Emerging Markets Growth Fund SM
Semi-Annual Report
For the Six Months Ended December 31, 1997
Seeks long-term growth of capital by investing in companies operating in
developing countries around the world
Fellow Shareholders:
The first half of our 1998 fiscal year--the six months ended December 31--was
an extremely rough period in emerging markets. The unmanaged Morgan Stanley
Capital International Emerging Markets Free (EMF) Index, which tracks stock
prices in 26 developing countries, fell 24.9% including reinvestment of
distributions.* Five Asian emerging markets-Indonesia, Malaysia, South Korea,
Thailand and the Philippines--suffered losses of between 25% and 45% in local
currencies, and between 58% and 76% in U.S. dollars. During the October-
December quarter--the worst calendar quarter in the history of the EMF
Index--23 of the 26 markets were down in both dollars and local currencies.
(After the close of the fiscal half, a few markets, including South Korea,
recovered somewhat from these devastating declines, while others lost
additional ground.)
Emerging Markets Growth Fund (EMGF) came through the six-month period better
than the EMF Index and much better than many of the markets in its investment
universe (see table on page 2). The value of EMGF's shares declined 15.1%
assuming reinvestment of an income dividend of $1.54 and a capital gain
distribution of $3.38 that were paid in December. Looking back over the past 12
months, the fund outpaced its principal benchmark by a wide margin, rising 9.7%
while the EMF Index was falling 11.6%.
The longer term comparisons are similarly favorable. For the five years ended
December 31, the fund generated a total return of 101.4%, more than double the
44.0% gain recorded by the EMF Index. For the 10 years ended December 31,
Emerging Markets Growth Fund had a total return of 827.3% (an average of 24.9%
a year compounded) versus 431.6% (18.2% a year) for the index.
*All percentage gain/loss figures include reinvestment of distributions unless
otherwise indicated.
6-MONTH RESULTS
With Dividends Reinvested (7/1/97 - 12/31/97)
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Emerging Markets Growth Fund -15.1%
MSCI Emerging Markets Free Index -24.9%
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A BRIEF REVIEW OF THE ASIAN CRISIS
Asia's economic troubles were brought on by inefficient allocation of capital
and, more specifically, by questionable lending practices that came to light
last year in Thailand's real estate industry, undermining that nation's
currency. In July, the Thai central bank let the baht float, setting off a
chain reaction that weakened other currencies in the region and had an impact
on financial markets in both developing and industrialized countries.
As stock prices and currency values dropped, countries that had been booming
suddenly found themselves facing the prospect of an economic slowdown, a
painful rescheduling of debts and a need for bailouts as well as for reforms
that are likely to prove politically unpopular. These developments produced
grim headlines and a search for scapegoats along with warnings that the crisis
could escalate far beyond the financial markets.
Without minimizing the seriousness of the situation, it would be well to keep
in mind that nearly all of the affected countries (including Thailand, where
the crisis began) have been through serious financial and economic problems in
the past. They have recovered from them, and we expect they will do so again.
In due course, we look for a majority of these nations to get back onto a path
of above-average growth. Meanwhile, we have been taking advantage of sharply
lower valuations and adding to our holdings of stocks that we feel positive
about on a long-term basis.
A CLOSER LOOK AT OUR RESULTS
While a decline in EMGF's share value is not pleasant news to have to report,
we believe that the fund's ability to hold its ground better than our principal
benchmark over the past six months is an accomplishment worth noting. A
breakdown of the period reveals that EMGF rose considerably more than the EMF
Index in July (4.3% vs. 1.5%) and slightly more in September and December; it
went down quite a bit less than the EMF Index during August (-8.1% vs. -12.7%)
and lost somewhat less ground than the index in October and November.
PERCENT CHANGE IN KEY MARKETS /1/
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Six months Ended 12/31/97
-----------------------------
Expressed in Expressed in
U.S. Dollars Local Currency
------------- --------------
Argentina 0.0% 0.0%
Brazil -17.4 -14.3
Chile -20.3 -16.1
China (Free)/2/ -33.2 -33.2
Colombia 4.6 24.3
Czech Republic -2.9 3.9
Greece -5.4 -2.2
Hungary 24.8 36.2
India -19.1 -11.4
Indonesia (Free)/2/ -75.5 -44.7
Israel -0.7 -2.1
Jordan -10.0 -10.0
Malaysia (Free)/2/ -63.8 -44.1
Mexico (Free)/2/ 17.8 19.8
Pakistan 4.9 14.3
Peru -14.1 -12.2
Philippines (Free)/2/ -57.6 -35.9
Poland -15.6 -9.4
Russia -2.6 NA /3/
South Africa -21.3 -15.5
South Korea -70.1 -43.0
Sri Lanka -16.6 -12.0
Taiwan -26.2 -13.3
Thailand (Free) /2/ -59.9 -25.5
Turkey 44.3 101.4
Venezuela -10.8 -7.5
Emerging Markets Growth Fund -15.1
</TABLE>
/1/ With gross dividends reinvested. All indexes are compiled by Morgan Stanley
Capital International and are unmanaged.
/2/ The fund is invested in the "free" Chinese, Indonesian, Malaysian, Mexican,
Philippine and Thai stock markets, which consist of securities that can be
purchased by investors other than resident nationals.
/3/ Index quoted only in U.S. dollars.
For some time before the crisis began, we had been reducing our exposure in
Southeast Asia, beginning with the sale in 1996 of most of our holdings in
Thailand's banking industry. We also were helped during the half-year by our
low profile in Malaysia, which until recently was one of the largest components
in the EMF Index. (The extent to which Malaysia's market capitalization and the
capitalizations of other affected markets have shrunk is reflected in the table
on the next page, which shows the percentage of the EMF Index accounted for by
each country. The table also shows changes in the fund's invested positions in
various regions and markets. The Asia-Pacific region as a whole dropped from
37% to 22% of net assets during the half-year, with the biggest reductions
coming in Taiwan and South Korea. Meanwhile, Latin America rose from 37% to 42%
of net assets, chiefly because of an increase in Mexico.)
In both Malaysia and Thailand, our research had uncovered problems, including
the excessive use of leverage, that threatened to undermine the currencies of
those countries. As a consequence, we felt it was prudent to hedge a number of
our investments back into dollars. Our hedging in those two countries, and in a
few others, produced currency profits for the fund that are treated as cash for
accounting purposes, making the total cash position on December 31 (page 3)
appear somewhat higher than usual. Although our research pointed to possible
devaluations, we make no claim to have anticipated the full fury of the
financial collapse or the extent to which it would spill over into countries in
Asia and elsewhere with economic structures that were thought to be fairly
sound.
THE BENEFITS OF DIVERSIFICATION
Emerging Markets Growth Fund's portfolio includes well over 400 companies
located in more than three dozen nations. (Countries not included in the EMF
Index accounted for 3.6% of our holdings.) Our portfolio, built one stock at a
time, represents a variety of industries, ranging from computer components and
telecommunications to energy and consumer goods. While the majority of our
investments declined in price during the six months, there were some noteworthy
exceptions--right spots that helped our results and underscored the value of
having a broadly diversified portfolio.
WHERE THE FUND'S ASSETS ARE INVESTED
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Percent of Net Assets Market Value
---------------------------------------------------------------- of Holdings
MSCI EMF Index /1/ 12/31/97
12/31/96 6/30/97 12/31/97 6/30/97 12/31/97 (in thousands)
-------- -------- --------- -------- --------- --------------
ASIA/PACIFIC
China 1.4% 1.0% .6% .6% .5% $82,442
Hong Kong .6 .3 .3 - - 45,841
India 6.6 7.5 6.6 6.2 6.5 869,725
Indonesia 4.1 3.5 1.9 5.7 1.8 255,226
Malaysia 4.5 3.4 1.2 12.6 6.0 154,879
Pakistan .5 .4 .5 .6 .8 59,545
Philippines 6.4 3.8 2.5 2.5 1.4 330,725
South Korea 4.7 6.4 1.7 4.0 /2/ 1.5 /2/ 230,061
Sri Lanka .1 .1 .1 .1 .1 11,739
Taiwan 3.5 9.5 5.9 9.6 /2/ 9.3 /2/ 780,382
Thailand 2.1 .9 .4 3.2 1.6 54,009
Vietnam .1 .1 .1 - - 6,206
------ ------ ------ ------ ------ ---------
34.6 36.9 21.8 45.1 29.5 2,880,780
------ ------ ------ ------ ------ ---------
LATIN AMERICA
Argentina 5.9 6.6 8.6 3.6 4.6 1,140,979
Brazil 15.2 16.9 16.5 15.8 16.6 2,186,896
Chile 1.8 2.2 2.1 4.0 4.0 275,622
Colombia .3 .2 .1 .8 1.0 9,768
Ecuador .4 .2 .2 - - 19,877
Mexico 9.9 8.2 12.1 8.5 13.2 1,599,685
Panama .3 .2 .1 - - 14,774
Peru 3.2 2.2 1.6 1.1 1.2 210,529
Venezuela .5 .5 .5 1.3 1.6 71,348
------ ------ ------ ------ ------ ---------
37.5 37.2 41.8 35.1 42.2 5,529,478
------ ------ ------ ------- ------ ---------
Eastern Europe
Bulgaria .4 .3 .3 - - 37,980
Czech Republic .3 .2 .2 .8 1.0 30,305
Hungary .4 .4 .6 .5 1.3 82,122
Kazakhstan - - - - - 3,080
Poland .5 .5 .9 .4 .6 117,479
Republic
of Croatia .6 .4 .5 - - 66,383
Russian Fe-
deration/3//4/ 4.3 6.7 6.5 - 5.9 864,863
Slovakia - .1 .1 - - 16,591
Ukraine - - .1 - - 9,437
------ ------ ------ ------ ------ ------
6.5 8.6 9.2 1.7 8.8 1,228,240
------ ------ ------ ------ ------ ---------
Other Markets
Egypt - .1 .1 - - 14,331
Ghana .4 .2 .2 - - 25,931
Greece 1.0 .8 1.0 1.4 2.7 134,643
Mauritius .1 .1 .1 - - 6,257
Morocco .2 .2 .2 - - 26,398
Portugal /4/ .6 .7 1.4 2.2 - 183,583
South Africa 4.1 3.9 4.8 10.6 10.8 634,187
Turkey 2.0 2.3 5.0 1.7 3.2 669,993
------ ------ ------ ------ ------ -----------
8.4 8.3 12.8 15.9 16.7 1,695,323
------ ------ ------ ------ ------ -----------
Multi-
National 2.3 2.2 2.0 266,354
------ ------ ------ -----------
Other /5/ .5 .6 .3 43,790
------ ------ ------ -----------
Cash &
Equivalents 10.2 6.2 12.1 1,600,939
------ ------ ------ -----------
TOTAL 100.0% 100.0% 100.0% $13,244,904
====== ====== ====== ===========
</TABLE>
/1/ Morgan Stanley Capital International Emerging Markets Free Index also
includes Israel (2.7%) 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 1996, Taiwan was added to the EMF Index; its weighting
reflects 50% of that country's market capitalization. South Korea's weighting
was 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/ Portugal was deleted from, and "the Russian Federation" was added to, the
EMF Index on 12/1/97.
/5/ Includes investments in markets where the holdings represent a percentage
of net assets of less than 0.05%. Also includes stocks in initial period of
acquisition.
The fund's investments in technology companies generally did well, even in
markets that were otherwise weak. In two markets that bucked the downtrend and
recorded large gains in dollars for the period--Turkey and Hungary--the fund
held several issues that also did well. Two of the strongest stocks in our
portfolio for the six months were Turkish banks: Turkiye Is Bankasi AS
(+113.2%) and Yapi ve Kredi Bankasi (+66.6%); together these two issues
accounted for 2.4% of the fund's net assets on December 31. Our largest single
holding, Telmex, which accounted for more than 4% of assets, rose 17.4%. Other
telecommunications stocks that went up include Telecom Argentina (+37.0%) and
Portugal Telecom (+16.1%). Our fixed-income securities, which accounted for 5%
of net assets on December 31, also produced good returns during the half-year.
Calendar 1997 was the third year in the past four that the EMF Index has
retreated. During this time, we have watched the mood of some investors swing
from near-euphoria to the point where emerging markets are no longer seen as
attractive places in which to invest. That is an extreme view which we
obviously do not share. After the current crisis passes, we are confident that
these markets will once again be recognized as areas of exceptional opportunity
for the serious long-term investor. We would, however, remind shareholders that
this type of investing does entail significant risks which we believe are
manageable, as well as excellent opportunities. We encourage all of our
investors to maintain a long-term perspective on their holdings.
