<PAGE>
[ART]
The Emerging Markets
Infrastructure Fund, Inc.
-----------------------------
SEMI-ANNUAL REPORT
MAY 31, 1999
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders................................................ 1
Portfolio Summary..................................................... 8
Schedule of Investments............................................... 10
Statement of Assets and Liabilities................................... 15
Statement of Operations............................................... 16
Statement of Changes in Net Assets.................................... 17
Financial Highlights.................................................. 18
Notes to Financial Statements......................................... 19
Results of Annual Meeting of Shareholders............................. 25
Description of InvestLink-SM- Program................................. 26
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO SHAREHOLDERS
June 30, 1999
DEAR SHAREHOLDER:
I am writing to report on the activities of The Emerging Markets Infrastructure
Fund, Inc. (the "Fund") for the six months ended May 31, 1999.
At May 31, 1999, the Fund's net asset value ("NAV") was $10.49 per share as
compared to $9.60 on November 30, 1998. Total net assets were $157,953,010.
PERFORMANCE: DISAPPOINTING
For the six months ended May 31, 1999, the Fund's total return, based on NAV was
9.3%. Given the lack of a comparable index of emerging markets infrastructure
stocks, I note that the broad universe of emerging markets equities (as
represented by the Morgan Stanley Capital International Emerging Markets Free
Index, or "EMF") rose 23.8% over the same period.
Although I make no excuses about the Fund's disappointing absolute return, I
believe that shareholders should be aware of two factors that played key roles
in its underperformance relative to EMF:
- - COUNTRY ALLOCATIONS AND STOCK SELECTION. On the country level, I chose to
underweight several markets whose returns were particularly strong, such as
Russia, Turkey, South Korea and Mexico.
In retrospect, I was clearly mistaken in not allocating more of the portfolio
to Russia and Turkey, but I truly felt that these markets were among the most
speculative of those available to the Fund. Given the volatility each has
experienced in the not-so-distant past, I believed (and still do) that
investing in them was no better than rolling dice.
The impact of stock selection, which was least effective in South Korea,
Brazil, Greece and India, was exacerbated by the simple fact that
infrastructure stocks as a group tended to underperform the broad markets in a
variety of emerging nations.
In fairness, I should also point out that there have been times when the
Fund's industry focus was quite beneficial to its overall return. This was
most notable in 1997, when infrastructure stocks were much stronger than the
banking and property sectors that tend to dominate many Asian equity indices.
It is likely that the kind of volatility in relative performance I have
described will continue to characterize the Fund in the future. It is worth
noting here that, in the three years ending May 31, 1999, the Fund returned
-16.3% with corresponding portfolio volatility (I.E., standard deviation) of
24.4%, compared to -20.1% and 28.6%, respectively, for EMF. In spite of
shorter-term periods of volatility, then, the Fund has outperformed aggregate
emerging equities while assuming less risk.
- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
- - SHARE BUYBACK. In October 1998, the Fund's directors proposed and approved a
program to buy back a portion of outstanding shares to help reduce the
difference between the Fund's share price and its net asset value. This plan
was subsequently superseded in February 1999 by a revised plan that obligates
the Fund to repurchase 10-15% of shares on a rolling 12-month basis, notably
if the discount to NAV should reach at least 15%. Consequently, the Fund was
holding a relatively high amount of cash at a time when stock prices were
rising. Transaction costs also increased significantly.
It is difficult to gauge the overall impact of share repurchases on the Fund's
return, but it is clear that it accounted for a healthy portion of
underperformance. The arbitrageurs who aggressively campaigned for a
repurchase program in the name of shareholder value, then, have actually
caused shareholder value to be further eroded.
GLOBAL EMERGING MARKETS: RAPIDLY RECOVERING
Written off just a few quarters ago as patients in need of long-term
convalescence, emerging equity markets have defied their critics and enjoyed
remarkable rallies since September of 1998. I attribute markets' much more
positive tone to these elements:
- - IMPROVING EXPECTATIONS FOR GLOBAL GROWTH. This is particularly true in Japan,
whose market has shown surprising strength thus far in 1999, despite a lack of
unmistakable evidence that the ailing economy has begun to revive. Elsewhere
in the developed world, the U.S. economy remains buoyant, with few signs of
slowing down substantially any time soon. And Europe has been disappointingly
sluggish, but there are credible indications that conditions could start to
turn around as early as the second half of this year. In each case, economic
strength has favorable implications for the emerging world's economies and
hence, their equity markets as well.
- - A BONA FIDE RECOVERY IN ASIA. Among all emerging markets, the Asian recovery
has been perhaps the strongest and most surprising. It was certainly
surprising to me, as I thought it would take far longer for Asia to get its
economic house in order than it actually did.
- - LACK OF A BRAZILIAN CONTAGION EFFECT. Something from which investors have
taken great encouragement is the distinct absence of a contagion-like
spillover effect from Brazil's decision to devalue its real currency in mid-
January. Emerging equities' ability to shrug off Brazil's move stands in sharp
contrast to the full-scale global meltdowns that occurred following
devaluations in Thailand in July 1997 and Russia in August 1998.
EMERGING INFRASTRUCTURE EQUITIES: A PROBLEMATIC ENVIRONMENT
Given the macroeconomic improvement I've described in the emerging world, it's
not surprising that emerging equity markets have been strong. In the first five
months of 1999, in fact, they were dramatically stronger than those in the
developed world: EMF's 25.6% return during the period dwarfed the 3.8% generated
by aggregate developed markets (I.E., in the form of Morgan Stanley Capital
International's World Index). Within this exceptional performance, however,
returns on infrastructure stocks lagged behind those of other sectors.
And for good reason. Historically, many emerging nations have spent heavily on
infrastructure projects, both to establish badly needed public works and create
jobs and the perception of progress. Such government spending simply isn't
possible under current conditions, however.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
The key here is that a wide variety of nations throughout the emerging world
have had to accept harsh austerity measures in order to qualify for financial
assistance packages from the International Monetary Fund and other global
lenders. One of the most important of these measures is that governments slash
their overall spending to more realistic levels. Huge infrastructure projects,
which are easy targets for spending cuts, have experienced postponement and even
outright cancellation.
In Asia, fiscal constraints of this nature are necessitated by the region's
extraordinarily high exposure to non-performing loans, which have crippled
banking systems and taken whole economies down with them. In Latin America, one
might add the cold fact that the region's economies are in recession, for the
most part. In a period of economic contraction, it is difficult to justify
spending on infrastructure projects that may lay idle for some time.
Clearly, then, the current environment for infrastructure companies in the
emerging world is problematic. Nonetheless, there are a few long-term positive
drivers for the sector that should be kept in mind:
- - PRIVATIZATION. Ongoing privatization of the many huge telecommunications
providers, electric utilities and other formerly government-controlled
infrastructure companies will continue to open up a new and potentially very
lucrative universe to investors.
- - INCREASING EMPHASIS ON SHAREHOLDER VALUE. There is an increasing trend among
emerging-world companies generally to manage with shareholder value as a
priority. Managements are paying much closer attention to profitability
measures; fostering greater transparency in their financial statements and
operations; and encouraging more frequent and open dialogue with analysts and
investors.
- - IMPROVING SOVEREIGN RISK FUNDAMENTALS. As sovereign risk fundamentals for
many emerging nations improve, interest rate-sensitive companies like electric
utilities and telecom providers--which typically are among the most liquid
stocks in emerging equity markets--should handsomely benefit from the
resulting decline in borrowing costs and increase in investor interest.
