<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
July 19, 1996
Dear Shareholders:
We are pleased to provide this interim report for The Emerging Markets Floating
Rate Fund Inc. (the 'Fund'), including market commentary and a statement of the
Fund's current investments.
During the fiscal quarter ended May 31, 1996, the net asset value of the Fund
increased from $13.66 per share at February 29, 1996 to $14.58 per share at May
31, 1996. Dividends of $0.3975 per share were declared during the quarter.
Assuming that these dividends were reinvested in additional shares of the Fund,
the net asset value return for the quarter ended May 31, 1996 was 9.79%. During
the same period, the Salomon Brothers Brady Bond Index, which we use as a
measure of the return of the overall market for emerging markets debt, returned
8.75%. In the volatile interest rate environment of 1996, floating rate bonds
have outperformed fixed rate bonds in the emerging markets debt universe. As you
know, the Fund's objective is to achieve high current income by investing
primarily in floating rate securities of emerging markets sovereign and
corporate issuers.
EMERGING MARKETS
After a difficult start, emerging markets turned in a strong performance in the
quarter ended May 31, 1996. The completion of Mexico's 30-year Brady bond swap
for Eurobonds, along with speculation over the likelihood of similar deals for
other Brady countries, lent a positive tone to the market by the end of May. In
March and early April, uncertainty about U.S. interest rates rattled local and
external debt markets. By the end of the period, however, individual country
fundamentals began to have a dominant impact on performance in the emerging
markets.
The Mexican economy continues to demonstrate strong fundamental progress.
Gross domestic product in the first quarter of 1996 was down 1% in real
terms from the same period last year, which was much less than the
2.5% - 3.0% drop that government officials had predicted. The
smaller-than-expected drop came from positive performance in the industrial
and primary sectors, which grew 2.4% and 0.8% for the year, respectively.
In Ecuador, presidential elections were progressing as expected through
May. Based on first round election results, presidential hopeful Jaime
Nebot was expected to be the winner in the July elections. However, leftist
candidate Abdala Bucaram won the election in a very close vote. As a
priority, Bucaram's new government will need to resolve important issues of
monetary and fiscal policy.
Venezuelan and International Monetary Fund authorities finalized terms of a
stand-by credit arrangement that will be implemented in conjunction with
that country's new free-market program. Venezuelan Planning Minister
Teodoro Petkoff visited New York in May to promote the initiative and
address investors' concerns regarding potential social unrest.
Outside Latin America, Russia continues to outperform the overall market.
By the end of May, President Boris Yeltsin's improving position in the
polls and a new post-reform low in monthly inflation of 2.2% in April
bolstered investor sentiment. Russia's output growth, however, has yet to
be positively impacted by these developments. Industrial production fell
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
in the first quarter and, while some recovery is likely in the next six
months, positive growth is not expected for the year as a whole.
In the African region, the unexpected fall in the value of South Africa's
currency, the rand, since mid-February 1996 presents investors with both
opportunities and challenges. On the positive side, it will constrain
consumer consumption and, therefore, improve the country's trade balance.
Negatively, the devaluation will boost inflation and widen the fiscal
deficit. Also, the devaluation unsettles foreign investor confidence, vital
to South Africa's ability to attract inexpensive private capital from
abroad.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Board of Directors of the Fund recently approved amendments to the Fund's
Dividend Reinvestment and Cash Purchase Plan (the 'Plan'), effective September
6, 1996. The Board, along with management of the Fund, believe that these
amendments are in the best interests of the Fund and its shareholders.
Under the current terms of the Plan, whenever the Fund declares a distribution
from capital gains or an income dividend payable in cash, the Plan Agent,
American Stock Transfer & Trust Company, purchases additional shares on the
open-market for shareholders participating in the Plan, regardless of whether
the Fund's shares are trading at a discount or a premium to net asset value. As
amended, the Plan provides that if the Fund's shares are trading at a premium to
net asset value, Plan participants will receive newly-issued shares rather than
shares purchased on the open-market. If the Fund's shares are trading at a
discount, the Plan Agent will purchase additional shares on the open-market. If
a discount shifts to a premium or if the Plan Agent cannot complete such
purchases within the time limits set forth in the Plan, participants will
receive the uninvested portion of the dividend or distribution in newly-issued
shares. One benefit of this new structure is that in the case of a market
premium, shares will now be issued to participants at net asset value (or 95% of
the market price if the net asset value is less than 95% of the market price) as
opposed to the current structure in which shares are purchased for participants
at the higher market price.
