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EMERGING MARKETS GROWTH FUND
Annual Report
For the Year Ended June 30, 1998
Seeks long-term growth of capital by investing in companies operating in
developing countries around the world
FELLOW SHAREHOLDERS:
For the 12 months ended June 30, Emerging Markets Growth Fund's share value
fell 27.6%. This was the first significant fiscal-year decline in the fund's
history.*
The downturn was broad as well as severe. For emerging markets investors, there
was virtually nowhere to hide. Of the 26 key markets tracked in the table on
the next page, 21 recorded losses. The only markets that rose were small ones
in Eastern Europe and the Mediterranean. In Asia, most of the markets in which
we can invest plunged between 50% and 90%. In Latin America, the losses were
somewhat smaller. The Brazilian market, our largest area of concentration, fell
30.5%.
The unmanaged Morgan Stanley Capital International Emerging Markets Free Index,
which tracks stock prices in these 26 developing countries, lost considerably
more than the fund - 39.1% for the 12 months. Much of the damage was done in
the April-June quarter, when the index skidded 23.6% - the largest quarterly
decline in its 10 1/2-year history.
CUSHIONING THE IMPACT
Emerging Markets Growth Fund held its ground better than the index for several
reasons. Our cash reserve (which averaged about 9% of net assets during the
year) and a good performance by our fixed-income investments (9% of net assets)
offset some of the weakness shown by many of our equity holdings (the index is
the equivalent of a fully invested fund and measures only equities). Moreover,
several of our investments in privatized telecommunications companies - a
category where EMGF is overrepresented relative to the index - held up quite
well. A few of them rose.
[Sidebar]
12-MONTH RESULTS
With Dividends Reinvested (7/1/97 - 6/30/98)
Emerging Markets Growth Fund.................... -27.6%
MSCI Emerging Markets Free Index................ -39.1
[End Sidebar]
Portugal Telecom gained 31.6%, and Telecom Argentina was up 13.3%. Our largest
holding, Telefonos de Mexico (Telmex), finished the 12 months almost exactly
where it began, with a modest increase of 0.6%.
Additionally, EMGF was overweighted on a relative basis in Turkey, our
fifth-largest area of concentration and one of the few markets that moved
higher. At the same time, we were underweighted in Malaysia and Thailand, two
of the hardest hit markets. In both, equities lost almost three-fourths of
their value during the 12 months. We were underweighted in those countries
mainly because we have been finding few companies with attractive investment
potential, rather than because we foresaw a collapse of stock prices and
currencies.
Despite our negative results this year, Emerging Markets Growth Fund's longer
term record remains very favorable, both on an absolute basis and relative to
its principal benchmark. Since operations began in 1986, EMGF has produced a
compound return of 21.9% a year. Over the past ten years (the longest period
for which EMF Index figures are available), the fund generated a total return
of 19.1% annualized versus 12.2% for the index. These results, we should add,
have been achieved in an investment climate that was strong for eight years but
began deteriorating in 1994; it has now been weak for about one-third of the
fund's lifetime.
*All percentage gain/loss figures are in U.S. dollars and include reinvestment
of distributions unless otherwise indicated. The only other fiscal-year decline
recorded by EMGF was in 1995, when the total return showed a minus 1.2%.
A CLOSER LOOK AT THE DECLINE
The meltdown in EMGF's investment universe in fiscal 1998 represents a
continuation of the crisis that arguably originated in Thailand in May 1997
(although some suggest the starting point may have been China's devaluation of
the renminbi in 1994). The fiscal year saw a selloff in the October-December
quarter followed by a rally in equities that lasted for a few months before
giving way to another round of heavy selling in the early spring. This second
round was exacerbated by fear and gloom among investors troubled by a host of
developments. These included rioting in Indonesia, bank failures in Malaysia,
rising unemployment in Korea, nuclear tests in Pakistan and India, and Japan's
seeming inability to grapple with its economic and currency problems. A healthy
yen is considered crucial to the region's prosperity.
Percent Change in Key Markets /1/
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Twelve Months Six Months
Ended 6/30/98 Ended 6/30/98
----------------------- ----------------------
Expressed Expressed Expressed Expressed
in U.S. in Local in U.S. in Local
Dollars Currency Dollars Currency
---------- ---------- --------- ----------
Argentina -16.4% -16.4% -16.4% -16.4%
Brazil -30.5 -25.4 -15.9 -12.9
Chile -37.3 -29.1 -21.2 -15.5
China (Free)2 -56.7 -56.7 -35.3 -35.3
Colombia -26.8 -8.4 -30.0 -26.3
Czech Republic 4.1 4.9 7.2 0.9
Greece 37.0 51.9 44.9 55.4
Hungary 24.6 45.7 -0.1 7.0
India -31.9 -19.4 -15.8 -9.0
Indonesia (Free)2 -89.7 -37.2 -57.9 13.5
Israel 7.4 9.3 8.2 11.6
Jordan -22.6 -22.4 -14.0 -13.8
Malaysia (Free)2 -74.7 -58.4 -30.1 -25.5
Mexico (Free)2 -8.4 3.6 -22.2 -13.6
Pakistan -56.1 -50.0 -58.2 -56.2
Peru -22.7 -15.9 -9.9 -4.2
Philippines (Free)2 -59.4 -35.8 -4.1 0.3
Poland -2.5 3.4 15.4 14.2
Russia -60.4 -/3/ -59.3 -/3/
South Africa -32.4 -12.3 -14.2 3.9
South Korea -68.5 -51.2 5.6 -14.5
Sri Lanka -40.5 -33.5 -28.6 -24.4
Taiwan -38.3 -23.8 -16.4 -12.1
Thailand (Free)2 -72.8 -55.5 -32.0 -40.3
Turkey 23.7 122.0 -14.3 10.3
Venezuela -51.6 -45.0 -45.7 -40.5
Emerging Markets Growth -27.6 -14.7
Fund
</TABLE>
/1/ Including reinvestment. All indexes are compiled by Morgan Stanley Capital
International and are nmanaged.
/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 is quoted in U.S. dollars only.
After pronounced weakness developed in the Russian ruble and the South African
rand during May, the slide in equity prices gathered momentum and spread to
countries that have little or no connection to the economic excesses which
spawned the crisis. Nonetheless, those excesses - and headline-making events
such as the tragic chaos in Indonesia - became the catalyst for a steep drop
that has further magnified the perceived risk of investing in emerging markets.
It is worth noting that this downturn also has altered the structure of the EMF
Index. The combined capitalization of all Asian emerging markets excluding
Taiwan has shrunk by two-thirds to around $128 billion, which was approximately
the size of the Malaysian market at the start of the fiscal year. The
capitalization of that market - once the largest component in the index - has
shrunk by about 75% since February 1997.
A LONG-TERM PROPOSITION
While a decline of more than one-fourth in the fund's share value is not
pleasant news to report or to hear, we believe there are some positives worth
carrying away from fiscal 1998 in addition to the fund's performance relative
to the index. Throughout the year, our shareholders demonstrated unwavering
support and an awareness that investing in these markets involves significant
risk and must be looked upon as a long-term proposition. It is gratifying to
see investors maintain their perspective at times like these. We also want to
recognize the many people in our organization who have shown patience along
with an ability to cope with nerve-racking investment conditions month after
month in a calm and professional manner. It is easy to talk about volatility,
and another thing entirely to live through a disturbing bout of it.
WHERE THE FUND'S ASSETS ARE INVESTED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Percent of Net Assets
----------------------------------------------- Market Value
MSCI EMF of Holdings
Index/1/ 6/30/98 (in
6/30/96 6/30/97 12/31/97 6/30/98 6/30/98 thousands)
------- ------- -------- ------- ------- -----------
ASIA/PACIFIC
China 1.2% 1.0% .6% .7% .7% $81,098
Hong Kong .9 .3 .3 .7 - 84,302
India 7.7 7.5 6.6 5.6 6.5 698,480
Indonesia 4.5 3.5 1.9 1.4 .9 174,057
Malaysia 4.4 3.4 1.2 .9 5.0 110,424
Pakistan .9 .4 .5 .1 .4 18,074
Philippines 6.4 3.8 2.5 2.7 1.6 327,979
South Korea 5.8 6.4 1.7 2.1 2.0 /2/ 255,843
Sri Lanka .1 .1 .1 .1 .1 7,063
Taiwan 2.8 9.5 5.9 6.5 9.4 /2/ 802,711
Thailand 3.7 .9 .4 .5 1.5 57,255
Vietnam .1 .1 .1 - - 4,319
----- ----- ----- ----- ----- ---------
38.5 36.9 21.8 21.3 28.1 2,621,605
----- ----- ----- ----- ----- ---------
LATIN AMERICA
Argentina 5.9 6.6 8.6 8.7 5.0 1,079,425
Brazil 14.8 16.9 16.5 16.1 16.6 1,991,843
Chile 1.8 2.2 2.1 3.2 4.6 393,241
Colombia .3 .2 .1 - .8 -
Ecuador .2 .2 .2 .1 - 6,242
Mexico 10.3 8.2 12.1 10.8 12.1 1,339,887
Panama .8 .2 .1 .7 - 79,251
Peru 2.3 2.2 1.6 2.0 1.3 247,082
Venezuela .5 .5 .5 1.3 1.0 159,702
----- ----- ----- ----- ----- ---------
36.9 37.2 41.8 42.9 41.4 5,296,673
----- ----- ----- ----- ----- ---------
EASTERN EUROPE
Bulgaria - .3 .3 .2 - 22,628
Republic of
Croatia .3 .4 .5 .8 - 103,997
Czech Republic .3 .2 .2 .3 1.3 42,139
Hungary .4 .4 .6 .9 1.6 114,859
Kazakhstan - - - - - 3,273
Poland .5 .5 .9 1.4 .7 176,065
Russian
Federation /3/ 3.7 6.7 6.5 3.8 2.9 471,432
Slovakia - .1 .1 .1 - 9,425
Ukraine - - .1 .1 - 8,150
----- ----- ----- ----- ----- ---------
5.2 8.6 9.2 7.6 6.5 951,968
----- ----- ----- ----- ----- ---------
OTHER MARKETS
Egypt - .1 .1 .1 - 16,218
Ghana .4 .2 .2 .2 - 26,458
Greece 1.1 .8 1.0 2.1 5.0 259,242
Mauritius .1 .1 .1 .1 - 7,315
Morocco .2 .2 .2 .3 - 38,061
Portugal .5 .7 1.4 1.6 - 201,819
South Africa 3.5 3.9 4.8 4.5 11.9 553,743
Turkey 1.6 2.3 5.0 6.0 3.3 747,252
----- ----- ----- ----- ----- ---------
7.4 8.3 12.8 14.9 20.2 1,850,108
----- ----- ----- ----- ----- ---------
Multinational 1.8 2.2 2.0 2.6 315,530
----- ----- ----- ----- ---------
Other /4/ .8 .6 .3 .5 62,788
----- ----- ----- ----- ---------
Cash & Equivalents 9.4 6.2 12.1 10.2 1,265,643
----- ----- ----- ----- ---------
TOTAL 100.0% 100.0% 100.0% 100.0% $12,364,315
====== ====== ====== ====== ===========
</TABLE>
/1/ Morgan Stanley Capital International Emerging Markets Free Index also
includes Israel (3.6%) and Jordan (0.2%). A dash indicates that the market is
not included in the index. Source: Morgan Stanley Capital International
Perspective.
