obligations - 2.09%
Credit Suisse First Boston, Structured Note linked to ruble-
denominated, Russian government security interest rates due 993 149,170 1.77
8/28-1/8/97
Mesbla SA, Series 2, 13.25% convertible bond 11/1/96 R$35,460 166 -
Polish Government Treasury Bills due 4/18-7/31/96 PLZ 81,950 26,774 .32
Tubos de Acero de Mexico, SA, 7.50% convertible
Eurobonds June 12, 1997 $250 247 -
---------- ----------
176,357 2.09
Non-U.S. Currency - 0.83%
Chilean Peso CHP6,096,113 14,869 .18
New Taiwanese Dollar NT$ 1,512,095 54,995 .65
Venezuela Bolivar VEB 2,660 6 -
---------- ----------
69,870 .83
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost:$804,943,000) 818,058 9.68
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $6,754,870,000) 8,477,778 100.32
Excess of liabilities over cash and receivables 27,118 .32
---------- ----------
NET ASSETS $8,450,660 100.00
========== ==========
1. Non- income-producing securities.
2. Purchased in a private placement transaction: resale to the public may require registration, and no right to demand
registration under U.S. law exists. As of June 30, 1996, the total market value and cost of such securities was $465,623,000 and
$469,869,000 respectively, and the market value
represented 5.51% of net assets. Such securities, excluding convertible bonds and American Depositary Receipts, are valued at fair
value.
3. Includes an unfunded capital commitment representing a binding commitment made by the fund which may be paid in the future.
4. Coupon rate may change periodically.
5. Respresents a zero coupon bond which will convert to a coupon-bearing security at a later date.
6. Subsequent to June 30, 1996, the fund's entire Panama Participation Agreement position was exchanged into Panama Interest
Reduction Bonds 3.5% due July 17, 2014. At the time of exchange, past due interest was given in the form of cash and Panama Past
Due Interest Bonds 6.75% due July 17, 2016. Total gain recognized on the exchange was $34,388,000.
7. Participation interests were acquired through the financial instituition indicated parenthetically.
8. Security is currently in default.
9. Represents a when-issued security.
Non-U.S. Currency Symbols:
ARP - Argentine Peso
C$ - Canadian Dollar
CHP - Chilean Peso
INR - Indian Rupee
MYR - Malaysian Ringitt
NT$ - New Taiwanese Dollar
PLZ - Polish Zloty
R$ - Brazilian Real
VEB - Venezuelan Bolivar
ZAR - South African Rand
</TABLE>
See Notes to Financial Statements
EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
<S> <C>
Equity-Type Securities Added to the Equity-Type Securities Eliminated from
Portfolio Since December 31, 1995 the Portfolio Since December 31, 1995
- -------------------------------------------- ---------------------------------------------
AO Torgovy Arcelik
Armada Gold Astra-Compania Argentina de Petroleo
Asia Corporate Partners Fund Atlantic Tele-Network
Bajaj Auto Banco de Bogota
Banco Bansud Banco Osorno y La Union
Bank Inicjatyw Gospodarczych Banmedica
Banco Itau Buenos Aires Embotelladora
Bank Rozwoju Eksportu CBV Industria Mecanica
Bidvest Group Central Costanera
Cementos Lima Central Puerto
Cementos Norte Pacasmayo Companhia Siderurgica Nacional
China-Hongkong Photo Products Eczacibasi Ilac Sanayi ve Ticaret
Compania Minas Buenaventura EID Parry
Commerce Asset-Holding Embotelladores del Valle de Anahuac
Communicacion Celular Hansol Paper
Daegu Bank Kepphil Shipyard
Disco Nan Ya Plastics
Eastern & Oriental NW China Investment
Fortune Cement Polifin
Gold Fields of South Africa PT Eka Gunatama Mandiri
Golden Shamrock Mines PT Indah Kiat Pulp & Paper
Grupo Financiero Bancomer PT Semen Gresik
Guinness Anchor SCF Finance and Securities
Hellenic Telecommunications Organization (OTE) Seoul Horizon Trust
HI Cement Siam City Credit Finance and Securities
Housing Development Finance Taihan Electric Wire
IOI Venezolana de Prerreducidos Caroni
Kamaz Yizheng Chemical Fibre
Korea Industrial Leasing
Korea Zinc
Lojas Arapua
Malaysian Airline System
Metro Cash and Carry
MIH Holdings
Minsur
Morgan Stanley Perqs (Telebras)
Moscow City Telephone Network
Mosenergo-Power Generation and
Electrification Amalgamation
New Asia East Investment Fund
New Straits Times Press
Osa
Petrol Ofisi
Petzetakis
Pliva
Quilmes Industrial
Rhodia-Ster
Richter Gedeon Vegyeszeti
Sage Group
Seres Capital
Siderca
Souza Cruz
Sutton Resources
Swedish Motors
Telecomunicacoes de Minas Gerais
Thai Glass
Tingyi (Cayman Islands) Holding
Videsh Sanchar Nigam
Want Want Holdings
White Martins
Yang Ming Marine Transport
</TABLE>
******
Emerging Markets Growth Fund
Financial Statements
<TABLE>
<CAPTION>
<S> <C> <C>
Statement of Assets and Liabilities (dollars in thousands)
at June 30, 1996
Assets:
Investment securities at market $8,477,778
(cost: $6,754,870) ...............
