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Previous: DAMES & MOORE INC /DE/, PRE 14A, 1998-06-02 |
Next: CHECKERS DRIVE IN RESTAURANTS INC /DE, S-3, 1998-06-02 |
<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 Stefanie V. Chang
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
(800) 730-6001
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
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.
- --------------------------------------------------------------------------------
FIRST QUARTER REPORT
MARCH 31, 1998
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- ------------
For the three months ended March 31, 1998, the Morgan Stanley Emerging Markets
Fund, Inc. (the "Fund") had a total return, based on net asset value per share,
of 11.65% compared with 7.32% for the IFC Global Total Return Composite Index
(the "Index"). For the one year ended March 31, 1998, and for the period from
commencement of operations on November 1, 1991 through March 31, 1998, the
Fund's total return, based on net asset value per share, was -0.59% and 132.07%,
respectively, compared with -16.32% and 49.75%, respectively, for the Index. On
March 31, 1998, the closing price of the Fund's shares on the New York Stock
Exchange was $12.50, representing an 12.9% discount to the Fund's net asset
value per share.
The largest contributors to the Fund's outperformance relative to its benchmark
were our overweights in Korea and Thailand, which surged 59.1% and 43.4%,
respectively.
Latin America remained relatively flat during the first quarter, gaining only
0.2%. Brazil was the star performer returning 7.7% during the quarter, followed
by Argentina, which gained 1.4%, and Chile which appreciated 0.6%. The Latin
laggards were Colombia, which fell 22.7%, Venezuela (-9.3%), Mexico (-6.4%), and
Peru (-5.5%). During the quarter, we trimmed our Mexican position and used the
proceeds to increase our Brazilian exposure. Within Brazil, we are focusing on
the banking and telecom stocks. Brazilian banks are attractive given their
cheap valuations and a declining interest rate environment. Regarding the
telecom sector, attractive valuations coupled with strong growth expectations
and steady progress on the privatization front are expected to drive returns. We
are underweight Mexico as a result of a worsening trade deficit and the
potential for higher than expected inflation and interest rate numbers. Within
Mexico, we continue to focus on the consumer sector taking advantage of the
recovery which began approximately ten months ago.
The Asian markets rallied, gaining 16.2% during the quarter led by Korea
(+59.1%), Thailand (+43.4%), the Philippines (+34.9%), and Malaysia (+29.8%).
Indonesia continues to lag the region, declining 11.2%. We have been trimming
our Indonesian positions as we are not convinced that President Suharto will
implement the strict measures necessary to create positive momentum in that
market. Suharto's decision not to follow IMF guidelines led to a delay of a $3
billion payment from the IMF. Conversely, Korea and Thailand continue to take
steps to improve financial conditions and investor sentiment. For example, the
Korean and Thai governments have recognized the need for foreign participation
and have removed or sharply reduced most foreign ownership restrictions.
Consequently, we remain overweight both Korea and Thailand.
The sub-continent experienced mixed results with India gaining 6.3% and Pakistan
falling 12.3%. India's gain was fueled by a dramatic drop in overnight interest
rates as well as the Bharatiya Janata Party (BJP) coalition government winning
the early-March national elections. Pakistan's market was driven by political
turmoil as four government ministers resigned and their political party withdrew
support from Prime Minister Sharif's coalition government. We remain overweight
both markets given their attractive valuations including 10 - 15% earnings
growth potential.
Europe, Middle-East and Africa posted mixed results. Poland and South Africa
were the star performers gaining 18.7% and 16.9%, respectively. We are
overweight Poland given its macroeconomic strength (e.g. three consecutive years
of annual real GDP growth in excess of 6%). We increased our South African
weighting during the quarter as a result of declining interest rates and
increased liquidity. Russia and Turkey, in which we have overweight positions,
fared poorly this quarter, due to political instability. The Russian equity
market fell 13.2% as a result of the dismissal of the entire Cabinet on March 23
by President Boris Yeltsin. Additional pressure was placed on the Russian
market as declines in oil prices threatened the earnings of oil companies.
