EMERGING MARKETS TELECOMMUNICATIONS FUND INC, N-30D, 1996-07-31

EMERGING MARKETS TELECOMMUNICATIONS FUND INC
N-30D, 1996-07-31

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<PAGE>

The Emerging Markets
Telecommunications
Fund, Inc.
--------------------
ANNUAL REPORT
MAY 31, 1996

[PHOTO]

<PAGE>

CONTENTS

Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Portfolio Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . . .13
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .15
Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .18
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . .22
Results of Annual Meeting of Shareholders. . . . . . . . . . . . . . . . . . .23
Tax Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Description of the Fund's Dividend Reinvestment and Cash Purchase Plan . . . .24

PICTURED ON THE COVER IS A COMPANIA DE TELECOMUNICACIONES DE CHILE ("CTC")
TELEPHONE BOOTH. CTC, THE FIRST SOUTH AMERICAN COMPANY TO LIST SHARES ON THE NEW
YORK STOCK EXCHANGE, IS THE LARGEST TELECOMMUNICATIONS ENTERPRISE IN CHILE
PROVIDING LOCAL SERVICE TO 92% OF CHILE'S POPULATION, AS WELL AS DOMESTIC AND
LONG DISTANCE SERVICES THROUGHOUT THE COUNTRY. ADDITIONALLY, CTC PROVIDES CABLE
TELEVISION, DATA TRANSMISSION SERVICES AND NOW OPERATES A NATIONWIDE CELLULAR
NETWORK. PHOTOGRAPH PROVIDED COURTESY OF CTC.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------

<PAGE>
LETTER TO SHAREHOLDERS

June 27, 1996

DEAR SHAREHOLDERS:

We are pleased to report on the activities of The Emerging Markets
Telecommunications Fund, Inc. (the "Fund") for the fiscal year ended May 31,
1996.

PERFORMANCE

At May 31, 1996, the Fund's net asset value, ("NAV") per share was $20.94 (net
of dividends paid of $0.44 per share), as compared to $19.20 on May 31, 1995.

For the period June 1, 1995 through May 31, 1996, the Fund's total return, based
on NAV and assuming the reinvestment of dividends and distributions, was 11.7%.
By comparison, the total return of the Morgan Stanley Capital International
Emerging Markets Index (the "Index") was 8.1% in the same period. From the
commencement of investment operations on June 25, 1992 through May 31, 1996, the
Fund's total return, based on net asset value and assuming reinvestment of
dividends and distributions, was 82.7%. The Index gained 75.6% during this
period.

At May 31, 1996, the Fund's investments were concentrated in three primary
sectors: $120.1 million was in basic telephone or cellular services of emerging
economies in over 15 developing countries; $9.5 million was in
telecommunications companies in the developed markets of Denmark, Italy and the
United Kingdom and $39.3 million was in electric/gas utilities in five
developing countries and one developed country.

INVESTMENT PHILOSOPHY

We believe that governmental deregulation and privatization around the world
will continue to offer the Fund many new opportunities in the future. We plan to
pursue these opportunities as government-owned companies involved in
telecommunications, electricity and gas distribution, ports and roads undergo
privatization. Our theme is simple: for developing economies to grow, basic
services must be provided. Implementation of basic services on a level
sufficient for growth means that these sorts of companies are likely to generate
high internal rates of return. Thus, as emerging market economies sustain their
rapid growth, we expect telecommunications and other infrastructure companies
within those markets to grow with equal rapidity.

To best illustrate how we have put our investment philosophy to work, we'd like
to discuss a few of our specific holdings.

LATIN AMERICA

We made a conscious decision over the last few months to modestly reduce our
exposure to Latin America, which we felt had reached a somewhat high level for
the Fund, and raise it elsewhere. Nevertheless, Latin America remains, by far,
our largest regional exposure.

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1
<PAGE>
LETTER TO SHAREHOLDERS

Within Latin America, we reallocated assets from Argentina to Brazil.
Specifically, we sold our holdings in two Argentine telephone companies, Telecom
Argentina S.A. ("Telecom") and Telefonica de Argentina S.A. ("Telefonica"), and
used the proceeds to raise our position in Brazil's largest phone company,
Telecomunicacoes Brasileiras S.A. ("Telebras"). Each move reflected our thinking
about how these companies would be affected by changes in their countries' phone
tariff (I.E., rate) structures.

The issue of tariffs is particularly important in the context of emerging
markets investment. This is because the cost and quality of a developing
nation's phone service (both local and long distance) directly affect that
nation's ability to i) grow and modernize its economy and ii) integrate its
economy more widely with those of other countries. Significant differences in
the tariff outlooks for Argentina and Brazil were the primary reason we changed
our allocations.

The need to rebalance Argentina's rates to be more in line with international
standards was clear and acknowledged when Telecom and Telefonica were privatized
in 1990. At that time, Argentine rates were much higher than those of many other
countries (e.g., the U.S. and Spain), making phone usage punitively expensive.

Six years later, however, a rebalancing of Argentina's rate structure has not
yet been implemented and its final form remains uncertain. Although long-term
fundamentals for Telecom and Telefonica are attractive, the short to medium-term
picture will likely include declines both in revenues and earnings. We decided
earlier in the year to realize our gains and apply the proceeds to brighter
opportunities.

The brightest telecom opportunity in Latin American equities, we feel, is in
Brazil. By now, the success of Brazil's Real Plan in dramatically turning around
the nation's economic status is well-known. What is less widely recognized is
how tariff rebalancing has created a huge opportunity for Telebras, and how the
company is uniquely situated to benefit from the twin forces of economic
reinvigoration and heavily growing demand for phone service.

Historically, Brazilian phone tariffs were much lower than international rates
in most categories of usage. This had the effect of limiting Telebras' potential
revenues and profits. In November 1995, however, Brazil significantly raised
tariffs for most phone usage categories. The outlook for Telebras considerably
improved, and its revenues subsequently were projected to surge in 1996 and
thereafter.

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2
<PAGE>
LETTER TO SHAREHOLDERS

EFFECT OF REBALANCING ON BRAZILIAN TELEPHONE TARIFFS
(IN BRAZILIAN REAIS TERMS)

<TABLE>
<CAPTION>
USAGE CATEGORY PREVIOUS AFTER REBALANCING % DIFFERENCE
- - - -------------------------------------- ------------- ------------------- ---------------
<S> <C> <C> <C>
Local:
Basic monthly residential 0.61 3.74 513.1
Basic monthly business 7.23 13.05 80.5
Four-minute local call (peak time) 0.03 0.05 66.7
Domestic long distance (one minute) 0.25 0.31 24.0
Intl. long distance (one minute) 1.88 1.88 0
Cellular service (one-minute local
call) 0.33 0.37 12.1
</TABLE>

- - - ------------------------------
SOURCE: BANCO DE INVESTIMENTOS GARANTIA

It is reasonable to conclude that higher phone tariffs would reduce usage,
particularly among residential customers. For the majority of Brazilians,
furthermore, the purchase of a phone line is very expensive. Nonetheless, we
feel that Telebras should have little difficulty in overcoming such obstacles,
due both to extremely high demand and the improving Brazilian economy. The
waiting list of phone line applicants is substantial and reduced inflation has
increased affordability of service.

Another fundamental growth driver for Telebras is Brazil's teledensity (I.E.,
the level of telephone penetration within the population). Brazil's teledensity
is much lower than that of many of its Latin American neighbors, meaning that
Telebras should reap enormous benefits merely by introducing phone service to
those currently without it.