/2/ Taiwan and South Korea's weightings reflect 50% of their respective market
capitalizations.
/3/ Includes investments in companies incorporated outside the region that have
significant operations in the region.
/4/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.
As prices tumbled during fiscal 1998, short term-oriented investors continued
to bail out of emerging markets. This presented us with many outstanding
opportunities to add new holdings to our portfolio. Drawing on our extensive
research resources, we searched for value and found it throughout the
developing world. We also did not hesitate to sell some stocks that fared
poorly in order to invest the proceeds in other securities that we felt were
more attractive.
It remains to be seen if we have experienced the end of the downward slide.
However, we are convinced that the basic concept underlying Emerging Markets
Growth Fund remains as sound today as it was when the fund was formed. EMGF
offers investors an opportunity to own a highly diversified portfolio of shares
in quality companies with good growth potential that are valued below their
counterparts in industrialized nations. An illustration of this diversification
can be seen in the list of our Ten Largest Equity Holdings on page 8. They
represent investments in five countries and five very different industries. In
spite of the nasty downturn, the market value of each of these ten holdings
continues to exceed acquisition cost, in some cases by a comfortable margin.
On the following two pages, 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
investment philosophy.
We look forward to reporting to you again in another six months.
Sincerely,
Walter P. Stern
Chairman
Nancy Englander
President
August 10, 1998
- -----------------------------------------------------------------------------
Here are the total returns and annual compound returns with all distributions
reinvested for periods ended June 30, 1998 - 10 years: +473.03%, or +19.07% a
year; 5 years: +43.39%, or +7.47% a year; 12 months: -27.56%.
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 at June 30.
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 (16.1% of net assets)
After holding its own for a few months, the Brazilian stock market was hit
fairly hard toward the end of fiscal 1998. More than any other Latin American
country, Brazil is viewed as having macroeconomic difficulties similar to those
that caused havoc in Asia, including a negative current account balance and a
currency that seems overvalued.
Since November of last year, Brazilian authorities have adopted monetary and
other policies in an attempt to minimize the impact of the Asian contagion. We
believe the fundamental outlook is superior to the outlook in the Asian
countries before the crisis. However, we would not be surprised to see Brazil's
economy soften and the real weaken somewhat more than the intended 7% annual
devaluation.
Brazil remains the largest country exposure in EMGF's portfolio. Our biggest
investment there, Telebras, currently has a market value more than five times
greater than acquisition cost, even though the stock is down sharply from its
high in 1997.
The privatization of Telebras is proceeding with the creation of 12 companies.
Much of the gain from the spinoff may already have been reflected in the price
of Telebras stock. However, we feel the company's assets remain undervalued and
that its long-term growth potential remains impressive in a nation with a large
population and significant unmet demand. For similar reasons, the fund also has
maintained a sizable holding in Eletrobras, the nation's largest electric
utility.
Mexico (10.8% of net assets)
Lower oil prices dampened economic growth prospects and the Mexican stock
market during the latter part of the fund's fiscal year. Nonetheless, for the
year as a whole, the equity market held up comparatively well. It showed a
decline of 8.4% in dollars and a gain of 3.6% in pesos.
Unlike Brazil, where domestic demand is most important, Mexico depends largely
on its relationship with the United States to keep its economy healthy. Since
the Mexican banking system was opened to foreign banks after the peso crisis in
1995, competitive pressures have increased. Small businesses (and midsize ones
that would be considered small in more developed countries) also have suffered
because many foreign banks are not interested in making relatively small loans
and the domestic banks cannot afford to be out of step.
Large businesses, on the other hand, have had no such troubles. Virtually all
of the fund's Mexican holdings are large companies. The most prominent example
is Telmex, the nation's dominant telephone company; it is experiencing solid
growth and has a low valuation by international telecommunications standards.
Argentina (8.7% of net assets)
The Argentine market felt the effects of events in Asia to some extent in
fiscal 1998, posting a loss that was larger than the loss recorded in Mexico
but smaller than in Brazil. For the 12 months, it amounted to -16.4%.
Relative to the Emerging Markets Free Index, the fund has a bigger
concentration of its portfolio in Argentina than in any other Latin American
country. This reflects both the comparatively small capitalization of the
Argentine market and our positive view of the long-range outlook for a number
of key companies in the telecommunications, banking and retailing industries.
Our two largest Argentine holdings are Telefonica de Argentina, which provides
phone service in the southern part of the country, and Telecom Argentina, which
serves the northern portion. Our principal retail investment is Disco, a
supermarket chain. These stocks and our investments in banking (most of which
have been in the portfolio for some time) should benefit if the country's
economic expansion continues at a healthy pace. Argentina has been one of the
world's faster growing economies, and we have continued to add to our holdings
there.
Taiwan (6.5% of net assets)
The Taiwanese dollar weakened from about 28/$US1 to 35/$US1 during the fiscal
year, even though Taiwan does not suffer from the same economic imbalances that
caused an implosion in other Asian countries. It is the world's largest
supplier of computer monitors, modems, keyboards and desktop computers. The
government is friendly to technology firms; semiconductor makers pay no taxes.
The Taiwanese stock market declined by 38.3% during the fiscal year, nearly the
same amount as the EMF Index. Technology stocks participated in the decline.
They were adversely affected by an anticipated slowdown in demand and by the
general economic deterioration in the region. We took advantage of price
weakness during the year and added to a number of the fund's holdings,
including Taiwan Semiconductor Manufacturing and Asustek Computer.
Turkey (6.0% of net assets)
The Turkish equity market bucked the downtrend in fiscal 1998, rising 23.7%.
The gain was 122.0% in local currency. The country has been plagued for some
time by high inflation - in calendar 1997 the cost of living approximately
doubled. Recently, however, the upward march of prices has slowed. A new
government has been formed that shows signs of pursuing policies aimed at
achieving greater economic stability. In the past, Turkey's financial markets
have tended to fluctuate a great deal.
We have added to EMGF's holdings in a number of banks that stand to benefit
from lower inflation, including Yapi ve Kredi Bankasi and Turkiye Is Bankasi,
the nation's largest retail bank. These two stocks rose spectacularly - 228%
and 486% in dollar terms, respectively, in calendar 1997 - and both have
continued to do fairly well in recent months. We also have increased the fund's
investments in consumer-related Turkish stocks that show good earnings growth.
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 these 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 by the IFC from a number of global investment firms to
manage Emerging Markets Growth Fund. 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 $12 billion in assets, 740
institutional and individual investors, and a portfolio of more than 400
securities representing companies based in 37 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 that 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 less-developed countries. Currently about 30 of the
organization's analysts cover 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.
INVESTMENT PORTFOLIO, JUNE 30, 1998
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Equity Securities
---------------------------------
Common Preferred Convertible Percent of
Stocks Stocks Bonds Bonds Net Assets
- -----------------------------------------------------------------------------------------------------------------
Telecommunications 15.29% 4.47% - .08% 19.84%
Banking 7.12 2.56 .04% .03 9.75
Utilities: Electric & Gas 5.09 2.69 - - 7.78
Beverages & Tobacco 5.64 1.88 - - 7.52
Energy Sources 5.02 .92 .01 - 5.95
Electronic Components 4.73 - .05 - 4.78
Merchandising 2.63 .04 - - 2.67
Other Industries 21.30 2.76 .57 6.84 31.47
------ ------ ----- ------ ------
66.82% 15.32% .67% 6.95% 89.76%
====== ====== ===== ======
Short-Term Securities 10.03
Excess of cash and receivables over liabilities .21
-------
Net Assets 100.00%
=======
</TABLE>
EMERGING MARKETS GROWTH FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Investment Portfolio - JUNE 30, 1998
Number of
Shares or Market Percent
EQUITY - TYPE SECURITIES Principal Value of Net
(common and preferred stocks and convertible debentures) Amount (000) Assets
- -----------------------------------------------------------------------------------------------------
Argentina - 6.80%
Banco de Galicia y Buenos Aires SA, Class B 2,753,509 $12,393
Banco de Galicia y Buenos Aires SA, Class B
(American Depositary Receipts) 3,059,368 55,834 .55
Banco Frances del Rio de la Plata SA 740,600 5,600
Banco Frances del Rio de la Plata SA
(American Depositary Receipts) 2,342,141 53,723 .48
Banco Rio de la Plata, Class B
(American Depositary Receipts) 3,726,700 39,363 .32
BI SA (acquired 10/21/93, cost: $6,130,000) (1) 6,130,000 6,621 .05
Disco SA (American Depositary Receipts) 753,000 24,096 .19
Hidroneuquen SA (acquired 11/11/93, cost: $29,086,000) (1) 28,022,311 29,086 .23
IRSA Inversiones y Representaciones SA 4,084,500 12,010
