<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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January 18, 1996
Dear Shareholders:
We are pleased to report on the activities of The Emerging Markets
Telecommunications Fund, Inc. (the "Fund") for the six months ended November 30,
1995.
After deduction of underwriting commissions and offering costs, the Fund began
operations on June 25, 1992 with a net asset value (NAV) of $13.84 per share. At
November 30, 1995, $148.9 million was invested in equity securities and
convertible bonds, with the balance of the Fund's investments, $0.9 million,
invested in short-term obligations. As of November 30, 1995, the Fund's NAV was
$18.27 per share.
For the period June 1, 1995 through November 30, 1995, the Fund saw its total
return, based on net asset value, decline by 4.8%. The Morgan Stanley Capital
International Emerging Markets Index fell by 5.9% during this period. From the
commencement of investment operations through November 30, 1995, the Fund saw
its total return, based on net asset value and assuming the reinvestment of
dividends and distributions, increase by 55.7%. The Morgan Stanley Capital
International Emerging Markets Index gained 52.9% during this period.
At November 30, 1995, the Fund had invested $106.0 million in basic telephone or
cellular services of emerging economies in over 16 developing countries, and an
additional $33.5 million in electric/gas utilities in five developing countries.
The Fund has also made investments totaling $9.5 million in telecommunications
companies in the developed markets of Denmark, Italy and the Netherlands.
As 1995 drew to a close, we were somewhat cheered by a markedly improving tone
in Latin American equity markets. December was the second consecutive positive
month for the region, something that has not occurred since mid-summer. It now
appears to us that the "Tequila Effect" -- the simultaneous decline of virtually
the entire region's markets in sympathy with Mexico's crisis -- is effectively a
thing of the past. Local concerns have returned to the forefront in determining
market performance, and returns during the quarter ranged from strongly positive
in Argentina (the best-performing market worldwide) to deeply negative in
Brazil. Meanwhile, returns in the Asian markets also varied widely, with
Singapore, Hong Kong and Indonesia leading the pack and Thailand, the
Philippines and Korea producing negative results.
In general, the major Latin American markets began the fourth quarter on a
negative note, following on a downward turn during September. The month of
November, however, saw a fundamental improvement in this difficult performance
environment. The triggers for this upward turn were twofold. First, at around
mid-month, Mexico was finally able to stabilize the peso, after a steady
two-month decline which had sharpened significantly during the first two weeks
of November. By steadfastly permitting short-term interest rates to rise as high
as the market deemed necessary (back to more than 70% at one point, in fact),
and by for once projecting an air of consistency and purpose in economic policy,
the Mexicans injected a somewhat higher level of confidence into the market,
bringing the peso down from a weak point of nearly 8 to the U.S. dollar to a
trading range of around 7.5. Serious problems, of course, remain in the Mexican
banking system, which will make progress difficult for both the peso and the
stock market. In addition, the political picture remains murky, as serious
questions continue to be raised about the Colosio and Massieu assassinations,
about
1
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THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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corruption in former President Salinas' administration (and in his family), and
about the willingness of the Zedillo administration and the PRI to confront the
disturbing implications of these problems. Equally as important, President
Zedillo's lack of strong leadership has left something of a power and policy
vacuum, a situation with which Mexico -- with its tradition of a strong
presidency -- is completely unaccustomed, and apparently uncomfortable. On the
positive side, however, recent political trends have been positive, in that
virtually all of the elections held so far this year have been won by the
conservative opposition, keeping the pressure on the governing PRI. In addition,
talks were recently reactivated to address constitutional reform.
Coincident with the stabilization of the Mexican situation in November was an
announcement by the Argentine government of a new program of economic reforms.
This program, dominated by spending cuts and a general orientation toward fiscal
discipline, was very well received by the market, particularly as it was taken
to indicate renewed strength in the partnership of President Menem and Finance
Minister Cavallo. It came on the heels of Menem's well-publicized visit to New
York, where his attempts to impress U.S. investment managers with his economic
leadership turned into a public relations disaster. The fallout from this trip
was a renewed sense that Menem's political fate is closely tied to both Cavallo
and (more importantly) to the Convertibility Plan that lies at the heart of
Argentina's economic success during the 1990s. Thus, paradoxically, the failure
of Menem to impress investors led to a more constructive political and economic
policy, which in turn led to an improvement in investor sentiment.
In Brazil, the success of the REAL Plan in defeating hyperinflation is now
well-established, with the annual inflation rate remaining steadily in the 25%
range -- it should be remembered that Brazil experienced annualized inflation in
excess of 14,000% only 14 months ago. This achievement, however, is now in
danger of becoming old news. While we remain bullish on the long-term prospects
for this market, we are somewhat less sanguine on shorter-term prospects, in
light of delays in enacting fiscal discipline and economic reforms. Progress in
reducing interest rates, in particular, has been hampered by delays in the
passage through Congress of a significant package of fiscal reforms. During
1995, the fiscal balance has changed from a 1% surplus a year ago to a current
deficit of nearly 4 1/2% of GDP. This negative trend occurred in the context of
a strong rise in tax receipts, indicating that spending pressures have not yet
been adequately dealt with, either on the national or the provincial level. As a
result, real interest rates remain extremely high (around 3% per month),
resulting in pronounced weakness in some sectors of the economy. Nonetheless, it
should be noted that a tremendous amount has been achieved this year despite the
above-mentioned concerns. An example of that is Telecomunicacoes Brasileiras
S.A., the semi-state-owned telecommunications system that, through
long-anticipated changes in its tariff structure, will finally be allowed to
generate the revenues needed to invest in line growth.