On pages 5 and 6, you will find a brief overview of the investment landscape in
those markets that represent the fund's largest areas of concentration. On page
7 there is a description of EMGF's adviser and its value-oriented investment
philosophy.
We look forward to reporting to you again in another six months.
Sincerely,
Walter P. Stern
Chairman
Nancy Englander
President
February 19, 1998
Here are the total returns and average annual compound returns with all
distributions reinvested for periods ended December 31, 1997--10 years:
+827.27%, or +24.95% a year; 5 years: +101.42%, or +15.03% a year; 12 months:
+9.66%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE 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. 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.
Here is a brief look at the investment landscape in the markets representing
Emerging Markets Growth Fund's five largest areas of concentration. Our
holdings in these markets account for nearly half of net assets. (Percentage
changes for markets and stock prices are in U.S. dollars.)
BRAZIL (16.5% of net assets)
After a rally in the first half of calendar 1997, Brazil's equity market
weakened during the July-December period. In large part, the decline was a
reaction to events in Asia. The Brazilian market as a whole fell 17.4% for the
six months. The fund's second- and third-largest holdings--Telebras and
Eletrobras--went down 23.3% and 11.2%, respectively, in price.
We have taken advantage of the weakness in Brazil's market to add to a number
of our holdings there. Because of concern about the strength of the real, we
hedged a portion of those holdings back into dollars. When the real came under
attack, the Brazilian authorities responded promptly. The central bank pushed
interest rates sharply higher and the government reaffirmed its commitment to
fiscal and administrative reforms, including the further privatization of
state-owned companies.
We view this commitment to reforms as a favorable development over the long
term. In the short run, however, we have some reservations about the situation
in Brazil. The economy could soon begin feeling the pinch of interest rates
that are about twice as high now as they were six months ago. Meanwhile,
President Cardoso's program of increased taxes and lower government spending
has encountered opposition in Congress. Because of the attack on the real, the
Cardoso program is being debated by Brazil's legislators several months sooner
than anticipated; it had been scheduled to be taken up by Congress following a
presidential election next October.
MEXICO (12.1% of net assets)
Mexico's stock market posted a gain of 17.8% for the six months. This was
rather impressive in light of what happened throughout much of the rest of the
fund's investment universe. It also is strong evidence of how far Mexico has
come since its own currency crisis two years ago.
Several factors contributed to the strong showing. The country's economy gave
clear evidence of having recovered from a bad recession. The earnings of
well-managed corporations rose, and the continued strength of the U.S. economy
encouraged exports.
Telmex, the fund's largest holding, is Mexico's dominant telephone carrier.
Over the past year or so, we have added to our position in this stock. We
believe Telmex's earnings prospects are good. The company has reported strong
cash-flow and is aggressively expanding its cellular services.
Other Mexican investments that deserve mention include Kimberly-Clark de
Mexico, an affiliate of the U.S. consumer products company, and Cifra, now a
subsidiary of Wal-Mart and Mexico's largest retailer; those two stocks rose
20.7% and 39.5%, respectively, for the six months.
ARGENTINA (8.6% of net assets)
Argentina's economy has continued to improve and corporate earnings have
continued to grow. In another, less jittery environment for investing, these
developments might have fueled an upward movement in stock prices. In the rocky
investment climate of the past six months, the Argentine market held its
ground; it showed a miniscule gain of 0.04% for the half-year.
Efforts to keep inflation down by linking the value of the Argentine peso to
the U.S. dollar appear to have succeeded thus far. If the currency remains
stable and if economic growth continues at a healthy pace, the investment
outlook in Argentina has to be considered very favorable. Valuations there
generally remain on the low side. We have added to our Argentine holdings,
principally among banks which stand to benefit from loan growth as the economy
expands, and among telecommunications firms. In addition to Telecom Argentina,
which services the northern part of the country, we own shares in Telefonica de
Argentina, which serves the southern portion. That stock recorded a small gain
of 7.7% for the half-year. Together, our positions in those two companies
represented 2.8% of net assets on December 31.
INDIA (6.6% of net assets)
Initially, India was not seriously affected by Asia's troubles, largely because
its economy relies less than other countries in the region on foreign capital.
However, by the end of November, as the crisis spread, the value of the rupee
was sinking faster than government authorities had expected; they had hoped for
a modest decline that would help bring the currency into alignment with others
in the area.
To combat speculators, the central bank at first sold U.S. dollar reserves and
bought rupees. Later, it raised interest rates and placed restrictions on
hedging. Central bank officials insist that these measures are temporary and
will not be allowed to become long-term obstacles to economic growth.
Meanwhile, the nation's government collapsed for the second time in seven
months. Political debate continues to be focused mainly on corruption rather
than economic policy; there is some concern that the Asian crisis might be
misinterpreted and cited as an illustration of the destructive power of foreign
capital, leading to decisions that could distort the flow of capital and impede
the pace of economic reforms.
India's stock market declined 19.1% during the fiscal half-year. The fund owns
shares in 35 companies in India. Those investments are long-term in nature and
based on intensive research into company managements and strategies. The
largest of our Indian holdings is Mahanagar Telephone Nigam Ltd. (MTNL), which
provides telecommunications services in Bombay and New Delhi. MTNL accounted
for 1.3% of net assets on December 31. For the six months, the stock was down
21.1%.
RUSSIAN FEDERATION (6.5% of net assets)
We have noted in the past that the Russian stock market is in an early stage of
development and tends to be highly volatile. The past several months afforded
fresh evidence of that. The market finished the fiscal half-year down 2.6%.
However, for calendar 1997, it was up 112.1%.
The positives on the Russian investment scene include low asset values, a
virtually unleveraged economy, a merchandise trade surplus, a mobile work
force, ample reserves of oil and the emergence of a stable group of reform
advocates within the government. In addition, factory production has been
rising, and inflation has been on the decline.
The negatives include accounting, tax collection and currency problems as well
as crime and increasing pressure on the profitability of assets. The health of
Boris Yeltsin and political stability in the future are other key issues
overhanging the financial markets.
Most of the fund's holdings are energy companies and utilities which have been
enjoying lower costs and higher revenues. Our largest Russian position (and the
fifth largest in the portfolio) is Unified Energy System, the Federation's
biggest power utility. It declined 16.4% in price for the six months. Our
second-largest Russian holding is LUKoil, Russia's leading producer of crude
oil; it rose 17.3%. Together those two stocks accounted for 3.5% of net assets
on December 31.
We recognize that over the next 12 to 18 months, negative factors, including
slower earnings growth, could create problems in the Russian market. However,
over a longer time frame--roughly three to five years--we believe that
relatively low asset valuations and other positives could lead to some
significant gains for the stocks of a select number of high-quality companies.
ABOUT THE FUND AND ITS ADVISER
Emerging Markets Growth Fund was organized in 1986 by the International Finance
Corporation (IFC), an affiliate of the World Bank, as a vehicle for investing
in the securities of companies domiciled in developing countries. The premise
behind the formation of EMGF was that rapid growth in those countries can
create some very attractive investment opportunities. It also was felt that the
availability of equity capital would stimulate the development of capital
markets and encourage countries to liberalize their investment regulations.
An affiliate of Capital International, Inc., the fund's current investment
adviser, was selected at the outset by the IFC to manage Emerging Markets
Growth Fund from among a number of global investment management firms. The fund
started with $50 million in assets, 13 institutional shareholders and a small
portfolio of stocks representing four markets. Today it has more than $13
billion in assets, nearly 700 institutional and individual investors, and a
portfolio of more than 400 securities representing companies based in more than
three dozen nations. As Emerging Markets Growth Fund has grown, its adviser has
steadily expanded its research activities in developing countries and devoted
increased resources to the task of managing emerging markets investments.
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, and has become one of the
world's largest managers of emerging markets assets.
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 250 investment professionals based
on three continents. They include analysts and portfolio counselors, born in
more than 30 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. Currently, about 30 of
the organization's analysts concentrate on emerging markets, compared with four
when EMGF began.
This extensive 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.
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EMERGING MARKETS GROWTH FUND
Investment Portfolio - December 31, 1997
(Unaudited)
Equity-Type Securities
--------------------------------------
Common Preferred Convertible Percent of
INDUSTRY DIVERSIFICATION Stocks Stocks Bonds Bonds Net Assets
- --------------------------------------------------------------------------------------------------------
Telecommunications 14.49 4.98 - 0.28 19.75%
Utilities: Electric & Gas 6.96 3.40 0.02 - 10.38
Banking 6.49 1.40 - - 7.89
Energy Sources 6.57 0.91 0.01 - 7.49
Beverages & Tobacco 4.90 1.50 - - 6.40
Electronic Components 4.83 - 0.07 - 4.90
Merchandising 2.72 - - - 2.72
Other Industries 22.30 1.17 0.41 4.50 28.38
----- ----- ----- ----- -----
69.26 13.36 0.51 4.78 87.91
===== ===== ===== ===== =====
Short-Term Securities 9.49
Excess of cash and receivables over liabilities 2.60
-----
Net Assets 100.00%
=======
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Percent of Gain/Loss
for the Year Ended
Percent of 12/31/97*
TEN LARGEST EQUITY HOLDINGS - 12/31/97 Net Assets (in U.S. Dollars)
- -------------------------------------------------------------------------------------------------
Telefonos de Mexico 4.75% +17.36%
Telecomunicacoes Brasileiras (Telebras) 4.01 -23.29
Centrais Eletricas Brasileiras (Eletrobras) 3.19 -11.21
Taiwan Semiconductor Manufacturing Co. Ltd. 2.26 -22.36
Unified Energy System of Russia 2.15 -16.44
Telefonica Argentina 1.65 +7.67
Cifra, SA de CV 1.59 +39.53
Companhia Energetica de Minas Gerais-CEMIG 1.38 -15.78
Turkiye Is Bankasi AS 1.38 +113.22
Sasol Ltd. 1.35 -20.10
* The percent change reflects the increase or decrease in the market price per share of respective equity securities held in the
portfolio for the entire period. The actual gain or loss on the total position in the fund may differ fro
the percentage shown.
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EMERGING MARKETS GROWTH FUND, INC.
