<PAGE>
The Emerging Markets
Infrastructure Fund, Inc.
-------------------------
SEMI-ANNUAL REPORT
MAY 31, 1996
[PHOTO]
<PAGE>
CONTENTS
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Portfolio Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . . .14
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . .16
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .18
Results of Annual Meeting of Shareholders. . . . . . . . . . . . . . . . . . .22
Description of the Fund's Dividend Reinvestment and Cash Purchase Plan . . . .23
PICTURED ON THE COVER IS A POWER STATION LOCATED IN ARGENTINA.
- - - --------------------------------------------------------------------------------
<PAGE>
LETTER TO SHAREHOLDERS
July 3, 1996
DEAR SHAREHOLDERS:
We are pleased to report on the activities of The Emerging Markets
Infrastructure Fund, Inc. (the "Fund") for the six months ended May 31, 1996.
PERFORMANCE
At May 31, 1996, the Fund's net asset value ("NAV") per share was $13.44 (net of
dividends paid of $0.09 per share), as compared to $11.60 on November 30, 1995.
For the period December 1, 1995 through May 31, 1996, the Fund's total return,
based on NAV and assuming the reinvestment of dividends and distributions, was
16.8%. By comparison, the total return of the Morgan Stanley Capital
International Emerging Markets Index ("Index") was 14.9% in the same period.
From the commencement of investment operations on December 29, 1993 through May
31, 1996, the Fund's total return, based on net asset value and assuming
reinvestment of dividends and distributions, declined by 2.0%. The Index fell by
2.9% during this period.
At May 31, 1996, the Fund had invested $164.7 million in infrastructure
companies in over 15 developing countries, $3.4 million in investment companies
in two developing countries and an additional $22.6 million in companies that
provide services or products ancillary to infrastructure development in several
of the same markets. The Fund had also made investments totaling $17.2 million
in infrastructure companies in the developed markets of Denmark, Italy, the
Netherlands, Spain and the United Kingdom.
INVESTMENT PHILOSOPHY
We believe that governmental deregulation and privatization around the world
will continue to offer the Fund many new opportunities in the future. We plan to
pursue these opportunities as government-owned companies involved in
construction, ports and roads, telecommunications and electricity and gas
distribution undergo privatization. Our theme is simple: for developing
economies to grow, basic services must be provided. Implementation of basic
services on a level sufficient for growth means that these sorts of companies
are likely to generate high internal rates of return. Thus, as emerging market
economies sustain their rapid growth, we expect infrastructure and other related
companies within those markets to grow with equal rapidity.
To best illustrate how we have put our investment philosophy to work, we'd like
to discuss two of our specific holdings.
- - - --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
LATIN AMERICA
A company we consider especially attractive is Cementos Mexicanos S.A. de C.V.,
better-known as Cemex. We feel that Cemex has significant positive attributes
that make it a compelling investment for the Fund:
- - - -It is the fourth-largest cement producer in the world, one of a handful of
cement companies with international capabilities and the only one of the latter
domiciled in an emerging market. In addition, it dominates cement production in
Mexico.
- - - -Due to its swelling exports (notably to Asia and Latin America) and overseas
operations, Cemex represents a strong investment play on the growth of emerging
markets' infrastructures.
- - - -Its overseas acquisition strategy (I.E., "buy, don't build") enables it to
obtain immediate local market share and the pricing power that goes along with
it. Moreover, it has been able to substantially increase the profitability of
acquired operations via cost-cutting and improvements in facilities and
processes.
- - - -It should benefit from Mexico's economic recovery, whose economic outlook we
consider among the emerging world's most promising.
- - - -Because sales in Mexico have long accounted for most, if not all, of total
sales, we feel that many investors misperceive Cemex as a strictly Mexican
company rather than a budding international giant.
Cemex's operations were entirely in Mexico from the company's inception in 1906
until 1992. Since then, it has purchased plants or majority stakes in cement
companies in Spain, Venezuela, Panama, Trinidad, the U.S. and the Dominican
Republic. Thus far in 1996, it has acquired two Colombian companies and, in the
process, become a major presence in the Colombian cement and ready-mix concrete
markets.
Overseas expansion is a priority for Cemex, which would like to reduce its
dependence on the Mexican market. It has already made tremendous progress: the
Mexican proportion of total sales dropped to 38% in 1995 from 67% in 1994.
CEMEX: REGIONAL SALES AND PROFITABILITY, 1995
(IN $U.S.)
<TABLE>
<CAPTION>
OPER.
SALES INCOME OPERATING
REGION (MILS.) % OF TOTAL (MILS.) % OF TOTAL MARGIN
- - - ------------------------------------------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Mexico $ 990 38.30% $ 300 48.86% 30.30%
Spain 777 30.06 188 30.62 24.20
U.S. 385 14.89 34 5.54 8.83
Venezuela 281 10.87 93 15.15 33.10
Other 152 5.88 (1) (0.17) N/A
--------- ----------- ----- -----------
TOTAL $ 2,585 100.00% $ 614 100.00% 23.75%
--------- ----------- ----- ----------- -----------
--------- ----------- ----- ----------- -----------
</TABLE>
- - - ------------------------
SOURCE: SALOMON BROTHERS
- - - --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
Long-term, Cemex's goal is to become a truly global cement company by increasing
international sales to two-thirds of total sales. Why? The answer, simply, is
that it is too costly NOT to do so:
- - - -Since the other global players (Holderbank [Switzerland], Lafarge [France],
Italcementi [Italy] and Blue Circle [United Kingdom]) have entrenched positions
in many world markets, Cemex must expand in order to be competitive.
- - - -As the global players continue to consolidate market share and power, overseas
acquisition candidates for Cemex decline in number and rise in price.
- - - -Expansion brings with it the potential for diversification of cash flows,
margin improvement, greater pricing flexibility and access to capital markets
in other countries.
- - - -Higher margins and pricing flexibility are two especially attractive features
of emerging markets.
In its domestic market, Cemex is dominant, whether in terms of sales or volume.
As the biggest player, it benefits disproportionately from the Mexican cement
industry's high barriers to entry. Barriers include the substantial investment
of capital and time needed to buy or build a plant; a highly fragmented, mostly
retail customer base; control of local distribution channels by Cemex and
number-two producer Apasco; cash costs among the lowest in the world; a lack of
suitable substitutes; the presence of three of the world's five major global
players; and the lack of adequate port facilities for imports.
