<PAGE>
<PAGE>
The Emerging Markets
Floating Rate Fund Inc.
Annual Report
FEBURARY 28, 1997
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
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<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
April 25, 1997
Dear Shareholder:
We are pleased to provide this annual report for The Emerging Markets Floating
Rate Fund Inc. (the 'Fund') as of February 28, 1997. Included are market
commentary, audited financial statements, the related report of the independent
accountants and other information about the Fund.
The net asset value of the Fund increased from $13.66 per share on February 29,
1996 to $16.71 per share on February 28, 1997. Dividends of $1.61 per share were
declared during the year. Assuming reinvestment of these dividends in additional
shares of the Fund, the net asset value return for the year ended February 28,
1997 was 36.02%. In comparison, the Salomon Brothers Brady Bond Index returned
38.95% during the same period.
The Fund continued to provide investors with stable current income through its
broad exposure to the world's emerging markets sovereign and corporate
floating-rate debt securities. On February 28, 1997, the Fund was invested in
floating rate instruments in 15 countries. Investments in securities of emerging
market issuers totaled approximately 96% of the Fund's total investments at
February 28, 1997. The remainder of the Fund's assets was invested primarily in
U.S. high-yield securities and short-term investments.
EMERGING MARKETS DEBT
The continued strong performance of the emerging markets debt market has been
driven by positive economic and political developments in a number of key
countries. The combination of favorable market conditions and attractive yields
has encouraged institutional investors to increase their allocations to emerging
markets debt.
The outlook for economic growth in emerging markets is especially strong in
Latin America. The major economies of the region are experiencing the benefits
of reform measures that have been enacted over the past few years. GDP annual
growth rates are expected to accelerate into the 4% to 6% range over the next
two years. This level of economic growth should provide the opportunity for
these countries to make progress in reducing unemployment. In addition,
inflation rates in the major Latin American countries are trending lower.
The recent renewed commitment on the part of the Russian government to reform
has been well received by the market. This important emerging economy is
concluding a large debt restructuring and is addressing its tax collection
problem which has hampered economic growth over the past few years.
* * *
On February 14, 1997, Oppenheimer Group, Inc., the ultimate parent company of
Advantage Advisers, Inc., the Fund's investment manager, entered into an
agreement to sell the stock of the investment manager to PIMCO Advisors, L.P.
and its affiliates. On April 1, 1997, the Board of Directors of the Fund
approved, subject to the vote of the Fund's shareholders, new investment
management and
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THE EMERGING MARKETS FLOATING RATE FUND INC.
investment advisory agreements for the Fund with the investment manager and with
Salomon Brothers Asset Management, the Fund's investment adviser. The agreements
are substantially identical to the existing agreements and would take effect
upon shareholder approval and the closing of the proposed acquisition of the
investment manager. The closing of the acquisition is also subject to certain
additional closing conditions.
We thank you for your ongoing interest and confidence in the Fund. In our
continuing effort to provide timely and relevant information to our
shareholders, a recorded Fund update is available 24 hours a day by calling
1-800-421-4777. This line provides current information relating to the Fund,
including portfolio manager outlook and market commentary, as well as price
information. Should you require specific information regarding your Emerging
Markets Floating Rate Fund stock account, or for information regarding the
Fund's Dividend Reinvestment Plan, please call American Stock Transfer & Trust
Company at 1-800-937-5449. If you are calling from within New York City, please
call 1-718-921-8200.