- - DEVELOPED-WORLD OPERATING EXPERTISE. Certain emerging infrastructure
companies have granted substantial equity ownership and operational control to
developed-world giants in exchange for major cash infusions. Notable among
these are Hungary's Matav (which I will discuss in greater detail later) and
the burgeoning Brazilian telecom sector. The world-class technical and
management expertise that these companies are importing can only enhance their
attractiveness to investors as local and regional macroeconomic conditions
improve.
- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
PORTFOLIO STRUCTURE: REMAINING DEFENSIVE
TOP 10 HOLDINGS, BY ISSUER *
<TABLE>
<CAPTION>
% OF
HOLDING COUNTRY NET ASSETS
---------------------------------------- --------- ----------
<S> <C> <C>
1. PEC Israel Economic Israel 6.6
2. Telebras Brazil 5.3
3. MS Opals LLC Taiwan 4.1
4. Cimpor Portugal 2.7
5. Camuzzi Argentina Argentina 2.4
6. Pohang Iron & Steel S. Korea 2.4
7. KEPCO S. Korea 2.3
8. Samsung Electronics S. Korea 2.2
9. GTS Europe 2.2
10. Gener Chile 2.0
</TABLE>
* Company names are abbreviations of those found in
the chart on page 9.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COUNTRY BREAKDOWN (% OF NET ASSETS)
<S> <C>
Other* 22.37%
Cash & Other Assets 13.71%
Argentina 6.90%
Brazil 12.79%
Chile 12.11%
Israel 10.71%
Portugal 2.70%
Singapore 3.56%
S. Korea 10.50%
Taiwan 4.65%
* Other includes Canada, China, Colombia,
Eastern Europe, Egypt, Estonia, Europe, Global, Hong
Kong,
Hungary, India, Indonesia, Jamaica, Pakistan, Peru,
Philippines,
Thailand, United Kingdom and Venezuela
</TABLE>
With the near-term prospects for emerging infrastructure stocks relatively
unexciting, I intend to manage the Fund with the defensive investment posture I
have maintained over the past few months.
I am doing so in several ways, such as greatly increasing exposure to Asian
markets, which are supported by the region's economic revival; cutting the
allocation to recession-plagued Latin America by half; avoiding the most
speculative markets, as there are sufficient attractive opportunities elsewhere;
and favoring stocks in countries where interest rates are falling and have room
to fall further, such as Korea, Taiwan and Israel.
Among the infrastructure companies I favor at present and believe will flourish
in years to come are Matav and KEPCO.
MAGYAR TAVKOZLESI RT.
MAGYAR TAVKOZLESI RT. ("Matav") is not only Hungary's largest telecommunications
concern, but also its largest company in terms of revenues and earnings. I am
particularly attracted to Matav because its shares are trading at a valuation
discount compared to its regional peers, even though it has outperformed them on
virtually every level available to a company of its kind.
Matav's management is generally regarded as very strong, as reflected by its
successful pursuit of new services, demonstrated ability to achieve financial
objectives and overall operational expertise. Well ahead of the official
- --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
opening of the Hungarian market to competition in 2002, for example, management
has successfully argued for rebalanced tariffs, made revenues and operations
more transparent and effectively challenged would-be competitors to meet its
existing high standards.
There are several other reasons to like Matav:
- - It has a track record of strong and increasing profitability, despite a mostly
lukewarm local economy.
- - It is among the most efficient telecom providers in Emerging Europe (E.G., it
boasts some of the highest digitalization rates and fewest employees per
line), and its capital expenditure levels are among the most stable.
- - It is 60%-owned by a joint venture between Ameritech and Deutsche Telekom,
which gives it access to developed-world telecom management depth, operational
expertise and lower-cost pools of capital. Most of its peers do not enjoy a
similar advantage.
- - It outperforms every regional peer in terms of the returns it earns on its own
capital and assets.
- - Its cellular franchise is relatively large and growing, making it more of a
cellular company than any other wireline company in emerging Europe.
KOREA ELECTRIC POWER CORPORATION
KOREA ELECTRIC POWER CORPORATION ("KEPCO"), South Korea's overwhelmingly
dominant electric utility and the world's sixth-largest, is a company that has
weathered extreme adversity and is well-positioned for significant growth.
KEPCO is benefiting from the current recovery in the Korean economy, which
should substantially increase demand for electricity. If, as expected, the
government allows the local cost of electricity to rise to a level approximating
international market pricing, it would combine with the economic recovery to
greatly increase KEPCO's revenues and profits going forward.
Another big positive for KEPCO's bottom line is declining costs. Falling
interest rates and rising domestic liquidity, for instance, have and will
continue to cut the company's borrowing costs and the price it pays for imported
fuels. KEPCO is also aggressively moving to use lower-cost coal and, to some
extent, nuclear facilities for electricity generation.
Then there is the issue of competition. The government's announced intention is
to fully open Korea's retail electricity market to competition by the year 2010,
with varying degrees of market liberalization scheduled to take place between
now and then. As part of this industry restructuring, KEPCO will be allowed to
sell certain generation and transmission facilities, which should provide it
with substantial revenues that will help it to fend off competitors.
Even with so much working in its favor, KEPCO shares trade at a substantial
discount to those of other fully integrated Asian utilities. Given Korea's
remarkable ability to turn itself around--and what this implies for future
electricity demand--it is a wonder that this is so, and one that I intend to
exploit on behalf of the Fund's investors.
- --------------------------------------------------------------------------------
5
<PAGE>
LETTER TO SHAREHOLDERS
OUTLOOK: SHORT-TERM VOLATILITY, LONG-TERM PROMISE
In the short term, I expect to see some additional volatility in emerging equity
markets generally. Although I am greatly encouraged by the marked improvement in
investor sentiment and the fairly muted reaction to the devaluation of the real,
the markets' extraordinary returns thus far in 1999 suggest that a pause for
breath--or even a modest correction of sorts--would not be unreasonable. As for
the infrastructure sector, I believe it will likely languish until the
constraints on government spending show credible signs of becoming less onerous.
The longer-term picture is much more positive, particularly since infrastructure
demand fundamentals remain strong. Countries still need roads, bridges,
telephone lines and all the other products and services that infrastructure
companies provide. There is no question that these needs will have to be
satisfied and will even grow as emerging nations transition from a phase of
economic recovery to one of economic competitiveness.
We have seen only the first fruits of the privatization trend that continues to
sweep through what were once highly restrictive, nationalized industries,
furthermore; there is much more yet to come. And it is only a matter of time
before the consolidation activity rampant among the developed world's
electricity and telecom industries more directly affects their counterparts in
emerging nations.
Respectfully,
/s/ Richard W. Watt
Richard W. Watt
President and Chief Investment Officer *
- --------------------------------------------------------------------------------
6
<PAGE>
LETTER TO SHAREHOLDERS
FROM CREDIT SUISSE ASSET MANAGEMENT:
I. Effective January 12, 1999, the Fund's investment adviser, BEA Associates,
changed its name to Credit Suisse Asset Management ("CSAM"). In making the
announcement, the firm said that it expected the new name to enhance its
recognition as a global asset manager. CSAM is the investment division of
Credit Suisse Group, one of the world's largest financial organizations,
with $600 billion in assets under management.
II. We wish to remind shareholders whose shares are registered in their own
name that they automatically participate in the Fund's dividend
reinvestment program which is known as the InvestLink-SM- Program (the
"Program"). The Program 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 the Fund's Transfer Agent for details about
participating in the Program. The Program also provides for additional
share purchases. The Program is described on pages 26 through 28 of this
report.
