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. 811-8076
----------------------------------------
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, New York, New York 10017-3140
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(Address of Principal Executive Offices) (Zip Code)
J. Kevin Gao, 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: October 31
Date of reporting period: December 1, 2003 to October 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
THE EMERGING MARKETS
TELECOMMUNICATIONS
FUND, INC.
ANNUAL REPORT
OCTOBER 31, 2004
[ETF LISTED NYSE(R) LOGO]
3018-AR-04
CONTENTS
Letter to Shareholders 1
Portfolio Summary 4
Schedule of Investments 6
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 Registered Public Accounting Firm 24
Description of InvestLink(SM) Program 25
Information Concerning Directors and Officers 28
Annual Certifications 30
Proxy Voting and Portfolio Holdings Information 31
LETTER TO SHAREHOLDERS
December 13, 2004
DEAR SHAREHOLDER:
The Emerging Markets Telecommunications Fund, Inc. (the "Fund") had a return of
21.8%, based on net asset value ("NAV"), for the eleven months ended October 31,
2004. (As a result of a recent change, the Fund's fiscal year now ends on
October 31. The Fund's previous fiscal year end-date was November 30.) This
compares with a same-period increase of 18.0% for the Morgan Stanley Capital
International Emerging Markets Index* ("MSCI EM") and an increase of 21.6% for
the telecommunications services subsector of the MSCI EM.
THE MARKET: TELECOMS OUTPERFORM
Emerging stock markets overcame a dramatic mid-period downturn to post a solid
gain and outperform developed equity markets. These stocks began the period on a
strong note, amid hopes that a global economic rebound would especially benefit
emerging market companies. However, the group surrendered its period-to-date
gains in April and May, when fears of rising U.S. interest rates, along with
concern that China's economy would slow too much, too fast, sparked a wave of
profit taking. Favorable conditions returned as inflation and interest rate
fears appeared excessive, China remained on a growth path and high and rising
commodity prices benefited numerous emerging countries in terms of export
revenues.
Emerging market telecommunications stocks outperformed the broader emerging
market universe in the period. In general, investors favored the group's
domestic orientation within a period of stronger local currencies and a
weakening U.S. dollar, trends that tend to hinder export-oriented companies
abroad.
PERFORMANCE: HELPED BY LATIN AMERICAN HOLDINGS
The Fund benefited from strong stock selection in Latin America. While Brazilian
telecommunications stocks collectively declined in the period, the Fund's
holdings were up almost 10%. Within Chile, the Fund's return was aided by
Compania de Telecomunicaciones de Chile S.A. ("Chile Telecommunications") (1.79%
of the Fund's net assets as of October 31, 2004), a position we established
during the summer, after its stock declined on uncertainties related to the
pending spin-off of its wireless division. In our view, the stock was attractive
on a dividend basis. The stock then rallied as investors became more comfortable
with the spin-off story.
The Fund's Asian holdings also added value, paced by its stocks from South
Korea. Another factor that aided performance was our underweighting in China,
whose telecom stocks rose only modestly. The Fund's private placement holdings,
which accounted for about 20% of the portfolio as of October 31, 2004, rose
about 5% in value overall, and hence detracted from relative performance.
THE PORTFOLIO: MANEUVERING WITHIN A SECTOR OFFERING GROWTH AND VALUE
Recently, the Fund's exposure to the Chilean wireless company was eliminated
after Chile Telecommunications spun off its wireless division (we received cash,
and did not have the option to own the wireless shares). On profit taking, we
1
reduced our exposure to Russia and Thailand in stocks that had good showings.
Another move we made late in the period was to raise our exposure to the
Brazilian wireless area.
Looking ahead, in Asia, we remain cautious toward China, remaining underweighted
on concerns over increased capital spending by Chinese telecom companies, which
could hamper profit margins for a spell. That said, a stronger Chinese currency
could emerge to support investor sentiment toward these stocks, and we continue
to monitor this closely. We ended the period with an underweighting in South
Korea, on wireless-broadband capital spending concerns. Elsewhere of note, we
have turned more cautious toward Russia, ending the period with less of an
overweighting. This was based in part on our analysis of increased political
risk.
Despite a year of solid performance in absolute terms and relative to most
emerging market industry sectors, we believe that emerging telecom stocks still
have potential to outperform going forward. First, as a domestic oriented
sector, as noted, telecom stocks could continue to benefit from strong local
currencies, barring a downturn in their value vs. the dollar. In addition, the
group has been generating relatively large cashflows, which may appeal to
investors from a defensive perspective, yet also has potentially healthy growth
prospects in areas such as Russia, India, Malaysia and Latin American wireless.