The Turkish market fell 21.7% as a result of political concerns and rising
tension along the Iraqi border. Fortunately, an agreement was reached between
the United Nations and Iraq on weapons inspections. Political concerns took
center stage in January when the Constitutional Court ruled that the pro-Islamic
party (the controversial Welfare Party) violated portions of the country's
secularist constitution. As a result, there is a possibility that the coalition
government would be forced to call early elections. Dissolution of the current
2
<PAGE>
government would decrease the likelihood of the continuation of the current
anti-inflationary program. We attached a low probability to the idea of early
elections and are optimistic that the government's anti-inflation program will
be successful, thereby resulting in lower yields, which should make equities
more attractive.
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
April 1998
3
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Investment Summary as of March 31, 1998 (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 15.58% -- 11.65% -- 7.32% --
ONE YEAR -4.04 -4.04% -0.59 -0.59% -16.32 -16.32%
FIVE YEAR 38.08+ 6.67+ 76.97+ 12.09+ 36.19 6.37
SINCE INCEPTION* 102.21+ 11.60+ 132.07+ 14.02+ 49.75 6.50
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- -------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31:
THREE MONTHS
ENDED
MARCH 31,
1991* 1992 1993 1994 1995 1996 1997 1998
----- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share... $14.71 $16.74 $28.20 $20.30 $14.69 $15.69 $15.52 $14.35
Market Value Per Share...... $14.25 $18.13 $31.63 $21.50 $15.50 $13.88 $13.06 $12.50
Premium/(Discount).......... -3.1% 8.3% 12.2% 5.9% 5.5% -11.5% -15.9% -12.9%
Income Dividends............ $0.04 $0.01 -- -- -- $0.05 $0.01 $0.11
Capital Gains Distributions. -- $0.01 $1.49 $6.50 $1.29 $0.98 $0.01 $2.18
Fund Total Return (2)....... 4.61% 13.94% 95.22%+ -5.33%+ -16.30%+ 13.84% -0.97% 11.65%
Index Total Return (3)...... 3.25% 0.33% 67.52% -0.51% -12.34% 7.84% -14.42% 7.32%
</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.
4
<PAGE>
Morgan Stanley Emerging Markets Fund, Inc.
Portfolio Summary as of March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Debt Securities 0.2%
Equity Securities 91.4%
Short-Term Investments 8.4%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
[CHART]
<TABLE>
<S> <C>
Other 31.2%
Utilities - Electrical & Gas 4.8%
Telecommunications 24.5%
Banking 8.0%
Beverages & Tobacco 7.0%
Broadcasting & Publishing 3.1%
Chemicals 2.9%
Electronic Components & Instruments 4.9%
Energy Sources 4.9%
Food & Household Products 2.9%
Multi-Industry 5.8%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[CHART]
<TABLE>
<S> <C>
Other 30.1%
Thailand 3.3%
Pakistan 3.4%
Turkey 3.7%
Taiwan 5.0%
Korea 6.0%
Brazil 17.8%
Russia 8.6%
Mexico 7.9%
South Africa 7.3%
India 6.9%
- --------------------------------------------------------------------------------
</TABLE>
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Telebras (Brazil) 7.7%
2. Global Tele-Systems Ltd. (Russia) 4.6
3. CRT (Brazil) 2.9
4. Samsung Electronics Co. (Korea) 2.6
5. Telmex (Mexico) 2.4
6. Asustek Computer Inc. (Taiwan) 2.2
7. Bharat Heavy Electricals Ltd. (India) 2.2
8. FEMSA (Mexico) 2.0
9. Yapi Ve Kredi Bankasi (Turkey) 1.9
10. Pohang Iron & Steel Co. Ltd. (Korea) 1.8
-----
30.3%
-----
-----
</TABLE>
* Excludes short-term investments.