III. Many services provided to the Fund and its shareholders by CSAM and the
Fund's service providers rely on the functioning of their respective
computer systems. Many computer systems cannot distinguish the year 2000
from the year 1900, with resulting potential difficulty in performing
various calculations (the "Year 2000 Issue"). The Year 2000 Issue could
potentially have an adverse impact on the handling of security trades, the
payment of interest and dividends, pricing, account services and other Fund
operations.
CSAM recognizes the importance of the Year 2000 Issue and is taking
appropriate steps necessary in preparation for the year 2000. At this time,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Fund, nor can there be any assurance that the Year
2000 Issue will not have an adverse effect on the Fund's investments or on
global markets or economies, generally.
CSAM anticipates that its systems will be adapted in time for the year
2000. CSAM is seeking assurances that comparable steps are being taken by
the Fund's other major service providers. CSAM will be monitoring the Year
2000 Issue in an effort to ensure appropriate preparation.
- --------------------------------------------------------------------------------
* Richard W. Watt, who is a Managing Director of Credit Suisse Asset Management
("CSAM"), is primarily responsible for management of the Fund's assets. He
joined CSAM on August 2, 1995. Mr. Watt formerly was associated with Gartmore
Investment Limited in London, where he was head of emerging markets investments
and research. In this capacity, he led a team of four portfolio managers and was
manager of a closed-end fund focusing on smaller Latin American companies.
Before joining Gartmore Investment Limited in 1992, Mr. Watt was a Director of
Kleinwort Benson International Investments in London, where he was responsible
for research, analysis and trading of equities in Latin America and other
regions. Mr. Watt is President, Chief Investment Officer and a Director of the
Fund. He also is President, Chief Investment Officer and a Director of The
Brazilian Equity Fund, Inc.; 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.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
PORTFOLIO SUMMARY - AS OF MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
MAY 31, 1999 NOVEMBER 30, 1998
Cellular Communications 3.37% 6.99%
Chemicals - 2.82%
Consumer Goods 1.01% -
Electric Distribution 8.67% 7.78%
Electric Generation 4.12% 3.83%
Engineering 1.17% -
Oil & Gas 7.85% 9.95%
Holding Companies 10.58% 8.95%
Infrastructure & Construction 4.07% 10.74%
Investment Companies 6.14% 5.61%
Local and/or Long Distance Telephone
Service 11.67% 9.54%
Office Retail 0.09% 0.37%
Steel 2.89% 1.18%
Telecommunications 16.09% 9.70%
Transportation 1.65% 1.40%
Other Infrastructure 4.49% 6.31%
Cash & Cash Equivalents 16.14% 14.83%
</TABLE>
GEOGRAPHIC ASSET BREAKDOWN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
MAY 31, 1999 NOVEMBER 30, 1998
Asia 29.07% 17.16%
Africa 0.85% 3.31%
Caribbean 0.65% 0.72%
Eastern Europe 4.97% 9.43%
Europe 5.67% 11.03%
Latin America 32.88% 36.34%
Middle East 10.91% 7.64%
North America 0.10% 0.37%
Global 1.19% 1.08%
Cash & Cash Equivalents 13.71% 12.92%
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
PORTFOLIO SUMMARY - AS OF MAY 31, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
SUMMARY OF EQUITY OR EQUITY-LINKED SECURITIES BY COUNTRY/REGION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
MAY 31, 1999 NOVEMBER 30, 1998
Argentina 6.90% 7.36%
Brazil 12.79% 9.57%
Chile 12.11% 9.69%
Eastern Europe 3.02% 4.16%
Eqypt 0.85% 3.31%
Europe 2.21% 5.02%
Greece 0.00% 5.06%
Hong Kong 2.27% 2.74%
Hungary 1.94% 5.26%
India 2.35% 6.16%
Israel 10.71% 7.46%
Mexico 0.00% 8.23%
Peru 1.08% 1.24%
Portugal 2.70% 0%
Singapore 3.56% 1.98%
South Korea 10.50% 3.42%
Taiwan 4.65% 0%
Global 1.19% 1.08%
Other 7.46% 5.34%
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of Net
Holding Sector Country/Region Assets
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
1. PEC Israel Economic Corp. Holding Companies Israel 6.6
- --------------------------------------------------------------------------------------------------------------------------------
2. Telecomunicacoes Brasileiras S.A. Local and/or Long Distance
Telephone Service Brazil 5.3
- --------------------------------------------------------------------------------------------------------------------------------
3. Morgan Stanley Opals LLC Investment Companies Taiwan 4.1
- --------------------------------------------------------------------------------------------------------------------------------
4. Cimpor-Cimentos de Portugal, S.G.P.S., S.A. Infrastructure &
Construction Portugal 2.7
- --------------------------------------------------------------------------------------------------------------------------------
5. Camuzzi Argentina S.A. Oil & Gas Argentina 2.4
- --------------------------------------------------------------------------------------------------------------------------------
6. Pohang Iron & Steel Company Ltd. Steel South Korea 2.4
- --------------------------------------------------------------------------------------------------------------------------------
7. Korea Electric Power Corporation Electric Distribution South Korea 2.3
- --------------------------------------------------------------------------------------------------------------------------------
8. Samsung Electronics Co. Ltd. Telecommunications South Korea 2.2
- --------------------------------------------------------------------------------------------------------------------------------
9. Global TeleSystems Group, Inc. Cellular Communications Europe 2.2
- --------------------------------------------------------------------------------------------------------------------------------
10. Gener S.A. Electric Generation Chile 2.0
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS - MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- --------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-83.66%
EQUITY OR EQUITY-LINKED SECURITIES OF INFRASTRUCTURE COMPANIES IN
EMERGING COUNTRIES-70.98%
ARGENTINA-6.90%
Camuzzi Argentina S.A.*+................ 1,729,347 $ 3,818,426
CEI Citicorp Holdings S.A., Class B..... 627,952 2,136,725
Exxel Capital Partners=/=............... 2,000,001 1,990,621
Transportadora de Gas del Sur S.A.
ADR.................................... 237,106 2,104,316
YPF Sociedad Anonima ADR................ 20,003 842,626
-----------
TOTAL ARGENTINA (Cost $10,018,760)..................... 10,892,714
-----------
BRAZIL-10.98%
Companhia Energetica de Minas Gerais
PN..................................... 95,100,000 2,002,972
Petroleo Brasileiro S.A. PN............. 12,200,000 1,724,755
Tele Centro Sul Participacoes S.A.
ADR.................................... 24,800 1,339,200
Tele Norte Leste Participacoes S.A.
ADR.................................... 92,600 1,516,325
Telecomunicacoes Brasileiras S.A.
ADR+................................... 100,291 8,374,298
Telecomunicacoes Brasileiras S.A. ADR
PN##................................... 100,291 6,268
Telecomunicacoes de Sao Paulo S.A. PN... 19,328,729 2,363,392
Telecomunicacoes de Sao Paulo S.A. PN
Receipts+.............................. 188,874 23,094
-----------
TOTAL BRAZIL (Cost $13,963,469)........................ 17,350,304
-----------
CHILE-9.39%
Besalco S.A............................. 404,205 984,565
Chilectra S.A.++........................ 157,446 898,048
Compania de Consumidores de Gas de
Santiago S.A........................... 138,945 547,150
Compania de Petroleos de Chile S.A...... 509,584 1,592,935
Compania de Telecomunicaciones de Chile
S.A. ADR##............................. 81,900 1,781,325
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
CHILE (CONTINUED)
Compania de Telecomunicaciones de Chile
S.A., Class A.......................... 197,799 $ 1,075,980
Compania Electrica del Rio Maipo S.A.... 1,990,540 1,030,321
Compania Electrica del Rio Maipo S.A.