Moreover, the Plan now provides that all shareholders who initially purchase
shares of the Fund on or after September 6, 1996 will be automatically enrolled
in the Plan. Other shareholders who have not previously enrolled in the Plan may
enroll by completing the Authorization Card attached to the Terms and Conditions
of the Plan located in the back of this Interim Report. IF YOUR SHARES ARE HELD
IN THE NAME OF A BROKER OR NOMINEE, YOU SHOULD CONTACT YOUR BROKER OR NOMINEE
FOR MORE INFORMATION ABOUT YOUR ABILITY TO PARTICIPATE IN THE PLAN.
We highly encourage those of you who are currently not participating in the Plan
to do so because the Plan offers you a prompt, simple and inexpensive way to put
your dividends and distributions to work through reinvestment in additional
shares of capital stock of the Fund. A further discussion of the benefits of
participation in the Plan follows this letter, and we encourage you to consider
the information carefully.
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
We encourage you to read the financial statements that follow for details about
the Fund's investments. A recorded update of developments affecting emerging
markets debt securities is available by calling (800) 421-4777. The update also
includes specific information about the Fund, its portfolio, country allocations
and recent performance.
Cordially,
<TABLE>
<S> <C>
ALAN H. RAPPAPORT MICHAEL S. HYLAND
Alan H. Rappaport Michael S. Hyland
Chairman of the Board President
</TABLE>
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Automatic Dividend Reinvestment and Cash Purchase Plan
DIVIDEND REINVESTMENT PLAN
The Automatic Dividend Reinvestment Plan (the 'Plan'), administered by American
Stock Transfer & Trust Company as Plan Agent for shareholders of The Emerging
Markets Floating Rate Fund Inc. (the 'Fund'), offers you a prompt, simple and
inexpensive way to put your dividends and distributions to work through
reinvestment in additional full and fractional shares of capital stock of the
Fund.
Money from dividends and distributions can lie idle for months at a time;
however, with the Plan, your dividends and distributions are promptly invested
for you, automatically increasing your holdings in the Fund. All paperwork is
done for you automatically by American Stock Transfer & Trust Company, and you
will receive statements from the Plan Agent to simplify your personal records.
CASH PURCHASE PLAN
The Cash Purchase Plan allows you to purchase shares of the Fund conveniently
and inexpensively, without committing large dollar amounts. Under the Cash
Purchase Plan, you have the option of making additional cash payments of at
least $250 to the Agent which will be used to purchase additional shares of the
Fund. Purchases of shares will be made monthly. You may make these payments
regularly or from time to time, as you choose. You may also vary the amount of
each optional payment as long as it is at least $250. Participants should send
in voluntary cash payments to be received by the Plan Agent approximately ten
days before each purchase date. The purchase date will be on or about the first
business day of each month. All cash payment shares will be purchased on the
open market at prevailing market prices and in accordance with the 'Terms and
Conditions of Authorization for Amended and Restated Dividend Reinvestment and
Cash Purchase Plan.' There is no maximum amount of investment under the Cash
Purchase Plan.
Shares purchased under the Cash Purchase Plan will be held as uncertificated
shares. Fractional shares cannot be issued in certificate form, and dividends
and distributions on those shares held by the Agent will be credited to each
participant's account.
COST TO YOU
Except as specifically noted, you will not bear any costs of administering the
Plan. You pay only your proportionate share of the commissions paid on all
open-market purchases. Dividends and distributions, even though automatically
reinvested, continue to be taxable.
TO ENROLL
The complete Dividend Reinvestment and Cash Purchase Plan and Authorization Card
can be found at the back of this report. If you are not already a participant,
you must complete the Authorization Card and return it in the envelope provided
in order to participate. Generally, shareholders who initially invest on or
after September 6, 1996 will be automatically enrolled in the Plan. HOWEVER, IF
YOUR SHARES ARE HELD IN THE NAME OF A BROKER OR NOMINEE, YOU SHOULD CONTACT YOUR
BROKER OR NOMINEE FOR MORE INFORMATION ABOUT YOUR ABILITY TO PARTICIPATE IN THE
PLAN. If you have any questions, contact the Plan Agent at (718) 921-8200.