In the Asian markets, meanwhile, we continue to see a division between the
established, industrialized "tigers" mainly in the northern Pacific Rim (Korea,
Taiwan, Hong Kong, and, to some extent, Singapore) on the one hand, and the
still-developing "new tigers" further south (Thailand, Indonesia, Malaysia, and
the Philippines) on the other. The latter, less-developed markets experienced
much more fallout from the Mexican crisis during 1995 -- because they do, in
some ways, bear some resemblance to Latin America -- and they continued to feel
the "Tequila Effect" for nearly as long as did the Latin American markets. These
markets have come under pressure recently as they are still at a relatively
early point on the development
2
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THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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curve, and the high rate of economic growth they are experiencing inevitably
leads to worries about "overheating." In order to maintain controlled growth,
each of the new tigers has in recent months been forced to tighten its money
supply, fighting rising inflation and an expanding current account deficit
through higher interest rates. On the other hand, in the northern, more
developed Asian markets, inflation remains under control, current accounts are
at or near balance, and interest rates have been stable or falling.
As Asian markets remained generally sluggish, emerging markets' bears have
managed to locate cause for worry in each of the region's markets. Political
transition in China, along with questions about relations with both Hong Kong
(set for transfer to Chinese sovereignty in 1997) and Taiwan, continues to cause
some concern throughout the region. In addition, inflation is perhaps higher
than optimal in Thailand, the current account deficit is continuing to grow in
Indonesia, earnings in Hong Kong failed to surprise on the upside, and so on
down the list of Asian markets. While none of this is inaccurate, it fails to
take into account the one overriding characteristic of the entire region, and a
characteristic that shows no signs of changing. Virtually without exception,
markets in this region continue to generate the world's highest levels of
economic growth, in an environment of manageable and controlled inflation.
Overall, growth in the major Asian nations (excluding Japan) should remain close
to 7% in 1995 and 1996, down only marginally from 1994. And political leaders
throughout the region remain committed to market-oriented, high growth policies.
While we are reasonably optimistic on Asia as a whole for the next two or three
months (these markets historically have tended to end the year strongly after a
difficult autumn), we remain most sanguine on the prospects for the older
"tiger" countries.
In all, 11.2% of the Fund's portfolio, expressed as a percentage of net assets,
has been invested in unlisted securities. Among these have been private equity
investments in telecommunications and other infrastructure companies in
Argentina, Israel, Peru and Russia. We continue to seek private equity
investment opportunities that offer attractive valuations, access to unique
situations such as privatizations, a solid management structure, and the
potential for dramatic growth.
Overall, we believe that 1996 is likely to bring better times for the emerging
markets. Economic growth is priced remarkably cheap in Latin America, and
declining interest rates in the developed world should translate into strong
capital flows into the emerging markets -- good news for investors who have
stayed the course through a two year bear market.
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
continue pursuing these opportunities as government-owned companies involved in
telecommunications, electricity and gas distribution, ports and roads continue
to privatize. Our theme is simple: for developing economies to grow, basic
services must be provided. If basic services sufficient for growth are to be
provided, these sorts of companies must generate high internal rates of return.
Thus, as emerging market economies continue to grow rapidly, we expect
telecommunications and other infrastructure companies within those markets to
grow with equal rapidity.
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 to
shareholders in maintaining their proportional ownership interest in the Fund in
3
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THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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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 program are described on pages 21
and 22 of this report.
We appreciate your interest in the Fund and would be pleased to respond to your
questions or comments.
Respectfully,
[LOGO]
Emilio Bassini
President
Chief Investment Officer*
* Emilio Bassini, who is a member of the Executive Committee of BEA Associates
and holds the offices of Chief Financial Officer and 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 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 First Israel Fund, Inc., The Latin America Equity
Fund, Inc., The Latin America Investment Fund, Inc. and The Portugal Fund, Inc.
He is also the President and Secretary of The Indonesia Fund, Inc. and Director,
Chairman of the Board, President and Investment Officer of The Brazilian Equity
Fund, Inc.
4
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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PORTFOLIO SUMMARY
AS OF NOVEMBER 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
GEOGRAPHIC ASSET BREAKDOWN SECTOR ALLOCATION
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GEOGRAPHICAL ASSET BREAKDOWN
<S> <C>
Latin America 60.7%
Caribbean 3.2%
Middle East 8.0%
Asia 11.7%
Eastern Europe 2.2%
Europe 6.3%
Cash and cash equivalent 3.3%
Global 4.6%
Sector Allocation
Local and/or long distance telephone
service 54.2%
Cellular Communications 15.3%
Investment Companies 0.4%
Gas and Oil 3.0%
Telecommunications Equipment 4.3%
Cash and cash equivalents 3.1%
Other 1.0%
Electric Distribution 11.3%
Electric Generation 7.4%
</TABLE>
<TABLE>
<S> <C>
THIS CHART REPRESENTS THE GEOGRAPHIC ASSET THIS CHART REPRESENTS THE SECTOR ALLOCATION
ALLOCATION OF TOTAL NET ASSETS OF THE FUND. OF TOTAL NET ASSETS OF THE FUND.
