UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File No. 811-08076
---------------------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, New York, New York 10017-3140
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Hal Liebes, Esq.
The Emerging Markets Telecommunications Fund Inc.
466 Lexington Avenue
New York, New York 10017-3140
Registrant's telephone number, including area code:(212) 875-3500
Date of fiscal year end: November 30, 2003
Date of reporting period: December 1, 2002 to November 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
THE EMERGING MARKETS
TELECOMMUNICATIONS
FUND, INC.
ANNUAL REPORT
NOVEMBER 30, 2003
[ETF LISTED NYSE(R) LOGO]
3018-AR-03
CONTENTS
Letter to Shareholders 1
Portfolio Summary 5
Schedule of Investments 7
Statement of Assets and Liabilities 10
Statement of Operations 11
Statement of Changes in Net Assets 12
Statement of Cash Flows 13
Financial Highlights 14
Notes to Financial Statements 16
Report of Independent Auditors 24
Results of Annual Meeting of Shareholders 25
Description of InvestLink(SM) Program 26
Information Concerning Directors and Officers 29
LETTER TO SHAREHOLDERS
January 16, 2004
DEAR SHAREHOLDER:
We are writing to report on the activities of The Emerging Markets
Telecommunications Fund, Inc. (the "Fund") for the fiscal year ended November
30, 2003. The Fund's total return for the period, based on net asset value
("NAV"), was 11.92% vs. an increase of 40.87% for the Morgan Stanley Capital
International Emerging Markets Free ("EMF") Index* and an increase of 28.96% for
the telecommunications services subsector of the EMF Index.
PERFORMANCE
The Fund's underperformance was attributable largely to its private holdings,
which declined in value in the period. For the most part, this reflected
weakness in technology-oriented venture capital funds. The collective decline in
the Fund's private holdings almost entirely accounted for the Fund's
underperformance of the EMF's telecommunications subsector. (The Fund's
underperformance of the broad EMF Index additionally reflected the
underperformance of emerging telecommunications stocks compared with a broader,
sectorally diversified universe of emerging market equities.) This
notwithstanding, the Fund's private holdings have enhanced its performance over
its history. Furthermore, as described below, we see some grounds for
encouragement going forward regarding the prospects for technology-oriented
funds.
Factors that contributed positively to the Fund's return vs. the emerging
telecommunications group included good stock selection in Asia, particularly
within China. The Fund also benefited from good stock selection in Latin
America, which partly offset the negative effect of its underweight position in
the region. In the Eastern Europe/Middle East/ Africa ("EMEA") segment, the Fund
benefited from its non-index bet in Russian cellular companies, which
significantly outperformed.
THE MARKET: BUOYED BY RISING RISK TOLERANCE
Following a disappointing start to the period, emerging telecoms as a group
enjoyed a sustained rally as investors began to embrace risk in almost all
forms. This shift in sentiment aided telecommunications stocks in general and
certain lower-tier, more-speculative telecom stocks in particular.
Early in the period, emerging telecoms and many other sectors, both developed
and emerging, suffered from a weak global economic recovery and heightened
geopolitical tensions leading up to and through the U.S.-led war with Iraq.
Beyond this, we witnessed some weakness in emerging wireless stocks as investors
sought to avoid a potential "contagion" effect from proposed developed market
reductions in wireless interconnection fees.
With the end of major armed conflict in Iraq in March, and subsequent
indications of a rebound in the U.S. economy and equity marketplace, telecom
stocks mounted a sustained rally, with wireless names significantly
outperforming more defensive stocks (those with the bulk of their revenues
generated by fixed line services).
This theme was particularly evident in the strong performance of wireless
companies in Latin America and EMEA over much of the year, especially those in
Brazil and South Africa. Most of Asia lagged, hampered by the same issues that
have negatively impacted most telecoms--developed or emerging--over the past few
years, notably: declining profits;
1
LETTER TO SHAREHOLDERS
increasing competition; weak pricing power, overcapacity, the cannibalization of
voice communications from wireless to wireless/mobile; corporate governance; and
weak demand for emerging third-generation (3-G) data-traffic services.
Elsewhere, certain Russian telecoms did well during the year, but their
performance was hampered near the end of the period by an unstable political
environment. And, in China, a few telecoms did very well, but concerns continued
to mount that rapid subscriber growth might come at the expense of corporate
profits.
STRATEGY
During the first quarter of 2003, the portfolio was underweight Latin America
and emerging Europe, where we maintained a bias in favor of faster growing
wireless companies, especially those in Mexico and parts of Eastern Europe.
In the second quarter, we took profits in China and Brazil, where valuations had
appreciated rapidly, while continuing to look for undervalued companies in
Central Europe.
The third quarter witnessed a slight shift in the portfolio in favor of two
non-index, high growth wireless companies in Russia. We also liked companies
that produce equipment for Asia's rapidly growing telecom markets, particularly
those of China and India. We were less sanguine about South Korean operators,
which suffered in part from the perception that they offered low growth, fixed
income-like returns.
Finally, during the latter part of the period, we reduced positions in China,
which appeared to be overheating. We also reduced positions in South Korea and
Russia. This said, we remained overweight to Russia's telecom growth stocks, but
reduced our overall position in light of heightened political instability.
In Latin America, we increased our positions in Mexico and Chile. Chile, in
particular, was one of the first Latin American countries to rebound
economically. This country appears well positioned to benefit from a broad
global economic recovery due to the strength of commodity prices (copper in
particular) and its exposure to trade with Asia, one of the fastest growing
regions globally.
Overall, the portfolio presently emphasizes growth stocks, but, as 2004
progresses, we will look to rotate out of some of the higher performing wireless
concerns and re-invest in more value-oriented fixed line and integrated
companies that we believe might outperform as the global economic recovery
matures.
What's in store for rapidly growing wireless companies over the intermediate
term? Time will tell, but we feel there might be room for upside surprises in
this segment, as economic recovery encourages subscriber growth and improved
profitability. Even now, we are seeing near-continuous upgrades in what were
admittedly conservative top line earnings forecasts for wireless companies in
Russia, Latin America, Europe and elsewhere.
There are risks, to be sure. Along with the ever-present risks of major
terrorist attacks and a pullback in global growth, emerging telecom stocks may
well suffer from oversupply, as developed and developing nations seek to take
advantage
2
LETTER TO SHAREHOLDERS
of currently favorable market conditions by selling substantial stakes in
government-owned telecommunications companies. Another concern is China, where
investor enthusiasm remains virtually unchecked. Bad news there could put the
global economic recovery story into question.
We now see China more as a source of funds for other investments, than as a
particularly attractive investment opportunity in its own right due to high
valuations. In Russia, we expect to maintain our reduced holdings, at least for
the time being. With new elections scheduled for the first quarter of 2004, we
would hope to see politics off the front page of the newspapers. If so, we would
look to increase our holdings in Russia's telecom sector, once again.
In the integrated and pure fixed line market segments, we see opportunities
further out, when the Federal Reserve and other central banks eventually raise
interest rates to cool economic growth and as investors seek to balance their
portfolios by adding the defensive, value-oriented stocks that have
underperformed in recent quarters. Here, we will favor those companies we deem
to have substantial free cash flows and have proven to be successful in making
and managing acquisitions, without overpaying for them. As ever, we will monitor
these segments closely, attempting to take advantage of any temporary price
declines brought by negative news and overselling.
Finally, with respect to the technology-oriented funds noted above, we see some
grounds for encouragement going forward. Recently, the pace of write-downs has
slowed, with overall market conditions for the funds' underlying companies
beginning to stabilize and improve. Generally, increases in the valuation of
private placement holdings tend to lag the recovery of the public equity
markets, as such increases are often driven by increased acquisition, IPO and
venture capital financing activity, which are beginning to show signs of
recovery. Should current public market trends continue, we hope to see increases
in the valuation of these holdings as the underlying companies' prospects
improve and they are able to raise additional growth financing at higher
valuations, go public or are sold to strategic buyers.
Respectfully,
/s/ Emily Alejos
Emily Alejos
Interim Chief Investment Officer**
3
LETTER TO SHAREHOLDERS
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS; THESE RISKS ARE GENERALLY HEIGHTENED FOR EMERGING MARKET
INVESTMENTS. SINCE THE FUND FOCUSES ITS INVESTMENTS ON COMPANIES INVOLVED IN
TELECOMMUNICATIONS, AN INVESTMENT IN THE FUND MAY INVOLVE A GREATER DEGREE OF
RISK THAN AN INVESTMENT IN OTHER FUNDS THAT SEEK CAPITAL APPRECIATION BY
INVESTING IN A BROADER MIX OF ISSUERS.
IN ADDITION TO HISTORICAL INFORMATION, THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS, WHICH MAY CONCERN, AMONG OTHER THINGS, DOMESTIC AND FOREIGN MARKET,
INDUSTRY AND ECONOMIC TRENDS AND DEVELOPMENTS AND GOVERNMENT REGULATION AND
THEIR POTENTIAL IMPACT ON THE FUND'S INVESTMENT PORTFOLIO. THESE STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES AND ACTUAL TRENDS, DEVELOPMENTS AND
REGULATIONS IN THE FUTURE AND THEIR IMPACT ON THE FUND COULD BE MATERIALLY
DIFFERENT FROM THOSE PROJECTED, ANTICIPATED OR IMPLIED. THE FUND HAS NO
OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS.
* The Morgan Stanley Capital International Emerging Markets Free Index is an
unmanaged index (with no defined investment objective) of emerging-market
equities that includes reinvestment of net dividends, and is the exclusive
property of Morgan Stanley Capital International Inc. Investors cannot invest
directly in an index.
** Emily Alejos, who is a Director of Credit Suisse Asset Management, LLC
("CSAM"), is primarily responsible for management of the Fund's assets.
Ms. Alejos joined CSAM in 1997 from Bankers Trust, where she was an emerging
markets portfolio manager. Previously, she focused on Latin American equities at
G.T. Capital Management in San Francisco. Ms. Alejos is Interim Chief Investment
Officer of the Fund and Chief Investment Officer of The Latin America Equity
Fund, Inc. and The Brazilian Equity Fund, Inc. She is also an Investment Officer
of The Chile Fund, Inc.
