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Previous: PHYSICIAN SUPPORT SYSTEMS INC, 8-K, 1997-12-11 |
Next: LASERSIGHT INC /DE, 10-Q/A, 1997-12-11 |
<PAGE>
MORGAN STANLEY
EMERGING MARKETS FUND, INC.
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS
Michael F. Klein James W. Grisham
PRESIDENT AND DIRECTOR VICE PRESIDENT
Peter J. Chase Harold J. Schaaff, Jr.
DIRECTOR VICE PRESIDENT
John W. Croghan Joseph P. Stadler
DIRECTOR VICE PRESIDENT
David B. Gill Valerie Y. Lewis
DIRECTOR SECRETARY
Graham E. Jones Joanna M. Haigney
DIRECTOR TREASURER
John A. Levin Belinda A. Brady
DIRECTOR ASSISTANT TREASURER
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(617) 575-3120
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726.
- --------------------------------------------------------------------------------
MORGAN STANLEY
EMERGING MARKETS
FUND, INC.
- --------------------------------------------------------------------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1997
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the nine months ended September 30, 1997, the Morgan Stanley Emerging
Markets Fund, Inc. (the "Fund") had a total return, based on net asset value per
share, of 24.36% compared with 6.62% for the IFC Global Total Return Composite
Index (the "Index"). For the one year ended September 30, 1997, the Fund had a
total return, based on net asset value per share, of 22.90% compared with 4.80%
for the Index. For the period from commencement of operations on November 1,
1991 through September 30, 1997, the Fund's total return, based on net asset
value per share, was 161.03% compared with 74.08% for the Index. On September
30, 1997, the closing price of the Fund's shares on the New York Stock Exchange
was $17.25, representing an 11.5% discount to the Fund's net asset value per
share.
The emerging markets had a poor third quarter as the IFC Global Total Return
Composite Index fell 8.97%. Devastating devaluations led the Asian markets down
23.70%. The Fund outperformed the Index for the quarter with a return, based on
net asset value per share, of -3.12%. Contagion in the aftermath of the Thai
baht devaluation caused the currencies in Malaysia, Indonesia and the
Philippines to weaken by 28.4%, 34.5% and 30.2%, respectively, for the quarter.
This currency weakness continued as political and economic leaders failed to
communicate the requisite level of concern or adequate plans to address the
issues which led to the markets' sell-off. In Latin America, Brazil and Mexico
continued to be supported by earnings growth and privatization. Mexico led
Latin markets during the quarter, returning 21.1% in U.S. Dollar terms.
The strength of Latin American markets in July relative to Asian bourses
evaporated in August amidst fears of contagion from the Asian currency crisis.
Brazil suffered most in Latin America, as economies with trade, current account
or fiscal deficits in conjunction with fixed currency regimes were sold down.
Our concern that too much good news was being anticipated for these markets was
realized, as sharp sell-offs hit all emerging markets in August. Latin markets
rebounded in September, making up much of their losses of the previous month.
During the quarter, Asia continued to be hard hit by currency woes and a general
dearth of good news. The largest positive impact on portfolio return this year
has been our underweight in the region, and in particular our underweight in
Malaysia. Malaysia's Prime Minister Mahathir exacerbated difficulties in that
market by making inflammatory comments regarding currency speculators and
limiting foreign investors access to foreign exchange. Having said this, with
Asia off 70% from its high, the region appears oversold. Many Asian markets now
look to be attractively valued and we are starting to get interested.
European markets' relative and absolute performance was good in the third
quarter, and helped to offset some of the noise in more volatile markets.
Turkey, Russia and Poland returned 16.0%, 18.5% and 8.6%, respectively during
the quarter.
Since the end of September, Latin America has been particularly volatile, as
evidenced by the performance of these markets in the last week of October. Prior
to these events, we believed that Latin America, which had experienced
tremendous price appreciation both this year and last year, had become less
reasonably valued. We had been easing out of markets like Brazil and Mexico
where we had significant gains, and easing into some of the Asian markets which
had dramatically underperformed.