CEMEX'S DOMINANCE OF THE MEXICAN CEMENT INDUSTRY
<TABLE>
<CAPTION>
1995 SALES INSTALLED CAPACITY CEMENT
COMPANY ($U.S., MILS.) (MTNS* MILS.) MKT. SHARE
- - - ----------------------------------------------------- ----------------------- ----------------------- -------------
<S> <C> <C> <C> <C> <C>
CEMEX $ 2,585 (80.4%) 30.1 (68.72%) 56%
Apasco 338 (10.5%) 9.0 (20.55%) 24
Cruz Azul 165 (5.1%) 3.4 (7.76%) 16
GCC** 98 (3.1%) 1.0 (2.28%) 2
Moctezuma 29 (0.9%) 0.3 (0.69%) 2
--------- ------------ --- ------------ ---
INDUSTRY TOTAL $ 3,215 (100.00%) 43.8 (100.00%) 100%
--------- ------------ --- ------------ ---
--------- ------------ --- ------------ ---
<CAPTION>
READY-MIX
COMPANY MKT. SHARE
- - - ----------------------------------------------------- --------------
<S> <C>
CEMEX 56%
Apasco 28
Cruz Azul 4
GCC** 0
Moctezuma 2
---
INDUSTRY TOTAL 100%***
---
---
</TABLE>
- - - ------------------------
* MTNs = metric tons
** 36%-owned by Cemex
*** 10% accounted for by small regional producers
SOURCE: SALOMON BROTHERS
- - - --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
Cement demand in Mexico has been weak for most of the period since late 1994.
This is changing, however, as pricing is firming, government-sponsored
construction programs are being legislated and, more generally, the
reinvigorated Mexican economy puts its agonizing peso crisis in the past.
Cement-company stock performance has reflected the downturn, and we sense that
prices will rise as the improving environment becomes clearer to investors.
We are very optimistic about Cemex's future prospects. Accordingly, we were able
to participate in an offering of private equity in May. This helped to raise
Cemex's exposure in the Fund to 2.46% of net assets from 1.01% at November 30,
1995.
ASIA
Simply by virtue of its size, China represents a source of enormous potential
opportunity to investors. It was not until recently, however, that Chinese
companies had sufficient size (and government approval) to list their stocks in
Hong Kong, which is considered the premier market for China-related equities.
Although the number of pure China stock plays is growing, they are still
relatively few in number. One that is an excellent fit for the Fund is New World
Infrastructure Ltd., ("NWI"), a Hong Kong company whose principal business is
the construction/development/operation of major capital projects in China and
Hong Kong. While the majority of NWI's latest annual profits come from container
port operations in Hong Kong, it is projected that its profit will mainly derive
from toll roads and bridges in China within the next few years.
NWI: PROJECTED PERCENTAGE DISTRIBUTION OF PRETAX PROFITS
BY REGION AND BUSINESS, 1995-1999E*
<TABLE>
<CAPTION>
BY REGION 1995 1996E 1997E 1998E 1999E
- - - ------------------------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Hong Kong 42% 53% 40% 34% 35%
--------- --------- --------- --------- ---------
China:
Guangdong 33 31 44 50 47
Wuhan 25 16 16 16 18
--------- --------- --------- --------- ---------
Total China 58 47 60 66 65
--------- --------- --------- --------- ---------
100% 100% 100% 100% 100%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
BY BUSINESS
- - - -------------------------------------------------------------------------
Hong Kong container port 52% 52% 38% 29% 26%
Power plants 12 7 9 9 7
Toll roads and bridges 36 41 53 62 67
--------- --------- --------- --------- ---------
100% 100% 100% 100% 100%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- - - ------------------------
* E = estimate
SOURCE: GOLDMAN SACHS
- - - --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
NWI is a very young company, having been created as an offshoot of the sprawling
New World Development Co., Ltd. ("NWD") conglomerate prior to NWI's initial
public offering in October 1995. Its top management, though, consists of highly
seasoned NWD executives who have a track record of savvy deal-making and
profitable operations in China.
The future appears very bright for NWI, based on powerful positive factors:
- - - -Due to heavy use, operating neglect and relatively low capital investment,
China's road system desperately needs additions, upgrading and normal
maintenance.
- - - -The Chinese government has designated infrastructure as one of seven
high-priority investment categories targeted for participation by foreigners.
- - - -NWI is concentrating its efforts on areas of China (I.E., the east-central city
of Wuhan and the southeastern Pearl River Delta region) that are two of the
nation's most important transportation hubs and the centers of huge local and
regional populations.
- - - -Its controlling interest in three Wuhan bridges gives it a virtual monopoly
over most of the long-haul road transport crossing the heart of China.
- - - -The volume of passenger traffic on its roads and bridges is expected to grow
briskly into the foreseeable future. Increased revenues from tolls and
maintenance/upgrade work should result.
- - - -It is somewhat protected against financial risk in several ways (E.G., it
structures its deals so as to significantly reduce its own risk; its mature
Hong Kong port operations generate strong, stable cash flows that help to fund
its China projects; and there is little danger of depreciation of the Chinese
renminbi currency).
- - - -There are few, if any, other publicly traded companies offering investors the
opportunity to benefit both from the infrastructure boom in China and a
well-structured portfolio of projects.
OUTLOOK
Looking ahead, we feel confident that the Fund is focused on the sectors that
will be instrumental in meeting the need for infrastructure within the world's
fastest-growing economic/geographical areas. In this regard, Latin America and
Asia offer especially promising possibilities.
For the first time, we see positive developments in Africa. One example is South
Africa, which could provide us with attractive investment opportunities as a
result of anticipated privatization and deregulation of the economy.
The Fund is well-positioned to take advantage of these and other attractive
opportunities.
- - - --------------------------------------------------------------------------------
5
<PAGE>
LETTER TO SHAREHOLDERS
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
an easy and convenient way. A shareholder whose shares are held in the name of a
broker/dealer or nominee should contact that party for details about
participating in the Plan. The Fund also offers shareholders a voluntary Cash
Purchase Plan. The Plan and the Cash Purchase Plan are described on pages 23
through 25 of this report.
We appreciate your continued confidence in the Fund and would be pleased to
respond to your questions and comments.
Sincerely yours,
[SIG]
Emilio Bassini
President
Chief Investment Officer*
- - - --------------------------------------------------------------------------------
* Emilio Bassini, who is a member of the Executive Committee of BEA Associates
and is an Executive Director of BEA Associates, is primarily responsible for
management of the Fund's assets. He has served in such capacity since the
commencement of the Fund's operations. Mr. Bassini joined BEA Associates
(formerly Basic Appraisals, Inc. and BEA Associates, Inc.) in 1984. Mr. Bassini
is a Director, Chairman of the Board, President and Chief Investment Officer of
the Fund and is also a Director, Chairman of the Board, President and Chief
Investment Officer of The Chile Fund, Inc., The Emerging Markets
Telecommunications 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 President and Secretary of The Indonesia Fund, Inc., and
Director, Chairman of the Board, President and Investment Officer of The
Brazilian Equity Fund, Inc. He is also the managing principal of Bassini,
Playfair + Associates LLC.