Sincerely,
/s/ Alan Rappaport /s/ Michael S. Hyland
Alan Rappaport Michael S. Hyland
Chairman of the Board President
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Investments
February 28, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Sovereign Bonds -- 80.9% (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Argentina -- 4.9%
$ 2,891 Republic of Argentina, FRB, Series L, 6.625%, 3/31/05*.......................... $ 2,612,741
1,200 Republic of Argentina, Par Bond, Series L, 5.25%, 3/31/23*...................... 795,000
-----------
3,407,741
-----------
Brazil -- 17.1%
14,500 Federal Republic of Brazil, DCB, 6.5625%, 4/15/12*.............................. 11,890,000
-----------
Costa Rica -- 2.3%
1,614 Costa Rica, Interest Bond, Series B, 6.3125%, 5/21/05*.......................... 1,573,815
-----------
Croatia -- 4.9%
3,500 Republic of Croatia, FRN, Series A, 6.50%, 7/30/10*............................. 3,432,188
-----------
Dominican Republic -- 5.1%
4,500 Dominican Republic, Discount Bond, 6.375%, 8/30/24*............................. 3,555,000
-----------
Ecuador -- 3.8%
4,306 Republic of Ecuador, PDI Bond, 6.4375%, 2/27/15*,**............................. 2,672,241
-----------
Jordan -- 4.7%
5,000 Republic of Jordan, Par Bond, 4.00%, 12/23/23*.................................. 3,268,750
-----------
Mexico -- 13.6%
United Mexican States, Discount Bond, Series B, 6.375%, 12/31/19*
2,000 (including 3,076,000 rights).................................................. 1,822,500
United Mexican States, Discount Bond, Series C, 6.375%, 12/31/19*
7,125 (including 10,961,000 rights)................................................. 6,492,656
United Mexican States, Discount Bond, Series D, 6.35156%, 12/31/19*
1,250 (including 1,923,000 rights).................................................. 1,139,062
-----------
9,454,218
-----------
Panama -- 3.6%
750 Republic of Panama, IRB, 3.50%, 7/17/14*........................................ 556,875
2,289 Republic of Panama, PDI Bond, 6.5625%, 7/17/16*,**.............................. 1,976,794
-----------
2,533,669
-----------
</TABLE>
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See accompanying notes to financial statements.
PAGE 1
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<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Investments (continued)
February 28, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Sovereign Bonds (concluded) (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Philippines -- 2.8%
$ 2,000 Republic of the Philippines, DCB, Series B, 6.375%, 12/01/09*................... $ 1,948,750
-----------
Poland -- 4.3%
1,550 Republic of Poland, Discount Bond, 6.50%, 10/27/24*............................. 1,522,875
1,750 Republic of Poland, PDI Bond, 4.00%, 10/27/14*.................................. 1,476,563
-----------
2,999,438
-----------
Uruguay -- 2.8%
2,000 Uruguay, DCB, 6.50%, 2/18/07*................................................... 1,980,000
-----------
Venezuela -- 11.0%
2,750 Republic of Venezuela, FLIRB, Series A, 6.625%, 3/31/07*........................ 2,505,937
5,750 Republic of Venezuela, DCB, 6.50%, 12/18/07*.................................... 5,164,219
-----------
7,670,156
-----------
Total Sovereign Bonds (cost $49,325,220)........................................ 56,385,966
-----------
Corporate Bond -- 1.1%
- ----------------------------------------------------------------------------------------------------------
781 Venture Holdings Trust, 9.75%, 4/01/04 (cost $738,081).......................... 741,950
-----------
Loan Participations -- 10.8%
- ----------------------------------------------------------------------------------------------------------
Republic of Jamaica, Tranche A, 6.4375%, 10/15/00*
1,000 (Chase Manhattan, New York)(T).................................................... 985,000
Kingdom of Morocco, Tranche B, 6.375%, 1/01/04*
6,588 (Morgan Stanley Emerging Markets Inc, Merrill Lynch)(T)........................... 6,555,295
-----------
Total Loan Participations (cost $6,271,066)..................................... 7,540,295
-----------
</TABLE>
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See accompanying notes to financial statements.
PAGE 2
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Investments (concluded)
February 28, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Repurchase Agreement -- 3.1% (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Union Bank of Switzerland, 5.36%, cost $2,153,000, dated 2/28/97, $2,153,962 due
3/03/97, (collateralized by $2,161,000 U.S. Treasury Notes, 5.875%, due
$ 2,153 10/31/98, valued at $2,196,116)............................................... $ 2,153,000
-----------
Total Investments -- 95.9% (cost $58,487,367).................................. 66,821,211
-----------
Cash and Other Assets in Excess of Liabilities -- 4.1%......................... 2,829,852
-----------
Net Assets -- 100.0%
(equivalent to $16.71 per share on 4,167,474 common shares outstanding)....... $69,651,063
-----------
-----------
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</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.
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
FRN -- Floating Rate Note.
IRB -- Interest Reduction Bond.