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Investments
May 31, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Sovereign Bonds -- 61.4% (NOTE 2)
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------
Argentina -- 11.0%
$ 8,663 Republic of Argentina, FRB, 6.3125%, 3/31/05*................................... $ 6,686,367
-----------
Brazil -- 14.1%
1,631 Federal Republic of Brazil, C Bond, 8.00%, 4/15/14**............................ 980,681
1,250 Federal Republic of Brazil, EIB, 6.50%, 4/15/06*................................ 967,188
10,000 Federal Republic of Brazil, DCB, 6.5625%, 4/15/12*.............................. 6,550,000
-----------
8,497,869
-----------
Costa Rica -- 3.1%
2,130 Costa Rica, Interest Bond, Series B, 6.32812%, 5/21/05*......................... 1,874,746
-----------
Ecuador -- 4.5%
6,298 Republic of Ecuador, PDI Bond, 6.0625%, 2/28/15*,**............................. 2,723,750
-----------
Mexico -- 2.5%
United Mexican States, Discount Bond, Series C, 6.35156%, 12/31/19
1,903 (including 2,923,000 rights)*................................................. 1,494,533
-----------
Panama -- 2.9%
1,846 Republic of Panama, FRN, 6.62891%, 5/10/02*..................................... 1,723,852
-----------
Philippines -- 4.7%
3,000 Republic of the Philippines, DCB, Series B, 6.50%, 12/01/09*.................... 2,857,500
-----------
Poland -- 4.5%
1,550 Republic of Poland, Discount Bond, 6.4375%, 10/27/24*........................... 1,432,781
1,750 Republic of Poland, PDI Bond, 3.75%, 10/27/14*.................................. 1,317,969
-----------
2,750,750
-----------
Uruguay -- 2.8%
2,000 Uruguay Debt Conversion Bond, 6.4375%, 2/18/07*................................. 1,697,500
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Investments (continued)
May 31, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Sovereign Bonds (concluded) (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Venezuela -- 11.3%
$ 4,250 Republic of Venezuela, FLIRB, Series A, 6.375%, 3/31/07*........................ $ 2,998,906
5,500 Republic of Venezuela, DCB, 6.5625%, 12/18/07*.................................. 3,815,625
-----------
6,814,531
-----------
Total Sovereign Bonds (cost $33,842,420)........................................ 37,121,398
-----------
<CAPTION>
Corporate Bonds -- 8.0%
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Consumer Cyclicals -- 1.7%
1,000 Cole National Group Inc., 11.25%, 10/01/01...................................... 1,035,000
-----------
Consumer Non-Cyclicals -- 3.3%
2,000 Empresa Distribuidora Sur S.A., 9.50%, 8/16/97*................................. 2,022,500
-----------
Industrial/Manufacturing -- 1.4%
1,000 Venture Holdings Trust, 9.75%, 4/01/04.......................................... 870,000
-----------
Transportation -- 1.6%
1,000 Petro PSC Properties, 12.50%, 6/01/02........................................... 945,000
-----------
Total Corporate Bonds (cost $4,918,654)......................................... 4,872,500
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Investments (concluded)
May 31, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Loan Participations -- 12.8% (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Republic of Jamaica, Tranche A, 6.34375%, 10/15/00*
$ 1,333 (Chase Manhattan, New York)T.................................................. $ 1,240,000
Kingdom of Morocco, Tranche B, 6.4375%, 1/01/04*
7,529 (Morgan Stanley Emerging Markets Inc, Merrill Lynch)T......................... 6,498,824
-----------
Total Loan Participations (cost $7,248,851)..................................... 7,738,824
-----------
Warrants(a) -- .1%
- ----------------------------------------------------------------------------------------------------------
Petro PSC Properties (exercise price of $0, expiring on 7/1/97; exchangeable for
1,000 $55,380 principal amount of Notes or an equivalent number of shares)
Warrants (cost $35,535)................................................................ 33,000
-----------
Total Investments -- 82.3% (cost $46,045,460).................................. 49,765,722
-----------
Cash and Other Assets in Excess of Liabilities -- 17.7%........................ 10,702,301
-----------
Net Assets -- 100.0%
(equivalent to $14.58 per share on 4,147,134 common shares outstanding)....... $60,468,023
-----------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Rate shown reflects current rate on instrument with variable rate or step
coupon rates.
** Payment-in-kind security for which part of the interest earned is
capitalized as additional principal.
T Participation interests were acquired through the financial institutions
indicated parenthetically.
(a) Non-income producing security.
DCB -- Debt Conversion Bond.
EIB -- Eligible Interest Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
FRN -- Floating Rate Note.