Given the events of the past several weeks, we now feel that valuations in Latin
America as well as in Asia are compelling. We have begun to repurchase
positions in Latin America and are exploring opportunities within Asia as we
assess relative value across the emerging markets. Cash is being raised in
markets which have held up well in the downturn, such as India, Pakistan, Russia
and South Africa in order to fund allocations in better valued markets.
We have always felt that in the event of a U.S. market correction the Emerging
Markets were vulnerable to a similar or larger correction. Having said this,
the fundamentals of many of our markets are improving and barring any nasty
shocks in the U.S., the emerging markets should provide excellent upside over
the next year.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
/s/ Madhav Dhar
Madhav Dhar
PORTFOLIO MANAGER
/s/ Robert L. Meyer
Robert L. Meyer
PORTFOLIO MANAGER
October 1997
2
<PAGE>
MORGAN STANLEY EMERGING MARKETS FUND, INC.
INVESTMENT SUMMARY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL TOTAL RETURN (%)
INFORMATION ------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
----------------------- ----------------------- ------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO DATE 24.47% -- 24.36% -- 6.62% --
ONE YEAR 15.13 15.13% 22.90 22.90% 4.80 4.80%
FIVE YEAR 96.67+ 14.48+ 118.36+ 16.91+ 77.26 12.13
SINCE INCEPTION* 131.04+ 15.20+ 161.03+ 17.60+ 74.08 9.83
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[CHART]
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31: NINE MONTHS
ENDED
1991* 1992 1993 1994 1995 1996 SEPTEMBER 30, 1997
----- ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share. . . $14.71 $16.74 $28.20 $20.30 $14.69 $15.69 $19.49
Market Value Per Share . . . . $14.25 $18.13 $31.63 $21.50 $15.50 $13.88 $17.25
Premium/(Discount) . . . . . . -3.1% 8.3% 12.2% 5.9% 5.5% -11.5% -11.5%
Income Dividends . . . . . . . $ 0.04 $ 0.01 -- -- -- $ 0.05 $ 0.01
Capital Gains Distributions. . -- $ 0.01 $ 1.49 $ 6.50 $ 1.29 $ 0.98 $ 0.01
Fund Total Return (2). . . . . 4.61% 13.94% 95.22%+ -5.33% -16.30%+ 13.84% 24.36%
Index Total Return (3) . . . . 3.25% 0.33% 67.52% -0.51% -12.34% 7.84% 6.62%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
(3) The IFC Global Total Return Composite Index is an unmanaged index of common
stocks of developing countries in Latin America, East and South Asia,
Europe, the Middle East and Africa, including dividends.
* The Fund commenced operations on November 1, 1991.
+ This return does not include the effect of the rights issued in connection
with the Rights Offering.
3
<PAGE>
MORGAN STANLEY EMERGING MARKETS FUND, INC.
PORTFOLIO SUMMARY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
[CHART]
Debt Securities (0.3%)
Equity Securities (94.7%)
Short-Term Investments (5.0%)
- --------------------------------------------------------------------------------
SECTORS
[CHART]
Other (29.4%)
Utilities-Electrical & Gas (7.1%)
Telecommunications (14.8%)
Banking (11.1%)
Beverages & Tobacco (8.4%)
Broadcasting & Publishing (3.2%)
Chemicals (4.8%)
Energy Equipment & Services (6.0%)
Energy Sources (5.7%)
Food & Household Products (3.7%)
Multi-Industry (5.8%)
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[CHART]
Other (20.8%)
Indonesia (3.6%)
Pakistan (4.3%)
Turkey (5.1%)
Taiwan (5.2%)
Korea (7.0%)
Brazil (13.3%)
Mexico (12.9%)
India (10.7%)
South Africa (9.1%)
Russia (8.0%)
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NET ASSETS NET ASSETS
---------- ----------
<S> <C> <C> <C>
1. Bharat Heavy Electricals Ltd. 6.0% 6. Samsung Electronics Co. 2.3%
2. FEMSA 3.4 7. Cemig 2.2
3. CRT 2.7 8. Asutek Computer, Inc. 2.2
4. SASOL Ltd. 2.5 9. Brahma 2.1
5. Telebras 2.3 10. Telmex 2.0
-----
27.7%
-----
-----
</TABLE>
* Excludes short-term investments.
