FOREIGN & COLONIAL EMERGING MIDDLE EAST FUND INC
N-30D, 2001-01-05
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<PAGE>
                                         [GRAPHIC MAP OF MIDDLE EAST AND AFRICA]

 THE FOREIGN & COLONIAL
 EMERGING MIDDLE EAST FUND, INC.

 ANNUAL REPORT
 OCTOBER 31, 2000

 [FOREIGN & COLONIAL EMERGING MARKETS LIMITED LOGO]
  FOREIGN & COLONIAL EMERGING MARKETS LIMITED
<PAGE>
GENERAL INFORMATION

THE FUND

The Foreign & Colonial Emerging Middle East Fund, Inc. (the "Fund") is a
non-diversified, closed-end management investment company. On June 12, 2000, the
stockholders approved the Plan of Liquidation and Dissolution (the "Plan") of
the Fund (see Note 6).

THE INVESTMENT ADVISER

Foreign & Colonial Emerging Markets Limited ("FCEM" or the "Investment
Adviser"), an indirect wholly-owned subsidiary of Foreign & Colonial Management
Ltd., is the Fund's investment adviser.

STOCKHOLDER INFORMATION

All inquiries regarding registered shareholder accounts may be directed to the
Fund's transfer agent, dividend paying agent and registrar, State Street Bank
and Trust Company, at 800-426-5523.

TAX INFORMATION

The Fund is required by subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's fiscal year end
(October 31, 2000) as to the U.S. federal tax status of long-term capital gain
distributions received by the Fund's shareholders in respect of such fiscal
year. Accordingly, during the fiscal year ended October 31, 2000, the Fund paid
to shareholders $0.4216 per share of ordinary income, and $1.2205 per share of
long-term capital gains. Additionally, in accordance with the Plan, the Fund
paid a liquidation distribution in the amount of $11.25 per share on
September 25, 2000. There were no dividends which would qualify for the dividend
received deduction available to corporate shareholders.

Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 2000. The second notification, which
will reflect the amount to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and will be
mailed in January 2001. Shareholders are advised to consult their tax advisers
with respect to the tax consequences of their investment in the Fund.

Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of their dividends.

Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be
reported as taxable income for U.S. federal income tax purposes. However, some
retirement trusts (e.g., corporate, Keogh and 403(b)(7) plans) may need this
information for their annual information reporting.

OTHER INFORMATION

For the period November 1, 1999 to June 11, 2000 there have been no:
(i) material changes in the Fund's investment objectives or policies;
(ii) changes to the Fund's charter; (iii) material changes in the principal risk
factors associated with investment in the Fund; or (iv) change in the person
primarily responsible for the day-to-day management of the Fund's portfolio. On
June 12, 2000 the Fund ceased doing business as a registered investment company
and was no longer required to follow the investment objective and policies set
forth in the Fund's prospectus (see Note 6).

                                                                               1
<PAGE>
SPECIAL MEETING OF STOCKHOLDERS

The Fund held a special meeting of stockholders on June 12, 2000. At that
meeting, shareholders voted to approve the Plan of Liquidation and Dissolution
of the Fund.

The resulting vote count is indicated below:

1.  Proposal to approve the Plan of Liquidation and Dissolution:

<TABLE>
<S>                                                           <C>
                                                For:          2,066,859
                                                Against:         27,344
                                                Abstain:          1,650
</TABLE>

2
<PAGE>
PORTFOLIO OF INVESTMENTS

October 31, 2000
--------------------------------------------------------------------------------
EQUITIES--1.06%
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES                                                                    VALUE
------                                                                 ------------
<C>      <S>                                                           <C>
EGYPT--0.33%
         PROPERTY--0.33%
 1,800   Alexandria Real Estate Investment...........................  $    42,035
                                                                       -----------
JORDAN--0.73%
         PROPERTY--0.73%
56,600   Zara Investments (a)........................................       91,741
                                                                       -----------

TOTAL EQUITIES (cost $169,114)--1.06%................................      133,776
Other assets in excess of liabilities--98.94%........................   12,455,377
                                                                       -----------
NET ASSETS (applicable to 2,807,169 shares; equivalent to $4.48 per
share)--100.00%......................................................  $12,589,153
                                                                       ===========
</TABLE>

-------------
(a) Non-income producing security.