4
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
PORTFOLIO SUMMARY - AS OF NOVEMBER 30, 2003 (UNAUDITED)
[CHART]
SECTOR ALLOCATION
NOVEMBER 30, 2003 NOVEMBER 30, 2002
Cellular Telecommunications 37.14% 40.58%
Computers 1.79% 0.00%
Diversified Operations 1.58% 1.51%
Electric-Integrated 2.98% 0.00%
Electronic Components/Semiconductors 3.83% 0.00%
Internet Services/Software 3.76% 1.36%
Telecommunications 12.87% 16.56%
Telephone-Integrated 20.28% 13.01%
Venture Capital 13.07% 16.51%
Other 2.21% 7.44%
Cash & Other Assets 0.49% 3.03%
[CHART]
GEOGRAPHIC ASSET BREAKDOWN
NOVEMBER 30, 2003 NOVEMBER 30, 2002
Africa 5.51% 0.00%
Asia 45.78% 49.40%
Caribbean 0.00% 4.53%
Latin America 29.53% 21.92%
Middle East 10.33% 11.79%
North America 1.59% 1.32%
Global 6.77% 8.01%
Cash & Other Assets 0.49% 3.03%
5
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
PORTFOLIO SUMMARY - AS OF NOVEMBER 30, 2003 (UNAUDITED) (CONCLUDED)
[CHART]
SUMMARY OF SECURITIES BY COUNTRY/REGION
NOVEMBER 30, 2003 NOVEMBER 30, 2002
Asia 3.56% 2.46%
Brazil 8.12% 0.00%
China 6.80% 0.00%
Hong Kong 0.00% 12.67%
Indonesia 2.54% 3.32%
Israel 9.57% 11.79%
Jamaica 0.00% 4.53%
Mexico 18.06% 17.40%
Russia 9.76% 6.76%
South Korea 13.21% 19.96%
South Africa 5.51% 0.00%
Taiwan 5.62% 1.30%
Global 6.77% 8.01%
Other 9.99% 8.77%
TOP 10 HOLDINGS, BY ISSUER
PERCENT OF
HOLDING SECTOR COUNTRY/REGION NET ASSETS
---------------------------------------------------------------------------------------------------------------------
1. America Movil, S.A. de C.V. Cellular Telecommunications Mexico 12.0
2. Telefonos de Mexico, S.A. de C.V. Telephone-Integrated Mexico 6.1
3. Emerging Markets Ventures I L.P. Venture Capital Global 5.9
4. Tele Norte Leste Participacoes S.A. Telephone-Integrated Brazil 5.5
5. SK Telecom Co., Ltd. Cellular Telecommunications South Korea 4.8
6. AO VimpelCom Cellular Telecommunications Russia 4.5
7. MTN Group Ltd. Cellular Telecommunications South Africa 4.4
8. MediaTek Inc. Electronic Components/Semiconductors Taiwan 3.8
9. China Unicom Ltd. Cellular Telecommunications China 3.5
10. China Telecom Corp. Ltd. Telecommunications China 3.3
6
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2003
NO. OF
DESCRIPTION SHARES/UNITS VALUE
----------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-99.51%
EQUITY OR EQUITY-LINKED SECURITIES OF
TELECOMMUNICATION COMPANIES IN EMERGING
COUNTRIES-94.37%
ASIA-3.56%
INVESCO AsiaNET Fund plc+ 97,560 $ 402,435
Nirvana Capital Ltd.+#* 42,000 21,842
TVG Asian Communications
Fund II, L.P.+^# 2,930,599 2,242,972
------------
TOTAL ASIA (Cost $4,120,885) 2,667,249
------------
BRAZIL-5.89%
Celular CRT Participacoes
S.A., PNA 1,741,000 324,768
Tele Norte Leste Participacoes
S.A., ADR 289,300 4,087,809
------------
TOTAL BRAZIL (Cost $3,569,696) 4,412,577
------------
CHILE-1.01%
Compania de Telecomunicaciones
de Chile S.A., ADR
(Cost $598,044) 54,500 754,825
------------
CHINA-6.80%
China Telecom Corp. Ltd. 7,594,000 2,444,961
China Unicom Ltd. 2,724,000 2,648,594
------------
TOTAL CHINA (Cost $3,462,315) 5,093,555
------------
INDIA-0.84%
Bharti Tele-Ventures Ltd.+ 335,000 621,035
The India Media, Internet and
Communications Fund Ltd.+* 37,693 10,931
------------
TOTAL INDIA (Cost $638,505) 631,966
------------
INDONESIA-2.54%
PT Telekomunikasi Indonesia
(Cost $1,383,420) 2,626,000 1,898,871
------------
ISRAEL-9.00%
BPW Israel Ventures LLC+^# 1,156,470 680,675
Concord Ventures II Fund L.P.+^# 3,280,000 1,397,503
Formula Ventures L.P.+^# 1,467,094 312,491
Giza GE Venture Fund III L.P.+^# 1,540,000 810,979
K.T. Concord Venture Fund L.P.+^ 2,000,000 $ 1,188,944
Lynx Photonic Networks+* 375,394 781,378
Lynx Series E+* 493,000 498,488
Neurone Ventures II, L.P.+^# 337,500 152,270
NICE Systems Ltd., ADR+ 5,000 118,750
SVE Star Ventures Enterprises
GmbH & Co. No. IX KG+^# 1,000,000 593,180
Walden-Israel Ventures III, L.P.+^# 340,313 206,890
------------
TOTAL ISRAEL (Cost $9,579,388) 6,741,548
------------
LATIN AMERICA-1.59%
J.P. Morgan Latin America Capital
Partners (Cayman), L.P.+^ 737,483 629,361
J.P. Morgan Latin America Capital
Partners (Delaware), L.P.+^# 1,244,560 557,650
------------
TOTAL LATIN AMERICA (Cost $1,445,278) 1,187,011
------------
MALAYSIA-0.94%
Astro All Asia Networks PLC+
(Cost $682,742) 602,200 706,793
------------
MEXICO-18.06%
America Movil, S.A. de C.V.,
Series L, ADR 349,900 8,971,436
Telefonos de Mexico, S.A. de C.V.,
Class L, ADR 137,600 4,553,184
------------
TOTAL MEXICO (Cost $10,440,741) 13,524,620
------------
PHILIPPINES-1.90%
Philippine Long Distance
Telephone Co.+
(Cost $999,814) 105,000 1,423,889
------------
RUSSIA-9.76%
AO VimpelCom, ADR+ 49,000 3,404,520
Independent Network Television,
Series II+^ 1,000,000 500,000
Mobile Telesystems, ADR 26,500 2,186,250
Rostelecom, ADR 105,400 1,220,532
------------
TOTAL RUSSIA (Cost $4,420,201) 7,311,302
------------
See accompanying notes to financial statements.
7
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
NO. OF
DESCRIPTION SHARES/UNITS VALUE
----------------------------------------------------------------------------------
SOUTH AFRICA-5.51%
MTN Group Ltd.+ 809,000 $ 3,305,961
Telkom South Africa Ltd.+ 80,160 823,026
------------
TOTAL SOUTH AFRICA (Cost $2,636,999) 4,128,987
------------
SOUTH KOREA-13.21%
KT Corp. 59,100 2,281,303
KT Freetel 140,500 2,372,738
NCsoft Corp.+ 29,900 1,621,796
SK Telecom Co., Ltd., ADR 202,700 3,618,195
------------
TOTAL SOUTH KOREA (Cost $10,101,082) 9,894,032
------------
TAIWAN-5.62%
Compal Electronics Inc. 989,000 1,343,766
MediaTek Inc. 324,250 2,867,452
------------
TOTAL TAIWAN (Cost $3,689,277) 4,211,218
------------
THAILAND-0.61%
Advanced Info Service Public
Co., Ltd. 254,100 413,688
TelecomAsia Corp. Public Co.
Ltd., Foreign Registered,
Warrants (expiring 04/03/08) 1,717,483 42,016
------------
TOTAL THAILAND (Cost $365,269) 455,704
------------
TURKEY-0.76%
Turkcell Iletisim Hizmetleri A.S.+
(Cost $534,733) 74,200,000 568,232
------------
GLOBAL-6.77%
Emerging Markets Ventures
I L.P.+^# 7,075,037 4,443,760
International Wireless
Communications Holdings
Corp.+^ 15,092 0
TeleSoft Partners L.P.+^ 1,250,000 247,500
TeleSoft Partners II QP, L.P.+^# 1,140,000 381,672
------------
TOTAL GLOBAL (Cost $7,230,371) 5,072,932
------------
TOTAL EMERGING COUNTRIES
(Cost $65,898,760) 70,685,311
------------
EQUITY SECURITIES OF TELECOMMUNICATION
COMPANIES IN DEVELOPED COUNTRIES-1.59%
UNITED STATES-1.59%
Global TeleSystems, Inc.+ 91,876 $ 0
Technology Crossover Ventures
IV, L.P.+^# 1,440,400 1,186,653
------------
TOTAL DEVELOPED COUNTRIES
(Cost $3,034,168) 1,186,653
------------
EQUITY SECURITES OF COMPANIES PROVIDING OTHER
ESSENTIAL SERVICES IN THE DEVELOPMENT OF AN
EMERGING COUNTRY'S INFRASTRUCTURE-3.55%
ARGENTINA-0.00%
Exxel Capital Partners V, L.P.+^
(Cost $539,966) 1,897,761 0
------------
BRAZIL-2.23%
Companhia Energetica de Minas
Gerais, PN
(Cost $1,553,253) 104,500,000 1,672,426
------------
CANADA-0.00%
Officeland Inc., PNA+*(a) 168,067 0
Officeland Inc., PNC+*(b) 133,654 0
------------
TOTAL CANADA (Cost $638,256) 0
------------
CHILE-0.75%
Enersis S.A., ADR
(Cost $561,965) 86,900 559,636
------------
ISRAEL-0.57%
Elbit Systems Ltd. 20,000 325,309
The Renaissance Fund LDC+^ 160 103,339
------------
TOTAL ISRAEL (Cost $828,030) 428,648
------------
TOTAL OTHER ESSENTIAL SERVICES
(Cost $4,121,470) 2,660,710
------------
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES (Cost $73,054,398) 74,532,674
------------
See accompanying notes to financial statements.
8
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
SCHEDULE OF INVESTMENTS (CONCLUDED)
PRINCIPAL
DESCRIPTION AMOUNT (000'S) VALUE
----------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-19.92%
GRAND CAYMAN-0.34%
Brown Brothers Harriman & Co.,
overnight deposit, 0.25%,
12/01/03** (Cost $256,000) $ 256 $ 256,000
------------
UNITED STATES-19.58%
Bear, Stearns & Co. Inc.,
repurchase agreement,
(Agreement dated 11/28/03 to
be repurchased at $12,027,990),
1.1875%, 12/01/03*** 12,027 12,026,800
Bear, Stearns & Co. Inc.,
repurchase agreement,
(Agreement dated 11/28/03 to
be repurchased at $2,636,171),
0.5312%, 12/01/03*** 2,636 2,636,054
------------
TOTAL UNITED STATES
(Cost $14,662,854) 14,662,854
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $14,918,854) 14,918,854
------------
TOTAL INVESTMENTS-119.43%
(Cost $87,973,252) (Notes A, D, F) 89,451,528
------------
LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS-(19.43)% (14,552,304)
------------
NET ASSETS-100.00% $ 74,899,224
============
+ Security is non-income producing.
^ Restricted security, not readily marketable; security is valued at fair
value as determined in good faith by the Board of Directors. (See Notes A
and G.)
# As of November 30, 2003, the Fund has committed to investing additional
capital as follows: Nirvana Capital Ltd. ($180,000), TVG Asian
Communications Fund II, L.P. ($1,069,401), BPW Israel Ventures LLC
($1,143,530), Concord Ventures II Fund L.P. ($720,000), Formula Ventures
L.P. ($32,906), Giza GE Venture Fund III L.P. ($1,210,000), Neurone
Ventures II, L.P. ($412,500), SVE Star Ventures Enterprises GmbH & Co. No.
IX KG ($1,000,000), Walden-Israel Ventures III, L.P. ($1,034,688), J.P.
Morgan Latin America Capital Partners (Delaware), L.P. ($3,459,860),
Emerging Markets Ventures I L.P. ($1,024,964), TeleSoft Partners II QP,
L.P. ($1,260,000) and Technology Crossover Ventures IV, L.P. ($559,600).
The aggregate amount of open commitments for the Fund is $13,107,449.
* Not readily marketable security; security is valued at fair value as
determined in good faith by the Board of Directors. (See Note A.)
** Variable rate account. Rate resets on a daily basis; amounts are available
on the same business day.
*** Represents security purchased with cash collateral received for securities
on loan.
(a) With an additional 134,454 warrants, expiring 04/21/05, with no market
value.
(b) With an additional 133,654 warrants, expiring 04/21/05, with no market
value.
ADR American Depositary Receipts.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNC Preferred Shares, Class C.
The following is a breakdown of the equity or equity-linked securities portion
of the Fund, by sector classification, as of November 30, 2003.
% OF NET
SECTOR ASSETS
------ --------
Aerospace/Defense-Equipment 0.43
Cellular Telecommunications 37.14
Computers 1.79
Diversified Operations 1.58
Electric-Integrated 2.98
Electronic Components/Semiconductors 3.83
Internet Services/Software 3.76
Investment & Holding Companies 0.14
Multimedia 0.94
Technology 0.03
Telecommunications 12.87
Telephone-Integrated 20.28
Television 0.67
Venture Capital 13.07
-----
99.51
=====
See accompanying notes to financial statements.