</TABLE>
TOP 10 EQUITY HOLDINGS, BY ISSUER
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT
OF
HOLDING SECTOR COUNTRY/REGION NET ASSETS
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
1. Telecomunicacoes Brasileiras S.A.
Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
2. Philippine Long Distance
Telephone Co. Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
3. Compania de Telecomunicaciones
de Chile S.A. Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
4. Telecom Argentina S.A.
Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
5. Millicom International Cellular S.A.
Cellular
Communications
- -----------------------------------------------------------------------------------------------------------
6. Telefonos de Mexico, S.A. de C.V.
Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
7. Telefonica de Argentina S.A.
Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
8. Compania Peruana
de Telefonos S.A. Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
9. Tele Danmark A/S
Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
10. Telecomunicacoes de Sao Paulo
S.A. Local and/or Long Distance
Telephone Service
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------
1.
Brazil 7.24
- ---------
2.
Philippines 5.95
- ---------
3.
Chile 5.28
- ---------
4.
Argentina 4.12
- ---------
5.
Global 3.61
- ---------
6.
Mexico 3.53
- ---------
7.
Argentina 3.41
- ---------
8.
Peru 3.33
- ---------
9.
Denmark 3.32
- ---------
10.
Brazil 3.19
- ---------
</TABLE>
5
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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SUMMARY OF EQUITY SECURITIES BY COUNTRY/REGION
(unaudited)
<TABLE>
<CAPTION>
PERCENT OF
COUNTRY/REGION NET ASSETS VALUE
- ----------------------------------------------------------------------------------- --------------- --------------
<S> <C> <C>
ARGENTINA.......................................................................... 12.96 $ 19,975,231
BRAZIL............................................................................. 14.24 21,940,108
CHILE.............................................................................. 19.51 30,044,066
DENMARK............................................................................ 3.32 5,123,425
EASTERN EUROPE..................................................................... 2.24 3,456,157
GREECE............................................................................. 0.16 252,885
HONG KONG.......................................................................... 2.68 4,133,089
INDONESIA.......................................................................... 0.68 1,050,000
ISRAEL............................................................................. 7.97 12,288,905
ITALY.............................................................................. 1.89 2,907,198
MEXICO............................................................................. 5.67 8,734,150
NETHERLANDS........................................................................ 0.95 1,468,081
PERU............................................................................... 5.13 7,909,137
PHILIPPINES........................................................................ 6.76 10,412,498
PORTUGAL........................................................................... 1.32 2,039,732
PUERTO RICO........................................................................ 3.16 4,868,259
THAILAND........................................................................... 1.52 2,341,812
VENEZUELA.......................................................................... 1.90 2,931,043
GLOBAL............................................................................. 4.59 7,068,510
----- --------------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES....................................... 96.65 $ 148,944,286
----- --------------
----- --------------
</TABLE>
6
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1995
(unaudited)
<TABLE>
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
EQUITY SECURITIES-96.65%
EQUITY OR EQUITY-LINKED SECURITIES OF TELECOMMUNICATION COMPANIES IN EMERGING COUNTRIES-68.76%
ARGENTINA-9.95%
304,094 Argentine Cellular Communications (Holdings) Ltd.*+........................... $ 1,596,493
217,332 Citicorp Equity Investments
S.A., Class B................................................................ 724,041
1,421,214 Telecom Argentina S.A., Class B............................................... 6,355,687
32,000 Telecom Argentina Stet - France Telecom S.A., Class B ADS+##.................. 1,400,000
214,580 Telefonica de Argentina S.A. ADS##............................................ 5,257,210
------------
TOTAL ARGENTINA (Cost $14,366,301).............................................. 15,333,431
------------
BRAZIL-10.74%
50,300 Telecomunicacoes
Brasileiras S.A. ADR......................................................... 2,414,400
56,188,200 Telecomunicacoes
Brasileiras S.A. ON.......................................................... 2,268,932
131,374,846 Telecomunicacoes
Brasileiras S.A. PN.......................................................... 6,473,208
28,277,755 Telecomunicacoes
de Sao Paulo S.A. PN......................................................... 4,916,738
7,900,000 Telecomunicacoes do Rio
de Janeiro S.A. PN+.......................................................... 474,303
------------
TOTAL BRAZIL (Cost $7,805,621).................................................. 16,547,581
------------
CHILE-6.72%
106,700 Compania de Telecomunicaciones de Chile S.A. ADS##............................ 7,695,738
117,000 Compania de Telecomunicaciones de Chile S.A., Series B........................ 440,787
184,719 Compania Nacional de
Telefonos S.A................................................................ 174,538
221,018 Empresa Nacional de Telecomunicaciones S.A.+.................................. 2,034,811
------------
TOTAL CHILE (Cost $7,944,799)................................................... 10,345,874
------------
EASTERN EUROPE-2.24%
189,345 Global Telesystems Group*+.................................................... 2,556,157
200,000 Petersburg Long Distance Inc.(a)*+++.......................................... 900,000
------------
TOTAL EASTERN EUROPE (Cost $3,031,162).......................................... 3,456,157
------------
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
GREECE--0.16%
39,600 Alcatel Hellas S.A. (Cost $586,831)........................................... $ 252,885
------------
HONG KONG-2.68%
1,947,600 Hong Kong
Telecommunications Ltd....................................................... 3,311,089
48,000 Hong Kong
Telecommunications Ltd. ADR.................................................. 822,000
------------
TOTAL HONG KONG (Cost $3,192,261)............................................... 4,133,089
------------
INDONESIA-0.68%
50,000 P.T. Telekomunikasi Indonesia ADS+ (Cost $900,000)............................ 1,050,000
------------
ISRAEL-7.97%
1,181,530 Bezeq Israeli Telecommunication Corp., Ltd.................................... 3,378,103
114,509 DSP Group, Inc.*+............................................................. 1,223,815
102,000 ECI Telecom Ltd............................................................... 2,167,500
133,000 Geotek Communications, Inc.+##................................................ 947,625
100 Geotek Communications, Inc., 8.5%, Convertible Preferred, Series M*........... 886,518
9,300 Koor Industries, Ltd.......................................................... 839,021
20,500 Koor Industries, Ltd. ADR..................................................... 371,563
123,048 M-Systems Flash Disk
Pioneers Ltd.*+.............................................................. 319,925
61,524 M-Systems Flash Disk
Pioneers Ltd., Warrants
(expiring 6/30/98)*+......................................................... 49,067
170,784 Nexus Telecommunication
Systems Ltd.+*............................................................... 725,832
1,282 Scorpio Communications(b)*+................................................... 1,108,686
43,400 Teledata Communication Ltd.+.................................................. 271,250
------------
TOTAL ISRAEL (Cost $11,043,884)................................................. 12,288,905
------------
MEXICO-5.67%
147,400 Grupo Iusacell, S.A. de C.V., Series L ADR+................................... 1,676,675
500,000 Hylsamex, S.A. de C.V.+....................................................... 1,612,475
165,000 Telefonos de Mexico, S.A.