For our part, we will maintain a mix of fixed-line and wireless companies,
making adjustments based on stock specific factors (currently, we have more of a
growth bias). In general, we tend to increase our exposure to wireline companies
when they trade at significant discounts to their historical share prices, offer
high yields, and/or are engaging in meaningful share buyback programs.
SHARE BUYBACKS AND PRIVATE PLACEMENT UPDATE
The Fund repurchased 484,200 of its shares in the period at a total cost of
$3,835,755. The total impact on the Fund's NAV as a result of the share buybacks
was to add $0.07 per share.
Regarding the Fund's private placements, several Israeli-focused technology
venture capital funds declined in value (primarily during the first half of the
period), as the investment managers of these funds went through another round of
write-downs. This was mostly related to technology investments in instances
where low cash positions, difficulty in raising additional capital and
performance not continuing within original expectations led to the write-downs.
Write-ups are generally the result of a third-party financing round, IPO or sale
of an investment, while write-downs also reflect the manager's judgment with
respect to any impairment of value. A number of the underlying venture capital
investments are still in the early stage of their development. On the positive
side, the Fund's investment in a U.S. venture capital fund benefited from the
write-up of some of its underlying investments due to new rounds of financing at
higher valuations. In addition, during the period, the Fund's investment in
Independent Network Television Holding Ltd., a Russian television network, was
written up back to cost as the company's performance and prospects improved.
Distributions from the fund investments during the period reached approximately
$1.2 million, as underlying investments were realized due to IPOs and strategic
sales, reflecting the improvement in the technology sector. With
2
this improved environment, the investment pace of the funds continues to
accelerate, with $2.5 million of capital calls made by the Fund's private
placements during the period (28.6% of unfunded commitments at beginning of the
period).
Respectfully,
/s/ Emily Alejos
Emily Alejos
Chief Investment Officer**
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 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 Chief Investment Officer of
the Fund and The Brazilian Equity Fund, Inc. and Co-Chief Investment Officer of
The Latin American Equity Fund, Inc. She is also an Investment Officer of The
Chile Fund, Inc.
3
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
PORTFOLIO SUMMARY - AS OF OCTOBER 31, 2004 (UNAUDITED)
[CHART]
SECTOR ALLOCATION
AS A PERCENT OF NET ASSETS
OCTOBER 31, 2004 NOVEMBER 30, 2003
Cellular Telecommunications 35.49% 37.14%
Computers 0.00% 1.79%
Diversified Operations 0.00% 1.58%
Electric-Integrated 0.00% 2.98%
Electric Products-Miscellaneous 1.06% 0.00%
Electronic Components/Semiconductors 0.00% 3.83%
Internet Services/Software 2.14% 3.76%
Telecommunications 18.94% 12.87%
Telephone-Integrated 24.50% 20.28%
Venture Capital 12.80% 13.07%
Other 2.12% 2.21%
Cash & Other Assets 2.95% 0.49%
[CHART]
GEOGRAPHIC ASSET BREAKDOWN
AS A PERCENT OF NET ASSETS
OCTOBER 31, 2004 NOVEMBER 30, 2003
Africa 5.39% 5.51%
Asia 31.49% 45.78%
Europe 2.81% 0.00%
Latin America 41.05% 29.53%
Middle East 8.09% 10.33%
North America 0.94% 1.59%
Global 7.28% 6.77%
Cash & Other Assets 2.95% 0.49%
4
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