9
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - NOVEMBER 30, 2003
ASSETS
Investments, at value, including collateral for securities on loan of $14,662,854 (1)
(Cost $87,973,252) (Notes A, D, F) $ 89,451,528
Cash (including $5,739 of foreign currencies with a cost of $7,000) 6,313
Distributions receivable 351,087
Prepaid expenses 2,016
---------------
Total Assets 89,810,944
---------------
LIABILITIES
Payables:
Upon return of securities loaned (Note A) 14,662,854
Investment advisory fee (Note B) 130,192
Directors' fees 7,625
Administration fees (Note B) 9,481
Other accrued expenses 101,568
---------------
Total Liabilities 14,911,720
---------------
NET ASSETS (applicable to 9,164,221 shares of common stock outstanding) (Note C) $ 74,899,224
===============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 9,164,221 shares issued and outstanding
(100,000,000 shares authorized) $ 9,164
Paid-in capital 170,316,293
Accumulated net realized loss on investments and foreign currency related transactions (96,903,248)
Net unrealized appreciation in value of investments and translation of other
assets and liabilities denominated in foreign currencies 1,477,015
---------------
Net assets applicable to shares outstanding $ 74,899,224
===============
NET ASSET VALUE PER SHARE ($74,899,224 DIVIDED BY 9,164,221) $ 8.17
===============
MARKET PRICE PER SHARE $ 6.85
===============
----------
(1) Includes securities out on loan to brokers with a market value of
$14,120,098.
See accompanying notes to financial statements.
10
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF OPERATIONS - FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2003
INVESTMENT LOSS
Income (Note A):
Dividends $ 947,556
Securities lending 14,698
Interest 9,133
Net investment loss allocated from partnerships (566,318)
Less: Foreign taxes withheld (112,722)
---------------
Total Investment Income 292,347
---------------
Expenses:
Investment advisory fees (Note B) 688,657
Administration fees (Note B) 91,568
Custodian fees 71,082
Legal fees 64,968
Audit fees 62,581
Directors' fees 43,266
Printing (Note B) 43,205
Accounting fees 29,249
Transfer agent fees 25,140
NYSE listing fees 24,810
Insurance 9,434
Miscellaneous 9,625
---------------
Total Expenses 1,163,585
---------------
Net Investment Loss (871,238)
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized loss from:
Investments (4,883,881)
Foreign currency related transactions (71,225)
Net change in unrealized depreciation in value of investments and translation
of other assets and liabilities denominated in foreign currencies 13,788,482
---------------
Net realized and unrealized gain on investments and foreign currency related transactions 8,833,376
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,962,138
===============
See accompanying notes to financial statements.
11
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FISCAL YEARS ENDED
NOVEMBER 30,
----------------------------------
2003 2002
--------------- ---------------
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment loss $ (871,238) $ (1,636,771)
Net realized loss on investments and foreign currency related transactions (4,955,106) (17,762,702)
Net change in unrealized depreciation in value of investments and
translation of other assets and liabilities denominated in foreign currencies 13,788,482 6,126,011
--------------- ---------------
Net increase/(decrease) in net assets resulting from operations 7,962,138 (13,273,462)
--------------- ---------------
Capital share transactions (Note H):
Cost of 1,617,215 shares purchased under tender offer -- (10,560,414)
--------------- ---------------
Total increase/(decrease) in net assets 7,962,138 (23,833,876)
--------------- ---------------
NET ASSETS
Beginning of year 66,937,086 90,770,962
--------------- ---------------
End of year $ 74,899,224 $ 66,937,086
=============== ===============
See accompanying notes to financial statements.
12
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF CASH FLOWS - FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2003
DECREASE IN CASH FROM
Operating Activities:
Investment income received $ 521,530
Partnership distributions received 490,338
Operating expenses paid (1,266,580)
Purchases of long-term portfolio investments (81,222,878)
Proceeds from disposition of long-term portfolio investments 79,467,160
Net proceeds from disposition of short-term portfolio investments 2,009,000
---------------
Net decrease in cash from operating activities $ (1,430)
Cash at beginning of year 7,743
---------------
Cash at end of year $ 6,313
===============
RECONCILIATION OF NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET DECREASE IN CASH
FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations $ 7,962,138
Adjustments:
Decrease in accrued expenses $ (112,736)
Increase in receivables (337,135)
Decrease in prepaid expenses 9,741
Net increase in cash from investment transactions 253,282
Net investment loss allocated from partnerships 1,056,656
Net realized and unrealized gain on investments and foreign currency related
transactions (8,833,376)
---------------
Total adjustments (7,963,568)
---------------
NET DECREASE IN CASH FROM OPERATING ACTIVITIES $ (1,430)
===============
See accompanying notes to financial statements.
13
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
FINANCIAL HIGHLIGHTS@
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
FOR THE FISCAL YEARS FOR THE
ENDED SIX MONTHS
NOVEMBER 30, ENDED
-------------------------------------------- NOVEMBER 30,
2003 2002 2001 2000
------------ ------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.30 $ 8.42 $ 10.35 $ 18.36
------------ ------------ ------------ ------------
Net investment income/(loss) (0.10)+ (0.15)+++ (0.12)++ (0.14)+
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions 0.97 (1.03) (1.88) (4.78)
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations 0.87 (1.18) (2.00) (4.92)
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income -- -- -- --
Net realized gain on investments and foreign currency
related transactions -- -- -- (3.09)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders -- -- -- (3.09)
------------ ------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered
or repurchased -- 0.06 0.07 --
------------ ------------ ------------ ------------
Net asset value, end of period $ 8.17 $ 7.30 $ 8.42 $ 10.35
============ ============ ============ ============
Market value, end of period $ 6.85 $ 6.22 $ 6.88 $ 7.688
============ ============ ============ ============
Total investment return (a) 10.13% (9.59)% (10.50)% (28.46)%
============ ============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 74,899 $ 66,937 $ 90,771 $ 131,325
Ratio of expenses to average net assets (b) 1.77% 1.90% 1.76% 1.91%(c)
Ratio of expenses to average net assets, excluding taxes 1.77% 1.77% 1.74% 1.91%(c)
Ratio of net investment income/(loss) to average net assets (1.33)% (1.89)% (1.18)% (1.50)%(c)
Portfolio turnover rate 120.31% 94.89% 82.16% 51.72%
@ Per share amounts prior to November 3, 2000 have been restated to
reflect a conversion factor of 0.9994 for shares issued in connection
with the merger of The Emerging Markets Infrastructure Fund, Inc. and
The Emerging Markets Telecommunications Fund, Inc.
# Includes a $0.03 per share increase to the Fund's net asset value per
share resulting from the anti-dilutive impact of shares issued
pursuant to the Fund's automatic Dividend Reinvestment Plan in January
1994.
+ Based on average shares outstanding.
++ Based on shares outstanding on November 21, 2001 (prior to the 2001
tender offer) and November 30, 2001.
+++ Based on shares outstanding on November 6, 2002 (prior to the 2002
tender offer) and November 30, 2002.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's dividend reinvestment program.
(b) Ratios shown are inclusive of Brazilian transaction and Chilean
repatriation taxes, if any.
(c) Annualized.
See accompanying notes to financial statements.
14
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
FINANCIAL HIGHLIGHTS@
FOR THE FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------------
2000 1999 1998 1997
------------ ------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 12.13 $ 16.37 $ 21.54 $ 20.95
------------ ------------ ------------ ------------
Net investment income/(loss) (0.20)+ (0.04)+ (0.06) 0.10
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions 6.14 (2.41) (1.40) 2.86
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations 5.94 (2.45) (1.46) 2.96
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income -- -- (0.09) (0.27)
Net realized gain on investments and foreign currency
related transactions -- (1.96) (3.62) (2.10)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders -- (1.96) (3.71) (2.37)
------------ ------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered
or repurchased 0.29 0.17 -- --
------------ ------------ ------------ ------------
Net asset value, end of period $ 18.36 $ 12.13 $ 16.37 $ 21.54
============ ============ ============ ============
Market value, end of period $ 13.508 $ 9.819 $ 13.008 $ 17.385
============ ============ ============ ============
Total investment return (a) 37.58% (9.99)% (4.57)% 14.31%
============ ============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 130,300 $ 94,026 $ 138,023 $ 181,627
Ratio of expenses to average net assets (b) 2.24% 2.09% 2.32% 1.90%
Ratio of expenses to average net assets, excluding taxes 2.04% 2.01% 1.82% 1.82%
Ratio of net investment income/(loss) to average net assets (1.15)% (0.33)% (0.29)% 0.52%
Portfolio turnover rate 113.75% 179.66% 162.58% 42.14%
FOR THE FISCAL YEARS ENDED MAY 31,
---------------------------------------------
1996 1995 1994
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 19.21 $ 20.91 $ 14.96
------------ ------------ ------------
Net investment income/(loss) 0.27 0.11 0.13
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions 1.91 0.01 7.03#
------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations 2.18 0.12 7.16
------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.04) (0.04) (0.15)
Net realized gain on investments and foreign currency
related transactions (0.40) (1.78) (1.06)
------------ ------------ ------------
Total dividends and distributions to shareholders (0.44) (1.82) (1.21)
------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered
or repurchased -- -- --
------------ ------------ ------------
Net asset value, end of period $ 20.95 $ 19.21 $ 20.91
============ ============ ============
Market value, end of period $ 17.385 $ 17.761 $ 22.764
============ ============ ============
Total investment return (a) 0.21% (13.94)% 64.74%
============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 176,628 $ 161,925 $ 176,253
Ratio of expenses to average net assets (b) 1.77% 1.89% 1.81%
Ratio of expenses to average net assets, excluding taxes -- -- --
Ratio of net investment income/(loss) to average net assets 1.40% 0.53% 0.63%
Portfolio turnover rate 27.71% 14.29% 43.98%
15
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Emerging Markets Telecommunications Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a closed-end,
non-diversified management investment company.
USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
SECURITY VALUATION: The net asset value of the Fund is determined daily as of
the close of regular trading on the New York Stock Exchange, Inc. (the
"Exchange") on each day the Exchange is open for business. The Fund's equity
investments are valued at market value, which is generally determined using the
closing price on the exchange or market on which the security is primarily
traded at the time of valuation (the "Valuation Time"). If no sales are
reported, equity investments are generally valued at the most recent bid
quotation as of the Valuation Time or at the lowest ask quotation in the case of
a short sale of securities. Debt securities with a remaining maturity greater
than 60 days are valued in accordance with the price supplied by a pricing
service, which may use a matrix, formula or other objective method that takes
into consideration market indices, yield curves and other specific adjustments.
Debt obligations that will mature in 60 days or less are valued on the basis of
amortized cost which approximates market value, unless the Board of Directors
determines that using this method would not reflect an investment's value.
Securities and other assets for which market quotations are not readily
available or whose values have been materially affected by events occurring
before the Fund's Valuation Time, but after the close of the securities primary
market are valued at fair value as determined in good faith by the Board of
Directors under procedures established by the Board of Directors. At November
30, 2003, the Fund held 22.63% of its net assets in securities valued at fair
value as determined in good faith by the Board of Directors with an aggregate
cost of $24,944,076 and fair value of $16,948,478. Although these securities may
be resold in privately negotiated transactions, the prices realized on such
sales could differ from the prices originally paid by the Fund or the current
carrying values, and the difference could be material.
SHORT-TERM INVESTMENT: The Fund sweeps available cash into a short-term deposit
issued by Brown Brothers Harriman & Co., the Fund's custodian. The short-term
time deposit is a variable rate account classified as a short-term investment.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on a trade date basis. The cost of investments sold is determined
by use of the specific identification method for both financial reporting and
U.S. income tax purposes. Interest income is accrued as earned; dividend income
is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. income or excise taxes as it is the Fund's
intention to continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. income and excise taxes.