PDI -- Past Due Interest.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Assets and Liabilities
May 31, 1996 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $46,045,460)................................................... $49,765,722
Receivable for investments sold................................................................ 9,965,603
Interest receivable............................................................................ 1,014,630
Unamortized organization expenses.............................................................. 62,386
Prepaid expenses............................................................................... 9,768
-----------
Total assets........................................................................... 60,818,109
-----------
LIABILITIES
Due to custodian............................................................................... 224,343
Accrued management fee (Note 3)................................................................ 56,075
Accrued audit and tax return preparation fees.................................................. 19,876
Accrued printing and mailing fees.............................................................. 19,448
Accrued legal fee.............................................................................. 13,350
Other accrued expenses......................................................................... 16,994
-----------
Total liabilities...................................................................... 350,086
-----------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000 shares; 4,147,134 shares outstanding).... 4,147
Additional paid-in capital..................................................................... 57,445,100
Undistributed net investment income............................................................ 281,699
Accumulated net realized loss on investments................................................... (983,185)
Net unrealized appreciation on investments..................................................... 3,720,262
-----------
Net assets............................................................................. $60,468,023
-----------
NET ASSET VALUE PER SHARE ($60,468,023 [div] 4,147,134 shares)................................. $ 14.58
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 4
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Operations
For the Three Months Ended May 31, 1996 (unaudited)
<TABLE>
<S> <C> <C>
INCOME
Interest (includes discount accretion of $567,264)................................ $1,974,435
EXPENSES
Management fee.................................................................... $161,800
Audit and tax services............................................................ 13,888
Transfer agent.................................................................... 10,168
Directors' fees and expenses...................................................... 7,094
Amortization of deferred organization expenses.................................... 5,594
Custodian......................................................................... 3,972
Listing fee....................................................................... 3,956
Legal............................................................................. 3,877
Printing.......................................................................... 2,113
Other............................................................................. 1,720 214,182
-------- ----------
Net investment income............................................................. 1,760,253
----------
NET REALIZED AND UNREALIZED GAIN
Net Realized Gain on Investments.................................................. 495,952
Change in Net Unrealized Appreciation on Investments.............................. 3,229,173
----------
Net realized gain and change in net unrealized appreciation....................... 3,725,125
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS........................................ $5,485,378
----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 5
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MAY 31, YEAR ENDED
1996 FEBRUARY 29,
(UNAUDITED) 1996
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income.................................................... $ 1,760,253 $ 6,871,147
Net realized gain/(loss) on investments.................................. 495,952 (1,163,346 )
Change in net unrealized appreciation.................................... 3,229,173 8,401,614
------------ ------------
Net increase in net assets from operations............................... 5,485,378 14,109,415
------------ ------------
DIVIDENDS
From net investment income............................................... (1,648,486 ) (6,925,715 )
------------ ------------
Total increase in net assets............................................. 3,836,892 7,183,700
NET ASSETS
Beginning of period...................................................... 56,631,131 49,447,431
------------ ------------
End of period (includes undistributed net investment income of $281,699
and $169,932, respectively)............................................ $60,468,023 $56,631,131
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements
(unaudited)
Note 1. Organization
The Emerging Markets Floating Rate Fund Inc. (the 'Fund') was incorporated in
Maryland on January 21, 1994 and is registered as a non-diversified, closed-end,
management investment company under the Investment Company Act of 1940, as
amended. The Fund commenced operations on March 25, 1994. The Fund seeks to
maintain a high level of current income by investing primarily in a portfolio of
floating rate debt securities of emerging market sovereign and corporate
issuers. As a secondary objective, the Fund seeks capital appreciation.
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
('GAAP'). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results may differ
from those estimates.
(a) SECURITIES VALUATION. In valuing the Fund's assets, all securities for
which market quotations are readily available are valued (i) at the last sale
price prior to the time of determination if there were a sale on the date of
determination, (ii) at the mean between the last current bid and asked prices if
there were no sales price on such date and bid and asked quotations are
available, and (iii) at the bid price if there were no sales price on such date
and only bid quotations are available. Publicly traded foreign government debt
securities are typically traded internationally in the over-the-counter market,
and are valued at the mean between the last current bid and asked price as at
the close of business of that market. However, when the spread between bid and
asked price exceeds five percent of the par value of the security, the security
is valued at the bid price. Securities may also be valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost which approximates market value. Securities
for which reliable quotations are not readily available and all other securities
and assets are valued at fair value as determined in good faith by, or under
procedures established by, the Board of Directors.
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
recorded on the trade date. Interest income is accrued on a daily basis. Market
discount on securities purchased is accreted on an effective yield basis over
the life of the security. The Fund uses the specific identification method for
determining realized gain or loss on sale of investments.
PAGE 7
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (continued)
(unaudited)
(c) FEDERAL INCOME TAXES. The Fund has complied and intends to continue to
comply with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute all of its
income and capital gains, if any, to its shareholders. Therefore, no federal
income tax or excise tax provision is required.
(d) DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends to
shareholders monthly from net investment income. Net realized gains, if any, in
excess of loss carryovers are expected to be distributed annually. Dividends and
distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations, which may
differ from GAAP. These 'book/tax' differences are either considered temporary
or permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax basis treatment; temporary differences do not require reclassifications.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes, but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains.