Rights (expiring 06/02/99)............. 166,271 86,063
Empresa Electrica Pehuenche S.A......... 1,032,141 544,721
Empresa Nacional de Electricidad S.A.... 2,168,445 783,484
Enersis S.A............................. 1,431,330 549,115
Gener S.A. ADR##........................ 166,327 3,149,818
Puerto Ventanas S.A..................... 488,453 619,675
Sociedad Austral de Electricidad S.A.... 61,355 1,194,346
-----------
TOTAL CHILE (Cost $16,281,574)......................... 14,837,546
-----------
CHINA-0.38%
Beijing Datang Power Generation Company
Ltd. (Cost $719,084)................... 2,496,438 601,990
-----------
EASTERN EUROPE-3.02%
Elektrim Spolka Akcyjna S.A............. 260,000 3,074,567
SPT Telecom a.s......................... 101,800 1,690,033
-----------
TOTAL EASTERN EUROPE
(Cost $4,612,658)..................................... 4,764,600
-----------
ESTONIA-0.14%
Estonian Telecom+,++ (Cost $181,400).... 9,832 220,237
-----------
EUROPE-2.21%
Global TeleSystems Group, Inc.+ (Cost
$2,090,162)............................ 45,938 3,491,288
-----------
HONG KONG-1.62%
Asia Satellite Telecommunications
Holdings Ltd........................... 449,930 954,415
</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>
HONG KONG (CONTINUED)
CLP Holdings Limited.................... 144,000 $ 694,481
Hutchison Whampoa Limited............... 110,000 914,911
-----------
TOTAL HONG KONG (Cost $2,298,982)...................... 2,563,807
-----------
HUNGARY-1.94%
Magyar Tavkozlesi Rt. ADR (Cost
$3,144,972)............................ 109,600 3,068,800
-----------
INDIA-2.34%
Bharat Heavy Electricals Ltd............ 210,355 931,977
BSES Ltd.++............................. 49,800 491,775
Hindustan Corp.......................... 100,600 516,797
Mahanagar Telephone Nigam Ltd.++........ 116,100 1,059,412
Videsh Sanchar Nigam Ltd. GDR++......... 61,600 700,700
-----------
TOTAL INDIA (Cost $5,451,933).......................... 3,700,661
-----------
INDONESIA-1.14%
PT Indosat ADR+##....................... 51,640 1,023,117
PT Telekomunikasi Indonesia............. 1,680,000 778,159
-----------
TOTAL INDONESIA (Cost $1,496,509)...................... 1,801,276
-----------
ISRAEL-10.71%
ECI Telecom Ltd......................... 86,210 2,985,021
Geotek Communications, Inc.+##.......... 49,501 1,337
Geotek Communications, Inc., Convertible
Preferred Series M, 8.50%*+............ 100 0
Geotek Communications, Inc., Convertible
Preferred Series N*+(a)................ 1,584 0
K.T. Concord Venture Fund LP+=/ =#...... 500,000 452,487
Nexus Telecommunication Systems Ltd.+... 210,283 558,564
PEC Israel Economic Corp.+.............. 330,951 10,487,010
Superbowl Acquisition LDC+=/=........... 96 1,245,984
The Renaissance Fund LDC+=/=............ 160 1,189,868
-----------
TOTAL ISRAEL (Cost $16,413,925)........................ 16,920,271
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
JAMAICA-0.65%
Jamaican Assets I L.P.=/= (Cost
$1,165,363)............................ 1,156,324 $ 1,020,895
-----------
PAKISTAN-0.20%
The Hub Power Company Limited+ (Cost
$1,209,434)............................ 957,600 317,841
-----------
PERU-1.04%
Ontario-Quinta A.V.V.*.................. 1,198,129 911,967
Telefonica del Peru S.A. ADR............ 50,000 725,000
-----------
TOTAL PERU (Cost $1,969,668)........................... 1,636,967
-----------
PHILIPPINES-1.85%
Manila Electric Company................. 418,884 1,442,150
Philippine Long Distance Telephone Co.
ADR##.................................. 51,100 1,475,512
-----------
TOTAL PHILIPPINES (Cost $2,624,260).................... 2,917,662
-----------
SINGAPORE-3.56%
Natsteel Electronics Ltd................ 538,000 1,795,728
Singapore Airlines Ltd.................. 222,000 1,984,559
Singapore Technologies Engineering
Ltd.................................... 1,690,000 1,844,314
-----------
TOTAL SINGAPORE (Cost $3,886,567)...................... 5,624,601
-----------
SOUTH KOREA-7.07%
Korea Electric Power Corporation........ 120,570 3,690,763
Korea Telecom Corp...................... 51,600 1,641,525
LG Information & Communication.......... 33,500 1,370,114
Samsung Electronics Co. Ltd............. 49,718 3,458,899
Samsung Electronics Co. Ltd., Rights
(expiring 06/22/99)+................... 4,069 43,234
SK Telecom Co. Ltd. ADR ##.............. 67,793 966,050
-----------
TOTAL SOUTH KOREA (Cost $9,972,115).................... 11,170,585
-----------
TAIWAN-4.09%
Morgan Stanley Opals LLC (Cost
$5,888,897)............................ 55,300 6,455,049
-----------
</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>
THAILAND-0.76%
Advanced Information Services Public Co.