                 See accompanying notes to financial statements

                                                                               3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
                                                              OCTOBER 31, 2000
                                                              ----------------
<S>                                                           <C>
ASSETS
Investments in securities, at value (cost $169,114).........    $   133,776
Cash (including foreign currency of $94,583 with a cost of
  $94,388)..................................................     12,235,663
Receivable for investments sold.............................        534,376
                                                                -----------
    Total assets............................................     12,903,815
                                                                -----------

LIABILITIES
Investment advisory fee payable.............................         13,748
Administration fee payable..................................         10,587
Accrued expenses and other liabilities......................        290,327
                                                                -----------
    Total liabilities.......................................        314,662
                                                                -----------

NET ASSETS
Common stock, $0.001 par value; 2,807,169 shares issued and
  outstanding (100,000,000 shares authorized)...............          2,807
Additional paid-in capital..................................     12,620,863
Net unrealized depreciation of investments and other assets
  and liabilities denominated in foreign currency...........        (34,517)
                                                                -----------
    Net assets applicable to shares outstanding.............    $12,589,153
                                                                ===========
NET ASSET VALUE PER SHARE...................................          $4.48
                                                                ===========
</TABLE>

                 See accompanying notes to financial statements

4
<PAGE>
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                FOR THE YEAR
                                                                   ENDED
                                                              OCTOBER 31, 2000
                                                              ----------------
<S>                                                           <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $73,307).....    $ 1,017,269
Interest....................................................        383,900
                                                                -----------
                                                                  1,401,169
                                                                -----------
EXPENSES
Investment advisory fees....................................        620,641
Legal and audit fees........................................        274,684
Custody and accounting fees.................................        222,146
Directors' fees and expenses................................        109,289
Administration fees.........................................        125,000
Shareholder reports expense.................................         77,794
Insurance expense...........................................        104,474
Transfer agent fees and expenses............................         26,049
New York Stock Exchange listing fee.........................          7,934
Other expenses..............................................         54,507
                                                                -----------
Total expenses..............................................      1,622,518
                                                                -----------
Net investment loss.........................................       (221,349)
                                                                -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
  Investments...............................................      8,851,747
  Foreign currency transactions.............................       (728,536)
Net change in unrealized appreciation/depreciation of:
  Investments...............................................     (7,163,053)
  Other assets and liabilities denominated in foreign
    currency................................................         (2,255)
                                                                -----------
Net realized and unrealized gain on investments and foreign
  currency transactions.....................................        957,903
                                                                -----------
NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS.......    $   736,554
                                                                ===========
</TABLE>

--------------------------------------------------------------------------------

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                FOR THE YEAR       FOR THE YEAR
                                                                   ENDED              ENDED
                                                              OCTOBER 31, 2000   OCTOBER 31, 1999
                                                              ----------------   ----------------
<S>                                                           <C>                <C>
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss)................................    $   (221,349)      $   162,521
Net realized gain on investments and foreign currency
  transactions..............................................       8,123,211         4,653,305
Net change in unrealized appreciation/depreciation of
  investments and other assets and liabilities denominated
  in foreign currency.......................................      (7,165,308)       (1,572,502)
                                                                ------------       -----------
Total from investment operations............................         736,554         3,243,324
                                                                ------------       -----------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
In excess of net investment income..........................         (19,650)         --
From net realized gain on investments.......................      (4,590,002)       (1,538,329)
Liquidation distribution....................................     (31,580,651)         --
                                                                ------------       -----------
Total dividends and distributions...........................     (36,190,303)       (1,538,329)
                                                                ------------       -----------
Net increase (decrease) in net assets.......................     (35,453,749)        1,704,995

NET ASSETS
Beginning of year...........................................      48,042,902        46,337,907
                                                                ------------       -----------
End of year.................................................    $ 12,589,153       $48,042,902
                                                                ============       ===========
</TABLE>

                 See accompanying notes to financial statements

                                                                               5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000

NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Foreign & Colonial Emerging Middle East Fund, Inc. (the "Fund") was
incorporated in the State of Maryland on July 29, 1994, as a non-diversified,
closed-end management investment company. Prior to commencing operations on
November 4, 1994, the Fund had no operations other than the sale to Foreign &
Colonial Emerging Markets Limited (the "Investment Adviser") of 7,169 shares of
common stock for $100,008 on October 25, 1994. On June 12, 2000, the
stockholders of the Fund approved the Plan of Liquidation and Dissolution (the
"Plan") of the Fund (see Note 6).