Income received by the Fund from sources within emerging countries and other
foreign countries may be subject to withholding and other taxes imposed by such
countries.
16
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Under certain circumstances the Fund may be subject to a maximum of 36% Israeli
capital gains tax on gains derived from the sale of certain Israeli investments.
For the fiscal year ended November 30, 2003, the Fund did not incur such
expense.
The Fund accrues foreign taxes on realized gains in an amount equal to what the
Fund would owe if the securities were sold on the valuation date as a liability
and reduction of realized/unrealized gains. Taxes on foreign income are recorded
when the related income is recorded.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
valuation date rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such foreign currency related transactions are
treated as ordinary income for U.S. income tax purposes.
Net unrealized currency gains or losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected as
a component of net unrealized appreciation/(depreciation) in value of
investments and translation of other assets and liabilities denominated in
foreign currencies.
Net realized foreign exchange gains or losses represent foreign exchange gains
and losses from sales and maturities of debt securities, transactions in foreign
currencies and forward foreign currency contracts, exchange gains or losses
realized between the trade date and settlement date on security transactions,
and the difference between the amounts of interest and dividends recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received.
SECURITIES LENDING: The market value of securities out on loan to brokers at
November 30, 2003, was $14,120,098, for which the Fund has received cash as
collateral of $14,662,854. Such cash collateral was reinvested into overnight
repurchase agreements with Bear, Stearns & Co. Inc., which was in turn
collateralized by U.S. Government securities with a value of $15,093,235.
Security loans are required at all times to have collateral at least equal to
102% of the market value of the securities on loan; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders, substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and
17
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
distributions to shareholders are recorded by the Fund on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
income tax purposes due to U.S. generally accepted accounting principles/tax
differences in the character of income and expense recognition.
PARTNERSHIP ACCOUNTING POLICY: The Fund records its pro-rata share of the
income/(loss) and capital gains/(losses) allocated from the underlying
partnerships and adjusts the cost of the underlying partnerships accordingly.
These amounts are included in the Fund's Statement of Operations.
OTHER: Some countries require governmental approval for the repatriation of
investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if there is a deterioration in a country's balance of
payments or for other reasons, a country may impose temporary restrictions on
foreign capital remittances abroad. Amounts repatriated prior to the end of
specified periods may be subject to taxes as imposed by a foreign country.
The emerging countries' securities markets are substantially smaller, less
liquid and more volatile than the major securities markets in the United States.
A high proportion of the securities of many companies in emerging countries may
be held by a limited number of persons, which may limit the number of securities
available for investment by the Fund. The limited liquidity of emerging country
securities markets may also affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so.
The Fund is sector concentrated and therefore invests a high percentage of its
assets in the telecommunications sector. As a result, the financial, economic,
business and political developments in a particular sector of the market,
positive or negative, have a greater impact on the Fund's net asset value and
will cause its shares to fluctuate more than if the Fund did not concentrate its
investments in a particular sector. Under normal market conditions, it will
invest not less than 80% of its net assets in a group of related industries
within the telecommunications sector of the market.
The Fund, subject to local investment limitations, may invest up to 25% of its
assets (at the time of commitment) in illiquid equity securities, including
securities of private equity funds (whether in corporate or partnership form)
that invest primarily in the emerging markets. When investing through another
investment fund, the Fund will bear its proportionate share of the expenses
incurred by that fund, including management fees. Such securities are expected
to be illiquid which may involve a high degree of business and financial risk
and may result in substantial losses. Because of the current absence of any
liquid trading market for these investments, the Fund may take longer to
liquidate these positions than would be the case for publicly traded securities.
Although these securities may be resold in privately negotiated transactions,
the prices realized on such sales could be substantially less than those
originally paid by the Fund or the current carrying values and these differences
could be material. Further, companies whose securities are not publicly traded
may not be subject to the disclosures and other investor protection requirements
applicable to companies whose securities are publicly traded.
The Fund may enter into repurchase agreements ("repos") on U.S. Government
securities with primary government securities dealers recognized by the Federal
Reserve Bank of New York and member banks of the Federal Reserve System and on
securities issued by the governments of foreign countries, their
instrumentalities and with creditworthy parties in
18
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
accordance with established procedures. Repos are contracts under which the
buyer of a security simultaneously buys and commits to resell the security to
the seller at an agreed upon price and date. Repos are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, the collateral
must have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities fall below the value of the repurchase price plus accrued interest,
the Fund will require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller; collectibility of such claims may be limited. At November 30, 2003,
the Fund had no such agreements, other than the cash collateral received that
was reinvested in a repo under the Fund's securities lending program.
NOTE B. AGREEMENTS
Credit Suisse Asset Management, LLC ("CSAM") serves as the Fund's investment
adviser with respect to all investments. CSAM receives as compensation for its
advisory services from the Fund, an annual fee, calculated weekly and paid
quarterly, equal to 1.25% of the first $100 million of the Fund's average weekly
market value or net assets (whichever is lower), 1.125% of the next $100 million
and 1.00% of amounts in excess of $200 million. For the fiscal year ended
November 30, 2003, CSAM earned $688,657 for advisory services. CSAM also
provides certain administrative services to the Fund and is reimbursed by the
Fund for costs incurred on behalf of the Fund (up to $20,000 per annum). For the
fiscal year ended November 30, 2003, CSAM was reimbursed $12,684 for
administrative services rendered to the Fund.
Credit Suisse Asset Management (Australia) Limited ("Sub-Adviser") serves as the
Fund's sub-investment adviser. CSAM currently pays the Sub-Adviser on a
quarterly basis a fee of $480,000 per annum for services rendered with respect
to the Fund and certain other Credit Suisse Funds for which the Sub-Adviser has
been appointed as such. The Fund does not pay the Sub-Adviser.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's U.S.
administrator. The Fund pays BSFM a monthly fee that is computed weekly at an
annual rate of 0.12% of the Fund's average weekly net assets. For the fiscal
year ended November 30, 2003, BSFM earned $78,884 for administrative services.
BankBoston, N.A., Sao Paulo ("BBNA") serves as the Fund's administrator with
respect to Brazilian investments. BBNA is paid for its services out of the
custody fee payable to Brown Brothers Harriman & Co., the Fund's accounting
agent and custodian, a quarterly fee based on an annual rate of 0.10% of average
month end Brazilian net assets of the Fund.
Merrill Corporation ("Merrill"), an affiliate of CSAM, has been engaged by the
Fund to provide certain financial and tender related printing services. For the
fiscal year ended November 30, 2003, Merrill was paid $57,964 for its services
to the Fund.
The Independent Directors receive fifty percent (50%) of their annual retainer
in the form of shares purchased by the Fund's transfer agent in the open market.
Directors as a group own less than 1% of the Fund's outstanding shares.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 9,164,221 shares outstanding at November 30, 2003, CSAM
owned 14,333 shares.
19
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE D. INVESTMENT IN SECURITIES
For the fiscal year ended November 30, 2003 purchases and sales of securities,
other than short-term investments, were $81,222,878 and $77,752,787,
respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by CSAM (collectively,
the "Participating Funds"), participates in a $100 million committed, unsecured,
line of credit facility ("Credit Facility") with Deutsche Bank, A.G. as
administrative agent and syndication agent and State Street Bank and Trust
Company as operations agent for temporary or emergency purposes. Under the terms
of the Credit Facility, the Participating Funds pay an aggregate commitment fee
at a rate of 0.10% per annum on the average unused amount of the Credit
Facility, which is allocated among the Participating Funds in such manner as is
determined by the governing Boards of the Participating Funds. In addition, the
Participating Funds pay interest on borrowings at the Federal Funds rate plus
0.50%. During the fiscal year ended November 30, 2003, the Fund had no
borrowings under the Credit Facility.
NOTE F. FEDERAL INCOME TAXES
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP. These differences are
primarily due to differing treatments of foreign currency transactions, losses
deferred due to wash sales and Post-October losses (as later defined), and
excise tax regulations.
At November 30, 2003, the components of distributable earnings on a tax basis,
for the Fund were as follows:
Undistributed ordinary income -
Accumulated net realized loss $ (96,598,789)
Unrealized appreciation 1,172,556
--------------
Total distributable earnings $ (95,426,233)
==============
Under current tax law, certain capital losses realized after October 31 within a
taxable year may be deferred and treated as occurring on the first day of the
following tax year ("Post-October losses"). For the tax period ended November
30, 2003, the Fund incurred and elected to defer net realized foreign currency
losses of $15,078.
At November 30, 2003, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $96,583,711 of which $20,972,304 expires in 2006. This
amount is subject to Internal Revenue Sections limitations. Capital loss
carryforward of $5,308,276, $47,300,891, $17,356,479 and $5,645,761 expires in
2007, 2009, 2010 and 2011, respectively. It is uncertain whether the Fund will
be able to realize the benefits before they expire.
At November 30, 2003, the identified cost for federal income tax purposes, as
well as the gross unrealized appreciation from investments for those securities
having an excess of value over cost, gross unrealized depreciation from
investments for those securities having an excess of cost over value and the net
unrealized appreciation from investments were $88,277,711, $12,974,475,
$(11,800,658) and $1,173,817 respectively.
At November 30, 2003, the Fund reclassified from accumulated net realized loss
on investments and foreign currency related transactions of $56,147 to
accumulated net investment loss. In addition, the Fund reclassified $927,385
from accumulated net investment loss to paid-in capital, to adjust for current
period permanent book/tax differences. Net assets were not affected by these
reclassifications.
NOTE G. RESTRICTED SECURITIES
Certain of the Fund's investments are restricted as to resale and are valued at
fair value as determined in good faith by the Board of Directors under
procedures established by the Board of Directors in the absence of readily
ascertainable market values. The table below
20
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
shows the number of units/shares held, the acquisition dates, aggregate costs,
fair value as of November 30, 2003, per unit/share of such securities and
percent of net assets which the securities comprise.