4
<PAGE>
INVESTMENTS (UNAUDITED)
- -------------
SEPTEMBER 30, 1997
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
COMMON STOCKS (94.8%)
(Unless otherwise noted)
- -------------------------------------------------------------------------------
ARGENTINA (2.9%)
AUTOMOBILES
CIADEA 1 U.S.$ --@
--------------
BEVERAGES & TOBACCO
Quilmes 97,340 1,363
--------------
ENERGY SOURCES
YPF ADR 114,610 4,226
--------------
TELECOMMUNICATIONS
Nortel ADR 28,685 796
Telecom Argentina ADR 41,722 1,270
Telefonica Argentina ADR 149,065 5,459
--------------
7,525
--------------
13,114
--------------
- -------------------------------------------------------------------------------
BRAZIL (13.3%)
BANKING
Banco Bradesco (Preferred) 79,271,363 836
Banco Nacional (Preferred) 61,598,720 3
Itaubanco (Preferred) 2,595,500 1,677
Unibanco (Preferred) GDR 52,980 1,940
--------------
4,456
--------------
BEVERAGES & TOBACCO
Brahma (Preferred) 10,564,209 8,100
Brahma (Preferred) ADR 78,950 1,214
--------------
9,314
--------------
CONSTRUCTION & HOUSING
Rossi Residencial GDR 33,840 364
--------------
ENERGY SOURCES
Petrobras (Preferred) 13,586,999 3,870
Petrobras ADR 144A 22,595 638
--------------
4,508
--------------
MERCHANDISING
Lojas Arapua (Preferred) 30,412,000 321
Lojas Arapua (Preferred) ADR 31,540 340
Lojas Renner (Preferred) 14,237,000 656
Pao de Acucar (Preferred) 6,460,000 151
Pao de Acucar (Preferred) ADR 52,360 1,198
--------------
2,666
--------------
METALS - NON-FERROUS
CVRD (Preferred) ADR 58,234 1,412
CVRD (Preferred) 8,500 208
--------------
1,620
--------------
TELECOMMUNICATIONS
CRT (Preferred) 'A' 9,019,200 11,715
CRT Receipts 286,847 373
Telebras 11,970,000 1,382
Telebras (Preferred) 46,389,183 5,992
Telebras (Preferred) ADR 23,265 2,995
Telesp (Preferred) 125,313 38
--------------
22,495
--------------
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
TEXTILES & APPAREL
Coteminas (Preferred) 2,980,000 U.S.$ 1,143
ENCORPAR 2,980,000 --@
--------------
1,143
--------------
UTILITIES - ELECTRICAL & GAS
Cemig (Preferred) 140,863,867 7,869
Cemig (Preferred) ADR 30,260 1,663
Cemig (Preferred) GDR 7,525 418
Eletrobras (Preferred) 'B' 916,138 518
Eletrobras ADR 48,720 1,279
Eletrobras ADR (Preferred) 15,885 441
Lightpar 1,608,000 572
--------------
12,760
--------------
59,326
--------------
- -------------------------------------------------------------------------------
CHILE (0.7%)
BEVERAGES & TOBACCO
CCU ADR 41,390 1,190
--------------
MERCHANDISING
Santa Isabel ADR 48,962 1,142
--------------
UTILITIES - ELECTRICAL & GAS
Enersis ADR 18,305 678
--------------
3,010
--------------
- -------------------------------------------------------------------------------
COLOMBIA (0.2%)
BANKING
Banco de Colombia 2,505,677 957
--------------
- -------------------------------------------------------------------------------
EGYPT (1.6%)
BANKING
Commercial International Bank 53,890 1,310
Egypt American Bank 2,839 97
--------------
1,407
--------------
BEVERAGES & TOBACCO
Eastern Tobacco 47,790 1,254
--------------
BUILDING MATERIALS & COMPONENTS
Ameriyah Cement Co. 35,900 888
Helwan Portland Cement 34,500 732
Tora Portland Cement Co. 37,150 990
--------------
2,610
--------------
CHEMICALS
Egyptian Finance & Industrial 14,850 1,000
--------------
FOOD & HOUSEHOLD PRODUCTS
North Cairo Flour Mills 7,910 403
--------------
REAL ESTATE
Madinet Nasr Housing &
Development 7,000 504
--------------
7,178
--------------
- -------------------------------------------------------------------------------
5
<PAGE>