At October 31, 2000, the financial statements of the Fund have been prepared in
accordance with accounting principles generally accepted in the United States of
America and are substantially similar to those prepared using the liquidation
basis of accounting.

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires Fund management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the
Fund.

VALUATION OF INVESTMENTS--Portfolio securities for which market quotations are
readily available are valued at the last sale price prior to the time of
determination if there was a sale on the date of determination or if there was
no sale on such day, at the mean between the last current bid and asked prices,
or if there was no asked price, the bid price. Securities for which reliable
market quotations or pricing services are not readily available are valued at
fair value using methods determined in good faith by, or under procedures
established by the Fund's Board of Directors. Investments in short-term debt
securities having a maturity of 60 days or less are valued at amortized cost,
which approximates market value, or by amortizing their value on the 61st day
prior to maturity if their term to maturity from the date of purchase is greater
than 60 days.

OTHER ASSETS AND LIABILITIES--At October 31, 2000, assets other than investments
and all liabilities of the Fund have been stated at their respective
realizable/liquidation value as of that date as a result of the Plan (see
Note 6). The Fund's liquidation related expenses have been accrued at
October 31, 2000. Income earned and certain operating expenses of the Fund
incurred subsequent to October 31, 2000 have not been accrued as of that date.

INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date (the date on which the order to buy or sell is
executed). Realized gains and losses from investments and foreign currency
transactions are determined on the identified cost basis. Interest income is
recorded on an accrual basis. Dividend income and other distributions are
recorded on the ex-dividend date, except for certain dividends which are
recorded as soon after the ex-dividend date as the Fund, using reasonable
diligence, becomes aware of such dividends.

FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are maintained
in U.S. dollars as follows: (1) the foreign currency market value of investments
and other assets and liabilities denominated in foreign currency are translated
at the prevailing rates of exchange on the valuation date; (2) purchases and
sales of investments, income and expenses are translated at the rate of exchange
prevailing on the respective dates of such transactions. The resulting net
foreign currency gain or loss is included in the Statement of Operations.

The Fund does not generally isolate that portion of the results of operations
arising as a result of changes in the foreign currency exchange rates from
fluctuations arising from changes in the market prices of securities.
Accordingly, such foreign currency gain (loss) is included in net realized and
unrealized gain (loss) on investments. However, the Fund does isolate the effect
of fluctuations in foreign currency exchange rates when determining the gain or
loss upon the sale or maturity of foreign currency denominated debt obligations
pursuant to U.S. federal income tax regulations; such amount is categorized as
foreign currency gain or loss for income tax reporting purposes.

Net foreign currency gain (loss) from valuing foreign currency denominated
assets and liabilities at period end exchange rates is reflected as a component
of net unrealized depreciation of investments

6
<PAGE>
and other assets and liabilities denominated in foreign currency. Net realized
foreign currency gain (loss) is treated as ordinary income (loss) for income tax
reporting purposes.

DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. Dividends and distributions from net
investment income and net realized capital gains are determined in accordance
with federal income tax regulations, which may differ from generally accepted
accounting principles. These "book/tax" differences are considered either
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
reclassification. Dividends and distributions which exceed net investment income
or net realized capital gain 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 gain on investments. To the extent they
exceed net investment income or net realized capital gain for tax purposes, they
are reported as distributions of additional paid-in capital. The liquidation
distribution is recorded as a distribution of additional paid-in-capital.

