<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
September 23, 1999
Dear Shareholder:
We are pleased to provide this semi-annual report for The Emerging Markets
Floating Rate Fund Inc. ('Fund') as of August 31, 1999. Included are market
commentary, a schedule of the Fund's investments, and financial statements for
the period ended August 31, 1999.
The net asset value of the Fund increased from $10.21 per share on February 26,
1999 to $10.49 on August 31, 1999. Dividends totaling $0.80 were paid during the
six-month period. For the six months ended August 31, 1999, the Fund had a total
return of 10.59% based on net asset value. In comparison, the JP Morgan Emerging
Markets Bond Index Plus ('EMBI+') returned 10.70% during the same period.
EMERGING MARKETS DEBT
The U.S. Federal Reserve Board ('Fed') raised interest rates by 50 basis points
over the first six months of the Fund's fiscal year in response to the ongoing
strength of the U.S. economy. The process of anticipating these two
25-basis-point rate increases has influenced bond market investors worldwide and
has impacted emerging markets debt. The Fed has emphasized its commitment to
price stability and its governors have made a number of public speeches
outlining their concerns. This high-profile approach on the part of the Fed has
increased the bond market's focus on the U.S. economy and the outlook for
increases in rates.
The emerging debt markets have performed well in this environment, returning
10.70% over the six months ended August 31, 1999. This performance has been
driven by exceptional returns from a handful of countries, notably Russia,
Venezuela, Brazil and Morocco.
Brazil. Brazil's recovery from the effects of its January currency devaluation
continues to be impressive. Brazil has exceeded the fiscal targets outlined in
its International Monetary Fund ('IMF') agreement for the first six months of
1999. In addition, unemployment and inflation levels have exceeded projections
and underscore the progress Brazil is making in reforming its economy. The most
compelling evidence of Brazil's progress in 1999 is the change in the overnight
borrowing rate set by the Central Bank. In an effort to stabilize the currency
and prevent an inflationary spike, the Central Bank set the overnight rate at
45% after the devaluation in January. That rate has been gradually reduced over
the ensuing months. The current overnight borrowing rate is 19.5%. Brazil
continues to have an ambitious structural reform agenda which includes changes
to the taxation and social security systems. Despite recent political noise, the
working relationship between the administration and congress remains intact and
we expect further positive developments on these important initiatives in the
fourth quarter.
Russia. Russia remains the best performing country in the EMBI+ for 1999. The
country continues to work with the IMF on an expanded financing package.
Spokesmen for the IMF indicated pleasant surprise at the status of Russia's
macroeconomic reforms. On the political front, Kremlin intrigue continues as the
Duma elections in December and the presidential election in June 2000 approach.
Prime Minister Stepashin was fired by President Yeltsin and replaced by Vladimir
Putin, the fifth Russian prime minister in 17 months. Allegations of money
laundering in the private sector have raised questions concerning misuse of IMF
aid money by the public sector. These political issues will likely keep
volatility in Russia high over the next few months.
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Venezuela. The Constituent Assembly, a key element of President Chavez's plan to
reform the Venezuelan political system, was elected in July. In a stunning
development, 91% of the seats were won by allies of President Chavez. The agenda
for the Assembly revolves around the drafting of a new constitution for
Venezuela. The initial draft of the constitution is expected to be available in
late October 1999. This document will have important implications for the future
of external capital investment in Venezuela. We believe the political agenda
will take precedence over any economic issues during the balance of 1999 as the
new constitution is reviewed and ratified. Oil prices at current levels are
giving Venezuela the economic flexibility to address the constitutional changes.
Morocco. Moroccan King Hassan II died after 38 years on the throne. He has been
replaced by his eldest son, King Mohammed VI. We expect the policies that have
made Morocco a steadily improving credit will be continued by the new king. In
another important development in Morocco, a cellular telephone license has been
awarded to Telefonica for a price of $1.1 billion and a commitment to spend an
additional $700 million developing the network. The proceeds from this sale will
be used to fund a variety of government initiatives in Morocco.