de C.V. ADR.................................................................. 5,445,000
------------
TOTAL MEXICO (Cost $7,969,655).................................................. 8,734,150
------------
PERU-3.92%
2,661,092 Compania Peruana de Telefonos S.A., Class B................................... 5,129,816
</TABLE>
7
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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SCHEDULE OF INVESTMENTS (unaudited) (continued)
<TABLE>
<CAPTION>
PAR VALUE
(000) DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
PERU (CONTINUED)
<C> <S> <C>
U.S.$ 1,120 Tele 2000 S.A., Convertible Note, 9.75%, 04/14/97++........................... $ 912,800
------------
TOTAL PERU (Cost $3,205,678).................................................... 6,042,616
------------
<CAPTION>
NO. OF SHARES
- -------------
<C> <S> <C>
PHILIPPINES-6.76%
163,700 Philippine Long Distance Telephone Co. ADR##.................................. 9,167,200
1,402,500 Pilipino Telephone Corporation+,++............................................ 1,245,298
------------
TOTAL PHILIPPINES (Cost $7,468,019)............................................. 10,412,498
------------
PORTUGAL-1.32%
111,428 Portugal Telecom S.A.+ (Cost $2,109,380)...................................... 2,039,732
------------
PUERTO RICO-3.16%
181,991 Cellular Communications of Puerto Rico, Inc.+ (Cost $2,825,252)............... 4,868,259
------------
THAILAND-1.52%
147,300 Advanced Information Services Public Co. Ltd., Foreign Registered (Cost
$1,600,015).................................................................. 2,341,812
------------
VENEZUELA-0.68%
125,947 Venworld Telecommunications*+++ (Cost $2,531,383)............................. 1,049,164
------------
GLOBAL-4.59%
5,503 International Wireless Communications, Inc.*+(c).............................. 1,446,149
<CAPTION>
PAR (000)
- -------------
<C> <S> <C>
U.S.$ 58 International Wireless Communications, Inc., Convertible Note, 9.75%,
01/01/99*.................................................................... 57,514
<CAPTION>
NO. OF
SHARES
- -------------
<C> <S> <C>
182,454 Millicom International
Cellular S.A.+##............................................................. 5,564,847
------------
TOTAL GLOBAL (Cost $4,666,766).................................................. 7,068,510
------------
TOTAL EMERGING COUNTRIES (Cost $81,247,007)..................................... 105,964,663
------------
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
EQUITY SECURITIES OF TELECOMMUNICATION COMPANIES IN DEVELOPED COUNTRIES-6.16%
DENMARK-3.32%
183,800 Tele Danmark A/S, Class B ADS## (Cost $4,491,189)............................. $ 5,123,425
------------
ITALY-1.89%
346,840 Telecom Italia S.p.A.+........................................................ 471,771
902,100 Telecom Italia S.p.A., Non-Convertible Savings Shares+........................ 995,731
346,840 Telecom Italia Mobile S.p.A.+................................................. 559,618
902,100 Telecom Italia Mobile S.p.A., Non-Convertible Savings Shares+................. 880,078
------------
TOTAL ITALY (Cost $1,998,951)................................................... 2,907,198
------------
NETHERLANDS-0.95%
41,200 Koninklijke PTT Nederland N.V. (Cost $1,176,270).............................. 1,468,081
------------
TOTAL DEVELOPED COUNTRIES (Cost $7,666,410)..................................... 9,498,704
------------
EQUITY SECURITIES OF COMPANIES PROVIDING OTHER ESSENTIAL SERVICES IN THE DEVELOPMENT OF AN
EMERGING COUNTRIES INFRASTRUCTURE-21.73%
ARGENTINA-3.01%
1,383,478 Camuzzi Argentina S.A.*....................................................... 2,631,998
58 Sodigas Pampeana S.A.*........................................................ 886,936
58 Sodigas del Sur S.A.*......................................................... 782,591
17,450 YPF Sociedad Anonima ADS...................................................... 340,275
------------
TOTAL ARGENTINA (Cost $3,519,957)............................................... 4,641,800
------------
BRAZIL-3.50%
5,086,198 Centrais Eletricas
Brasileiras S.A. ON.......................................................... 1,442,594
1,653,452 Centrais Eletricas
Brasileiras S.A. Class B PN.................................................. 465,544
718,500 Centrais Eletricas de Santa Catarin Class B PN+............................... 483,438
38,516,774 Companhia Energetica de Minas Gerais PN....................................... 853,226
15,628,900 Companhia Paulista de Forca e Luz ON(d)....................................... 719,766
<CAPTION>
PAR (000)
- -------------
<C> <S> <C>