PDI -- Past Due Interest.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
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<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Assets and Liabilities
February 28, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $58,487,367)................................................... $66,821,211
Cash........................................................................................... 12
Receivable for investments sold................................................................ 5,727,886
Interest receivable............................................................................ 1,297,910
Unamortized organization expenses.............................................................. 45,788
Prepaid expenses............................................................................... 13,671
-----------
Total assets........................................................................... 73,906,478
-----------
LIABILITIES
Payable for investments purchased.............................................................. 4,062,500
Accrued audit and tax return preparation fees.................................................. 62,300
Accrued management fee (Note 3)................................................................ 58,875
Accrued legal fee.............................................................................. 44,481
Accrued printing and mailing fees.............................................................. 9,904
Other accrued expenses......................................................................... 17,355
-----------
Total liabilities...................................................................... 4,255,415
-----------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000 shares; 4,167,474 shares outstanding).... 4,167
Additional paid-in capital..................................................................... 57,773,941
Distributions in excess of net investment income............................................... (3,153)
Accumulated net realized gain on investments................................................... 3,542,264
Net unrealized appreciation on investments..................................................... 8,333,844
-----------
Net assets............................................................................. $69,651,063
-----------
NET ASSET VALUE PER SHARE ($69,651,063 [div] 4,167,474 shares)................................... $ 16.71
-----------
</TABLE>
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See accompanying notes to financial statements.
PAGE 4
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<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Operations
For the Year Ended February 28, 1997
<TABLE>
<S> <C> <C>
INCOME
Interest (includes discount accretion of $2,199,579)............................. $ 7,475,008
EXPENSES
Management fee................................................................... $692,816
Audit and tax services........................................................... 62,512
Legal............................................................................ 46,803
Directors' fees and expenses..................................................... 32,478
Transfer agent................................................................... 29,282
Amortization of deferred organization expenses................................... 22,192
Custodian........................................................................ 20,927
Printing......................................................................... 20,665
Listing fee...................................................................... 17,195
Other............................................................................ 18,930 963,800
-------- -----------
Net investment income............................................................ 6,511,208
-----------
NET REALIZED AND UNREALIZED GAIN
Net Realized Gain on Investments................................................. 5,021,401
Change in Net Unrealized Appreciation on Investments............................. 7,842,755
-----------
Net realized gain and change in net unrealized appreciation...................... 12,864,156
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS....................................... $19,375,364
-----------
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income..................................................... $ 6,511,208 $ 6,871,147
Net realized gain/(loss) on investments................................... 5,021,401 (1,163,346)
Change in net unrealized appreciation..................................... 7,842,755 8,401,614
------------ ------------
Net increase in net assets from operations................................ 19,375,364 14,109,415
------------ ------------
DIVIDENDS
From net investment income................................................ (6,684,293) (6,925,715)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares issued in reinvestment of dividends (20,340 and 0
shares issued).......................................................... 328,861 --
------------ ------------
Total increase in net assets.............................................. 13,019,932 7,183,700
NET ASSETS
Beginning of period....................................................... 56,631,131 49,447,431
------------ ------------
End of period (includes distributions in excess of net investment income
of $3,153 and undistributed net investment income of $169,932,
respectively)........................................................... $69,651,063 $ 56,631,131
------------ ------------
</TABLE>
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See accompanying notes to financial statements.
PAGE 5
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements
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.
(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
PAGE 6
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (continued)
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 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.
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
PAGE 7
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (continued)
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 February 28, 1997, 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 year ended February 28, 1997, aggregated $72,253,525 and $75,163,173,
respectively. The federal income tax cost basis of the Fund's investments at
February 28, 1997 was substantially the same as the cost basis for financial
reporting. Gross unrealized appreciation and depreciation amounted to $8,385,216
and $51,372, respectively, resulting in a net unrealized appreciation for
federal income tax purposes of $8,333,844.
For federal income tax purposes, the Fund had a capital loss carryforward as of
February 29, 1996 of approximately $1,479,000 all of which was utilized as of
February 28, 1997 to offset net realized capital gains.
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 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
PAGE 8
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (concluded)
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 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
February 28, 1997, the Fund has a concentration of credit risk in sovereign debt
of emerging market countries.
Note 7. Events Subsequent to February 28, 1997
On March 3, 1997, the Board of Directors of the Fund declared a common stock
dividend from net investment income of $0.1325 per share payable on March 31,
1997 to shareholders of record on March 18, 1997.
