October 18, 1996
The Emerging Markets
Income Fund Inc
Dear Shareholders:
We are pleased to provide you with this annual report for The Emerging Markets
Income Fund Inc (the "Fund") for the year ended August 31, 1996. Included are
market commentary, audited financial statements, the related report of
independent accountants and other information about the Fund.
We are pleased to report that the Fund returned 51.28% based on net asset value
per share, for the year ended August 31, 1996, significantly outperforming the
38.78% return of the Lipper Emerging Market Debt Fund Average. In fact, the Fund
ranked #1 of 13 funds in this investment category tracked by Lipper Analytical
Services, Inc.*
The net asset value of the Fund increased from $16.94 per share on May 31, 1996,
to $18.04 per share on August 31, 1996. Dividends of $0.4125 per share were
declared during the quarter. Assuming reinvestment of these dividends in
additional shares of the Fund, the net asset value return for the quarter ended
August 31, 1996, was 9.22%. In comparison, the Salomon Brothers Brady Bond Index
returned 6.85% during the same period.
Throughout the last twelve months, the Fund continued to provide investors with
stable current income through its broad exposure to government sponsored debt
instruments issued in emerging market economies. On August 31, 1996, the Fund,
as a percentage of total investments, was approximately 93% invested in
securities of emerging market issuers, including obligations of sovereign
governments and companies. The remainder of the Fund's assets was invested
primarily in short-term investments.
Emerging Markets Review
There was a decidedly positive tone to the emerging debt markets by the end of
August 1996, as political and fundamental economic developments continued to
promote growth throughout most of the emerging market nations.
Latin America-The Mexican Finance Ministry confirmed late in July that it would
repay $7 billion of its remaining $10.5 billion in emergency borrowings from the
U.S. Treasury as well as $1 billion in debt owed to the International Monetary
Fund (the "IMF"). The repayments, financed in part with a $6 billion
floating-rate note issue, are nearly double what Mexico had initially planned.
Since these bonds will be repaid from oil-export revenues of government-owned
Petroleos Mexicanos, flowing directly to the Fedral Reserve Bank of New York,
the issue was rated Baa-3 by Moody's Investors Service and BBB- by Standard and
Poor's, both higher ratings than garnered by Mexico itself.
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
In other positive news, Mexico reported a surge in second-quarter economic
growth, breaking a five-quarter string of declines. A strong export sector is
credited with reviving demand for goods and services in the local economy.
The Venezuelan government approved the creation of a Debt Rescue Fund that will
set aside certain oil revenues to pay down foreign debt. Also, the IMF approved
a $1.4 billion standby credit, signifying Venezuela's first formal credit
arrangement since 1989. As a further positive sign, Venezuela's economy is
estimated to rebound to a 4% annual growth rate in 1997 from a negative 1.1%
inflation-adjusted growth rate this year, according to the IMF. The IMF's visit
to Caracas in August highlighted the government's progress towards many of its
economic reform targets.
Eastern Europe Russia was the emerging debt market's top performer in August,
despite continued speculation over the health of President Boris Yeltsin.
Yeltsin soundly beat his Communist rival in a runoff presidential election in
July but immediately departed Moscow to receive care for his ailing condition.
Separately, the Russian Central Bank moved to draw more foreign investors into
its treasury bill market in a bid to lower the country's rising interest
payments. Foreign investors will now be allowed greater flexibility in investing
in ruble-denominated treasury bills, including easier repatriation of profits.
Poland enjoyed another successful issue with its July 9 release of a five-year,
250 million deutschemark Eurobond, priced very competitively over comparable
German government bonds. This pricing, along with recent acceptance of Poland
into the Organization for Economic Cooperation and Development and its strong
trade relations with Germany, are believed to be among the primary reasons
German investors accounted for one-third of the bond issue's placement.
In Bulgaria, the IMF approved a fourth standby loan for the country in July.
This loan is hoped to pave the way for additional external financial support
from the World Bank and bilateral lenders. Of course, the success of Bulgaria's
IMF and World Bank loan programs is dependent on the nation's ongoing progress
towards recapitalization and reform of its banking system. Interest payments
totaling US$125 million on Brady bonds were paid in July as scheduled.
Dividend Reinvestment Plan
For those shareholders not currently participating in the Fund's Dividend
Reinvestment Plan (the "Plan"), we encourage you to do so. The Plan offers a
prompt, simple and inexpensive way to put your dividends and distributions to
work through reinvestment in additional shares of capital stock of the Fund.
Shareholders who are not currently participating in the Plan may enroll in the
Plan by completing an Authorization Card attached to the Terms and Conditions of
the Plan, which can be obtained by contacting American Stock Transfer & Trust
Company at 1-800-937-5449 (1-718-921-8200 if you are calling from within New
York City). Shareholders who initially purchased shares of the Fund on or after
September 6, 1996, are automatically enrolled in the Plan. If your shares are
held in the name of a broker or nominee, you should contact your broker or
nominee for more information about your ability to participate in the Plan.
* * *
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
As we continue to pursue the Fund's investment objective of high current income
through investments in selected debt securities of emerging markets countries
and capital appreciation as a secondary objective, we appreciate your ongoing
interest in the Fund. In an effort to provide more timely information concerning
the Fund, shareholders may call 1-800-421-4777 for a recorded periodic update of
the developments affecting the markets in which the Fund invests, as well as its
current net asset value, portfolio manager comments and other information
regarding the Fund's portfolio holdings and allocations. Although the Fund will
continue to issue a semi-annual and annual report to shareholders, a press
release containing financial highlights and other Fund information will be
issued in lieu of a first and third quarter interim report. This will result in
some cost savings for the Fund while still providing shareholders with current
information about the Fund.