BR 1,000 Enersul, Convertible Bond, 16.00%, 09/01/98................................... 1,427,959
------------
TOTAL BRAZIL (Cost $4,319,515).................................................. 5,392,527
------------
</TABLE>
8
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (unaudited) (continued)
<TABLE>
<CAPTION>
DESCRIPTION
--------------------------------------------------------------------------------
VALUE
NO. OF SHARES CHILE-12.79% (NOTE A)
- ------------- ------------
6,900 Chilectra S.A. ADS++.......................................................... $ 293,250
<C> <S> <C>
372,332 Chilgener S.A................................................................. 2,155,962
270,192 Chilquinta S.A. .............................................................. 1,406,111
2,459,567 Compania Electrica del
Rio Maipo S.A................................................................ 1,519,539
586,445 Compania General de
Electricidad Industrial S.A.................................................. 2,081,507
155,813 Emelsa S.A.................................................................... 3,680,622
546,165 Empresa Electrica de
Antofagasta S.A.............................................................. 240,829
1,761,580 Empresa Electrica de Arica S.A................................................ 435,327
1,514,182 Empresa Electrica de Iquique S.A.............................................. 513,593
1,394,156 Empresa Electrica Pehuenche S.A............................................... 2,381,296
2,637,691 Empresa Nacional de
Electricidad S.A............................................................. 1,701,159
3,676,992 Enersis S.A................................................................... 1,826,247
57,500 Sociedad Austral de Electricidad S.A.......................................... 1,462,750
------------
TOTAL CHILE (Cost $10,122,326).................................................. 19,698,192
------------
PERU-1.21%
1,787,000 Ontario-Quinta A.V.V.*
(Cost $1,835,372)............................................................ 1,866,521
------------
VENEZUELA-1.22%
1,551,043 C.A. La Electricidad de Caracas, SAICA-SACA (Cost $1,487,074)................. 1,881,879
------------
TOTAL OTHER ESSENTIAL SERVICES
(Cost $21,284,244)............................................................. 33,480,919
------------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES (Cost $110,197,661).................... 148,944,286
------------
<CAPTION>
PAR VALUE
(000) DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS-0.59%
CHILEAN INFLATION-ADJUSTED TIME DEPOSITS-0.27%
CLP 11,270 Molina Swett y Valdes Ltda 6.33%, 01/29/96**.................................. $ 331,920
2,963 Molina Swett y Valdes Ltda 6.05%, 01/22/96**.................................. 87,220
------------
TOTAL CHILEAN INFLATION-ADJUSTED TIME DEPOSITS (Cost $418,121).................. 419,140
------------
<CAPTION>
NO. OF
SHARES
- -------------
<C> <S> <C>
CHILEAN MUTUAL FUNDS-0.32%
32,737 Fondo Mutuo Bonosorno Global.................................................. 120,326
27,017 Fondo Mutuo Bonosorno Rentamas................................................ 94,660
25,985 Fondo Mutuo Operacional BanChile.............................................. 262,144
842 Fondo Mutuo Santander......................................................... 4,885
------------
TOTAL CHILEAN MUTUAL FUNDS
(Cost $488,609)................................................................ 482,015
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $906,730).................................... 901,155
------------
TOTAL INVESTMENTS (Notes A, D)
(Cost $111,104,391)..................................................... 97.24% 149,845,441
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES.....................................................2.76% 4,260,964
------------
NET ASSETS...............................................................100.00% $154,106,405
------------
------------
</TABLE>
- ----------------------------------
* 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".
++ Restricted security (see Note F).
## Security is out on loan.
(a) With an additional 40,000 warrants attached, expiring 12/31/96, with no
market value.
(b) With an additional 156 warrants attached, expiring 06/04/97, with no
market value.
(c) With an additional 581 warrants attached, expiring 12/31/98, with a
market value of $581.
(d) With an additional 85,021 rights attached, expiring 12/18/98, with no
market value.
ADR American Depositary Receipts.
ADS American Depositary Shares.
BR Brazilian real.
CLP Chilean pesos.
ON Ordinary Shares.
PN Preferred Shares.
U.S.$ United States dollars.
See accompanying notes to financial statements.