At October 31, 2000, the Fund reclassified losses of $182,038 and $642,171 from
undistributed net investment income (loss) to accumulated net realized gain and
additional paid-in capital, respectively, attributable primarily to net
operating loss for the year. In addition, the Fund reclassified net realized
gain of $7,762,957 from accumulated net realized gain to additional paid-in
capital relating to the liquidation distribution made by the Fund during the
year ended October 31, 2000. Net assets and net investment loss of the Fund were
not affected by such reclassifications.

U.S. FEDERAL INCOME TAXES--The Fund intends to distribute all of its taxable
income and to comply with the other requirements of the Internal Revenue Code of
1986, as amended, applicable to regulated investment companies. Accordingly, no
provision for U.S. federal income taxes is required. In addition, by
distributing substantially all of its net investment income, capital gains and
certain other amounts, if any, during each calendar year, the Fund intends not
to be subject to U.S. federal excise tax.

FOREIGN TAXES--The Fund may be subject to certain taxes on dividends, capital
gains and other income imposed by the foreign countries in which it invests.
Withholding taxes on foreign dividends and interest have been provided for in
accordance with the applicable tax requirements.

NOTE 2  INVESTMENT ADVISER AND ADMINISTRATOR

The Investment Adviser provided investment advisory services to the Fund under
the terms of an Investment Advisory Agreement. As compensation for its services,
the Investment Adviser was paid a monthly fee at the annual rate of 1.25% of the
value of the Fund's average weekly net assets. Due to the sale of substantially
all of the investments of the Fund and considering the planned liquidation and
dissolution of the Fund (see Note 6 below), the Investment Adviser agreed not to
charge the Fund any investment advisory fees subsequent to October 31, 2000. The
Investment Adviser, however, will continue to carry out its activities and
facilitate the complete liquidation and dissolution of the Fund in accordance
with the Plan approved by the stockholders of the Fund at no additional charge.

Mitchell Hutchins Asset Management Inc. (the "Administrator"), a wholly-owned
subsidiary of PaineWebber, Inc., which is a wholly owned indirect subsidiary of
UBS AG, provided administrative services to the Fund under an Administration
Agreement. As compensation for its services, the Administrator was paid a
monthly fee at the annual rate of 0.15% of the value of the Fund's average
weekly net assets, subject to a minimum annual fee of $125,000. Subsequent to
October 31, 2000, the Administrator agreed to receive a fixed fee of $15,000 in
its capacity as the liquidating agent of the Fund.

NOTE 3  INVESTMENTS IN SECURITIES

For U.S. federal income tax purposes, the cost of securities owned at October
31, 2000 was substantially the same as the cost of securities for financial
statement purposes. Accordingly, net and gross unrealized depreciation of
investments is $35,338 for investments having an excess of cost over value.

For the year ended October 31, 2000, aggregate purchases and sales of portfolio
securities, excluding short-term securities, were $10,631,494 and $58,634,207,
respectively.

                                                                               7
<PAGE>
NOTE 4  CONCENTRATION OF RISK

Investment in Middle East issuers involves certain risks and special
considerations which are not typically associated with investing in securities
issued by U.S. or Western European companies or governments, as a result of,
among other things, future political and economic developments and the level of
governmental supervision and regulation of the securities markets. In
particular, securities markets and currencies of many Middle East countries,
similar to those of other emerging market countries, have been subject to
substantial price volatility and sudden market declines. The ability of the
issuers of the debt securities held by the Fund to meet their obligations may be
affected by economic and political developments in a specific industry or
region.

At October 31, 2000 the Fund maintained cash at State Street Bank and Trust
Company ("SSBT"), the Fund's custodian, and at sub-custodians in each country
where the Fund held investments and which are part of SSBT's custodian network;
total cash including foreign currency balances represented 97.2% of the Fund's
net assets as of that date. Subsequent to October 31, 2000, the Fund converted
all of its foreign currency balances including amounts receivable at
October 31, 2000 and those amounts received upon sale of investment held at
October 31, 2000 into United States dollars and were held at SSBT.

NOTE 5  CAPITAL STOCK

There were no transactions in common stock for the years ended October 31, 2000
and October 31, 1999.