Cash ............................... 10,376
Receivables for--
Sales of investments ............. $11,437
Sales of fund's shares 65,330
Open forward currency contracts 294
Dividends and accrued interest ... 38,097 115,158
-------------- ----------------
8,603,312
----------------
Liabilities:
Non-U.S. taxes payable 9,466
Payables for--
Purchases of investments ......... 26,762
Unfunded capital commitments 105,756
Management services .............. 4,347
Accrued expenses ................. 6,321 143,186
------------------- ----------------
152,652
----------------
Net Assets at June 30, 1996 --
Equivalent to $57.57 per share on
146,779,844 shares of $0.01 par value
capital stock outstanding (authorized
capital stock -- 200,000,000
shares)............................ $8,450,660
================
Statement of Operations (dollars in thousands)
for the Year Ended June 30, 1996
Investment Income:
Income:
Dividends ........................ $151,080
Interest ......................... 72,008 $223,088
--------------
Expenses:
Management services fee .......... 44,162
Custodian fee .................... 8,840
Registration statement and prospectus 791
Taxes other than federal
income tax ..................... 358
Auditing and legal fees .......... 210
Reports to shareholders .......... 11
Postage, stationery and supplies 1
Other expenses ................... 671 55,044
------------- ---------------
Income before non-U.S. taxes........ 168,044
Non-U.S. taxes...................... (678)
----------------
Net investment income .............. 167,366
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Realized gain before non-U.S. taxes..... 54,881
Non-U.S. taxes...................... 394
--------------
Net realized gain .................. 55,275
Net increase in unrealized appreciation
on investments.....................
785,857
Net unrealized appreciation on open forward
currency contracts........................
294
--------------
Net unrealized appreciation ...... 786,151
Non-U.S. taxes.. (4,724) 781,427
-------------- ----------------
Net realized gain and unrealized 836,702
appreciation on investments ............. ----------------
Net Increase in Net Assets Resulting $1,004,068
from Operations .................... ================
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------- (dollars in thousands)
Year Ended Year Ended
June 30,1996 June 30, 1995
----------------- ----------------
Operations:
Net investment income .............. $167,366 $85,015
Net realized gain on investments ... 55,275 305,354
Net unrealized appreciation (depreciation) 781,427 (486,957)
on investments ................... ---------------- ----------------
Net increase (decrease) in net assets 1,004,068 (96,588)
resulting from operations ...... ---------------- ----------------
Dividends and Distributions Paid
to Shareholders:
Dividends from net
investment income ................ (169,255) (61,624)
Distributions from net realized ---------------- ----------------
gain on investments .............. (140,664) (456,090)
---------------- ----------------
Total dividends and (309,919) (517,714)
distributions .................. ---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold:
34,530,418 and 26,840,022 shares,
respectively ...................... 1,882,259 1,502,619
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of net
realized gain on investments:
5,829,211 and 8,593,036 shares,
respectively ...................... 302,442 513,177
---------------- ---------------
Net increase in net assets
resulting from capital share
transactions ................... 2,184,701 2,015,796
---------------- ----------------
Total Increase in Net Assets 2,878,850 1,401,494
Net Assets:
Beginning of year.................. 5,571,810 4,170,316
---------------- ----------------
End of year (including excess distributions $8,450,660 $5,571,810
over net investment income: $3,949 ================ ===============
and $2,410, respectively............
EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
1. Emerging Markets Growth Fund, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as a closed-end, diversified management
investment company. The fund's investment objective is to seek long-term
capital growth through investment in developing country equity securities. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Equity-type securities traded on a national securities exchange (or reported on
the NASDAQ national market) and securities traded in the over-the-counter
market are stated at the last reported sales price on the day of valuation;
other securities, and securities for which no sale was reported on that date,
are stated at the last quoted bid price. In cases where securities are traded
on more than one exchange, the securities are valued on the exchange designated
by or under the authority of the Board of Directors as the primary market.
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the investment adviser deems it appropriate to do so,
such securities will be valued at the mean of their representative quoted bid
and asked prices or, if such prices are not available, at prices for securities
of comparable maturity, quality, and type. Short-term securities with original
or remaining maturities in excess of 60 days, including forward currency
contracts, are valued at the mean of their quoted bid and asked prices.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the fund if acquired within 60 days of maturity
or, if already held by the fund on the 60th day, based on the value determined
on the 61st day. Securities for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale), or which are not deemed to represent market value, are valued
at fair value as determined in good faith by the Valuation Committee of the
Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. Discounts
on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Investment securities, cash balances, and other assets and liabilities,
including forward currency contracts, denominated in non-U.S. currencies are
recorded in the financial statements after translation into U.S. dollars
utilizing rates of exchange on the last business day of the year. Purchases and
sales of investment securities, dividend and interest income, and certain
expenses are calculated at the rates of exchange prevailing on the respective
dates of such transactions. Gains and losses that arise from changes in
exchange rates are not segregated from gains and losses that arise from changes
in market prices of investments.
Unfunded capital commitments represent agreements which obligate the fund to
meet capital calls in the future. Payment would be made when a capital call is
requested. Capital calls can only be made if and when certain requirements have
been fulfilled; thus, the timing of such capital calls cannot be readily
determined. Unfunded capital commitments are recorded at the amount that would
be paid when and if capital calls are made.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $8,840,000 includes $691,000 that was paid by these
credits rather than in cash.
2. Investing in securities of issuers in a variety of developing countries
involves certain special investment risks, which may include investment and
repatriation restrictions, currency volatility, government involvement in the
private sector, limited investor information, shallow securities markets,
certain local tax law considerations, and limited regulation of the securities
markets.
Dividend income, and interest income, net realized gain and net unrealized
gain, of the fund derived in Chile are subject to certain non-U.S. taxes at
rates of 20% and 35%, respectively. Net realized gain and net unrealized gain
of the fund derived in India are subject to certain non-U.S. taxes at a rate of
10%. The fund provides for such non-U.S. taxes on investment income, net
realized gain, and net unrealized gain.
3. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of June 30, 1996, net unrealized appreciation on investments, excluding
forward currency contracts, for federal income tax purposes aggregated
$1,705,604,000, net of accumulated deferred taxes totaling $8,891,000 on net
unrealized appreciation of Chilean and Indian securities, of which
$2,207,459,000 related to appreciated securities and $501,855,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended June 30, 1996. The cost of
portfolio securities, excluding forward currency contracts, for federal income
tax purposes was $6,763,283,000 at June 30, 1996.
4. The fee of $44,162,000 for management services was paid pursuant to an
agreement with Capital International, Inc. (CII), with which certain officers
and Directors of the fund are affiliated. The Investment Advisory and Service
Agreement provides for monthly fees, accrued weekly, based on an annual rate of
0.90% on the first $400 million of the fund's net assets; 0.80% of such assets
in excess of $400 million but not exceeding $1 billion; 0.70% of such assets in
excess of $1 billion but not exceeding $2 billion; 0.65% of such assets in
excess of $2 billion but not exceeding $4 billion; 0.625% of such assets in
excess of $4 billion but not exceeding $6 billion; 0.60% of such assets in
excess of $6 billion but not exceeding $8 billion; 0.58% of such assets in
excess of $8 billion but not exceeding $11 billion; and 0.56% of such assets in
excess of $11 billion. CII is owned by Capital Group International, Inc.,
which is a wholly owned subsidiary of The Capital Group Companies, Inc.