9
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $111,104,391) (Note
A) $149,845,441
Cash and cash equivalents (including $64,097 of
foreign currencies
with a cost of $67,178) (Note A) 4,706,549
Receivables:
Investments sold 481,437
Note 144,430
Dividends 139,356
Interest 79,550
Prepaid expenses and other assets 22,079
------------
Total Assets 155,418,842
------------
LIABILITIES:
Payables:
Investments purchased 779,558
Advisory fee (Note B) 207,488
Administration fees (Note B) 83,148
Other accrued expenses 242,243
------------
Total Liabilities 1,312,437
------------
NET ASSETS (applicable to 8,434,919 shares of
common stock outstanding) (Note C) $154,106,405
------------
------------
NET ASSET VALUE PER SHARE
($154,106,405 DIVIDED BY 8,434,919) $18.27
------------
------------
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 1,028,231
Accumulated net realized loss on investments and
foreign currency related transactions (2,918,495)
Net unrealized appreciation in value of
investments and translation of other assets and
liabilities denominated in foreign currencies 38,698,083
------------
Net assets applicable to shares outstanding $154,106,405
------------
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
(unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income (Note A):
Dividends $ 1,480,366
Interest 408,932
Less: Foreign taxes withheld (45,453)
------------
Total Investment Income 1,843,845
------------
Expenses:
Investment advisory fees (Note B) 866,837
Administration fees (Note B) 168,767
Custodian fees (Note B) 138,828
Accounting fees 61,427
Printing 33,632
Audit fees 23,660
Insurance 21,652
Legal fees 19,800
Transfer agent fees 10,020
Directors' fees 9,475
Amortization of organizational costs 3,989
Other 15,192
------------
Total Expenses 1,373,279
------------
Net Investment Income 470,566
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net realized loss from:
Investments (4,561,398)
Foreign currency related transactions (149,438)
Net change in unrealized appreciation in value
of investments and translation
of other assets and liabilities denominated
in foreign currencies (3,577,960)
------------
Net realized and unrealized loss on
investments and foreign currency related
transactions (8,288,796)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (7,818,230)
------------
------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
NOVEMBER 30, 1995 ENDED
(UNAUDITED) MAY 31, 1995
----------------- ------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 470,566 $ 895,061
Net realized gain/(loss) on investments
and foreign currency related
transactions (4,710,836) 6,105,919
Net change in unrealized appreciation in
value of investments and translation of
other assets and liabilities denominated
in foreign currencies (3,577,960) (5,978,276)
----------------- ------------
Net increase/(decrease) in net assets
resulting from
operations (7,818,230) 1,022,704
----------------- ------------
Dividends and distributions to shareholders
from:
Net investment income ($0.04 per share) -- (337,396)
Net realized gain on investments and
foreign currency related transactions
($1.78 per share) -- (15,014,156)
----------------- ------------
-- (15,351,552)
----------------- ------------
Total decrease in net assets (7,818,230) (14,328,848)
NET ASSETS:
Beginning of period 161,924,635 176,253,483
----------------- ------------
End of period (including undistributed net
investment income of $1,028,231 and
$557,665, respectively) $154,106,405 $161,924,635
----------------- ------------
----------------- ------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
(unaudited)
<TABLE>
<S> <C> <C>
INCREASE/(DECREASE) IN
CASH AND CASH
EQUIVALENTS FROM
OPERATING ACTIVITIES:
Investment income
received $ 1,896,722
Operating expenses paid (1,402,612)
------------
Net increase in cash
and cash equivalents
from operating
activities $ 494,110
INVESTING ACTIVITIES:
Purchases of long-term
investments (17,158,334)
Sales of short-term
investments, net 1,607,975
Proceeds from
disposition of
long-term investments 20,016,439
------------
Net increase in cash
and cash equivalents
from investing
activities 4,466,080
FINANCING ACTIVITIES:
Notes receivable 355,482
------------
Net increase in cash
and cash equivalents
from financing
activities 355,482
-----------
Net increase in cash
and cash equivalents 5,315,672
Due to custodian at
beginning of period (609,123)
-----------
Net cash and cash
equivalents at end of
period $ 4,706,549
-----------
-----------
RECONCILIATION OF NET
DECREASE IN NET ASSETS
FROM OPERATIONS TO NET
INCREASE IN CASH AND
CASH EQUIVALENTS FROM
OPERATING ACTIVITIES:
Net decrease in net
assets resulting from
operations $(7,818,230)
ADJUSTMENTS:
Decrease in dividend
and interest
receivable 52,877
Decrease in accrued
expenses (68,534)
Decrease in prepaid
expenses 39,201
Net realized and
unrealized loss on
investments and
foreign currency
related transactions 8,288,796
------------
Net increase in cash
and cash equivalents
from investing
activities 8,312,340
-----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS FROM
OPERATING ACTIVITIES: $ 494,110
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
13
<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 SIX FOR THE YEAR ENDED MAY FOR THE PERIOD
MONTHS ENDED 31, JUNE 25, 1992*
NOVEMBER 30, 1995 ----------------------- THROUGH
(UNAUDITED) 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 0.05 0.11 0.13 0.16
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions (0.98) 0.01 7.03+ 1.20
------ ---------- ---------- ------
Net increase/(decrease) in net assets from operations (0.93) 0.12 7.16 1.36
Dividends and distributions to shareholders from:
Net investment income -- (0.04) (0.15) (0.14)
Net realized gain on investments and foreign currency related
transactions -- (1.78) (1.06) (0.11)
------ ---------- ---------- ------
Total dividends and distributions to shareholders -- (1.82) (1.21) (0.25)
------ ---------- ---------- ------
Net asset value, end of period $18.27 $ 19.20 $ 20.90 $ 14.95
------ ---------- ---------- ------
------ ---------- ---------- ------
Market value, end of period $16.38 $ 17.75 $ 22.75 $ 14.50
------ ---------- ---------- ------
------ ---------- ---------- ------
Total investment return(a) (7.75)% (13.94)% 64.74% 5.85%
------ ---------- ---------- ------
------ ---------- ---------- ------
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $154,106 $161,925 $176,253 $125,338
Ratio of expenses to average net assets 1.73%(b) 1.89% 1.81% 1.99%(b)
Ratio of net investment income to average net assets 0.59%(b) 0.53% 0.63% 2.02%(b)
Portfolio turnover 10.72%(c) 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.