- - - --------------------------------------------------------------------------------
6
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
PORTFOLIO SUMMARY - AS OF MAY 31, 1996 (UNAUDITED)
- - - --------------------------------------------------------------------------------
SECTOR ALLOCATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
5/31/96 11/30/95
Local and/or Long Distance Telephone
Service 23.94% 24.90%
Electric Generation 8.74% 13.70%
Electric Distribution 17.79% 17.20%
Gas & Oil 9.84% 9.30%
Telecommunications Equipment 2.15% 2.40%
Infrastructure & Construction 9.15% 8.70%
Cellular Communications 13.64% 17.60%
Cash and Cash Equivalents 4.00% 2.20%
Investment Companies 1.57% 1.60%
Other 9.18% 8.40%
</TABLE>
GEOGRAPHIC ASSET BREAKDOWN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
5/31/96 11/30/95
Asia 21.7% 21.6%
Carribean 0.8% 0.8%
Eastern Europe 2.1% 2.2%
Europe 8.0% 8.1%
Latin America 54.1% 56.8%
Middle East 6.0% 6.1%
Global 4.4% 3.3%
Cash & Cash Equivalent 2.9% 1.1%
</TABLE>
- - - --------------------------------------------------------------------------------
7
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
PORTFOLIO SUMMARY - AS OF MAY 31, 1996 (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
SUMMARY OF EQUITY OR EQUITY-LINKED SECURITIES BY COUNTRY/REGION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
5/31/96 11/30/95
Argentina 6.50% 10.80%
Brazil 18.31% 16.52%
Chile 15.09% 15.75%
Eastern Europe 2.11% 2.23%
Hong Kong 5.82% 8.07%
Israel 5.99% 6.12%
Italy 4.01% 2.58%
Malaysia 4.61% 3.49%
Mexico 6.51% 6.10%
Peru 3.02% 2.91%
Philippines 3.06% 3.24%
Portugal 1.62% 1.42%
Spain 1.79% 1.83%
Thailand 4.10% 2.84%
Global 4.42% 3.30%
Other 9.04% 10.57%
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of Net
Holding Sector Country/Region Assets
<C> <S> <C> <C> <C>
- - - --------------------------------------------------------------------------------------------------------------------------------
1. Telecomunicacoes Brasileiras S.A. Local and/or Long Distance
Telephone Service Brazil 4.2
- - - --------------------------------------------------------------------------------------------------------------------------------
2. Chilectra S.A. Electric Distribution Chile 3.7
- - - --------------------------------------------------------------------------------------------------------------------------------
3. Millicom International Cellular S.A. Cellular Communications Global 3.4
- - - --------------------------------------------------------------------------------------------------------------------------------
4. Companhia Energetica de Minas Gerais Electric Distribution Brazil 3.2
- - - --------------------------------------------------------------------------------------------------------------------------------
5. Philippine Long Distance Telephone Co. Local and/or Long Distance
Telephone Service Philippines 2.9
- - - --------------------------------------------------------------------------------------------------------------------------------
6. Technology Resources Industries Cellular Communications Malaysia 2.5
- - - --------------------------------------------------------------------------------------------------------------------------------
7. Cementos Mexicanos S.A. de C.V. Other Infrastructure Mexico 2.5
- - - --------------------------------------------------------------------------------------------------------------------------------
8. Siam Cement Co. Ltd. Foreign Registered Other Infrastructure Thailand 2.2
- - - --------------------------------------------------------------------------------------------------------------------------------
9. Companhia Paulista de Forca e Luz Electric Distribution Brazil 2.1
- - - --------------------------------------------------------------------------------------------------------------------------------
10. Compania de Telecomunicaciones de Chile S.A. Local and/or Long Distance
Telephone Service Chile 2.0
- - - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- - - --------------------------------------------------------------------------------
8
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS - MAY 31, 1996 (UNAUDITED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- - - -----------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-96.00%
EQUITY OR EQUITY-LINKED SECURITIES OF INFRASTRUCTURE
COMPANIES IN EMERGING COUNTRIES-76.08%
ARGENTINA-5.88%
Argentine Cellular
Communications
(Holdings) Ltd.@*+...... 347,578 $ 1,824,784
Camuzzi Argentina
S.A.*................... 1,729,347 3,289,996
Capex S.A. Ord........... 100,700 821,046
Central Costanera S.A.,
Class B ADR++........... 33,000 1,229,250
Central Puerto S.A.
ADR++##................. 48,000 867,120
Citicorp Equity
Investments S.A., Class
B....................... 202,025 818,541
Juan Minetti S.A......... 162,765 711,578
Polledo+................. 308,626 333,454
Sociedad Comercia del
Plata S.A............... 695,400 2,080,109
Telefonica de Argentina
S.A. ADS##.............. 25,732 749,445
-----------
TOTAL ARGENTINA (Cost $15,219,216)...... 12,725,323
-----------
BOLIVIA-1.36%
Compania Boliviana de
Energia Electrica S.A.
(Cost $1,854,055)....... 79,200 2,940,300
-----------
BRAZIL-18.21%
Acesita CIA Espec Itab
PN...................... 143,510,497 589,425
Bardella Industrias
Mecanicas S.A........... 4,386 417,400
Centrais Eletricas
Brasileiras S.A. ON..... 12,259,179 2,984,203
Centrais Eletricas
Brasileiras S.A., Class
B PN.................... 4,538,474 1,172,979
Centrais Eletricas de
Santa Catarin, Class B
PN+..................... 1,279,000 1,063,431
Companhia Energetica de
Minas Gerais PN......... 265,535,400 7,035,724
Companhia Energetica de
Sao Paulo ADR+,++....... 77,380 619,040
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
BRAZIL (CONTINUED)
Companhia Paulista de
Forca e Luz ON.......... 64,837,500 $ 4,514,106
Companhia Siderurgica
Nacional ON............. 79,100,000 1,996,022
Confab Industrial S.A.
PN+..................... 918,000 331,059
Petroleo Brasileiro S.A.
PN...................... 21,248,266 2,564,905
Telecomunicacoes
Brasileiras S.A. ADR.... 67,300 4,332,438
Telecomunicacoes
Brasileiras S.A.
PN(a)................... 74,664,182 4,828,022
Telecomunicacoes de Sao
Paulo S.A. PN(b)........ 11,820,291 2,498,454
Telecomunicacoes do
Parana S.A. PN(c)....... 994,000 460,033
Telecomunicacoes do Rio
de Janeiro S.A.