Our outlook for emerging markets debt is positive based upon the current spread
level of 1,100 basis points over Treasuries. The economic rebound in Asia and
the apparent bottoming of the recession in many Latin American countries points
to an improving macroeconomic environment for emerging countries. We expect the
market to remain volatile but believe that we are being well compensated for
this price risk at current spread levels.
* * *
In a continuing effort to provide timely information concerning The Emerging
Markets Floating Rate Fund Inc., shareholders may call 1-888-777-0102 (toll
free), Monday through Friday from 8:00 a.m. to 6:00 p.m. EST, for the Fund's
current net asset value, market price and other information regarding the Fund's
portfolio holdings and allocations. For information concerning your Emerging
Markets Floating Rate Fund stock account, please call American Stock Transfer &
Trust Company at 1-800-937-5449 (1-718-921-8200 if you are calling from within
New York City).
We appreciate the confidence you have demonstrated in the past and hope to
continue to serve you in the future years.
Sincerely,
<TABLE>
<S> <C>
William D. Cvengros Heath B. McLendon
- ------------------------- -------------------------
William D. Cvengros Heath B. McLendon
Co-Chairman of the Board Co-Chairman of the Board
Peter J. Wilby Thomas K. Flanagan
- ------------------------- --------------------------
Peter J. Wilby Thomas K. Flanagan
Executive Vice President Executive Vice President
</TABLE>
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Schedule of Investments (unaudited)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ---------------------------------------------------------------------------------------------
<C> <S> <C>
Sovereign Bonds -- 83.5%
Argentina -- 5.5%
$ 2,208,750 Republic of Argentina, FRB, Series L, 5.9375%
due 3/31/05 (a)........................................... $ 1,885,720
-----------
Brazil -- 24.8%
Federal Republic of Brazil:
10,830,000 Bearer, EI Bond, Series L, 5.875% due 4/15/06 (a)......... 8,136,038
750,000 DCB, Series L, 5.9375% due 4/15/12 (a).................... 427,500
-----------
8,563,538
-----------
Bulgaria -- 6.0%
Republic of Bulgaria:
2,300,000 FLIRB, Series A, 2.750% due 7/28/12 (a)................... 1,397,250
1,000,000 IAB, Series RPDI, 6.500% due 7/28/11 (a).................. 690,625
-----------
2,087,875
-----------
Colombia -- 4.7%
1,700,000 Republic of Colombia, Global Bond, 10.875% due 3/9/04....... 1,623,500
-----------
Croatia -- 5.2%
2,300,000 Republic of Croatia, FRB, Series A, 6.45625%
due 7/31/10 (a)........................................... 1,805,500
-----------
Ivory Coast -- 6.0%
8,500,000 Ivory Coast, FLIRB, 2.000% due 3/29/18 (a).................. 2,061,250
-----------
Mexico -- 1.2%
500,000 United Mexican States, Series A, 5.875% due 12/31/19
(including 769,000 warrants) (a).......................... 416,083
-----------
Peru -- 5.8%
Republic of Peru:
2,800,000 FLIRB, 3.750% due 3/7/17 (a).............................. 1,421,000
1,000,000 PDI Bond, 4.500% due 3/7/17 (a)........................... 581,875
-----------
2,002,875
-----------
Russia -- 2.7%
1,700,000 Russian Ministry of Finance, 12.750% due 6/24/28............ 920,125
-----------
Venezuela -- 21.6%
Republic of Venezuela:
2,833,333 DCB, Series DL, 6.3125% due 12/18/07 (a).................. 2,001,042
7,809,475 FLIRB, Series A, 6.000% due 3/31/07 (a)................... 5,454,918
-----------
7,455,960
-----------
Total Sovereign Bonds (Cost -- $28,032,577)................ 28,822,426
-----------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 3
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Schedule of Investments (unaudited) (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ---------------------------------------------------------------------------------------------
<C> <S> <C>
Loan Participations(b) -- 16.5%
Algeria -- 6.0%
The People's Democratic Republic of Algeria (Chase
Manhattan):
$ 636,363 Tranche A, 6.750% due 3/4/00 (a).......................... $ 614,090
2,300,000 Tranche 3, 6.000% due 3/4/10 (a).......................... 1,472,000
-----------
2,086,090
-----------
Morocco -- 10.5%
4,235,296 Kingdom of Morocco, Tranche B, 6.0625% due 1/1/04
(Morgan Stanley Emerging Markets Inc., Merrill Lynch) (a).. 3,621,178
-----------
Total Loan Participations (Cost -- $5,555,699)............. 5,707,268
-----------
Total Investments -- 100% (Cost -- $33,588,276*).......... $34,529,694
-----------
-----------
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Rate shown reflects current rate on instrument with variable rate or step
coupon rates.