(e) UNAMORTIZED ORGANIZATION EXPENSES. Organization expenses amounting to
$115,541 were incurred in connection with the organization of the Fund. These
expenses have been deferred and are being amortized ratably over a five-year
period from commencement of operations.
(f) REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Fund's policy to take possession, through its custodian, of the underlying
collateral and to monitor its value at the time the arrangement is entered into
and on a daily basis during the term of the repurchase agreement to ensure that
it equals or exceeds the repurchase price. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral may be subject to
legal proceedings.
Note 3. Management and Advisory Fees and Other Transactions
The Fund entered into a management agreement with Advantage Advisers, Inc. (the
'Investment Manager'), a subsidiary of Oppenheimer & Co., Inc. ('Oppenheimer'),
pursuant to which the Investment Manager, among other things, supervises the
Fund's investment program and monitors the performance of the Fund's service
providers.
PAGE 8
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (continued)
(unaudited)
The Investment Manager and the Fund entered into an investment advisory and
administration agreement with Salomon Brothers Asset Management Inc (the
'Investment Adviser') pursuant to which the Investment Adviser provides
investment advisory and administrative services to the Fund. The Investment
Adviser is responsible for the management of the Fund's portfolio in accordance
with the Fund's investment objectives and policies and for making decisions to
buy, sell, or hold particular securities and is responsible for day-to-day
administration of the Fund.
The Fund pays the Investment Manager a monthly fee at an annual rate of 1.10% of
the Fund's average weekly net assets for its services, out of which the
Investment Manager pays the Investment Adviser a monthly fee at an annual rate
of .65% of the Fund's average weekly net assets for its services.
At May 31, 1996, Oppenheimer and the Investment Adviser owned 3,567 and 4,230
shares of the Fund, respectively.
Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager or the Investment Adviser.
The Fund pays each Director not affiliated with the Investment Manager or the
Investment Adviser a fee of $5,000 per year, a fee of $700 for attendance at
each in-person meeting and $100 for participation in each telephonic meeting and
reimbursement for travel and out-of-pocket expenses for each board and committee
meeting attended.
Note 4. Portfolio Activity
Purchases and sales of investment securities, other than short-term investments,
for the three months ended May 31, 1996, aggregated $15,051,142 and $23,878,061,
respectively. The federal income tax cost basis of the Fund's investments at May
31, 1996 was substantially the same as the cost basis for financial reporting.
Gross unrealized appreciation and depreciation amounted to $4,165,709 and
$445,447, respectively, resulting in a net unrealized appreciation for federal
income tax purposes of $3,720,262.
For federal income tax purposes, the Fund has a capital loss carryforward as of
February 29, 1996 of approximately $1,479,000 of which approximately $316,000
and $1,163,000 expires in 2003 and 2004, respectively. To the extent future
capital gains are offset by such capital losses, the Fund does not anticipate
distributing such gains to shareholders.
PAGE 9
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (concluded)
(unaudited)
Note 5. Loan Participations
The Fund invests in fixed and floating rate loans arranged through private
negotiations between a foreign sovereign entity and one or more financial
institutions. The Fund's investment in any such loan may be in the form of a
participation in or an assignment of the loan.
In connection with purchasing loan participations, the Fund generally will have
no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not benefit directly from any collateral supporting the loan in
which it has purchased the participation. As a result, the Fund will assume the
credit risk of both the borrower and the lender that is selling the
participation. In the event of the insolvency of the lender selling the
participation, the Fund may be treated as a general creditor of the lender and
may not benefit from any set-off between the lender and the borrower. The Fund
may have difficulty disposing of participations and assignments because the
market for such instruments is not highly liquid.
Note 6. Credit and Market Risk
The yields of emerging market debt obligations and high yield corporate debt
obligations reflect, among other things, perceived credit risk. The Fund's
investment in securities rated below investment grade typically involve risks
not associated with higher rated securities including, among others, overall
greater risk of timely and ultimate payment of interest and principal, greater
market price volatility and less liquid secondary market trading. The
consequences of political, social, economic or diplomatic changes may have
disruptive effects on the market prices of investments held by the Fund. At May
31, 1996, the Fund has a concentration of credit risk in sovereign debt of
emerging market countries.
Note 7. Events Subsequent to May 31, 1996
On June 3, 1996, the Board of Directors of the Fund declared a common stock
dividend from net investment income of $0.1325 per share payable on June 28,
1996 to shareholders of record on June 18, 1996.
On July 1, 1996, the Board of Directors of the Fund declared a common stock
dividend from net investment income of $0.1325 per share payable on July 31,
1996 to shareholders of record on July 16, 1996.