Also note that the annual meeting of shareholders of the Fund will be held on
December 12, 1996, at 10:00 a.m. at Oppenheimer Tower, World Financial Center,
Two Liberty Street, 40th Floor in New York City. We hope those of you who are
able to will attend.
Sincerely,
Michael S. Hyland Alan H. Rappaport
Chairman of the Board President
* Lipper rankings change monthly. Lipper performance results represent changes
in net asset value, adjusted to reflect reinvestment of dividends and capital
gains distributions.
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Statement of Investments August 31, 1996
Bonds - 97.7%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal
Amount Value
000's(a) (Note 2a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA - 16.1%
Peso 1,895 Republic of Argentina, BOCON, Pre 1, 3.474%, 4/01/01*(b)............. $ 1,454,707
Peso 2,358 Republic of Argentina, BOCON, Pre 3, 3.474%, 9/01/02*(b)............. 1,478,852
1,281 Republic of Argentina, BOCON, Pre 2, 5.46094%, 4/01/01*(b)........... 1,141,685
7,920 Republic of Argentina, FRB, Series L, 6.3125%, 3/31/05*,**........... 6,147,900
-----------
TOTAL ARGENTINA...................................................... 10,223,144
-----------
BRAZIL - 24.2%
14,532 Federal Republic of Brazil, Capitalization (C) Bond, 8.0%, 4/15/14**(b) 9,382,103
1,000 Federal Republic of Brazil, Investment (Exit) Bond, 6%, 9/15/13...... 648,750
4,000 Federal Republic of Brazil, NMB, Series L, 6.5625%, 4/15/09*,**...... 3,095,000
4,000 Federal Republic of Brazil, Par Bond, Series Z-L, 5%, 4/15/24*,**.... 2,237,500
-----------
TOTAL BRAZIL........................................................ 15,363,353
-----------
BULGARIA - 3.5%
800 Republic of Bulgaria, Discount Bond, Tranche A, 6.6875%, 7/28/24*,**. 400,500
1,250 Republic of Bulgaria, FLIRB, Series A, 2.25%, 7/28/12*,**............ 385,938
3,250 Republic of Bulgaria, IAB, 6.6875%, 7/28/11*,**...................... 1,460,469
-----------
TOTAL BULGARIA...................................................... 2,246,907
-----------
COSTA RICA - 4.0%
3,500 Costa Rica, Principal Bond, Series A, 6.25%, 5/21/10**............... 2,555,000
-----------
ECUADOR - 4.6%
6,260 Republic of Ecuador, PDI Bond, 6.5%, 2/27/15*,**(b).................. 2,903,106
-----------
INDONESIA - 3.2%
1,000 APP International Finance Company B.V., 11.75%, 10/01/05**........... 1,012,500
1,000 Polysindo International Finance Company B.V., 11.375%, 6/15/06....... 1,007,500
-----------
TOTAL INDONESIA..................................................... 2,020,000
-----------
MEXICO - 8.6%
1,000 Grupo Industrial Durango, 12.0%, 7/15/01**........................... 1,045,000
4,596 United Mexican States, Global Bond, 11.5%, 5/15/26**................. 4,420,778
-----------
TOTAL MEXICO......................................................... 5,465,778
-----------
PANAMA - 3.8%
4,000 Republic of Panama, IRB, 3.5%, 7/17/14*(d)........................... 2,410,000
-----------
</TABLE>
See accompanying notes to financial statements.
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Statement of Investments August 31, 1996 (continued)
Bonds (concluded)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal
Amount Value
000's(a) (Note 2a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
PHILIPPINES - 2.6%
2,000 Republic of the Philippines, Par Bond, Series B, 6.25%, 12/01/17*,**. $ 1,632,500
-----------
POLAND - 4.7%
3,750 Republic of Poland, PDI Bond, 3.75%, 10/27/14*,**.................... 2,960,156
-----------
RUSSIA - 3.8%
4,000 Russia, IAN, 12/31/15*(c)............................................ 2,377,600
-----------
SOUTH AFRICA - 0.9%
ZAL 3,000 Republic of South Africa Notes, 12%, 2/28/05**....................... 567,114
-----------
URUGUAY - 1.5%
1,000 Uruguay, DCB, Series B, 6.6875%, 2/18/07*,**......................... 932,500
-----------
VENEZUELA - 16.2%
5,000 Republic of Venezuela, DCB, Series DL, 6.625%, 12/18/07*............. 3,771,875
4,500 Republic of Venezuela, FLIRB, Series A, 6.375%, 3/31/07*,**.......... 3,476,250
1,000 Republic of Venezuela, FLIRB, Series B, 6.5%, 3/31/07*,**............ 772,500
2,500 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20**
(including 12,500 warrants expiring 3/31/20)....................... 1,582,812
1,000 Republic of Venezuela, Par Bond, Series B, 6.75%, 3/31/20**
(including 5,000 warrants expiring 3/31/20)........................ 633,125
-----------
TOTAL VENEZUELA...................................................... 10,236,562
-----------
TOTAL BONDS (cost $55,681,149)....................................... 61,893,720
-----------
Loan Participations - 19.5%
- -------------------------------------------------------------------------------------------------------
3,000 Government of Ivory Coast, 1/01/01#
(Morgan Stanley Emerging Markets, Inc.)T........................... 570,000
611 Government of Jamaica, Tranche A, 6.5%, 10/15/00*
(Chase Manhattan, New York)T....................................... 595,813
12,000 Kingdom of Morocco, Tranche A, 6.4375%, 1/01/09*,**
(Morgan Guaranty Trust Company of New York)T....................... 8,970,000
2,250 Peru Non-Citi # (Merrill Lynch)T..................................... 2,245,781
-----------
TOTAL LOAN PARTICIPATIONS
(cost $9,245,434).................................................. 12,381,594
-----------
TOTAL INVESTMENTS - 117.2% (cost $64,926,583)........................ 74,275,314
-----------
See accompanying notes to financial statements.