IRSA Inversiones y Representaciones SA .23
(Global Depositary Receipts) 564,915 16,453
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts)
(acquired 11/24/92, cost:$5,562,000) (1)(3) 803,868 10,675
Nortel Inversora SA, Class B, preferred .43
(American Depositary Receipts)(3) 1,688,140 41,993
Perez Companc, Class B 12,811,086 64,321
Perez Companc, Class B (American Depositary Receipts) 689,668 6,925 .58
Quilmes Industrial SA, nonvoting, preferred
(American Depositary Shares) 1,088,800 10,616 .09
Sociedad Comercial del Plata SA 1,059,290 1,165 .01
Telecom Argentina STET-France Telecom SA, Class B(3) 2,800,000 16,522
Telecom Argentina STET-France Telecom SA, Class B 1.17
(American Depositary Shares)(3) 4,312,900 128,578
Telefonica de Argentina SA, Class B(3) 4,910,000 15,911
Telefonica de Argentina SA, Class B 1.54
(American Depositary Shares)(3) 5,366,600 174,079
YPF SA, Class D (American Depositary Receipts) 3,827,500 115,064 .93
---------- ----------
841,028 6.80
---------- ----------
Brazil - 15.52%
Aracruz Celulose SA, Class B, preferred nominative
(American Depositary Receipts) 533,550 6,102 .05
Banco Bradesco SA, preferred nominative 11,032,827,214 92,059 .74
Banco do Estado de Sao Paulo SA,preferred nominative 409,982,700 18,969 .15
Banco Itau SA, preferred nominative 312,564,300 178,377 1.44
Banco Nacional SA, preferred nominative (2) 215,940,814 -
Banco Nacional SA, ordinary nominative (2) 2,500,000 - -
Banco Real de Investimento SA, preferred nominative 4,650,000 17,289 .14
Banco Real SA, preferred nominative 10,771,650 8,383 .07
Bompreco SA, Supermercados do Nordeste,
preferred nominative (Global Depositary Receipts) 329,000 4,688 .04
Brasmotor SA, preferred nominative 50,872,932 4,663 .04
CEN Geradoras, preferred nominative, Class B
(American Depositary Receipts) 722,678 5,059
CEN Geradoras, ordinary nominative .09
(American Depositary Receipts) 906,059 6,116
Centrais Eletricas Brasileiras SA-ELETROBRAS, Class B,
preferred nominative (American Depositary Receipts) 7,226,788 108,402
Centrais Eletricas Brasileiras SA - ELETROBRAS,
ordinary nominative 164,800,000 4,845 1.98
Centrais Eletricas Brasileiras SA - ELETROBRAS,
ordinary nominative (American Depositary Receipts) 9,060,591 131,379
Centrais Eletricas de Santa Catarina SA - CELESC, Class B,
preferred nominative 983,000 748 .01
CESP-Companhia Energetica de Sao Paulo,
preferred nominative 24,700,000 686
CESP- Companhia Energetica de Sao Paulo, preferred
nominative (American Depositary Receipts) 1,151,291 9,786 .08
CESP-Companhia Energetica de Sao Paulo,
ordinary nominative 16,927,984 397
Companhia Cervejaria Brahma, preferred nominative 142,451,437 88,686
Companhia Cervejaria Brahma, preferred nominative 1.23
(American Depositary Receipts) 5,100,500 63,756
Companhia Cervejaria Brahma, preferred nominative
(American Depositary Receipts) 224,483 124
Companhia Cervejaria Brahma, ordinary nominative 56,147,100 9,957 .08
Companhia de Eletricidade do Estado do Rio de Janeiro
CERJ, ordinary nominative (2) 23,019,820,000 11,346 .09
Companhia de Tecidos Norte de Minas- COTEMINAS
preferred nominative (3) 76,970,466 11,647
Companhia de Tecidos Norte de Minas- COTEMINAS .13
ordinary nominative (Global Depositary Receipts) (3) 535,000 3,946
Companhia Energetica de Minas Gerais-CEMIG,
prefrred nominative 804,718,110 25,050
Companhia Energetica de Minas Gerais-CEMIG,
preferred nominative(American Depositary Receipts) (9) 4,250,580 128,580
1.35
Companhia Energetica de Minas Gerais-CEMIG,
preferred nominative (American Depositary Receipts)
(acquired 6/21/96, cost: $9,501,000) (1)(5) 457,575 13,842
Companhia Paranaense de Energia-COPEL, Class B,
preferred nominative 1,916,814,562 17,900
Companhia Paranaense de Energia- COPEL, Class B, .39
preferred nominative (American Depositary Receipts) 2,096,000 19,388
Companhia Paranaense de Energia -COPEL,
ordinary nominative 1,370,764,600 10,786
Companhia Paulista de Forca @ Luz,
preferred nominative (2) 522,153 41
Companhia Paulista de Forca @ Luz, .19
ordinary nominative (2) 234,091,000 23,887
Companhia Vale do Rio Doce
(American Depositary Receipts) 2,854,037 57,794 .47
Consorcio Real Brasileiro de Administracao SA, Class F,
preferred nominative (3) 1,405,000 2,405 .02
Dixie Toga SA, preferred nominative 1,872,000 793 .01
ELETROPAULO-Eletricidade de Sao Paulo SA,
preferred nominative 34,961,925 2,630 .02
Empresa Nacional de Commercio Redito SA-Encopar,
preferred nominative (3) 61,861,588 155 .00
Empresa Paulista de Transmisao de Energia Eletrica SA-EPTE (2) 34,961,925 124 .00
GP Capital Partners, LP
(acquired 1/28/94, cost: $21,468,000) (1) (3) 27,000 20,641 .17
LIGHT- Servicos de Eletricidade SA, ordinary nominative 114,095,546 35,023 .28
Lojas Americanas SA, ordinary nominative (2) 8,643,000 59 .00
Mesbla SA, preferred nominative (2) 111,674,640 .00
Mesbla SA, ordinary nominative (2) 1,041,447,836 104 .00
Multicanal Participacoes SA, preferred nominative .00
(American Depositary Shares) (2) 1,441,000 7,115 .06
Petroleo Brasileiro SA-PETROBRAS, preferred nominative 611,741,000 113,726 .92
REAL SA Participacoes e Administracao, SA
Class A, preferred nominative 3,000 5 .00
Sadia Concordia SAIC, preferred nominative 4,645,000 2,892 .02
SA White Martins, ordinary nominative 11,903,844 11,014 .09
Souza Cruz SA, ordinary nominative 2,842,000 21,134 .17
Telecomunicacoes Brasileiras SA (Telebras),
preferred nominative 60,052,090 6,532
Telecomunicacoes Brasileiras SA (Telebras),
preferred nominative ( American Depositary Receipts) 3,560,618 388,775 3.30
Telecomunicacoe Brasileiras SA (Telebras),
ordinary nominative 155,290,100 12,353
Telecomunicacoe de Sao Paulo SA- (Telebras),
preferred nominative 273,516,751 64,329
Telecomunicacoes de Sao Paulo SA-Telesp,
ordinary nominative (2) 35,664,592 5,394 .57
Telecomunicacoes de Sao Paulo SA-Telesp,
preferred nominative, rights, expire July 10,1998 (2) 14,400,315 230
Telecomunicacoes de Sao Paulo SA-Telesp Celular, Class B,
preferred nominative (2) 383,782,651 31,857 .27
Telecomunicacoes de Sao Paulo SA- Telesp Celular,
ordinary nominative (2) 35,664,592 1,513
Souza Cruz SA, ordinary nominative
Telecomunicacoes Brasileiras SA (Telebras), 3,332,150 98,298 .80
Usinas Siderurgicas de Minas Gerais SA,
preferred nominative (American Depositary Receipts)
(acquired 9/1/93,cost: $9,774,000) (1) 1,550,305 7,558 .06
---------- ----------
1,919,337 15.52
---------- ----------
Chile - 3.18%
Antofagasta PLC 4,805,530 20,061 .16
Banco Santander Chile, Class A
(American Depositary Receipts) 1,608,500 20,709 .17
Compania Cervecerias Unidas SA
(American Depositary Shares) 916,500 19,361 .16
Compania de Telecomunicaciones de Chile SA
(American Depositary Receipts) 5,402,252 109,733 .89
Distribucion y Servicio D&S SA
(American Depositary Receipts) 1,177,800 17,667 .14
Embotelladora Andina SA, Class A, preferred
(American Depositary Receipts) 2,462,350 43,091
Embotelladora Andina SA, Class B, preferred .55
(American Depositary Receipts) 1,573,200 24,581
Empresa Nacional de Electricidad SA
(American Depositary Receipts) 6,643,509 94,670 .76
Enersis SA (American Depositary Receipts) 765,456 18,706 .15
Gener SA ,(American Depositary Receipts) 248,643 4,538 .04
Laboratorio Chile SA (American Depositary Receipts) 120,400 1,731 .01
Santa Isabel SA (American Depositary Receipts) 878,700 9,666 .08
Sociedad Quimica y Minera de Chile SA, Class B
(American Depositary Receipts) 260,500 8,727 .07
---------- ----------
393,241 3.18
---------- ----------
China - 0.66%
China Eastern Airlines Corp. Ltd., Class H (2) 40,700,000 3,573
China Eastern Airlines Corp. Ltd., Class H, .04
(American Depositary Receipts)(2) 175,700 1,559
China Resources Beijing Land Ltd. 32,392,000 10,454 .09
China Yuchai International Ltd. (2) 913,000 2,340 .02
Guang Dong Electric Power Development Co. Ltd., Class B 3,191,448 1,187 .01
Huaneng Power International, Inc., Class N
(American Depositary Receipts)(2) 718,200 9,651 .08
Jiangsu ExpresswayCo. Ltd.,Class H 44,584,000 8,460 .07
Jiangxi CopperCo. Ltd., Class H 25,403,500 1,671 .01
NG Fung Hong Ltd. 30,059,000 20,760 .17
Quingling Motors Co.,Ltd., Class H 46,042,600 12,779 .10
Tingyi (Cayman Islands) Holding Corp. 67,261,500 4,124 .03
Zhejiang Expressway Co. Ltd., Class H 27,052,000 4,540 .04
---------- ----------
81,098 .66
---------- ----------
Republic of Croatia - 0.84%
PLIVA d.d. (Global Depositary Receipts) 6,399,821 103,997 .84
---------- ----------
103,997 .84
---------- ----------
Czech Republic - 0.34%
SPT Telecom, a.s. (2) 3,049,740 42,139 .34
---------- ----------
Ecuador - 0.02%
La Cemento Nacional CA (Global Depositary Receipts)(3) 15,530 2,407 .02
---------- ----------
Egypt - 0.13%
Al-Ahram Beverages Co. (Global Depositary Receipts) (3) 510,000 16,218 .13
------------- ------------
Ghana - 0.21%
Ashanti Goldfields Co. Ltd. 691,111 5,287
Ashanti Goldfields Co. Ltd. (Global Depositary Receipts) 1,131,500 9,193
Ashanti Goldfields Co. Ltd., .21
5.50% exchangeable note March 15, 2003 $15,970,000 11,978
---------- ----------
26,458 .21
---------- ----------
Greece - 2.10%
Aluminum de Grece SAIC (2)(3) 374,540 22,178 .18
Ergobank SA Reg 671,010 57,402 .47
Hellenic Bottling Co. SA 5,020,620 155,248 1.26
Katselis Sons SA, ordinary 74,110 446 .00
Titan Cement Co. SA, ordinary 366,044 23,968 .19
---------- ----------
259,242 2.10
---------- ----------
Hong Kong - 0.68%
China Resources Enterprise, Ltd. 35,598,000 36,763 .30
China-Hongkong Photo Products Holdings Ltd. 11,996,000 1,688 .01
Legend Holdings Ltd (2) 25,570,000 7,674 .07
New World Infrastructure Ltd. (2) 17,662,497 20,293
New World In 144 A CV 1.00% 04-15-03 (1)
April 15, 2003 (acquired 3/24/98, cost: $24,686,000) (1) 24,670,000 17,762
Siu-Fung Ceramics Holdings Ltd. (2) 7,869,409 0 .30
Tian An China Investments Co. Ltd. 4,293,500 122
---------- ----------
84,302 .68
---------- ----------
Hungary - 0.93%
Gedeon Richter Ltd. 648,200 52,145 .42
Matav RT
Graboplast Textil-es Muborgyarto Rt. 102,200 2,588 .02
MATAV, Hungarian Telecommunications Co. Ltd 7,706,000 44,733 .36
MOL Magyar Olaj-es Gazipari Rt.
(Global Depositary Receipts) 570,100 15,393 .13
---------- ----------
114,859 .93
---------- ----------
India - 5.64%
Asian Paints (India) Ltd. 564,600 3,244 .03
Bajaj Auto Ltd. 4,396,350 59,450
.49
Bajaj Auto Ltd. (Global Depositary Receipts) 54,900 744
Bharat Forge Ltd. 3,250 6 -
Bharat Petroleum (2) 5,535,200 45,898 .37
Bombay Dyeing and Manufacturing Co. Ltd.