(b) Participation interests were acquired through the financial institutions
indicated parenthetically.
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in this schedule:
DCB -- Debt Conversion Bond.
EI -- Eligible Interest.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
IAB -- Interest in Arrears Bond.
PDI -- Past Due Interest.
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 4
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Assets and Liabilities (unaudited)
August 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $33,588,276)............... $34,529,694
Cash...................................................... 95,656
Receivable for securities sold............................ 9,025,034
Interest receivable....................................... 1,055,805
Prepaid expenses.......................................... 1,474
-----------
TOTAL ASSETS.............................................. 44,707,663
-----------
LIABILITIES:
Management fees payable................................... 41,949
Accrued expenses.......................................... 148,834
-----------
TOTAL LIABILITIES......................................... 190,783
-----------
TOTAL NET ASSETS.......................................... $44,516,880
-----------
-----------
NET ASSETS:
Common stock ($0.001 par value, authorized 100,000,000
shares; 4,245,345 shares outstanding)................... $ 4,245
Additional paid-in capital................................ 58,774,263
Undistributed net investment income....................... 62,532
Accumulated net realized loss from security
transactions............................................ (15,265,578)
Net unrealized appreciation of investments................ 941,418
-----------
TOTAL NET ASSETS.......................................... $44,516,880
-----------
-----------
NET ASSET VALUE, PER SHARE ($44,516,880 [div] 4,245,345
shares)................................................... $10.49
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statement of Operations (unaudited)
For the Six Months Ended August 31, 1999
<TABLE>
<S> <C>
INCOME:
Interest................................................ $ 3,683,164
-----------
EXPENSES:
Management fees (Note 2)................................ 256,056
Audit fees.............................................. 32,104
Legal fees.............................................. 24,461
Directors' fees......................................... 16,614
Transfer agent fees..................................... 15,899
Custody................................................. 12,229
Shareholder reporting fees.............................. 9,681
Amortization of deferred organization costs (Note 1).... 1,525
Other................................................... 17,542
-----------
TOTAL EXPENSES.......................................... 386,111
-----------
NET INVESTMENT INCOME....................................... 3,297,053
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Net Realized Loss From Security Transactions (excluding
short-term securities):
Proceeds from sales................................. 37,513,046
Cost of securities sold............................. 45,260,136
-----------
NET REALIZED LOSS....................................... (7,747,090)
-----------
Change in Net Unrealized Appreciation (Depreciation) of
Investments:
Beginning of period................................. (8,007,989)
End of period....................................... 941,418
-----------
INCREASE IN NET UNREALIZED APPRECIATION................. 8,949,407
-----------
NET GAIN ON INVESTMENTS..................................... 1,202,317
-----------
INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 4,499,370
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Statements of Changes in Net Assets
For the Six Months Ended August 31, 1999 (unaudited)
and the Year Ended February 28, 1999
<TABLE>
<CAPTION>
AUGUST 31 FEBRUARY 28
<S> <C> <C>
- ----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income................................... $ 3,297,053 $ 6,816,423
Net realized loss....................................... (7,747,090) (7,514,243)
Increase (decrease) in net unrealized appreciation...... 8,949,407 (13,876,863)
----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....... 4,499,370 (14,574,683)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (3,366,112) (6,684,832)
Net realized gains...................................... -- (1,170,913)
----------- ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS.......................................... (3,366,112) (7,855,745)
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued in reinvestment of dividends
(18,830 and 38,528 shares issued, respectively)....... 221,125 450,844
----------- ------------
INCREASE (DECREASE) IN NET ASSETS........................... 1,354,383 (21,979,584)
NET ASSETS:
Beginning of Period..................................... 43,162,497 65,142,081
----------- ------------
END OF PERIOD (includes undistributed net investment
income of $62,532 and $131,591, respectively)......... $44,516,880 $ 43,162,497
----------- ------------
----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (unaudited)
Note 1. Organization and Significant Accounting Policies
The Emerging Markets Floating Rate Fund Inc. ('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.