BRAZILIAN TELEPHONE PENETRATION AND DEMAND SATISFACTION
VS. SELECTED OTHER COUNTRIES (1994)

<TABLE>
<CAPTION>
LINES PER EST. % DEMAND EST. YEARS TO
COUNTRY 100 INHABITANTS SATISFIED SATISFY DEMAND
- - - ------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Peru 3.3 82.3 2.6
BRAZIL 7.4 72.2 8.7
Colombia 9.7 73.4 4.3
Chile 11.0 88.6 1.2
Argentina 14.1 90.7 0.9
Spain 37.1 99.9 N/A
United States 60.2 100.0 N/A
</TABLE>

- - - ------------------------------
SOURCES: INTL. TELECOMM. UNION, SANTANDER INVESTMENT

Clearly, Telebras is an outstanding long-term investment opportunity. We have
raised its weighting in the Fund to 11.71% of net assets from 7.24% at November
30, 1995, and it remains the Fund's largest single holding.

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3
<PAGE>
LETTER TO SHAREHOLDERS

ASIA

In general, prospects for the telecom industry in Asia are very positive. With
more than half the world's population and only about 10% of world phone lines,
Asia's teledensity level is low and its markets have enormous room for
expansion.

Within the region, we are focused on the Philippines, which has two
characteristics very favorable for telecom companies: its economy is booming and
its teledensity is among the world's lowest. Two equity opportunities there are
especially promising. These are Pilipino Telephone Corporation ("Piltel") and
Philippine Long Distance Telephone Company ("PLDT").

Piltel is the Philippines's largest cellular phone carrier. Its 42% share of
cellular subscribers is nearly twice the share of each of its two closest
competitors. There are significant drivers for mobile telephony in the
Philippines: demand for cellular service is rising more quickly than for
traditional fixed-line systems; cellular systems are much cheaper to install and
maintain than fixed-line systems; and mobile phones are very desirable among
Filipinos both for use in traffic-clogged urban areas and as a substitute for
fixed-line phones in less-populated areas, where fixed-line service is often
impractical and/or unavailable.

Piltel is 30.8% owned by PLDT, with which it has a close working relationship.
The PLDT connection gives Piltel meaningful competitive advantages (E.G., access
to one of the nation's biggest companies; greater availability of funding from
banks and the capital markets; and enhanced credit standing).

Other positives for Piltel include its aggressive pricing, which is helping it
to capture market share; its relatively lean cost structure; and its recent
inclusion in the Philippines Composite Index, which should raise the company's
visibility among global investors.

Some industry observers are less sanguine about PLDT, which is considered
vulnerable to earnings erosion due to projected excess industry capacity. They
also note that deregulation has eliminated PLDT's monopoly in the last few years
and exposed it to hungrier, nimbler and more aggressive competitors.

Our view is far more favorable. Simply put, PLDT dominates the Philippine
telecom business, with an estimated 86% share of the local-exchange market.
Challengers are unable to match its huge infrastructure. Even if it loses market
share as call volume rises, it gains in the form of fees that the other
fixed-line providers must pay for the use of its network. International system
operators perceive it as the carrier of choice.

PLDT also handsomely benefits from the Philippine cellular boom; its stake in
Piltel, presumably, will rise in value, and cellular operators must pay PLDT for
network inter-connection.

Finally, PLDT can be seen almost as a proxy for investing in the Philippines
more generally. It is a major participant in and beneficiary of the
modernization of the nation's phone system. Since about 80% of its revenues are
U.S. dollar-denominated, moreover, it is an easy way of hedging exposure to the
peso.

- - - --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS

ISRAEL

After Latin America and Asia, the Middle East is our next-largest regional
exposure. Our Middle Eastern holdings consist entirely of Israeli securities.

In dollar terms, the Fund's biggest Israeli position (about 2% of net assets) is
in Geotek Communications, Inc. ("Geotek"), a company with exciting prospects.
Using technology originally developed by the Israeli military, Geotek has
created products that significantly increase the capabilities of existing
wireless communication devices and services. Its primary target market is
companies that manage fleets of vehicles (E.G., trucks) in relatively defined
geographical areas, mostly in the U.S.

Geotek possesses an unusually strong set of competitive advantages:

-It is the only company to offer a wide variety of wireless services (E.G.,
dispatch, telephony, paging, vehicle location, data communication) over a
single system. Its nearest competitor, Nextel, will need one to two years
just to catch up to where Geotek is now.

-Its capital and operating costs are substantially less than those
associated with other wireless technologies, allowing Geotek to break even
at much lower subscriber levels.

-Its system operates over a generally neglected part of the radio frequency
spectrum, enabling it to buy big chunks of the spectrum in major U.S.
cities at minimum cost.

-It controls its technology and manufactures its own equipment. This
provides Geotek not only with complete autonomy over its products and
services, but also with the potential to add to revenues by licensing and
selling to others.

In addition to its own appreciation potential, Geotek offers the Fund the
benefit of diversification both among regions and telecommunications categories.

OUTLOOK

Looking ahead, we feel confident that the Fund is focused on an essential and
growing industry sector within the world's fastest-growing economic/geographical
areas. Latin America and Asia are especially promising sources of demand for
telecommunications products and services.

For the first time, we see positive developments in Africa. One example is South
Africa, which could provide us with attractive investment opportunities as a
result of anticipated privatization and deregulation of the economy.

The Fund is well-positioned to take advantage of these and other attractive
opportunities.

We wish to remind shareholders whose shares are registered in their own name
that they automatically participate in the Fund's dividend reinvestment program.
The automatic Dividend Reinvestment Plan (the "Plan") can be of value

- - - --------------------------------------------------------------------------------
5
<PAGE>
LETTER TO SHAREHOLDERS

to shareholders in maintaining their proportional ownership interest in the Fund
in an easy and convenient way. A shareholder whose shares are held in the name
of a broker/dealer or nominee should contact that party for details about
participating in the Plan. The Fund also offers shareholders a voluntary Cash
Purchase Plan. The Plan and the Cash Purchase Plan are described on pages 24
through 26 of this report.

We appreciate your continued confidence in the Fund and would be pleased to
respond to your questions and comments.

Sincerely yours,

[LOGO]
Emilio Bassini
President
Chief Investment Officer*

- - - --------------------------------------------------------------------------------
* Emilio Bassini, who is a member of the Executive Committee and is an Executive
Director of BEA Associates, is primarily responsible for management of the
Fund's assets. He has served in such capacity since the commencement of the
Fund's operations. Mr. Bassini joined BEA Associates (formerly Basic Appraisals,
Inc. and BEA Associates, Inc.) in 1984. Mr. Bassini is a Director, Chairman of
the Board, President and Chief Investment Officer of the Fund and is also a
Director, Chairman of the Board, President and Chief Investment Officer of The
Chile Fund, Inc., The Emerging Markets Infrastructure Fund, Inc., The Latin
America Equity Fund, Inc., The Latin America Investment Fund, Inc., The Portugal
Fund, Inc. and The First Israel Fund, Inc. He is President and Secretary of The
Indonesia Fund, Inc. and Director, Chairman of the Board, President and
Investment Officer of The Brazilian Equity Fund, Inc. He is also the managing
principal of Bassini, Playfair + Associates LLC.