Investment Portfolio - DECEMBER 31, 1997
Number of
EQUITY - TYPE SECURITIES Shares Market Percent
(common and preferred stocks or Value of Net
and convertible debentures) Principal (000) Assets
Amount
ARGENTINA - 6.86%
Banco Bansud SA, Class B (1) 178,336 $1,837 .01
Banco de Galicia y Buenos Aires SA, Class B 2,343,412 $15,001
Banco de Galicia y Buenos Aires SA, Class B
(American Depositary Receipts) 2,603,718 67,046 .62
Banco Frances del Rio de la Plata SA 740,600 6,874
Banco Frances del Rio de la Plata SA
(American Depositary Receipts) 2,342,141 64,116 .54
Banco Rio de la Plata, Class B
(American Depositary Receipts)(1) 1,308,700 18,322 .14
BI SA (acquired 10/21/93, cost: $6,130,000) (2) 6,130,000 6,620 .05
Disco SA (American Depositary Receipts) (1) 753,000 33,509 .25
Hidroneuquen SA (acquired 11/11/93, cost: $29,086,000) (1)(2) 29,086,231 29,086 .22
IRSA Inversiones y Representaciones SA 2,142,000 7,970
IRSA Inversiones y Representaciones SA .17
(Global Depositary Receipts) 370,715 13,948
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts)
(acquired 11/24/92, cost:$6,180,000) (2)(3) 893,187 11,433
Nortel Inversora SA, Class B, preferred
(American Depositary Receipts) .41
(acquired 2/27/92, cost: $17,705,000) (2)(3) 1,287,640 32,835
Nortel Inversora SA, Class B, preferred
(American Depositary Receipts)(3) 400,500 10,213
Perez Companc, Class B 11,291,086 80,635
Perez Companc, Class B (American Depositary Receipts) (1) 689,668 9,850 .68
Quilmes Industrial SA, nonvoting, preferred
(American Depositary Shares) 1,088,800 14,903 .11
Sociedad Comercial del Plata SA 1,881,960 2,974 .02
Telecom Argentina STET-France Telecom SA, Class B(3) 2,800,000 20,164
Telecom Argentina STET-France Telecom SA, Class B 1.11
(American Depositary Shares)(3) 3,541,800 126,619
Telefonica de Argentina SA, Class B(3) 4,910,000 18,416
Telefonica de Argentina SA, Class B
(American Depositary Shares)(3) 5,366,600 199,906 1.65
YPF SA, Class D (American Depositary Receipts) 3,414,300 116,726 .88
---------- ----------
909,003 6.86
BRAZIL - 15.85%
Aracruz Celulose SA, Class B, preferred nominative
(American Depositary Receipts) 700,650 10,072 .08
Banco Bradesco SA, preferred nominative 5,102,889,334 50,297
Banco Bradesco SA, preferred nominative, rights,
expire February 9,1998 (1) 208,490,880 747 .39
Banco Itau SA, preferred nominative 186,642,300 100,345 .76
Banco Nacional SA, preferred nominative (1) 215,940,814 -
Banco Nacional SA, ordinary nominative (1) 2,500,000 - .00
Banco Real de Investimento SA, preferred nominative 4,650,000 13,208 .10
Banco Real SA, preferred nominative 9,582,050 8,500 .06
Banespa, preferred nominative(1) 242,813,000 9,900 .07
Bompreco SA, Supermercados do Nordeste,
preferred nominative (Global Depositary Receipts) 329,000 6,128 .05
Brasmotor SA, preferred nominative 136,190,974 13,424 .10
Centrais Eletricas Brasileiras SA - ELETROBRAS, preferred
nominative, Class B (American Depositary Receipts) 7,226,788 186,090
Centrais Eletricas Brasileiras SA - ELETROBRAS,
ordinary nominative 164,800,000 8,196 3.19
Centrais Eletricas Brasileiras SA - ELETROBRAS,
ordinary nominative (American Depositary Receipts) 9,060,591 227,647
Centrais Eletricas de Santa Catarina SA - CELESC, Class B,
preferred nominative 983,000 1,224 .01
CESP- Companhia Energetica de Sao Paulo
preferred nominative 24,700,000 1,483
CESP-Companhia Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts) 1,068,243 19,495
CESP-Companhia Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts) .18
(acquired 8/30/94, cost: $1,383,000) (1)(2) 83,048 1,516
CESP-Companhia Energetica de Sao Paulo,
ordinary nominative (1) 16,927,984 819
COFAP-Companhia Fabricadora de Pecas,
preferred nominative (1) 285,116 818 .01
Companhia Cervejaria Brahma, preferred nominative 142,451,437 95,733
Companhia Cervejaria Brahma, preferred nominative
(American Depositary Receipts) 3,901,200 55,348 1.14
Companhia Cervejaria Brahma, ordinary nominative 224,483 140
Companhia Cimento Portland Itau, preferred nominative 77,577,100 13,555 .10
Companhia de Tecidos Norte de Minas-COTEMINAS,
preferred nominative 76,970,466 27,588
Companhia de Tecidos Norte de Minas- COTEMINAS .27
ordinary nominative, (Global Depositary Receipts) (1) 527,800 8,709
Companhia Energetica de Minas Gerais-CEMIG,
prefrred nominative 385,372,000 16,744
Companhia Energetica de Minas Gerais-CEMIG,
preferred nominative (American Depositary Receipts) 3,473,349 150,657
Companhia Energetica de Minas Gerais-CEMIG,
preferred nominative (American Depositary Receipts) 1.38
(acquired 9/22/94, cost: $9,501,000) (2) 373,906 16,218
Companhia Paranaense de Energia-COPEL,
Class B, preferred nominative (1) 1,522,274,600 20,665
Companhia Paranaense de Energia-COPEL,
ordinary nominative (1) 1,370,764,600 15,354
Companhia Paranaense de Energia-COPEL,
Class B, preferred nominative .49
(American Depositary Receipts) 2,096,000 28,689
Companhia Vale do Rio Doce, preferred nominative
(American Depositary Receipts) (1) 1,439,037 28,961 .22
Consorcio Real Brasileiro de Administracao SA, Class F,
preferred nominative 1,405,000 2,392 .02
Dixie Toga SA, preferred nominative (1) 1,872,000 956 .01
ELETROPAULO-Eletricidade de Sao Paulo SA,
Class B, preferred nominative (1) 34,056,000 6,408 .05
Empresa Nacional de Commercio Redito SA-Encopar,
preferred nominative (1) 61,861,588 46 -
GP Capital Partners, LP
(acquired 1/28/94, cost: $24,857,363) (1)(2) 27,000 25,585 .19
LIGHT- Servicos de Eletricidade SA, ordinary nominative 66,540,546 27,724 .21
Lojas Americanas SA, ordinary nominative (1) 19,660,800 120 -
Lojas Arapua, preferred nominative
(Global Depositary Receipts) 104,000 377 -
Mesbla SA, preferred nominative (1) 111,674,640 -
Mesbla SA, Series 2 Convertible bond
13.250% April 1, 1998 R$35,460,000 108 -
Multicanal Participacoes SA, preferred nominative
(American Depositary Shares) (1) 1,441,000 8,466 .06
Paulista Forca LZ, ordinary nominative (CPFL) 52,184,000 6,874 .05
Petroleo Brasileiro SA-PETROBRAS, preferred nominative 514,257,000 120,270 .91
REAL Participacoes e Administracao, SA
Class A, preferred nominative 3,000 5 -
SA White Martins, ordinary nominative 10,782,844 15,749 .12
Sadia Concordia SAIC, preferred nominative 4,645,000 3,038 .02
Souza Cruz SA, ordinary nominative 2,842,000 22,919 .17
Souza Cruz SA, rights, expire January 30, 1998(1) 2,842,000 - -
Telecomunicacoes Brasileiras SA (Telebras),
preferred nominative 59,500,000 6,787
Telecomunicacoes Brasileiras SA (Telebras),
preferred nominative,blocked (1) 552,090 57
Telecomunicacoes Brasileiras SA (Telebras),
ordinary nominative 11,700,000 1,190 4.01
Telecomunicacoes Brasileiras SA (Telebras),
preferred nominative (American Depositary Receipts) 4,497,918 523,726
Telecomunicacoes de Sao Paulo SA-Telesp,
preferred nominative 241,979,651 64,396
Telecomunicacoes de Sao Paulo SA-Telesp,
ordinary nominative (1) 35,664,592 8,117 .55
Unibanco - Uniao de Bancos Brasileiros SA, unit
(Global Depositary Shares) (1) 3,332,150 107,254 .81
Usinas Siderurgicas de Minas Gerais SA,
preferred nominative (American Depositary Receipts)
(acquired 9/1/93,cost: $9,774,000) (2) 1,550,305 9,108 .07
---------- ----------
2,099,942 15.85
---------- ----------
CHILE - 2.08%
Antofagasta Holdings PLC 3,662,180 19,666 .15
Banco Santander Chile, Class A
(American Depositary Receipts) 131,200 1,853 .01
Chilgener SA (American Depositary Receipts) 248,643 6,092 .05
Compania Cervecerias Unidas SA
(American Depositary Shares) 398,500 11,706 .09
Compania de Telefonos de Chile SA
(American Depositary Receipts) 3,257,775 97,326 .73
Distribucion y Servicio D&S SA
(American Depositary Receipts) (1) 1,159,900 21,531 .16
Embotelladora Andina SA, preferred, Class A
(American Depositary Receipts) 1,002,450 20,863
Embotelladora Andina SA, preferred, Class B
(American Depositary Receipts) 589,300 11,455 .24
Empresa Nacional de Electricidad SA
(American Depositary Receipts) 1,931,309 34,160 .26
Enersis SA (American Depositary Receipts) 926,156 26,859 .20
Santa Isabel SA (American Depositary Receipts) 878,700 15,377 .12
Sociedad Quimica y Minera de Chile SA, Class B
(American Depositary Receipts) (1) 198,500 8,734 .07
---------- ----------
275,622 2.08
CHINA - 0.62%
Beijing Datang Power Generation Co. Ltd., Class H (1) 4,550,000 2,085 .01
China Eastern Airlines Corp. Ltd., Class H (1) 28,980,000 4,676
China Eastern Airlines Corp. Ltd., Class H,
(American Depositary Receipts) (1) 175,700 2,844 .06
China North Industries Investment Ltd.
(acquired 9/30/94, cost: $4,517,150) (2) 5,500,000 1,540 .01
China Resources Beijing Land Ltd.(1) 7,508,000 3,586 .03
China Yuchai International Ltd. (1) 913,000 2,511 .02
Guang Dong Electric Power Development Co. Ltd., Class B 2,454,960 1,451 .01
Harbin Power Equipment Co. Ltd., Class H 24,470,000 2,969
Harbin Power Equipment Co. Ltd., Class H
(American Depositary Receipts)
(acquired 11/30/94, cost: $2,224,000) (2) 66,000 801 .03
Huaneng Power International, Inc., Class N
(American Depositary Receipts) (1) 718,200 16,653 .12
Jiangsu ExpresswayCo. Ltd.,Class H (1) 43,208,000 8,923 .07
Jiangxi CopperCo. Ltd., Class H (1) 56,477,500 6,269 .05
NG Fung Hong Ltd. 12,660,000 13,318 .10
Shanghai Diesel Engine Co. Ltd., Class B (1) 5,277,200 665 .01
Tingyi (Cayman Islands) Holding Corp. 67,261,500 8,768 .06
Zhejiang Expressway Co. Ltd., Class H (1) 24,964,000 5,059 .04
Zhenhai Refining & Chemical Co. Ltd., Class H 778,000 324 .00
---------- ----------
82,442 .62
---------- ----------
COLOMBIA - 0.07%
Compania de Cementos Argos, SA 1,665,027 9,768 .07
---------- ----------
CZECH REPUBLIC - 0.23%
SPT TELECOM, a.s. (1) 289,974 30,305 .23
---------- ----------
ECUADOR - 0.12%
La Cemento Nacional CA (Global Depositary Receipts)(3) 76,330 15,571 .12
---------- ----------
EGYPT - 0.11%
Al-Ahram Beverages Co. (Global Depositary Receipts) (3) 510,000 14,331 .11
---------- ----------
EGYPT - 0.11%
Al-Ahram Beverages Co. (Global Depositary Receipts) (3) 510,000 14,331 .11
---------- ---------
GHANA - 0.20%
Ashanti Goldfields Co. Ltd. 691,111 5,667
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts) 1,131,500 8,486
Ashanti Goldfields Co. Ltd., .20
5.50% exchangeable note March 15, 2003 $15,970,000 11,778
---------- ----------
25,931 .20
---------- ----------
GREECE - 1.02%
Aluminum de Grece SAIC (3) 389,840 21,576 .16
Hellenic Bottling Co. SA 4,137,790 96,062 .73
Katselis Sons SA, ordinary 49,410 306
Titan Cement Co. SA, ordinary 366,044 16,699 .13
---------- ----------
134,643 1.02
---------- ----------
HONG KONG - 0.34%
China Resources Enterprise, Ltd. 2,576,000 5,752 .04
China-Hongkong Photo Products Holdings Ltd. 11,996,000 3,004 .02
New World Infrastructure Ltd. (1) 16,112,497 36,291 .27
Siu-Fung Ceramics Holdings Ltd. (1) 7,869,409 434
Siu-Fung Ceramics Holdings Ltd., rights, expire -
January 2, 1998 (1) 3,147,763 -
Tian An China Investments Co. Ltd. 6,637,500 360 .01
---------- ----------
45,841 .34
---------- ----------
HUNDARY - 0.62%
Gedeon Richter Ltd. 561,100 63,707 .48
Graboplast Textil-es Muborgyarto Rt. 85,200 4,504 .03
MOL Magyar Olaj-es Gazipari Rt.
(Global Depositary Receipts) 570,100 13,911 .11
---------- ----------
82,122 .62
---------- ----------
INDIA - 6.56%
Asian Paints (India) Ltd. 564,600 4,390 .03
Bajaj Auto Ltd. 4,396,350 68,025
Bajaj Auto Ltd. (Global Depositary Receipts) 54,900 1,102 .52
Bharat Forge Ltd. 3,250 5 -
Bharat Petroleum Corp. Ltd. 5,985,200 64,291 .48
Bombay Dyeing and Manufacturing Co. Ltd.