PORTFOLIO SUMMARY - AS OF OCTOBER 31, 2004 (UNAUDITED) (CONCLUDED)
[CHART]
SUMMARY OF SECURITIES BY COUNTRY/REGION
AS A PERCENT OF NET ASSETS
OCTOBER 31, 2004 NOVEMBER 30, 2003
Asia 2.64% 3.56%
Brazil 10.94% 8.12%
Chile 3.05% 1.76%
China 5.26% 6.80%
Indonesia 4.83% 2.54%
Israel 8.09% 9.57%
Malaysia 3.28% 0.94%
Mexico 21.56% 18.06%
Russia 3.58% 9.76%
South Africa 5.39% 5.51%
South Korea 8.76% 13.21%
Taiwan 0.00% 5.62%
Global 7.28% 6.77%
Other 12.39% 7.29%
[CHART]
TOP 10 HOLDINGS, BY ISSUER
COUNTRY/ PERCENT OF
HOLDING SECTOR REGION NET ASSETS
-------------------------------------------------------------------------------------------------------
1. America Movil S.A. de C.V. Cellular Telecommunications Mexico 17.3
2. SK Telecom Co., Ltd. Cellular Telecommunications South Korea 6.5
3. Emerging Markets Ventures I, L.P. Venture Capital Global 5.8
4. China Telecom Corp. Ltd. Telecommunications China 5.3
5. Telefonos de Mexico, S.A. de C.V. Telephone-Integrated Mexico 4.2
6. Tele Norte Leste Participacoes S.A. Telephone-Integrated Brazil 3.7
7. Telekom Malaysia Berhad Telecommunications Malaysia 3.3
8. Telkom South Africa Ltd. Telephone-Integrated South Africa 2.7
9. MTN Group Ltd. Cellular Telecommunications South Africa 2.7
10. TVG Asian Communications Fund II, L.P. Telecommunications Asia 2.6
5
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
SCHEDULE OF INVESTMENTS - OCTOBER 31, 2004
NO. OF
DESCRIPTION SHARES/UNITS VALUE
-----------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-97.05%
EQUITY OR EQUITY-LINKED SECURITIES OF
TELECOMMUNICATION COMPANIES IN EMERGING
COUNTRIES-96.00%
ARGENTINA-1.71%
TELEPHONE-INTEGRATED-1.71%
Nortel Inversora S.A., PNB,
ADR+ 61,400 $ 434,712
Telecom Argentina S.A., ADR+ 98,200 1,044,848
------------
TOTAL ARGENTINA (Cost $1,451,906) 1,479,560
------------
ASIA-2.64%
TECHNOLOGY-0.01%
Nirvana Capital Ltd.+#* 42,000 9,851
------------
TELECOMMUNICATIONS-2.63%
TVG Asian Communications
Fund II, L.P.+++# 3,008,374 2,267,972
------------
TOTAL ASIA (Cost $2,977,267) 2,277,823
------------
BRAZIL-10.94%
CELLULAR TELECOMMUNICATIONS-2.33%
Telesp Celular Participacoes
S.A., ADR+^ 335,200 2,007,848
------------
TELEPHONE-INTEGRATED-8.61%
Brasil Telecom Participacoes
S.A. 188,600,000 1,353,746
Tele Norte Leste Participacoes
S.A. 136,900 1,735,217
Tele Norte Leste Participacoes
S.A., ADR^ 112,600 1,472,808
Telecomunicacoes de Sao Paulo
S.A., PN 102,900,000 1,640,779
Telemar Norte Leste S.A., PNA 67,200 1,235,765
------------
7,438,315
------------
TOTAL BRAZIL (Cost $9,117,877) 9,446,163
------------
CENTRAL AND EASTERN EUROPE-1.08%
CELLULAR TELECOMMUNICATIONS-1.08%
Telesystem International
Wireless Inc.+
(Cost $839,238) 85,500 $ 936,225
------------
CHILE-3.05%
TELEPHONE-INTEGRATED-3.05%
Compania de Telecomunicaciones
de Chile S.A., ADR 150,000 1,549,500
Empresa Nacional de
Telecomunicaciones S.A. 150,000 1,084,249
------------
TOTAL CHILE (Cost $2,671,088) 2,633,749
------------
CHINA-5.26%
TELECOMMUNICATIONS-5.26%
China Telecom Corp. Ltd. 9,541,000 3,070,051
China Telecom Corp. Ltd., ADR^ 46,000 1,473,840
------------
TOTAL CHINA (Cost $4,018,559) 4,543,891
------------
HUNGARY-1.73%
TELEPHONE-INTEGRATED-1.73%
Magyar Tavkozlesi Rt
(Cost $1,411,612) 357,300 1,495,132
------------
INDIA-1.35%
CELLULAR TELECOMMUNICATIONS-1.35%
Bharti Tele-Ventures Ltd.+ 335,000 1,161,844
------------
INTERNET SERVICES-0.00%
The India Media, Internet and
Communications Fund Ltd.+* 37,694 2,639
------------
TOTAL INDIA (Cost $638,507) 1,164,483
------------
INDONESIA-4.83%
TELECOMMUNICATIONS-4.83%
PT Indonesian Satellite Corp.