NUMBER FAIR PERCENT
OF VALUE AT VALUE PER OF NET
SECURITY UNITS/SHARES ACQUISITION DATE(S) COST 11/30/2003 UNIT/SHARE ASSETS
-------- ------------ ------------------- ---------- ------------ ---------- ---------
BPW Israel Ventures LLC 1,121,970 10/05/00 - 07/01/02 $ 925,837 $ 660,369 $ 0.59 0.89
17,250 01/07/03 15,850 10,153 0.59 0.01
17,250 06/30/03 15,850 10,153 0.59 0.01
------------ ---------- ------------ -------
1,156,470 957,537 680,675 0.91
------------ ---------- ------------ -------
Concord Ventures II Fund L.P. 3,000,000 03/29/00 - 07/29/02 2,393,492 1,278,204 0.43 1.71
120,000 04/03/03 105,516 51,128 0.43 0.07
160,000 07/15/03 140,688 68,171 0.43 0.09
------------ ---------- ------------ -------
3,280,000 2,639,696 1,397,503 1.87
------------ ---------- ------------ -------
Emerging Markets
Ventures I L.P. 7,038,940 01/22/98 - 10/01/02 5,277,247 4,421,088 0.63 5.90
36,097 06/30/03 29,374 22,672 0.63 0.03
------------ ---------- ------------ -------
7,075,037 5,306,621 4,443,760 5.93
------------ ---------- ------------ -------
Exxel Capital Partners V, L.P. 1,897,761 05/11/98 - 12/03/98 539,966 0 0.00 0.00
------------ ---------- ------------ -------
Formula Ventures L.P. 1,399,747 08/06/99 - 07/03/02 550,826 298,146 0.21 0.40
40,487 04/03/03 24,541 8,624 0.21 0.01
26,860 07/24/03 16,954 5,721 0.21 0.01
------------ ---------- ------------ -------
1,467,094 592,321 312,491 0.42
------------ ---------- ------------ -------
Giza GE Venture Fund III L.P. 1,375,000 01/31/00 - 05/28/02 1,084,737 724,088 0.53 0.97
165,000 04/30/03 147,517 86,891 0.53 0.11
------------ ---------- ------------ -------
1,540,000 1,232,254 810,979 1.08
------------ ---------- ------------ -------
Independent Network Television,
Series II 1,000,000 07/06/98 1,000,000 500,000 0.50 0.67
------------ ---------- ------------ -------
International Wireless
Communications Holdings
Corp. 15,092 12/08/97 414,568 0 0.00 0.00
------------ ---------- ------------ -------
21
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NUMBER FAIR PERCENT
OF VALUE AT VALUE PER OF NET
SECURITY UNITS/SHARES ACQUISITION DATE(S) COST 11/30/2003 UNIT/SHARE ASSETS
-------- ------------ ------------------- ---------- ------------ ---------- ---------
J.P. Morgan Latin America Capital
Partners (Cayman), L.P. 556,734 04/10/00 - 06/28/01 $ 542,104 $ 475,112 $ 0.85 0.63
31,052 04/17/03 30,886 26,499 0.85 0.04
149,697 05/28/03 148,906 127,750 0.85 0.17
------------ ---------- ------------ -------
737,483 721,896 629,361 0.84
------------ ---------- ------------ -------
J.P. Morgan Latin America Capital
Partners (Delaware), L.P. 1,104,766 04/10/00 - 09/30/02 606,536 495,013 0.45 0.66
71,258 12/09/02 59,619 31,929 0.45 0.05
68,536 04/17/03 57,227 30,708 0.45 0.04
------------ ---------- ------------ -------
1,244,560 723,382 557,650 0.75
------------ ---------- ------------ -------
K.T. Concord Venture Fund L.P. 2,000,000 12/08/97 - 09/29/00 1,866,215 1,188,944 0.59 1.59
------------ ---------- ------------ -------
Neurone Ventures II, L.P. 270,000 11/24/00 - 06/17/02 208,772 121,816 0.45 0.16
30,000 01/27/03 27,712 13,535 0.45 0.02
37,500 06/23/03 34,641 16,919 0.45 0.02
------------ ---------- ------------ -------
337,500 271,125 152,270 0.20
------------ ---------- ------------ -------
The Renaissance Fund LDC 160 03/30/94 - 03/21/97 485,495 103,339 645.87 0.14
------------ ---------- ------------ -------
SVE Star Ventures Enterprises
GmbH & Co. No. IX KG 730,000 12/21/00 - 03/04/02 568,845 433,021 0.59 0.58
20,000 01/14/03 -- 11,864 0.59 0.01
250,000 08/18/03 238,214 148,295 0.59 0.20
------------ ---------- ------------ -------
1,000,000 807,059 593,180 0.79
------------ ---------- ------------ -------
Technology Crossover
Ventures IV, L.P. 1,272,200 03/08/00 - 08/07/02 799,164 1,048,084 0.82 1.40
125,000 06/18/03 101,642 102,979 0.82 0.14
43,200 11/14/03 43,200 35,590 0.82 0.04
------------ ---------- ------------ -------
1,440,400 944,006 1,186,653 1.58
------------ ---------- ------------ -------
TeleSoft Partners L.P. 1,250,000 07/22/97 - 06/07/01 614,980 247,500 0.20 0.33
------------ ---------- ------------ -------
TeleSoft Partners II QP, L.P. 900,000 07/14/00 - 01/25/01 668,558 301,320 0.33 0.40
240,000 12/12/02 225,643 80,352 0.33 0.11
------------ ---------- ------------ -------
1,140,000 894,201 381,672 0.51
------------ ---------- ------------ -------
22
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NUMBER FAIR PERCENT
OF VALUE AT VALUE PER OF NET
SECURITY UNITS/SHARES ACQUISITION DATE(S) COST 11/30/2003 UNIT/SHARE ASSETS
-------- ------------ ------------------- ------------ ------------ ---------- ---------
TVG Asian Communications
Fund II, L.P. 1,727,586 06/07/00 - 09/24/02 $ 1,521,882 $ 1,322,231 $ 0.77 1.77
60,181 01/02/03 57,947 46,060 0.77 0.06
43,594 03/31/03 41,976 33,365 0.77 0.04
63,798 06/30/03 61,429 48,829 0.77 0.07
432,232 07/16/03 416,186 330,814 0.77 0.44
46,686 08/19/03 44,953 35,732 0.77 0.05
556,522 11/07/03 556,522 425,941 0.77 0.57
------------ ------------ ------------ -------
2,930,599 2,700,895 2,242,972 3.00
------------ ------------ ------------ -------
Walden-Israel Ventures III, L.P. 220,000 02/23/01 - 06/19/02 157,062 133,747 0.61 0.18
68,750 04/01/03 60,929 41,796 0.61 0.06
51,563 10/09/03 45,697 31,347 0.61 0.04
------------ ------------ ------------ -------
340,313 263,688 206,890 0.28
------------ ------------ ------------ -------
Total $ 22,975,905 $ 15,635,839 20.89
============ ============ =======
The Fund may incur certain costs in connection with the disposition of the above
securities.
NOTE H. SHARE REPURCHASE PROGRAM
The Board of Directors of the Fund, at a meeting held on November 21, 2003,
authorized management to make open market purchases from time to time in an
amount up to 10% of the Fund's outstanding shares whenever the Fund's shares are
trading at a discount to net asset value of 15% or more. The Board has
instructed management to report repurchase activity to it regularly, and to post
the number of shares repurchased on the Fund's website on a monthly basis. The
Board at the same time determined to suspend the Fund's annual self-tender
program that had been announced in June of 2000. Open market purchases may also
be made within the discretion of management if the discount is less than 15%. In
November 2002, the Fund completed a tender offer for 15% of its outstanding
shares (1,617,215 shares) at a price of $6.53 per share.
23
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of The Emerging Markets Telecommunications Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of The Emerging Markets
Telecommunications Fund, Inc. (the "Fund") at November 30, 2003, the results of
its operations and its cash flows 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 ten years in the period then ended, in conformity
with accounting principles generally accepted 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 November 30, 2003 by correspondence with the
custodian and issuers, provide a reasonable basis for our opinion.
As explained in Note A, the financial statements include securities valued at
$16,948,478 (22.63% of net assets), whose fair values have been determined in
good faith under procedures established by the Board of Directors in the absence
of readily ascertainable market values. We have reviewed the procedures
established by the Board of Directors to value such securities and have
inspected underlying documentation, and, in the circumstances, we believe the
procedures are reasonable and the documentation appropriate. However, these
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the difference could be material.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 21, 2004
24
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On March 27, 2003, the Annual Meeting of Shareholders of The Emerging Markets
Telecommunications Fund, Inc. (the "Fund") was held and the following matter was
voted upon:
(1) To re-elect one director to the Board of Directors of the Fund.
NAME OF DIRECTOR FOR WITHHELD
-------------------------------------------------- --------- ---------
George W. Landau 7,803,871 228,515
In addition to the director re-elected at the meeting, Enrique R. Arzac, James
J. Cattano, William W. Priest, Jr. and Martin M. Torino continue to serve as
directors of the Fund.
Effective May 21, 2003, Joseph D. Gallagher was appointed as Chairman of the
Fund, Chief Executive Officer and President. Laurence R. Smith who previously
held these positions has resigned from the Fund effective May 21, 2003.
25
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED)
The InvestLink(SM) Program is sponsored and administered by EquiServe, L.P., not
by The Emerging Markets Telecommunications Fund, Inc. (the "Fund"). EquiServe,
L.P., will act as program administrator (the "Program Administrator") of the
InvestLink(SM) Program (the "Program"). The purpose of the Program is to provide
existing shareholders with a simple and convenient way to invest additional
funds and reinvest dividends in shares of the Fund's common stock ("Shares") at
prevailing prices, with reduced brokerage commissions and fees.
In order to participate in the Program, you must be a registered holder of at
least one Share of stock of the Fund. Purchases of Shares with funds from a
participant's cash payment or automatic account deduction will begin on the next
day on which funds are invested. All cash payments must be drawn on a U.S. bank
and payable in U.S. dollars. Checks must be made payable to EquiServe. If a
participant selects the dividend reinvestment option, automatic investment of
dividends generally will begin with the next dividend payable after the Program
Administrator receives his enrollment form. Once in the Program, a person will
remain a participant until he terminates his participation or sells all Shares
held in his Program account, or his account is terminated by the Program
Administrator. A participant may change his investment options at any time by
requesting a new enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. All optional cash deposit investments will be
subject to a service charge. Sales processed through the Program will have a
service fee deducted from the net proceeds, after brokerage commissions. In
addition to the transaction charges outlined above, participants will be
assessed per share processing fees (which include brokerage commissions.)
Participants will not be charged any fee for reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
investment date for cash payments is the 25th day of each month (or the next
trading day if the 25th is not a trading day). The investment date for dividend
reinvestment is the dividend payment date. The Program Administrator uses
dividends and funds of participants to purchase Shares of the Fund in the open
market. Such purchases will be made by participating brokers as agent for the
participants using normal cash settlement practices. All Shares purchased
through the Program will be allocated to participants as of the settlement date,
which is usually three business days from the purchase date. In all cases,
transaction processing will occur within 30 days of the receipt of funds, except
where temporary curtailment or suspension of purchases is necessary to comply
with applicable provisions of the Federal Securities laws or when unusual market
conditions make prudent investment impracticable. In the event the Program
Administrator is unable to purchase Shares within 30 days of the receipt of
funds, such funds will be returned to the participants.
The average price of all Shares purchased by the Program Administrator with all
funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period. All sale requests
having an anticipated market value of $100,000.00 or more are expected to be
submitted in
26
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED) (CONTINUED)
written form. In addition, all sale requests received by the Program
Administrator within thirty (30) days of an address change are expected to be
submitted in written form.
EquiServe L.P., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such participant's
account (if applicable), as well as the fees paid by the participant. In
addition, each participant will receive copies of the Fund's annual and
semi-annual reports to shareholders, proxy statements and, if applicable,
dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name of
the accounts of the respective participants. Unless requested, the Fund will not
issue to participants certificates for Shares of the Fund purchased under the
Program. The Program Administrator will hold the Shares in book-entry form until
a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split will
be based upon both the Shares of the Fund registered in participants' names and
the Shares (including fractional Shares) credited to participants' Program
accounts. Any stock dividend or Shares resulting from stock splits with respect
to Shares of the Fund, both full and fractional, which participants hold in
their Program accounts and with respect to all Shares registered in their names
will be automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his account
under the Program will be voted as the participant directs. The participants
will be sent the proxy materials for the annual meetings of shareholders. When a
participant returns an executed proxy, all of such Shares will be voted as
indicated. A participant may also elect to vote his Shares in person at the
Shareholders' meeting.
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as
27
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED) (CONCLUDED)
to tax consequences of participation in the Program, participants should consult
with their own tax advisors.
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However, the
Program Administrator will be liable for loss or damage due to error caused by
its negligence, bad faith or willful misconduct. Shares held in custody by the
Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all of his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely, the
Program Administrator reserves the right to suspend or terminate the Program at
any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested shareholder may participate in the Program. All other cash
payments or bank account deductions must be at least $100.00, up to a maximum of
$100,000.00 annually. An interested shareholder may join the Program by reading
the Program description, completing and signing the enrollment form and
returning it to the Program Administrator. The enrollment form and information
relating to the Program (including the terms and conditions) may be obtained by
calling the Program Administrator at one of the following telephone numbers:
(800) 730-6001 (U.S. and Canada) or (781) 575-3100 (outside U.S. and Canada).