(Global Depositary Receipts) 90,000 245 -
Cummins India Ltd. (formerly Kirloskar Cummins) 1,838,000 21,388 .16
East India Hotels Ltd. 997,165 10,966 .08
Essar Steel Ltd. 1,049,600 456
Flex Industries Ltd. 288,800 140 -
Flex Industries Ltd., units
(equivalent to 1 shares + 1/2 warrant) 41,681 20 -
Grasim Industries Ltd. 659,480 5,886
Grasim Industries Ltd. (Global Depositary Receipts) 1,714,265 18,686 .19
Hindalco Industries Ltd. 2,670,425 51,018
Hindalco Industries Ltd. (Global Depositary Receipts) 1,302,280 26,046 .58
Hindustan Lever Ltd. 1,081,700 38,649 .29
Hindustan Petroleum Corp. Ltd.(1) 2,564,100 32,264 .25
Housing Development Finance Corp. Ltd. 294,300 23,164 .18
Indian Aluminum Co., Ltd. 1,288,600 2,406
Indian Aluminum Co., Ltd. (Global Depositary Receipts) 1,308,771 2,618 .04
Indian Rayon and Industries Ltd. 1,529,700 7,248
Indian Rayon and Industries, Ltd.
(Global Depositary Receipts) 597,000 2,553 .07
Indo Gulf Fertilisers and Chemicals Corp. Ltd. 2,155,200 2,026
Indo Gulf Fertilisers and Chemicals Corp. Ltd.
(Global Depositary Receipts) 1,770,900 1,594 .03
Industrial Credit and Investment Corp. of India Ltd. 3,176,760 6,215 .05
Ispat Industries Ltd., 3.00% convertible Eurobonds
April 1, 2001 $ 3,999,000 2,000
Ispat Industries Ltd., 3.00% convertible bond April 1, 2001
(acquired 3/1/94, cost: $6,829,000) (2) $ 7,000,000 3,500 .04
I.T.C. Ltd. 70,600 1,125 .01
Madras Cements Ltd. 22,000 2,574 .02
Mahanagar Telephone Nigam Ltd. 24,041,000 161,708
Mahanagar Telephone Nigam Ltd.
(Global Depositary Receipts) (1) 802,700 12,402 1.31
Mahindra & Mahindra Ltd. 2,658,516 21,860
Mahindra & Mahindra Ltd.(Global Depositary Receipts) 958,333 10,230
Mahindra & Mahindra Ltd.,5.00% convertible bond
July 9,2001 (acquired 7/3/96; cost: $5,952,000)(2) $5,954,000 5,656 .28
Master Gain Scheme (1) 235,900 66 -
Max India Ltd. 493,522 1,170
Max India Ltd., warrants, expire January 1998 (1) 81,661 -
Max India Ltd., 12.50% nonconvertible debenture
March 2, 2004 INR81,661 334 .01
Motor Industries Co. Ltd. (3) 201,855 25,425 .19
Nicholas Piramal India Ltd. (3) 1,885,700 14,842 .11
Ranbaxy Laboratories Ltd. 1,217,050 22,256
Ranbaxy Laboratories Ltd. (Global Depositary Receipts) 874,525 22,563 .34
Raymond Woollen Mills Ltd. 931,800 1,478
Raymond Woollen Mills Ltd. (Global Depositary Receipts) 1,083,000 2,978 .04
Reliance Industries Ltd. 16,244,000 69,754
Reliance Industries Ltd. (Global Depositary Receipts) 657,150 5,651 .57
SCICI Ltd., 3.50% convertible Eurobonds April 1, 2004 $1,220,000 1,293 .01
Sundaram Finance Ltd. 153,000 920 .01
Tata Engineering and Locomotive Co. Ltd. 3,827,400 29,058
Tata Engineering and Locomotive Co. Ltd. (Global Depositary Receipts) 4,267,091 35,524 .49
United Phospherous Ltd. 1,227,800 3,226
United Phosperous Ltd. (Global Depositary Receipts) 443,264 665 .03
Videsh Sanchar Nigam Ltd. 613,000 13,483
Videsh Sanchar Nigam Ltd. (Global Depositary Receipts) 253,700 3,558 .13
Zee Telefilms Ltd. (3) 1,010,200 2,416 .02
---------- ----------
869,116 6.56
---------- ----------
INDONESIA - 1.88%
Asia Pacific Resources International Holdings Ltd., Class A (1) 2,420,969 4,539 .04
Asia Pulp & Paper Co, Ltd. (American Depostary Receipts) (1) 2,014,000 20,266 .15
PT Astra International Inc. 36,718,000 9,872 .08
PT Bank Internasional Indonesia 10,231,459 628
PT Bank Internasional Indonesia, warrants, -
expire January 17, 2000 (1) 909,462 13
PT BAT Indonesia (1) 530,000 2,600 .02
Gulf Indon Resources (1) 482,500 10,615 .08
PT Hanjaya Mandala Sampoerna 23,105,000 18,092 .14
PT Indah Kiat Pulp/Paper 135,186,000 24,869 .19
PT Indofood Sukses Makmur 46,735,200 15,872 .12
PT Indo-Rama Synthetics 26,315,500 12,165 .09
PT International Nickel Indonesia 5,069,500 6,504 .05
PT Jaya Real Property 10,857,000 563 -
PT Lautan Luas Tbk 3,158,000 536 -
PT Lippo Bank 24,348,000 2,756 .02
PT Mayora Indah 3,205,500 287 -
PT Modern Photo Film Co. 10,500,800 3,170 .02
PT Mulia Industrindo 20,948,072 2,381 .02
PT Pabrik Kertas Tjiwi Kimia 11,653,272 2,968 .02
PT Panin Bank 34,039,500 4,335
PT Panin Indonesia warrants, expire June 26, 2000 (1) 4,862,785 43 .03
Perusahaan Perseroan (Persero) PT Indonesian
Satellite Corp. 3,683,500 7,089
Perusahaan Perseroan (Persero)PT Indonesian
Satellite Corp. (American Depositary Receipts) 1,927,480 37,224 .34
Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia, Class B 47,504,000 26,217
Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia, Class B (American Depositary Receipts) 1,204,500 13,325 .30
PT PP London Sumatra Indonesia (1) 12,000,000 7,076 .05
PT Ramayana Lestari Sentosa 2,157,000 2,107 .02
PT Semen Cibinong 10,500,000 495
PT Sorini Corp. (1) 250 - -
PT Tambang Timah (Persero) 3,432,000 3,821
PT Tambang Timah (Persero), Class B
(Global Depositary Receipts) 126,183 6,131 .08
PT Tigaraksa Satria 2,173,140 1,394 .01
PT United Tractors 6,671,000 818 .01
---------- ----------
248,771 1.88
---------- ----------
KAZAKHSTAN - 0.02%
Kazkommertsbank (American Depositary Receipts)
(acquired 9/10/97, cost: $4,024,000) (1) (2) 154,000 3,080 .02
------------ ----------
MALAYSIA - 1.17%
Arab-Malaysian Finance Bhd. 5,155,000 1,035 .01
Commerce Asset-Holding Bhd. 11,154,200 5,340 .04
Genting International PLC 8,972,000 20,546 .16
Guinness Anchor Bhd. 6,975,000 8,617 .07
Hap Seng Consolidated Bhd. 6,029,000 7,448 .06
Hong Leong Credit Bhd. 3,433,600 3,093 .00
Hong Leong Credit Bhd., warrants, expire December 27, 2001 (1) 386,000 32 .02
IJM Corp. Bhd. 9,902,714 3,288 .02
IOI Corp. Bhd. 13,735,000 4,454 .03
Leader Universal Holdings Bhd. 8,965,000 2,769 .02
Malayan Banking Bhd. 10,000 29 .00
Malaysian Airline System Bhd. 3,566,000 2,863 .02
MBf Capital Bhd. 14,594,000 3,399 .03
Nestle (Malaysia) Sdn. Bhd. 4,765,000 22,074 .17
New Straits Times Press (Malaysia) Bhd. 2,710,000 3,362 .03
Oriental Holdings Bhd. 3,397,120 4,162 .03
O.Y.L. Industries Bhd. 1,281,980 3,002 .02
Renong Bhd., warrants, expire November 21, 2000 (1) 990,500 127 .00
Resorts World Bhd. 967,000 1,630 .01
Rothmans of Pall Mall (Malaysia) Bhd. 1,676,000 13,048 .10
Sime Darby Bhd. 22,541,000 21,697 .16
Sime UEP Properties Bhd. 2,647,000 1,417 .01
Star Publications 1,516,000 1,732 .01
Tanjong PLC (Malaysia) Bhd 3,829,800 6,357 .05
Technology Resources Industries Bhd. (1) 3,314,000 1,962 .01
UMW Holdings Bhd. 7,147,359 5,427
UMW Holdings Bhd., warrants, expire January 26, 2000 (1) 575,159 49 .04
YTL Corp. 2,586,000 3,494 .03
YTL Power International Bhd. (1) 3,152,000 2,426 .02
---------- ----------
154,879 1.17
---------- ----------
MAURITIUS - 0.05%
State Bank of Mauritius 10,927,000 6,257 .05
---------- ----------
MEXICO - 11.37%
Apasco, SA de CV 1,703,056 11,774 .09
Carso Global Telecom, SA de CV 2,645,000 10,711 .08
Cemex, SA de CV, Class A (1) 2,956,762 13,251
Cemex, SA de CV, Class B (1) 9,242,251 49,178
Cemex, SA de CV, ordinary participation certificates(1) 9,733,620 43,921
Cemex, SA de CV, Class B, ordinary participation
certificates (American Depositary Receipts)
.86
(acquired 6/14/93, cost: $8,000) (1) (2) 1,183 10
Cemex, SA de CV, Class B (American Depositary Receipts) (1) 755,792 7,747
Cifra, SA de CV, Class C(3) 34,106,334 76,213
Cifra, SA de CV, Class V (1)(3) 43,423,960 106,684 1.59
Cifra, SA de CV, Class V (American Depositary Receipts)(1) (3) 1,111,150 27,223
Coca-Cola FEMSA, SA de CV, Class L
(American Depositary Receipts) 329,800 19,128 .14
Consorcio International Hospital, SA de CV, preferred
(acquired 9/25/97, cost: $4,533,000) (1) (2) 22,665 4,533 .03
Fomento Economico Mexicano, SA de CV, Class B 8,374 66,682 .51
Grupo Carso, SA de CV, Class A, (1) 2,645,000 17,633 .13
Grupo Casa Autrey, SA de CV (American Depositary Receipts) 810,000 16,554 .13
Grupo Financiero Banamex Accival, SA de CV, Class B (1) 30,611,450 91,267
Grupo Financiero Banamex Accival, SA de CV, Class L (1) 12,656,067 32,500
Grupo Financiero Banamex Accival, SA de CV,
7.00% convertible Eurobonds December 15, 1999 103,000 101 .94
Grupo Financiero Banamex Accival, SA de CV,
11.00% convertible July 15, 2003
(acquired 7/12/96, cost: $351,000)(2) $ 371,000 391
Grupo Financiero Bancomer, SA de CV, Class B(1) 45,044,000 28,917 .22
Grupo Financiero Bancomer, SA de CV., Series L2 25.387%
convertible subordinated debentures May 16, 2002(2) MXN5,750,000 802
Grupo Financiero BBV-Probursa, SA de CV, Class B (1) 31,351,166 8,089 .06
Grupo Industrial Maseca, SA de CV, Class B
(American Depositary Receipts) 1,064,700 16,503 .13
Grupo Mexico, SA de CV, Class L 4,862,500 15,308 .12
Grupo Televisa, SA, ordinary participation certificates (1) 350,954 6,807
Grupo Televisa, SA, ordinary participation certificates
(American Depositary Receipts) (1) 1,354,399 52,398 .45
Kimberly-Clark de Mexico, SA de CV, Class A 17,148,300 83,624
Kimberly-Clark de Mexico, SA de CV, Class B 350,000 1,642 .64
Pepsi-Gemex, SA de CV, ordinary participation certificates
(Global Depositary Receipts) 922,200 13,314 .10
Sigma Alimentos, SA de CV, Class B 434,000 6,564 .05
Telefonos de Mexico, SA de CV, Class A 9,137,500 25,608
Telefonos de Mexico, SA de CV, Class L 13,706,250 38,496
Telefonos de Mexico, SA de CV, Class A 4.75%
(American Depositary Receipts) 71,000 195
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) 10,086,075 565,451
Tubos de Acero de Mexico, SA
(American Depositary Receipts) (1) 904,300 19,556 .15
TV Azteca SA de CV, (American Depositary Receipts) (1) 1,181,100 26,649 .20
--------- -------
1,505,424 11.37
--------- -------
MOROCCO - 0.20%
Banque Commerciale du Maroc 35,443 3,226 .02
Cimenterie de l'Oriental, Class A (1) 79,000 6,419 .05
ONA SA 56,000 4,855 .04
Societe des Brasseries du Maroc 23,432 5,181 .04
Wafabank, Class A 72,000 6,717 .05
---------- ----------
26,398 .20
---------- ----------
PAKISTAN - 0.45%
Chakwal Cement Co. Ltd. (Global Depositary Receipts) (1) 891,111 891 .01
Engro Chemical Pakistan Ltd. 3,952,600 10,253 .08
Hub Power Co. Ltd. (Global Depositary Receipts) (1) 1,263,328 38,215 .29
Pakistan Telecommunication Corp.