Tbk+ 4,085,000 2,121,630
PT Telekomunikasi Indonesia 4,272,000 2,044,152
------------
TOTAL INDONESIA (Cost $3,477,251) 4,165,782
------------
See accompanying notes to financial statements.
6
NO. OF
DESCRIPTION SHARES/UNITS VALUE
-----------------------------------------------------------------------------------
ISRAEL-7.98%
TECHNOLOGY-0.85%
SVE Star Ventures Enterprises
GmbH & Co. No. IX KG+++# 1,250,000 $ 730,400
------------
TELECOMMUNICATIONS-1.48%
Lynx Photonic Networks+* 375,394 781,378
Lynx Series E+* 493,000 498,488
------------
1,279,866
------------
VENTURE CAPITAL-5.65%
BPW Israel Ventures LLC+++# 1,482,848 857,893
Concord Ventures II Fund
L.P.+++# 3,520,000 1,257,880
Formula Ventures L.P.+++ 1,499,989 215,098
Giza GE Venture Fund III,
L.P.+++# 2,117,500 1,150,798
K.T. Concord Venture Fund
L.P.+++ 2,000,000 880,156
Neurone Ventures II, L.P.+++# 438,684 199,762
Walden-Israel Ventures III,
L.P.+++# 492,938 315,135
------------
4,876,722
------------
TOTAL ISRAEL (Cost $10,362,718) 6,886,988
------------
LATIN AMERICA-1.33%
VENTURE CAPITAL-1.33%
J.P. Morgan Latin America Capital
Partners (Cayman), L.P.+++ 803,879 670,298
J.P. Morgan Latin America Capital
Partners (Delaware), L.P.+++# 1,277,217 481,805
------------
TOTAL LATIN AMERICA (Cost $1,376,771) 1,152,103
------------
MALAYSIA-3.28%
TELECOMMUNICATIONS-3.28%
Telekom Malaysia Berhad
(Cost $2,492,173) 936,000 2,834,233
------------
MEXICO-21.56%
CELLULAR TELECOMMUNICATIONS-17.34%
America Movil S.A. de C.V.,
Series L, ADR^ 340,200 $ 14,968,800
------------
TELEPHONE-INTEGRATED-4.22%
Telefonos de Mexico, S.A. de C.V.,
Class L, ADR^ 106,500 3,646,560
------------
TOTAL MEXICO (Cost $10,239,349) 18,615,360
------------
RUSSIA-3.58%
CELLULAR TELECOMMUNICATIONS-2.42%
AO VimpelCom, ADR+ 9,300 1,060,200
Mobile Telesystems, ADR^ 7,100 1,030,352
------------
2,090,552
------------
TELEVISION-1.16%
Independent Network Television
Holding Ltd., Series II+++ 1,000,000 1,000,000
------------
TOTAL RUSSIA (Cost $2,052,774) 3,090,552
------------
SOUTH AFRICA-5.39%
CELLULAR TELECOMMUNICATIONS-2.68%
MTN Group Ltd. 427,600 2,313,727
------------
TELEPHONE-INTEGRATED-2.71%
Telkom South Africa Ltd. 166,160 2,341,659
------------
TOTAL SOUTH AFRICA (Cost $3,344,543) 4,655,386
------------
SOUTH KOREA-8.76%
CELLULAR TELECOMMUNICATIONS-6.50%
SK Telecom Co., Ltd. 5,890 927,291
SK Telecom Co., Ltd., ADR^ 237,300 4,681,929
------------
5,609,220
------------
ELECTRIC PRODUCTS-MISCELLANEOUS-1.06%
LG Electronics Inc. 16,200 915,688
------------
INTERNET SOFTWARE-1.20%
NCsoft Corp.+ 10,790 1,034,785
------------
TOTAL SOUTH KOREA (Cost $6,721,331) 7,559,693
------------
See accompanying notes to financial statements.
7
NO. OF
DESCRIPTION SHARES/UNITS VALUE
-----------------------------------------------------------------------------------
THAILAND-1.79%
CELLULAR TELECOMMUNICATIONS-1.79%
Advanced Info Service Public
Co., Ltd. 679,500 $ 1,547,139
------------
TELEPHONE-INTEGRATED-0.00%
True Corporation Public Co.