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</TABLE>
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Statement of Investments August 31, 1996 (concluded)
Repurchase Agreements - 9.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal
Amount Value
000's(a) (Note 2a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
2,701 State Street Bank and Trust Company, 5.2%, cost $2,701,000, dated 8/30/96,
$2,702,561 due 9/03/96, (collateralized by $2,715,000 U.S. Treasury
Note, 6.125%, due 5/15/98, valued at $2,759,119)................... $ 2,701,000
3,000 Union Bank of Switzerland, 5.21%, cost $3,000,000, dated 8/30/96,
$3,001,737 due 9/03/96, (collateralized by $2,925,000 U.S. Treasury Bond,
7.5%, due 11/15/16, valued at $3,060,281).......................... 3,000,000
-----------
TOTAL REPURCHASE AGREEMENTS
(cost $5,701,000).................................................. 5,701,000
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS - (26.2)%...................... (16,627,048)
-----------
NET ASSETS - 100.0% (equivalent to $18.04 per share on
3,512,134 common shares outstanding)............................... $63,349,266
===========
<FN>
- ------------
(a)Principal denominated in U.S. dollars unless otherwise indicated.
(b)Payment-in-kind security for which all or part of the interest earned is capitalized as additional principal.
(c)"When and if issued" security issued pursuant to Russia's Brady Plan debt restructuring. The Investment
Adviser believes that this restructuring will be completed and finalized and that the related Brady Bonds will
be issued. Accordingly, the Fund has marked-to-market its investment in this security at August 31, 1996.
(d)Securities valued at $2,410,000 as of August 31, 1996 were segregated to be available for the purchase of
delayed delivery securities with a cost of $2,186,875.
*Rate shown reflects current rate on instrument with variable rates or step coupon rates.
**All or a portion of the security is segregated as collateral pursuant to a loan agreement. See Note 5.
#Non-income producing. Security is currently in default.
TParticipation interests were acquired through the financial institutions indicated parenthetically. See Note 6.
Abbreviations used in this statement:
BOCON - Bonos de Consolidacion.
DCB - Debt Conversion Bond.
FLIRB - Front Loaded Interest Reduction Bond.
FRB - Floating Rate Bond.
IAB - Interest Arrears Bond.
IAN - Interest Arrears Note.
IRB - Interest Reduction Bond.
NMB - New Money Bond.
PDI - Past Due Interest.
Peso - Argentina Peso.
ZAL - South African Rand.
</FN>
</TABLE>
See accompanying notes to financial statements.
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Statement of Assets and Liabilities August 31, 1996
<TABLE>
<S> <C>
Assets
Investments, at value (cost-$64,926,583)............................................. $74,275,314
Repurchase Agreements ............................................................... 5,701,000
Cash................................................................................. 576
Receivable for securities sold ...................................................... 4,973,860
Interest receivable ................................................................. 1,723,142
Unamortized organization expenses .................................................. 35,036
Prepaid expenses .................................................................... 6,362
-----------
Total assets ........................................................... 86,715,290
-----------
Liabilities
Loan payable (Note 5) .............................................................. 20,000,000
Payable for securities purchased ................................................... 2,186,875
Payable for compensated foreign currency contracts (Note 2)......................... 505,370
Accrued interest expense on loan .................................................... 432,769
Accrued management fee (Note 3) ..................................................... 37,222
Accrued advisory fee (Note 3) ...................................................... 26,587
Other accrued expenses .............................................................. 177,201
-----------
Total liabilities ...................................................... 23,366,024
-----------
Net Assets
Common Stock ($.001 par value, authorized
100,000,000; 3,512,134 shares outstanding) ....................................... 3,512
Additional paid-in capital ......................................................... 48,724,585
Undistributed net investment income ................................................. 2,315,932
Accumulated net realized gain on investments ....................................... 2,958,406
Net unrealized appreciation on investments and foreign currency translations ........ 9,346,831
-----------
Net assets............................................................... $63,349,266
===========
Net Asset Value Per Share ($63,349,266 (d/b) 3,512,134 shares) .......................... $18.04
======
See accompanying notes to financial statements.