(Global Depositary Receipts) 10,100 13 .00
cummins India Ltd. 1,838,000 15,328 .12
East India Hotels Ltd. 869,065 4,506 .04
Essar Steel Ltd. 300 - .00
Flex Industries Ltd. 260,480 73
Flex Industries Ltd., warrants, expire November 23, 1999 116,210 8 .00
Grasim Industries Ltd. 659,480 5,577
Grasim Industries Ltd. (Global Depositary Receipts) 1,714,265 10,757 .13
Hindalco Industries Ltd. (3) 2,670,425 42,140
Hindalco Industries Ltd, (Global Depositary Receipts) (3) 1,302,280 18,232 .49
Hindustan Lever Ltd. 2,024,500 71,791 .58
Hindustan Petroleum Corp. Ltd. (2) 3,515,300 32,286 .26
Housing Development Finance Corp. Ltd. 294,300 20,823 .17
Indian Aluminum Co., Ltd. 2,597,371 7,565 .06
Indian Rayon and Industries Ltd. 1,527,825 7,404
Indian Rayon and Industries Ltd. .08
(Global Depositary Receipts) 597,000 1,881
Indo Gulf Fertilisers and Chemicals Corp. Ltd. 2,155,200 1,804
Indo Gulf Fertilisers and Chemicals Corp. Ltd. .02
(Global Depositary Receipts) 1,770,900 947
Industrial Credit and Investment Corp. of India Ltd. 3,176,760 5,857 .05
Ispat Industries Ltd. 3.00% convertible Eurobond
April 1, 2001 4,624,000 2,220
Ispat Industries Ltd., 3.00% convertible bond April 1,2001 .04
(acquired 3/1/94, cost: $6,258,000) (1) 6,375,000 3,060
I.T.C. Ltd. 13,247 204
Madras Cements Ltd. 22,000 1,859 .02
Mahanagar Telephone Nigam Ltd. 22,903,000 96,593
Mahanagar Telephone Nigam Ltd. .85
(Global Depositary Receipts) 802,700 8,408
Mahindra & Mahindra Ltd. 2,658,516 13,524
Mahindra & Mahindra Ltd. (Global Depositary Receipts) 958,333 4,193
Mahindra & Mahindra Ltd. 5.00% convertible bond .18
July 9,2001 (acquired 7/3/96; cost: $5,952,000) 5,954,000 4,972
Master Gain Scheme (2) 177,000 42
Max India Ltd 315,377 1,030
Max India Ltd. 12.50% nonconvertible debenture .01
March 2, 2004 $41,957 156
Motor Industries Co. Ltd. (3) 201,855 18,301 .15
Nicholas Piramal India Ltd. (9) 1,885,700 15,034 .12
Niko Resources LTD C$ (2) (3) 1,000,000 2,962 .02
Ranbaxy Laboratories Ltd. 1,591,950 20,595
Ranbaxy Laboratories Ltd. (Global Depositary Receipts) 874,525 13,861 .28
Raymond Woollen Mills Ltd. (5) 931,800 1,764
.04
Raymond Woollen Mills Ltd. (Global Depositary Receipts) (9) 1,083,000 3,358
Reliance Industries Ltd. 15,251,000 51,630
.45
Reliance Industries Ltd. (Global Depositary Receipts) 657,150 4,288
Sundaram Finance Ltd. 38,400 213
Tata Engineering and Locomotive Co. Ltd. 4,577,400 17,920
Tata Engineering and Locomotive Co. Ltd. .26
(Global Depositary Receipts) 4,960,191 14,508
United Phospherous Ltd. 822,700 1,957
.02
United Phospherous Ltd. (Global Depositary Receipts) 358,964 898
Videsh Sanchar Nigam Ltd. 986,800 21,929
.22
Videsh Sanchar Nigam Ltd. (Global Depositary Receipts) 473,700 5,069
Zee Telefilms Ltd. (3) 1,010,200 10,986 .09
---------- ----------
697,895 5.64
---------- ----------
Indonesia - 1.20%
PT Aneka Tambang 18,871,000 1,952 .02
APP Fin (VII)Maur Convertible 144A 3.50% 04-30-03 (1)
April 30, 2003 (acquired 4/23/98, cost: $6,180,000) 6,180,000 4,867 .04
Asia Pacific Resources International Holdings Ltd.,
Class A (2) 2,420,969 4,388 .04
Asia Pulp & Paper Co, Ltd. (American Depostary Receipts) 2,514,000 28,282 .23
PT Astra International Inc. 65,123,500 4,491 .04
PT Bank International Indonesia 10,231,459 212
PT Bank Internasional Indonesia , warrants,
expire January 17, 2000 (2) 909,462 4
PT BAT Indonesia 530,000 841 .01
Gulf Indonesia Resources Ltd,(2) 482,500 5,549 .05
PT Hanjaya Mandala Sampoerna 29,535,000 4,125 .03
PT Indah Kiat Pulp/Paper Corp. 158,800,000 30,939 .25
PT Indofood Sukses Makmur 61,335,200 6,133 .05
PT Indo-Rama Synthetics 26,315,500 2,087 .02
PT International Nickel Indonesia 5,069,500 2,727 .02
PT Jaya Real Property 1,549,000 19 .00
PT Lautan Luas Tbk 3,158,000 207 .00
PT Lippo Bank 18,584,000 961 .01
PT Mayora Indah 3,205,500 133 .00
PT Modern Photo Film Co. 10,500,800 597 .00
PT Mulia Industrindo 7,175,572 124 .00
PT Pabrik Kertas Tjiwi Kimia 11,653,272 1,487 .01
Perusahaan Perseroan (Persero) PT Indonesian
satellite Corp. 3,683,500 4,369
Perusahaan Perseroan (Persero) PT Indonesian .19
Satellite Corp. (American Depositary Receipts) 1,757,980 19,557
Perusahaan Perseroan (Persero) PT Telekomunikasi
Indonesia, Class B 42,093,500 12,120
Perusahaan Perseroan (Persero) PT Telekomunikasi .13
Indonesia, Class B (American Depositary Receipts) 729,000 4,237
PT PP London Sumatra Indonesia 12,000,000 952 .01
PT Ramayana Lestari Sentosa Tbk 4,314,000 342 .00
PT Semen Gresik 6,633,500 3,843 .03
PT Tambang Timah (Persero), 2,069,000 945
PT Tambang Timah (Persero) .02
(Global Depositary Receipts) 440,270 1,959
PT United Tractors 3,915,000 122 .00
---------- ----------
148,571 1.20
---------- ----------
Kazakhstan - 0.03%
JSC Kazkommertsbank (American Depositary Receipts) 154,000 3,273 .03
(acquired 9/10/97, cost: $4,024,000) (1)(2) ------------ ----------
Malaysia - 0.89%
Commerce Asset-Holding Bhd. 5,487,240 2,064 .02
Guinness Anchor Bhd. 6,975,000 7,448 .06
Hap Seng Consolidated Bhd. 12,058,000 6,438 .05
Hong Leong Credit Bhd. 1,833,600 1,246
Hong Leong Credit Bhd., .01
warrants, expire December 27, 2001 (2) 174,400 14
Genting Intl PLC(2) 6,864,000 721 .01
IJM Corp. Bhd. 9,902,714 2,644 .02
IOI Corp. Bhd. 18,316,000 9,201 .08
Leader Universal Holdings Bhd. 8,965,000 1,349 .01
Malaysian Airline System Bhd. 2,291,000 762 .01
Malaysian Pacific Industries Bhd 1,116,000 1,327 .01
Nestle (Malaysia) Sdn. Bhd. 4,765,000 21,741 .18
Oriental Holdings Bhd. 3,497,120 5,856 .05
O.Y.L. Industries Bhd. 453,000 990 .01
PPB Oil Palms BHD 4,589,000 3,007 .02
Rothmans of Pall Mall (Malaysia) Bhd. 1,676,000 11,694 .09
Sime Darby Bhd. 23,549,000 16,345 .13
Sime UEP Properties Bhd. 3,017,000 1,743 .01
Star Publications 1,516,000 1,280 .01
Technology Resources Industries Bhd. 615,000 425
UMW Holdings Bhd. 7,147,359 3,226 .03
UMW Holdings Bhd., warrants, expire January 26, 2000 575,159 39 .07
YTL Corp. 12,065,000 9,135 .01
YTL Power International Bhd. (1) (2) 3,152,000 1,729
---------- ----------
110,424 .89
---------- ----------
Mauritius - 0.06%
State Bank of Mauritius 10,927,000 7,315 .06
---------- ----------
Mexico - 9.31%
Apasco, SA de CV 1,647,576 8,718 .07
Carso Global Telecom, SA de CV 2,980,000 9,461 .08
Cemex, SA de CV, Class A 2,956,762 11,133
Cemex, SA de CV, Class B 9,242,251 40,667
Cemex, SA de CV, Class B (American Depositary Receipts) 755,792 6,566
.69
Cemex, SA de CV, ordinary participation certificates 7,275,597 27,353
Cemex , SA de CV, ordinary particiaption certificates
(American Depositary Receipts) 23,892 179
Cifra, SA de CV, Class C(3) 34,106,334 47,415
Cifra, SA de CV, Class V (2)(3) 70,315,202 105,743
Cifra, SA de CV, Class V
(American Depositary Receipts) (2) (3) 1,240,543 18,298 1.39
Coca-Cola FEMSA, SA de CV, Class L
(American Depositary Receipts) 989,400 17,191 .14
Consorcio International Hospital, SA de CV, preferred
preferred (acquired 9/25/97, cost: $4,533,000) (1) (2) 22,665 4,533 .04
Grupo Carso, SA de CV, Class A, ordinary
participation certificates 1,828,100 7,698 .06
Grupo Casa Autrey, SA de CV (American Depositary Receipts) 810,000 5,265 .04
Grupo Financiero Banamex Accival, SA de CV, Class B (2) 5,019,675 9,785
Grupo Financiero Banamex Accival, SA de CV, Class L (2) 6,961,238 11,477
Grupo Financiero Banamex Accival, SA de CV,
7.00% convertible Eurobonds December 15, 1999 103,000 101 .17
Grupo Financiero Banamex Accival, SA de CV,
11.00% convertible July 15, 2003
(acquired 7/12/96, cost: $351,000)(1) $ 371,000 377
Grupo Financiero Bancomer, SA de CV, Class B 37,100,000 13,845
Grupo Financiero Bancomer, SA de CV., Series L2 25.387% .12
convertible subordinated debentures May 16, 2002 MXN5,750,000 713
Grupo Financiero BBV-Probursa, SA de CV, Class B (2) 41,464,331 5,266 .04
Grupo Industrial Emprex, Class B
(formerly Fomento Economico Mexicano, SA de CV) (2) 1,980,400 62,383 .51
Grupo Industrial Maseca, SA de CV, Class B
(American Depositary Receipts) 1,064,700 11,845 .10
Grupo Mexico, SA de CV, Class L (2) 4,862,500 13,352 .11
Grupo Televisa, SA, ordinary participation certificates (2) 263,000 4,922
Grupo Televisa, SA, ordinary participation certificates
(American Depositary Receipts) (2) 1,306,599 49,161 .44
Kimberly-Clark de Mexico, SA de CV, Class A,
ordinary participation certificates 21,833,300 77,585
.64
Kimberly-Clark de Mexico, SA de CV, Class B 350,000 1,821
Pepsi-Gemex, SA de CV, ordinary participation certificates
(Global Depositary Receipts) 662,000 7,985 .07
Telefonos de Mexico, SA de CV, Class A 9,137,500 21,884
Telefonos de Mexico, SA de CV, Class A
(American Depositary Receipts) 71,000 166
Telefonos de Mexico, SA de CV, Class L 13,706,250 32,979
Telefonos de Mexico, SA de CV, Class L 4.43
(American Depositary Receipts) 10,252,275 492,750
TV Azteca SA de CV, (American Depositary Receipts) 1,993,800 21,558 .17
---------- ----------
1,150,175 9.31
---------- ----------
Morocco - 0.31%
Banque Commerciale du Maroc 35,443 3,506 .03
Cimenterie de l'Oriental, Class A 100,641 11,165 .09
ONA SA 56,000 6,782 .05
Societe des Brasseries du Maroc 23,432 7,955 .07
Wafabank, Class A 72,000 8,653 .07
---------- ----------
38,061 .31
---------- ----------
Pakistan - 0.15%
Chakwal Cement Co. Ltd. (Global Depositary Receipts) (2) 891,111 - .00
Engro Chemical Pakistan Ltd. 4,545,490 4,883 .04
Hub Power Co. Ltd. (Global Depositary Receipts) 1,263,328 8,211 .07
Pakistan Telecommunication Corp.