Ltd., Foreign Registered,
Warrants (expiring 04/03/08)+ 1,717,483 1
------------
TOTAL THAILAND (Cost $1,389,080) 1,547,140
------------
VENEZUELA-2.46%
TELEPHONE-INTEGRATED-2.46%
Compania Anonima Nacional
Telefonos de Venezuela, ADR
(Cost $1,390,188) 92,200 2,120,600
------------
GLOBAL-7.28%
TELECOMMUNICATIONS-1.46%
International Wireless
Communications Holdings
Corp.+++ 15,092 0
TeleSoft Partners L.P.+++ 1,250,000 134,875
TeleSoft Partners II QP, L.P.+++# 1,500,000 1,126,233
------------
1,261,108
------------
VENTURE CAPITAL-5.82%
Emerging Markets Ventures I,
L.P.+++# 7,145,806 5,026,729
------------
TOTAL GLOBAL (Cost $7,149,691) 6,287,837
------------
TOTAL EMERGING COUNTRIES
(Cost $73,121,923) 82,892,700
------------
EQUITY SECURITIES OF TELECOMMUNICATION
COMPANIES IN DEVELOPED COUNTRIES-0.94%
UNITED STATES-0.94%
INTERNET SERVICES-0.94%
Technology Crossover
Ventures IV, L.P.+++#
(Cost $803,282) 1,563,800 813,065
------------
EQUITY SECURITES OF COMPANIES PROVIDING OTHER
ESSENTIAL SERVICES IN THE DEVELOPMENT OF AN
EMERGING COUNTRY'S INFRASTRUCTURE-0.11%
ARGENTINA-0.00%
INVESTMENT & HOLDING COMPANY-0.00%
Exxel Capital Partners V, L.P.+++
(Cost $449,172) 1,897,761 $ 0
------------
ISRAEL-0.11%
INVESTMENT & HOLDING COMPANY-0.11%
The Renaissance Fund LDC+++
(Cost $484,061) 160 95,232
------------
TOTAL OTHER ESSENTIAL SERVICES
(Cost $933,233) 95,232
------------
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES (Cost $74,858,438) 83,800,997
------------
See accompanying notes to financial statements.
8
PRINCIPAL
DESCRIPTION AMOUNT (000'S) VALUE
-----------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-14.07%
GRAND CAYMAN-2.81%
Brown Brothers Harriman & Co.,
overnight deposit, 1.04%,
11/01/04** (Cost $2,426,000) $ 2,426 $ 2,426,000
------------
UNITED STATES-11.26%
Bear, Stearns & Co. Inc.,
repurchase agreement,
(Agreement dated 10/29/04 to
be repurchased at $8,644,150),
1.875%, 11/01/04, collateralized
by U.S. Gov't National Mortgage
Association*** 8,643 8,642,800
Bear, Stearns & Co. Inc.,
repurchase agreement,
(Agreement dated 10/29/04 to
be repurchased at $1,078,496),
0.9375%, 11/01/04, collateralized
by U.S. Gov't National Mortgage
Association*** 1,078 1,078,412
------------
TOTAL UNITED STATES
(Cost $9,721,212) 9,721,212
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $12,147,212) 12,147,212
------------
TOTAL INVESTMENTS-111.12%
(Cost $87,005,650) (Notes A,D,F) 95,948,209
------------
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(11.12)% (9,597,155)
------------
NET ASSETS-100.00% $ 86,351,054
============
----------
+ Non-income producing security.
++ Restricted security, not readily marketable; security is valued at fair
value as determined in good faith by, or under the direction of, the Board
of Directors under procedures established by the Board of Directors. (See
Notes A and G)
^ Security or a portion thereof is out on loan.
# As of October 31, 2004, the Fund has committed to investing additional
capital as follows: Nirvana Capital Ltd. ($90,000), TVG Asian
Communications Fund II, L.P. ($991,626), BPW Israel Ventures LLC
($817,152), Concord Ventures II Fund L.P. ($480,000), Giza GE Venture Fund
III, L.P. ($632,500), Neurone Ventures II, L.P. ($322,500), SVE Star
Ventures Enterprises GmbH & Co. No. IX KG ($750,000), Walden-Israel
Ventures III, L.P. ($882,063), J.P. Morgan Latin America Capital Partners
(Delaware), L.P. ($1,482,685), Emerging Markets Ventures I, L.P.
($954,194), TeleSoft Partners II QP, L.P. ($900,000) and Technology
Crossover Ventures IV, L.P. ($436,200). The aggregate amount of open
commitments for the Fund is $8,738,920.
* Not readily marketable security; security is valued at fair value as
determined in good faith by, or under the direction of, the Board of
Directors under procedures established 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.