On April 1, 1997, the Board of Directors of the Fund declared a common stock
dividend from net investment income of $0.1325 per share payable on April 30,
1997 to shareholders of record on April 15, 1997.
On February 14, 1997, Oppenheimer Group, Inc., the ultimate parent company of
the Investment Manager, entered into an agreement to sell the stock of the
Investment Manager to PIMCO Advisors, L.P. and its affiliates. On April 1, 1997,
the Board of Directors of the Fund approved, subject to the vote of the Fund's
shareholders, a new investment management and investment advisory and
administration agreement for the Fund with the Investment Manager and the
Investment Adviser. The agreements are substantially identical to the existing
agreements and would take effect upon shareholder approval and the closing of
the proposed acquisition of the Investment Manager. The closing of the
acquisition is also subject to certain additional closing conditions.
PAGE 9
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Financial Highlights
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995(a)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period....................... $ 13.66 $ 11.92 $ 14.02
-------- ------- --------
Net investment income...................................... 1.56 1.66 1.24
Net realized and unrealized gain (loss) on securities...... 3.10 1.75 (1.98)
-------- ------- --------
Total from investment operations........................... 4.66 3.41 (.74)
Dividends from net investment income....................... (1.61) (1.67) (1.19)
Offering costs on issuance of common stock................. -- -- (.17)
-------- ------- --------
Net increase (decrease) in net asset value................. 3.05 1.74 (2.10)
-------- ------- --------
Net asset value, end of period............................. $ 16.71 $ 13.66 $ 11.92
-------- ------- --------
-------- ------- --------
Per share market value, end of period...................... $ 17.125 $ 13.75 $ 11.75
Total investment return(c)................................. 38.28% 33.31% (8.17%)(b)
Ratios/supplemental data:
Net assets, end of period (000)........................ $ 69,651 $56,631 $ 49,447
Ratio of total expenses to average net assets.......... 1.52% 1.65% 1.73%(d)
Ratio of net investment income to average net assets... 10.28% 12.99% 10.00%(d)
Portfolio turnover rate................................ 119.50% 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 10
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<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
August 31, 1996................................................ 1,646 .40 1,768 .43
November 30, 1996.............................................. 1,597 .38 4,663 1.12
February 28, 1997.............................................. 1,508 .36 2,708 .65
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</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 11
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<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Report of Independent Accountants
To the Board of Directors and Shareholders of
The Emerging Markets Floating Rate Fund Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Emerging Markets Floating Rate
Fund Inc. (the 'Fund') at February 28, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the two years in
the period then ended and for the period March 25, 1994 (commencement of
investment operations) through February 28, 1995, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at February 28, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
April 11, 1997
PAGE 12
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THE EMERGING MARKETS FLOATING RATE FUND INC.
PURSUANT TO CERTAIN RULES OF THE SECURITIES AND EXCHANGE COMMISSION, THE
FOLLOWING ADDITIONAL DISCLOSURE IS PROVIDED.
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'). 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.
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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.
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
PAGE 14
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THE EMERGING MARKETS FLOATING RATE FUND INC.
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 undividend
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 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 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
PAGE 15
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THE EMERGING MARKETS FLOATING RATE FUND INC.
Agent in its place and stead of a successor Agent under these terms and
conditions, with full power and authority to perform all or any of the acts to
be performed by the Agent under these terms and conditions. Upon any such
appointment of an Agent for the purpose of receiving dividends and
distributions, the Fund will be authorized to pay to such successor Agent, for
each Participant's account, all dividends and distributions payable on Shares of
the Fund held in each Participant's name or under the Plan for retention or
application by such successor Agent as provided in these terms and conditions.
15. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ('Nominee
Holders'), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.
16. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
17. All correspondence concerning the Plan should be directed to the Agent at 40
Wall Street, 46th Floor, New York, New York 10005.
PAGE 16
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<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 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 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
JENNIFER MUZZEY
Secretary
NOEL DAUGHERTY
Assistant Secretary
The Emerging Markets
Floating Rate Fund Inc.
7 World Trade Center
New York, New York 10048
TELEPHONE
1-800-SALOMON
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
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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
EFL
STATEMENT OF DIFFERENCES
------------------------
The division symbol shall be expressed as ..............................[div]