5. As of June 30, 1996, accumulated undistributed net realized gain on
investments was $24,303,000 and additional paid-in capital was $6,797,078,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $3,307,632,000 and $1,059,997,000, respectively,
during the year ended June 30, 1996.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended June 30, 1996, such non-U.S. taxes were $24,362,000. Net realized
currency losses on dividends, interest, withholding taxes reclaimable, and
purchases and sales of non-U.S. equity-type securities and bonds were
$4,144,000 for the year ended June 30, 1996.
On June 21, 1996, the fund acquired all the net assets of New World Investment
Fund ("NWIF") pursuant to a plan of reorganization approved by NWIF's
shareholders on June 20, 1996. The acquisition was accomplished by a tax-free
exchange of 4,891,619 shares of the fund for 12,205,648 shares of NWIF
outstanding on June 21, 1996 and is included in the "Proceeds From Shares Sold"
in the Statement of Changes in Net Assets. NWIF's net assets at that date of
$278,920,000, which included $77,615,000 of net unrealized appreciation, were
combined with those of the fund.
The fund reclassified $350,000 from additional paid-in capital to undistributed
net investment income and $223,000 from undistributed net realized gains and
$348,000 from undistributed net currency gains, respectively, to additional
paid-in capital for the year ended June 30, 1996.
The fund may enter into forward currency contracts, which represent an
agreement to exchange currencies of different countries at a specified future
date at a specified rate. The fund purchased forward currency contracts to
hedge the foreign exchange exposure in the Polish Government Treasury Bills
held by the fund. The Polish Government has pegged the Zloty to a basket of
currencies, and the forward currency contracts protect the fund against
movements in these currencies against the U.S. dollar. The fund's use of
forward currency contracts involves market risk in excess of the amount
recognized in the statement of assets and liabilities. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value. The face or contract amount in U.S. dollars reflects the total exposure
the fund has in that particular contract. Losses may arise upon entering these
contracts from the potential inability of counterparties to meet the terms of
their contracts and from the possible movements in non-U.S. exchange rates and
securities values underlying these instruments. At June 30, 1996, the fund had
outstanding forward currency contracts to sell non-U.S. currencies as follows:
NON-U.S. CURRENCY
SALE CONTRACTS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Contract Amount U.S. Valuation at 6/30/96
--------------------------------- --------------------------------
Non-U.S. U.S. Amount Unrealized
-------------- -------------- -------------- Appreciation
(Depreciation)
--------------
French Francs FF6,195,000 $ 1,226,000 $ 1,207,000 $ 19,000
expiring 7/19-8/20/96
German Deutschemarks DM12,788,000 8,689,000 8,430,000 259,000
expiring 7/19-8/20/96
Pound Sterling L1,229,000 1,863,000 1,909,000 (46,000)
expiring 7/19-8/20/96
Swiss Francs SFR1,543,000 1,299,000 1,237,000 62,000
expiring 7/19-8/20/96 -------------
$ 294,000
=============
</TABLE>
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year ended June 30
---------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- ------- -------
Net Asset Value, Beginning of Year $52.36 $58.75 $44.95 $38.64 $32.73
-------- -------- -------- ------- -------
Income from Investment
Operations:
Net investment income ...... 1.30 .87 .53 .62 .55
Net realized and unrealized
gains (losses) on investments
before non-U.S. taxes ..... 6.49 (.79) 15.29 7.33 8.87
Non-U.S. taxes ................ (.01) (.03) (.39) .06 (.28 )
-------- -------- -------- ------- -------
Total income from 7.78 .05 15.43 8 9
investment operations......... -------- -------- -------- .01 .14
------- -------
Less Distributions:
Dividends from net (1.30) (.63) (.49) (.56) (.56)
investment income .............
Distributions from net (1.27) (5.81) (1.14) (1.14) (2.67)
realized gain -------- -------- -------- ------- -------
Total distributions ....... (2.57) (6.44) (1.63) (1.70) (3.23)
-------- -------- -------- ------- -------
Net Asset Value, End of Year $57.57 $52.36 $58.75 $44.95 $38.64
======= ======= ======= ======= ========
Total Return .................... 15.49% (1.22)% 34.33% 21.55% 29.73%
Ratios/Supplemental Data:
Net assets, end of year $8,451 $5,572 $4,170 $2,574 $1,561
(in millions)
Ratio of expenses to average .84% .91% 1.00% 1.01% 1.11%
net assets
Ratio of expenses and non-U.S.
taxes to average net assets ...... .85% .94% 1.04% 1.07% 1.18%
Ratio of net income to average 2.54% 1.70% .91% 1.82% 1.84%
net assets ..........