Page 7
</TABLE>
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Statement of Operations For the Year Ended August 31, 1996
<TABLE>
<S> <C> <C>
Net Investment Income
Income
Interest (includes discount accretion of $2,980,573) ................................ $10,268,837
Expenses
Interest on loan....................................................... $1,392,560
Management fee ........................................................ 382,896
Advisory fee .......................................................... 273,497
Audit and tax services ................................................ 80,030
Custodian ............................................................. 66,524
Printing .............................................................. 53,020
Directors' fees and expenses .......................................... 41,240
Legal ................................................................. 40,002
Amortization of organization expenses ................................. 30,012
Transfer agent expenses................................................ 20,888
Listing fees .......................................................... 17,191
Other ................................................................. 19,570 2,417,430
---------- -----------
Net investment income................................................................ 7,851,407
-----------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions
Net Realized Gain on:
Investments...................................................................... 5,623,501
Foreign currency transactions.................................................... 28,848
-----------
5,652,349
-----------
Change in Net Unrealized Appreciation on:
Investments...................................................................... 8,754,414
Translation of foreign currency contracts and other assets and liabilities
denominated in foreign currencies.............................................. (1,622)
-----------
8,752,792
-----------
Net realized gain and change in net unrealized appreciation ......................... 14,405,141
-----------
Net Increase in Net Assets from Operations........................................... $22,256,548
===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
Year Ended Year Ended
August 31, 1996 August 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income ............................................ ........ $ 7,851,407 $ 6,832,081
Net realized gain (loss) on investments and foreign currency transactions . 5,652,349 (1,970,869)
Change in net unrealized appreciation(depreciation) .............. ........ 8,752,792 (5,811,885)
----------- -----------
Net increase (decrease) in net assets from operations ..................... 22,256,548 (950,673)
----------- -----------
Dividends and Distributions to Shareholders
From net investment income ................................................ (5,795,021) (4,794,063)
From net realized capital gains ........................................... (105,364) (1,729,666)
In excess of net realized capital gains.................................... - (2,537,577)
----------- -----------
Total dividends and distributions to shareholders.......................... (5,900,385) (9,061,306)
----------- -----------
Total increase (decrease) in net assets.................................... 16,356,163 (10,011,979)
Net Assets
Beginning of period........................................................ 46,993,103 57,005,082
----------- -----------
End of period (includes undistributed net investment income of
$2,315,932 and $216,636, respectively)................................. $63,349,266 $46,993,103
=========== ===========
</TABLE>
Statement of Cash Flows For the Year Ended August 31, 1996 (unaudited)
Cash Flows from Operating Activities:
<TABLE>
<S> <C>
Purchases of securities .................................................................. $(68,786,130)
Net purchases of short-term investments ................................................... (4,512,631)
Proceeds from sales of securities and principal paydowns................................... 75,465,878
------------
2,167,117
Net investment income .................................................................... 7,851,407
Accretion of discount on investments ...................................................... (2,980,573)
Interest on payment-in-kind bonds ......................................................... (1,260,632)
Amortization of organization expenses ..................................................... 30,012
Net change in receivables/payables related to operations .................................. 66,194
------------
Net cash provided by operating activities.................................................. 5,873,525
------------
Cash Flows from Financing Activities:
Dividends paid ............................................................................ (5,900,385)
------------
Net cash used by financing activities .................................................... (5,900,385)
------------
Net decrease in cash ..................................................................... (26,860)
Cash at beginning of period .............................................................. 27,436
------------
Cash at end of period .................................................................... $ 576
============
See accompanying notes to financial statements.
Page 9
</TABLE>
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Notes to Financial Statements
1. Organization
The Emerging Markets Income Fund Inc (the "Fund") was incorporated in
Maryland on July 30, 1992 and is registered as a non-diversified, closed-end,
management investment company under the Investment Company Act of 1940, as
amended. The Board of Directors authorized 100 million shares of $.001 par value
common stock.The Fund's primary investment objective is to seek high current
income through investments in selected debt securities of emerging markets
countries. As a secondary objective, the Fund seeks capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results may differ
from those estimates.
(a) Securities valuation. In valuing the Fund's assets, all securities for
which market quotations are readily available are valued (i) at the last
sale price prior to the time of determination if there was a sale on the
date of determination, (ii) at the mean between the last current bid and
asked prices if there was no sales price on such date and bid and asked
quotations are available, and (iii) at the bid price if there was no sales
price on such date and only bid quotations are available. Publicly traded
foreign government debt securities are typically traded internationally in
the over-the-counter market, and are valued at the mean between the last
current bid and asked price as of the close of business of that market.
However, where the spread between bid and asked price exceeds five percent
of the par value of the security, the security is valued at the bid price.
Securities may also be valued by independent pricing services which use
prices provided by market-makers or estimates of market values obtained
from yield data relating to instruments or securities with similar
characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost, unless the Board of Directors determines
that such valuation does not constitute fair value. Securities for which
reliable quotations are not readily available and all other securities and
assets are valued at fair value as determined in good faith by, or under
procedures established by, the Board of Directors.
(b) Securities transactions and investment income. Securities transactions
are recorded on the trade date. Interest income is accrued on a daily
basis. Discount on securities purchased is accreted on an effective yield
basis over the life of the security. The Fund uses the specific
identification method for determining realized gain or loss on investments
sold.