(Global Depositary Receipts) 150,900 10,186 .07
---------- ----------
59,545 .45
---------- ----------
PERU - 1.43%
Cementos Lima SA 611,323 13,331 .10
Compania de Minas Buenaventura SA, Class B 111,975 843
Compania de Minas Buenaventura SA, Class B
(American Depositary Receipts) 1,166,298 18,661 .19
Compania de Minas Buenaventura SA, Class T 963,000 5,733
Credicorp Ltd. 3,950,128 71,102 .54
Minsur SA-Trabajo 2,700,751 5,772 .04
Ontario-Quinta (acquired 8/15/94, cost: $12,900,000) (2) 12,571,524 19,288 .15
Telefonica del Peru, Class B (American Depositary Shares) 2,344,700 54,661 .41
---------- ----------
189,391 1.43
---------- ----------
PHILIPPINES - 2.29%
Ayala Corp., Class B 42,273,425 16,645
Ayala Corp., Class B (Global Depositary Shares) 965,580 3,380 .15
Ayala Land, Inc.(1) 49,476,773 19,791
Ayala Land, Inc.,6.00% convertible bond March 19, 2002 PHP260,000,000 6,500 .20
Bacnotan Consolidated Industries, Inc. 567,100 184
Bacnotan Consolidated Industries, Inc., 5.50% convertible
bond June 21, 2004 (acquired 6/8/94, cost: $4,484,000) (2) $4,500,000 1,890 .02
Bank of the Philippine Islands 5,178,660 11,522 .09
Bayan Telecommunications Holding Corp.
(acquired 12/22/97, cost: $9,000,000) (1) (2) 180,000 9,000 .07
Benpres Holdings Corp. (Global Depositary Receipts) (1) 5,815,194 15,701 .12
C&P Homes, Inc. 47,656,450 2,812 .02
Fil-Estate Land, Inc. (1) 25,300,000 746 .01
Fortune Cement Corp. 33,868,500 3,387 .03
HI Cement Corp. 33,051,900 2,520 .02
International Container Terminal Services, Inc. (1) 13,022,392 1,628
International Container Terminal Services, Inc.,
6.00% convertible bond February 19,2000 .03
(acquired 2/18/93, cost: $4,000,000) (1)(2) $4,000,000 3,200
JG Summit Holdings, Inc., Class B 18,772,900 1,549
JG Summit Holdings, Inc., Class B
(Global Depositary Shares) 20,000 150 .05
JG Summit Holdings, Inc., 3.50% convertible bond
December 23,2003 (acquired 12/9/93, cost: $9,870,000) (1)(2) $9,870,000 5,429
Keppel Philippines Holdings, Inc., Class B (1) 312,896 19 -
Manila Electric Co., Class B 5,065,447 16,969 .13
Metropolitan Bank and Trust Co. 2,698,070 18,381 .14
Petron Corp. 29,319,274 2,455
Petron Corp. (Global Depositary Receipts) 322,852 1,291 .03
Philippine Airlines Inc. (1) 53,811,255 6,726 .05
Philippine Commercial International Bank, Inc. 871,940 2,507 .01
Philippine Long Distance Telephone Co., ordinary 172,500 3,795
Philippine Long Distance Telephone Co.
(American Depositary Shares) 3,740,516 84,162 .69
Philippine Long Distance Telephone Co., convertible
preferred, Series III (Global Depositary Shares) 87,000 3,991
Philippine National Bank (1) 530,209 1,180 .01
PR Holdings, Inc., subscription rights
(acquired 7/8/92, cost: $9,835,000) (1)(2) 2,236,600 1,853 .01
San Miguel Corp., Class B 27,858,852 34,475 .26
SM Prime Holdings, Inc. 99,467,000 14,920 .11
Southeast Asia Cement Holdings, Inc. (1) 68,088,782 902 .01
Universal Robina Corp. 29,809,400 3,689 .03
---------- ----------
303,349 2.29
---------- ----------
POLAND - 0.80%
Bank Handlowy W Warszawie SA(1) 1,577,920 20,172
Bank Handlowy w Warszawie SA
(Global Depositary Receipts)(1) 790,072 10,468 .23
Bank Inicjatyw Gospodarczych BIG SA 1,589,957 1,558 .01
Bank Rozwoju Eksportu SA 604,700 12,541 .10
Elektrim SA 2,610,325 25,288
Elektrim SA, 2.0% convertible bond May 30, 2004 DEM9,727,000 5,087 .23
Optimus SA (1) 70,282 1,857 .01
Polifarb Cieszyn Wroclaw (1) 1,458,174 6,918 .05
Zaklady Metali Lekkich Kety SA(1) 262,680 4,030 .03
Zaklady Piwowarskie w Zywcu SA (3) 217,611 18,299 .14
---------- ----------
106,218 .80
---------- ----------
PORTUGAL - 1.38%
Portugal Telecom ,SA 1,703,105 79,089
Portugal Telecom, SA (American Depositary Receipts) 951,500 44,721 .93
TELECEL - Comunicacoes Pessoais, SA (1) 560,300 59,747 .45
TVI-Televisao Independente, SA (1) 26,375 26 -
---------- ----------
183,583 1.38
---------- ----------
REPUBLIC OF CROATIA - 0.50%
PLIVA d.d. (Global Depositary Receipts) 3,761,053 66,383 .50
---------- ----------
RUSSIAN FEDERATION - 6.28%
AO Mosenergo Power Generation and Electrification
Amalgamation 4,500,000 5,715
AO Mosenergo Power Generation and Electrification
Amalgamation (American Depositary Shares) 1,172,500 44,672 .45
AO Mosenergo Power Generation and Electrification
Amalgamation (Russian Depositary Trust Certificate) 750 9,525
Ao Torgovy Dom Gum (Russian Depoitary Trust Certificate) (1) 270 6,804 .05
Avalon Oil PLC (1) (3) 5,068,000 4,438 .03
Gez Investments Holding Ltd.,Class A
(aquired 9/11/95,cost: $77,000) (1)(2) 2,870 231
Gez Investments Holding Ltd.,Class B
(aquired 9/11/95,Cost: $4,208,000) (1)(2) 157,793 12,689 .10
Global Tele-Systems Ltd., warrants, expire February 2, 2001
(acquired 2/2/96, cost:$0) (1)(2) 1,944,444 11,667 .09
Irkutskenergo (Russian Depositary Trust Certificate) (1) 700 27,720 .21
JSC Moscow City Telephone Network (MGTS) (1) 3,200 3,840
JSC Moscow City Telephone Network (MGTS)
(Russian Depositary Trust Certificate) (1) 1,111 66,660 .53
Kamaz (1) 4,345,000 7,604 .06
Lenenergo (1) 28,336,800 17,030 .13
LUKoil Holding (Russian Depositary Trust Certificate) 60 6,906
LUKoil Holding (American Depositary Receipts) 1,818,000 167,401 1.32
New Century Capital Partners, LP
(acquired 12/7/95,cost: $7,968,000) (1)(2)(5) 7,770,000 7,968 .06
Nizhny Novgorod Sviazinform
(Russian Depositary Trust Certificate) (1) 70 6,720 .05
Ramco Energy PLC (3) 1,417,000 19,550 .15
RAO Gazprom, (American Depositary Receipts) 1,071,088 25,840
RAO Gazprom (American Depositary Receipts) .62
(acquired 10/21/96, cost:$38,674,000) (2) 2,322,800 56,038
Russian Telecommunications Development Corp.
(acquired 12/22/93, cost: $3,800,000) (1)(2) 380,000 2,850
Russian Telecommunications Development Corp.,
nonvoting ordinary (acquired 12/22/93, .06
cost: $6,200,000) (1) (2) 620,000 4,650
St. Petersburg Telephone Network JSC 12,913,020 14,850 .11
Star Mining Corp. NL (1) 18,884,400 209 -
Story First Communications Inc., Class B Senior convertible
preferred (acquired 10/14/97, cost:$14,848,000)(1) (2) 10,383 14,848 .11
Unified Energy Systems of Russia (1) 942,496,500 285,011 -
Unified Energy System of Russia
(Global Depositary Receitps) 1,800 54 2.15
Xavier Corp (1) (3) 1,350,000 42 -
---------- ----------
831,532 6.28
----------- ----------
SLOVAKIA - 0.13%
VSZ, AS 845,148 16,591 .13
---------- ------------
SOUTH AFRICA - 4.72%
African Oxygen Ltd. 6,677,614 17,985 .14
Bidvest Group Ltd.(1) 1,812,733 15,094 .11
Coronation Holdings Ltd., Class N (1) 2,570,892 37,475
Coronation Holdings Ltd.(1) 555,400 8,393 .35
Ellerine Holding Ltd. 2,806,465 18,117 .14
Energy Africa Ltd.(1) 1,820,000 9,635 .07
Foodcorp Ltd. 65,795 338 -
Gencor LTD 6,725,000 11,130 .08
Hudaco Industries Ltd. 1,452,000 4,478 .03
International Pepsi-Cola Bottler Investments
(aquired 12/18/95, cost: $9,900,000) (1)(2)(5) 100,000 10,000 .08
Iscor Ltd. 50,116,268 14,837 .11
JD Group Ltd. 3,580,723 21,901 .17
Malbak Ltd. 6,832,051 6,672 .05
Metro Cash and Carry Ltd. 39,012,623 34,088 .26
Nasionale Pers Beperk N, Class N 5,466,000 44,951 .34
Nedcor Ltd. (Global Depositary Receipts) 80,000 1,776 .01
New Clicks Holding Ltd. 1,660,467 2,031 .02
Rembrandt Group Ltd. 3,237,000 23,625 .18
Sage Group Ltd. 1,570,000 7,101 .05
Sasol Ltd. 17,007,086 178,323 1.35
South African Capital Growth Fund, LP, Class A
(acquired 8/25/95, cost: $1,901,000) (1) (2) (5) 1,901 1,997
South Africa Capital Growth Fund, LP, Class D .12
(acquired 8/25/95, cost: $13,650,000) (1) (2) (5) 13,560 14,352
South African Breweries Ltd. 4,771,138 117,709 .89
South African Druggist Ltd.(3) 4,138,839 22,974 .17
---------- ----------
624,982 4.72
---------- ----------
SOUTH KOREA - 1.74%
Anam Industrial Co. Ltd. 634,872 2,360 .02
Daegu Bank, Ltd. 10,004 23 -
Daehan Asia Trust (International Depositary Receipts) 2,820 1,551 .01
Daehan Korea Trust (International Depositary Receipts) 500 100 -
Daewoo Securities Co., Ltd., nonvoting preferred 193,920 350
Daewoo Securities Co., Ltd.,ordinary (1) 1,416,622 6,979 .06
Hanil Bank 373,422 701 .01
Hansol Paper Co., Ltd. 446,500 1,962 .01
Housing & Commercial Bank 13,610 92 -
Hyundai Electronics 215,450 2,733 .02
Hyundai Motor Co. 1,502,700 16,578
Hyundai Motor Co., nonvoting preferred .15
(Global Depositary Receipts) 1,823,380 2,844
Korea Electric Power Corp. 678,090 6,281
Korea Electric Power Corp., .07
5.0% convertible bond August 1, 2001 $3,000,000 2,599
Korea Industrial Leasing Co., Ltd. 241,000 360 .00
Korea Pacific Trust (International Depositary Receipts) (1) 3,000 1,200 .01
Korea Zinc Co. Ltd. 409,070 1,820 .01
LG Chemical Ltd., preferred 330,000 604 -
LG Electronics Inc. 993,264 7,559
LG Electronics Inc., nonvoting preferred 220,500 552
LG Electronics Inc.