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
HUNGARY (0.6%)
CHEMICALS
BorsodChem Rt. GDR 5,500 U.S.$ 219
Tiszai Vegyi Kombinat Rt. GDR 28,600 644
--------------
863
--------------
ENERGY SOURCES
MOL Magyar Olaj-es
Gazipari Rt. GDR 36,100 786
--------------
HEALTH & PERSONAL CARE
Richter Gedeon Rt. 7,400 785
Richter Gedeon Rt. GDR 3,100 325
--------------
1,110
--------------
2,759
--------------
- -------------------------------------------------------------------------------
INDIA (10.4%)
AUTOMOBILES
Apollo Tyres Ltd. 33,200 70
Hero Honda Ltd. 11,518 226
MRF Ltd. 10,000 816
Tata Engineering & Locomotive Ltd. 2,259 21
--------------
1,133
--------------
BANKING
State Bank of India Ltd. 798,700 6,112
--------------
BEVERAGES & TOBACCO
ITC Ltd. 122,318 1,992
--------------
CHEMICALS
Indian Petro Chemical Corp. Ltd. 2,020 6
Reliance Industries Ltd. 802 8
--------------
14
--------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 2,690,900 26,786
--------------
FINANCIAL SERVICES
Housing Development
Finance Corp. Ltd. 76,175 6,874
--------------
MULTI-INDUSTRY
*Morgan Stanley Growth Fund 6,881,800 1,237
--------------
RECREATION, OTHER CONSUMER GOODS
Tube Investments of India Ltd. 149,500 167
--------------
TEXTILES & APPAREL
Raymond Ltd. - New 574 1
--------------
TRANSPORTATION - ROAD & RAIL
Container Corp. of India Ltd. 181,500 2,108
--------------
46,424
--------------
- -------------------------------------------------------------------------------
INDONESIA (3.6%)
AUTOMOBILES
Astra International (Foreign) 3,305,000 2,989
--------------
BANKING
Bank International Indonesia
(Foreign) 4,622,003 1,335
Bank International Indonesia
(Foreign)(Warrants), expiring
1/17/00 329,334 28
Bank Negara Indonesia (Foreign) 6,760,000 1,849
--------------
3,212
--------------
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
BEVERAGES & TOBACCO
Gudang Garam (Foreign) 710,800 U.S.$ 2,053
HM Sampoerna (Foreign) 839,000 1,721
--------------
3,774
--------------
FINANCIAL SERVICES
Putra Surya Multidana (Foreign) 1,838,000 838
--------------
FOOD & HOUSEHOLD PRODUCTS
Indofood Sukses Makmur (Foreign) 1,031,400 1,246
Mayora Indah (Foreign) 2,899,000 705
--------------
1,951
--------------
FOREST PRODUCTS & PAPER
Indah Kait Pulp & Paper (Foreign) 2,341,605 907
Indah Kait Pulp & Paper (Warrants),
expiring 7/11/02 214,147 13
--------------
920
--------------
MERCHANDISING
Matahari Putra Prima (Foreign) 888,000 304
--------------
MULTI-INDUSTRY
Bimantara Citra (Foreign) 1,782,000 1,814
--------------
15,802
--------------
- -------------------------------------------------------------------------------
ISRAEL (2.3%)
BANKING
Bank Hapoalim Ltd. 162,500 377
First International Bank of Israel '5' 2,064 1,461
--------------
1,838
--------------
ELECTRICAL & ELECTRONICS
Elbit Systems Ltd. 66,365 907
Scitex Ltd. 55,467 707
--------------
1,614
--------------
FOOD & HOUSEHOLD PRODUCTS
Osem Investment Ltd. 94,176 490
Super Sol Ltd. 963,400 3,131
--------------
3,621
--------------
MERCHANDISING
Blue Square-Isreal Ltd. ADR 87,700 1,140
--------------
MULTI-INDUSTRY
Koor Industries Ltd. 10,850 1,128
Pec Israel Economic Corp. 43,870 847
--------------
1,975
--------------
10,188
--------------
- -------------------------------------------------------------------------------
KOREA (7.0%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. (Foreign) 75,417 7,290
Samsung Electronics Co. GDR - New 144A 54,636 2,827
--------------
10,117
--------------
- -------------------------------------------------------------------------------
6
<PAGE>