PN+(d).................. 4,371,000 455,381
Trafo Equipamentos
Electricos S.A. PN+..... 509,800 893,714
Usinas Siderurgicas de
Minas Gerais S.A.
ADR++##................. 142,400 1,530,088
Usinas Siderurgicas de
Minas Gerais S.A. PN.... 1,054,700,000 1,151,638
-----------
TOTAL BRAZIL (Cost $36,366,883)......... 39,438,062
-----------
CHILE-15.09%
Besalco S.A.............. 146,976 859,383
Chilectra S.A. ADS++..... 145,600 8,080,800
Chilgener S.A............ 243,803 1,407,645
Chilquinta S.A........... 226,522 1,141,615
Compania de
Telecomunicaciones de
Chile S.A. ADS##........ 48,000 4,380,000
Compania Electrica del
Rio Maipo S.A........... 2,320,540 1,220,590
Compania General de
Electricidad S.A........ 605,258 2,680,164
Compania Nacional de
Telefonos S.A........... 70,000 57,284
Empresa Electrica de
Antofagasta S.A......... 605,459 340,686
</TABLE>
- - - --------------------------------------------------------------------------------
9
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
CHILE (CONTINUED)
Empresa Electrica de
Arica S.A............... 1,321,792 $ 349,244
Empresa Electrica de
Iquique S.A............. 978,133 366,127
Empresa Electrica de
Melipalla Colchaqua y
Maule S.A............... 81,328 1,790,708
Empresa Electrica
Pehuenche S.A........... 1,044,341 1,418,004
Empresa Nacional de
Electricidad S.A........ 3,092,853 1,914,353
Empresa Nacional de
Telecomunicaciones
S.A..................... 195,234 1,815,019
Enersis S.A. ADR......... 116,000 3,407,500
Soceidad Austral de
Electricidad S.A........ 61,355 1,448,503
-----------
TOTAL CHILE (Cost $27,754,972).......... 32,677,625
-----------
EASTERN EUROPE-2.11%
Global Telesystems
Group*+................. 189,345 2,556,158
Petersburg Long Distance
Inc.+................... 322,600 2,016,250
-----------
TOTAL EASTERN EUROPE
(Cost $4,612,183)...................... 4,572,408
-----------
HONG KONG-5.82%
China Light & Power Co.
Ltd..................... 493,000 2,338,426
Hong Kong & China Gas
Co...................... 1,584,576 2,519,003
Hong Kong & China Gas
Co., Warrants (expiring
9/30/97)+............... 132,048 37,119
Hong Kong Electric
Holdings................ 642,000 2,053,623
Hong Kong
Telecommunications Ltd.
ADR..................... 100,900 1,866,650
New World Infrastucture
Ltd.+................... 1,799,600 3,779,548
-----------
TOTAL HONG KONG
(Cost $12,724,743)..................... 12,594,369
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
INDONESIA-0.58%
PT Citra Marga Nusaphala
Persada
(Cost $1,012,419)....... 776,500 $ 1,265,038
-----------
ISRAEL-4.68%
Bezeq, Israeli
Telecommunication Corp.,
Ltd..................... 284,680 705,340
ECI Telecom Ltd.##....... 58,700 1,555,550
Geotek Communications,
Inc.##.................. 163,000 2,261,625
Geotek Communications,
Inc., Convertible
Preferred
Series M, 8.5%*......... 100 1,622,632
Nexus Telecommunication
Systems Ltd.+........... 210,283 1,130,271
Nexus Telecommunication
Systems Ltd., Warrants
(expiring 11/28/97)..... 210,283 262,854
Paz Oil Co.*+............ 96 1,009,728
Tadiran
Telecommunications+..... 37,000 666,000
Teledata Communication
Ltd.+................... 65,700 928,013
-----------
TOTAL ISRAEL (Cost $9,088,266).......... 10,142,013
-----------
MALAYSIA-4.60%
Petronas Gas Sdn
Berhard................. 375,000 1,637,292
Petronas Gas Sdn Berhard,
Int'l Warrants (expiring
8/17/00)+............... 640,000 1,358,702
Technology Resources
Industries+............. 1,657,000 5,508,953
Tenega Nasional
Berhard................. 345,000 1,464,851
-----------
TOTAL MALAYSIA (Cost $10,151,578)....... 9,969,798
-----------
MEXICO-1.86%
Telefonos de Mexico, S.A.
de C.V. ADR (Cost
$8,380,611)............. 122,300 4,035,900
-----------
PERU-3.02%
Ontario-Quinta A.V.V.*... 2,085,000 3,023,250
</TABLE>
- - - --------------------------------------------------------------------------------
10
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
PERU (CONTINUED)
Telefonica del Peru S.A.,
Class B................. 1,157,354 $ 2,289,798
<CAPTION>
Par (000)
-------------
<S> <C> <C>
Tele 2000 S.A.,
Convertible Note, 9.75%,
04/14/97++.............. USD 1,260 1,222,200
-----------
TOTAL PERU (Cost $4,704,467)............ 6,535,248
-----------
<CAPTION>
No. of
Shares
-------------
<S> <C> <C>
PHILIPPINES-2.88%
Philippine Long Distance
Telephone Co. ADR##
(Cost $8,549,750)....... 108,200 6,221,500
-----------
PORTUGAL-1.62%
Portugal Telecom, S.A.
(Cost $2,795,719)....... 144,857 3,504,347
-----------
PUERTO RICO-0.78%
Cellular Communications
of Puerto Rico, Inc.+
(Cost $1,231,325)....... 54,600 1,678,950
-----------
SINGAPORE-1.28%
Keppel Corp. Ltd.
(Cost $2,324,745)....... 330,000 2,764,643
-----------
SOUTH KOREA-1.34%
Pohang Iron & Steel Co.,
Ltd., ADR##
(Cost $2,915,000)....... 110,000 2,901,250
-----------
THAILAND-0.55%
Advanced Information
Services Public Co. Ltd.