(c) Foreign currency translation. The books and records of the Fund are
maintained in U.S. dollars. Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at the date of valuation using the 12:00 noon rate of
exchange reported by Reuters. Purchases and sales of portfolio securities
and income and expense items denominated in foreign currencies are
translated into U.S. dollars at rates of exchange prevailing on the
respective dates of such transactions. Net realized gains and losses on
foreign currency transactions represent net gains and losses from sales and
maturities of forward currency contracts, disposition of foreign
currencies, currency gains and losses realized between the trade and
settlement dates on securities transactions and the difference between the
amount of net investment income accrued and the U.S. dollar equivalent
amount actually received. The Fund does not isolate that portion of gains
and losses on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the securities. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Page 10
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T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
However, pursuant to U.S. federal income tax regulations, certain net
foreign exchange gains/losses included in realized gain/loss are included
in or are a reduction of ordinary income for federal income tax purposes.
(d) Federal income taxes. It is the Fund's intention to continue to meet
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable
income and capital gains, if any, to its shareholders. Therefore, no
federal income tax or excise tax provision is required.
(e) Organization expenses. Organization expenses amounting to $150,000 were
incurred in connection with the organization of the Fund. These costs have
been deferred and are being amortized ratably over a five year period from
commencement of operations.
(f) Repurchase agreements. When entering into repurchase agreements, it is
the Fund's policy to take possession, through its custodian, of the
underlying collateral and to monitor its value at the time the arrangement
is entered into and during the term of the repurchase agreement to ensure
that it always equals or exceeds the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, 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.
(g) Distribution of income and gains. The Fund declares and pays
distributions to shareholders quarterly from net investment income. Net
realized gains, if any, in excess of loss carryovers are expected to be
distributed annually. Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions
from net investment income and net realized gains are determined in
accordance with federal income tax regulations, which may differ from
generally accepted accounting principles due primarily to differences in
the treatment of foreign currency gains/losses and deferral of wash sales
and post-October losses incurred by the Fund. These "book/tax" differences
are either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within
the capital accounts based on their federal income tax basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are
reported as distributions in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as tax return of capital.
(h) Forward foreign currency contracts. A forward foreign currency contract
is a commitment to purchase or sell a foreign currency at a future date at
a negotiated forward rate. The contract is marked-to-market to reflect the
change in the currency exchange rate. The change in market value is
recorded by the Fund as an unrealized gain or loss. The Fund records a
realized gain or loss on delivery of the currency or at the time the
forward contract is extinguished (compensated) by entering into a closing
transaction prior to delivery. This gain or loss, if any, is included in
net realized gain (loss) on foreign currency transactions.
(i) Cash flow information. The Fund invests in securities and distributes
dividends from net investment income and net realized gains from investment
transactions which are paid in cash. These activities are reported in the
Statement of Changes in Net Assets. Additional information
Page 11
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
on cash receipts and cash payments is presented in the Statement of Cash
Flows. For the year ended August 31, 1996, the Fund paid interest expense
of $1,459,756.
3. Management and Advisory Fees and Other Transactions
The Fund has retained Salomon Brothers Asset Management Inc, an indirect
wholly owned subsidiary of Salomon Inc, to act as investment manager and
administrator (the "Manager") of the Fund subject to supervision by the Board of
Directors of the Fund. The Manager is responsible for the day-to-day management
of the Fund's investment portfolio as well as providing certain clerical
services relating to the Fund's operations, maintenance of the Fund's records,
preparation of reports and supervision of the Fund's arrangements with its
custodian and transfer and dividend paying agent. The management fee for these
services is payable monthly at an annual rate of 0.70% of the Fund's average
weekly net assets.
The Fund has also retained Advantage Advisers, Inc., a subsidiary of
Oppenheimer, to act as investment adviser (the "Adviser") to the Fund and to
provide financial, economic and political advice concerning emerging market
countries and also, as appropriate, to be involved in aiding the process of
emerging market country selection. The advisory fee for these services is
payable monthly at an annual rate of 0.50% of the Fund's average weekly net
assets.
At August 31, 1996, Oppenheimer and the Manager own 3,658 and 5,562 shares
of the Fund, respectively.
Certain officers and/or directors of the Fund are officers and/or directors
of the Manager or the Adviser.
The Fund pays each Director not affiliated with the Manager or the Adviser
a fee of $5,000 per year, plus a fee of $700 and reimbursement for travel and
out-of-pocket expenses for each board meeting attended.
4. Portfolio Activity and Federal Income Tax Status
Cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended August 31, 1996 aggregated
$70,973,005 and $80,228,197, respectively. The federal income tax cost basis of
the Fund's investments and repurchase agreements at August 31, 1996 was
$70,635,674. Gross unrealized appreciation and depreciation amounted to
$9,757,108 and $416,468, respectively, resulting in a net unrealized
appreciation on investments of $9,340,640.
As a result of differing book and tax treatment for foreign currency gain
for the year ended August 31, 1996, $42,910 has been reclassified from
Accumulated Net Realized Gain on Investments to Undistributed Net Investment
Income.
5. Bank Loan
The Fund has borrowed $20,000,000 pursuant to a secured loan agreement (the
"Loan Agreement") with Morgan Guaranty Trust Company of New York. The interest
rate on the loan is equal to six month LIBOR plus 1% and the maturity date is
November 6, 1996. The collateral for the loan was valued at $51,318,615 on
August 31, 1996 and is being held in a segregated account by the Fund's
custodian. In accordance with the terms of the Loan Agreement, the Fund must
maintain a level of collateral to debt of at least 200%.
Page 12
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Notes to Financial Statements (concluded)
6. Loan Participations/Assignments
The Fund invests in fixed and floating rate loans arranged through private
negotiations between a foreign sovereign entity and one or more financial
institutions ("lenders"). The Fund's investment in any such loan may be in the
form of a participation in or an assignment of the loan. The market value of the
Fund's loan participations at August 31, 1996 was $12,381,594.