- - - --------------------------------------------------------------------------------
6
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

PORTFOLIO SUMMARY - AS OF MAY 31, 1996 (UNAUDITED)
- - - --------------------------------------------------------------------------------
SECTOR ALLOCATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
May 31,1996 May 31,1995
Cellular Communications 18.5% 14.5%
Electric Distribution 11.0% 12.8%
Electric Generation 4.9% 8.7%
Gas & Oil 3.4% 2.7%
Local and/or Long Distance Telephone
Service 50.3% 55.2%
Telecommunications Equipment 4.6% 4.0%
Other 2.9% 1.4%
Cash & Cash Equivalents 4.4% 0.7%
</TABLE>

GEOGRAPHIC ASSET BREAKDOWN

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
May 31,1996 May 31,1995
Asia 14.1% 20.3%
Caribbean 3.2% 3.5%
Eastern Europe 2.1% 1.9%
Europe 7.7% 7.2%
Latin America 54.5% 57.1%
Middle East 8.8% 6.8%
Global 6.2% 3.0%
Cash & Cash Equivalents 3.5% 0.2%
</TABLE>

- - - --------------------------------------------------------------------------------
7
<PAGE>
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THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

PORTFOLIO SUMMARY - AS OF MAY 31, 1996 (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
SUMMARY OF EQUITY OR EQUITY-LINKED SECURITIES BY COUNTRY/REGION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
May 31,1996 May 31,1995
Argentina 3.83% 11.92%
Brazil 19.20% 10.90%
Chile 17.50% 23.60%
Denmark 2.59% 3.19%
Eastern Europe 2.08% 1.88%
Hong Kong 2.55% 3.18%
Indonesia 2.16% 0.00%
Israel 7.78% 6.80%
Italy 3.38% 2.06%
Malaysia 2.06% 5.71%
Mexico 7.43% 4.30%
Peru 5.06% 4.54%
Philippines 5.01% 8.26%
Portugal 2.18% 1.23%
Puerto Rico 3.17% 3.45%
Thailand 2.30% 2.80%
Global 6.22% 2.71%
Other 2.01% 2.88%
</TABLE>

TOP 10 HOLDINGS, BY ISSUER

<TABLE>
<CAPTION>
Percent of Net
Holding Sector Country/Region Assets
<C> <S> <C> <C> <C>
- - - --------------------------------------------------------------------------------------------------------------------------------
1. Telecomunicacoes Brasileiras S.A. Local and/or Long Distance
Telephone Service Brazil 11.7
- - - --------------------------------------------------------------------------------------------------------------------------------
2. Compania de Telecomunicaciones de Chile S.A. Local and/or Long Distance
Telephone Service Chile 5.4
- - - --------------------------------------------------------------------------------------------------------------------------------
3. Millicom International Cellular S.A. Cellular Communications Global 5.0
- - - --------------------------------------------------------------------------------------------------------------------------------
4. Telefonos de Mexico, S.A. de C.V. Local and/or Long Distance
Telephone Service Mexico 3.6
- - - --------------------------------------------------------------------------------------------------------------------------------
5. Telecomunicacoes de Sao Paulo S.A. Local and/or Long Distance
Telephone Service Brazil 3.4
- - - --------------------------------------------------------------------------------------------------------------------------------
6. Cellular Communications of Puerto Rico, Inc. Cellular Communications Puerto Rico 3.2
- - - --------------------------------------------------------------------------------------------------------------------------------
7. Telefonica del Peru S.A. Local and/or Long Distance
Telephone Service Peru 3.0
- - - --------------------------------------------------------------------------------------------------------------------------------
8. Philippine Long Distance Telephone Co. Local and/or Long Distance
Telephone Service Philippines 2.8
- - - --------------------------------------------------------------------------------------------------------------------------------
9. Tele Danmark, A/S Local and/or Long Distance
Telephone Service Denmark 2.6
- - - --------------------------------------------------------------------------------------------------------------------------------
10. Hong Kong Telecommunications Ltd. Local and/or Long Distance
Telephone Service Hong Kong 2.6
- - - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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8
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

SCHEDULE OF INVESTMENTS - MAY 31, 1996
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- - - -----------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-95.63%
EQUITY OR EQUITY-LINKED SECURITIES OF
TELECOMMUNICATION COMPANIES IN EMERGING
COUNTRIES-67.99%
ARGENTINA-1.40%
Argentine Cellular
Communications
(Holdings) Ltd.@*+...... 304,094 $ 1,596,493
Citicorp Equity
Investments S.A., Class
B....................... 217,332 880,560
-----------
TOTAL ARGENTINA (Cost $3,572,070)....... 2,477,053
-----------
BRAZIL-15.56%
Telecomunicacoes
Brasileiras S.A.
ADR##................... 145,800 9,385,875
Telecomunicacoes
Brasileiras S.A.
ON(a)................... 56,188,200 2,803,078
Telecomunicacoes
Brasileiras S.A.
PN(b)................... 131,374,846 8,495,113
Telecomunicacoes de Sao
Paulo S.A. PN(c)........ 28,277,755 5,977,066
Telecomunicacoes do Rio
de Janeiro S.A.
PN+(d).................. 7,900,000 823,040
-----------
TOTAL BRAZIL (Cost $13,125,705)......... 27,484,172
-----------
CHILE-6.66%
Compania de
Telecomunicaciones de
Chile S.A. ADS##........ 98,400 8,979,000
Compania de
Telecomunicaciones de
Chile S.A., Class B..... 117,000 581,064
Compania Nacional de
Telefonos S.A........... 184,719 151,165
Empresa Nacional de
Telecomunicaciones
S.A..................... 221,018 2,054,724
-----------
TOTAL CHILE (Cost $7,474,357)........... 11,765,953
-----------
EASTERN EUROPE-2.08%
Global Telesystems
Group*+................. 189,345 2,556,158

<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
EASTERN EUROPE (CONTINUED)
Petersburg Long Distance
Inc.*++ +(e)............ 200,000 $ 1,125,000
-----------
TOTAL EASTERN EUROPE (Cost
$3,031,163)............................ 3,681,158
-----------
GREECE-0.13%
Alcatel Hellas S.A. (Cost
$586,831)............... 39,600 221,647
-----------
HONG KONG-2.55%
Hong Kong
Telecommunications
Ltd..................... 1,947,600 3,612,121
Hong Kong
Telecommunications Ltd.
ADR..................... 48,000 888,000
-----------
TOTAL HONG KONG (Cost $3,192,261)....... 4,500,121
-----------
INDONESIA-2.16%
PT Telekomunikasi
Indonesia+.............. 1,500,000 2,282,958
PT Telekomunikasi
Indonesia ADR+.......... 50,000 1,525,000
-----------
TOTAL INDONESIA (Cost $2,520,297)....... 3,807,958
-----------
ISRAEL-7.78%
Bezeq, Israeli
Telecommunication Corp.,
Ltd..................... 481,530 1,193,067
DSP Group Inc.*+......... 114,509 1,210,933
ECI Telecom Ltd.##....... 51,000 1,351,500
Geotek Communications,
Inc.##.................. 133,000 1,845,375
Geotek Communications,
Inc., Convertible
Preferred Series M,
8.5%*................... 100 1,622,632
Koor Industries, Ltd..... 9,300 804,344
Koor Industries, Ltd.
ADR##................... 20,500 369,000
M-Systems Flash Disk
Pioneers Ltd.*+......... 100,248 1,215,507
M-Systems Flash Disk
Pioneers Ltd., Warrants
(expiring 06/30/98)*+... 61,524 483,995
Nexus Telecommunication
Systems Ltd.+........... 170,784 917,964
</TABLE>

- - - --------------------------------------------------------------------------------
9
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