All correspondence regarding the Program should be directed to: EquiServe Trust
Company N.A., InvestLink(SM) Program, P.O. Box 43010, Providence, RI
02940-3010.
InvestLink is a service mark of EquiServe, L.P.
28
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
TERM NUMBER OF
OF OFFICE PORTFOLIOS IN
AND FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS AND HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH FUND SERVED PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
------------------------- -------------------- ------------ --------------------------- ------------- ------------------
INDEPENDENT DIRECTORS
Enrique R. Arzac Director; Nominating Since 1996; Professor of Finance and 8 Director of The
c/o Credit Suisse Asset and Audit Committee current term Economics, Graduate Adams Express
Management, LLC Member ends at the School of Business, Company (a closed-
466 Lexington Avenue 2004 annual Columbia University end investment
New York, New York meeting since 1971 company); Director
10017-3140 of Petroleum and
Resources
Date of Birth: 02/10/41 Corporation (a
closed-end
investment company)
James J. Cattano Director; Nominating Since 1993; President, Primary 4 None
55 Old Field Point Road and Audit Committee current term Resources Inc. (an
Greenwich, Connecticut Member ends at the international trading and
06830 2004 annual manufacturing company
meeting specializing in the sale of
Date of Birth: 06/24/43 agricultural commodities
throughout Latin American
markets) since October 1996
George W. Landau Director; Nominating Since 1993; Senior Advisor, Latin 5 Director of GAM
c/o Credit Suisse Asset and Audit Committee current term America, The Coca-Cola Funds,Inc.
Management, LLC Member ends at the Company since 1988
466 Lexington Avenue 2006 annual
New York, New York meeting
10017-3140
Date of Birth: 03/04/20
Martin M. Torino Director; Nominating Since 1993; Chief Executive Officer and 3 None
c/o Credit Suisse Asset and Audit Committee current term Director of Celsur Logistica
Management, LLC Member ends at the S.A. (Logistics) since 2002;
466 Lexington Avenue 2005 annual Chairman of the Board of
New York, New York meeting Ingenio y Refineria San
10017-3140 Martin Del Tabacal S.A.
(sugar refinery) from
Date of Birth: 08/14/49 August 1996 to 2000
INTERESTED DIRECTOR
William W. Priest, Jr.* Director Since 1997; Co-Managing Partner, 49 Director of Globe
Steinberg Priest & Sloane current term Steinberg Priest & Sloane Wireless, L.L.C.
Capital Management, LLC ends at the Capital Management, LLC (a maritime
12 East 49th Street 2005annual since March 2001; communications
12th Floor meeting Chairman and Managing company); Director
New York, New York Director of CSAM from of InfraRed X (a
10017 2000 to February 2001, Chief medical device
Executive Officer and company)
Date of Birth: 09/24/41 Managing Director of CSAM
from 1990 to 2000
29
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED) (CONTINUED)
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
------------------------- --------------- ---------- -----------------------------------------------------------------------
OFFICERS
Joseph D. Gallagher** Chairman of the Since 2003 Managing Director, Chief Executive Officer of CSAM and Global Chief
c/o Credit Suisse Asset Fund, Chief Operating Officer of Credit Suisse Asset Management since 2003; Global
Management, LLC Executive Chief Financial Officer, Credit Suisse Asset Management from 1999 to
466 Lexington Avenue Officer and 2003; Chief Executive Officer and Director of Credit Suisse Asset
New York, New York President Management Limited, London, England, from June 2000 to 2003; Director of
10017-3140 Credit Suisse Asset Management Funds (UK) Limited, London, England,
from June 2000 to 2003; Managing Director, Head-Asian Corporate
Date of Birth: 12/14/62 Finance and M&A, Credit Suisse First Boston, Hong Kong, China, from
January 1998 to May 1999; Officer of other Credit Suisse Funds
Emily Alejos*** Interim Chief Since 1999 Director of CSAM since January 1999; Vice President of CSAM from 1997
c/o Credit Suisse Asset Investment to January 1999; Associated with CSAM since 1997; Officer of other
Management, LLC Officer Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 10/27/63
Hal Liebes Senior Vice Since 1997 Managing Director and Global General Counsel of CSAM; Associated
c/o Credit Suisse Asset President with CSAM since 1997; Officer of other Credit Suisse Funds
Management, LLC
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 07/06/64
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration of CSAM; Associated with
c/o Credit Suisse Asset Officer and CSAM since 1984; Officer of other Credit Suisse Funds
Management, LLC Secretary
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 11/15/59
Rocco A. Del Guercio Vice President Since 1997 Vice President of CSAM; Associated with CSAM since 1996; Officer of
c/o Credit Suisse Asset other Credit Suisse Funds
Management, LLC
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 04/28/63
30
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED) (CONCLUDED)
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
------------------------- --------------- ---------- -----------------------------------------------------------------------
OFFICERS--(CONCLUDED)
Robert M. Rizza Treasurer Since 1999 Assistant Vice President of CSAM since January 2001; Associated with
c/o Credit Suisse Asset CSAM since 1998; Officer of other Credit Suisse Funds
Management, LLC
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 12/09/65
* Designates a director who is an "interested person" of the Fund as defined
under the Investment Company Act of 1940, as amended. Mr. Priest is an
interested person of the Fund because he provided consulting services to
CSAM within the last two years.
** Effective May 21, 2003, Joseph D. Gallagher was appointed as Chairman of
the Fund, Chief Executive Officer and President of the Fund. Laurence R.
Smith who previously held these positions has resigned effective May 21,
2003.
*** Effective December 13, 2003, Emily Alejos was appointed as Interim Chief
Investment Officer. Yaroslaw Aranowicz who previously held the position has
resigned from CSAM.
31
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Emerging Growth Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Fixed Income Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Post-Venture Capital Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Municipal Money Fund
Credit Suisse New York Municipal Fund
Credit Suisse New York Tax Exempt Fund
Credit Suisse Select Equity Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value Fund
Credit Suisse Strategic Small Cap Fund
Credit Suisse U.S. Government Money Fund
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC or any affiliate, are not FDIC-insured and are not guaranteed by
Credit Suisse Asset Management, LLC or any affiliate. Fund investments are
subject to investment risks, including loss of your investment. There are
special risk considerations associated with international, global,
emerging-market, small-company, high-yield debt, single-industry, single-country
and other special, aggressive or concentrated investment strategies. Past
performance cannot guarantee future results.
More complete information about a fund, including charges and expenses, is
provided in the Prospectus, which should be read carefully before investing. You
may obtain copies by calling Credit Suisse Funds at 800-927-2874. For up-to-date
performance, please look in the mutual fund section of your newspaper under
Credit Suisse.
Credit Suisse Asset Management Securities, Inc., Distributor.
32
This page left intentionally blank.
SUMMARY OF GENERAL INFORMATION
The Fund--The Emerging Markets Telecommunications Fund, Inc.--is a closed-end,
non-diversified management investment company whose shares trade on the New York
Stock Exchange, Inc. Its investment objective is long-term capital appreciation
through investments primarily in equity securities of telecommunications
companies in emerging countries. Credit Suisse Asset Management, LLC (New York),
the Fund's investment adviser, is part of Credit Suisse Asset Management
("CSAM"), the institutional and mutual-fund asset-management arm of Credit
Suisse First Boston. As of September 30, 2003, CSAM managed over $49 billion in
the U.S. and, together with its global affiliates, managed assets of over $312
billion in 14 countries.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "EmMktTel" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "EmergMktTele". The Fund's New York Stock Exchange
trading symbol is ETF. Weekly comparative net asset value (NAV) and market price
information about The Emerging Markets Telecommunications Fund, Inc.'s shares
are published each Sunday in THE NEW YORK TIMES and each Monday in THE WALL
STREET JOURNAL and BARRON'S, as well as other newspapers, in a table called
"Closed-End Funds."
THE CSAM GROUP OF FUNDS
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.csam.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
MULTIPLE COUNTRY
The Latin America Equity Fund, Inc. (LAQ)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse High Yield Bond Fund (DHY)
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The Emerging Markets Telecommunications
Fund, Inc. may from time to time purchase shares of its capital stock in the
open market.
DIRECTORS AND CORPORATE OFFICERS
Enrique R. Arzac Director
James J. Cattano Director
George W. Landau Director
William W. Priest, Jr. Director
Martin M. Torino Director
Joseph D. Gallagher Chairman of the Fund, Chief Executive Officer
and President
Emily Alejos Interim Chief Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and Secretary
Rocco A. Del Guercio Vice President
Robert M. Rizza Treasurer
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, NY 10017
INVESTMENT SUB-ADVISER
Credit Suisse Asset Management (Australia) Limited
Level 32, Gateway Building
1 Macquarie Place
Sydney NSW 2000
ADMINISTRATOR
Bear Stearns Funds Management Inc.
383 Madison Avenue
New York, NY 10179
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
Fleet National Bank
(c/o EquiServe, L.P.)
P.O. Box 43010
Providence, RI 02940
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
This report, including the financial statements herein, 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.
[ETF LISTED NYSE(R) LOGO]
3018-AR-03
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics applicable to its Chief Executive
Officer, President, Chief Financial Officer and Chief Accounting Officer, or
persons performing similar functions. A copy of the code is filed as Exhibit
11(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended November 30, 2003. There were no waivers or implicit waivers from
the code granted by the registrant during the fiscal year ended
November 30, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's governing board has determined that it has one audit committee
financial expert serving on its audit committee: Enrique R. Arzac. The audit
committee financial expert is "independent" for purposes of this item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement is not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended. The members of the committee are Enrique R. Arzac, James J. Cattano,
George W. Landau and Martin M. Torino.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
CREDIT SUISSE ASSET MANAGEMENT, LLC
CSAM CAPITAL INC.
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
CSAM CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
INTRODUCTION
Credit Suisse Asset Management, LLC and CSAM Capital Inc.
(collectively, "CSAM") are fiduciaries that owe each of its clients duties of
care and loyalty with respect to proxy voting. The duty of care requires CSAM to
monitor corporate events and to vote proxies. To satisfy its duty of loyalty,
CSAM must cast proxy votes in the best interests of each of its clients.
The Credit Suisse Funds, Credit Suisse Institutional Funds, and CSAM
Closed-End Funds (the "Funds"), which have engaged Credit Suisse Asset
Management, LLC as their investment adviser, are of the belief that the proxy
voting process is a means of addressing corporate governance issues and
encouraging corporate actions both of which can enhance shareholder value.
POLICY
The Proxy Voting Policy (the "Policy") set forth below is designed to
ensure that proxies are voted in the best interests of CSAM's clients. The
Policy addresses particular issues and gives a general indication of how CSAM
will vote proxies. The Policy is not exhaustive and does not include all
potential issues.
PROXY VOTING COMMITTEE
The Proxy Voting Committee will consist of a member of the Portfolio
Management Department, a member of the Legal and Compliance Department, and a
member of the Operations Department (or their designees). The purpose of the
Proxy Voting Committee is to administer the voting of all clients' proxies in
accordance with the Policy. The Proxy Voting Committee will review the Policy
annually to ensure that it is designed to promote the best interests of CSAM's
clients.
For the reasons disclosed below under "Conflicts," the Proxy Voting
Committee has engaged the services of an independent third party (initially,
Institutional Shareholder Services ("ISS")) to assist in issue analysis and vote
recommendation for proxy proposals not addressed by the Policy. ISS will also
provide CSAM with issue analysis and vote recommendation for the proxy proposals
addressed by the Policy.
Proxy proposals addressed by the Policy will be voted in accordance
with the Policy. Proxy proposals addressed by the Policy that require a
case-by-case analysis will be voted in accordance with the vote recommendation
of ISS. Proxy proposals not addressed by the Policy will also be voted in
accordance with the vote recommendation of ISS. To the extent that the Proxy
Voting Committee proposes to deviate from the Policy or the ISS vote
recommendation, the Committee shall obtain client consent as described below.