Foreign Registered
(Cost $950,012)......... 70,500 1,194,844
-----------
GLOBAL-4.42%
International Wireless
Communications, Inc.,
Series D*+.............. 5,503 2,063,625
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
GLOBAL (CONTINUED)
International Wireless
Communications, Inc.,
Series F*+.............. 386 $ 144,750
International Wireless
Communications, Inc.,
Warrants (expiring
12/31/98)*+............. 581 582
Millicom International
Cellular S.A.+.......... 152,981 7,362,211
-----------
TOTAL GLOBAL (Cost $4,958,198).......... 9,571,168
-----------
TOTAL EMERGING COUNTRIES
(Cost $155,594,142).................... 164,732,786
-----------
EQUITY SECURITIES OF INFRASTRUCTURE COMPANIES IN
DEVELOPED COUNTRIES-7.93%
DENMARK-1.15%
Tele Danmark, A/S, Class
B ADS
(Cost $2,352,600)....... 100,000 2,487,500
-----------
ITALY-4.01%
Edison S.p.A.+........... 305,000 1,775,493
Telecom Italia Mobile
S.p.A................... 813,600 1,740,475
Telecom Italia Mobile
S.p.A., Non Convertible
Savings Shares.......... 1,155,000 1,594,793
Telecom Italia S.p.A..... 813,600 1,629,717
Telecom Italia S.p.A.,
Non Convertible Savings
Shares.................. 1,155,000 1,950,440
-----------
TOTAL ITALY (Cost $5,784,151)........... 8,690,918
-----------
NETHERLANDS-0.65%
Koninklijke PTT Nederland
N.V.
(Cost $1,063,513)....... 38,900 1,408,479
-----------
SPAIN-1.79%
Iberdrola S.A............ 182,100 1,849,393
Repsol S.A. ADR.......... 59,600 2,026,400
-----------
TOTAL SPAIN (Cost $3,375,421)........... 3,875,793
-----------
</TABLE>
- - - --------------------------------------------------------------------------------
11
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
UNITED KINGDOM-0.33%
Orange P.L.C. ADR+
(Cost $584,188)......... 37,400 $ 710,600
-----------
TOTAL DEVELOPED COUNTRIES
(Cost $13,159,873)..................... 17,173,290
-----------
EQUITY SECURITES OF COMPANIES PROVIDING OTHER
ESSENTIAL SERVICES IN THE DEVELOPMENT OF AN EMERGING
COUNTRY'S INFRASTRUCTURE-10.42%
ARGENTINA-0.62%
Compania Naviera Perez
Companc, Class B........ 118,231 754,627
Corp. Cementera
Argentina+.............. 120,108 585,169
-----------
TOTAL ARGENTINA (Cost $1,360,459)....... 1,339,796
-----------
BRAZIL-0.10%
Moinho Santista
Industrias Gerais PN+
(Cost $1,060,580)....... 304,000 207,082
-----------
ECUADOR-0.63%
La Cemento Nacional GDR++
(Cost $1,490,362)....... 7,481 1,361,542
-----------
ISRAEL-0.69%
Koor Industries, Ltd..... 13,118 1,134,558
Koor Industries, Ltd.
ADR##................... 20,500 369,000
-----------
TOTAL ISRAEL (Cost $1,689,174).......... 1,503,558
-----------
MEXICO-4.65%
Cementos Apasco, S.A. de
C.V..................... 325,000 1,751,196
Cementos Mexicanos S.A.
de C.V. C.P............. 1,171,400 4,370,954
Cementos Mexicanos S.A.
de C.V., Class B........ 238,925 952,675
Grupo Simec, S.A. de C.V.
ADS+.................... 39,600 232,650
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
MEXICO (CONTINUED)
Grupo Simec, S.A. de
C.V., Series B+......... 400,000 $ 120,698
Hylsamex, S.A. de C.V.... 624,000 2,639,402
-----------
TOTAL MEXICO (Cost $14,007,569)......... 10,067,575
-----------
PHILIPPINES-0.18%
Hi Cement Corporation
(Cost $404,154)......... 1,164,000 400,153
-----------
THAILAND-3.55%
PTT Exploration and
Production Public
Company Foreign
Registered.............. 200,000 2,986,667
Siam Cement Co. Ltd.
Foreign Registered...... 87,200 4,705,786
-----------
TOTAL THAILAND (Cost $5,309,031)........ 7,692,453
-----------
TOTAL OTHER ESSENTIAL SERVICES (Cost
$25,321,329)........................... 22,572,159
-----------
INVESTMENT COMPANIES IN EMERGING COUNTRIES-1.57%
INDIA-0.95%
India Special Situations
Fund Ltd.*+
(Cost $2,000,000)....... 2,000,000 2,048,300
-----------
ISRAEL-0.62%
The Renaissance Fund*#
(Cost $1,360,414)....... 136 1,349,539
-----------
TOTAL INVESTMENT COMPANIES
(Cost $3,360,414)...................... 3,397,839
-----------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES
(Cost $197,435,758).................... 207,876,074
-----------
</TABLE>
- - - --------------------------------------------------------------------------------
12
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Units Value
Description (000) (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS-1.07%
CHILEAN INFLATION-ADJUSTED TIME DEPOSITS-0.59%
Banco de O' Higgins,
7.02%, 07/15/96**....... CLP 14 $ 430,581
Banco de O' Higgins,
7.20%, 07/22/96**....... 25 758,410
Banco Security Pacific,
7.20%, 07/16/96**....... 3 92,966
-----------
TOTAL CHILEAN INFLATION-ADJUSTED TIME
DEPOSITS (Cost $1,284,372)............. 1,281,957
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- - - -----------------------------------------------------
<S> <C> <C>
CHILEAN MUTUAL FUNDS-0.48%
Fondo Mutuo Operacional
BanChile................ 61,604 $ 659,690
Fondo Mutuo Security
Premium................. 67,029 365,893
-----------
TOTAL CHILEAN MUTUAL FUNDS
(Cost $992,013)........................ 1,025,583
-----------
TOTAL SHORT-TERM INVESTMENTS (Cost
$2,276,385)............................ 2,307,540
-----------
TOTAL INVESTMENTS-97.07%
(Cost $199,712,143) (Notes A,D)........ 210,183,614
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-2.93%...................... 6,346,088
-----------
NET ASSETS-100.00%...................... $216,529,702
-----------
-----------
- - - ---------------------------------------------------------
@ Subsequent to May 31, 1996, certain events took place
that indicated an impairment to the carrying value of
this security. Effective July 25, 1996 the estimated
fair value of this investment is $387,125.
* 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."
# As of May 31, 1996, the Fund committed to investing
additional capital of $239,586 in The Renaissance
Fund.
## Security or a portion thereof is out on loan.
(a) With an additional 2,788,053 rights attached,
expiring 12/31/96, with no market value.
(b) With an additional 506,572 rights attached, expiring
6/20/96, with no market value.
(c) With an additional 823 rights attached, expiring
6/18/96, with no market value.
(d) With an additional 168,827 rights attached, expiring
12/31/96, with no market value.
ADR American Depositary Receipts.
ADS American Depositary Shares.
C.P. Certificate of Participation.
CLP Chilean Pesos.
GDR Global Depositary Receipts.
ON Ordinary Shares.
PN Preferred Shares.
USD United States Dollars.