SCHEDULE OF INVESTMENTS (CONTINUED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
ISRAEL (CONTINUED)
Nexus Telecommunication
Systems Ltd., Warrants
(expiring 11/28/97)+.... 170,784 $ 213,480
Scorpio Communications
Ltd.*+(f)............... 1,282 1,108,686
<CAPTION>
Par (000)
-------------
<S> <C> <C>
Scorpio Communications
Ltd., Convertible Note,
11/06/96*............... USD 264 264,092
<CAPTION>
No. of
Shares
-------------
<S> <C> <C>
Scorpio Communications
Ltd., Warrants (expiring
12/31/01)*+............. 22 22
Tadiran
Telecommunications...... 29,000 522,000
Teledata Communication
Ltd.+................... 43,400 613,025
-----------
TOTAL ISRAEL (Cost $9,339,663).......... 13,735,622
-----------
MALAYSIA-2.06%
Technology Resources
Industries+............. 400,000 1,329,862
Telekom Malaysia......... 253,000 2,310,595
-----------
TOTAL MALAYSIA (Cost $3,566,786)........ 3,640,457
-----------
MEXICO-4.54%
Grupo Iusacell, S.A. de
C.V., Series L ADR+..... 147,400 1,676,675
Telefonos de Mexico, S.A.
de C.V. ADR............. 192,300 6,345,900
-----------
TOTAL MEXICO (Cost $7,985,203).......... 8,022,575
-----------
<CAPTION>
Par (000)
-------------
<S> <C> <C>
PERU-3.60%
Tele 2000 S.A.,
Convertible Note, 9.75%,
04/14/97++.............. USD 1,120 1,086,400
<CAPTION>
No. of
Shares
-------------
<S> <C> <C>
Telefonica del Peru S.A.,
Class B................. 2,661,092 5,264,909
-----------
TOTAL PERU (Cost $3,205,678)............ 6,351,309
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
PHILIPPINES-5.01%
Philippine Long Distance
Telephone Co. ADR....... 86,800 $ 4,991,000
Pilipino Telephone
Corporation+,++......... 2,402,500 3,854,278
-----------
TOTAL PHILIPPINES (Cost $5,405,385)..... 8,845,278
-----------
PORTUGAL-2.18%
Portugal Telecom, S.A.
(Cost $3,094,635)....... 158,928 3,844,750
-----------
PUERTO RICO-3.17%
Cellular Communications
of Puerto Rico, Inc.+
(Cost $2,825,253)....... 181,991 5,596,223
-----------
THAILAND-2.30%
Advanced Information
Services Public Co. Ltd.
Foreign Registered...... 147,300 2,496,462
Total Access
Communication........... 173,000 1,574,300
-----------
TOTAL THAILAND (Cost $3,102,321)........ 4,070,762
-----------
VENEZUELA-0.59%
Venworld
Telecommunications*++ +
(Cost $2,531,383)....... 125,947 1,049,164
-----------
GLOBAL-6.22%
International Wireless
Communications, Inc.,
Series D*+.............. 5,503 2,063,625
International Wireless
Communications, Inc.,
Series F*+.............. 386 144,750
International Wireless
Communications, Inc.,
Warrants (expiring
12/31/98)*+............. 581 582
</TABLE>

- - - --------------------------------------------------------------------------------
10
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

SCHEDULE OF INVESTMENTS (CONTINUED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
GLOBAL (CONTINUED)
Millicom International
Cellular S.A.+##........ 182,454 $ 8,780,599
-----------
TOTAL GLOBAL (Cost $4,756,091).......... 10,989,556
-----------
TOTAL EMERGING COUNTRIES (Cost
$79,315,082)........................... 120,083,758
-----------
EQUITY SECURITIES OF TELECOMMUNICATION COMPANIES IN
DEVELOPED COUNTRIES-5.37%
DENMARK-2.59%
Tele Danmark, A/S Class B
ADS (Cost $4,491,189)... 183,800 4,572,025
-----------
ITALY-2.38%
Telecom Italia Mobile
S.p.A................... 346,840 741,969
Telecom Italia Mobile
S.p.A., Non Convertible
Savings Shares.......... 902,100 1,245,596
Telecom Italia S.p.A..... 346,840 694,753
Telecom Italia S.p.A.,
Non Convertible Savings
Shares.................. 902,100 1,523,369
-----------
TOTAL ITALY (Cost $1,998,950)........... 4,205,687
-----------
UNITED KINGDOM-0.40%
Orange PLC ADR
(Cost $584,188)......... 37,400 710,600
-----------
TOTAL DEVELOPED COUNTRIES (Cost
$7,074,327)............................ 9,488,312
-----------
EQUITY OR EQUITY-LINKED SECURITES OF COMPANIES
PROVIDING OTHER ESSENTIAL SERVICES IN THE
DEVELOPMENT OF AN EMERGING COUNTRY'S
INFRASTRUCTURE-21.27%
ARGENTINA-2.43%
Camuzzi Argentina
S.A.*................... 1,383,478 2,631,998
Sodigas del Sur S.A.*.... 421,485 782,592
Sodigas Pampeana S.A.*... 583,264 886,935
-----------
TOTAL ARGENTINA (Cost $3,032,317)....... 4,301,525
-----------
BRAZIL-3.64%
Centrais Eletricas
Brasileiras S.A. ON..... 5,086,198 1,238,113
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
BRAZIL (CONTINUED)
Centrais Eletricas
Brasileiras S.A., Class
B PN.................... 1,263,452 $ 326,542
Centrais Eletricas de
Santa Catarin, Class B
PN...................... 718,500 597,400
Companhia Energetica de
Minas Gerais PN......... 65,400,000 1,732,863
Companhia Paulista de
Forca e Luz ON.......... 15,628,900 1,088,113
<CAPTION>
Par (000)
-------------
<S> <C> <C>
Enersul, Convertible
Bond, 16.00%,
09/01/98................ BRL 1,000 1,445,089
-----------
TOTAL BRAZIL (Cost $5,582,599).......... 6,428,120
-----------
<CAPTION>
No. of
Shares
-------------
<S> <C> <C>
CHILE-10.84%
Chilgener S.A............ 372,332 2,149,733
Chilquinta S.A........... 270,192 1,361,702
Compania Electrica del
Rio Maipo S.A........... 2,459,567 1,293,717
Compania General de
Electricidad S.A........ 586,445 2,596,857
Empresa Electrica de
Antofagasta S.A......... 546,165 307,322
Empresa Electrica de
Arica S.A............... 1,761,580 465,445
Empresa Electrica de
Iquique S.A............. 1,514,182 566,776
Empresa Electrica de
Melipalla Colchaqua y
Maule S.A............... 148,394 3,267,391
Empresa Electrica
Pehuenche S.A........... 1,394,156 1,892,982
Empresa Nacional de
Electricidad S.A........ 2,637,691 1,632,626
Enersis S.A.............. 3,981,651 2,252,129
Soceidad Austral de
Electricidad S.A........ 57,500 1,357,492
-----------
TOTAL CHILE (Cost $10,099,926).......... 19,144,172
-----------
</TABLE>

- - - --------------------------------------------------------------------------------
11
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