PAGE 10
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Financial Highlights
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED PERIOD ENDED
MAY 31, 1996 FEBRUARY 29, FEBRUARY 28,
(UNAUDITED) 1996 1995(A)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period......................... $ 13.66 $ 11.92 $ 14.02
------------ ------------ ------------
Net investment income........................................ .42 1.66 1.24
Net realized and unrealized gain (loss) on securities........ .90 1.75 (1.98)
------------ ------------ ------------
Total from investment operations............................. 1.32 3.41 (.74)
Dividends from net investment income......................... (.40) (1.67) (1.19)
Offering costs on issuance of common stock................... -- -- (.17)
------------ ------------ ------------
Net increase (decrease) in net asset value................... .92 1.74 (2.10)
------------ ------------ ------------
Net asset value, end of period............................... $ 14.58 $ 13.66 $ 11.92
------------ ------------ ------------
------------ ------------ ------------
Per share market value, end of period........................ $ 14.25 $ 13.75 $ 11.75
Total investment return(c)................................... 6.60% 33.31% (8.17%)(b)
Ratios/supplemental data:
Net assets, end of period (000).......................... $ 60,468 $ 56,631 $ 49,447
Ratio of total expenses to average net assets............ 1.45%(d) 1.65% 1.73%(d)
Ratio of net investment income to average net assets..... 11.92%(d) 12.99% 10.00%(d)
Portfolio turnover rate.................................. 27.81% 70.36% 60.84%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period March 25, 1994 (commencement of investment operations)
through February 28, 1995.
(b) Return calculated based on beginning of period price of $14.02 (initial
offering price of $15.00 less sales load of $0.98) and end of period market
value of $11.75 per share. This calculation is not annualized.
(c) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. For purposes of this
calculation, dividends are assumed to be reinvested at prices obtained
under the Fund's dividend reinvestment plan and the broker commission paid
to purchase or sell a share is excluded.
(d) Annualized.
See accompanying notes to financial statements.
PAGE 11
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Selected Quarterly Financial Information (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>
NET REALIZED GAIN
(LOSS) & CHANGE IN
NET UNREALIZED
NET INVESTMENT APPRECIATION
INCOME (DEPRECIATION)
---------------------- --------------------
QUARTERS ENDED(a) TOTAL PER SHARE TOTAL PER SHARE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
May 31, 1994(b)................................................ $ 834 $.20 $(2,171) $ (.52)
August 31, 1994................................................ 1,188 .29 2,380 .57
November 30, 1994.............................................. 1,433 .34 (1,396) (.33)
February 28, 1995.............................................. 1,684 .41 (7,039) (1.70)
May 31, 1995................................................... 1,753 .42 2,874 .70
August 31, 1995................................................ 1,721 .42 67 .01
November 30, 1995.............................................. 1,704 .41 1,163 .28
February 29, 1996.............................................. 1,693 .41 3,134 .76
May 31, 1996................................................... 1,760 .42 3,725 .90
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Totals expressed in thousands of dollars except per share amounts.
(b) For the period March 25, 1994 (commencement of investment operations)
through May 31, 1994.
See accompanying notes to financial statements.
PAGE 12
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Form of Terms and Conditions of Amended and Restated Dividend Reinvestment
and Cash Purchase Plan
1. Each shareholder initially purchasing shares of common stock ('Shares') of
The Emerging Markets Floating Rate Fund Inc. (the 'Fund') on or after September
6, 1996 will be deemed to have elected to be a participant in the Amended and
Restated Dividend Reinvestment and Cash Purchase Plan (the 'Plan'), unless the
shareholder specifically elects in writing (addressed to the Agent at the
address below or to any nominee who holds Shares for the shareholder in its
name) to receive all income dividends and distributions of capital gains in
cash, paid by check, mailed directly to the record holder by or under the
direction of American Stock Transfer & Trust Company as the Fund's
dividend-paying agent (the 'Agent'). All other shareholders may elect to be a
participant in the Plan by completing and returning the attached Authorization
Card to the Agent at the address below or to any nominee who holds Shares for
the shareholder in its name. Notwithstanding the foregoing, a shareholder whose
Shares are held in the name of a broker or nominee who does not provide an
automatic reinvestment service may be required to take such Shares out of
'street name' and register such Shares in the shareholder's name in order to
participate, otherwise dividends and distributions will be paid in cash to such
shareholder by the broker or nominee. Each participant in the Plan is referred
to herein as a 'Participant.' The Agent will act as Agent for each Participant,
and will open accounts for each Participant under the Plan in the same name as
their Shares are registered.