5
<PAGE>
INVESTMENTS (UNAUDITED)
- --------
MARCH 31, 1998
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (91.2%)
(Unless otherwise noted)
- --------------------------------------------------------------------------------
ARGENTINA (1.7%)
AUTOMOBILES
CIADEA 1 U.S.$ --@
--------------
TELECOMMUNICATIONS
Nortel ADR 28,685 828
Telecom Argentina ADR 11,812 423
Telefonica Argentina ADR 117,855 4,486
--------------
5,737
--------------
5,737
--------------
- --------------------------------------------------------------------------------
BRAZIL (17.8%)
BANKING
Banco Bradesco (Preferred) 220,742,974 2,281
Banco Nacional (Preferred) 61,598,720 3
Itaubanco (Preferred) 2,066,500 1,327
Unibanco (Preferred) GDR 80,705 2,925
--------------
6,536
--------------
BEVERAGES & TOBACCO
Brahma (Preferred) 4,973,209 3,854
Brahma (Preferred) ADR 27,765 430
--------------
4,284
--------------
ENERGY SOURCES
Petrobras (Preferred) 10,292,999 2,453
Petrobras ADR 22,595 529
--------------
2,982
--------------
MERCHANDISING
Lojas Arapua (Preferred) 30,412,000 102
Lojas Arapua (Preferred) ADR 31,540 108
Lojas Renner (Preferred) 14,237,000 538
Pao de Acucar (Preferred) 6,460,000 149
Pao de Acucar (Preferred) ADR 20,530 471
--------------
1,368
--------------
Metals -- Non-Ferrous
CVRD (Preferred) 10,602 253
CVRD (Preferred) ADR 42,769 1,031
--------------
1,284
--------------
TELECOMMUNICATIONS
CRT (Preferred) 'A' 7,356,200 9,252
CRT Receipts (Preferred) 286,847 361
Telebras 9,620,000 998
Telebras (Preferred) 66,226,183 8,719
Telebras (Preferred) ADR 120,138 15,595
Telesp (Preferred) 624,313 203
--------------
35,128
--------------
TEXTILES & APPAREL
Coteminas 2,200,500 571
Coteminas ADR 23,460 304
Encorpar (Preferred) 2,980,000 12
--------------
887
--------------
- --------------------------------------------------------------------------------
UTILITIES -- ELECTRICAL & GAS
Cemig (Preferred) 73,197,867 U.S.$ 3,554
Cemig (Preferred) ADR 38,370 1,866
Light Services de Electricidad 334,349 128
Lightpar 1,086,000 282
--------------
5,830
--------------
58,299
--------------
- --------------------------------------------------------------------------------
CHILE (0.8%)
BEVERAGES & TOBACCO
CCU ADR 28,420 859
--------------
MERCHANDISING
Santa Isabel ADR 13,022 237
--------------
UTILITIES -- ELECTRICAL & GAS
Endesa ADR 17,235 332
Enersis ADR 38,720 1,222
--------------
1,554
--------------
2,650
--------------
- --------------------------------------------------------------------------------
CHINA (0.7%)
ENERGY SOURCES
Huaneng Power International, Inc. ADR 42,385 996
Zhenhai Refining & Chemical Co. Ltd. 'H' 734,000 230
--------------
1,226
--------------
MINING
Yanzhou Coal Mining Co. Ltd. ADR 65,650 1,050
--------------
2,276
--------------
- --------------------------------------------------------------------------------
COLOMBIA (0.0%)
BANKING
BanColombia 59,937 16
--------------
- --------------------------------------------------------------------------------
EGYPT (1.9%)
BANKING
Commercial International Bank 49,190 923
--------------
BEVERAGES & TOBACCO
Al-Ahram Beverages Co. GDR 12,000 363
Eastern Tobacco 47,790 1,094
--------------
1,457
--------------
BUILDING MATERIALS & COMPONENTS
Ameriyah Cement Co. 35,900 737
Helwan Portland Cement 34,500 727
--------------
1,464
--------------
CHEMICALS
Egyptian Finance & Industrial 14,850 818
Paints & Chemical Industries 2,000 68
Paints & Chemical Industries GDR 55,700 623
--------------
1,509