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 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 8
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (unaudited) (continued)
investment companies, and to distribute all, or substantially 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) DEFERRED ORGANIZATION COSTS. Organization costs amounting to $115,541 were
incurred in connection with the organization of the Fund. These costs have been
deferred and amortized ratably over a five-year period from commencement of
operations. As of August 31, 1999, deferred organization costs had been fully
amortized.
(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.
(g) YEAR END TAX RECLASSIFICATIONS. The character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from GAAP.
Note 2. Management and Advisory Fees and Other Transactions
The Fund has entered into a management agreement with Value Advisors LLC
('Investment Manager'), a subsidiary of PIMCO Advisors L.P. ('PIMCO'), 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 9
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (unaudited) (continued)
The Investment Manager and the Fund have entered into an investment advisory and
administration agreement with Salomon Brothers Asset Management Inc ('Investment
Adviser'), a wholly-owned subsidiary of Salomon Smith Barney Holdings Inc.
('SSBH'), pursuant to which the Investment Adviser provides investment advisory
and administrative services to the Fund. The Investment Adviser is responsible
on a day-to-day basis 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 0.65% of the Fund's average weekly net assets for its services.
At August 31, 1999, the Investment Adviser owned 4,230 shares of the Fund.
Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager or the Investment Adviser.
Note 3. Portfolio Activity and Federal Income Tax Status
For the six months ended August 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<S> <C>
Purchases................................................... $39,720,980
-----------
-----------
Sales....................................................... $37,513,046
-----------
-----------
</TABLE>
At August 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation............................... $ 2,139,094
Gross unrealized depreciation............................... (1,197,676)
-----------
Net unrealized appreciation................................. $ 941,418
-----------
-----------
</TABLE>
Note 4. 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
PAGE 10
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Notes to Financial Statements (unaudited) (continued)
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 because the market for such instruments is not highly liquid.
At August 31, 1999, the Fund held loan participations with a total cost of
$5,555,699.
Note 5. Credit and Market Risk
The yields on 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
August 31, 1999, the Fund has a concentration of credit risk in sovereign debt
of emerging market countries.
Note 6. Dividends Subsequent to August 31, 1999
Subsequent to August 31, 1999, the Board of Directors of the Fund declared
dividends of $0.1325 per common share payable September 24, 1999, October 29,
1999 and November 26, 1999 to shareholders of record on September 14, 1999,
October 13, 1999 and November 16, 1999, respectively.
Note 7. Capital Loss Carryforward
At February 26, 1999, the Fund had, for Federal income tax purposes,
approximately $6,104,000 of capital loss carryforwards, expiring on
February 27, 2007, available to offset future capital gains. To the extent that
these carryforward losses are used to offset capital gains, it is probable that
the gains so offset will not be distributed.