In connection with purchasing participations, the Fund generally will have
no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not benefit directly from any collateral supporting the loan in
which it has purchased the participation. As a result, the Fund will assume the
credit risk of both the borrower and the lender that is selling the
participation. In the event of the insolvency of the lender selling the
participation, the Fund may be treated as a general creditor of the lender and
may not benefit from any set-off between the lender and the borrower.
When the Fund purchases assignments from lenders, the Fund will acquire
direct rights against the borrower on the loan, except that under certain
circumstances such rights may be more limited than those held by the assigning
lender.
7. Credit and Market Risk
The yields of emerging market debt obligations reflect, among other things,
perceived credit risk. The Fund's investment in securities rated below
investment grade typically involves risks not associated with higher rated
securities including, among others, overall greater risk of timely and ultimate
payment of interest and principal, greater market price volatility and less
liquid secondary market trading. The consequences of political, social, economic
or diplomatic changes may have disruptive effects on the market prices of
investments held by the Fund. The Fund's investment in non-dollar-denominated
securities may also result in foreign currency losses caused by devaluations and
exchange rate fluctuations. At August 31, 1996, the Fund has a concentration
risk in sovereign debt of emerging market countries.
8. Financial Instruments with Off-Balance Sheet Risk
The Fund enters into forward foreign currency contracts ("forward
contracts") to facilitate settlement of foreign currency denominated portfolio
transactions or to manage foreign currency exposure associated with foreign
currency denominated securities. Forward contracts involve elements of market
risk in excess of the amount reflected in the Statement of Assets and
Liabilities. The Fund bears the risk of an unfavorable change in the foreign
exchange rate underlying the forward contract. Risks may also arise upon
entering into these contracts from the potential inability of the counterparties
to meet the terms of their contracts. As of August 31, 1996, all forward
contracts which the Fund has entered into have been compensated by the Fund with
offsetting closing transactions.
9. Dividend Subsequent to August 31, 1996
On September 3, 1996, the Board of Directors of the Fund declared a
dividend of $.4125 per share, from net investment income, payable on September
30, 1996 to shareholders of record September 17, 1996.
Page 13
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Financial Highlights
Selected data per share of common stock outstanding throughout the period:
<TABLE>
<CAPTION>
Period
Year Year Year Ended
Ended Ended Ended August 31,
August 31, 1996 August 31, 1995 August 31, 1994 1993(c)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income.................................. $ 2.24 $ 1.95 $ 1.37 $ 1.28
Net realized gain (loss) and change in
unrealized appreciation (depreciation) on
securities and foreign currency translations ....... 4.10 (2.22) (0.79) 3.88
------ ------ ------ ------
Total from investment operations....................... 6.34 (0.27) 0.58 5.16
------ ------ ------ ------
Dividends to shareholders from net
investment income................................... (1.65) (1.37) (1.50) (1.07)
Dividends to shareholders from net
realized capital gains.............................. (0.03) (0.49) (0.81) -
Distributions in excess of net realized capital gains . - (0.72) - -
------ ------ ------ ------
Total dividends and distributions to shareholders ..... (1.68) (2.58) (2.31) (1.07)
------ ------ ------ ------
Offering costs on issuance of common stock............. - - - (0.15)
------ ------ ------ ------
Net increase (decrease) in net asset value............. 4.66 (2.85) (1.73) 3.94
Net asset value, beginning of period................... 13.38 16.23 17.96 14.02
------ ------ ------ ------
Net asset value, end of period......................... $18.04 $13.38 $16.23 $17.96
====== ====== ====== ======
Per share market value, end of period.................. $16.625 $13.00 $16.00 $18.50
Total investment return based on market
price per share (b)................................. 42.46% -1.76% -1.33% 40.7%(d)
Ratios/Supplemental data:
Net assets, end of period........................... $63,349,266 $46,993,103 $57,005,082 $63,091,629
Ratio of total expenses to
average net assets.............................. 4.41% 5.15% 3.31% 2.81%(a)
Ratio of operating expenses to
average net assets.............................. 1.87% 2.00% 1.78% 2.00%(a)
Ratio of interest expense to
average net assets.............................. 2.54% 3.15% 1.53% 0.81%(a)
Ratio of net investment income to
average net assets.............................. 14.34% 14.45% 7.99% 9.99%(a)
Portfolio turnover rate............................. 98.45% 79.7% 21.6% 29.9%
Bank loan outstanding, end of period................ $20,000,000 $20,000,000 $20,000,000 $10,000,000
Interest rate on bank loan, end of period........... 6.60156% 7.5625% 6.3125% 4.9375%
Weighted average bank loan.......................... $20,000,000 $20,000,000 $16,876,712 $18,202,614
Weighted average interest rate...................... 6.96% 7.5% 5.4% 5.2%(a)
<FN>
- ---------------
(a) Annualized.
(b) Dividends are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend
reinvestment plan.
(c) For the period October 30, 1992 (commencement of operations) through August 31, 1993.