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
KOREA (CONTINUED)
BANKING
Cho Hung Bank Co. Ltd. GDR 51,100 U.S.$ 241
Housing & Commercial Bank, Korea 117,980 1,999
Housing & Commercial Bank, Korea
GDR 83,800 1,643
Kookmin Bank 164,480 1,980
Kookmin Bank GDR 97,798 1,223
--------------
7,086
--------------
CONSTRUCTION & HOUSING
Hyundai Engineering (Foreign) 74,014 1,456
--------------
FOREST PRODUCTS & PAPER
Hansol Paper Co. 68,310 1,590
--------------
METALS - STEEL
Pohang Iron & Steel Ltd. (Foreign) 39,040 3,045
--------------
TELECOMMUNICATIONS
LG Information & Communication Ltd. 55,630 5,381
--------------
UTILITIES - ELECTRICAL & GAS
Korea Electric Power Corp. (Foreign) 104,240 2,313
--------------
30,988
--------------
- -------------------------------------------------------------------------------
MALAYSIA (0.2%)
BANKING
Commerce Asset Holding Bhd
(Warrants), expiring 3/16/02 63,500 21
--------------
FINANCIAL SERVICES
Rashid Hussain Bhd (Warrants),
expiring 3/25/02 17,285 13
--------------
LEISURE & TOURISM
Genting Bhd 267,400 832
--------------
MACHINERY & ENGINEERING
United Engineers (Malaysia) Bhd 52,000 167
--------------
1,033
--------------
- -------------------------------------------------------------------------------
MAURITIUS (0.4%)
BANKING
State Bank of Mauritius 3,050,000 1,756
--------------
- -------------------------------------------------------------------------------
MEXICO (12.9%)
BANKING
Banacci 'B' 18,817 59
Banacci 'L' 805,847 2,366
Bancomer 'B' ADR 144A 165,768 2,259
--------------
4,684
--------------
BEVERAGES & TOBACCO
FEMSA 'B' 1,777,695 15,295
--------------
BROADCASTING & PUBLISHING
Televisa CPO GDR 239,708 8,585
TV Azteca ADR 102,460 2,305
--------------
10,890
--------------
BUILDING MATERIALS & COMPONENTS
Apasco 101,703 779
Cemex 'B' ADR 158,080 1,879
Cemex CPO 402,341 2,109
Cemex CPO ADR 188,969 1,932
--------------
6,699
--------------
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS
Kimberly 'A' 1,258,411 U.S.$ 6,580
Maseca 'B' 192,835 234
--------------
6,814
--------------
MERCHANDISING
Cifra 'A' 36,785 83
Cifra 'B' 140,175 331
Cifra 'B' ADR 58,740 138
Cifra 'C' 459,484 1,007
--------------
1,559
--------------
MULTI-INDUSTRY
Carso 'A1' 66,245 531
Carso ADR 61,710 981
Desc ADR 25,164 1,051
Sidek 'A' 1,000 --@
--------------
2,563
--------------
TELECOMMUNICATIONS
Telmex 'L' ADR 172,525 8,928
--------------
57,432
--------------
- -------------------------------------------------------------------------------
PAKISTAN (4.3%)
CHEMICALS
Engro Chemicals Ltd. 292,000 1,082
Fauji Fertilizer Co. Ltd. 1,643,700 3,488
--------------
4,570
--------------
ENERGY SOURCES
Pakistan State Oil Co., Ltd. 351,699 3,666
--------------
TELECOMMUNICATIONS
Pakistan
Telecommunications 7,025,000 6,786
Pakistan Telecommunications GDR 7,650 738
--------------
7,524
--------------
TEXTILES & APPAREL
Nishat Mills Ltd. 471,926 181
--------------
UTILITIES - ELECTRICAL & GAS
Hub Power Co. 1,530,600 2,048
Karachi Electric Supply Corp. 554,400 388
Sui Northern Gas Co. 771,300 615
--------------
3,051
--------------
18,992
--------------
- -------------------------------------------------------------------------------
PERU (0.5%)
TELECOMMUNICATIONS
Tel Peru 'B' ADR 90,550 2,139
--------------
- -------------------------------------------------------------------------------
POLAND (2.5%)
BANKING
Bank Handlowy W Warszawie 17,000 243
Bank Inicjatyw Gospodarczych
GDR 84,000 1,638
Bank Rozwoju Eksportu 22,750 458
Bank Slaski 6,900 519
--------------
2,858
--------------