CSAM investment professionals may submit a written recommendation to
the Proxy Voting Committee to vote in a manner inconsistent with the Policy
and/or the recommendation of ISS. Such recommendation will set forth its basis
and rationale. In addition, the investment professional must confirm m writing
that he/she is not aware of any conflicts of interest concerning the proxy
matter or provide a full and complete description of the conflict.
CONFLICTS
CSAM is the institutional and mutual fund asset management arm of
Credit Suisse First Boston, which is part of Credit Suisse Group, one of the
world's largest financial organizations. As part of a global, full service
investment-bank, broker-dealer, and asset-management organization, CSAM and its
affiliates and personnel may have multiple advisory, transactional, financial,
and other interests in securities, instruments, and companies that may be
purchased or sold by CSAM for its clients' accounts. The interests of CSAM
and/or its affiliates and personnel may conflict with the
interests of CSAM's clients in connection with any proxy issue. In addition,
CSAM may not be able to identify all of the conflicts of interest relating to
any proxy matter.
CONSENT
In each and every instance in which the Proxy Voting Committee favors
voting in a manner that is inconsistent with the Policy or the vote
recommendation of ISS (including proxy proposals addressed and not addressed by
the Policy), it shall disclose to the client conflicts of interest information
and obtain client consent to vote. Where the client is a Fund, disclosure shall
be made to any one director who is not an "interested person," as that term is
defined under the Investment Company Act of 1940, as amended, of the Fund.
RECORDKEEPING
CSAM is required to maintain in an easily accessible place for five
years all records relating to proxy voting. These records include the following:
- a copy of the Policy;
- a copy of each proxy statement received on behalf of CSAM clients;
- a record of each vote cast on behalf of CSAM clients;
- a copy of all documents created by CSAM personnel that were material to
making a decision on a vote or that memorializes the basis for the
decision; and
- a copy of each written request by a client for information on how CSAM
voted proxies, as well as a copy of any written response.
CSAM reserves the right to maintain certain required proxy records
with ISS m accordance with all applicable regulations.
DISCLOSURE
CSAM will describe the Policy to each client. Upon request, CSAM will
provide any client with a copy of the Policy. CSAM will also disclose to its
clients how they can obtain information on their proxy votes.
ISS will capture data necessary for Funds to file Form N-PX on an
annual basis concerning their proxy voting record in accordance with applicable
law.
PROCEDURES
The Proxy Voting Committee will administer the voting of all client
proxies. CSAM has engaged ISS as an independent third party proxy voting service
to assist in the voting of client proxies. ISS will coordinate with each
client's custodian to ensure that proxy materials reviewed by the custodians are
processed in a timely fashion. ISS will provide CSAM with an analysis of proxy
issues and a vote recommendation for proxy proposals. ISS will refer proxies to
the Proxy Voting Committee for instructions when the application of the Policy
is not clear. The Proxy Voting Committee will notify ISS of any changes to the
Policy or deviating thereof.
PROXY VOTING POLICY
OPERATIONAL ITEMS
Adjourn Meeting
Proposals to provide management with the authority to adjourn an
annual or special meeting will be determined on a case-by-case basis.
Amend Quorum Requirements
Proposals to reduce quorum requirements for shareholder meetings below
a majority of the shares outstanding will be determined on a case-by-case basis.
Amend Minor Bylaws
Generally vote for bylaw or charter changes that are of a housekeeping
nature.
Change Date, Time, or Location of Annual Meeting
Generally vote for management proposals to change the
date/time/location of the annual meeting unless the proposed change is
unreasonable. Generally vote against shareholder proposals to change the
date/time/location of the annual meeting unless the current scheduling or
location is unreasonable.
Ratify Auditors
Generally vote for proposals to ratify auditors unless: (1) an auditor has a
financial interest in or association with the company, and is therefore not
independent; (2) fees for non-audit services are excessive, or (3) there is
reason to believe that the independent auditor has rendered an opinion, which is
neither accurate nor indicative of the company's financial position. Generally
vote on a case-by-case basis on shareholder proposals asking companies to
prohibit their auditors from engaging in non-audit services (or capping the
level of non-audit services). Generally vote for shareholder proposals asking
for audit firm rotation, unless the rotation period is so short (less than five
years) that it would be unduly burdensome to the company.
BOARD OF DIRECTORS
Voting on Director Nominees in Uncontested Elections
Generally votes on director nominees on a case-by-case basis. Votes
may be withheld: (1) from directors who attended less than 75% of the board and
committee meetings without a valid reason for the absences; (2) implemented or
renewed a dead-hand poison pill; (3) ignored a shareholder proposal that was
approved by a majority of the votes cast for two consecutive years; (4) ignored
a shareholder proposal approved by a majority of the shares outstanding; (5)
have failed to act on takeover offers where the majority of the shareholders
have tendered their shares; (6) are inside directors or affiliated outside
directors and sit on the audit, compensation, or nominating committee; (7) are
inside directors or affiliated outside directors and the full board serves as
the audit, compensation, or nominating committee or the company does not have
one of these committees; or (8) are audit committee members and the non-audit
fees paid to the auditor are excessive.
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a
case-by-case basis. Proposals to restore or provide for cumulative voting in the
absence of sufficient good governance provisions and/or poor relative
shareholder returns will be determined on a case-by-case basis.
Director and Officer Indemnification and Liability Protection
Proposals on director and officer indemnification and liability
protection generally evaluated on a case-bycase basis. Generally vote against
proposals that would: (1) eliminate entirely directors' and officers' liability
for monetary damages for violating the duty of care; or (2) expand coverage
beyond just legal expenses to acts, such as negligence, that are more serious
violations of fiduciary obligation than mere carelessness. Generally vote for
only those proposals providing such expanded coverage in cases when a director's
or officer's legal defense was unsuccessful if, (1) the director was found to
have acted in good faith and in a manner that he reasonably believed was in the
best interests of the company, and (2) only if the director's legal expenses
would be covered.
Filling Vacancies/Removal of Directors
Generally vote against proposals that provide that directors may be
removed only for cause. Generally vote for proposals to restore shareholder
ability to remove directors with or without cause. Proposals that provide that
only continuing directors may elect replacements to fill board vacancies will be
determined on a case-by-case basis. Generally vote for proposals that permit
shareholders to elect directors to fill board vacancies.
Independent Chairman (Separate Chairman/CEO)
Generally vote for shareholder proposals requiring the position of
chairman be filled by an independent director unless there are compelling
reasons to recommend against the proposal, including: (1) designated lead
director, appointed from the ranks of the independent board members with clearly
delineated duties; (2) majority of independent directors; (3) all independent
key committees; (4) committee chairpersons nominated by the independent
directors; (5) CEO performance is reviewed annually by a committee of outside
directors; (6) established governance guidelines; or (7) company performance.
Majority of Independent Directors
Generally vote for shareholder proposals requiring that the board
consist of a majority or substantial majority (two-thirds) of independent
directors unless the board composition already meets the adequate threshold.
Generally vote for shareholder proposals requiring the board audit,
compensation, and/or nominating committees be composed exclusively of
independent directors if they currently do not meet that standard. Generally
withhold votes from insiders and affiliated outsiders sitting on the audit,
compensation, or nominating committees. Generally withhold votes from insiders
and affiliated outsiders on boards that are lacking any of these three panels.
Term Limits
Generally vote against shareholder proposals to limit the tenure of outside
directors.
PROXY CONTESTS
Voting on Director Nominees in Contested Elections
Votes in a contested election of directors should be decided on a
case-by-case basis, with shareholders determining which directors are best
suited to add value for shareholders. The major decision factors are: (1)
company performance relative to its peers; (2) strategy of the incumbents versus
the dissidents; (3) independence of directors/nominees; (4) experience and
skills of board candidates; (5) governance profile of the company; (6) evidence
of management entrenchment; (7) responsiveness to shareholders; or (8) whether
takeover offer has been rebuffed.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws
will be determined on a case-by-case basis. Proposals giving the board the
ability to amend the bylaws in addition to shareholders will be determined on a
case-by-case basis.
Confidential Voting
Generally vote for shareholder proposals requesting that corporations
adopt confidential voting, use independent vote tabulators and use independent
inspectors of election, as
long as the proposal includes a provision for proxy contests as follows: In the
case of a contested election, management should be permitted to request that the
dissident group honor its confidential voting policy. If the dissidents agree,
the policy may remain in place. If the dissidents will not agree, the
confidential voting policy may be waived. Generally vote for management
proposals to adopt confidential voting.
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a
case-by-case basis. Proposals to restore or provide for cumulative voting in the
absence of sufficient good governance provisions and/or poor relative
shareholder returns will be determined on a case-by-case basis.
ANTITAKEOVER DEFENSES AND VOTING RELATED ISSUES
Advance Notice Requirements for Shareholder Proposals/Nominations
Votes on advance notice proposals are determined on a case-by-case
basis.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws
will be determined on a case-by-case basis. Generally vote for proposals giving
the board the ability to amend the bylaws in addition to shareholders.
Poison Pills (Shareholder Rights Plans)
Generally vote for shareholder proposals requesting that the company
submit its poison pill to a shareholder vote or redeem it. Votes regarding
management proposals to ratify a poison pill should be determined on a
case-by-case basis. Plans should embody the following attributes: (1) 20% or
higher flip-in or flip-over; (2) two to three year sunset provision; (3) no
dead-hand or no-hand features; or (4) shareholder redemption feature.
Shareholders' Ability to Act by Written Consent
Generally vote against proposals to restrict or prohibit shareholders'
ability to take action by written consent. Generally vote for proposals to allow
or make easier shareholder action by written consent.
Shareholders' Ability to Call Special Meetings
Proposals to restrict or prohibit shareholders' ability to call
special meetings or that remove restrictions on the right of shareholders to act
independently of management will be determined on a case-by-case basis.
Supermajority Vote Requirements
Proposals to require a supermajority shareholder vote will be
determined on a case-by-case basis Proposals to lower supermajority vote
requirements will be determined on a case-by-case basis.
MERGER AND CORPORATE RESTRUCTURING
Appraisal Rights
Generally vote for proposals to restore, or provide shareholders with,
rights of appraisal.
Asset Purchases
Generally vote case-by-case on asset purchase proposals, taking into
account: (1) purchase price, including earnout and contingent payments; (2)
fairness opinion; (3) financial and strategic benefits; (4) how the deal was
negotiated; (5) conflicts of interest; (6) other alternatives for the business;
or (7) noncompletion risk (company's going concern prospects, possible
bankruptcy).
Asset Sales
Votes on asset sales should be determined on a case-by-case basis
after considering: (1) impact on the balance sheet/working capital; (2)
potential elimination of diseconomies; (3) anticipated financial and operating
benefits; (4) anticipated use of funds; (5) value received for the asset;
fairness opinion (if any); (6) how the deal was negotiated; or (6) Conflicts of
interest
Conversion of Securities
Votes on proposals regarding conversion of securities are determined
on a case-by-case basis. When evaluating these proposals, should review (1)
dilution to existing shareholders' position; (2) conversion price relative to
market value; (3) financial issues: company's financial situation and degree of
need for capital; effect of the transaction on the company's cost of capital;
(4) control issues: change in management; change in control; standstill
provisions and voting agreements; guaranteed contractual board and committee
seats for investor; veto power over certain corporate actions; (5) termination
penalties; (6) conflict of interest: arm's length transactions, managerial
incentives. Generally vote for the conversion if it is expected that the company
will be subject to onerous penalties or will be forced to file for bankruptcy if
the transaction is not approved.
Corporate Reorganization
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution
to existing shareholders' position; (2) terms of the offer; (3) financial
issues; (4) management's efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest. Generally vote for the debt restructuring if
it is expected that the company will file for bankruptcy if the transaction is
not approved.