</TABLE>
- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
13
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 1996 (UNAUDITED)
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost
$199,712,143) (Note A)................. $210,183,614
Cash (including $505,839 of foreign
currencies with a cost of $506,503)
(Note A)............................... 5,253,390
Receivables:
Investments sold...................... 1,078,817
Dividends............................. 940,250
Interest.............................. 29,545
Prepaid expenses and other assets....... 64,932
------------
Total Assets............................ 217,550,548
------------
LIABILITIES
Payables:
Investments purchased................. 404,154
Advisory fee (Note B)................. 452,794
Administration fees (Note B).......... 35,162
Other accrued expenses................ 128,736
------------
Total Liabilities....................... 1,020,846
------------
NET ASSETS (applicable to 16,107,169
shares of common stock outstanding)
(Note C)............................... $216,529,702
------------
------------
NET ASSET VALUE PER SHARE ($216,529,702
DIVIDED BY 16,107,169)................ $13.44
------------
------------
NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
16,107,169 shares issued and
outstanding (100,000,000 shares
authorized)............................ $ 16,107
Paid-in capital......................... 223,751,241
Undistributed net investment income..... 1,409,358
Accumulated net realized loss on
investments and foreign currency
related transactions................... (19,112,333)
Net unrealized appreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currencies..................... 10,465,329
------------
Net assets applicable to shares
outstanding............................ $216,529,702
------------
------------
</TABLE>
- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 3,589,346
Interest.............................. 244,720
Less: Foreign taxes withheld.......... (303,471)
-----------
Total Investment Income............... 3,530,595
-----------
Expenses:
Investment advisory fees (Note B)..... 1,311,338
Administration fees (Note B).......... 152,809
Custodian fees........................ 121,724
Accounting fees....................... 70,307
Printing.............................. 34,989
Audit and legal fees.................. 30,898
Insurance............................. 23,096
Directors' fees....................... 15,106
NYSE listing fees..................... 12,694
Transfer agent fees................... 12,162
Amortization of organizational
costs................................ 4,983
Other................................. 7,826
-----------
Total Expenses........................ 1,797,932
-----------
Net Investment Income................. 1,732,663
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized loss from:
Investments........................... (4,807,606)
Foreign currency related
transactions......................... (231,131)
Net change in unrealized depreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currencies...... 34,364,059
-----------
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 29,325,322
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $31,057,985
-----------
-----------
</TABLE>
- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
15
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Fiscal
For the Six Months Year
Ended May 31, 1996 Ended
(unaudited) November 30, 1995
<S> <C> <C>
-----------------------------------------
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income................. $ 1,732,663 $ 1,268,005
Net realized loss on investments and
foreign currency related
transactions......................... (5,038,737) (9,958,681)
Net change in unrealized
appreciation/(depreciation) in value
of investments and translation of
other assets and liabilities
denominated in foreign currencies.... 34,364,059 (31,753,559)
------------------ -----------------
Net increase/(decrease) in net
assets resulting from operations... 31,057,985 (40,444,235)
------------------ -----------------
Dividends and distributions to
shareholders:
Net investment income................. (1,449,645) (512,808)
Net realized gain on foreign currency
related transactions................. -- (292,550)
------------------ -----------------
Total dividends and distributions to
shareholders....................... (1,449,645) (805,358)
------------------ -----------------
Total increase/(decrease) in net
assets............................. 29,608,340 (41,249,593)
------------------ -----------------
NET ASSETS
Beginning of period..................... 186,921,362 228,170,955
------------------ -----------------
End of period (including undistributed
net investment income of $1,409,358 and
$1,126,340, respectively).............. $216,529,702 $186,921,362
------------------ -----------------
------------------ -----------------
</TABLE>
- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
16
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
FINANCIAL HIGHLIGHTS
- - - --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
For the Six Months For the Fiscal December 29, 1993*
Ended May 31, 1996 Year Ended through
(unaudited) November 30, 1995 November 30, 1994
<S> <C> <C> <C>
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period........................ $11.60 $14.17 $13.89**
---------- ----------------- ----------
Net investment income/(loss)................................ 0.11 0.07 (0.01)
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions..................... 1.82 (2.59) 0.29
---------- ----------------- ----------
Net increase/(decrease) in net assets resulting from
operations................................................ 1.93 (2.52) 0.28
---------- ----------------- ----------
Dividends and distributions to shareholders:
Net investment income..................................... (0.09) (0.03) --
Net realized gain on foreign currency related
transactions............................................. -- (0.02) --
---------- ----------------- ----------
Total dividends and distributions to shareholders........... (0.09) (0.05) --
---------- ----------------- ----------
Net asset value, end of period.............................. $13.44 $11.60 $14.17
---------- ----------------- ----------
---------- ----------------- ----------
Market value, end of period................................. $10.75 $ 9.75 $11.88
---------- ----------------- ----------
---------- ----------------- ----------
Total investment return(a).................................. 11.11% (17.49)% (14.87)%
---------- ----------------- ----------
---------- ----------------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)..................... $216,530 $186,921 $228,171
Ratio of expenses to average net assets..................... 1.78%(b) 1.83% 2.02%(b)#
Ratio of net investment income/(loss) to average net
assets.................................................... 1.72%(b) 0.65% (0.13)%(b)
Portfolio turnover.......................................... 8.71%(c) 13.73% 24.63%(c)
Average commission rate per share........................... $ 0.0102 (d) (d)
</TABLE>
- - - ---------------------------------------------------------------------------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share offering expenses of $0.06 per share.
# For the calendar year ending December 31, 1994, the Brazilian Congress
imposed a 0.25% withholding tax on financial transactions. If such tax
had not been imposed, the ratio of expenses to average net assets
would have been 1.96% for the period December 29, 1993 through
November 30, 1994.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions or initial underwriting discounts and
has not been annualized.
(b) Annualized.
(c) Not annualized.
(d) Only applicable to fiscal years beginning after September 1, 1995.
- - - --------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- - - --------------------------------------------------------------------------------
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Emerging Markets Infrastructure Fund, Inc. (the "Fund") was incorporated in
Maryland on October 12, 1993 and commenced investment operations on December 29,
1993. The Fund is registered under the Investment Company Act of 1940, as
amended, as a closed-end, non-diversified management investment company.
Significant accounting policies are as follows:
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at the closing price quoted for the securities prior to the
time of determination (but if bid and asked quotations are available, at the
mean between the last current bid and asked prices). Securities that are traded
over-the-counter are valued at the mean between the current bid and the asked
prices, if available. All other securities and assets are valued at the fair
value as determined in good faith by the Board of Directors. Short-term
investments having a maturity of 60 days or less are valued on the basis of
amortized cost. The preparation of financial statements requires the use of
estimates by management, principally the valuation of non-publicly traded
securities. Accordingly, the Board of Directors has established general
guidelines for calculating fair value of non-publicly traded securities. At May
31, 1996, the Fund held 8.7% of its net assets in securities valued in good
faith by the Board of Directors with an aggregate cost of $17,162,204 and fair
value of $18,933,344. The net asset value per share of the Fund is calculated
weekly, at the end of each month and at any other times determined by the Board
of Directors.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At May 31, 1996 the interest rate
was 4.75% which resets on a daily basis. Amounts on deposit are generally
available on the same business day.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.