ADR American Depository Receipts.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNB Preferred Shares, Class B.
See accompanying notes to financial statements.
9
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - OCTOBER 31, 2004
ASSETS
Investments, at value, including collateral for securities on loan of $9,721,212 (1)
(Cost $87,005,650) (Notes A,D,F) $ 95,948,209
Cash (including $7,585 of foreign currencies with a cost of $7,814) 8,549
Dividends receivable 389,383
Prepaid expenses 4,524
---------------
Total Assets 96,350,665
---------------
LIABILITIES
Payables:
Upon return of securities loaned (Note A) 9,721,212
Investment advisory fee (Note B) 76,097
Directors' fees 12,697
Administration fees (Note B) 9,824
Other accrued fees 179,781
---------------
Total Liabilities 9,999,611
---------------
NET ASSETS (applicable to 8,680,021 shares of common stock outstanding) (Note C) $ 86,351,054
===============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 8,680,021 shares issued and outstanding
(100,000,000 shares authorized) $ 8,680
Paid-in capital 166,480,112
Accumulated net realized loss on investments and foreign currency related transactions (89,080,475)
Net unrealized appreciation in value of investments and translation of other
assets and liabilities denominated in foreign currencies 8,942,737
---------------
Net assets applicable to shares outstanding $ 86,351,054
===============
NET ASSET VALUE PER SHARE ($86,351,054 DIVIDED BY 8,680,021) $ 9.95
===============
MARKET PRICE PER SHARE $ 8.52
===============
----------
(1) Includes securities out on loan to brokers with a market value of
$9,312,264
See accompanying notes to financial statements.
10
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF OPERATIONS - FOR THE ELEVEN MONTHS ENDED OCTOBER 31, 2004
INVESTMENT INCOME
Income (Note A):
Dividends $ 2,622,385
Interest 39,618
Securities lending 12,196
Net investment loss allocated from partnerships (935,389)
Less: Foreign taxes withheld (285,797)
---------------
Total Investment Income 1,453,013
---------------
Expenses:
Investment advisory fees (Note B) 806,993
Administration fees (Note B) 102,429
Legal fees 101,197
Custodian fees 77,721
Printing (Note B) 71,891
Audit fees 64,804
Directors' fees 38,099
Accounting fees 27,722
NYSE listing fees 21,810
Transfer agent fees 18,324
Insurance 16,462
Miscellaneous 8,823
---------------
Total Expenses 1,356,275
---------------
Net Investment Income 96,738
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments 7,807,695
Foreign currency related transactions (82,570)
Net change in unrealized appreciation in value of investments and translation
of other assets and liabilities denominted in foreign currencies 7,465,722
---------------
Net realized and unrealized gain on investments and foreign currency related transactions 15,190,847
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,287,585
===============
See accompanying notes to financial statements.
11
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE ELEVEN FOR THE FISCAL YEAR
MONTHS ENDED ENDED
OCTOBER 31, 2004 NOVEMBER 30, 2003
------------------ -------------------
INCREASE IN NET ASSETS
Operations:
Net investment income/(loss) $ 96,738 $ (871,238)
Net realized gain/(loss) on investments and foreign currency related
transactions 7,725,125 (4,955,106)
Net change in unrealized appreciation/depreciation in value of investments
and translation of other assets and liabilities denominated in
foreign currencies 7,465,722 13,788,482
------------------ -------------------
Net increase in net assets resulting from operations 15,287,585 7,962,138
------------------ -------------------
Capital share transactions (Note H):
Cost of 484,200 shares purchased under the share repurchase program (3,835,755) --
------------------ -------------------
Total increase in net assets 11,451,830 7,962,138
------------------ -------------------
NET ASSETS
Beginning of period 74,899,224 66,937,086
------------------ -------------------
End of period $ 86,351,054 $ 74,899,224
================== ===================
See accompanying notes to financial statements.