Reverse Leveraged Buyouts
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing shareholders'
position; (2) terms of the offer; (3) financial issues; (4) management's efforts
to pursue other alternatives; (5) control issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the company
will file for bankruptcy if the transaction is not approved.
Formation of Holding Company
Votes on proposals regarding the formation of a holding company should
be determined on a case-by-case basis taking into consideration: (1) the reasons
for the change; (2) any financial or tax benefits; (3) regulatory benefits; (4)
increases in capital structure; (5) changes to the articles of incorporation or
bylaws of the company. Absent compelling financial reasons to recommend the
transaction, generally vote against the formation of a holding company if the
transaction would include either of the following: (1) increases in common or
preferred stock in excess of the allowable maximum as calculated a model capital
structure; (2) adverse changes in shareholder rights; (3) going private
transactions; (4) votes going private transactions on a case-by-case basis,
taking into account: (a) offer price/premium; (b) fairness opinion; (c) how the
deal was negotiated; (d) conflicts of interest; (e) other alternatives/offers
considered; (f) noncompletion risk.
Joint Ventures
Vote on a case-by-case basis on proposals to form joint ventures,
taking into account: (1) percentage of assets/business contributed; (2)
percentage ownership; (3) financial and strategic benefits; (4) governance
structure; (5) conflicts of interest; (6) other alternatives; (7) noncompletion
risk; (8) liquidations. Votes on liquidations should be determined on a
case-by-case basis after reviewing: (1) management's efforts to pursue other
alternatives such as mergers; (2) appraisal value of the assets (including any
fairness opinions); (3) compensation plan for executives managing the
liquidation. Generally vote for the liquidation if the company will file for
bankruptcy if the proposal is not approved.
Mergers and Acquisitions
Votes on mergers and acquisitions should be considered on a
case-by-case basis, determining whether the transaction enhances shareholder
value by giving consideration to: (1) prospects of the combined companies; (2)
anticipated financial and operating benefits; (3) offer price;
(4) fairness opinion; (5) how the deal was negotiated; (6) changes in corporate
governance and their impact on shareholder rights; (7) change in the capital
structure; (8) conflicts of interest.
Private Placements
Votes on proposals regarding private placements should be determined
on a case-by-case basis. When evaluating these proposals, should review: (1)
dilution to existing shareholders' position; (2) terms of the offer; (3)
financial issues; (4) management's efforts to pursue alternatives such as
mergers; (5) control issues; (6) conflict of interest. Generally vote for the
private placement if it is expected that the company will file for bankruptcy if
the transaction is not approved.
Prepackaged Bankruptcy Plans
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing shareholders'
position; (2) terms of the offer; (3) financial issues; (4) management's efforts
to pursue other alternatives; (5) control issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the company
will file for bankruptcy if the transaction is not approved. Recapitalization
Votes case-by-case on recapitalizations (reclassifications of securities),
taking into account: (1) more simplified capital structure; (2) enhanced
liquidity, (3) fairness of conversion terms, including fairness opinion; (4)
impact on voting power and dividends; (5) reasons for the reclassification; (6)
conflicts of interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse stock
split when the number of authorized shares will be proportionately reduced.
Generally vote for management proposals to implement a reverse stock split to
avoid delisting. Votes on proposals to implement a reverse stock split that do
not proportionately reduce the number of shares authorized for issue should be
determined on a case-by-case basis.
Spinoffs
Votes on spinoffs should be considered on a case-by-case basis
depending on: (1) tax and regulatory advantages; (2) planned use of the sale
proceeds; (3) valuation of spinoff; fairness opinion; (3) benefits that the
spinoff may have on the parent company including improved market focus; (4)
conflicts of interest; managerial incentives; (5) any changes in corporate
governance and their impact on shareholder rights; (6) change in the capital
structure
Value Maximization Proposals
Vote case-by-case on shareholder proposals seeking to maximize
shareholder value.
CAPITAL STRUCTURE
Adjustments to Par Value of Common Stock
Generally vote for management proposals to reduce the par value of
common stock unless the action is being taken to facilitate an antitakeover
device or some other negative corporate governance action. Generally vote for
management proposals to eliminate par value.
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock
authorized for issuance are determined on a case-by-case basis. Generally vote
against proposals at companies with dual-class capital structures to increase
the number of authorized shares of the class of stock that has superior voting
rights. Generally vote for proposals to approve increases beyond the allowable
increase when a company's shares are in danger of being delisted or if a
company's ability to continue to operate as a going concern is uncertain.
Dual-class Stock
Generally vote against proposals to create a new class of common stock
with superior voting rights. Generally vote for proposals to create a new class
of nonvoting or subvoting common stock if: (1) it is intended for financing
purposes with minimal or no dilution to current shareholders; (2) it is not
designed to preserve the voting power of an insider or significant shareholder.
Issue Stock for Use with Rights Plan
Generally vote against proposals that increase authorized common stock
for the explicit purpose of implementing a shareholder rights plan.
Preemptive Rights
Votes regarding shareholder proposals seeking preemptive rights should
be determined on a case-by-case basis after evaluating: (1) the size of the
company; (2) the shareholder base; (3) the liquidity of the stock
Preferred Stock
Generally vote against proposals authorizing the creation of new
classes of preferred stock with unspecified voting, conversion, dividend
distribution, and other rights ("blank check" preferred stock). Generally vote
for proposals to create "declawed" blank check preferred stock (stock that
cannot be used as a takeover defense). Generally vote for proposals to authorize
preferred stock in cases where the company specifies the voting, dividend,
conversion, and other rights of such stock and the terms of the preferred stock
appear reasonable. Generally vote against proposals to
increase the number of blank check preferred stock authorized for issuance when
no shares have been issued or reserved for a specific purpose. Generally vote
case-by-case on proposals to increase the number of blank check preferred shares
after analyzing the number of preferred shares available for issue given a
company's industry and performance in terms of shareholder returns.
Recapitalization
Vote case-by-case on recapitalizations (reclassifications of
securities), taking into account: (1) more simplified capital structure; (2)
enhanced liquidity; (3) fairness of conversion terms, including fairness
opinion; (4) impact on voting power and dividends; (5) reasons for the
reclassification; (6) conflicts of interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse stock
split when the number of authorized shares will be proportionately reduced.
Generally vote for management proposals to implement a reverse stock split to
avoid delisting. Votes on proposals to implement a reverse stock split that do
not proportionately reduce the number of shares authorized for issue should be
determined on a case-by-case basis.
Share Repurchase Programs
Generally vote for management proposals to institute open-market share
repurchase plans in which all shareholders may participate on equal terms.
Stock Distributions: Splits and Dividends
Generally vote for management proposals to increase the common share
authorization for a stock split or share dividend, provided that the increase in
authorized shares would not result in an excessive number of shares available
for issuance.
Tracking Stock
Votes on the creation of tracking stock are determined on a
case-by-case basis, weighing the strategic value of the transaction against such
factors as: (1) adverse governance changes; (2) excessive increases in
authorized capital stock; (3) unfair method of distribution; (4) diminution of
voting rights; (5) adverse conversion features; (6) negative impact on stock
option plans; (7) other alternatives such as a spinoff.
EXECUTIVE AND DIRECTOR COMPENSATION
Executive and Director Compensation
Votes on compensation plans for directors are determined on a
case-by-case basis.
Stock Plans in Lieu of Cash
Votes for plans which provide participants with the option of taking
all or a portion of their cash compensation in the form of stock are determined
on a case-by-case basis. Generally vote for plans which provide a
dollar-for-dollar cash for stock exchange. Votes for plans which do not provide
a dollar-fordollar cash for stock exchange should be determined on a
case-by-case basis.
Director Retirement Plans
Generally vote against retirement plans for nonemployee directors.
Generally vote for shareholder proposals to eliminate retirement plans for
nonemployee directors.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are
evaluated on a case-by-case basis giving consideration to the following: (1)
historic trading patterns; (2) rationale for the repricing; (3) valuefor-value
exchange; (4) option vesting; (5) term of the option; (6) exercise price; (7)
participants; (8) employee stock purchase plans. Votes on employee stock
purchase plans should be determined on a case-by-case basis. Generally vote for
employee stock purchase plans where: (1) purchase price is at least 85 percent
of fair market value; (2) offering period is 27 months or less, and (3)
potential voting power dilution (VPD) is ten percent or less. Generally vote
against employee stock purchase plans where either: (1) purchase price is less
than 85 percent of fair market value; (2) Offering period is greater than 27
months, or (3) VPD is greater than ten percent
Incentive Bonus Plans and Tax Deductibility Proposals
Generally vote for proposals that simply amend shareholder-approved
compensation plans to include administrative features or place a cap on the
annual grants any one participant may receive. Generally vote for proposals to
add performance goals to existing compensation plans. Votes to amend existing
plans to increase shares reserved and to qualify for favorable tax treatment
considered on a case-by-case basis. Generally vote for cash or cash and stock
bonus plans that are submitted to shareholders for the purpose of exempting
compensation from taxes if no increase in shares is requested.
Employee Stock Ownership Plans (ESOPs)
Generally vote for proposals to implement an ESOP or increase
authorized shares for existing ESOPs, unless the number of shares allocated to
the ESOP is excessive (more than five percent of outstanding shares.)
401 (k) Employee Benefit Plans
Generally vote for proposals to implement a 401(k) savings plan for
employees.
Shareholder Proposals Regarding Executive and Director Pay
Generally vote for shareholder proposals seeking additional disclosure
of executive and director pay information, provided the information requested is
relevant to shareholders' needs, would not put the company at a competitive
disadvantage relative to its industry, and is not unduly burdensome to the
company. Generally vote against shareholder proposals seeking to set absolute
levels on compensation or otherwise dictate the amount or form of compensation.
Generally vote against shareholder proposals requiring director fees be paid in
stock only. Generally vote for shareholder proposals to put option repricings to
a shareholder vote. Vote on a case-by-ease basis for all other shareholder
proposals regarding executive and director pay, taking into account company
performance, pay level versus peers, pay level versus industry, and long term
corporate outlook.
Performance-Based Stock Option Proposals
Vote case-by-case on shareholder proposals advocating the use of
performance-based stock options (indexed, premium-priced, and performance-vested
options).
Stock Option Expensing
Generally vote for shareholder proposals asking the company to expense
stock options unless the company has already publicly committed to start
expensing by a specific date.
Golden and Tin Parachutes
Generally vote for shareholder proposals to require golden and tin
parachutes to be submitted for shareholder ratification, unless the proposal
requires shareholder approval prior to entering into employment contracts. Vote
on a case-by-case basis on proposals to ratify or cancel golden or tin
parachutes.
Dated: July 30, 2003
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Form N-CSR disclosure requirement not yet applicable to the registrant.
ITEM 10. CONTROLS AND PROCEDURES.
(a) As of a date within 90 days from the filing date of this report, the
principal executive officer and principal financial officer concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")) were effective based on
their evaluation of the disclosure controls and procedures required by Rule
30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934.
(b) There were no changes in registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
registrant's second fiscal half-year that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(a)(1) The registrant's code of ethics is an exhibit to this report.
(a)(2) The certifications of the registrant as required by Rule 30a-2(a)
under the Act are exhibits to this report.
(a)(3) Not applicable.
(b) The certifications of the registrant as required by Rule 30a-2(b)
under the Act are an exhibit to this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE EMERGING MARKETS TELECOMMUNICATIONS FUND INC.
/s/ Joseph D. Gallagher
-----------------------
Name: Joseph D. Gallagher
Title: Chief Executive Officer
Date: February 5, 2004
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Joseph D. Gallagher
-----------------------
Name: Joseph D. Gallagher
Title: Chief Executive Officer
Date: February 5, 2004
/s/ Michael A. Pignataro
------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: February 5, 2004