(Global Depositary Receipts) 150,900 4,980 .04
---------- ----------
18,074 .15
---------- ----------
Peru - 1.60%
Cementos Lima SA 641,888 12,007 .10
Compania de Minas Buenaventura SA, Class B 111,975 735
Compania de Minas Buenaventura SA, Class B
(American Depositary Receipts) 1,166,298 15,307 .17
Compania de Minas Buenaventura SA, Class T 963,000 5,381
Credicorp Ltd. 5,152,591 75,678 .61
Minsur SA-Trabajo 3,482,386 6,882 .06
Ontario-Quinta (acquired 8/15/94, cost: $12,900,000) (1) 7,224,130 7,737 .06
Telefonica del Peru,
Class B (American Depositary Shares) 3,603,000 73,636 .60
---------- ----------
197,363 1.60
---------- ----------
Philippines - 2.33%
Ayala Corp., Class B 50,728,110 13,140
Ayala Corp., Class B (Global Depositary Shares) 1,158,696 2,456 .13
Ayala Land, Inc. 117,524,133 33,983
Ayala Land, Inc.,6.00% convertible bond March 19, 2002 PHP260,000,000 4,386 .31
Bacnotan Consolidated Industries, Inc. 567,100 417
Bacnotan Consolidated Industries, Inc., 5.50% convertible
bond June 21, 2004 (acquired 6/8/94, cost: $4,484,000) (1) $4,500,000 1,575 .02
Bank of the Philippine Islands 5,211,800 10,675 .09
Bayan Telecommunications Holding Corp.
(acquired 2/12/98, cost: $81,000) (1) (2) 32,281 78
Bayan Telecommunications Holding Corp. convertible
preferred (acquired 12/22/97, cost: $9,000,000) (1) (2) 180,000 9,000 .07
Benpres Holdings Corp. (Global Depositary Receipts) (2) 5,815,194 14,538 .12
C&P Homes, Inc. (2) 47,656,450 2,411 .02
Fil-Estate Land, Inc. (2) 25,300,000 658 .01
Fortune Cement Corp. (2) 42,335,625 2,244 .02
HI Cement Corp. 33,051,900 2,070 .01
International Container Terminal Services, Inc. (2) 13,022,392 1,491
International Container Terminal Services, Inc.,
6.00% convertible bond February 19,2000 .03
(acquired 2/18/93, cost: $4,000,000) (1) $4,000,000 2,400
JG Summit Holdings, Inc., Class B 21,119,513 916
JG Summit Holdings, Inc., Class B
(Global Depositary Shares) 20,000 82 .05
JG Summit Holdings, Inc., 3.50% convertible bond
December 23,2003 (acquired 12/9/93, cost: $9,870,000) (1) $9,870,000 5,182
Keppel Philippines Holdings, Inc., Class B (2) 44,893 1 .00
Manila Electric Co., Class B 5,076,507 13,456 .11
Metropolitan Bank and Trust Co. 2,698,070 15,928 .13
Petron Corp. (2) 8,381,074 889 .01
Philippine Airlines Inc. (2) 53,811,255 - .00
Philippine Long Distance Telephone Co., ordinary (2) 172,500 3,949
Philippine Long Distance Telephone Co., ordinary
(American Depositary Shares) 3,740,516 84,629 .75
Philippine Long Distance Telephone Co., convertible
preferred, Series III (Global Depositary Shares) 87,000 4,002
Philippine National Bank (2) 530,208 633 .00
PR Holdings, Inc., subscription rights
(acquired 7/8/92, cost: $9,835,000) (1) (2) 2,236,600 - .00
San Miguel Corp., Class B 27,858,852 36,921 .30
SM Prime Holdings, Inc. 99,467,000 15,819 .13
Southeast Asia Cement Holdings, Inc. (2) 68,088,782 574 .00
Universal Robina Corp. 29,809,400 3,053 .02
---------- ----------
287,556 2.33
---------- ----------
Poland - 1.27%
@ Entertainment (2) 192,000 2,112
@ Entertainment (1)(2) 461,000 5,071 .06
Bank Handlowy W Warszawie SA 1,577,920 30,114
Bank Handlowy w Warszawie SA .36
(Global Depositary Receipts) 790,072 15,090
Bank Rozwoju Exportu SA 604,700 16,400 .13
Bank Rozwoju Exportu, Rights, expire July 10,1998 (2) 604,700 174
Bid Bank GDANSKI SA
(formerly Bank Inlcjatyw Gospodarczych BIG SA) 1,907,948 2,546 .02
Elektrim SA 2,610,325 31,838
Elektrim SA, 2.0% convertible bond May 30, 2004 DEM9,727,000 6,848 .31
Exbud SA (2) (3) 634,193 7,644 .06
KGHM Polska Miedz (Global Ddepositary Receipts) 3,182,600 25,698 .21
Optimus SA 178,900 3,594 .03
Polifarb Cieszyn Wroclaw 1,967,667 5,082 .04
Zaklady Metali Lekkich Kety SA (2) 292,680 4,410 .04
Zaklady Piwowarskie w Zywcu SA (3) 7,262 875 .01
---------- ----------
24,085,967 157,496 1.27
---------- ----------
Portugal - 1.63%
Portugal Telecom ,SA 1,703,105 90,278
Portugal Telecom, SA (American Depositary Receipts) 951,500 50,370 1.14
TELECEL - Comunicacoes Pessoais, SA 344,300 61,145 .49
TVI-Televisao Independente, SA non voting preferred (2) (3) 26,375 26 .00
---------- ----------
201,819 1.63
---------- ----------
Russian Federation - 3.76%
AO Mosenergo Power Generation and Electrification
Amalgamation 45,000,000 2,250
AO Mosenergo Power Generation and Electrification .19
Amalgamation (American Depositary Shares) 3,418,800 17,094
AO Mosenergo Power Generation and Electrification
Amalgamation (Russian Depositary Trust Certificate) 750 3,750
Ao Torgovy Dom Gum (Russian Depoitary Trust Certificate) 270 4,050 .03
Avalon Oil PLC (2) (9) 5,068,000 3,047 .02
Global Tele-Systems Ltd.,(acquired 2/2/96,
cost: less than $1,000) (1) (2) 2,225,042 104,132 .84
Irkutskenergo (Russian Depositary Trust Certificate) 685 13,426 .11
JSC Moscow City Telephone Network (MGTS) (2) 3,200 1,184
JSC Moscow City Telephone Network (MGTS)
(Russian Depositary Trust Certificate) (2) 1,111 20,554 .18
Kamaz (2) 4,345,000 1,521 .01
Lenenergo 28,336,800 11,476 .09
LUKoil Holding (American Depositary Receipts) 1,593,700 53,548 .43
New Century Capital Partners, LP
(acquired 12/7/95,cost: $5,492,000) (1)(2)(5) 5,256,300 5,492 .05
Nizhny Novgorod Sviazinform
(Russian Depositary Trust Certificate) (2) 70 3,675 .03
Ramco Energy PLC (5) 1,417,000 16,089 .13
RAO Gazprom, (American Depositary Receipts) 1,606,630 17,793
RAO Gazprom (American Depositary Receipts)
(acquired 10/21/96, cost:$38,674,000) (1) (3) 2,322,800 25,725 .35
Russian Telecommunications Development Corp.
(acquired 12/22/93, cost: $3,800,000) (1)(2) 380,000 1,900
Russian Telecommunications Development Corp.,
nonvoting ordinary (acquired 12/22/93, .04
cost: $6,200,000) (1)(2) 620,000 3,100
St. Petersburg Telephone Network JSC (2) 12,913,020 7,851 .06
Star Mining Corp (2) 18,884,400 70.00
StoryFirst Communications Inc., Class B, Senior
convertible preferred (acquired 10/14/97,
cost: $14,848,000) (1) (2) (3) 10,383 14,848 .12
Unified Energy Systems of Russia 1,030,329,500 132,913
Unified Energy System of Russia 1.08
(Global Depositary Receitps) 1,800 24
Xavier Corp US$ (2) (3) 1,350,000 - .00
---------- ------------
465,512 3.76
---------- ------------
Slovakia - 0.09%
VSZ, AS (5) 1,141,427 9,425 .09
---------- ------------
South Africa - 4.48%
African Oxygen Ltd. 6,811,139 11,447 .09
Bidvest Group Ltd.(2) 1,830,860 13,924 .11
Coronation Holdings Ltd., Class N (2) 2,555,338 38,223
Coronation Holdings Ltd. (2) 555,400 8,588 .38
Ellerine Holding Ltd. 2,806,465 15,329 .12
Energy Africa Ltd.(2) 2,294,500 7,616 .06
Gencor LTD 6,725,000 10,342 .08
Hudaco Industries Ltd. 1,452,000 2,367 .02
International Pepsi-Cola Bottler Investments
(aquired 12/18/95, cost: $9,900,000) (1)(2)(3)(5) 100,000 10,000 .08
Iscor Ltd. 113,116,268 21,292 .17
JD Group Ltd. 3,580,723 24,012 .19
Malbak Ltd. 4,609,076 3,099 .03
Metro Cash and Carry Ltd. 39,012,623 24,588 .20
Nasionale Pers Beperk N, Class N 5,466,000 35,828 .29
New Clicks Holding Ltd. 684,267 857 .01
Rembrandt Group Ltd. 3,237,000 20,129 .16
Sage Group Ltd. 1,570,000 6,597 .05
Sasol Ltd. 22,930,686 132,381 1.07
South African Capital Growth Fund, LP, Class A
(acquired 8/25/95, cost: $1,765,000) (1) (5) 1,900 2,464
South Africa Capital Growth Fund, LP, Class D .18
(acquired 8/25/95, cost: $12,681,000) (1) (5) 13,650 17,707
South African Breweries Ltd. 6,081,338 124,693 1.01
South African Druggist Ltd.(3) 4,798,839 22,260 .18
---------- ----------
553,743 4.48
---------- ----------
South Korea - 2.04%
Anam Industrial Co. Ltd. (2) 634,872 1,492 .01
Daehan Asia Trust (International Depositary Receipts) 2,820 1,094 .01
Daehan Korea Trust (International Depositary Receipts) 500 97 .00
Daewoo Securities Co., Ltd., nonvoting preferred 102,440 125
Daewoo Securities Co., Ltd.,ordinary (2) 678,502 2,526 .02
Hansol Paper Co., Ltd. 718,160 3,407 .03
Hyundai Motor Co. 1,486,690 15,084
Hyundai Motor Co., nonvoting preferred
(Global Depositary Receipts) 1,188,250 2,228 .14
Korea Electric Power Corp. 2,340 25 .00
Korea Industrial Leasing Co., Ltd. (2) 241,000 99 .00
Korea Pacific Trust
(International Depositary Receipts) (2) 3,000 1,320 .01
Korea Zinc Co. Ltd. 474,070 3,703 .03
LG Electronics Inc., non-voting preferred
(Global Depositary Receipts) 311,710 475 .01
LG Securities Ltd., preferred (2) 235,890 158 .00
LG Semiconductor Co. (2) 438,680 3,426 .03
Mirae Co 74,727 124 .00
Pohang Iron & Steel Co., Ltd. (2) 77,740 2,576 .02
Samsung Display Devices 908,911 24,879
Samsung Display Devices 0.5% convertible Eurobonds
April 12, 2002 $770,000 805 .21
Samsung Electronics Co., Ltd., nonvoting preferred 156,813 1,889
Samsung Electronics Co., Ltd., nonvoting preferred
(Global Depositary Shares) 485,468 4,127 1.15
Samsung Electronics Co., Ltd. 3,166,306 98,225
Samsung Electronics Co., Ltd.(Global Depositary Shares) 2,427,235 38,533
Samsung Fire & Marine Insurance (2) 31,071 5,194 .04
Seoul Asia Index Trust (2)
(International Depositary Receipts) 80 180 .00
Shinhan Bank (2) 32,000 107 .00
SK Telecom Co., Ltd. 63,426 29,128
SK Telecom Co., Ltd. (American Depositary Receipts) 1,964,982 10,930 .33
Yukong Ltd., warrants, expire June 18, 1999 (2) 8,000 137 .00
---------- ----------
252,093 2.04
---------- ----------
Sri Lanka - 0.06%
Asian Hotels Corp. Ltd. 12,215,000 888 .01
Development Finance Corp of Ceylon (3) 1,788,861 3,695 .03
National Develpoment Bank of Sri Lanka 1,296,600 2,480 .02
---------- ----------
7,063 .06
---------- ----------
Taiwan - 6.49%
Acer Computer Intl. 1,639,500 574 .00
Acer Peripherals Inc. 13,931,406 16,060 .13
Advanced Semiconductor Engineering, Inc. (2) 54,827,766 93,372
Advanced Semiconductor Engineering, Inc.