At October 31, 2000, The Foreign & Colonial Emerging Markets Investment Trust,
The Global Emerging Markets Ex-Pacific Asia Fund and The Global Emerging Markets
Investment Co., each of whom are deemed to be affiliates of the Investment
Adviser under U.S. securities laws, owned 84,215, 9,197 and 2,886 shares,
respectively, of the Fund.

NOTE 6  PLAN OF LIQUIDATION AND DISSOLUTION

At the meeting of the Fund's stockholders held on June 12, 2000 (the "Effective
Date"), the stockholders approved the Plan of Liquidation and Dissolution (the
"Plan") of the Fund which was proposed by the Board of Directors of the Fund.
The Plan provides for the following:

1.  The complete liquidation of all of the assets of the Fund;

2.  The payment by the Fund of all known obligations including the expenses of
    the liquidation; and

3.  The receipt by the stockholders of one or more distributions equal to their
    pro rata portion of the net assets of the Fund, together with accrued and
    unpaid dividends and distributions.

After the Effective Date, the Board of Directors set a distribution record date
of June 26, 2000. Stockholders holding Fund shares as of the close of business
on the distribution record date will receive their proportionate share of all
liquidation distributions. The Plan also provided that on the Effective Date,
the Fund will cease doing business as a registered investment company and, will
no longer be required to follow the investment objective and policies set forth
in the Fund's prospectus.

On September 18, 2000, the Board of Directors of the Fund approved the first
liquidation distribution of $11.25 per share aggregating $31,580,651 which
represented approximately 70% of the Fund's net asset value as of September 14,
2000. The first liquidation distribution was paid on September 25, 2000.

On December 11, 2000, the Board of Directors of the Fund approved the final
liquidation distribution of $4.4799 per share aggregating $12,575,836, which
represented the Fund's net asset value as of December 11, 2000, to be paid on
December 28, 2000. The final liquidation distribution shall be made in complete
cancellation and redemption of all the outstanding shares of the Fund. Upon
payment of the final liquidation distribution, the Fund shall have cash, bank
deposits or cash equivalents in an estimated amount necessary to discharge any
unpaid liabilities and obligations of the Fund and to pay or provide for the
payment of such contingent liabilities as the Board of Directors shall
reasonably deem to exist against the assets of the Fund on the Fund's books.

8
<PAGE>
FINANCIAL HIGHLIGHTS

Selected data for a share of common stock outstanding throughout each year is
presented below.

<TABLE>
<CAPTION>
                                                 2000        1999        1998        1997          1996
                                               --------    --------    --------    --------      --------
<S>                                            <C>         <C>         <C>         <C>           <C>
Net asset value, beginning of year...........  $ 17.11     $ 16.51     $ 21.50     $ 15.37       $ 13.45
                                               -------     -------     -------     -------       -------
INCOME (LOSS) FROM INVESTMENT
 OPERATIONS
Net investment income (loss).................    (0.08)       0.06        0.06        0.01         (0.03)
Net realized and unrealized gain
 (loss) on investments and foreign
 currency transactions.......................     0.34        1.09       (3.78)       6.33          1.95
                                               -------     -------     -------     -------       -------
  Total from investment operations...........     0.26        1.15       (3.72)       6.34          1.92
                                               -------     -------     -------     -------       -------
DIVIDENDS AND DISTRIBUTIONS
 TO SHAREHOLDERS
In excess of net investment income...........    (0.01)      --          (0.23)      --            --
From net realized gain on
 investments.................................    (1.63)      (0.55)      (1.04)      (0.21)        --
Liquidation Distribution.....................   (11.25)      --          --          --
                                               -------     -------     -------     -------       -------
  Total dividends and distributions..........   (12.89)      (0.55)      (1.27)      (0.21)        --
                                               -------     -------     -------     -------       -------
CAPITAL SHARE TRANSACTIONS
Net asset value, end of year.................  $  4.48     $ 17.11     $ 16.51     $ 21.50       $ 15.37
                                               =======     =======     =======     =======       =======
Market value, end of year....................    (c)       $ 13.25     $13.375     $ 17.75       $12.375
                                               =======     =======     =======     =======       =======
Total investment return (a)..................    19.40%       3.23%     (19.01)%     45.46%        12.50%
                                               =======     =======     =======     =======       =======