Ltd.................................... 77,900 $ 949,078
Bangkok Expressway Public Company
Limited................................ 357,529 257,787
-----------
TOTAL THAILAND (Cost $992,218)......................... 1,206,865
-----------
VENEZUELA-0.00%
C.A. La Electricidad de Caracas,
SAICA-SACA (Cost $0)................... 10 4
-----------
GLOBAL-0.99%
Emerging Markets Ventures, L.P.+=/=#.... 1,690,333 1,563,558
International Wireless Communications,
Inc., Warrants (expiring 08/17/07)*+... 1 0
International Wireless Communications,
Inc., Warrants (expiring 08/17/07)*+... 1,240 0
International Wireless Communications,
Inc., Series D*+....................... 220,120 0
International Wireless Communications,
Inc., Series F*+....................... 15,440 0
-----------
TOTAL GLOBAL (Cost $3,205,013)......................... 1,563,558
-----------
TOTAL EMERGING COUNTRIES (Cost
$107,586,963).......................... 112,127,521
-----------
EQUITY OR EQUITY-LINKED SECURITIES OF NON-INFRASTRUCTURE
COMPANIES-1.12%
CANADA-0.10%
<CAPTION>
Par (000)
-------------
<S> <C> <C>
Officeland Inc., Senior Unsecured
Convertible Notes, 12%, 12/31/25
(Cost $571,429)*+...................... USD 571 152,311
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
SOUTH KOREA-1.02%
LG Electronics Co. (Cost $1,153,320).... 84,200 $ 1,604,689
-----------
TOTAL NON-INFRASTRUCTURE COMPANIES (Cost
$1,724,749)............................ 1,757,000
-----------
EQUITY SECURITIES OF INFRASTRUCTURE COMPANIES IN DEVELOPED
COUNTRIES-3.32%
PORTUGAL-2.70%
Cimpor-Cimentos de Portugal, S.G.P.S.,
S.A. (Cost $4,523,893)................. 160,577 4,270,924
-----------
UNITED KINGDOM-0.62%
Societe General Ladenburg Thalmann
Ukraine Fund Limited (Cost
$2,323,200)............................ 24,000 972,000
-----------
TOTAL DEVELOPED COUNTRIES
(Cost $6,847,093)..................................... 5,242,924
-----------
EQUITY SECURITES OF COMPANIES PROVIDING OTHER ESSENTIAL SERVICES IN
THE DEVELOPMENT OF AN EMERGING COUNTRY'S INFRASTRUCTURE-8.24%
BRAZIL-1.81%
Companhia Vale do Rio Doce PNA (Cost
$2,120,115)............................ 161,000 2,852,106
-----------
CHILE-0.29%
Empresa Obras Sanitar (Cost $534,539)... 5,496,135 457,407
-----------
CHINA-0.48%
China Steel Corporation (Cost
$715,500).............................. 55,650 758,231
-----------
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
COLOMBIA-0.01%
Cementos Paz del Rio S.A. ADR+, ++, ##
(Cost $29,089)......................... 2,135 $ 19,752
-----------
EGYPT-0.85%
Nile Growth Company (Cost $2,020,000)... 200,000 1,350,000
-----------
HONG KONG-0.65%
Yanzhou Coal Mining Co. Ltd. (Cost
$741,854).............................. 4,100,000 1,025,681
-----------
INDIA-0.01%
India Special Situations Fund Ltd.*+
(Cost $20,000)......................... 20 14,261
-----------
PERU-0.04%
Ferreyros S.A. (Cost $94,329)........... 89,076 69,878
-----------
SOUTH KOREA-2.41%
Pohang Iron & Steel Company Ltd. ADR
(Cost $2,754,174)...................... 150,140 3,800,419
-----------
TAIWAN 0.56%
Windbond Electronics Corp. GDR+,++ (Cost
$858,887).............................. 75,012 881,391
-----------
THAILAND-1.13%
The Siam Cement Public Company Ltd.
(Cost $1,428,914)...................... 68,847 1,788,909
-----------
TOTAL OTHER ESSENTIAL SERVICES (Cost
$11,317,401)........................... 13,018,035
-----------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES (Cost
$127,476,206)......................................... 132,145,480
-----------
FIXED RATE INVESTMENT-0.20%
GLOBAL-0.20%
<CAPTION>
Par (000)
-------------
<S> <C> <C>
International Wireless Communications,
Inc. Senior Secured Notes,
14.00%-25.00%, 08/17/02*(b) (Cost
$546,967).............................. USD 385 318,659
-----------
<CAPTION>
Units Value
Description (000) (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS-2.43%
CHILEAN INFLATION-ADJUSTED TIME DEPOSITS-1.37%
Banco Citibank, 6.90%**, 06/07/99....... CLP 8 $ 243,581
Banco Citibank, 6.80%**, 06/14/99....... 2 52,697
Banco Citibank, 7.10%**, 06/21/99....... 3 87,132
Banco Citibank, 7.10%**, 07/05/99....... 8 228,021
Banco Citibank, 7.00%**, 07/19/99....... 10 308,972
Banco Citibank, 6.80%**, 07/26/99....... 16 459,216
Banco Citibank, 6.30%**, 08/04/99....... 1 28,418
Banco Citibank, 5.70%**, 08/23/99....... 19 553,513
Banco Citibank, 5.90%**, 08/30/99....... 7 202,984
-----------
Total Chilean Inflation-Adjusted Time
Deposits (Cost $2,188,548)............. 2,164,534
-----------
-----------
CHILEAN MUTUAL FUNDS-1.06%
<CAPTION>
No. of
Shares
-------------
<S> <C> <C>
Bice Manager Investment Fund............ 92,752 250,895
Fondo Mutuo Banco de A. Edwards......... 12,481 351,024
Fondo Mutuo Citicorp Cash............... 92,749 210,679
Fondo Mutuo Santander................... 152,092 704,869
Fondo Mutuo Security Check.............. 32,928 152,537
TOTAL CHILEAN MUTUAL FUNDS (Cost
$1,672,145)............................ 1,670,004
-----------
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
TOTAL SHORT-TERM INVESTMENTS (Cost $3,860,693).........
$ 3,834,538
-----------
TOTAL INVESTMENTS-86.29%
(Cost $131,883,866) (Notes A,D)....................... 136,298,677
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-13.71%.................................... 21,654,333
-----------
NET ASSETS-100.00%..................................... $157,953,010
-----------
-----------
- ---------------------------------------------------------
* Not readily marketable security.
** Effective yield on the date of purchase.
+ Security is non-income producing.
++ SEC Rule 144A security. Such securities are traded
only among "qualified institutional buyers."
=/= Restricted security, not readily marketable (See Note
F).
# As of May 31, 1999, the Fund committed to investing
an additional $2,332,260 and $500,000 of capital in
Emerging Markets Ventures, L.P. and K.T. Concord
Venture Fund LP, respectively.
## Security or a portion thereof is out on loan.
(a) With an additional 30 warrants attached, expiring
06/20/01, with no market value.
(b) As of March 31, 1998, this investment ceased accruing
interest.
ADR American Depositary Receipts.
CLP Chilean Pesos.
GDR Global Depositary Receipts.
PN Preferred Shares.
PNA Preferred Shares, Class A.