+ Reflects 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 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.
14
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
The Emerging Markets
NOTE A. SIGNIFICANT
T e l e c o m m u n i c a t i o n s
ACCOUNTING POLICIES
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. Investments in
short-term debt instruments having a maturity of 60 days or less are valued on
the basis of amortized cost. The Board of Directors has established general
guidelines for calculating fair value of non-publicly traded securities. At
November 30, 1995, the Fund held 11.74% of its net assets in securities valued
in good faith by the Board of Directors with an aggregate cost of $19,501,066
and market value of $18,087,366. The net asset value per share of the Fund is
calculated weekly and at the end of each month and at any other times determined
by the Board of Directors.
CASH AND CASH EQUIVALENTS: Deposits held at the Fund's custodian, Brown
Brothers Harriman & Co. in a variable rate account are classified as cash
equivalents. Rates reset on a daily basis and amounts 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 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 will be subject to and will accrue a 10% Chilean repatriation tax
with respect to all known and estimated remittances from Chile. For the six
months ended November 30, 1995, 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 which is due to change in market prices of equity securities.
15
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
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 U.S. federal income tax reporting purposes.
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.
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, holdings of foreign
currencies, transactions in 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.
SECURITIES LENDING: The market value of securities out on loan to brokers at
November 30, 1995, was $15,964,128, for which the Fund has received cash as
collateral of $16,572,120. Such cash collateral was reinvested into a repurchase
agreement which is in turn collateralized by U.S. Treasury Bonds and 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 period, the Fund earned $11,399 in securities lending income which
is included in interest income in the Statement of Operations.
DISTRIBUTION 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, although
it currently expects to distribute such gains. 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.
OTHER: Some countries require governmental approval for the repatriation of
investment income, capital or the 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
16
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
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.
BEA Associates serves as
NOTE B. AGREEMENTS
the Fund's investment adviser with respect to all
investments. As compensation for its advisory services, BEA Associates 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
six months ended November 30, 1995, BEA Associates earned $866,837 for advisory
services. BEA Associates also provides certain administrative services to the
Fund and is reimbursed by the Fund for costs they incur on behalf of the Fund
(up to $20,000 per annum). For the six months ended November 30, 1995, BEA
Associates was reimbursed $3,276 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 November 30, 1995, the Fund paid BSFM a fee for its services rendered
that is computed at an annual rate of 0.12% of the Fund's average weekly net
assets. For the six months ended November 30, 1995, BSFM earned $91,039 for
administrative services.
CELFIN Administradora de Fondos de Inversion de Capital Extranjero S.A.
("Chilean administrator") and Correval, S.A. ("Correval") serve as the Fund's
administrators with respect to Chilean and Colombian investments, respectively.
In return for services rendered, the Chilean administrator and Correval each
receive a fee computed monthly and paid quarterly at an annual rate of 0.10% of
the Fund's average weekly net assets in their respective countries, subject to
certain minimum annual fees and reimbursement 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 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.
17
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
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.
The authorized capital
NOTE C. CAPITAL
stock of the Fund is STOCK
100,000,000 shares of common stock, $0.001 par value.
Of the 8,434,919 shares outstanding at November 30, 1995, BEA Associates owned
7,169 shares.
For U.S. federal income
NOTE D. INVESTMENTS
tax purposes, the cost of IN
SECURITIES
securities owned at November 30, 1995 was
$111,639,442. Accordingly, the net unrealized appreciation of investments
(including investments denominated in foreign currencies) of $38,205,999, was
composed of gross appreciation of $43,085,324 for those investments having an
excess of
value over cost and gross depreciation of $4,879,325 for those investments
having an excess of cost over value.
For the period ended November 30, 1995, total purchases and sales of
securities, other than short-term obligations, aggregated $16,348,509 and
$19,736,298, respectively.
The Fund, along with
NOTE E. CREDIT
15 other U.S. regulated AGREEMENT
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 16 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%. The
Fund had no amounts outstanding under the credit agreement at November 30, 1995.
18
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
Certain of the Fund's investments are restricted as to
resale and are valued at the
NOTE F. RESTRICTED
direction of the Fund's Board of Directors in good faith,
at fair value, after taking
SECURITIES
into consideration appropriate indications of value. The
table below shows the number of shares held, the
acquisition date, value as of November 30, 1995, percentage of net assets which
the securities comprise, aggregate cost and share value of such securities.