(Global Depositary Receipts)(1) 13,488 46
LG Electronics Inc., non-voting preferred
(Global Depositary Receipts)(1) 707,100 1,103 .07
LG Industrial System 576,780 2,263 .02
LG Securities Ltd., preferred (1) 849,010 1,247
LG Securities Co., Ltd. (1) 1,454,920 5,579 .05
LG Semicon Co. 495,760 4,826 .04
Pohang Iron & Steel Co., Ltd. 66,300 1,867 .01
Samsung Display Devices 793,993 14,990
Samsung Display Devices 0.5% convertible Eurobonds
April 12, 2002 $770,000 762 .12
Samsung Electronics Co., Ltd., nonvoting preferred 118,403 818
Samsung Electronics Co., Ltd. 2,751,002 62,324
Samsung Electronics Co., Ltd., nonvoting preferred
(Global Depositary Shares) 1,688,168 9,496 .78
Samsung Electronics Co., Ltd.(Global Depositary Shares) 2,202,252 30,820
Samsung Electronics Co., Ltd., rights, expire July 1, 1997 (1)
Samsung Fire & Marine Insurance (1) 27,470 3,160 .03
Seoul Asia Index Trust (International Depositary Receipts) (1) 80 200 -
Shinhan Bank 640,000 2,851 .02
SK Telecom Co., Ltd. 60,759 17,547
SK Telecom Co., Ltd. (American Depositary Receipts) 1,964,982 12,772 .23
Yukong Chf, warrants, expire June 18, 1999 (1) 8,000 142 -
---------- ----------
230,061 1.74
---------- ----------
Sri Lanka - 0.09%
Asian Hotels Corp. Ltd. (1) 12,215,000 1,485 .01
Development Finance Corp. of Ceylon (3) 1,533,310 5,865 .05
National Development Bank of Sri Lanka 1,178,700 4,389 .03
---------- ----------
11,739 .09
---------- ----------
TAIWAN - 5.89%
Acer Computer International Ltd. 1,639,500 1,508 .01
Acer Inc.(Global Depositary Receipts) (1) 1,936,850 14,817 .11
Acer Peripherals Inc. 11,145,125 20,951 .16
Advanced Semiconductor Engineering, Inc. (1) 27,632,608 97,502
Advanced Semiconductor Engineering, Inc. .78
(Global Depositary Receipts) (1) 280,692 5,502
ASE Test Limited (1) 460,300 30,092 .23
Asia Cement Corp. 22,573,680 26,782 .20
Asia Corporate Partners Fund, Class B
(acquired 3/12/96; cost: $20,027,000) (1)(2)(5) 40,000 20,000 .15
Asustek Computer Inc. (1) 7,111,000 113,294 .86
Cathay Construction Co. Ltd. 18,804,400 21,557 .16
China Steel Corp.(1) 8,097,500 6,139 .05
Delta Electronics, Inc. 8,008,800 32,085
Delta Electronics Inc., 0.50% convertible bond .30
March 6,2004 (acquired 2/27/97, cost: $6,031,000) (2) $ 5,976,000 7,350
Mosel Vitelic Inc. (1) 19,133,800 25,237 .19
Nan Ya Plastics Corp.,1.75% Eurobond July 19, 2001 $1,850,000 2,109 .02
Primax Electronics Ltd. 6,561,582 14,963 .11
Seres Capital (Cayman Islands)
(acquired 3/12/96; cost:$25,000) (1)(2) 8 125
Seres Capital (Cayman Islands), nonvoting -
(acquired 3/12/96; cost: $125,000) (1)(2) 2 25
Siliconware Precision Industries Co., Ltd. 8,564,920 20,324 .15
Taiwan Mask Corp. (1) 837,039 3,805 .03
Taiwan Semiconductor Manufacturing Co. Ltd. (1) 86,415,700 298,261
Taiwan Semiconductor Manufacturing Co. Ltd,
convertible Eurobonds July 3, 2002 (acquired 7/4/97, 2.26
cost: $1,049,000)(1) (2) $1,000,000 1,068
Ton Yi Industrial Corp. (1) 3,977,631 3,297 .02
U-Ming Marine Transport Corp. 1,772,138 1,119 .01
Unicap Electronics Industrial Corp. (1) 342,240 471 -
United Microelectrionics Corp., Ltd. (1) 2,615,600 5,158 .04
Wus Printed Circuit Co., Ltd. 1,101,100 1,985 .01
Yangming Marine Transport Corp.(1) 5,992,000 4,856 .04
---------- ----------
780,382 5.89
---------- ----------
THAILAND - 0.40%
Alphatec Electronics PCL (1) 423,400 - -
Ayudhya Jardine CMG Life Assurance (1) 84,547 22 -
Bangkok Bank PCL 4,090,160 10,247
Bangkok Bank PCL, 3.25% convertible
Eurobonds March 3, 2004 $ 1,000,000 325 .08
Bangkok Insurance PLC 493,800 4,021 .03
Bank of Ayudhya PCL 327,000 137 -
Charoen Pokphand Feedmill PCL 1,575,600 2,303 .02
Dusit Thani PCL 990,000 734 .01
Electricity Generating Authority of Thailand 10,663,217 20,035
Electricity Generating Authority of Thailand, local registered 22,530 30 .15
KR Precision 1,302,100 4,947 .04
Nakhornthai Integrated Steels Co., Ltd. (1)(3) 11,213,400 140 -
Post Publishing PCL (3) 2,525,000 1,634 .01
Serm Suk PCL 210,166 1,448
Serm Suk PCL, local registered 64,960 352 .01
Siam Commercial Bank PCL 1,109,466 1,274 .01
Swedish Motors Corp. PCL 1,608,100 394 -
Thai Farmers Bank PCL 1,182,010 2,159
Thai Farmers Bank PCL
warrants, expire September 15, 2002 (1) 292,351 31 .02
Thai Glass Industries PCL 1,272,200 983 .01
Wattachak 3.50% convertible bond December 6, 2003 $6,400,000 1,920 .01
---------- ----------
53,136 .40
---------- ----------
Turkey - 5.06%
Adana Cimento Sanayii TAS, Class A (3) (4) 140,911,321 11,913 .09
Adana Cimento Sanayii, TAS, Class C (3) 48,392,068 421
Aktas Elektrik Ticaret AS (1) 33,931,644 27,047 .20
Ege Biracilik ve Malt Sanayii AS 75,491,838 6,838 .05
Erciyas Biracilik ve Malt Sanayii AS 77,891,000 10,912 .08
Ere gli Demir ve Celik Fabrikalari TAS (3) 364,422,000 56,336 .42
Koc Holding AS, ordinary 260,074,538 60,935 .46
Migros Turk TAS 43,223,363 39,152 .30
Nergis Holding (1) 60,000,000 7,536 .06
Netas Northern Electric Telekomunikasyon AS (1) 33,819,300 12,253 .09
Petrol Ofisi AS 163,841,437 39,179 .30
Trakya Cam Sanayii AS (3) 564,604,574 32,731 .25
Turliye Is Bankasi AS(1) 1,006,429,500 182,324 1.38
Turkiye Sise ve Cam Fabrikalari AS (1) (3) 674,668,096 49,704 .38
Yapi ve Kredi Bankasi AS (3) 3,477,393,889 132,712 1.00
---------- ----------
669,993 5.06
--------- ----------
Ukraine - 0.07%
JKX Oil & Gas PCL(1) (3) 10,230,233 7,437
JKX Oil & Gas PLC, 7.00% convertible bond June 30, 2001
(acquired 6/6/96 , cost: $2,000,000) (2), (3) $ 2,000,000 2,000 .07
---------- ----------
9,437 0.07
---------- ----------
Venezuela - 0.14%
Compania Anonima Nacional Telefonos de Venezuela
(CANTV), Class D (American Depositary Receipts) 454,000 18,898 .14
------------- ------------
Vietnam - 0.05%
Vietnam Frontier Fund
(acquired 7/21/94, cost: $3,000,000) (1)(2)(3)(5) 291,300 3,000 .02
Vietnam Investment Fund, preferred, units
(acquired 8/4/94, cost: $3,206,000) (1)(2)(3)(5) 30 3,206
Vietnam Investment Fund, ordinary, units
(acquired 8/4/94, cost: less than $1,000) (1)(2)(3)(5) 6 - .03
---------- ----------
6,206 .05
---------- ----------
Multi-National - 2.01%
Abacan Resource Corp. (1)(3) 7,550,000 11,849 .09
Aminex PLC (acquired 8/1/97, cost: $3,855,000) (1)(2) 3,250,000 3,168 .02
Armada Gold Corp.(1) (3) 4,600,000 804
Armada Gold Corp., 10.0% convertible bond,
exprires July 8, 2004 (3) c$800000 755 .01
Cie Financiere pour l'Europe Centrale SA
(Global Depositary Receipts) (1) 103,195 1,625 .01
DiamondWorks Ltd. (1) 4,000,000 3,355
DiamondWorks Ltd. , warrants, expire July 15, 1998 (1) 1,000,000 129 .03
Dragon Oil PLC (1) 6,515,200 7,213 .06
Freeport McMoRan Copper & Gold, Class A 90,000 1,378 .01
Marchmont Gold Corp.(1) 148,380 18 -
New Asia East Investment Fund Ltd., Class A
(acquired 5/23/96, cost $2,936,000) (1), (2), (5) 293,600 2,912
New Asia East Investment Fund Ltd., Class B .32
(acquired 5/23/96, cost $40,064,000) (1), (2), (5) 4,006,400 39,739
New Europe East Investment Fund Ltd., Class B
(acquired 6/4/93, cost: $45,349,000) (1), (2) 436 52,547 .40
Oliver Gold Corp 75,795 18 -
Panamerican Beverages, Inc., Class A 4,062,800 132,549 1.00
Sutton Resources Ltd. (1) 1,220,000 8,078
Sutton Resources Ltd., warrants, expire September 30, 1998 (1) 155,000 217 .06
------------- ----------
266,354 2.01
------------- -----------
MISCELLANEOUS - 0.33%
Equity securities in initial period of acquisition 43,790 .33
---------- ----------
TOTAL EQUITY SECURITIES (cost: $9,774,667,000)
11,011,016 83.13
---------- ----------
Principal Market Percent
Amount Value of Net
(000) (000) Assets
BOND & NOTES
ARGENTINA - 1.75%
Republic of Argentina 8.75% July 10,2002 ARP29,100 25,322 .19
Republic of Argentina 9.75% September 19, 2027 10,250 9,840 .08
Republic of Argentina 11.00% October 9, 2006 38,575 41,430 .31
Republic of Argentina 11.375% January 30, 2017 28,350 31,072 .24
Republic of Argentina ARS 11.75% February 12, 2007
(acquired 1/29/97, cost: $40,784,000) (2) ARP41000 38,753 .29
Republic of Argentina 11.75% February 12, 2007 ARP11200 10,586 .08
Republic of Argentina Bocon PIK 3.2052% April 1, 2007(4) ARP25699 14,575 .11
Republic of Argentina Bocon PIK Capitalized
Interest 3.2424% April 1, 2007(4) $9,893 9,894 .07
Republic of Argentina Bearer Bond,
Series L, 6.6875% March 31, 2005(4) 18,048 16,153 .12
Bonos Del Tesoro 8.75% May 9, 2002 26,500 25,009 .19
CEI Citicorp Holdings, Series B 11.25% February14, 2007 ARP11675 9,342 .07
---------- ----------
231,976 1.75
---------- ----------
BRAZIL - 0.66%
Comtel Brasileira Ltda. 10.75% September 26,2004
(acquired 9/18/96, cost: $2,400,000)(2) $ 2,400 2,342 .02
Federal Republic of Brazil Capitalization Bond,
PIK 8.00% April 15,2014 23,147 18,205 .14
Federal Republic of Brazil Debt Conversion Bond,
Series L, 6.75% April 15,2012 (4) 23,250 17,670 .14
Federal Republic of Brazil Bond,
Series EI-L, 6.6875% April 15, 2006 (4) 10,192 8,791 .06
Federal Republic of Brazil NMB,
Series L, 6.75% April 15,2009 (4) 7,100 5,733 .04
Multicanal Participacoes SA Class B 12.625% June 18, 2004 10,500 10,815 .08
MYDFA Trust 6.6875% September 9, 2007 4,469 3,810 .03
MYDFA Trust 6.6875% September 15, 2007
(acquired 10/2/96, cost: $13,797,000) (2) (4) 15,995 13,636 .10
Tevecap SA 12.625% Senior Notes November 26, 2004 6,470 5,952 .05
---------- ----------
86,954 .66
---------- ----------
BULGARIA - 0.29%
Republic of Bulgaria Interest Arrears Bond
6.5625% July 28, 2011 19,600 14,406 .12
Republic of Bulgaria Front Loaded Interest Reduction
Bond, Series A 2.25% July 28, 2012 38,725 23,574 .17
---------- ----------
37,980 .29
---------- ----------
ECUADOR - 0.03%
Republic of Bulgaria Interest Arrears Bond
6.685% July 28, 2011 6,561 4,306 .03
---------- ----------
INDIA - 0.00%
Flex Industries Ltd. 13.50% December 31, 2004 INR29,929 609 -
---------- ----------
INDONESIA - 0.05%
Indah Kiat Finance Reg S 10.0%, July 1, 2007 2,500 2,075 .02
Indah Kiat International Finance 10.00% July 1,2007
(acquired 12/11/97, cost $1,502,000) (2) 1,650 1,370 .01
Pindo Deli Finance 10.00% October 1,2007
(acquired 11/25/97, cost:$3,257,000) 3,500 3,010 .02
---------- ---------- ----------
6,455 .05
---------- ----------
MEXICO - 0.71%
Banco Nacional de Comercio Exterior, S.N.C.