- -------------------------------------------------------------------------------
7
<PAGE>
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
POLAND (CONTINUED)
CHEMICALS
Eastbridge 33,600 U.S.$ 2,259
Polifarb Cieszyn - Wroclaw 32,403 176
Polifarb Cieszyn - Wroclaw 'C' 125,000 627
Polifarb Cieszyn - Wroclaw (Rights) 9,805 17
--------------
3,079
--------------
CONSTRUCTION & HOUSING
Exbud 46,500 567
--------------
FOOD & HOUSEHOLD PRODUCTS
Agros Holding 'C' 60,880 1,775
--------------
INDUSTRIAL COMPONENTS
Debica 31,500 914
--------------
MULTI-INDUSTRY
International UNP Holdings Ltd. 2,280,000 280
--------------
WHOLESALE & INTERNATIONAL TRADE
Elektrim 148,500 1,659
--------------
11,132
--------------
- -------------------------------------------------------------------------------
RUSSIA (8.0%)
BROADCASTING & PUBLISHING
Storyfirst Communications, Inc. 'C'
(Preferred) 270 180
Storyfirst Communications, Inc. 'D'
(Preferred) 720 540
Storyfirst Communications, Inc. 'E'
(Preferred) 780 780
Storyfirst Communications, Inc. 'F'
(Preferred) 139 348
Storyfirst Communications, Inc.,
First Section, Tranche 1
(Convertible) 577 685
Storyfirst Communications, Inc.,
Second Section, Tranche II
(Convertible) 146 173
Storyfirst Communications, Inc.,
Tranche IV(Convertible) 221 263
--------------
2,969
--------------
ENERGY SOURCES
Lukoil Holdings 149,900 3,680
Lukoil Holdings (Preferred) 60,000 1,146
Lukoil Holdings ADR 144A 27,065 2,626
Surgutneftegaz ADR 175,000 2,056
Tatneft ADR 10,000 1,565
--------------
11,073
--------------
FOREST PRODUCTS & PAPER
Alliance Cellulose Ltd. 'B' 156,075 1,049
--------------
MERCHANDISING
TSUM 2,828,000 1,895
--------------
TELECOMMUNICATIONS
Global Tele-Systems Ltd. 214,285 4,285
Rostelecom 278,500 1,170
Russian Telecom
Development Corp. 176,000 836
--------------
6,291
--------------
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
UTILITIES - ELECTRICAL & GAS
Edinaya Energetiches 62,500 U.S.$ 25
Irkutskenergo 3,460,000 1,128
Mosenergo 2,525,000 4,090
Unified Energy System (UES) 18,022,500 7,191
--------------
12,434
--------------
35,711
--------------
- -------------------------------------------------------------------------------
SINGAPORE (0.1%)
FOOD & HOUSEHOLD PRODUCTS
Want Want Holdings 156,000 396
--------------
- -------------------------------------------------------------------------------
SOUTH AFRICA (9.1%)
APPLIANCES & HOUSEHOLD DURABLES
Ellerine Holdings Ltd. 337,500 2,680
--------------
BANKING
First National Bank Holdings Ltd. 148,200 1,177
NBS Boland Ltd. 30,600 630
--------------
1,807
--------------
CHEMICALS
SASOL Ltd. 815,500 11,242
SASOL Ltd. 8.5%
(Convertible Preferred) 3,200 43
--------------
11,285
--------------
ELECTRICAL & ELECTRONICS
Persetel Q Holdings Ltd. 253,000 1,661
Reunert Ltd. 32,900 97
--------------
1,758
--------------
FINANCIAL SERVICES
Amalgamated Banks of South Africa 278,559 1,898
Coronation Holdings Ltd. 'N'
(Rights) 4,925 7
Coronation Holdings Ltd. 'N' - New 19,700 339
Forbes Group Ltd. 355,300 671
Samgro Investment Holdings Ltd. -
New 452,000 1,164
--------------
4,079
--------------
FOOD & HOUSEHOLD PRODUCTS
Foodcorp Ltd. 136,427 878
Illovo Sugar Ltd. 403,600 736
--------------
1,614
--------------
INSURANCE
Liberty Life Association of Africa Ltd. 41,900 1,223
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
De Beers Centenary AG 27,100 789
--------------
MULTI-INDUSTRY
Barlow Ltd. 289,676 3,310
Bidvest Group Ltd. 56,734 463
Gencor Ltd. 90,460 213
Malbak Ltd. 651,300 950
*Morgan Stanley Africa Investment
Fund, Inc. 141,445 2,405
New Africa Investments Ltd.