2. Unless the Fund declares a dividend or distribution payable only in the form
of cash, the Agent will apply all dividends and distributions in the manner set
forth below.
3. If, on the determination date, the market price per Share equals or exceeds
the net asset value per Share on that date (such condition, a 'market premium'),
the Agent will receive the dividend or distribution in newly issued Shares of
the Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a 'market
discount'), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a 'Trading Day') preceding the
payment date for the dividend or distribution. For purposes herein, 'market
price' will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.
4. Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided, however, that such purchases
will, in any event, terminate on the Trading Day prior to the 'ex-dividend' date
next succeeding the dividend or distribution payment date.
PAGE 13
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
5. If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or (ii) a market discount shifts to a market premium
during the purchase period, then the Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued Shares (x) in the case of (i) above, at the close of business on
the date the Agent is required to terminate making open-market purchases as
specified in paragraph 4 above or (y) in the case of (ii) above, at the close of
business on the date such shift occurs; but in no event prior to the payment
date for the dividend or distribution.
6. In the event that all or part of a dividend or distribution amount is to be
paid in newly issued Shares, such Shares will be issued to Participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per share is less than or equal to the market price per Share, then
the newly issued Shares will be valued at net asset value per Share on the
valuation date; provided, however, that if the net asset value is less than 95%
of the market price on the valuation date, then such Shares will be issued at
95% of the market price and (ii) if, on the valuation date, the net asset value
per share is greater than the market price per Share, then the newly issued
Shares will be issued at the market price on the valuation date. The valuation
date will be the dividend or distribution payment date, except that with respect
to Shares issued pursuant to paragraph 5 above, the valuation date will be the
date such Shares are issued. If a date that would otherwise be a valuation date
is not a Trading Day, the valuation date will be the next preceding Trading Day.
7. Participants have the option of making additional cash payments to the Agent,
monthly, in a minimum amount of $250, for investment in Shares. The Agent will
use all such funds received from Participants to purchase Shares in the open
market on or about the first business day of each month. To avoid unnecessary
cash accumulations, and also to allow ample time for receipt and processing by
the Agent, Participants should send in voluntary cash payments to be received by
the Agent approximately 10 days before an applicable purchase date specified
above. A Participant may withdraw a voluntary cash payment by written notice, if
the notice is received by the Agent not less than 48 hours before such payment
is to be invested.
8. Purchases by the Agent pursuant to paragraphs 4 and 7 above may be made on
any securities exchange on which the Shares of the Fund are traded, in the
over-the-counter market or in negotiated transactions, and may be on such terms
as to price, delivery and otherwise as the Agent shall determine. Funds held by
the Agent uninvested will not bear interest, and it is understood that, in any
event, the Agent shall have no liability in connection with any inability to
purchase Shares within the time periods herein provided, or with the timing of
any purchases effected. The Agent shall have no responsibility as to the value
of the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price per Share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions) of all
Shares purchased by the Agent.
PAGE 14
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
9. The Agent will maintain all Participants' accounts in the Plan and will
furnish written confirmations of all transactions in each account, including
information needed by Participants for personal and tax records. The Agent will
hold Shares acquired pursuant to the Plan in noncertificated form in the
Participant's name or that of its nominee, and each Participant's proxy will
include those Shares purchased pursuant to the Plan. The Agent will forward to
Participants any proxy solicitation material and will vote any Shares so held
for Participants only in accordance with the proxy returned by Participants to
the Fund. Upon written request, the Agent will deliver to Participants, without
charge, a certificate or certificates for the full Shares.
10. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants may from time to time have an undivided
fractional interest (computed to three decimal places) in a Share of the Fund,
no certificates for fractional shares will be issued. Dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's Shares at the time of termination less the pro rata
expense of any sale required to make such an adjustment.
11. Any share dividends or split shares distributed by the Fund on Shares held
by the Agent for Participants will be credited to their respective accounts. In
the event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.
12. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.
13. Participants may terminate their accounts under the Plan by notifying the
Agent in writing. Such termination will be effective immediately if notice is
received by the Agent not less than 10 days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first Trading Day after the payment date for such dividend or distribution with
respect to any subsequent dividend or distribution. The Plan may be amended or
terminated by the Fund as applied to any voluntary cash payments made and any
income dividend or capital gains distribution paid subsequent to written notice
of the change or termination sent to Participants at least 30 days prior to the
record date for the income dividend or capital gains distribution. The Plan may
be amended or terminated by the Agent, with the Fund's prior written consent, on
at least 30 days' written notice to Participants. Notwithstanding the preceding
two sentences, the Agent or the Fund may amend or supplement the Plan at any
time or times when necessary or appropriate to comply with applicable law or
rules or policies of the Securities and Exchange Commission or any other
regulatory authority. Upon any termination, the Agent will cause a certificate
or certificates for the full Shares held by each Participant under the Plan and
cash adjustment for any fraction to be delivered to each Participant without
charge. If the Participant
PAGE 15
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
elects by notice to the Agent in writing in advance of such termination to have
the Agent sell part or all of a Participant's Shares and remit the proceeds to
Participant, the Agent is authorized to deduct a brokerage commission for this
transaction from the proceeds.
14. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such successor Agent, for each Participant's account, all dividends and
distributions payable on Shares of the Fund held in each Participant's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.
15. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ('Nominee
Holders'), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.
16. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
17. All correspondence concerning the Plan should be directed to the Agent at 40
Wall Street, 46th Floor, New York, New York 10005.
18. These terms and conditions shall be governed by the laws of the State of New
York.
Dated: March 17, 1994, as amended and
restated September 6, 1996
ACKNOWLEDGED AND ACCEPTED:
American Stock Transfer
& Trust Company
By: /S/ GERALD RUDDY
_______________________________
Name: Gerald Ruddy
Title: Vice President
PAGE 16
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
AUTHORIZATION CARD
THIS FORM IS FOR SHAREHOLDERS WHO HOLD SHARES IN THEIR OWN NAMES. IF YOUR SHARES
ARE HELD THROUGH A BROKERAGE FIRM, BANK OR OTHER NOMINEE, YOU SHOULD CONTACT
YOUR NOMINEE TO ARRANGE FOR IT TO PARTICIPATE IN THE PLAN ON YOUR BEHALF.
AUTHORIZATION FOR REINVESTMENT OF DIVIDENDS
AND DISTRIBUTIONS
(Please read carefully before signing.)
I hereby authorize The Emerging Markets Floating Rate Fund Inc. (the 'Fund') to
pay to American Stock Transfer & Trust Company for my account all income
dividends and capital gains distributions payable to me on shares of Common
Stock of the Fund now or hereafter registered in my name.
I hereby appoint American Stock Transfer & Trust Company as my Agent and
authorize the Agent to apply all such income dividends and capital gains
distributions in accordance with the Terms and Conditions of the Amended and
Restated Dividend Reinvestment and Cash Purchase Plan set forth accompanying
this Authorization Card.
The authorization and appointment is given with the understanding that I may
terminate it at any time by terminating my account under the Plan as provided in
such Amended and Restated Terms and Conditions.
<TABLE>
<S> <C>
Please sign exactly as your shares are registered.
All persons whose names appear on the share Participant
certificates must sign. Participant
Date
</TABLE>
YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO RECEIVE YOUR DIVIDENDS
OR DISTRIBUTIONS IN CASH.
THIS IS NOT A PROXY.
<PAGE>
<PAGE>
This authorization form, when signed, should be mailed to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attn: The Emerging Markets Floating Rate Fund Inc.
<PAGE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
- ------------
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
LESLIE H. GELB
President, The Council on
Foreign Relations
MICHAEL S. HYLAND
President;
Managing Director, Salomon Brothers Inc
President, Salomon Brothers
Asset Management Inc
ALAN H. RAPPAPORT
Chairman of the Board;
Executive Vice President,
Oppenheimer & Co., Inc.
RIORDAN ROETT
Professor and Director,
Latin American Studies Program,
Paul H. Nitze School of Advanced
International Studies,
Johns Hopkins University
JESWALD W. SALACUSE
Henry J. Braker Professor of Commercial
Law, and formerly Dean, The Fletcher
School of Law & Diplomacy
Tufts University
- ---------
Officers
ALAN H. RAPPAPORT
Chairman of the Board
MICHAEL S. HYLAND
President
PETER WILBY
Executive Vice President
THOMAS K. FLANAGAN
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
and General Counsel
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
TANA E. TSELEPIS
Secretary
JENNIFER MUZZEY
Assistant Secretary
- --------------------------------
The Emerging Markets
Floating Rate Fund Inc.
7 World Trade Center
New York, New York 10048
TELEPHONE
1-800-725-6666
INVESTMENT MANAGER
Advantage Advisers, Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
INVESTMENT ADVISER
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
CUSTODIAN
The Chase Manhattan Bank, N.A.
Four Metrotech Center
Brooklyn, New York 11245
DIVIDEND DISBURSING AND TRANSFER AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
EFL
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
THE EMERGING MARKETS
FLOATING RATE FUND INC.
INTERIM REPORT
MAY 31, 1996
[PHOTO OF GLOBE OF EARTH]