<TABLE>
<CAPTION>
NUMBER OF ACQUISITION FAIR VALUE AT PERCENT OF NET VALUE PER
SECURITY SHARES DATE NOVEMBER 30, 1995 ASSETS COST SHARE
- -------------------------------- ----------- ----------- ----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Venworld Telecommunications 125,947 5/18/95 $ 1,049,164 0.7 $ 2,531,383 $ 8.33
Petersburg Long Distance Inc. 200,000 11/18/92 900,000 0.6 1,000,005 4.50
</TABLE>
NOTE G. QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET GAIN/(LOSS)
ON INVESTMENT NET
AND FOREIGN INCREASE/(DECREASE)
NET CURRENCY IN NET
INVESTMENT INVESTMENT DENOMINATED ASSETS RESULTING MARKET
INCOME INCOME/(LOSS) TRANSACTIONS FROM OPERATIONS PRICE
--------------------- -------------------- -------------------- -------------------- ON NYSE
TOTAL TOTAL TOTAL TOTAL ---------
QUARTER ENDED (000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE HIGH
- -------------------------- --------- ---------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
August 31, 1995........... $ 837 $ 0.10 $ 120 $ 0.01 $ (4,459) $ (0.53) $ (4,339) $ (0.52) $ 18.500
November 30, 1995......... 1,007 0.12 351 0.04 (3,830) (0.45) (3,479) (0.41) 17.125
--------- ----- --------- --------- --------- --------- --------- ---------
Totals................ $ 1,844 $ 0.22 $ 471 $ 0.05 $ (8,289) $ (0.98) $ (7,818) $ (0.93)
--------- ----- --------- --------- --------- --------- --------- ---------
--------- ----- --------- --------- --------- --------- --------- ---------
August 31, 1994........... $ 1,269 $ 0.15 $ 501 $ 0.06 $ 22,258 $ 2.64 $ 22,759 $ 2.70 $ 25.250
November 30, 1994......... 883 0.11 61 0.01 (13,432) (1.60) (13,371) (1.59) 24.750
February 28, 1995......... 1,085 0.13 375 0.04 (31,771) (3.76) (31,396) (3.72) 21.500
May 31, 1995.............. 853 0.10 (42) 0.00 23,073 2.73 23,031 2.73 18.375
--------- ----- --------- --------- --------- --------- --------- ---------
Totals................ $ 4,090 $ 0.49 $ 895 $ 0.11 $ 128 $ 0.01 $ 1,023 $ 0.12
--------- ----- --------- --------- --------- --------- --------- ---------
--------- ----- --------- --------- --------- --------- --------- ---------
August 31, 1993........... $ 1,070 $ 0.13 $ 430 $ 0.05 $ 22,999 $ 2.74 $ 23,429 $ 2.79 $ 20.000
November 30, 1993......... 1,289 0.15 561 0.07 18,518 2.21 19,079 2.28 26.000
February 28, 1994......... 532 0.06 (238) (0.03) 36,151 4.32* 35,913 4.29 28.125
May 31, 1994.............. 1,128 0.14 287 0.04 (18,908) (2.24) (18,621) (2.20) 26.375
--------- ----- --------- --------- --------- --------- --------- ---------
Totals................ $ 4,019 $ 0.48 $ 1,040 $ 0.13 $ 58,760 $ 7.03 $ 59,800 $ 7.16
--------- ----- --------- --------- --------- --------- --------- ---------
--------- ----- --------- --------- --------- --------- --------- ---------
<CAPTION>
QUARTER ENDED LOW
- -------------------------- ---------
<S> <C>
August 31, 1995........... $ 16.000
November 30, 1995......... 14.500
Totals................
August 31, 1994........... $ 19.250
November 30, 1994......... 20.250
February 28, 1995......... 15.000
May 31, 1995.............. 11.750
Totals................
August 31, 1993........... $ 14.125
November 30, 1993......... 18.875
February 28, 1994......... 23.500
May 31, 1994.............. 20.375
Totals................
</TABLE>
- --------------------------
* Reflects 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.
19
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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>
NAME OF DIRECTOR VOTES FOR VOTES AGAINST VOTES WITHHELD NON-VOTES
- ----------------------------------------------- ---------- ----------------- -------------- ----------
<S> <C> <C> <C> <C>
Martin Torino.................................. 7,100,720 -- 132,514 1,201,685
Peter Gordon................................... 7,096,812 -- 136,422 1,201,685
</TABLE>
In addition to the directors elected at the meeting, Emilio Bassini, James
Cattano, Daniel Sigg and George 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 FOR AGAINST VOTES WITHHELD NON-VOTES
---------- ------------ --------------- ----------
<S> <C> <C> <C> <C>
6,995,138 156,738 81,358 1,201,685
</TABLE>
20
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND
CASH PURCHASE PLAN
Pursuant to The Emerging Markets Telecommunications Fund, Inc. (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, nonparticipants 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 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, semiannually, 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
21
<PAGE>
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
- --------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND
CASH PURCHASE PLAN (CONTINUED)
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 stock 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.
The Fund and the 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 semiannual 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.
22
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
THE EMERGING MARKETS
BEA Associates
----------------------------
New York, New York
TELECOMMUNICATIONS
--------------------------
U.S. ADMINISTRATOR
FUND, INC.
-----------
Bear Stearns Funds Management Inc.
New York, New York
TRANSFER AGENT AND REGISTRAR
The First National Bank of Boston
Boston, Massachusetts
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, Massachusetts
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
LEGAL COUNSEL
Willkie Farr & Gallagher
New York, New York
THE EMERGING MARKETS
TELECOMMUNICATIONS FUND, INC.
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. The financial information
included herein is taken SEMI-ANNUAL REPORT
from the records of the Fund without examination by independent accountants who
do not express an opinion thereon. It is not a prospectus, circular or NOVEMBER
30, 1995
representation intended for use in the purchase or sale of shares of the Fund or
of any securities mentioned in this report.
(UNAUDITED)