(Global Depositary Receipts) (2) 482,790 4,285 .79
ASE Test Ltd (2) 1,760,700 54,582 .44
Asia Cement Corp. 24,831,048 23,132 .19
Asia Corporate Partners Fund, Class B
(acquired 3/12/96; cost: $20,027,000) (1)(2)(5) 40,000 18,873 .15
Asustek Computer Inc. (2) 16,977,500 138,880 1.12
Cathay Construction Co. Ltd. 18,804,400 13,193 .11
China Steel Corp. 8,097,500 5,445 .04
Compal Electronics (2) 28,527,800 76,819 .62
Delta Electronics Inc., 0.50% convertible bond
March 6,2004 (acquired 2/27/97, cost: $4,247,000) (1) 4,232,000 4,507 .04
Lite-on Technology 19,338,220 18,015 .15
Nan Ya Plastics Corp.,1.75% Eurobond July 19, 2001 $1,850,000 1,956 .02
Primax Electronics Ltd. 8,530,056 16,637 .14
Seres Capital (Cayman Islands)
(acquired 3/12/96; cost:$25,000) (1)(3) 2 25
Seres Capital (Cayman Islands), nonvoting
(acquired 3/12/96; cost: $125,000) (1)(3) 8.00 125 .00
Siliconware Precision Industries Co., Ltd. 4,624,000 6,717 .06
Taiwan Mask Corp. (2) 5,448,038 14,591 .12
Taiwan Semiconductor Manufacturing Co. Ltd, 137,259,465 283,701
Taiwan Semiconductor Manufacturing Co. Ltd,
convertible Eurobonds July 3, 2002 (acquired 7/4/97, 2.30
cost: $1,044,000) (1)(2) $ 1,000,000 1,103
Ton Yi Industrial Corp. (2) 3,977,631 2,605 .02
Unicap Electronics Industrial Corp. (2) 431,222 596 .00
Wus Printed Circuit Co., Ltd. 1,431,430 2,605 .02
Yangming Marine Transport Corp. (2) 6,890,800 4,313 .03
---------- ----------
802,711 6.49
---------- ----------
Thailand - 0.45%
Bangkok Bank PCL(2) 16,237,460 20,104 .16
Bank of Ayudhya PCL 654,000 84 .00
Charoen Pokphand Feedmill PCL(2) 1,509,900 1,258 .01
Dusit Thani PCL (2) 990,000 943 .01
Electricity Generating Authority of Thailand (2) 10,180,817 15,878
Electricity Generating Authority of Thailand
Local Registered (2) 8,130 10 .13
Post Publishing PCL (2)(3) 2,525,000 2,465 .02
PTT Exploration and Production PCL (2) 1,302,500 9,924 .08
Serm Suk PCL (2) 210,166 1,501
Serm Suk PCL, local registered (2) 64,960 309 .02
Siam Commercial Bank PCL 1,109,466 357
Siam Commercial Bank, warrants (2) 277,366 - .00
Swedish Motors Corp. PCL (2) 1,608,100 92 .00
Thai Farmers Bank PCL 1,182,010 1,048
Thai Farmers Bank PCL
warrants, expire September 15, 2002 (2) 147,851 9 .01
Thai Glass Industries PCL 1,272,200 2,029 .01
Wattachak 3.50% convertible bond December 6, 2003 (2) $6,400,000 - .00
---------- ----------
56,011 .45
---------- ----------
Turkey - 6.04%
Adana Cimento Sanayii TAS, Class A (3) (4) 302,959,339 11,267
Adana Cimento Sanayii, TAS, Class C (3) 104,042,945 498 .10
Aktas Elektrik Ticaret AS 37,154,868 19,540 .16
Ege Biracilik ve Malt Sanayii AS 181,448,538 21,470 .17
Erciyas Biracilik ve Malt Sanayii AS 155,582,000 23,670 .19
Eregli Demir ve Celik Fabrikalari TAS(2) (3) 364,422,000 56,810 .46
Koc Holding AS, ordinary 319,991,538 62,505 .50
Migros Turk TAS 43,223,363 42,215 .34
Nergis Holding 99,999,960 8,640 .07
Netas Northern Electric Telekomunikasyon AS (2) 33,819,300 9,020 .07
Petrol Ofisi AS 200,648,437 51,253 .41
Trakya Cam Sanayii AS (3) 564,604,574 23,330 .19
Turkiye Garanti Bank AS(2) 910,240,000 41,886 .34
Turkiye Is Bankasi AS 4,213,583,149 170,152 1.38
Turkiye Sise ve Cam Fabrikalari AS (9) 1,391,502,947 45,998 .37
Yapi Kredi Bankasi AS (3) 6,224,535,060 158,998 1.29
---------- ----------
747,252 6.04
---------- ----------
Ukraine - 0.07%
JKX Oil & Gas PCL(2) (3) 10,230,233 6,150
JKX Oil & Gas PLC, 7.00% convertible bond June 30, 2001
(acquired 6/6/96 , cost: $2,000,000) (1), (3) 2,000,000 2,000 .07
---------- ----------
8,150 .07
---------- ----------
Venezuela - 0.42%
Compania Anonima Nacional Telefonos de Venezuela
(CANTV), Class D (American Depositary Receipts) 2,092,000 52,300 .42
------------- ------------
Vietnam - 0.03%
Vietnam Frontier Fund
(acquired 7/21/94, cost: $2,293,000) (1)(2)(5) 222,610 1,113 .01
Vietnam Investment Fund, preferred, units
(acquired 8/4/94, cost: $3,206,000) (1)(2)(5) 30 3,206
Vietnam Investment Fund, ordinary, units
(acquired 8/4/94, cost: less than $1,000) (1)(2)(5) 6 -- .02
---------- ----------
4,319 .03
---------- ----------
Multi National - 2.55%
Aminex PLC (acquired 8/1/97, cost: $3,856,000) (1) (2) (5) 3,250,000 2,551 .02
Argosy Mining Corp (2) 424,462 66 .00
Armada Gold Corp C$ (2) (5) 5,315,000 905 .01
Armada Gold Corp. 10.00% convertible bond July 8,2004 (9) CAD800000 380 .00
Billiton PLC 18,156,778 36,079 .29
Cie. Financiere pour l'Europe Centrale SA
(Global Depositary Receipts) (2) 103,195 1,419 .01
Diamondworks Ltd (2) 4,000,000 3,786 .03
Diamondworks Ltd., warrants, expire July 15, 1998 (2) 1,000,000 26 .00
Dragon Oil PLC (2) 6,515,200 4,569 .04
Freeport-McMoRan Copper & Gold Inc., Class A 90,000 1,282 .01
Glencar Mining (PLC) (2) 519,735 339 .00
Marchmont Gold C$ (2) 148,380 10 .00
New Asia East Investment Fund Ltd., Class A
(acquired 5/23/96, cost: $2,936,000) (1) (2) 293,600 2,766
New Asia East Investment Fund Ltd., Class B .33
(acquired 5/23/96, cost: $40,064,000) (1) (2) 4,006,400 37,744
New Europe East Investment Fund Ltd., Class B
(acquired 6/4/93, cost: $38,116,000) (1) (2) 436 72,883 .59
Oliver Gold Corp (2) 75,795 11.00 .00
Panamerican Beverages, Inc., Class A 4,062,800 127,724 1.03
Star Cruises PLC (2) 6,944,200 13,263 .11
Sutton Resources LTD (2) (3) 1,844,500 9569.00
Sutton Resources Ltd., warrants, expire September 30, 1998 (2) (3) 155,000 158.00 .08
------------- -----------
315,530 2.55
---------- ----------
Miscellaneous - 0.51%
Equity securities in initial period of acquisition 62,788 .51
---------- ----------
TOTAL EQUITY SECURITIES (cost: $10,925,487,000) 10,239,245 82.81
---------- ----------
Principal
Amount
(000)
BOND & NOTES
Argentina - 1.93%
Republic of Argentina:
8.75% July 10,2002 ARP15620 13,552 .11
9.75% September 19, 2027 2,930 2,718 .02
11.00% Octpber 9,2006 37,575 39,642 .32
11.375% January 30, 2017 20,600 21,939 .18
11.75% February 12, 2007
(acquired 1/29/97, cost: $33,035,000) (1) ARP33200 31,586 .25
11.75% February 12, 2007 ARP23700 22,548 .18
Bocon PIK 3.2052% April 1,2007 (4) ARS8429 5,721 .05
Series L 6.6875% March 31, 2005 (4) 22,373 19,800 .16
Bonos Del Tesoro 8.75% May 9, 2002 74,750 71,199 .58
CEI Citicorp Holdings, Series B 11.25% February14, 2007 ARS11675 9,692 .08
Republic of Argentina Bearer Bond,
---------- ----------
238,397 1.93
---------- ----------
Brazil - 0.59%
Federal Republic of Brazil:
Capitalization Bond PIK 8.00% April 15, 2014 23,552 17,311 .14
6.6875% April 15,2012 (4) 21,750 15,143 .12
6.875% April 15, 2012 (4) 1,500 1,044 .01
MYDFA Trust:
6.5625% September 15, 2007
(Acquired 10/2/96, cost: $13,346,000) (1) (4) 5,355 12,361 .10
6.6875% September 15,2007 4,290 3,454 .03
NMB Series L 6.625% April 15, 2009 (4) 4,600 3,513 .03
Series EI-L 6.625% April 15, 2006 (4) 17,848 14,680 .12
Multicanal Participacoes SA Class B 12.625% June 18, 2004 .00
MYDFA Trust 6.6875% September 15, 2007
(acquired 10/2/96, cost: $13,797,000) (1) (4) 5,000 5,000 .04
---------- ----------
72,506 .59
---------- ----------
Bulgaria - 0.18%
Republic of Bulgaria:
Interested Arrears bond 6.5625% July28, 2011 5,050.00 3,623 .03
Front Loaded Interest Reduction Bond
Series A 2.25% July28, 2012 28,525 19,005 .15
---------- ----------
22,628 .18
---------- ----------
Ecuador - 0.03%
Republic of Ecuador Past Due Interest Bond 6.625%
February 27, 2015 (4) 6,676 3,835 .03
---------- ----------
3,835 .03
---------- ----------
India - 0.00%
Flex Industries Ltd. 13.50% December 31, 2004 INR29,929 585 .00
---------- ----------
585 .00
---------- ----------
Indonesia - 0.21%
International Finance Co. 10.00% June 1, 2007 1,950 1,521 .01
Indah Kiat International Finance:
10.00% July 1, 2007 9,375 6,656 .06
11.875% June 6, 2002 4,850 3,880 .03
Pindo Deli finance: .00
10.25% October 1, 2002 4,825 3,390 .03
10.75% October 1, 2007 14,290 10,039 .08
---------- ----------
25,486 .21
---------- ----------
Mexico - 1.53%
Banco Nacional de Comercio Exterior, S.N.C.