At November 30, 1995, the Fund had a capital loss carryover of $14,026,165 of
which $1,079,127 expires in 2002 and $12,947,038 expires in 2003.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, 1995, within the fiscal year, are
deemed to arise on the first day of the following fiscal year. The Fund incurred
and elected to defer such losses of $23,664 and $21,033, respectively.
Income received by the Fund from sources within emerging countries and other
foreign countries may be subject to withholding and other taxes imposed by such
countries.
The Fund is subject to a 10% Chilean repatriation tax with respect to all
remittances from Chile in excess of original investment capital. For the six
months ended May 31, 1996, the Fund incurred no such expense.
- - - --------------------------------------------------------------------------------
18
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
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. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances. However, the Fund does isolate the
effect of fluctuations in foreign exchange rates when determining the gain or
loss upon the sale or maturity of foreign currency denominated debt obligations
pursuant to U.S. federal income tax regulations, with such amount categorized as
foreign exchange gain or loss for both financial reporting and income tax
reporting purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation on investments, foreign currency holdings,
and other assets and liabilities denominated in foreign currencies.
Net realized foreign exchange losses represent foreign exchange gains and losses
from sales and maturities of debt securities, transactions in foreign currencies
and forward foreign currency contracts, exchange gains or losses realized
between the trade date and settlement dates on security transactions, and the
difference between the amounts of interest and dividends recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received.
The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such components are treated as ordinary income for
U.S. federal income tax purposes.
SECURITIES LENDING: The market value of securities out on loan to brokers at May
31, 1996, was $13,745,427, for which the Fund has received cash as collateral of
$14,102,567. Such cash collateral was reinvested into a repurchase agreement
which is in turn collateralized by U.S. Treasury Strips (interest-only).
Security loans are required at all times to have collateral at least equal to
102% of the market value of the securities on loan; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
During the six months ended May 31, 1996, the Fund earned $20,750 in securities
lending income which is included in interest income in the Statement of
Operations.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a
- - - --------------------------------------------------------------------------------
19
<PAGE>
- - - --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
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 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 30% of its
assets in non-publicly traded equity securities which may involve a high degree
of business and financial risk and may result in substantial losses. Because of
the current absence of any liquid trading market for these investments, the Fund
may take longer to liquidate these positions than would be the case for publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized on such sales could be less than
those originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded.
NOTE B. AGREEMENTS
BEA Associates ("BEA") serves as the Fund's investment adviser with respect to
all investments. As compensation for its advisory services, BEA receives from
the Fund an annual fee, calculated weekly and paid quarterly, equal to 1.30% of
the Fund's average weekly net assets. For the six months ended May 31, 1996, BEA
earned $1,311,338 for advisory services. BEA also provides certain
administrative services to the Fund and is reimbursed by the Fund for costs
incurred on behalf of the Fund (up to $20,000 per annum). For the six months
ended May 31, 1996, BEA was reimbursed $6,916 for administrative services
rendered to the Fund.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's U.S.
administrator. The Fund pays 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 May 31, 1996, BSFM earned $121,659 for administrative
services.
Banco de Boston and CELFIN Administradora de Fondos de Inversion de Capital
Extranjero S.A. ("Chilean administrator") serve as the Fund's administrators
with respect to Brazilian and Chilean investments, respectively. Banco de Boston
is paid for its services a quarterly fee based on an annual rate of 0.10% of
average month end Brazilian net assets of the Fund. In return for services
rendered, the Chilean administrator's fee is paid quarterly at an annual rate of
0.10% of the Fund's average weekly net assets in Chile, subject to certain
minimum annual fees and reimbursement for a predefined limit of their expenses.
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20
<PAGE>
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THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - - --------------------------------------------------------------------------------
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 16,107,169 shares outstanding at May 31, 1996, BEA
Associates owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at May 31,
1996 was $199,718,722. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$10,464,892, was composed of gross appreciation of $34,569,398 for those
investments having an excess of value over cost and gross depreciation of
$24,104,506 for those investments having an excess of cost over value.
For the six months ended May 31, 1996, total purchases and sales of securities,
other than short-term investments, were $17,056,325 and $21,566,058,
respectively.
NOTE E. CREDIT AGREEMENT
The Fund, along with 17 other U.S. regulated investment companies for which BEA
serves as investment adviser, has a credit agreement with The First National
Bank of Boston. The agreement provides that each fund is permitted to borrow an
amount equal to the lesser of $50,000,000 or 25% of the net assets of the fund.
However, at no time shall the aggregate outstanding principal amount of all
loans to any of the 18 funds exceed $50,000,000. The line of credit will bear
interest at (i) the greater of the bank's prime rate or the Federal Funds
Effective Rate plus 0.50% or (ii) the Adjusted Eurodollar Rate plus 1.50%. The
Fund had no amounts outstanding under the credit agreement during the six months
ended May 31, 1996.
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21
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On March 29, 1996 the annual meeting of shareholders of The Emerging Markets
Infrastructure Fund, Inc. (the "Fund") was held and the following matters were
voted upon:
(1) To re-elect four directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
VOTES
NAME OF DIRECTOR VOTES FOR WITHHELD NON-VOTES
- - - ----------------------------------------------------------------------------- ------------ ------------- ----------
<S> <C> <C> <C>
Enrique R. Arzac 13,355,019 411,359 2,340,791
Daniel Sigg 13,362,841 403,537 2,340,791
Martin M. Torino 13,340,449 425,929 2,340,791
Richard Watt 13,338,100 428,278 2,340,791
</TABLE>
In addition to the directors elected at the meeting, Emilio Bassini, Peter A.
Gordon, James J. Cattano and George W. Landau continue to serve as directors of
the Fund.
(2) To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants for the fiscal year ending November 30, 1996.