7.25% Februaary 2,2004 21,200 19,557 .15
Grupo Televisa, SA 0/13.25% May 15, 2008 (6) 3,000 2,243 .02
Innova, S. de R.L. 12.875% Senior Notes due April 1, 2007 1,000 1,000 .01
Tubos de Acero de Mexico, SA 13.75% December 8, 1999
(acquired 11/23/94, cost : $1,736,824) 1,750 1,912 .01
United Mexican States Discount Bonds
Series A unit 6.6925% December 31, 2019 1,750 1,623 .01
United Mexican States Discount Bonds
Series B 6.617% December 31, 2019(4) 1,000 926 .01
United Mexican States Discount Bonds
Series C 6.820% December 31, 2019 (4) 3,000 2,783 .02
United Mexican States Discount Bonds
Series D 6.820% December 31, 2019 (4) 10,000 9,275 .07
United Mexican States Government
Bond 9.875% January 15,2007 9,000 9,401 .07
United Mexican States Government
Bond 11.375% September 15,2016 15,930 18,319 .14
United Mexican States Government
Bond 11.50% May 15,2026 22,925 27,222 .20
---------- ----------
94,261 .71
---------- ----------
PANAMA - 0.11%
Republic of Panama (Interest Reduction Bond) 3.50%
due July 17, 2014 (acquired 11/8/95, cost: $7,769,000)(2)(4) 13,864 10,623 .08
Republic of Panama Past Due Interest Bond 6.6875%
due July 17, 2016 (acquired 6/21/96, cost:$2,861,000)(2)(4) 4,212 3,444 .02
Republic of Panama ( Past Due Interest Bond) 6.6875%
July 17, 2016 865 707 .01
---------- ----------
18,076 14,774 .11
---------- ----------
PERU - 0.16%
Republic of Peru (Front Loaded Interest Reduction Bond)
3.25% March 7,2017 (acquired 8/5/96,
cost: $6,404,000) (2)(4) 10,900 6,491 .05
Republic of Peru (Past Due Interest Bond) 4.00%
March 7, 2017 (acquired 3/7/97, cost: $14,601,000)(2)(4) 22,235 14,647 .11
---------- ----------
10,900 21,138 .16
---------- ----------
PHILIPPINES - 0.21%
Republic of Philippines (Front Loaded Interest Reduction
Bond) Series B, 5.00% due June 1, 2008 30,250 27,376 .21
---------- ----------
POLAND - 0.09%
Republic of Poland Past Due Interest Bond (PDI)
3.75% due October 27, 2014(4) $7,500 6,497 .05
Republic of Poland (Past Due Interest Bond)
4.00% October 27,2014(4) 5,500 4,764 .04
---------- ----------
11,261 .09
---------- ----------
RUSSIAN FEDERATION - 0.24%
Global Tele-systems Group Loan 10.00% February 2, 2001
(acquired 2/2/96, cost; $25,924,000)(1)(2) 26,250 25,725 .19
Russia Interest Arrears Notes 6.71875% due
December 15,2015 (acquired 12/5/97, cost :$1,914,000) (2)(4) 2,618 1,850 .01
Russia Principal Loan 6.71875% due December 15,2020 (4) 9,284 5,756 .04
---------- ----------
33,331 .24
SOUTH AFRICA - 0.07%
Republic of South Africa 13.00% August 31, 2010 ZAR47,000 9,205 .07
---------- ----------
THAILAND - 0.01%
Advance Agro Public Company Ltd. Senior Unsecured
Notes 13.00% due November 15,2007
(acquired 11/19/97, cost: $901,000) 1,000 873 .01
---------- ----------
VENEZUELA - 0.40%
Republic of Venezuela (Front Loaded Interest Reduction
Bond) Series A Eurobonds 6.75% March 31, 2007 (4) 10,631 9,541 .07
Republic of Venezuela (Front Loaded Interest Reduction
Bond) Series B Eurobonds 6.75% March 31, 2007 (4) 9,952 8,932 .07
Republic of Venezuela Debt Conversion Bond
6.8125% December 18, 2007 (4) 37,857 33,977 .26
---------- ----------
52,450 .40
---------- ----------
TOTAL BONDS AND NOTES (cost: $ 607,719,000) 632,949 4.78
---------- ----------
SHORT-TERM SECURITIES
CORPORATE SHORT-TERM NOTES - 5.64%
ABN-AMRO Bank NV5.75% due 3/20/98 39,700 39,204 .29
Anz (DE) Inc.5.67% due 1/27/98 25,000 24,894 .19
Bank of Montreal 5.65%-5.73% due 1/23 -1/26/98 64,500 64,258 .48
Barclays U.S. Funding Corp.5.60%-5.63% due 1/5-1/26/98 27,000 26,943 .20
Caisse Des Depots Et Consignations 5.62%-5.78% due 2/5-3/05/98 71,400 70,889 .53
Canada Bills 5.58% due 2/10/98 15,000 14,903 .11
Commerzbank U.S. Finance 5.76% due 01/20/98 43,000 42,864 .32
Daimler-Benz North American Corp.5.75% due 1/16/98 50,000 49,873 .38
Deutsche Bank Financial Inc.5.74% due 2/2/98 50,000 49,740 .38
Halifax PLC5.73% due 1/22/98 25,000 24,914 .19
International Lease Finance Corp.5.63% due 1/27/98 25,000 24,894 .19
Lloyds Bank PLC 5.61%-5.70% due 1/12-1/27/98 43,200 43,100 .33
National Australia Funding (Delaware) Inc.
5.59%-5.84% due 1/8/2/10/98 55,000 54,846 .42
Rank Xerox Capital (Europe) PLC5.61% due 1/14/98 45,000 44,901 .34
Siemens Capital Corp.5.63%-5.65%due 2/5-2/6/98 35,000 34,798 .26
Societe Generale N.A. Inc.5.58% due 1/16/98 5,000 4,987 .04
Sony Europe Finance PLC5.89%-5.91% due 1/16-1/22/98 55,550 55,376 .42
Svenska Handelsbanken Inc.5.78% due 3/13/98 50,000 49,425 .37
Sweden (Kingdom of) 5.65% due 1/20/98 26,100 26,017 .20
---------- ----------
746,826 5.64
---------- ----------
Federal Agency Discount Notes - 1.27%
Fannie Mae (formerly Federal National Mortgage Assn.)
5.41%-5.57% due 3/12/98 10,200 10,088 .08
Federal Home Loan Banks 5.535% due 2/18-3/4/98 90,400 89,662 .68
Freddie Mac (formerly Federal Home Loan Mortgage Corp.)
5.59%-5.72% due 2/6-3/10/98 39,000 38,620 .29
U.S. Treasury Bills 5.17% due 2/12/98 30,000 29,828 .22
---------- ----------
168,198 1.27
---------- ----------
Certificates of Deposit - 0.98%
Canadian Imperial Holdings Inc. 5.610% due 01/13/98 30,000 29,999 .22
Dresdner Bank YK 5.650% 1-05-98 50,000 50,000 .38
Swiss Bank Corp. YK 5.70% due 2/17/98 50,000 49,995 .38
---------- ----------
129,994 .98
---------- ----------
Non-U.S. Government Short -Term Obligations - 1.41%
Kenya Government Treasury Bills due 9/22/97 KES192,500 3,062 .02
Polish Government Treasury Bills due 1/7-4/17/98 PLZ78,600 20,961 .16
Turkey Government Teasury Bills 3/4-9/16/98 TRL53,185,330 162,797 1.23
---------- ----------
186,820 1.41
---------- ----------
Non-U.S. Currency - 0.19%
Chilean Peso CHP6,296,473 14,375 .11
New Taiwanese Dollar NT$350,286 10,795 .08
---------- ----------
25,170 .19
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost:$1,291,224,000) 1,257,008 9.49
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $11,673,610,000) 12,900,973 97.40
Net unrealized appreciation on foreign currency contracts (7) 75,606 .57
Excess of cash and receivables over liabilities
(excludes open foreign currency contracts) 268,325 2.03
----------
- ----------
NET ASSETS 13,244,904 100.00%
=========== ==========
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 December 31, 1997, the total market value and cost of such securities was
$588,137,000 and $531,371,000, respectively, and the market value represented 4.44% of net assets. Such securities, excluding
convertible bonds and American Depositary Receipts, are valued at fair value.
3. The fund owns 5% or more or the outstanding voting securities of this company, which represents investment in an
affiliate as defined in the Investment Company Act of 1940.
4. Coupon rate may change periodically.
5. Includes an unfunded capital commitment representing a binding commitment made by the fund which may be paid in
the future.
6. Represents a zero coupon bond which will convert to a coupon-bearing security at a later date.
7. Included in the excess of cash and receivables over liabilities is the net receivable related to open foreign
currency contracts.
As of December 31, 1997, the net receivable consists of the following:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Contract Amount U.S. Valuation at 12/31/97
- -----------------------------------------------------------------------------------------------------------------------
Unrealized
Appreciation
Non-U.S. U.S. Amount (Depreciation)
(000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
Sales:
Brazilian real expiring 9/15/98-10/27/98 B$1,744,173 $1,413,882 $1,354,788 $59,094
French francs expiring 1/7/98 FF5,099 886 849 37
German deutsche Marks expiring 1/7/98 DM10,518 6,145 5,852 293
Pounds sterling expiring 1/7/98 L1,011 1,644 1,671 (27)
Swiss francs expiring 1/7/98 CHF1,270 890 869 21
Taiwan dollars expiring 5/26/98 NT$2,323,230 69,000 69,562 (562)
Thai bahts expiring 5/19/98 THB1,908,924 68,559 39,595 28,964
-------
87,820
Indonesian rupiah expiring
10/7/98 - 12/11/98 IDR213,280,825 47,685 35,471 (12,214)
--------
Foreign currency contracts - net $75,606
========
- ---------------------------------------
ARP - Argentine Peso
C$ - Canadian Dollar
CHF - Swiss Franc
CHP - Chilean Peso
DEM- German Deutsche Mark
FF - French Franc
IDR - Indonesian Rupiah
INR - Indian Rupee
KES - Kenyan Shilling
MXN -Mexican Peso
NT$ - New Taiwanese Dollar
PHP - Philippine Peso
PLZ - Polish Zloty
L - British Pound
R$ - Brazilian Real
THB - Thai Bahts
TRL - Turkish Lira
ZAR - South African Rand
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C>
EQUITY SECURITIES ADDED TO THE EQUITY SECURITIES ELIMINATED FROM THE
PORTFOLIO SINCE JUNE 30,1997 PORTFOLIO SINCE JUNE 30, 1997
Aktas Elektril Ticaret Accton Technology Corp.