USD United States Dollars.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost
$131,883,866) (Note A)................. $136,298,677
Cash (including $1,019,144 of foreign
currencies with a cost of $1,020,269)
(Note A)............................... 20,103,691
Collateral received for securities
loaned (Note A)........................ 6,086,720
Receivables:
Investments sold...................... 2,030,235
Dividends............................. 824,585
Interest.............................. 2,084
Prepaid expenses and other assets....... 27,115
------------
Total Assets............................ 165,373,107
------------
LIABILITIES
Payables:
Payable upon return of securities
loaned (Note A)...................... 6,086,720
Investments purchased................. 623,161
Investment advisory fee (Note B)...... 344,416
Administration fees (Note B).......... 59,113
Other accrued expenses................ 306,687
------------
Total Liabilities....................... 7,420,097
------------
NET ASSETS (applicable to 15,058,569
shares of common stock outstanding)
(Note C)............................... $157,953,010
------------
------------
NET ASSET VALUE PER SHARE ($157,953,010
DIVIDED BY 15,058,569)................ $10.49
------------
------------
NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
15,058,569 shares issued and
outstanding (100,000,000 shares
authorized)............................ $ 15,059
Paid-in capital......................... 215,696,739
Undistributed net investment income..... 729,285
Accumulated net realized loss on
investments and foreign currency
related transactions................... (62,672,667)
Net unrealized appreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currencies..................... 4,184,594
------------
Net assets applicable to shares
outstanding............................ $157,953,010
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 1,564,372
Interest.............................. 593,189
Less: Foreign taxes withheld.......... (139,946)
-----------
Total Investment Income............... 2,017,615
-----------
Expenses:
Investment advisory fees (Note B)..... 985,989
Audit and legal fees.................. 187,807
Administration fees (Note B).......... 133,398
Custodian fees........................ 105,969
Printing.............................. 60,540
Accounting fees....................... 58,642
Directors' fees....................... 19,197
Transfer agent fees................... 14,560
NYSE listing fees..................... 12,428
Insurance............................. 6,464
Other................................. 56,766
Brazilian taxes (Note A).............. 13,781
-----------
Total Expenses........................ 1,655,541
-----------
Net Investment Income................. 362,074
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized loss from:
Investments........................... (5,741,070)
Foreign currency related
transactions......................... (858,459)
Net change in unrealized depreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currencies...... 17,575,656
-----------
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 10,976,127
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $11,338,201
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Fiscal Year
Ended Ended
May 31, 1999 November 30,
(unaudited) 1998
<S> <C> <C>
-----------------------------------
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income................. $ 362,074 $ 1,441,353
Net realized loss on investments and
foreign currency related
transactions......................... (6,599,529) (56,233,474)
Net change in unrealized
appreciation/(depreciation) in value
of investments and translation of
other assets and liabilities
denominated in foreign currencies.... 17,575,656 (19,664,151)
---------------- -------------
Net increase/(decrease) in net
assets resulting from operations... 11,338,201 (74,456,272)
---------------- -------------
Dividends and distributions to
shareholders:
Net investment income................. -- (453,397)
Net realized gain on investments...... -- (6,955,900)
---------------- -------------
Total dividends and distributions to
shareholders....................... -- (7,409,297)
---------------- -------------
Capital share transactions:
Cost of 1,048,600 shares repurchased
(Note G)............................. (8,055,550) --
---------------- -------------
Total increase/(decrease) in net
assets............................. 3,282,651 (81,865,569)
---------------- -------------
NET ASSETS
Beginning of period..................... 154,670,359 236,535,928
---------------- -------------
End of period (including undistributed
net investment income of $729,285 and
$367,211, respectively)................ $157,953,010 $154,670,359
---------------- -------------
---------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
<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 Six Months For the Fiscal Years Ended For the Period
Ended November 30, December 29, 1993*
May 31, 1999 ------------------------------------------------- through
(unaudited) 1998 1997 1996 1995 November 30, 1994
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $9.60 $14.69 $13.39 $11.60 $14.17 $13.89**
---------- ---------- ---------- ---------- ---------- ----------
Net investment income/(loss)....... 0.02+ 0.08 0.07 0.12 0.07 (0.01)
Net realized and unrealized gain/
(loss) on investments and foreign
currency related transactions..... 0.74+ (4.71) 1.32 1.76 (2.59) 0.29
---------- ---------- ---------- ---------- ---------- ----------
Net increase/(decrease) in net
assets resulting from
operations........................ 0.76 (4.63) 1.39 1.88 (2.52) 0.28
---------- ---------- ---------- ---------- ---------- ----------
Dividends and distributions to
shareholders:
Net investment income............ -- (0.03) (0.09) (0.09) (0.03) --
Net realized gain on investments
and foreign currency related
transactions.................... -- (0.43) -- -- (0.02) --
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions
to shareholders................... -- (0.46) (0.09) (0.09) (0.05) --
---------- ---------- ---------- ---------- ---------- ----------
Anti-dilutive impact due to shares
of beneficial interest
repurchased....................... 0.13 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period..... $10.49 $9.60 $14.69 $13.39 $11.60 $14.17
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Market value, end of period........ $8.375 $7.44 $11.25 $10.75 $9.75 $11.88
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total investment return(a)......... 12.61% (29.60)% 5.46% 11.11% (17.49)% (14.87)%
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted).......................... $157,953 $154,670 $236,536 $215,735 $186,921 $228,171
Ratio of expenses to average net
assets#........................... 2.18%(b) 2.07% 2.02% 1.81% 1.83% 2.02%(b)
Ratio of expenses to average net
assets, excluding taxes........... 2.16%(b) 1.91% 1.83% -- -- 1.96%(b)
Ratio of net investment income/
(loss) to average net assets...... 0.48%(b) 0.72% 0.46% 0.90% 0.65% (0.13)%(b)
Portfolio turnover rate............ 65.09% 169.85% 108.68% 23.89% 13.73% 24.63%
</TABLE>
- ---------------------------------------------------------------------------
* Commencement of investment operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share and offering expenses of $0.06 per share.
+ Based on average shares outstanding.
# Ratios shown are inclusive of Brazilian transaction and Chilean
repatriation taxes, if any.
(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 program. Total investment return does not
reflect brokerage commissions or initial underwriting discounts and
has not been annualized.
(b) Annualized.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
18
<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:
MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
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 Board of Directors has established general guidelines for
calculating fair value of securities not readily marketable. At May 31, 1999,
the Fund held 8.03% of its net assets in securities valued in good faith by the
Board of Directors with an aggregate cost of $16,904,956 and fair value of
$12,679,037. The net asset value per share of the Fund is calculated on each
business day, with the exception of those days on which the New York Stock
Exchange is closed.
At the time of the Fund's organization, the Board of Directors of the Fund
adopted the following non-fundamental policies: (i) up to 30% of the Fund's
total assets may be invested in private placements of equity securities where
the Fund's investment adviser anticipates that a liquid market will develop for
these securities within a period of two to five years from the date of
acquisition; and (ii) up to 10% of the Fund's total assets may be invested in
equity securities of emerging market corporate issuers that are not
infrastructure companies. As disclosed in the Fund's prospectus at that time,
these policies and percentage limitations are subject to modification by the
Board of Directors if, in the reasonable exercise of the Board's business
judgment, modification is determined to be necessary or appropriate to carry out
the Fund's investment objective of long-term capital appreciation.
The limit on non-infrastructure companies was subsequently increased from 10% to
20% and the policy was modified to permit within that 20% limit investments in
private equity funds (whether in corporate or partnership form) that invest
primarily in emerging markets without regard to whether a liquid market is
expected to develop for such investment. Any such investment continues to count
against the overall 30% limit on private placements. The Board approved these
changes on the basis that the long-term value added approach of an emerging
markets private equity strategy is well suited to the long-term capital
appreciation objective of the Fund. When investing through another investment
fund, the Fund will bear its proportionate share of the expenses incurred by
that fund, including management fees.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At May 31, 1999, the interest rate
was 4.08% which resets on a daily basis. Amounts on deposit are generally
available on the same business day.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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, 1998, the Fund had a capital loss carryforward of $51,411,531
which expires in 2006.
Income received by the Fund from sources within emerging countries and other
foreign countries may be subject to withholding and other taxes imposed by such
countries.
The Fund is subject to a 10% Chilean repatriation tax with respect to all
remittances from Chile in excess of original invested capital. For the six
months ended May 31, 1999, the Fund incurred no such expense.
Under certain circumstances the Fund may be subject to a maximum of 36% Israeli
capital gains tax on gains derived from the sale of certain Israeli investments.
From January 23, 1997 through January 22, 1999, Brazil imposed a 0.20%
CONTRIBUCAO PROVISORIA SOBRE MOVIMENTACAOES FINANCIERAS ("CPMF") tax that
applied to most debit transactions carried out by financial institutions. For
the six months ended May 31, 1999, the Fund incurred $13,781 of such expense.
Effective January 23, 1999, the CPMF tax expired and will be reinstated on June
17, 1999 for a period of three years. The tax will be assessed at a rate of
0.38% for the initial year and drop to 0.30% for the remaining two years.
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 or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/(depreciation) in value of investments and translation
of other assets and liabilities denominated in foreign currencies.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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, 1999, was $5,861,522, for which the Fund has received cash as collateral of
$6,086,720. Such cash collateral was reinvested into an overnight repurchase
agreement with Bear, Stearns & Co. Inc., which is in turn collateralized by U.S.