TOTAL INVESTMENTS-96.50%
(Cost $114,361,507) (Notes A, D)....... 170,445,551
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-3.50%...................... 6,182,127
-----------
NET ASSETS-100.00%...................... $176,627,678
-----------
-----------
- - - ---------------------------------------------------------
@ Subsequent to May 31, 1996, certain events took place
that indicated an impairment to the carrying value of
this security. Effective July 25, 1996, the estimated
fair value of this investment is
$338,694.++Restricted security (See Note F).
* Not readily marketable security.
** Effective yield on the date of purchase.
+ Security is non-income producing.
++ SEC Rule 144A security. Such securities are traded
only among "qualified institutional buyers."
## Security or a portion thereof is out on loan.
(a) With an additional 1,121,470 rights attached ,
expiring 06/19/96, with no market value.
(b) With an additional 5,882,367 rights attached,
expiring 12/31/96 with no market value.
(c) With an additional 1,211,875 rights attached,
expiring 06/20/96, with no market value.
(d) With an additional 305,132 rights attached, expiring
06/18/96, with no market value.
(e) With an additional 40,000 warrants attached, expiring
12/31/96, with no market value.
(f) With an additional 156 warrants attached, expiring
06/04/97, with no market value.
ADR American Depositary Receipts.
ADS American Depositary Shares.
BRL Brazilian Real.
CLP Chilean Pesos.
C.P. Certificate of Participation.
ON Ordinary Shares.
PN Preferred Shares.
USD United States Dollars.
</TABLE>

- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
12
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 1996
- - - --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost
$114,361,507) (Note A)................. $170,445,551
Cash (including $41,090 of foreign
currencies with a cost of $41,164)
(Note A)............................... 1,527,232
Receivables:
Investments sold...................... 4,066,957
Dividends............................. 802,290
Note.................................. 183,454
Interest.............................. 58,493
Prepaid expenses and other assets....... 36,973
------------
Total Assets............................ 177,120,950
------------

LIABILITIES
Payables:
Advisory fee (Note B)................. 334,340
Administration fees (Note B).......... 28,604
Other accrued expenses................ 130,328
------------
Total Liabilities....................... 493,272
------------
NET ASSETS (applicable to 8,434,919
shares of common stock outstanding)
(Note C)............................... $176,627,678
------------
------------

NET ASSET VALUE PER SHARE ($176,627,678
DIVIDED BY 8,434,919)................. $20.94
------------
------------

NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
8,434,919 shares issued and outstanding
(100,000,000 shares authorized)........ $ 8,435
Paid-in capital......................... 117,290,151
Undistributed net investment income..... 1,431,647
Accumulated net realized gain on
investments and foreign currency
related transactions................... 1,817,393
Net unrealized appreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currencies..................... 56,080,052
------------
Net assets applicable to shares
outstanding............................ $176,627,678
------------
------------
</TABLE>

- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
13
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

STATEMENT OF OPERATIONS - FOR THE FISCAL YEAR ENDED MAY 31, 1996
- - - --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 4,644,880
Interest.............................. 671,635
Less: Foreign taxes withheld.......... (218,502)
-----------
Total Investment Income............... 5,098,013
-----------
Expenses:
Investment advisory fees (Note B)..... 1,933,447
Administration fees (Note B).......... 272,169
Custodian fees (Note B)............... 228,955
Accounting fees....................... 135,064
Audit and legal fees.................. 79,160
Printing.............................. 69,447
Insurance............................. 43,304
Transfer agent fees................... 20,150
Directors' fees....................... 19,002
NYSE listing fees..................... 16,487
Amortization of organizational
costs................................ 8,001
Other................................. 14,873
-----------
Total Expenses........................ 2,840,059
-----------
Net Investment Income................. 2,257,954
-----------

NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments........................... 2,666,396
Foreign currency related
transactions......................... (313,952)
Net change in unrealized appreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currencies...... 13,804,009
-----------
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 16,156,453
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $18,414,407
-----------
-----------
</TABLE>

- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS
- - - --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Fiscal Years Ended
May 31,
-----------------------------
1996 1995
<S> <C> <C>
-----------------------------

INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income................. $ 2,257,954 $ 895,061
Net realized gain on investments and
foreign currency related
transactions......................... 2,352,444 6,105,919
Net change in unrealized appreciation
in value of investments and
translation of other assets and
liabilities denominated in foreign
currencies........................... 13,804,009 (5,978,276)
------------ ------------
Net increase in net assets resulting
from operations.................... 18,414,407 1,022,704
------------ ------------
Dividends and distributions to
shareholders:
Net investment income................. (321,938) (337,396)
Net realized gain on investments and
foreign currency related
transactions......................... (3,389,426) (15,014,156)
------------ ------------
Total dividends and distributions to
shareholders....................... (3,711,364) (15,351,552)
------------ ------------
Total increase/(decrease) in net
assets............................. 14,703,043 (14,328,848)
------------ ------------

NET ASSETS
Beginning of year....................... 161,924,635 176,253,483
------------ ------------
End of year (including undistributed net
investment income of $1,431,647 and
$557,665, respectively)................ $176,627,678 $161,924,635
------------ ------------
------------ ------------
</TABLE>

- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
15
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

STATEMENT OF CASH FLOWS - FOR THE FISCAL YEAR ENDED MAY 31, 1996
- - - --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INCREASE/(DECREASE) IN CASH FROM
OPERATING ACTIVITIES
Investment income received.............. $ 4,509,013
Operating expenses paid................. (2,923,893)
------------
Net increase in cash from operating
activities............................. $ 1,585,120
Investing Activities
Purchases of long-term investments...... (44,873,021)
Purchases of short-term portfolio
investments, net....................... (848,361)
Proceeds from disposition of long-term
portfolio investments.................. 47,808,435
------------
Net increase in cash from investing
activities............................. 2,087,053
Financing Activities
Notes receivable........................ 316,546
Cash dividends paid..................... (3,711,364)
------------
Net cash repaid by financing
activities............................. (3,394,818)
------------
Net increase in cash.................... 277,355
Cash at beginning of year (Note A)...... 1,249,877
------------
Cash at end of year (Note A)............ $ 1,527,232
------------
------------

RECONCILIATION OF NET INCREASE IN NET
ASSETS FROM OPERATIONS TO NET INCREASE
IN CASH FROM OPERATING ACTIVITIES
Net increase in net assets resulting
from operations........................ $ 18,414,407
Adjustments:
Increase in dividend and interest
receivable............................. $ (589,000)
Decrease in accrued expenses............ (108,141)
Decrease in prepaid expenses............ 24,307
Net realized and unrealized gain on
investments and foreign currency
related transactions................... (16,156,453)
------------
Net decrease in cash from investing
activities............................. (16,829,287)
------------
NET INCREASE IN CASH FROM OPERATING
ACTIVITIES............................. $ 1,585,120
------------
------------
</TABLE>

- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
16
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

FINANCIAL HIGHLIGHTS
- - - --------------------------------------------------------------------------------

Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
- - - --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the
period
For the Fiscal Years Ended June 25,
May 31, 1992*
---------------------------- through
1996 1995 1994 May 31, 1993
<S> <C> <C> <C> <C>
-------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.............. $19.20 $20.90 $14.95 $13.84**
-------- -------- -------- -------------
Net investment income............................. 0.27 0.11 0.13 0.16
Net realized and unrealized gain on investments
and foreign currency related transactions....... 1.91 0.01 7.03+ 1.20
-------- -------- -------- -------------
Net increase in net assets resulting from
operations...................................... 2.18 0.12 7.16 1.36
-------- -------- -------- -------------
Dividends and distributions to shareholders:
Net investment income........................... (0.04) (0.04) (0.15) (0.14)
Net realized gain on investments and foreign
currency related transactions.................. (0.40) (1.78) (1.06) (0.11)
-------- -------- -------- -------------
Total dividends and distributions to
shareholders.................................... (0.44) (1.82) (1.21) (0.25)
-------- -------- -------- -------------
Net asset value, end of period.................... $20.94 $19.20 $20.90 $14.95
-------- -------- -------- -------------
-------- -------- -------- -------------
Market value, end of period....................... $17.375 $17.75 $22.75 $14.50
-------- -------- -------- -------------
-------- -------- -------- -------------
Total investment return(a)........................ 0.21% (13.94)% 64.74% 5.85%
-------- -------- -------- -------------
-------- -------- -------- -------------

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)........... $176,628 $161,925 $176,253 $125,338
Ratio of expenses to average net assets........... 1.77% 1.89% 1.81% 1.99%(b)
Ratio of net investment income to average net
assets.......................................... 1.40% 0.53% 0.63% 2.02%(b)
Portfolio turnover................................ 27.71% 14.29% 43.98% 22.55%(c)
</TABLE>

- - - ---------------------------------------------------------------------------
* Commencement of investment operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share and offering expenses of $0.11 per share.
+ Includes a $0.03 per share increase to the Fund's net asset value per
share resulting from the antidilutive impact of shares issued pursuant
to the Fund's automatic dividend reinvestment plan in January 1994.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions or initial underwriting discounts and
has not been annualized.
(b) Annualized.
(c) Not annualized.

- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

NOTES TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------

NOTE A. SIGNIFICANT ACCOUNTING POLICIES

The Emerging Markets Telecommunications Fund, Inc. (the "Fund") was incorporated
in Maryland on February 11, 1992 and commenced investment operations on June 25,
1992. The Fund is registered under the Investment Company Act of 1940, as
amended, as a closed-end, non-diversified management investment company.
Significant accounting policies are as follows:

PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at the closing price quoted for the securities prior to the
time of determination (but if bid and asked quotations are available, at the
mean between the last current bid and asked prices). Securities that are traded
over-the-counter are valued at the mean between the current bid and the asked
prices, if available. All other securities and assets are valued at the fair
value as determined in good faith by the Board of Directors. Short-term
investments having a maturity of 60 days or less are valued on the basis of
amortized cost. The preparation of financial statements requires the use of
estimates by management, principally the valuation of non-publicly traded
securities. Accordingly, the Board of Directors has established general
guidelines for calculating fair value of non-publicly traded securities. At May
31, 1996, the Fund held 12.1% of its net assets in securities valued in good
faith by the Board of Directors with an aggregate cost of $19,040,971 and fair
value of $21,334,315. The net asset value per share of the Fund is calculated
weekly, at the end of each month and at any other times determined by the Board
of Directors.

CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At May 31, 1996, the interest rate
was 4.75%, which resets on a daily basis. Amounts on deposit are generally
available on the same business day.

INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.

TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.

Income received by the Fund from sources within emerging countries and other
foreign countries may be subject to withholding and other taxes imposed by such
countries.

The Fund is subject to a 10% Chilean repatriation tax with respect to all
remittances from Chile in excess of original invested capital. For the fiscal
year ended May 31, 1996, the Fund incurred no such expense.

FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:

(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and

(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.

The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that

- - - --------------------------------------------------------------------------------
18
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- - - --------------------------------------------------------------------------------
which is due to change in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances. However, the Fund does isolate the
effect of fluctuations in foreign exchange rates when determining the gain or
loss upon the sale or maturity of foreign currency denominated debt obligations
pursuant to U.S. federal income tax regulations, with such amount categorized as
foreign exchange gain or loss for both financial reporting and income tax
reporting purposes.

Net currency gains from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation on investments, foreign currency holdings,
and other assets and liabilities denominated in foreign currencies.

Net realized foreign exchange losses represent foreign exchange gains and losses
from sales and maturities of debt securities, transactions in foreign currencies
and forward foreign currency contracts, exchange gains or losses realized
between the trade date and settlement dates on security transactions, and the
difference between the amounts of interest and dividends recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received.

The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such components are treated as ordinary income for
U.S. federal income tax purposes.

SECURITIES LENDING: The market value of securities out on loan to brokers at May
31, 1996, was $13,674,125, for which the Fund has received cash as collateral of
$14,943,100. Such cash collateral was reinvested into a repurchase agreement
which is in turn collateralized by U.S. Treasury Strips (interest-only).
Security loans are required at all times to have collateral at least equal to
102% of the market value of the securities on loan; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.

During the fiscal year ended May 31, 1996, the Fund earned $42,169 in securities
lending income which is included in interest income in the Statement of
Operations.

DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.

The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.

At May 31, 1996, the Fund reclassified $1,062,034 of foreign currency losses to
undistributed net investment income.

OTHER: Some countries require governmental approval for the repatriation of
investment income, capital or the

- - - --------------------------------------------------------------------------------
19
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- - - --------------------------------------------------------------------------------
proceeds of sales of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a country
may impose temporary restrictions on foreign capital remittances abroad. Amounts
repatriated prior to the end of specified periods may be subject to taxes as
imposed by a foreign country.

The emerging countries' securities markets are substantially smaller, less
liquid and more volatile than the major securities markets in the United States.
A high proportion of the securities of many companies in emerging countries may
be held by a limited number of persons, which may limit the number of securities
available for investment by the Fund. The limited liquidity of emerging country
securities markets may also affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so.

The Fund, subject to local investment limitations, may invest up to 25% of its
assets in non-publicly traded equity securities which may involve a high degree
of business and financial risk and may result in substantial losses. Because of
the current absence of any liquid trading market for these investments, the Fund
may take longer to liquidate these positions than would be the case for publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized on such sales could be less than
those originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded.
NOTE B. AGREEMENTS

BEA Associates ("BEA") serves as the Fund's investment adviser with respect to
all investments. As compensation for its advisory services, BEA receives from
the Fund an annual fee, calculated weekly and paid quarterly, equal to 1.25% of
the first $100 million of the Fund's average weekly net assets, 1.125% of the
next $100 million and 1.00% of amounts in excess of $200 million. For the fiscal
year ended May 31, 1996, BEA earned $1,933,447 for advisory services. BEA also
provides certain administrative services to the Fund and is reimbursed by the
Fund for costs incurred on behalf of the Fund (up to $20,000 per annum). For the
fiscal year ended May 31, 1996, BEA was reimbursed $18,570 for administrative
services rendered to the Fund.

Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's U.S.
administrator. During the period June 1, 1995 through July 13, 1995, the Fund
paid BSFM a fee for its services rendered that was computed weekly at an annual
rate of 0.10% of the Fund's average weekly net assets. From July 14, 1995
through May 31, 1996, the Fund paid BSFM a fee for its services rendered that is
computed weekly at an annual rate of 0.12% of the Fund's average weekly net
assets. For the fiscal year ended May 31, 1996, BSFM earned $189,134 for
administrative services.

Banco de Boston and CELFIN Administradora de Fondos de Inversion de Capital
Extranjero S.A. ("Chilean administrator") serve as the Fund's administrators
with respect to Brazilian and Chilean investments, respectively. Banco de Boston
is paid for its services a quarterly fee based on an annual rate of 0.10% of
average month end Brazilian net assets of the Fund. In return for services
rendered, the Chilean administrator receives a fee computed monthly and paid
quarterly at an annual rate of 0.10% of the Fund's average weekly net assets in
Chile, subject to certain minimum annual fees and reimbursements for a
predefined limit of their expenses.

Through June 14, 1995, Brown Brothers Harriman & Co. served as the custodian for
the Fund's U.S. and

- - - --------------------------------------------------------------------------------
20
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- - - --------------------------------------------------------------------------------
foreign assets (other than Mexican equities), and S.D. Indeval, S.A. de C.V.
served as custodian for the Fund's Mexican equity investments.

Effective June 15, 1995, Brown Brothers Harriman & Co. serves as custodian for
all of the Fund's U.S. and foreign assets.