PAGE 11
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Financial Highlights
Data for a share of common stock outstanding throughout each year shown below,
except where noted:
<TABLE>
<CAPTION>
AUG. 31, FEB. 26, FEB. 27, FEB. 28, FEB. 29, FEB. 28,
1999(1) 1999 1998 1997 1996 1995(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........... $ 10.21 $ 15.55 $ 16.71 $ 13.66 $ 11.92 $ 14.02
------- -------- ------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income......... 0.78 1.62 1.51 1.56 1.66 1.24
Net realized and unrealized
gain (loss)................. 0.30 (5.09) 0.07 3.10 1.75 (1.98)
------- -------- ------- ------- ------- -------
Total Income (Loss)
From Operations............... 1.08 (3.47) 1.58 4.66 3.41 (0.74)
------- -------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income......... (0.80) (1.59) (1.53) (1.61) (1.67) (1.19)
Net realized gains............ -- (0.28) (1.21) -- -- --
------- -------- ------- ------- ------- -------
Total Distributions............. (0.80) (1.87) (2.74) (1.61) (1.67) (1.19)
------- -------- ------- ------- ------- -------
OFFERING COSTS ON ISSUANCE
OF COMMON STOCK............... -- -- -- -- -- (0.17)
------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 10.49 $ 10.21 $ 15.55 $ 16.71 $ 13.66 $ 11.92
------- -------- ------- ------- ------- -------
------- -------- ------- ------- ------- -------
MARKET VALUE, END OF PERIOD..... $11.375 $12.1875 $ 16.50 $17.125 $ 13.75 $ 11.75
------- -------- ------- ------- ------- -------
------- -------- ------- ------- ------- -------
TOTAL RETURN(3)................. (0.18)%'DD' (13.64)% 14.04% 38.28% 33.31% (8.17)%*'DD'
NET ASSETS,
END OF PERIOD (000S).......... $44,517 $43,162 $65,142 $69,651 $56,631 $49,447
RATIOS TO AVERAGE NET ASSETS:
Expenses...................... 1.67%'D' 1.58% 1.49% 1.52% 1.65% 1.73%'D'
Net investment income......... 14.29%'D' 12.95% 9.19% 10.28% 12.99% 10.00%'D'
PORTFOLIO TURNOVER RATE......... 90% 163% 214% 120% 70% 61%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the six months ended August 31, 1999 (unaudited).
(2) For the period March 25, 1994 (commencement of investment operations)
through February 28, 1995.
(3) Total 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.
<TABLE>
<S> <C>
* 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.
'DD' Total return is not annualized, as it may not be
representative of the total return for the year.
'D' Annualized.
</TABLE>
PAGE 12
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Selected Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
NET REALIZED &
NET INVESTMENT UNREALIZED
INCOME GAIN (LOSS)
--------------------- --------------------
QUARTERS ENDED(A) TOTAL PER SHARE TOTAL PER SHARE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
May 31, 1997................................................ $1,581 $0.38 $ 1,184 $ 0.28
August 31, 1997............................................. 1,627 0.39 1,444 0.35
November 30, 1997........................................... 1,558 0.37 (4,210) (1.01)
February 27, 1998........................................... 1,544 0.37 1,862 0.45
May 29, 1998................................................ 1,638 0.39 (2,338) (0.56)
August 31, 1998............................................. 1,761 0.42 (22,937) (5.45)
November 30, 1998........................................... 1,723 0.41 7,769 1.85
February 26, 1999........................................... 1,694 0.40 (3,885) (0.93)
May 28, 1999................................................ 1,700 0.40 1,989 0.48
August 31, 1999............................................. 1,597 0.38 (787) (0.18)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Totals expressed in thousands of dollars except per share amounts.