(d) Return calculated based on beginning period price of $14.02 (initial offering price of $15.00 less sales load of $0.98) and end
of period market value of $18.50 per share. This calculation is not annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
Page 14
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Report of Independent Accountants
To the Board of Directors and Shareholders of
The Emerging Markets Income Fund Inc
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments and the related statements of operations of changes
in net assets and of cash flows and the financial highlights present fairly, in
all material respects, the financial position of The Emerging Markets Income
Fund Inc (the "Fund") at August 31, 1996, 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 the financial highlights for each of the
three yeasrs in the period then ended and for the period October 30, 1992
(commencement of operations) through August 31, 1993, in conformity with
generally accepted accounting principles. The financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financiual statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
New York, New York
October 11, 1996
Page 15
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Selected Quarterly Financial Information
Summary of quarterly results of operations (unaudited)
<TABLE>
<CAPTION>
Net Realized Gain
(Loss) & Change in
Net Investment Net Unrealized
Income Appreciation (Depreciation)
Per Per
Quarters Ended** Total Share Total Share
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
November 30, 1992*.......................... $ 243 $.07 $ (148) $ (.04)
February 28, 1993........................... 1,530 .44 1,000 .28
May 31, 1993................................ 1,378 .39 5,280 1.50
August 31, 1993............................. 1,290 .38 7,537 2.14
November 30, 1993........................... 1,267 .36 4,243 1.21
February 28, 1994........................... 1,146 .33 (1,723) (.49)
May 31, 1994................................ 1,197 .34 (6,897) (1.97)
August 31, 1994............................. 1,189 .34 1,615 .46
November 30, 1994........................... 1,595 .46 (3,082) (.88)
February 28, 1995........................... 1,599 .45 (9,960) (2.83)
May 31, 1995................................ 1,744 .49 5,054 1.44
August 31, 1995............................. 1,894 .55 205 .05
November 30, 1995........................... 1,859 .53 1,412 .40
February 29, 1996........................... 1,989 .57 5,477 1.56
May 31, 1996................................ 2,070 .58 4,137 1.18
August 31, 1996............................. 1,933 .56 3,379 .96
<FN>
*For the period October 30, 1992 (commencement of operations) through November 30, 1992.
**Totals expressed in thousands of dollars except per share amounts.
</FN>
</TABLE>
See accompanying notes to financial statements.
Page 16
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
Form of Terms and Conditions of Amended and Restated Dividend Reinvestment
and Cash Purchase Plan
Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosures is provided.
1. Each shareholder holding shares of common stock ("Shares") of The Emerging
Markets Income Fund Inc (the "Fund") will be deemed to have elected to be a
participant in the Amended and Restated Dividend Reinvestment and Cash Purchase
Plan (the "Plan"), unless the shareholder specifically elects in writing
(addressed to the Agent at the address below or to any nominee who holds Shares
for the shareholder in its name) to receive all income dividends and
distributions of capital gains in cash, paid by check, mailed directly to the
record holder by or under the direction of American Stock Transfer & Trust
Company as the Fund's dividend-paying agent (the "Agent"). Notwithstanding the
foregoing, a shareholder whose Shares are held in the name of a broker or
nominee who does not provide an automatic reinvestment service may be required
to take such Shares out of "street name" and register such Shares in the
shareholder's name in order to participate, otherwise dividends and
distributions will be paid in cash to such shareholder by the broker or nominee.
Each participant in the Plan is referred to herein as a "Participant." The Agent
will act as Agent for each Participant, and will open accounts for each
Participant under the Plan in the same name as their Shares are registered.
2. Unless the Fund declares a dividend or distribution payable only in the form
of cash, the Agent will apply all dividends and distributions in the manner set
forth below.
3. If, on the determination date, the market price per Share equals or exceeds
the net asset value per Share on that date (such condition, a "market premium"),
the Agent will receive the dividend or distribution in newly issued Shares of
the Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a "market
discount"), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a "Trading Day") preceding the
payment date for the dividend or distribution. For purposes herein, "market
price" will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.
4. Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided, however, that such purchases
will, in any event, terminate on the earlier of (i) 60 days after the dividend
or distribution payment date and (ii) the Trading Day prior to the "ex-dividend"
date next succeeding the dividend or distribution payment date.
Page 17
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
5. If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or (ii) a market discount shifts to a market premium
during the purchase period, then the Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued Shares (x) in the case of (i) above, at the close of business on
the date the Agent is required to terminate making open-market purchases as
specified in paragraph 4 above or (y) in the case of (ii) above, at the close of
business on the date such shift occurs; but in no event prior to the payment
date for the dividend or distribution.
6. In the event that all or part of a dividend or distribution amount is to be
paid in newly issued Shares, such Shares will be issued to Participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per Share is less than or equal to the market price per Share, then
the newly issued Shares will be valued at net asset value per Share on the
valuation date; provided, however, that if the net asset value is less than 95%
of the market price on the valuation date, then such Shares will be issued at
95% of the market price and (ii) if, on the valuation date, the net asset value
per Share is greater than the market price per Share, then the newly issued
Shares will be issued at the market price on the valuation date. The valuation
date will be the dividend or distribution payment date, except that with respect
to Shares issued pursuant to paragraph 5 above, the valuation date will be the
date such Shares are issued. If a date that would otherwise be a valuation date
is not a Trading Day, the valuation date will be the next preceding Trading Day.
7. Participants have the option of making additional cash payments to the Agent,
monthly, in a minimum amount of $250, for investment in Shares. The Agent will
use all such funds received from Participants to purchase Shares in the open
market on or about the first business day of each month. To avoid unnecessary
cash accumulations, and also to allow ample time for receipt and processing by
the Agent, Participants should send in voluntary cash payments to be received by
the Agent approximately 10 days before an applicable purchase date specified
above. A Participant may withdraw a voluntary cash payment by written notice, if
the notice is received by the Agent not less than 48 hours before such payment
is to be invested.