(Preferred) 'N' 492,100 364
Rembrandt Group Ltd. 685,500 6,207
--------------
13,912
--------------
- -------------------------------------------------------------------------------
8
<PAGE>
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
SOUTH AFRICA (CONTINUED)
RETAIL - MAJOR DEPARTMENT STORES
Protea Furnishers Ltd. 1,029,200 U.S.$ 530
--------------
TELECOMMUNICATIONS
Plessey Corp. Ltd. 413,300 851
--------------
40,528
--------------
- -------------------------------------------------------------------------------
TAIWAN (5.2%)
CHEMICALS
Formosa Plastics Corp. 36,090 73
--------------
CONSTRUCTION & HOUSING
Cathay Construction Corp. 1,425,000 2,127
Kuoyang Construction 496,540 1,197
--------------
3,324
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Acer, Inc. 412,250 807
Asustek Computer Inc. 550,000 9,708
Compal Electronics 230,700 823
Hon Hai Precision Industry 105,000 789
Siliconware Precision Industries Co. 518,000 1,765
--------------
13,892
--------------
FINANCIAL SERVICES
China Development Corp. 382,500 1,357
--------------
TEXTILES & APPAREL
Far East Textile 2,987,866 4,407
--------------
23,053
--------------
- -------------------------------------------------------------------------------
THAILAND (2.4%)
BANKING
Siam Commercial Bank Co. Ltd.
(Foreign) 770,300 2,504
--------------
BROADCASTING & PUBLISHING
Grammy Entertainment Public
Co. Ltd. 67,000 534
--------------
CHEMICALS
National Petrochemical Ltd. (Foreign) 622,000 394
--------------
CONSTRUCTION & HOUSING
Bangkok Expressway Public
Co., Ltd. 460,000 444
--------------
ELECTRICAL & ELECTRONICS
Delta Electronics Public Co., Ltd. 10,300 88
Shinawatra Computer Co. Ltd. (Foreign) 260,900 1,437
--------------
1,525
--------------
ENERGY SOURCES
Lanna Lignite Co. Ltd. (Foreign) 66,400 362
PTT Exploration & Production Public Co. Ltd. 43,200 579
--------------
941
--------------
FINANCIAL SERVICES
Industrial Finance Corp. (Foreign) 448,300 583
National Finance & Securities
Co. Ltd. 320,700 219
National Finance & Securities
Co. Ltd. (Foreign) 297,300 252
--------------
1,054
--------------
- -------------------------------------------------------------------------------
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
REAL ESTATE
Central Pattana Co. Ltd. (Foreign) 200,900 U.S.$ 343
--------------
TELECOMMUNICATIONS
Advanced Information Services Co.