--------------
FOOD & HOUSEHOLD PRODUCTS
North Cairo Flour Mills 7,910 188
--------------
MULTI-INDUSTRY
Industrial & Engineering 11,690 213
--------------
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
EGYPT (CONTINUED)
REAL ESTATE
Madinet Nasr Housing & Development 7,000 U.S.$ 437
--------------
6,191
--------------
- --------------------------------------------------------------------------------
HONG KONG (1.7%)
AUTOMOBILES
Qingling Motors Co. 484,000 225
--------------
MULTI-INDUSTRY
China Resources Enterprise Ltd. 243,000 492
Ng Fung Hong Ltd. 725,000 706
Shanghai Industrial Holdings Ltd. 73,000 299
--------------
1,497
--------------
REAL ESTATE
Cheung Kong (Holdings) Ltd. 137,000 973
Sun Hung Kai Properties Ltd. 129,000 878
--------------
1,851
--------------
TRANSPORTATION -- ROAD & RAIL
Zhejiang Expressway Co. Ltd. 'H' 1,683,000 426
--------------
Utilities -- Electrical & Gas
CLP Holdings Ltd. 306,000 1,540
--------------
5,539
--------------
- --------------------------------------------------------------------------------
HUNGARY (1.5%)
BANKING
OTP Bank Rt. 11,300 575
--------------
ENERGY SOURCES
MOL Magyar Olaj-es Gazipari GDR 52,500 1,610
MOL Magyar Olaj-es Gazipari Rt. GDR 50,700 1,554
--------------
3,164
--------------
HEALTH & PERSONAL CARE
Richter Gedeon Rt. 7,400 778
Richter Gedeon Rt. GDS 3,100 324
--------------
1,102
--------------
4,841
--------------
- --------------------------------------------------------------------------------
INDIA (6.7%)
AUTOMOBILES
Apollo Tyres Ltd. 8,675 18
Bajaj Auto Ltd. 103,500 1,557
Hero Honda Ltd. 90,550 2,002
MRF Ltd. 10,000 509
Tata Engineering & Locomotive Ltd. 797 6
--------------
4,092
--------------
BANKING
State Bank of India Ltd. 151,100 1,063
--------------
BEVERAGES & TOBACCO
ITC Ltd. 146,432 2,647
--------------
BUILDING MATERIALS & COMPONENTS
ITW Signode India Ltd. 136,800 222
--------------
CHEMICALS
Reliance Industries Ltd. 1,604 7
--------------
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES
Bharat Heavy Electricals Ltd. 779,100 U.S.$ 7,041
--------------
FINANCIAL SERVICES
Housing Development Finance Corp. Ltd. 34,090 2,743
--------------
HEALTH & PERSONAL CARE
Hoechst Marion Roussel India Ltd. 50,000 489
--------------
MACHINERY & ENGINEERING
Thermax Ltd. 25,000 139
--------------
MULTI-INDUSTRY
*Morgan Stanley Growth Fund 6,881,800 1,045
--------------
TRANSPORTATION -- ROAD & RAIL
Container Corp. of India Ltd. 221,500 2,355
--------------
21,843
--------------
- --------------------------------------------------------------------------------
INDONESIA (1.5%)
AUTOMOBILES
Astra International Inc. 50,000 12
--------------
BANKING
Bank International Indonesia (Foreign)
(Warrants), expiring 1/17/00 2,834 --@
--------------
BEVERAGES & TOBACCO
Gudang Garam 834,160 1,155
HM Sampoerna 565,000 513
--------------
1,668
--------------
ENERGY SOURCES
Gulf Indonesia Resources Ltd. 15,800 284
--------------
FOOD & HOUSEHOLD PRODUCTS
Indofood Sukses Makmur 2,500 1
Mayora Indah 243,000 21
--------------
22
--------------
FOREST PRODUCTS & PAPER
Indah Kait Pulp & Paper 2,953,405 734
Indah Kait Pulp & Paper
(Warrants), expiring 7/11/02 214,152 27
--------------
761
--------------
MERCHANDISING
PT Matahari Putra Prima 485,500 27
--------------
MINING
Tambang Timah 70,800 59
--------------
MULTI-INDUSTRY
London Sumatra Indonesia 371,800 117
--------------
TELECOMMUNICATIONS
Telekomunikasi Indonesia 3,103,000 1,480
Telekomunikasi Indonesia ADR 34,170 335