12
STATEMENT OF CASH FLOWS - FOR THE ELEVEN MONTHS ENDED OCTOBER 31, 2004
INCREASE IN CASH FROM
Operating Activities:
Investment income received $ 2,350,105
Operating expenses paid (1,329,250)
Purchases of long-term portfolio investments (56,766,644)
Proceeds from disposition of long-term portfolio investments 61,753,780
Net purchase of short-term portfolio investments (2,170,000)
Cost of shares repurchased (3,835,755)
------------------
Net increase in cash from operating activities $ 2,236
Cash at beginning of period 6,313
-------------------
Cash at end of period $ 8,549
===================
RECONCILIATION OF NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET INCREASE IN CASH
FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations $ 15,287,585
Adjustments:
Increase in accrued expenses $ 29,533
Increase in receivables (38,296)
Increase in prepaid expenses (2,509)
Net increase in cash from investment transactions 3,752,525
Cost of shares repurchased (3,835,755)
Net realized and unrealized gain on investments and foreign currency
related transactions (15,190,847)
------------------
Total adjustments (15,285,349)
-------------------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES $ 2,236
===================
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 FOR THE FISCAL YEARS
ELEVEN MONTHS ENDED
ENDED NOVEMBER 30,
OCTOBER 31, ------------------------------------------
2004 2003 2002 2001
------------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.17 $ 7.30 $ 8.42 $ 10.35
------------- ---------- ---------- ----------
Net investment income/(loss) 0.01+ (0.10)+ (0.15)+++ (0.12)++
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions 1.70 0.97 (1.03) (1.88)
------------- ---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations 1.71 0.87 (1.18) (2.00)
------------- ---------- ---------- ----------
Dividends and distributions to shareholders:
Net investment income -- -- -- --
Net realized gain on investments and foreign currency
related transactions -- -- -- --
------------- ---------- ---------- ----------
Total dividends and distributions to shareholders -- -- -- --
------------- ---------- ---------- ----------
Anti-dilutive impact due to capital shares tendered
or repurchased 0.07 -- 0.06 0.07
------------- ---------- ---------- ----------
Net asset value, end of period $ 9.95 $ 8.17 $ 7.30 $ 8.42
============= ========== ========== ==========
Market value, end of period $ 8.52 $ 6.85 $ 6.22 $ 6.88
============= ========== ========== ==========
Total investment return (a) 24.38% 10.13% (9.59)% (10.50)%
============= ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 86,351 $ 74,899 $ 66,937 $ 90,771
Ratio of expenses to average net assets (b) 1.81%(c) 1.77% 1.90% 1.76%
Ratio of expenses to average net assets, excluding taxes 1.81%(c) 1.77% 1.77% 1.74%
Ratio of net investment income/(loss) to average net assets 0.13%(c) (1.33)% (1.89)% (1.18)%
Portfolio turnover rate 71.57% 120.31% 94.89% 82.16%
^ 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
FOR THE
SIX MONTHS
ENDED FOR THE FISCAL YEARS ENDED MAY 31,
NOVEMBER 30, --------------------------------------------------------
2000 2000 1999 1998 1997 1996
----------- --------- --------- --------- --------- ---------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 18.36 $ 12.13 $ 16.37 $ 21.54 $ 20.95 $ 19.21
----------- --------- --------- --------- --------- ---------
Net investment income/(loss) (0.14)+ (0.20)+ (0.04)+ (0.06) 0.10 0.27
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions (4.78) 6.14 (2.41) (1.40) 2.86 1.91
----------- --------- --------- --------- --------- ---------
Net increase/(decrease) in net assets resulting
from operations (4.92) 5.94 (2.45) (1.46) 2.96 2.18
----------- --------- --------- --------- --------- ---------
Dividends and distributions to shareholders:
Net investment income -- -- -- (0.09) (0.27) (0.04)
Net realized gain on investments and foreign
currency related transactions (3.09) -- (1.96) (3.62) (2.10) (0.40)
----------- --------- --------- --------- --------- ---------
Total dividends and distributions to shareholders (3.09) -- (1.96) (3.71) (2.37) (0.44)
----------- --------- --------- --------- --------- ---------
Anti-dilutive impact due to capital shares tendered
or repurchased -- 0.29 0.17 -- -- --
----------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 10.35 $ 18.36 $ 12.13 $ 16.37 $ 21.54 $ 20.95
=========== ========= ========= ========= ========= =========
Market value, end of period $ 7.688 $ 13.508 $ 9.819 $ 13.008 $ 17.385 $ 17.385
=========== ========= ========= ========= ========= =========
Total investment return (a) (28.46)% 37.58% (9.99)% (4.57)% 14.31% 0.21%
=========== ========= ========= ========= ========= =========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 131,325 $ 130,300 $ 94,026 $ 138,023 $ 181,627 $ 176,628
Ratio of expenses to average net assets (b) 1.91%(c) 2.24% 2.09% 2.32% 1.90% 1.77%
Ratio of expenses to average net assets,
excluding taxes 1.91%(c) 2.04% 2.01% 1.82% 1.82% --
Ratio of net investment income/(loss) to average
net assets (1.50)%(c) (1.15)% (0.33)% (0.29)% 0.52% 1.40%
Portfolio turnover rate 51.72% 113.75% 179.66% 162.58% 42.14% 27.71%
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. On August 9, 2004, the Fund's
Board of Directors approved a change in the Fund's fiscal year end from a
twelve-month period ending November 30 to a twelve-month period ending October
31. The statements of operations, changes in net assets, cash flows and
financial highlights for 2004 represent the eleven month period beginning on
December 1, 2003 and ending October 31, 2004.