Ltd. (Foreign) 306,300 2,025
United Communications Industry
Ltd. (Foreign) 360,200 1,052
--------------
3,077
--------------
TRANSPORTATION
Thai Airways International
Public Co., Ltd. 42,000 65
--------------
10,881
--------------
- -------------------------------------------------------------------------------
TURKEY (5.1%)
APPLIANCES & HOUSEHOLD DURABLES
Aksa Arcelik 3,531,500 446
--------------
BANKING
Turkiye Garanti Bankasi 56,429,940 3,045
Yapi Ve Kredi Bankasi 295,094,850 7,367
--------------
10,412
--------------
BEVERAGES & TOBACCO
Efes Sinai Yatirim 30,236,087 694
Ege Biracilik Ve Malt Sanayii 22,828,000 2,620
--------------
3,314
--------------
ELECTRICAL & ELECTRONICS
Vestel Elektronik Sanayi Ve Ticaret AS 13,308,000 1,222
--------------
MERCHANDISING
Migros Turk TAS 2,328,750 2,038
--------------
METALS - STEEL
Eregli Demir Ve Celik
Fabrikalari TAS 28,305,000 5,036
--------------
22,468
--------------
- -------------------------------------------------------------------------------
UNITED KINGDOM (0.1%)
METALS - NON-FERROUS
Billiton plc 98,775 380
--------------
- -------------------------------------------------------------------------------
VENEZUELA (0.5%)
TELECOMMUNICATIONS
CANTV ADR 34,090 1,560
--------------
UTILITIES - ELECTRICAL & GAS
Electricidad de Caracas 308,009 496
--------------
2,056
--------------
- -------------------------------------------------------------------------------
ZIMBABWE (0.9%)
BANKING
NMBZ Holdings Ltd. 202,600 469
--------------
MERCHANDISING
Meikles Africa Ltd. 157,000 338
--------------
MULTI-INDUSTRY
Delta Corp. 607,500 848
Trans Zambezi Industries Ltd. 4,000,000 2,347
--------------
3,195
--------------
4,002
--------------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$360,715) 421,705
--------------
- -------------------------------------------------------------------------------
9
<PAGE>
FACE
AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
DEBT INSTRUMENTS (0.3%)
- -------------------------------------------------------------------------------
INDIA (0.3%)
CHEMICALS
Supreme Petrochem Ltd. 2.25%, 4/22/02 INR 400 U.S.$ 133
--------------
METALS - STEEL
Shri Ishar Alloy Steels Ltd.
15.00%, 4/21/01 581 235
--------------
MULTI-INDUSTRY
DCM Shriram Industries
Ltd. 9.90%, 2/21/02 335 466
DCM Shriram Industries Ltd.
(Convertible) 7.50%, 2/21/02 330 363
--------------
829
--------------
- -------------------------------------------------------------------------------
TOTAL DEBT INSTRUMENTS
(Cost U.S.$1,687) 1,197
--------------
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (3.9%)
- -------------------------------------------------------------------------------
UNITED STATES (3.9%)
REPURCHASE AGREEMENT
Chase Securities, Inc., 5.75%,
dated 9/30/97, due
10/1/97, to be
repurchased at U.S.
$17,501, collateralized by
United States Treasury
Bonds, 8.50%, due
2/15/20, valued at U.S.
$17,839 (Cost U.S.$17,501) U.S.$ 17,501 17,501
--------------
- -------------------------------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- -------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (1.2%)
Argentine Peso ARP 6 U.S.$ 6
Brazil Real BRL 997 910
Colombian Peso COP 89,137 72
Indian Rupee INR 56,210 1,554
Israeli Shekel ISS 9 3
Mexican Peso MXP 3,984 513
Pakistani Rupee PKR 28,671 708
Peruvian New Sol PSS 4 1
Philippine Peso PHP 1,875 54
Polish Zloty PLZ 224 65
South Korean Won KRW 284,157 311
Taiwan Dollar TWD 7,654 268
Thai Baht THB 21,845 602
Venezuelan Bolivar VEB 582 1
--------------
(Cost U.S.$5,095) 5,068
--------------
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(Cost U.S.$384,998) 445,471
--------------
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.2%)
Other Assets U.S.$ 47,064
Liabilities (47,784) (720)
---------- --------------
- -------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 22,824,344 issued and outstanding
U.S.$0.01 par value shares (100,000,000 shares
authorized) U.S.$ 444,751
--------------
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 19.49
--------------
- --------------------------------------------------------------------------------
@ -- Value is less than U.S.$500.
* -- The Fund is advised by an affiliate.
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
NOTE: Prior government approval for foreign investments may be required under
certain circumstances in some emerging markets, and foreign ownership
limitations may also be imposed by the charters of individual companies
in emerging markets. As a result, an additional class of shares
designated as "foreign" may be created and offered for investment. The
"local" and "foreign" shares' market values may vary.
10
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