Government agency securities with a value of $6,215,332. 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.
For the six months ended May 31, 1999, the Fund earned $8,500 in securities
lending income which is included under the caption INTEREST in the Statement of
Operations.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.
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
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
case for publicly traded securities. Although these securities may be resold in
privately negotiated transactions, the prices realized on such sales could be
significantly less than those originally paid by the Fund or the current
carrying values. 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.
The Fund may enter into repurchase agreements ("repos") on U.S. Government
securities with primary government securities dealers recognized by the Federal
Reserve Bank of New York and member banks of the Federal Reserve System and on
securities issued by the governments of foreign countries, their
instrumentalities and with creditworthy parties in accordance with established
procedures. Repos are contracts under which the buyer of a security
simultaneously buys and commits to resell the security to the seller at an
agreed upon price and date. Repos are deposited with the Fund's custodian and,
pursuant to the terms of the repurchase agreement, the collateral must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. If the value of the underlying securities fall
below the value of the repurchase price plus accrued interest, the Fund will
require the seller to deposit additional collateral by the next business day. If
the request for additional collateral is not met, or the seller defaults on its
repurchase obligation, the Fund maintains the right to sell the underlying
securities at market value and may claim any resulting loss against the seller;
collectibility of such claims may be limited. At May 31, 1999, the Fund had no
such agreements, other than the cash collateral received that was reinvested in
a repo under the Fund's securities lending program.
NOTE B. AGREEMENTS
Credit Suisse Asset Management ("CSAM"), formerly BEA Associates, serves as the
Fund's investment adviser with respect to all investments. As compensation for
its advisory services, CSAM 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, 1999, CSAM earned $985,989 for advisory
services. CSAM 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, 1999, CSAM was reimbursed $9,972
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, 1999, BSFM earned $91,015 for administrative
services.
BankBoston, N.A., Sao Paulo ("BBNA") 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. BBNA is paid for its services out of the custody fee payable to
Brown Brothers Harriman & Co., the Fund's accounting agent and custodian, 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 invested in Chile, subject to certain minimum annual
fees and reimbursement for a predefined limit of their expenses.
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 15,058,569 shares outstanding at May 31, 1999, CSAM
owned 7,169 shares.
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at May 31,
1999 was $135,054,503. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$1,244,174, was composed of gross appreciation of $17,966,998 for those
investments having an excess of value over cost and gross depreciation of
$16,722,824 for those investments having an excess of cost over value.
For the six months ended May 31, 1999, total purchases and sales of securities,
other than short-term investments, were $82,550,407 and $93,842,927,
respectively.
NOTE E. CREDIT AGREEMENT
The Fund, along with 10 other U.S. regulated investment companies for which CSAM
serves as investment adviser, has a credit agreement with BankBoston, N.A. The
agreement provides that each fund is permitted to borrow an amount equal to the
lesser of $25,000,000 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 11
funds exceed $25,000,000. 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 for the six months ended and at May 31,
1999.
NOTE F. RESTRICTED SECURITIES
Certain of the Fund's investments are restricted as to resale and are valued at
the direction of the Fund's Board of Directors in good faith, at fair value,
after taking into consideration appropriate indications of value. The table
below shows the number of shares held, the acquisition dates, aggregate costs,
fair value as of May 31, 1999, per share value of such securities and percent of
net assets which the securities comprise.
<TABLE>
<CAPTION>
PERCENT
NUMBER FAIR VALUE OF
OF ACQUISITION AT MAY 31, VALUE NET
SECURITY SHARES DATES COST 1999 PER SHARE ASSETS
- --------------------------------------- -------- ---------------- ---------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets Ventures, L.P......... 159,653 01/22/98 $ 162,671 $ 147,679 $ 0.93 0.09
Emerging Markets Ventures, L.P......... 3,525 03/05/98 3,635 3,261 0.93 --
Emerging Markets Ventures, L.P......... 586,127 05/05/98 597,205 542,167 0.93 0.34
Emerging Markets Ventures, L.P......... 361,637 07/07/98 368,472 334,514 0.93 0.21
Emerging Markets Ventures, L.P......... 42,334 08/17/98 43,134 39,159 0.93 0.02
Emerging Markets Ventures, L.P......... 296,812 10/27/98 302,422 274,551 0.93 0.17
Emerging Markets Ventures, L.P......... 170,989 02/26/99 170,988 158,165 0.93 0.10
Emerging Markets Ventures, L.P......... 69,256 04/19/99 69,256 64,062 0.93 0.04
Exxel Capital Partners................. 1,787,688 05/11/98 1,861,836 1,779,304 1.00 1.13
Exxel Capital Partners................. 111,520 07/07/98 113,293 110,997 1.00 0.07
Exxel Capital Partners................. 34,610 09/01/98 34,610 34,448 1.00 0.02
Exxel Capital Partners................. 66,183 12/03/98 66,183 65,872 1.00 0.04
Jamaican Assets I L.P.................. 578,162 07/29/97 582,682 510,448 0.88 0.32
Jamaican Assets I L.P.................. 578,162 10/20/97 582,681 510,447 0.88 0.32
K.T. Concord Venture Fund LP........... 250,000 12/08/97 242,295 226,244 0.90 0.14
K.T. Concord Venture Fund LP........... 100,000 12/28/98 100,000 90,497 0.90 0.06
K.T. Concord Venture Fund LP........... 150,000 03/12/99 150,000 135,746 0.90 0.09
Superbowl Acquisition LDC.............. 96 10/10/94 885,700 1,245,984 12,979.00 0.79
The Renaissance Fund LDC............... 160 03/30/94 1,714,566 1,189,868 7,436.68 0.75
</TABLE>
The Fund may incur certain costs in connection with the disposition of the above
securities.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
THE EMERGING MARKETS INFRASTRUCTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NOTE G. SHARE REPURCHASE PROGRAM
On October 21, 1998, the Fund announced that its Board of Directors has
authorized the repurchase by the Fund of up to 15% of the Fund's outstanding
common stock, for the purposes of enhancing shareholder value. The Fund's Board
has authorized management of the Fund to repurchase such shares in open market
transactions at prevailing market prices from time to time and in a manner
consistent with the Fund continuing to seek to achieve its investment
objectives. The Board's actions were taken in light of the significant discounts
at which the Fund's shares recently have been trading. It is intended both to
provide additional liquidity to those shareholders that elect to sell their
shares and to enhance the net asset value of the shares held by those
shareholders that maintain their investment. On February 12, 1999, the Fund
announced that its Board of Directors has authorized significant enhancements to
its existing share repurchase program (the "Program"). The Fund intends to
repurchase in open market transactions at prevailing market prices no less than
10% (on a rolling twelve-month basis) of the Fund's outstanding common stock. In
addition, the 15% "cap" imposed on repurchases has been changed to an annual
rolling twelve month cap. The Fund is committed to actively seek to repurchase
its outstanding common stock whenever the discount to net asset value is 15% or
more. Effective May 18, 1999, the Fund suspended repurchases of shares under the
Program and will reassess whether to reinstate the Program, and if so, on what
terms, after evaluating the results of the Fund's self tender. From December 1,
1998 through May 31, 1999 the Fund repurchased 1,048,600 of its shares for a
total of $8,055,550 at a weighted average discount of 20.18% from net asset
value. The discount of individual repurchases ranged from 16.35%-24.49%.