7.25% Februaary 2,2004 77,700 72,649 .59
Grupo Televisa, SA 0/13.25% May 15, 2008 (6) 3,000 2,400 .02
Innova, S. de R.L. 12.875% Senior Notes due April 1, 2007 1,000 1,015 .01
Tubos de Acero de Mexico, SA 13.75% December 8, 1999
(acquired 11/23/94, cost : $1,736,824) 1,750 1,872 .01
United Mexican States Discount Bonds
Series A unit 6.6938% December 31, 2019 (4) 1,750 1,573 .01
Series B 6.617% December 31, 2019(4) 1,000 899 .01
Series C 6.820% December 31, 2019 (4) 3,000 2,696 .02
Series D 6.6016% December 31, 2019 (4) 9,000 8,089 .06
United Mexican States Government
8.625% March 12, 2008 11,000 10,684 .09
9.75% February 6, 2001 17,250 18,130 .15
9.875% January 15, 2007 24,000 25,020 .20
11.375% September 15, 2016 15,930 17,802 .14
11.50% May, 2026 23,675 26,883 .22
---------- ----------
189,712 1.53
---------- ----------
Panama - 0.64%
Republic of Panama:
8.875% September 30, 2007 500 473 .00
Interest Reduction Bonds 3.75% July 17, 2014 .00
(acquired 11/08/95, cost : $7,894,000) (10 (4) 13,864 10,398 .08
Past Due Interest Bond :
6.5625% July 17, 2016 84,247 65,080 .53
6.5625% July 17, 2016 .00
(acquired 6/21/96, cost: $2,938,000) (1) (4) 4,271 3,300 .03
---------- ----------
79,251 .64
---------- ----------
Peru - 0.35%
Front Loaded Interest Reduction Bond 3.25%
3.25% March 7,2017 (acquired 8/5/96, cost : $6,404, 000) (1) (4) 10,900 6,153 .05
Past Due Interest Bonds:
4.00% July 17, 2016 47,750 29,725 .24
4.00% July 17, 2016
(acquired 3/7/97, cost: $14,761,000)(1)(4) 22,235 13,841 .11
---------- ----------
49,719 .40
---------- ----------
Philippines - 0.33%
Republic of Philippines
Front Loaded Interest Reduction Bond Series B 5.00%
June 1, 2008 14,250 12,611 .10
8.75% October 7, 2016 11,500 10,839 .09
8.875% April 15, 2008 17,750 16,973 .14
---------- ----------
40,423 .33
---------- ----------
Poland - 0.15%
Republic of Poland Past Due Interest Bond 4.00%
October 27, 2014(4) 17,000 15,334 .12
Poland Govt Bond PLN 14.0% 02-12-00 Pln12200 3,235 .03
---------- ----------
18,569 .15
---------- ----------
Russian Federation - 0.05%
Russia 12.75% 06-24-28
(acquired 6/18/98, cost: $896,000) 910 811 .01
Russia Principal Loan 6.625% due December 15,2020 (4) 10,784 5,109 .04
---------- ----------
5,920 .05
Korea - 0.03%
Korea Development Bank:
6.5% November 15, 2002 700 588 .01
6.625% November 21, 2003 3,000 2,424 .02
6.75% December 1, 2005 200 161
7.375% September 17, 2004 700 577 .00
---------- ----------
3,750 .03
---------- ----------
Thailand - 0.01%
Advance Agro PCL Senior Unsecured Notes 13.00%
November 15, 2007 (acquired 11/19/97,
cost: $1,127,000) 1,250 1,244 .01
---------- ----------
1,244 .01
---------- ----------
Venezuela - 0.87%
Republic of Venezuela
Front Loaded Interest Reduction
Series A Eurobonds 6.625% March 31, 2007 (4) 10,071 8,369 .07
Series B Eurobonds 6.625% March 31, 2007 (4) 9,428 7,835 .06
Debt Conversion Bonds:
6.8125% December 18, 2007 (4) 73,738 61,409 .50
9.25% September 15, 2027 38,375 29,789 .24
---------- ----------
107,402 .87
---------- ----------
---------- ----------
TOTAL BONDS AND NOTES (cost: $ 875,461,000) 859,427 6.95
---------- ----------
SHORT-TERM SECURITIES
CORPORATE SHORT-TERM NOTES - 7.19%
ABN-AMRO North America Finance Inc. 5.55% due 8/5/98 46,800 $46,543 .38
American Express Credit Corp 5.57% due 8/21/98 22,500 $22,321 .18
Arco British Ltd. 5.56% due 7/17-8/24/98 29,800 29,636 .24
Bayer Corp. 5.53% due 7/7-7/14/98 52,400 52,328 .42
Canada Bills 5.52%-5.53% due7/15-8/14/98 65,000 64,627 .52
Commerzbank U.S. Finance Inc. 5.55% due 7/1/98 26,300 26,296 .21
Daimler-Benz North American Corp.5.55% due 7/9-7/21/98 63,900 63,717 .52
Deutsche Bank Financial Inc.5.55%-5.56% due 7/6-7/23/98 44,665 44,599 .36
Diageo Capital PLC 5.54%-5.55% due 7/24-9/4/98 58,000 57,560 .47
France Telecom, SA 5.56% due 7/24/98 25,605 25,511 .21
Glaxo Wellcome PLC 5.53%-5.54% due 7/16/98 50,000 49,875 .41
Lloyds Bank PLC 5.54% due 7/6/98 30,000 29,973 .24
National Australia Funding(Delaware) Inc. 5.56% due 9/17/98 35,000 34,574 .28
Novartis Finance Corp. 5.53%-5.60% due 7/8-8/24/98 45,000 44,755 .36
Reed Elsevier Inc. 5.56% due 9/9-9/11/98 51,000 50,435 .41
Repsol International Finance Corp. 5.53% due 7/22-8/10/98 55,000 54,729 .44
Societe Generale NA Inc. 5.55%-5.58% due 7/7-8/18/98 29,000 28,826 .23
Svenska Handelsbanken Inc. 5.54% due 7/14-8/11/98 51,200 50,984 .41
Telstra Corp. Ltd. 5.58%-5.59% due 7/30-8/17/98 40,000 39,773 .32
Toyota Motor Credit Corp. 5.56%-5.58% due 8/21-8/27/98 51,000 50,562 .41
Xerox Capital(Europe) PLC 5.57% due 8/13/98 21,500 21,355 .17
---------- ----------
888,979 7.19
---------- ----------
Federal Agency Discount Notes - 0.51%
Fannie Mae 5.45% due 8/24/98 47,700 47,302 .38
Freddie Mac 5.48%-5.50% due 7/2/98 15,400 15,395 .13
5.59%-5.72% due 7/2/98
---------- ----------
62,697 .51
---------- ----------
Certificates of Deposit - 0.48%
Wsdeutch Landesbank Girozentrale 5.57% due 7/23/98 30,000 30,000 .24
---------- ----------
Non-U.S. Government -Short Term Obligations - 2.02%
Polish Government Treasury Bills DUE 12/9/98-3/17/98 PLZ388,830 98,895 .80
Turkey Government Teasury Bills due 7/15-11/4/98 TRL45,092 150,321 1.22
---------- ----------
249,216 2.02
---------- ----------
Non-U.S. Currency - 0.07%
Chilean Peso CHP175,049 374 .00
Taiwanese Dollar NT$288,403 8,396 .07
---------- ----------
8,770 .07
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost:$1,282,630,000) 1,239,662 10.03
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $13,083,356,000) 12,338,334 99.79
Net unrealized appreciation on foreign currency contracts (7) (3,795) (.03)
Excess of cash and receivables over liabilities (6)
(excludes open foreign currency contracts) 29,776 .24
---------- ----------
NET ASSETS $12,364,315 100.00
=========== ==========
1. Purchased in a private placement transaction: resale to the public may require registration, and no right to demand registration
under U.S. law exists. As of June 30, 1998, the total market value and cost of such securities was $545,554,000 and $453,196,000,
respectively, and the market value represented 4.41% of net assets. Such securities, excluding certain convertible bonds and
American Depositary Receipts, are valued at fair value.