--------------
1,815
--------------
WHOLESALE & INTERNATIONAL TRADE
Daya Guna Samudera 194,961 195
--------------
4,960
--------------
- --------------------------------------------------------------------------------
ISRAEL (2.8%)
BANKING
Bank Hapoalim Ltd. 616,470 1,689
First International Bank of Israel '5' 1,920 1,387
--------------
3,076
--------------
ELECTRICAL & ELECTRONICS
Elbit Systems Ltd. 30,615 392
--------------
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ISRAEL (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS
Super Sol Ltd. 963,400 U.S.$ 3,117
--------------
MULTI-INDUSTRY
Koor Industries Ltd. 22,350 2,781
--------------
9,366
--------------
- --------------------------------------------------------------------------------
KOREA (6.0%)
APPLIANCES & HOUSEHOLD DURABLES
Samsung Electronics Co. 159,877 8,427
Samsung Electronics Co. GDR - New 2,836 71
--------------
8,498
--------------
BUILDING MATERIALS & COMPONENTS
Hankuk Glass Industry Co. Ltd. 43,000 683
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
S1 Corp. 10,680 1,494
--------------
FOREST PRODUCTS & PAPER
Hansol Paper Co. 2,280 17
--------------
METALS -- STEEL
Pohang Iron & Steel Co. Ltd. 104,840 5,773
--------------
MULTI-INDUSTRY
Daewoo Heavy Industries 282,150 1,446
--------------
TELECOMMUNICATIONS
LG Information & Communication Ltd. 20,620 716
SK Telecom Co. Ltd. 2,043 1,153
--------------
1,869
--------------
19,780
--------------
- --------------------------------------------------------------------------------
MALAYSIA (3.2%)
BANKING
Malayan Banking Bhd 303,000 1,162
--------------
BEVERAGES & TOBACCO
Carlsberg Brewery Malaysia Bhd 37,000 144
R.J. Reynolds Bhd 106,000 195
Rothmans of Pall Mall Bhd 109,200 912
--------------
1,251
--------------
BROADCASTING & PUBLISHING
New Straits Times Press Bhd 54,000 84
--------------
ENERGY SOURCES
Petronas Gas Bhd 327,000 869
--------------
FOOD & HOUSEHOLD PRODUCTS
Nestle Bhd 80,000 443
--------------
INDUSTRIAL COMPONENTS
Malaysian Pacific Industries Bhd 33,000 97
--------------
LEISURE & TOURISM
Genting Bhd 413,400 1,416
Magnum Corp. Bhd 288,000 246
Resorts World Bhd 102,000 225
--------------
1,887
--------------
MISCELLANEOUS MATERIALS & COMMODITIES
Golden Hope Plantations Bhd 418,000 527
IOI Corporation Bhd 214,000 164
Kuala Lumpur Kepong Bhd 259,000 621
--------------
1,312
--------------
- --------------------------------------------------------------------------------
MULTI-INDUSTRY
Sime Darby Bhd 4,000 U.S.$ 4
Technology Resources Industries Bhd 226,000 258
--------------
262
--------------
TELECOMMUNICATIONS
Telekom Malaysia Bhd 442,000 1,526
--------------
TRANSPORTATION -- SHIPPING
Malaysian International Shipping Bhd (Foreign) 105,000 201
--------------
UTILITIES -- ELECTRICAL & GAS
Tenaga Nasional Bhd 620,000 1,563
--------------
10,657
--------------
- --------------------------------------------------------------------------------
MEXICO (7.9%)
BANKING
Banacci 'B' 336,000 854
Banacci 'L' 45,447 105
--------------
959
--------------
BEVERAGES & TOBACCO
FEMSA 'B' 900,084 6,529
--------------
BROADCASTING & PUBLISHING
Televisa CPO GDR 95,370 3,493
TV Azteca ADR 35,401 695
--------------
4,188
--------------
BUILDING MATERIALS & COMPONENTS
Cemex CPO 352,486 1,570
Cemex CPO ADR 145,999 1,291
--------------
2,861
--------------
FOOD & HOUSEHOLD PRODUCTS
Kimberly Clark de Mexico 'A' 658,626 3,386
--------------
MULTI-INDUSTRY
Sidek 'A' 1,000 --@
--------------