Aminex Banco de Colombia
Antofagasta Bavaria
PT Astra International Black Swan Gold Mines
ASE Test Limited Companhia Siderurgica Belgo-Mineira
PT Astra International (Indonesia) Comunicacion Celular
Banco Rio de la Plata CTI Compania Tecno Industrial
Banco Santander Eastern & Oriental Bhd
Banespa Elec de Portugal
Bank Handlowy w Warszawie SA Electrolux Brasileras
Bayan Telecommunications Holding Corp. Emerging Markets Gold Fund
Bompreco SA Encorpar
China Resources Beijing Land Forestal Terranova
Coca-Cola FEMSA Inventec
Comania Anonima Nacional Industrial Finance Corp. of Thailand
Compania Cervecerias Unidas SA Invercap
Telefonos de Venezuela (CANTV) Kookmin Bank
Consorcio International Hospital Korea First Bank
Coronation Holdings Korea Long Term Credit Bank
Distribution y Servicio D&S Kyongnam Bank
Embotelladora Andina Lukinter Finance
Energy Africa Malaysian International Shipping
Erciyas Biracilik ve Malt Sanayii Metal Leve
Eregli Demir ve Celik Fabrikalari Michaniki
Fomento Economico Mexicano MIH holdings
Gencor OSA SA-Organizacao, Sistemas e Aplicacoes
Grupo Financiero BBV-Probursa Pacific Chemical Industrial Co.
Grupo Mexico PT Gudang Garam
Gulf Indonesia Resources PT Kalbe Farma
Hansol Paper Shanghai Petrochemical
Hindustan Petroleum Thai Military Bank
PT Indah Kiat Pulp & Paper United Engineers (Malaysia)
LG Industrial System Videocon International
Jiangsu Expressway Vneshekonombank
Jiangxi Copper Yieh Phui Enterprises
Kazkommertsbank Yizeng Chemical Fibre Co.
PT Lautan Luas Yukong
Nergis Holding
New Clicks Holding Ltd.
Ng Fung Hong Ltd
Oliver Gold Corp
Optimus
Paulista Forca
Real SA Participacoese Administracao
Santa Isabel
LG Semicon
Star Publications
StoryFirst Communcations
Tanjong PLC (Malaysia)
TV Azteca
United Microelectronics
United Tractors
YTL Corporation
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Emerging Markets Growth Fund, Inc.
Financial Statements
Statement of Assets and Liabilities
at December 31, 1997 (dollars in thousands) (Unaudited )
- -------------------------------------------------------------------------------------------------
ASSETS:
Investment securities at market
(cost: $11,673,610) $12,900,973
Cash 4,983
Receivables for -
Sales of investments $76,544
Sales of fund's shares 256,945
Open forward currency contracts 75,606
Dividends and accrued interest 41,425 450,520
------- ----------
13,356,476
----------
LIABILITIES:
Non-U.S. taxes payable 2,407
Payables for -
Purchases of investments 28,432
Unfunded capital commitments 64,493
Management services 6,546
Accrued expenses 9,694 109,165
------- ----------
111,572
NET ASSETS AT DECEMBER 31, 1997 - ----------
Equivalent to $54.92 per share on
241,180,922 shares of $0.01 par value
capital stock outstanding (authorized
capital stock -- 400,000,000 shares) $13,244,904
===========
- ------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(dollars in thousands) (Unaudited)
- ------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Dividends $65,563
Interest 97,555 $163,118
-------
Expenses:
Management services fee 42,306
Custodian fee 7,917
Registration statement and prospectus 1,238
Auditing and legal fees 226
Reports to shareholders 10
Other expenses 1,716 53,413
------- ---------
Income before non-U.S. taxes 109,705
Non-U.S. taxes (279)
---------
Net investment income 109,426
---------
REALIZED GAIN AND UNREALIZED
DEPRECIATION ON INVESTMENTS:
Realized gain before non-U.S. taxes 273,757
Non-U.S. taxes (2,940)
-------
Net realized gain 270,817
Net change in unrealized appreciation on
investments (2,682,487)
Net change in unrealized appreciation
on open forward currency contracts 76,059
-----------
Net unrealized depreciation (2,606,428)
Non-U.S. taxes 14,146 (2,592,282)
----------- -----------
Net realized gain and unrealized
depreciation on investments (2,321,465)
-----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $(2,212,039)
===========
- ------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
- ------------------------------------------------------------------------------------
Six Months Ended Year Ended
December 31, 1997 /1/ June 30, 1997
OPERATIONS:
Net investment income $109,426 $276,260
Net realized gain on investments 270,817 480,316
Net unrealized appreciation
(depreciation) on investments (2,592,282) 2,179,832
---------- ---------
Net increase (decrease) in net assets
resulting from operations (2,212,039) 2,936,408
---------- ---------
DIVIDENDS AND DISTRIBUTIONS PAID
TO SHAREHOLDERS:
Dividends from net
investment income (329,357) (304,645)
Distributions from net realized
gain on investments (722,874) (160,065)
Total dividends and
distributions (1,052,231) (464,710)
---------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
29,604,306 and 37,177,633 shares,
respectively 1,901,805 2,214,203
Proceeds from shares issued in
reinvestment of net investment
income dividends and
distributions of net realized
gain on investments:
19,905,203 and 7,713,936 shares,
respectively 1,023,725 447,083
--------- ---------
Net increase in net assets
resulting from capital share
transactions 2,925,530 2,661,286
--------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS (338,740) 5,132,984
NET ASSETS:
Beginning of period 13,583,644 8,450,660
---------- ---------
End of period (including
excess distributions over
net investment income: $259,205
and $39,274, respectively) $13,244,904 $13,583,644
=========== ===========
/1/ Unaudited
</TABLE>
See Notes to Financial Statements
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 securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, 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 quoted bid and asked prices or at
prices for securities of comparable maturity, quality and type. Securities with
original maturities of one year or less having 60 days or less to maturity are
amortized to maturity based on their cost if acquired within 60 days of
maturity or, if already held on the 60th day, based on the value determined on
the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith under policies approved by the fund's 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. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. 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 and premiums on
securities purchased are amortized over the life of the respective securities.
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 period. The fund
records realized gains or losses on forward currency contracts at the time the
contracts are offset by entry into closing transactions or are extinguished by
the delivery of currency. 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.
The fund may enter into forward currency contracts, which represent
agreements to exchange currencies of different countries at specified future
dates at specified rates. The fund purchased forward currency contracts to
hedge the foreign exchange exposure in certain securities held by the fund
which are pegged to or denominated in various non-U.S. currencies. 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.
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 $7,917,000 includes $55,000 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. Interest income of the fund derived in
Kenya is subject to certain non-U.S. taxes at a rate of 12.5%. 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%. Net realized gain and net unrealized
gain of the fund derived in Venezuela are subject to certain non-U.S. taxes at
rates between 15% and 34%. 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 December 31, 1997, net unrealized appreciation on investments,
excluding forward currency contracts, for federal income tax purposes
aggregated $1,193,493,000, net of accrued taxes totaling $691,000 on net
unrealized appreciation of Indian securities, of which $3,222,629,000 related
to appreciated securities and $2,029,136,000 related to depreciated securities.
During the period ended December 31, 1997, the fund realized, on a tax basis, a
net capital gain of $370,839,000 on securities transactions. The cost of
portfolio securities, excluding forward currency contracts, for federal income
tax purposes was $11,706,789,000 at December 31, 1997.
4. The fee of $42,306,000 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 December 31, 1997, excess distributions of net realized gain on
investments was $101,786,000 and additional paid-in capital was
$12,301,790,000. The fund made purchases and sales of investment securities,
excluding short-term securities, of $3,184,265,000 and $1,887,660,000,
respectively, during the period ended December 31, 1997.
Dividend and interest income is recorded net of non-U.S. taxes paid. For
the period ended December 31, 1997, such non-U.S. taxes were $4,655,000. Net
realized currency losses on dividends, interest, withholding taxes reclaimable,
and purchases and sales of non-U.S. equity-type securities and bonds were
$6,600,000 for the period ended December 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EMERGING MARKETS GROWTH FUND, INC.
PER-SHARE DATA AND RATIOS
Six Months Year Ended June 30
Ended ---------------------------------------------------------
12/31/97/1/ 1997 1996 1995 1994 1993
------------------------------------------------------------------------
Net Asset Value, Beginning of Period $70.87 $57.57 $52.36 $58.75 $44.95 $38.64
------ ------ ------ ------ ------ ------
Income (Loss) from Investment Operations:
Net investment income 0.67 1.61 1.30 0.87 0.53 0.62
Net realized and unrealized gain (loss)
on investments before non-U.S. taxes (11.68) 14.51 6.49 (0.79) 15.29 7.33
Non-U.S. taxes (0.02) (0.01) (0.01) (0.03) (0.39) 0.06
Total income (loss) from investment ------- ------ ------ ------ ------ ------
operations (11.03) 16.11 7.78 0.05 15.43 8.01
------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (1.54) (1.79) (1.30) (0.63) (0.49) (0.56)
Distributions from net realized gains (3.38) (1.02) (1.27) (5.81) (1.14) (1.14)
------- ------ ------ ------ ------ ------
Total distributions (4.92) (2.81) (2.57) (6.44) (1.63) (1.70)
------- ------ ------ ------ ------ ------
Net Asset Value, End of Period $54.92 $70.87 $57.57 $52.36 $58.75 $44.95
======= ====== ====== ====== ====== ======
Total Return (15.09)%/2/ 29.17% 15.49% (1.22)% 34.33% 21.55%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $13,245 $13,584 $8,451 $5,572 $4,170 $2,574
Ratio of expenses to average net assets .40% /2/ .78% .84% .91% 1.00% 1.01%
Ratio of expenses and non-U.S.
taxes to average net assets .40% /2/ .78% .85% .94% 1.04% 1.07%
Ratio of net income to average net assets .81%/2/ 2.74% 2.54% 1.70% .91% 1.82%
Average commissions paid per share /3/ .21 ct .13 ct .10 ct .02ct .01ct .02ct
Portfolio turnover rate 15.57% /2/ 23.75% 17.78% 23.75% 18.13% 11.97%
</TABLE>
/1/ Unaudited
/2/ Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
/3/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold and are not
separately reflected in the fund's statement of operations. Shares traded on a
principal basis (without commissions), such as most over-the-counter and
fixed-income transactions are excluded. Generally, non-U.S. commissions are
lower than U.S. commissions when expressed as cents per share but higher when
expressed as a percentage of transactions because of the lower per-share
prices of many non-U.S. securities.
BOARD OF DIRECTORS
Robert E. Angelica, Berkeley Heights, New Jersey
President and Chief Investment Officer,
AT&T Investment Management Corporation
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.
Khalil Foulathi, Abu Dhabi, United Arab Emirates
Managing Director,
Abu Dhabi Islamic Bank
Beverly L. Hamilton, Los Angeles, California
President, ARCO Investment Management Company
Raymond Kanner, Stamford, Connecticut
Senior Investment Manager, IBM Retirement Funds
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
John G. McDonald, Stanford, California
The IBJ Professor of Finance,
Graduate School of Business, Stanford University
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.
Shaw B. Wagener, Los Angeles, California
Executive Vice President of the fund
President and Director,
Capital International, Inc.
Robert E. Angelica was elected to the Board of Directors on February 10, 1998.
Teresa E. Martini resigned from the Board effective October 29, 1997. She had
been a member since 1991. The Directors wish to thank her for her contributions
to the fund.
OTHER OFFICERS
Roberta A. Conroy, Los Angeles, California
Senior Vice President and Secretary of the fund
Assistant General Counsel,
The Capital Group Companies, Inc.
Michael A. Felix, Brea, California
Vice President and Treasurer of the fund
Vice President, Capital International, 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.
Peter C. Kelly, Los Angeles, California
Vice President of the fund
Senior Vice President, Capital International, Inc.
Victor D. Kohn, Los Angeles, California
Vice President of the fund
Executive Vice President,
Capital Research International
Nancy J. Kyle, New York, New York
Vice President of the fund
Senior Vice President, International,
Capital Guardian Trust Company
Abbe G. Shapiro, Los Angeles, California
Vice President of the fund
Vice President, Capital International, Inc.
Jennifer L. Butler, Los Angeles, California
Assistant Secretary of the fund
Fund Administrative and Compliance Associate,
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
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006-2401
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 TAG/CG/3688
(c) 1998 Emerging Markets Growth Fund, Inc.
Lit. No. EMGF-013-0298(NLS)