2. Non- income-producing securities.
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 June 30, 1998, the net receivable consists of the following:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Contract Amount U.S. Valuation at 6/30/98
----------------------------- ------------------------------
Unrealized
Non-U.S. U.S. Amount Appreciation
(000) (000) (000) (Depreciation) (000)
- -------------------------------------------------------------------------------
SALES:
Brazilian real expiring
9/15/98 -10/27/98 BRL1,288,873 $1,044,673 $1,079,420 $(34,747)
British Pounds
expiring 3/17/99 Gbp4,906 $7,920 $8,091 (171)
French francs
expiring 3/17/99 FRF24,753 4,131 4,143 (12)
German deutschemarks
expiring 3/17/99 DEM51,050 28,570 28,652 (82)
Malaysian Ringgits
expiring 5/12/99 MYR 169, 253 38,909 36,512 2,397
Mexican Pesos
expiring 10/13/98 MXN793,585 86,854 83,854 3,000
South African Rands
expiring 1/12/99-6/22/9 ZAR1,506,514 278,290 236,722 41,568
Swiss Francs
expiring 3/17/99 CHF6,225 4,400 4,201 199
Taiwan dollars
expiring 8/31/98 TWD2,379,478 69,191 68,638 553
Venezuelan Bolivars
expiring 1/13/99 VEB 11,325,315 17,949 14,470 3,479
------
PURCHASE:
Indonesian rupiah
expiring 10/7/98 -
2/9/99 IDR337,913,840 38,630 18,651 (19,979)
--------
FOREIGN CURRENCY CONTRACTS - NET $(3,795)
=========
Non-U.S. Currency Symbols:
ARS - Argentine Peso
CAD - Canadian Dollar
CHF - Swiss Franc
CLP - Chilean Peso
DEM - German Deutsche Mark
FRF - French Franc
IDR - Indonesian Rupiah
INR - Indian Rupee
GBP - British Pound
MXN - Mexican Peso
MYR - Malaysian Ringgit
PHP - Philippine Peso
PLN - Polish Zloty
BRL - Brazilian Real
TRL - Turkish Lira
TWD - Taiwan Dollar
VEB - Venezuelan Bolivar
ZAR - South African Rand
</TABLE>
See Notes to Financial Statements
EQUITY SECURITIES ADDED TO THE
PORTFOLIO SINCE DECEMBER 31,1997
- --------------------------------
Aneka Tambang
APP Finance (VI) Mauritius
Argosy Mining
@ Entertainment
Billiton
CEN Geradoras
Compal Electronics
Eletricidade do Estado do Rio de Janeiro - CERJ
Empresa Paulista de Transmisao de Energia
Eletrica - EPTE
Ergobank
EXBUD
Gener
Glencar Mining
KGHM Polska Mied'z
Laboratorio Chile
Legend Holdings
Lite-On Technology
Malaysian Pacific Industries
MATAV, Hungarian Telecommunications
Mirae
Niko Resources
PPB Oil Palms
PTT Exploration and Production
Qingling Motors
Semen Gresik
Star Cruises
Telecomunicacoes de Sao Paulo - Telesp Celular
Turkiye Garanti Bankasi
EQUITY SECURITIES ELIMINATED FROM
THE PORTFOLIO SINCE DECEMBER 31, 1997
- -------------------------------------
Abacan Resource
Acer
Alphatec Electronics
Arab-Malaysian Finance
Ayudhya Jardine CMG Life Assurance
Banco Bansud
Bangkok Insurance
Beijing Datang Power Generation
Chilgener
China North Industries Investment
COFAP - Companhia Fabricadora de Pecas
Compania de Cemento Argos
Daegu Bank
Foodcorp
Gez Investments Holding
Hanil Bank
Harbin Power Equipment
Housing & Commercial Bank
Hyundai Electronics
K.R. Precision
LG Chemical
LG Industrial Systems
Lojas Arapua
Malayan Banking
MBf Capital
Mosel Vitelic
Nakhornthai Integrated Steels
Nedcor
New Straits Times Press (Malaysia)
PT Panin Bank
PT Panin Indonesia
Philippine Commercial International Bank
Renong
Resorts World
PT Semen Cibinong
Shanghai Diesel Engine
Sigma Alimentos
PT Sorini
Tanjong
PT Tigaraksa Satria
U-Ming Marine Transport
United Microelectronics
Zhenhai Refining & Chemical
Emerging Markets Growth Fund, Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Financial Statements
Statement of Assets and Liabilities
at June 30, 1998 (dollars in thousands)
- ---------------------------------------------------------------------------------------
Assets:
Investment securities at market (cost $12,338,334
$13,083,356)
Cash 3,607
Receivables for -
Sales of investments $29,404
Sales of fund's shares 20,741
Dividends and accrued interest 70,208 120,353
12,462,294
Liabilities:
Non-U.S. taxes payable 3,649
Payables for -
Purchases of investments 42,290
Unfunded capital commitments 39,567
Open forward currency contracts 3,795
Management services 6,422
Accrued expenses 2,256 94,330
97,979
Net Assets at June 30, 1998 -
Equivalent to $46.05 per share on
268,494,501 shares of $0.01 par value
capital stock outstanding (authorized
capital stock -- 400,000,000 shares) $12,364,315
Emerging Markets Growth Fund, Inc.
Statement of Operations
For the Year Ended June 30, 1998
(dollars in thousands)
Investment Income:
Income:
Dividends $211,314
Interest 247,577 $458,891
Expenses:
Management services fee 84,252
Custodian fee 14,513
Registration statement and prospectus 1,247
Auditing and legal fees 414
Reports to shareholders 41
Taxes other than federal
income tax 235
Other expenses 2,793 103,495
Income before non-U.S. taxes 355,396
Non-U.S. taxes (4,677)
Net investment income 350,719
REALIZED LOSS AND UNREALIZED
DEPRECIATION ON INVESTMENTS:
Realized loss before non-U.S. taxes (43,286)
Non-U.S. taxes (2,504)
Net realized loss (45,790)
Net change in unrealized depreciation on
investments (4,655,464)
Net change in unrealized depreciation
on open forward currency contracts (3,342)
Net unrealized depreciation (4,658,806)
Non-U.S. taxes 14,837 (4,643,969)
Net realized loss and unrealized
depreciation on investments (4,689,759)
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $(4,339,040)
Emerging Markets Growth Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
(DOLLARS IN THOUSANDS)
Year Ended June 30
1998 1997
------------ -----------
OPERATIONS:
Net investment income $350,719 $276,260
Net realized gain (loss) on investments (45,790) 480,316
Net unrealized appreciation
(depreciation) on investments (4,643,969) 2,179,832
Net increase (decrease) in net assets
resulting from operations (4,339,040) 2,936,408
DIVIDENDS AND DISTRIBUTIONS PAID
TO SHAREHOLDERS:
Dividends from net
investment income (545,105) (304,645)
Distributions from net realized
gain on investments (722,874) (160,065)
Total dividends and
distributions (1,267,979) (464,710)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
52,680,219 and 37,177,633 shares,respectively 3,164,945 2,214,203
Proceeds from shares issued in
reinvestment of net investment
income dividends and
distributions of net realized
gain on investments:
24,142,868 and 7,713,936 shares,
respectively 1,222,745 447,083
Net increase in net assets
resulting from capital share
transactions 4,387,690 2,661,286
Total Increase (Decrease) in Net Assets (1,219,329) 5,132,984
Net Assets:
Beginning of period 13,583,644 8,450,660
End of period (including
excess distributions over
net investment income: $270,619
and $39,274, respectively) $12,364,315 $13,583,644
</TABLE>
EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
1. Emerging Markets Growth Fund, Inc. (the "fund") is registered under the
Investment Company Act of 1940 as a closed-end, diversified management
investment company. The fund's investment objective is to seek long-term
capital growth through investment in developing country equity securities. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Equity 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. Assets or liabilities initially
expressed in terms of foreign currencies are translated into U.S. dollars at
the prevailing market rates at the end of the reporting period. Purchases and
sales of securities and income and expenses are translated into U.S. dollars at
the prevailing market rates on the dates of such transactions. The effects of
changes in foreign currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities. 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.
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. Dividends and distributions paid to
shareholders are recorded on the ex-dividend date.
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.
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. Risks 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.
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 derived in Turkey is subject to
non-U.S. tax at a rate of 13.2%. 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 June 30, 1998, net unrealized depreciation on investments, excluding
forward currency contracts, for federal income tax purposes aggregated
$768,688,000, of which $2,190,583,000 related to appreciated securities and
$2,959,271,000 related to depreciated securities. During the year ended June
30, 1998, the fund realized, on a tax basis, a net capital gain of $370,514,000
on securities transactions. Net gains related to non-U.S. currency
transactions of $164,264,000 were treated as ordinary income for federal income
tax purposes. The cost of portfolio securities, excluding forward currency
contracts, for federal income tax purposes was $13,449,588,000 at June 30,
1998.
4. The fee of $84,252,000 for management services was incurred 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; 0.56% of such assets in
excess of $11 billion but not exceeding $15 billion; 0.54% of such assets in
excess of $15 billion but not exceeding $20 billion; and 0.52% of such assets
in excess of $20 billion. CII is owned by Capital Group International, Inc.,
which is a wholly owned subsidiary of The Capital Group Companies, Inc.
5. As of June 30, 1998, accumulated undistributed net realized loss on
investments was $370,531,000 and additional paid-in capital was
$13,752,774,000. The fund reclassified $36,959,000 from undistributed net
investment income to additional paid-in capital and $47,862,000 from additional
paid-in capital to undistributed net realized gain for the year ended June 30,
1998.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $5,947,960,000 and $2,870,087,000, respectively,
during the year ended June 30, 1998.
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 $14,513,000 includes $305,000 that was paid by these
credits rather than in cash.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
year ended June 30, 1998, such non-U.S. taxes were $14,861,000. Net realized
currency losses on dividends, interest, withholding taxes reclaimable, and
purchases and sales of non-U.S. equity securities and bonds, on a book basis,
were $34,591,000 for the year ended June 30, 1998.
EMERGING MARKETS GROWTH FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL STATEMENTS
PER-SHARE DATA AND RATIOS
Year Ended June 30
--------------------------------------------------------
1998 1997 1996 1995 1994
---------------------------------------------------------
Net Asset Value, Beginning of Period $70.87 $57.57 $52.36 $58.75 $44.95
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income 1.56 1.61 1.30 0.87 0.53
Net realized and unrealized
gain (loss) on investments
before non-U.S. taxes (20.69) 14.51 6.49 (0.79) 15.29
Non-U.S. taxes 0.05 (0.01) (0.01) (0.03) (0.39)
------- ------ ------ ------ ------
Total income (loss) from
investment operations (19.08) 16.11 7.78 0.05 15.43
------- ------ ------ ------ -------
LESS DISTRIBUTIONS:
Dividends from net
investment income (2.36) (1.79) (1.30) (0.63) (0.49)
Distributions from net
realized gains (3.38) (1.02) (1.27) (5.81) (1.14)
------ ------ ------ ------ -------
Total distributions (5.74) (2.81) (2.57) (6.44) (1.63)
------ ------ ------ ------ -------
Net Asset Value, End of Period $46.05 $70.87 $57.57 $52.36 $58.75
====== ======= ======= ======= =======
Total Return (27.56)% 29.17% 15.49% (1.22)% 34.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) $12,364 $13,584 $8,451 $5,572 $4,170
Ratio of expenses to average
net assets .76% .78% .84% .91% 1.00%
Ratio of expenses and non-U.S.
taxes to average net assets .80% .78% .85% .94% 1.04%
Ratio of net income to average
net assets 2.58% 2.74% 2.54% 1.70% .91%
Average commissions paid
per share* .06 cents .13 cents .10 cents .02 cents .01 cents
Portfolio turnover rate 23.41% 23.75% 17.78% 23.75% 18.13%
</TABLE>
*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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Emerging Markets Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of Emerging Markets Growth Fund (the
"Fund") at June 30, 1998, the results of its operations, the changes in its net
assets, and the per-share data and ratios for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 1998 by correspondence with the
custodian and brokers and application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
/s/PricewaterhouseCoopers, LLP
Los Angeles, California
August 14, 1998
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
Director, Investment Strategy, 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.
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
Assistant 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
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
400 South Hope Street
Los Angeles, California 90071-2889
This report is for the information of shareholders of Emerging Markets Growth
Fund, but it may also be used as sales literature when preceded or accompanied
by the current prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the fund.
Printed in USA NA/CG/3922/45054
(c) 1998 Emerging Markets Growth Fund, Inc.
Lit. No. EMGF-011-0898(NLS)
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