Through September 4, 1995, PNC Bank, N.A. served as the Fund's transfer agent
and registrar. Effective September 5, 1995, The First National Bank of Boston
serves as the Fund's transfer agent and registrar.
NOTE C. CAPITAL STOCK

The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 8,434,919 shares outstanding at May 31, 1996, BEA owned
7,169 shares.
NOTE D. INVESTMENT IN SECURITIES

For U.S. federal income tax purposes, the cost of securities owned at May 31,
1996 was $115,220,235. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$55,225,316, was composed of gross appreciation of $59,767,679 for those
investments having an excess of value over cost and gross depreciation of
$4,542,363 for those investments having an excess of cost over value.

For the fiscal year ended May 31, 1996, total purchases and sales of securities,
other than short-term investments, were $43,283,638 and $51,239,530,
respectively.
NOTE E. CREDIT AGREEMENT

The Fund, along with 17 other U.S. regulated investment companies for which BEA
serves as investment adviser, has a credit agreement with The First National
Bank of Boston. The agreement provides that each fund is permitted to borrow an
amount equal to the lesser of $50,000,000 or 25% of the net assets of the fund.
However, at no time shall the aggregate outstanding principal amount of all
loans to any of the 18 funds exceed $50,000,000. The line of credit will bear
interest at (i) the greater of the bank's prime rate or the Federal Funds
Effective Rate plus 0.50% or (ii) the Adjusted Eurodollar Rate plus 1.50%.
During the fiscal year ended May 31, 1996, the Fund had no amounts outstanding
under the credit agreement.

NOTE F. RESTRICTED SECURITIES

Certain of the Fund's investments are restricted as to resale and are valued at
the direction of the Fund's Board of Directors in good faith, at fair value,
after taking into consideration available indications of value. The table below
shows the number of shares held, the acquisition date, aggregate cost, fair
value as of May 31, 1996, share value of such securities and percent of net
assets which the securities comprise.

<TABLE>
<CAPTION>
FAIR VALUE
NUMBER ACQUISITION AT MAY 31, VALUE PERCENT OF
SECURITY OF SHARES DATE COST 1996 PER SHARE NET ASSETS
- - - -------------------------------------------- ----------- ----------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Venworld Telecommunications 125,947 5/18/95 $ 2,531,383 $ 1,049,164 $ 8.33 0.6
Petersburg Long Distance Inc. 200,000 11/18/92 1,000,005 1,125,000 5.63 0.6
</TABLE>

- - - --------------------------------------------------------------------------------
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
of The Emerging Markets Telecommunications Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of The
Emerging Markets Telecommunications Fund, Inc., including the schedule of
investments, as of May 31, 1996, and the related statements of operations and
cash flows for the year then ended, and changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments held by the
custodians and issuers as of May 31, 1996. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Emerging Markets Telecommunications Fund, Inc., as of May 31, 1996 and the
results of its operations and cash flows for the year then ended, the changes in
its net assets for each of the two years in the period then ended and its
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 16, 1996

- - - --------------------------------------------------------------------------------
22
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)

On September 21, 1995, the annual meeting of shareholders of The Emerging
Markets Telecommunications Fund, Inc. (the "Fund") was held and the following
matters were voted upon:

(1) To re-elect two directors to the Board of Directors of the Fund.

<TABLE>
<CAPTION>
VOTES
NAME OF DIRECTOR VOTES FOR WITHHELD NON-VOTES
- - - ------------------------------------------------------------------------------ ---------- ------------- ----------
<S> <C> <C> <C>
Martin M. Torino 7,100,720 132,514 1,201,685
Peter A. Gordon 7,096,812 136,422 1,201,685
</TABLE>

In addition to the directors elected at the meeting, Emilio Bassini, Daniel
Sigg, Richard Watt, James J. Cattano and George W. Landau continue to serve as
directors of the Fund.

(2) To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants for the fiscal year ending May 31, 1996.

<TABLE>
<CAPTION>
VOTES VOTES
VOTES FOR AGAINST WITHHELD NON-VOTES
---------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
6,995,138 156,738 81,358 1,201,685
</TABLE>

TAX INFORMATION (UNAUDITED)

The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's fiscal year end
(May 31, 1996) as to the U.S. federal tax status of distributions received by
the Fund's shareholders in respect of such fiscal year. Of the $0.44 per share
dividend and distributions received by the Fund's shareholders in respect of
such fiscal year, $0.04 was derived from net investment income and $0.40 per
share was from net realized long-term capital gains. There were no dividends
which would qualify for the dividend received deduction available to corporate
shareholders.

The Fund does not intend to make an election under Section 853 to pass through
foreign taxes paid by the Fund to its shareholders. This information is given to
meet certain requirements of the Internal Revenue Code of 1986, as amended.
Shareholders should refer to their Form 1099-DIV to determine the amount
includable on their respective tax returns for 1996.

Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect to calendar year 1996. The second notification, which
will reflect the amount to be used by calendar year taxpayers on their 1996 U.S.
federal income tax returns, will be made in conjunction with Form 1099-DIV and
will be mailed in January, 1997.

Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of their dividend. They will generally not be entitled to a foreign tax
credit or deduction for the withholding taxes paid by the Fund.

In general, dividends received by tax-exempt recipients (e.g., IRAs and Keoghs)
need not be reported as taxable income for U.S. federal income tax purposes.
However, some retirement trusts (e.g. corporate, Keogh and 403(b)(7) plans) may
need this information for their annual information reporting.

Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investment in the Fund.

- - - --------------------------------------------------------------------------------
23
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

Pursuant to The Emerging Markets Telecommunications Fund, Inc.'s (the "Fund")
Dividend Reinvestment and Cash Purchase Plan (the "Plan"), each shareholder will
be deemed to have elected, unless the Fund's transfer agent, as the Plan Agent
(the "Plan Agent"), is otherwise instructed by the shareholder in writing, to
have all distributions, net of any applicable U.S. withholding tax,
automatically reinvested in additional shares of the Fund. Shareholders who do
not participate in the Plan will receive all dividends and distributions in
cash, net of any applicable U.S. withholding tax, paid in dollars by check
mailed directly to the shareholder by the Plan Agent, as dividend-paying agent.
Shareholders who do not wish to have dividends and distributions automatically
reinvested should notify the Plan Agent for the Fund at the address set forth
below. Dividends and distributions with respect to shares registered in the name
of a broker-dealer or other nominee (i.e. in "street name") will be reinvested
under the Plan unless such service is not provided by the broker or nominee or
the shareholder elects to receive dividends and distributions in cash. A
shareholder whose shares are held by a broker or nominee that does not provide a
dividend reinvestment program may be required to have his shares registered in
his own name to participate in the Plan. Investors who own shares of the Fund's
common stock registered in street name should contact the broker or nominee for
details concerning participation in the Plan.

Certain distributions of cash attributable to (a) some of the dividends and
interest amounts paid to the Fund and (b) certain capital gains earned by the
Fund that are derived from securities of certain emerging country issuers are
subject to taxes payable by the Fund at the time amounts are remitted. Such
taxes, if any, will be borne by the Fund and allocated to all shareholders in
proportion to their interests in the Fund.