NOTE H. TENDER OFFER
The Fund's Board of Directors approved a tender offer on May 13, 1999 to
repurchase the outstanding Fund's shares. Pursuant to the self tender offer, the
Fund will purchase up to 3,011,714 issued and outstanding shares of its common
stock, representing 20% of its total outstanding shares, at a price per share
equal to 95% of the net asset value per share as determined by the Fund as of
the close of regular trading on the New York Stock Exchange on June 25, 1999,
the expiration date of the self tender offer. On July 1, 1999, the Fund
announced that the number of shares properly tendered and not withdrawn was
11,475,060 and during the month the Fund will purchase 3,011,714 shares at a
price of $10.62 per share.
- --------------------------------------------------------------------------------
24
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On May 20, 1999, the annual meeting of shareholders of The Emerging Markets
Infrastructure Fund, Inc. (the "Fund") was held, which was postponed from April
27, 1999, and the following matters were voted upon:
(1) To re-elect two directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ----------------------------------------------------------------------------------- ---------- --------- ----------
<S> <C> <C> <C>
William W. Priest, Jr. 8,466,289 405,163 6,536,017
Martin M. Torino 8,461,117 410,335 6,536,017
</TABLE>
In addition to the directors elected at the meeting, Peter A. Gordon, George W.
Landau, Dr. Enrique R. Arzac, Richard W. Watt and James J. Cattano continue to
serve as directors of the Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending November 30, 1999.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
8,724,067 94,341 53,044 6,536,017
</TABLE>
- --------------------------------------------------------------------------------
25
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM
The InvestLink Program is sponsored and administered by BankBoston, N.A., not by
The Emerging Markets Infrastructure Fund, Inc. (the "Fund"). BankBoston, N.A.
will act as program administrator (the "Program Administrator") of the
InvestLink Program (the "Program"). The purpose of the Program is to provide
interested investors with a simple and convenient way to invest funds and
reinvest dividends in shares of the Fund's common stock ("Shares") at prevailing
prices, with reduced brokerage commissions and fees.
An interested investor may join the Program at any time. Purchases of Shares
with funds from a participant's cash payment or automatic account deduction will
begin on the next day on which funds are invested. If a participant selects the
dividend reinvestment option, automatic investment of dividends generally will
begin with the next dividend payable after the Program Administrator receives
his enrollment form. Once in the Program, a person will remain a participant
until he terminates his participation or sells all Shares held in his Program
account, or his account is terminated by the Program Administrator. A
participant may change his investment options at any time by requesting a new
enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. All
optional cash deposit investments will be subject to a service charge. Sales
processed through the Program will have a service fee deducted from the net
proceeds, after brokerage commissions. In addition to the transaction charges
outlined above, participants will be assessed per share processing fees (which
include brokerage commissions.) Participants will not be charged any fee for
reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
Program Administrator uses dividends and funds of participants to purchase
Shares of Company Common Stock in the open market. Such purchases will be made
by participating brokers as agent for the participants using normal cash
settlement practices. All Shares purchased through the Program will be allocated
to participants as of the settlement date, which is usually three business days
from the the purchase date. In all cases, transaction processing will occur
within 30 days of the receipt of funds, except where temporary curtailment or
suspension of purchases is necessary to comply with applicable provisions of the
Federal Securities laws or when unusual market conditions make prudent
investment impracticable. In the event the Program Administrator is unable to
purchase Shares within 30 days of the receipt of funds, such funds will be
returned to the participants.
The average price of all Shares purchased by the Program Administrator with all
funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period.
BankBoston, N.A., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such
- --------------------------------------------------------------------------------
26
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
participant's account (if applicable), as well as the fees paid by the
participant. In addition, each participant will receive copies of the Fund's
annual and semi-annual reports to shareholders, proxy statements and, if
applicable, dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name of
the accounts of the respective participants. Unless requested, the Fund will not
issue to participants certificates for Shares of the Fund purchased under the
Program. The Program Administrator will hold the Shares in book-entry form until
a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split will
be based upon both the Shares of the Fund registered in participants' names and
the Shares (including fractional Shares) credited to participants' Program
accounts. Any stock dividend or Shares resulting from stock splits with respect
to Shares of the Fund, both full and fractional, which participants hold in
their Program accounts and with respect to all Shares registered in their names
will be automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his account
under the Program will be voted as the participant directs. The participants
will be sent the proxy materials for the annual meetings of shareholders. When a
participant returns an executed proxy, all of such Shares will be voted as
indicated. A participant may also elect to vote his Shares in person at the
Shareholders' meeting.
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as to tax consequences of
participation in the Program, participants should consult with their own tax
advisors.
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However, the
Program Administrator will be liable for loss or damage due to error caused by
its negligence, bad faith or willful misconduct. Shares held in custody by the
Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
- --------------------------------------------------------------------------------
27
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all of his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely, the
Program Administrator reserves the right to suspend or terminate the Program at
any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested investor may participate in the Program. To participate in the
Program, an investor who is not already a registered owner of the Shares must
make an initial investment of at least $250.00. All other cash payments or bank
account deductions must be at least $100.00, up to a maximum of $100,000.00
annually. An interested investor may join the Program by reading the Program
description, completing and signing the enrollment form and returning it to the
Program Administrator. The enrollment form and information relating to the
Program (including the terms and conditions) may be obtained by calling the
Program Administrator at one of the following telephone numbers: First Time
Investors--(800) 969-3365; Current Shareholders--(800) 730-6001. All
correspondence regarding the Program should be directed to: BankBoston, N.A.,
InvestLink Program, P.O. Box 8040, Boston, MA 02266-8040.
- ---------------------------------------------
*InvestLink is a service mark of Boston EquiServe Limited Partnership.
- --------------------------------------------------------------------------------
28
<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 Credit Suisse Asset
Management ("CSAM"), formerly known as BEA Associates. CSAM 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. CSAM manages money for corporate pension and profit-sharing
funds, public pension funds, union funds, endowments and other charitable
institutions and private individuals. As of May 31, 1999, CSAM-Americas managed
approximately $37.3 billion in assets.
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.'s shares are
published each Sunday in THE NEW YORK TIMES and each Monday in THE WALL STREET
JOURNAL and BARRON'S, as well as other newspapers, in a table called "Closed-End
Funds."
THE CSAM GROUP OF FUNDS
LITERATURE REQUEST - Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.cefsource.com.
<TABLE>
<S> <C>
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
The Portugal Fund, Inc. (PGF)
MULTIPLE COUNTRY
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
The Latin America Investment Fund, Inc. (LAM)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (CGF)
</TABLE>
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The Emerging Markets Infrastructure
Fund, Inc. may from time to time purchase shares of its capital stock in the
open market.
- --------------------------------------------------------------------------------
<PAGE>
DIRECTORS AND CORPORATE OFFICERS
Dr. Enrique R. Arzac Director
James J. Cattano Director
Peter A. Gordon Director
George W. Landau Director
Martin M. Torino Director
William W. Priest, Jr. Chairman of the Board of Directors
Richard W. Watt President, Chief Investment Officer
and Director
Robert B. Hrabchak Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and
Secretary
Rocco A. Del Guercio Vice President
INVESTMENT ADVISER
Credit Suisse Asset Management
One Citicorp Center
153 East 53rd Street
New York, NY 10022
ADMINISTRATOR
Bear Stearns Funds Management Inc.
575 Lexington Avenue
New York, NY 10022
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
BankBoston, N.A.
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
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. [LOGO]
- --------------------------------------------------------------------------------
3918-SA-99