Portfolio turnover rate ........... 17.78% 23.75% 18.13% 11.97% 16.03%
</TABLE>
****
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Emerging Markets Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of Emerging Markets Growth Fund (the
"Fund") at June 30, 1996, the results of its operations, the changes in its net
assets, and the per-share data and ratios for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 1996 by correspondence with the
custodian and brokers and application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
/s/PRICE WATERHOUSE
Los Angeles, California
August 12, 1996
TAX INFORMATION (UNAUDITED)
The fund makes an election under the Internal Revenue Code Section 853 to pass
through foreign taxes paid by the fund to its shareholders. The total amount
of foreign taxes passed through to shareholders for the year ended June 30,
1996 totals $0.19729 per share.
None of the distributions paid by the fund from investment income earned in the
year ended June 30, 1996 qualifies for the corporate dividends-received
deduction. None of the dividends paid to shareholders was derived from
interest on direct U.S. Treasury obligations.
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. for tax return preparation purposes, please refer to the annual
information on the taxability of distributions supplied by the fund.
BOARD OF DIRECTORS
Khalil Foulathi, Abu Dhabi, United Arab Emirates
Executive Director, Evaluation and Followup
Department, Abu Dhabi Investment Authority
Robert B. Egelston, Los Angeles, California
Vice Chairman of the Board of the fund
Former Chairman of the Board,
The Capital Group Companies, Inc.
Nancy Englander, Los Angeles, California
President of the fund
Senior Vice President, Capital International, Inc.
David I. Fisher, Los Angeles, California
Vice Chairman of the Board of the fund
Chairman of the Board,
The Capital Group Companies, Inc.
Beverly L. Hamilton, Los Angeles, California
President,
ARCO Investment Management Company
Marinus W. Keijzer, Zeist, Netherlands
Chief Economist & Strategist, Pensioenfonds PGGM
Hugh G. Lynch, New York, New York
Managing Director, International Investments,
General Motors Investment Management Corporation
Helmut Mader, Frankfurt, Germany
Director, Deutsche Bank AG
Teresa E. Martini, Berkeley Heights, New Jersey
Vice President, Public Equities,
AT&T Investment Management Corporation
John G. McDonald, Stanford, California
The IBJ Professor of Finance,
Graduate School of Business, Stanford University
James K. Peterson, Stamford, Connecticut
Director of Investment Management,
IBM Corporation
William Robinson, Gouvieux, France
Director, Aga Khan Fund for Economic Development
Patricia A. Small, Oakland, California
Treasurer, The Regents of the University of California
Walter P. Stern, New York, New York
Chairman of the Board of the fund
Chairman of the Board,
Capital Group International, Inc.
OTHER OFFICERS
Shaw B. Wagener, Los Angeles, California
Executive Vice President of the fund
Executive Vice President and Director,
Capital International, Inc.
Roberta A. Conroy, Los Angeles, California
Senior Vice President and Secretary of the fund
Assistant General Counsel,
The Capital Group Companies, Inc.
Hartmut Giesecke, Singapore
Vice President of the fund
Chairman of the Board and Director,
Capital International K.K. and
Senior Vice President and Director,
Capital International, Inc.
Steven N. Kearsley, Brea, California
Vice President of the fund
Vice President and Treasurer,
Capital Research and Management Company
Peter C. Kelly, Los Angeles, California
Vice President of the fund
Senior Counsel, The Capital Group Companies, Inc.
Victor D. Kohn, Los Angeles, California
Vice President of the fund
Executive Vice President,
Capital Research International, Inc.
Nancy J. Kyle, New York, New York
Vice President of the fund
Senior Vice President, International
Capital Guardian Trust Company
Michael A. Felix, Brea, California
Treasurer of the fund
Vice President, Capital International, Inc.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL INTERNATIONAL, INC.
11100 Santa Monica Boulevard, 15th Floor
Los Angeles, California 90025-3302
135 South State College Boulevard
Brea, California 92821-5804
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
400 South Hope Street
Los Angeles, California 90071-2889
This report is for the information of shareholders of Emerging Markets Growth
Fund, but it may also be used as sales literature when preceded or accompanied
by the current prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the fund.
Printed in USA JA/WS/3018
(C) 1996 Emerging Markets Growth Fund, Inc.
Lit. No. EMGF-011-0896 (NLS)
|
|