Other Information (unaudited)
Year 2000. The investment management services provided to the Fund by the
Investment Adviser depend in large part on the smooth functioning of its
computer systems. Many computer software systems in use today cannot recognize
the year 2000, but revert to 1900 or some other date, due to the manner in which
the dates were encoded or calculated. The capability of these systems to
recognize the year 2000 could have a negative impact on the Investment Adviser's
provision of investment advisory services, including handling of securities
trades, pricing and account services. The Investment Adviser has advised the
Fund that it has been reviewing all of their computer systems and actively
working on necessary changes to its systems to prepare for the year 2000 and
expects that given the extensive testing which it is undertaking, its systems
will be year 2000 compliant before such date. In addition, the Investment
Adviser has been advised by certain of the Fund's service providers that they
are also in the process of modifying their systems with the same goal. There
can, however, be no assurance that the Investment Adviser or any other service
provider will be successful in achieving year 2000 compliance, or that
interaction with other non-complying computer systems will not impair services
to the Fund at that time.
PAGE 13
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Additional Shareholder Information (unaudited)
On May 11, 1999, the Annual Meeting of the Fund's Stockholders was held for the
purpose of voting on the following matters:
1. The election of Dr. Riordan Roett and Jeswald W. Salacuse as directors
of the Fund; and
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Fund's independent accountants for the fiscal year ended August 31,
1999.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
% OF SHARES VOTES % OF SHARES
NAME OF DIRECTORS VOTES FOR VOTED AGAINST VOTED
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Dr. Riordan Roett 3,903,406 97.9% 82,343 2.1%
Jeswald W. Salacuse 3,901,956 97.9 83,793 2.1
- -----------------------------------------------------------------------------------------------------
</TABLE>
The results of the vote on Proposal 2 were as follows:
<TABLE>
<CAPTION>
% OF SHARES VOTES % OF SHARES VOTES % OF SHARES
VOTES FOR VOTED AGAINST VOTED ABSTAINED ABSTAINED
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3,937,074 98.8% 15,293 0.4% 33,382 0.8%
- ------------------------------------------------------------------------
</TABLE>
PAGE 14
<PAGE>
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 (unaudited)
1. Each shareholder initially purchasing shares of common stock ('Shares') of
The Emerging Markets Floating Rate Fund Inc. ('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 ('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 ('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.
PAGE 15
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Form of Terms and Conditions of Amended and Restated Dividend Reinvestment
and Cash Purchase Plan (unaudited) (continued)
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
PAGE 16
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Form of Terms and Conditions of Amended and Restated Dividend Reinvestment
and Cash Purchase Plan (unaudited) (continued)
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 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 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
PAGE 17
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Form of Terms and Conditions of Amended and Restated Dividend Reinvestment
and Cash Purchase Plan (unaudited) (continued)
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 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 18
<PAGE>
THE EMERGING MARKETS FLOATING RATE FUND INC.
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Inc.
WILLIAM D. CVENGROS
Co-Chairman of the Board;
Chief Executive Officer and
President of Value Advisors LLC and
President of PIMCO Advisors L.P.
LESLIE H. GELB
President, The Council on
Foreign Relations
HEATH B. MCLENDON
Co-Chairman of the Board;
Managing Director, Salomon Smith Barney
Inc.; President and Director,
SSB Citi Fund
Management LLC and Travelers
Investment Advisers, 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
WILLIAM D. CVENGROS
Co-Chairman of the Board
HEATH B. MCLENDON
Co-Chairman of the Board
STEPHEN J. TREADWAY
President
LEWIS E. DAIDONE
Executive Vice President and Treasurer
THOMAS K. FLANAGAN
Executive Vice President
NEWTON B. SCHOTT
Executive Vice President
PETER J. WILBY
Executive Vice President
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
Secretary
The Emerging Markets
Floating Rate Fund Inc.
7 World Trade Center
New York, New York 10048
TELEPHONE
1-888-777-0102
INVESTMENT MANAGER
Value Advisors LLC
800 Newport Center Drive
Suite 100
Newport Beach, California 92660
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
PricewaterhouseCoopers 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
- --------------------------------------------------------------------------------
<PAGE>
THE EMERGING MARKETS
FLOATING RATE FUND INC.
SEMI-ANNUAL REPORT
AUGUST 31, 1999
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
- ----------------------
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as................................... 'D'
The double dagger symbol shall be expressed as............................ 'DD'