TELECOMMUNICATIONS
Telmex 'L' ADR 141,532 7,979
--------------
25,902
--------------
- --------------------------------------------------------------------------------
PAKISTAN (3.4%)
CHEMICALS
Fauji Fertilizer Co. Ltd. 1,385,400 2,576
--------------
ENERGY SOURCES
Pakistan State Oil Co., Ltd. 281,598 1,639
--------------
TELECOMMUNICATIONS
Pakistan Telecommunications Corp. 7,514,500 4,986
Pakistan Telecommunications Corp. GDR 7,650 508
--------------
5,494
--------------
UTILITIES -- ELECTRICAL & GAS
Hub Power Co. 966,200 1,028
Sui Northern Gas Co. 886,995 470
--------------
1,498
--------------
11,207
--------------
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PHILIPPINES (1.9%)
BEVERAGES & TOBACCO
San Miguel Corp. 'B' 616,560 U.S.$ 1,071
--------------
MULTI-INDUSTRY
Ayala Corp. 2,787,600 1,284
--------------
REAL ESTATE
Ayala Land, Inc. 'B' 335,160 161
SM Prime Holdings, Inc. 'B' 3,862,580 752
--------------
913
--------------
TELECOMMUNICATIONS
Philippine Long Distance Telephone Co. 71,390 1,982
Philippine Long Distance Telephone Co. ADR 6,000 167
--------------
2,149
--------------
UTILITIES -- ELECTRICAL & GAS
Manila Electric Co. 'B' 214,310 699
--------------
6,116
--------------
- --------------------------------------------------------------------------------
POLAND (2.6%)
BANKING
Bank Rozwoju Eksportu 18,750 522
Bank Slaski 5,300 384
BIG Bank Gdanski GDR 60,000 1,282
--------------
2,188
--------------
CHEMICALS
Eastbridge 33,600 2,259
Polifarb Cieszyn - Wroclaw 157,403 657
Polifarb Cieszyn - Wroclaw (Rights) 3,268 --
--------------
2,916
--------------
FOOD & HOUSEHOLD PRODUCTS
Agros Holding 'C' 42,250 985
--------------
INDUSTRIAL COMPONENTS
Debica 25,500 665
--------------
MULTI-INDUSTRY
International UNP Holdings Ltd. 2,280,000 354
--------------
WHOLESALE & INTERNATIONAL TRADE
Elektrim 119,500 1,489
--------------
8,597
--------------
- --------------------------------------------------------------------------------
RUSSIA (8.6%)
BROADCASTING & PUBLISHING
Storyfirst Communications, Inc. 'C' (Preferred) 270 386
Storyfirst Communications, Inc. 'D'(Preferred) 720 1,030
Storyfirst Communications, Inc. 'E' (Preferred) 780 1,115
Storyfirst Communications, Inc. 'F' (Preferred) 139 398
Storyfirst Communications, Inc., First Section 604 863
Storyfirst Communications, Inc., First Section,
Tranche I (Convertible) 35 50
Storyfirst Communications, Inc., Second Section,
Tranche II (Convertible) 152 217
- --------------------------------------------------------------------------------
Storyfirst Communications, Inc., Tranche IV
(Convertible) 207 U.S.$ 296
--------------
4,355
--------------
ENERGY SOURCES
AO Tatneft ADR 26,585 616
Lukoil Holdings 79,933 1,402
Lukoil Holdings (Preferred) 48,000 477
Lukoil Holdings ADR 8,053 564
Surgutneftegaz (Preferred) 84,167 663
--------------
3,722
--------------
FOREST PRODUCTS & PAPER
Alliance Cellulose Ltd. 'B' 156,075 621
--------------
MERCHANDISING
TSUM 2,228,000 613
--------------
TELECOMMUNICATIONS
Global Tele-Systems Ltd. 321,427 15,027
Russian Telecom Development Corp. 176,000 836
--------------
15,863
--------------
UTILITIES -- ELECTRICAL & GAS
Irkutskenergo 2,768,000 471
Mosenergo 920,000 1,127
Unified Energy Systems 3,974,094 1,261
--------------
2,859
--------------
28,033
--------------
- --------------------------------------------------------------------------------
SOUTH AFRICA (7.3%)
BANKING
NBS Boland Group Ltd. 425,660 1,158
--------------
BEVERAGES & TOBACCO