8. Purchases by the Agent pursuant to paragraphs 4 and 7 above may be made on
any securities exchange on which the Shares are traded, in the over-the-counter
market or in negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Agent shall determine. Funds held by the Agent
uninvested will not bear interest, and it is understood that, in any event, the
Agent shall have no liability in connection with any inability to purchase
Shares within the time periods herein provided, or with the timing of any
purchases effected. The Agent shall have no responsibility as to the value of
the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price per Share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions) of all
Shares purchased by the Agent.
Page 18
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
9. The Agent will maintain all Participants' accounts in the Plan and will
furnish written confirmations of all transactions in each account, including
information needed by Participants for personal and tax records. The Agent will
hold Shares acquired pursuant to the Plan in noncertificated form in the
Participant's name or that of its nominee, and each Participant's proxy will
include those Shares purchased pursuant to the Plan. The Agent will forward to
Participants any proxy solicitation material and will vote any Shares so held
for Participants only in accordance with the proxy returned by Participants to
the Fund. Upon written request, the Agent will deliver to Participants, without
charge, a certificate or certificates for the full Shares.
10. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants may from time to time have an undivided
fractional interest (computed to three decimal places) in a Share of the Fund,
no certificates for fractional shares will be issued. Dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's Shares at the time of termination less the pro rata
expense of any sale required to make such an adjustment.
11. Any share dividends or split shares distributed by the Fund on Shares held
by the Agent for Participants will be credited to their respective accounts. In
the event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.
12. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.
13. Participants may terminate their accounts under the Plan by notifying the
Agent in writing. Such termination will be effective immediately if notice is
received by the Agent not less than 10 days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first Trading Day after the payment date for such dividend or distribution with
respect to any subsequent dividend or distribution. The Plan may be amended or
terminated by the Fund as applied to any voluntary cash payments made and any
income dividend or capital gains distribution paid subsequent to written notice
of the change or termination sent to Participants at least 30 days prior to the
record date for the income dividend or capital gains distribution. The Plan may
be amended or terminated by the Agent, with the Fund's prior written consent, on
at least 30 days' written notice to Participants. Notwithstanding the preceding
two sentences, the Agent or the Fund may amend or supplement the Plan at any
time or times when necessary or appropriate to comply with applicable law or
rules or policies of the Securities and Exchange Commission or any other
regulatory authority. Upon any termination, the Agent will cause a certificate
or certificates for the full Shares held by each Participant under the Plan and
cash adjustment for any fraction to be
Page 19
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
delivered to each Participant without charge. If the Participant elects by
notice to the Agent in writing in advance of such termination to have the Agent
sell part or all of a Participant's Shares and remit the proceeds to the
Participant, the Agent is authorized to deduct a $2.50 fee plus brokerage
commission for this transaction from the proceeds.
14. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such successor Agent, for each Participant's account, all dividends and
distributions payable on Shares of the Fund held in each Participant's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.
15. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ("Nominee
Holders"), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.
16. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
17. All correspondence concerning the Plan should be directed to the Agent at 40
Wall Street, 46th Floor, New York, New York 10005.
Page 20
<PAGE>
T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C
(left column)
Directors
Charles F. Barber
Consultant; formerly Chairman,
ASARCO Incorporated
Leslie H. Gelb
President, The Council
on Foreign Relations
Michael S. Hyland
Chairman of the Board;
Managing Director, Salomon Brothers Inc President, Salomon Brothers
Asset Management Inc
Alan H. Rappaport
President;
Executive Vice President,
Oppenheimer & Co., Inc.
Riordan Roett
Professor and Director,
Latin American Studies Program,
Paul H. Nitze School of Advanced
International Studies,
John Hopkins University
Jeswald W. Salacuse
Henry J. Braker Professor of
Commercial Law, and formerly Dean,
The Fletcher School of Law & Diplomacy
Tufts University
Officers
Michael S. Hyland
Chairman of the Board
Alan H. Rappaport
President
Peter J. Wilby
Executive Vice President
Thomas K. Flanagan
Executive Vice President
Lawrence H. Kaplan
Executive Vice President and General Counsel
Alan M. Mandel
Treasurer
Tana E. Tselepis
Secretary
Jennifer G. Muzzey
Assistant Secretary
Amy W. Yeung
Assistant Treasurer
Laurie A. Pitti
Assistant Treasurer
(right column)
The Emerging Markets Income Fund Inc
7 World Trade Center
New York, New York 10048
1-800-SALOMON (1-800-725-6666)
Investment Manager
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
Investment Adviser
Advantage Advisers, Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Dividend Disbursing and Transfer Agent
American Stock Transfer &Trust Company
40 Wall Street
New York, New York 10005
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
New York Stock Exchange Symbol
EMD
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Emerging Markets Income Fund Inc. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective Prospectus
for the Fund, which contains information concerning the Fund's investment
policies and expenses as well as other pertinent information.
<PAGE>
(left column)
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT No. 169
(right column)
The Emerging Markets
Income Fund Inc
Annual Report
AUGUST 31, 1996
- ------------------------------------------
The Emerging Markets Income Fund Inc
------------------------------------------