<TABLE>
<CAPTION>
VOTES VOTES
VOTES FOR AGAINST WITHHELD NON-VOTES
------------ ------------ ------------- ----------
<S> <C> <C> <C> <C>
13,356,924 305,831 103,623 2,340,791
</TABLE>
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22
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to The Emerging Markets Infrastructure Fund, Inc.'s (the "Fund")
Dividend Reinvestment and Cash Purchase Plan (the "Plan"), each shareholder will
be deemed to have elected, unless the Fund's transfer agent, as the Plan Agent
(the "Plan Agent"), is otherwise instructed by the shareholder in writing, to
have all distributions, net of any applicable U.S. withholding tax,
automatically reinvested in additional shares of the Fund. Shareholders who do
not participate in the Plan will receive all dividends and distributions in
cash, net of any applicable U.S. withholding tax, paid in dollars by check
mailed directly to the shareholder by the Plan Agent, as dividend-paying agent.
Shareholders who do not wish to have dividends and distributions automatically
reinvested should notify the Plan Agent for the Fund at the address set forth
below. Dividends and distributions with respect to shares registered in the name
of a broker-dealer or other nominee (i.e. in "street name") will be reinvested
under the Plan unless such service is not provided by the broker or nominee or
the shareholder elects to receive dividends and distributions in cash. A
shareholder whose shares are held by a broker or nominee that does not provide a
dividend reinvestment program may be required to have his shares registered in
his own name to participate in the Plan. Investors who own shares of the Fund's
common stock registered in street name should contact the broker or nominee for
details concerning participation in the Plan.
Certain distributions of cash attributable to (a) some of the dividends and
interest amounts paid to the Fund and (b) certain capital gains earned by the
Fund that are derived from securities of certain emerging country issuers are
subject to taxes payable by the Fund at the time amounts are remitted. Such
taxes, if any, will be borne by the Fund and allocated to all shareholders in
proportion to their interests in the Fund.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the Board of Directors of the Fund declares an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
shareholders may have elected, 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
- - - --------------------------------------------------------------------------------
23
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
(CONTINUED)
the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash payments to
the Plan Agent, 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 each year. Any voluntary cash payments received more than 30
days prior to these dates will be returned by the Plan Agent and interest will
not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately 10 days before February 15 or August
15, as the case may be. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent not less than 48
hours before the payment is to be invested. A participant's tax basis in his
shares acquired through this optional investment right will equal his cash
payments to the Plan, including any cash payments used to pay brokerage
commissions allocable to his acquired shares.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
In the case of a shareholder, such as a bank, broker or nominee, that holds
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions payable in either shares or cash. The Plan Agent's fees for the
handling of reinvestment of such dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage charges with respect to shares
issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, each participant will
be charged by the Plan Agent a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open market purchases in connection with
voluntary cash payments made by the participant or the reinvestment of dividends
or capital gains distributions payable only in cash. Brokerage charges for
purchasing small amounts of stock for individual accounts through the Plan are
expected to be less than the usual brokerage charges for such transactions
because the Plan Agent will be purchasing stock for all participants in blocks
and prorating the lower commission thus obtainable. Brokerage commissions will
vary based on, among other things, the broker selected to effect a particular
purchase and the number of participants on whose behalf such purchase is being
made. The Fund cannot predict, therefore, whether the cost to a participant who
makes a voluntary cash payment will be less than if a participant were to make
an open market purchase of the Fund's common stock on his own behalf.
The receipt of dividends and distributions in the stock under the Plan will not
relieve participants of any income tax (including withholding tax) that may be
payable on such dividends or distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the
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24
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
(CONTINUED)
Plan Agent reserve the right to terminate the Plan as applied to any voluntary
cash payments made and any dividend or distribution paid subsequent to notice of
the termination sent to the members of the Plan at least 30 days before the
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.
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25
<PAGE>
SUMMARY OF GENERAL INFORMATION
The Fund--The Emerging Markets Infrastructure Fund, Inc.--is a closed-end, non-
diversified management investment company whose shares trade on the New York
Stock Exchange. Its investment objective is long-term capital appreciation
through investments primarily in equity securities of infrastructure companies
in emerging countries. The Fund is managed and advised by BEA Associates
("BEA"). BEA is a diversified asset manager, handling equity, balanced, fixed
income, international and derivative based accounts. Portfolios include
international and emerging market investments, common stocks, taxable and non-
taxable bonds, options, futures and venture capital. BEA manages money for
corporate pension and profit-sharing funds, public pension funds, union funds,
endowments and other charitable institutions and private individuals. As of
June 30, 1996, BEA managed approximately $28.7 billion in assets. BEA also
advises eight other international closed-end funds: The Brazilian Equity Fund,
Inc., The First Israel Fund, Inc., The Chile Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., The Indonesia Fund, Inc., The Latin America
Equity Fund, Inc., The Latin America Investment Fund, Inc. and The Portugal
Fund, Inc.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "EmgMkt" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "EmergMktInfr". The Fund's New York Stock Exchange
trading symbol is EMG. Weekly comparative net asset value (NAV) and market price
information about The Emerging Markets Infrastructure Fund, Inc. shares are
published each Sunday in THE NEW YORK TIMES and each Monday in THE WALL STREET
JOURNAL and BARRON'S, as well as other newspapers, in a table called "Closed End
Funds."
To request an annual report, or to be placed on the Fund's mailing list,
shareholders should call 1-800-293-1232.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN--SUMMARY
An automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") is
available to provide shareholders with automatic reinvestment of their dividend
income and capitals gains distributions in additional shares of the Fund's
common stock. A brochure describing the Plan is available from the Plan agent,
The First National Bank of Boston, by calling: 1-800-730-6001.
As per the Plan, each shareholder will be automatically reinvested in additional
shares of the Fund by The First National Bank of Boston, unless otherwise
instructed by the shareholder in writing. Shareholders who do not participate in
the Plan will receive all dividends and distributions in cash paid by check in
U.S. dollars. Shares registered in street name will be reinvested under the
Plan, unless the broker-dealer or other nominee does not provide a dividend
reinvestment plan or the shareholder elects to receive their dividends in cash.
- - - --------------------------------------------------------------------------------
<PAGE>
DIRECTORS AND CORPORATE OFFICERS
Emilio Bassini Chairman of the Board
of Directors, President
and Chief Investment Officer
Enrique R. Arzac Director
James J. Cattano Director
Peter A. Gordon Director
George W. Landau Director
Daniel Sigg Director and
Senior Vice President
Martin M. Torino Director
Richard Watt Director,
Senior Vice President
and Investment Officer
Stephen Swift Senior Vice President and
Investment Officer
Paul P. Stamler Senior Vice President
Michael A. Pignataro Chief Financial Officer
and Secretary
Rachel D. Manney Vice President and Treasurer
INVESTMENT ADVISER
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022
ADMINISTRATOR
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, NY 10167
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
The First National Bank of Boston
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. The financial information
included herein is taken 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 representation intended for use in the purchase or sale
of shares of the Fund or of any securities mentioned in this report. [EMG LOGO]
- - - --------------------------------------------------------------------------------