South African Breweries Ltd. 38,800 1,151
--------------
BROADCASTING & PUBLISHING
Primedia Ltd. 66,900 440
--------------
BUSINESS & PUBLIC SERVICES
The Education Investment Corp. Ltd. 471,400 857
--------------
CHEMICALS
SASOL Ltd. 245,200 1,987
SASOL Ltd. 8.50% (Convertible Preferred) 3,200 24
--------------
2,011
--------------
ELECTRICAL & ELECTRONICS
Persetel Holdings Ltd. 118,700 970
--------------
FINANCIAL SERVICES
ABSA Group Ltd. 24,000 218
Coronation Holdings Ltd. 'N' - New 19,700 374
Orion Selections Holdings Ltd. 402,100 1,441
Orion Selections Ltd. 246,400 661
--------------
2,694
--------------
FOOD & HOUSEHOLD PRODUCTS
Foodcorp Ltd. 135,027 847
Illovo Sugar Ltd. 386,900 661
--------------
1,508
--------------
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
SOUTH AFRICA (CONTINUED)
INSURANCE
Forbes Group Ltd. 184,700 U.S.$ 458
Liberty Life Association of Africa Ltd. 39,500 1,334
Metropolitan Life Ltd. 51,100 205
--------------
1,997
--------------
MULTI-INDUSTRY
Barlow Ltd. 116,200 946
Bidvest Group Ltd. 41,948 458
Malbak Ltd. 532,075 497
*Morgan Stanley Africa Investment Fund, Inc. 141,445 1,998
New Africa Investments Ltd. (Preferred) 'N' 1,510,600 2,160
Rembrandt Group Ltd. 225,500 1,863
--------------
7,922
--------------
RETAIL -- MAJOR DEPARTMENT STORES
Ellerine Holdings Ltd. 236,200 2,252
Protea Furnishers Ltd. 1,029,200 889
--------------
3,141
--------------
23,849
--------------
- --------------------------------------------------------------------------------
TAIWAN (5.0%)
CONSTRUCTION & HOUSING
Cathay Construction Corp. 297,000 306
Kuoyang Construction 124,000 296
--------------
602
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Asustek Computer Inc. 316,000 7,171
Compal Electronics 569,618 2,278
Hon Hai Precision Industry 377,000 2,259
Siliconware Precision Industries Co. 605,000 1,831
--------------
13,539
--------------
TEXTILES & APPAREL
Far East Textile 1,937,866 2,122
--------------
16,263
--------------
- --------------------------------------------------------------------------------
THAILAND (3.3%)
AUTOMOBILES
Thai Engine Manufacturing Public Co. Ltd.
(Foreign) 63,100 144
--------------
BANKING
Bank of Ayudhya Public Co. Ltd. (Foreign) 8,600 5
Siam Commercial Bank Co. Ltd. (Foreign) 690,233 1,018
Siam Commercial Bank Co. Ltd. (Foreign)
(Warrants), expiring 12/31/02 280,333 --
--------------
1,023
--------------
BROADCASTING & PUBLISHING
BEC World plc (Foreign) 72,100 396
Grammy Entertainment Public Co. Ltd. (Foreign) 132,500 680
--------------
1,076
--------------
- --------------------------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS
Siam City Cement Public Co. Ltd. (Foreign) 27,800 U.S.$ 74
--------------
CHEMICALS
National Petrochemical Ltd. (Foreign) 487,000 489
--------------
ELECTRICAL & ELECTRONICS
Shinawatra Computer Co. Ltd. (Foreign) 201,900 1,242
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS
Delta Electronics Public Co. Ltd. (Foreign) 82,800 1,098
--------------
ENERGY SOURCES
Lanna Lignite Co. Ltd. (Foreign) 66,400 297
PTT Exploration & Production Public Co. Ltd.
(Foreign) 151,700 1,719
--------------
2,016
--------------
FINANCIAL SERVICES
National Finance & Securities Public Co. Ltd.
(Foreign) 76,000 42
--------------
FOREST PRODUCTS & PAPER
Advance Agro Public Co. Ltd. (Foreign) 73,800 70
--------------
REAL ESTATE
Central Pattana Co. Ltd. (Foreign) 140,500 36
--------------
TELECOMMUNICATIONS
Advanced Information Services Co. Ltd.