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands).......  $12,589     $48,043     $46,338     $60,366       $43,157
Ratio of expenses to average net assets......     3.27%       3.50%       2.91%       2.89%(b)      3.16%(b)
Ratio of net investment income (loss)
 to average net assets.......................    (0.45)%      0.34%       0.29%       0.06%(b)     (0.23)%(b)
Portfolio turnover...........................       26%         94%         45%         57%           30%
</TABLE>

-------------
NOTES:

(a) 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 (net asset value per share at October 31, 2000) on the last day of
    each year reported. Dividends and distributions, other than liquidation
    distribution, if any, are assumed, for purposes of this calculation, to be
    reinvested at prices obtained under the Fund's dividend reinvestment plan.
    Liquidation distribution is assumed to be reinvested at the net asset value
    per share of the Fund at the distribution payment date. Total investment
    return does not reflect sales charges or brokerage commissions.

(b) The Administrator waived a portion of its fees during the years ended
    October 31, 1997 and 1996. If such waivers had not been made, the ratio of
    expenses to average net assets would have been 2.92% and 3.25%,
    respectively, and the ratio of net investment income (loss) to average net
    assets would have been 0.03% and (0.32)%, respectively.

(c) In accordance with the Plan of Liquidation and Dissolution of the Fund
    approved by the shareholders of the Fund on June 12, 2000, the Fund was
    delisted from the New York Stock Exchange ("NYSE") and the Fund's shares
    ceased to be traded on the NYSE. As such, there is no market price of the
    Fund's shares at October 31, 2000 (see Note 6).

                                                                               9
<PAGE>
REPORT OF THE INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
The Foreign & Colonial Emerging Middle East Fund, Inc. (In Liquidation)

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio 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 Foreign & Colonial Emerging
Middle East Fund, Inc. (In Liquidation) (the "Fund") at October 31, 2000, 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 five years in the period then ended, in conformity with
generally accepted accounting principles in the United States of America. 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 auditing standards generally accepted in the United States of America,
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 October 31, 2000 by correspondence with the
custodian, provide a reasonable basis for our opinion.

As described in Note 6, on June 12, 2000, the stockholders of the Fund approved
the Plan of Liquidation and Dissolution of the Fund.

PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, New York

December 13, 2000

10
<PAGE>
CORPORATE INFORMATION

DIRECTORS

Fred Arthur Rank Packard, Chairman
Bassam Aburdene
Abdulwahab Al-Mulla
Karen J. Clarke
Albert Francke
Walter M. Noel, Jr.
David C. Patterson

OFFICERS

Karen J. Clarke                           President, Treasurer & Secretary
Arnab Banerji                             Executive Vice President
Jeffrey Chowdhry                          Executive Vice President
David McIlroy                             Vice President

INVESTMENT ADVISER

Foreign & Colonial Emerging Markets Limited
Exchange House, 8th Floor
Primrose Street
London, England EC2A 2NY

ADMINISTRATOR

Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, NY 10019-6114

CUSTODIAN AND TRANSFER AGENT

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

LEGAL COUNSEL

Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017

THIS REPORT IS SENT TO THE SHAREHOLDERS OF THE FUND FOR THEIR INFORMATION. IT IS
NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR
SALE OF SHARES OF THE FUND OR OF ANY SECURITIES MENTIONED IN THIS REPORT.

FC00A
<PAGE>
The Foreign & Colonial Emerging Middle East Fund, Inc.
51 West 52nd Street
New York, NY 10019-6114
Telephone: 201-318-4150
Fax: 201-533-2847

Foreign & Colonial Emerging Markets Limited
Exchange House, 8th Floor
Primrose Street
London, England EC2A 2NY
Telephone: 44-207-628-1234
Fax: 44-207-628-2281

[FOREIGN & COLONIAL EMERGING MARKETS LIMITED LOGO]
 FOREIGN & COLONIAL EMERGING MARKETS LIMITED


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