The Plan Agent serves as agent for the shareholders in administering the Plan.
If the Board of Directors of the Fund declares an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
shareholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive common stock to be issued by the Fund.
If the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants
valued at net asset value or, if the net asset value is less than 95% of the
market price on the valuation date, then valued at 95% of the market price. If
net asset value per share on the valuation date exceeds the market price per
share on that date the Plan Agent, as agent for the participants, will purchase
shares of common stock on the open market, on the New York Stock Exchange or
elsewhere, for the participants' accounts. If, before the Plan Agent has
completed its purchases, the market price exceeds the net asset value per share,
the average per share purchase price paid by the Plan Agent may exceed the net
asset value per share, resulting in the acquisition of fewer shares than if the
dividend or distribution had been paid in shares issued by the Fund at net asset
value. If the market price exceeds the net asset value per share before the Plan
Agent has completed its purchases, the Plan Agent is permitted to cease
purchasing shares and the Fund may issue the remaining shares at a price equal
to the greater of (a) net asset value or (b) 95% of the then current market
price. In a case where the Plan Agent has terminated open market purchases and
the Fund has issued the remaining shares, the number of shares received by the
participant in respect of the cash dividend or distribution will be based on the
weighted average of prices paid for shares purchased in the open market and the
price at which the Fund issues remaining shares.

The valuation date is the dividend or distribution payment date or, if that date
is not a New York Stock Exchange trading day, the next preceding trading day. If
the Fund should declare an income dividend or capital gains distribution payable
only in cash, the Plan Agent will, as agent for the participants, buy Fund
shares in

- - - --------------------------------------------------------------------------------
24
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
(CONTINUED)

the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts on, or shortly after, the payment date.

Participants in the Plan have the option of making additional cash payments to
the Plan Agent, semi-annually, in any amount from $100 to $3,000, for investment
in the Fund's common stock. The Plan Agent will use all funds received from
participants to purchase Fund shares in the open market on or about February 15
and August 15 of each year. Any voluntary cash payments received more than 30
days prior to these dates will be returned by the Plan Agent and interest will
not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately 10 days before February 15 or August
15, as the case may be. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent not less than 48
hours before the payment is to be invested. A participant's tax basis in his
shares acquired through this optional investment right will equal his cash
payments to the Plan, including any cash payments used to pay brokerage
commissions allocable to his acquired shares.

The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant and each shareholder's proxy will include those shares purchased
pursuant to the Plan.

In the case of a shareholder, such as a bank, broker or nominee, that holds
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan.

There is no charge to participants for reinvesting dividends or capital gains
distributions payable in either shares or cash. The Plan Agent's fees for the
handling of reinvestment of such dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage charges with respect to shares
issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, each participant will
be charged by the Plan Agent a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open market purchases in connection with
voluntary cash payments made by the participant or the reinvestment of dividends
or capital gains distributions payable only in cash. Brokerage charges for
purchasing small amounts of stock for individual accounts through the Plan are
expected to be less than the usual brokerage charges for such transactions
because the Plan Agent will be purchasing stock for all participants in blocks
and prorating the lower commission thus obtainable. Brokerage commissions will
vary based on, among other things, the broker selected to effect a particular
purchase and the number of participants on whose behalf such purchase is being
made. The Fund cannot predict, therefore, whether the cost to a participant who
makes a voluntary cash payment will be less than if a participant were to make
an open market purchase of the Fund's common stock on his own behalf.

The receipt of dividends and distributions in the stock under the Plan will not
relieve participants of any income tax (including withholding tax) that may be
payable on such dividends or distributions.

Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the

- - - --------------------------------------------------------------------------------
25
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
(CONTINUED)

Plan Agent reserve the right to terminate the Plan as applied to any voluntary
cash payments made and any dividend or distribution paid subsequent to notice of
the termination sent to the members of the Plan at least 30 days before the
semi-annual contribution date, in the case of voluntary cash payments, or the
record date for dividends or distributions. The Plan also may be amended by the
Fund or the Plan Agent, but (except when necessary or appropriate to comply with
applicable law, rules or policies of a regulatory authority) only by at least 30
days' written notice to members of the Plan. All correspondence concerning the
Plan should be directed to The First National Bank of Boston, Investor Relations
Department, P.O. Box 644, Mail Stop 45-02-09, Boston, Massachusetts 02102-0644
or by telephone at 1-800-730-6001.

- - - --------------------------------------------------------------------------------
26
<PAGE>

SUMMARY OF GENERAL INFORMATION

The Fund--The Emerging Markets Telecommunications Fund, Inc.--is a closed-end,
non-diversified management investment company whose shares trade on the New York
Stock Exchange. Its investment objective is long-term capital appreciation
through investments primarily in equity securities of telecommunications
companies in emerging countries. The Fund is managed and advised by BEA
Associates ("BEA"). BEA is a diversified asset manager, handling equity,
balanced, fixed income, international and derivative based accounts. Portfolios
include international and emerging market investments, common stocks, taxable
and non-taxable bonds, options, futures and venture capital. BEA manages money
for corporate pension and profit-sharing funds, public pension funds, union
funds, endowments and other charitable institutions and private individuals. As
of June 30, 1996, BEA managed approximately $28.7 billion in assets. BEA also
advises eight other international closed-end funds: The Brazilian Equity Fund,
Inc., The First Israel Fund, Inc., The Chile Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc., The Indonesia Fund, Inc., The Latin America Equity
Fund, Inc., The Latin America Investment Fund, Inc. and The Portugal Fund, Inc.

SHAREHOLDER INFORMATION

The market price is published in: THE NEW YORK TIMES (daily) under the
designation "EMTel" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "EmergMktTele". The Fund's New York Stock Exchange
trading symbol is ETF. Weekly comparative net asset value (NAV) and market price
information about The Emerging Markets Telecommunications Fund, Inc.'s shares
are published each Sunday in THE NEW YORK TIMES and each Monday in THE WALL
STREET JOURNAL and BARRON'S, as well as other newspapers, in a table called
"Closed End Funds."

To request an annual report, or to be placed on the Fund's mailing list,
shareholders should call 1-800-293-1232.

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN--SUMMARY

An automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") is
available to provide shareholders with automatic reinvestment of their dividend
income and capitals gains distributions in additional shares of the Fund's
common stock. A brochure describing the Plan is available from the Plan agent,
The First National Bank of Boston, by calling: 1-800-730-6001.

As per the Plan, each shareholder will be automatically reinvested in additional
shares of the Fund by The First National Bank of Boston, unless otherwise
instructed by the shareholder in writing. Shareholders who do not participate in
the Plan will receive all dividends and distributions in cash paid by check in
U.S. dollars. Shares registered in street name will be reinvested under the
Plan, unless the broker-dealer or other nominee does not provide a dividend
reinvestment plan or the shareholder elects to receive their dividends in cash.

- - - --------------------------------------------------------------------------------

<PAGE>

DIRECTORS AND CORPORATE OFFICERS

Emilio Bassini Chairman of the Board
of Directors, President
and Chief Investment Officer

Enrique R. Arzac Director

James J. Cattano Director

Peter A. Gordon Director

George W. Landau Director

Daniel Sigg Director and
Senior Vice President

Martin M. Torino Director

Richard Watt Director,
Senior Vice President
and Investment Officer

Stephen Swift Senior Vice President
and Investment Officer

Paul P. Stamler Senior Vice President

Michael A. Pignataro Chief Financial Officer
and Secretary

Rachel D. Manney Vice President and Treasurer

INVESTMENT ADVISER

BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022

ADMINISTRATOR

Bear Stearns Funds Management Inc.
245 Park Avenue
New York, NY 10167

CUSTODIAN

Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

SHAREHOLDER SERVICING AGENT

The First National Bank of Boston
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

LEGAL COUNSEL

Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022

This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. It is not a prospectus, circular
or representation intended for use in the purchase or sale of shares of the Fund
or of any securities mentioned in this report. [ETF LOGO]
- - - --------------------------------------------------------------------------------