(Foreign) 340,400 2,647
--------------
TRANSPORTATION -- ROAD & RAIL
Bangkok Expressway Public Co. Ltd. (Foreign) 910,300 844
--------------
10,801
--------------
- --------------------------------------------------------------------------------
TURKEY (3.7%)
APPLIANCES & HOUSEHOLD DURABLES
Arcelik 5,437,500 470
--------------
BANKING
Yapi Ve Kredi Bankasi 182,391,850 6,302
--------------
BEVERAGES & TOBACCO
Efes Sinai Yatirim 30,236,087 497
Ege Biracilik Ve Malt Sanayii 9,736,000 1,402
Erciyas Biracilik 181,000 29
--------------
1,928
--------------
ELECTRICAL & ELECTRONICS
Vestel Elektronik Sanayi Ve Ticaret AS 7,569,000 592
--------------
METALS -- STEEL
Eregli Demir Ve Celik Fabrikalari TAS 22,398,000 2,810
--------------
12,102
--------------
- --------------------------------------------------------------------------------
UNITED KINGDOM (0.4%)
BANKING
HSBC Holdings plc 40,200 1,230
--------------
- --------------------------------------------------------------------------------
VENEZUELA (0.1%)
UTILITIES -- ELECTRICAL & GAS
Electricidad de Caracas 320,316 302
--------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ZIMBABWE (0.7%)
MERCHANDISING
Meikles Africa Ltd. 342,000 U.S.$ 419
--------------
MULTI-INDUSTRY
Delta Corp. 918,391 853
Trans Zambezi Industries Ltd. ADR 4,000,000 929
--------------
1,782
--------------
2,201
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S. $272,324) 298,758
--------------
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
DEBT INSTRUMENTS (0.2%)
- --------------------------------------------------------------------------------
INDIA (0.2%)
CHEMICALS
Supreme Petrochem Ltd. 2.25%, 4/22/02 INR 275 75
--------------
METALS -- STEEL
Shri Ishar Alloy Steels Ltd. 15.00%, 4/21/01 581 121
--------------
MULTI-INDUSTRY
DCM Shriram Industries Ltd. 9.90%, 2/21/02 335 237
DCM Shriram Industries Ltd. (Convertible)
7.50%, 2/21/02 330 186
--------------
423
--------------
- --------------------------------------------------------------------------------
TOTAL DEBT INSTRUMENTS
(Cost U.S. $1,627) 619
--------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (6.6%)
- --------------------------------------------------------------------------------
UNITED STATES (6.6%)
REPURCHASE AGREEMENT
Chase Securities, Inc., 5.60%, dated 3/31/98,
due 4/1/98, to be repurchased at U.S.$21,529,
collateralized by U.S.$22,095. United States
Treasury Notes, 5.50%, due 3/31/03, valued at
U.S.$21,988
(Cost U.S. $21,526) U.S.$ 21,526 21,526
--------------
- --------------------------------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.9%)
Argentine Peso ARP 6 U.S.$ 6
Brazil Real BRL 424 373
Egyptian Pound EGP 5 1
Hong Kong Dollar HKD 96 12
Indian Rupee INR 131,341 3,325
Indonesian Rupiah IDR 486 --@
Israeli Shekel ISS 1,518 422
Malaysian Ringgit MYR 769 211
Mexican Peso MXP 4,467 524
Pakistani Rupee PKR 41,052 930
Peruvian New Sol PSS 4 1
Philippine Peso PHP 364 10
Polish Zloty PLZ 77 22
South African Rand ZAR 20 4
South Korean Won KRW 37,908 27
Taiwan Dollar TWD 2,640 80
Thai Baht THB 5,226 133
Venezuelan Bolivar VEB 2,545 5
--------------
(Cost U.S.$6,093) 6,086
--------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(Cost U.S.$301,570) 326,989
--------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.1%)
Other Assets U.S.$ 30,899
Liabilities (30,466) 433
-------------- --------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 22,824,344 issued and
outstanding U.S.$0.01 par value
shares (100,000,000 shares authorized) U.S.$ 327,422
--------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 14.35
--------------
- --------------------------------------------------------------------------------
</TABLE>
@-- Value is less than U.S.$500.
*-- The Fund is advised by an affiliate.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
GDS -- Global Depositary Shares
NOTE: Prior governmental 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.
11
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