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 it is determined that
this method would not represent fair 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, or under the
direction of, the Board of Directors under procedures established by the Board
of Directors. The Fund may utilize a service provided by an independent third
party which has been approved by the Board of Directors to fair value certain
securities. At October 31, 2004, the Fund held 21.44% of its net assets in
securities valued at fair value as determined in good faith under procedures
established by the Board of Directors with an aggregate cost of $24,652,435 and
fair value of $18,515,687. The Fund's estimate of fair value assumes a willing
buyer and a willing seller neither acting under the compulsion to buy or sell.
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.
16
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 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.
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 eleven months ended October 31, 2004, the Fund did not incur such
expense.
The Fund accrues foreign taxes on realized gains as a liability and reduction of
realized/unrealized gains in an amount equal to what the Fund owed when the
securities were sold. 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 on 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 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
October 31, 2004, was $9,312,264, for which the Fund has received cash as
collateral of $9,721,212. Such cash collateral was reinvested into an overnight
repurchase agreement with Bear, Stearns & Co. Inc., which was in turn
collateralized by U.S. Government securities with a value of $10,011,263.
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.
17
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 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
18
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 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 October 31, 2004, 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 eleven months ended
October 31, 2004, CSAM earned $806,993 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 eleven
months ended October 31, 2004, CSAM was reimbursed $12,612 for administrative
services rendered to the Fund.
Credit Suisse Asset Management Limited (CSAM U.K.) ("CSAM Ltd. U.K.") and Credit
Suisse Asset Management Limited (CSAM Australia) ("CSAM Ltd. Australia"),
affiliates of CSAM, are sub-investment advisers to the Fund. CSAM Ltd. U.K. and
CSAM Ltd. Australia's sub-investment advisory fees are paid by CSAM out of
CSAM's investment advisory fee and are not paid by the Fund.
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 eleven
months ended October 31, 2004, BSFM earned $89,817 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 printing services. For the eleven months ended
October 31, 2004, Merrill was paid $54,755 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
19
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 8,680,021 shares outstanding at October 31, 2004, CSAM
owned 14,333 shares.
NOTE D. INVESTMENT IN SECURITIES
For the eleven months ended October 31, 2004 purchases and sales of securities,
other than short-term investments, were $56,766,644 and $61,113,243,
respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by CSAM (collectively,
the "Participating Funds"), participates in a $75 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 eleven months ended October 31, 2004, 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 excise tax regulations.
At October 31, 2004, the components of distributable earnings on a tax basis,
for the Fund were as follows:
Undistributed ordinary income --
Accumulated net realized loss $ (88,722,816)
Unrealized appreciation 8,585,078
---------------
Total accumulated deficit $ (80,137,738)
===============
At October 31, 2004, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $88,722,816 of which $13,111,409 expires in 2006. This
amount is subject to Internal Revenue Sections limitations. Capital loss
carryforwards of $5,308,276, $47,300,891, $17,356,479 and $5,645,761 expire in
2007, 2009, 2010 and 2011, respectively. It is uncertain whether the Fund will
be able to realize the benefits before they expire. During the eleven month
period ended October 31, 2004, the Fund utilized capital loss carryforwards of
$7,860,895.
At October 31, 2004, 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 $87,363,309, $16,345,492,
$(7,760,592) and $8,584,900, respectively.
At October 31, 2004, the Fund reclassified $97,648 from accumulated net realized
loss on investments and foreign currency related transactions to accumulated net
investment income and $910 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.
20
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, or under the direction of, the Board
of Directors under procedures established by the Board of Directors in the
absence of readily ascertainable market values. The table below shows the number
of units/shares held, the acquisition dates, aggregate costs, fair value as of
October 31, 2004, per unit/share of such securities and percent of net assets
which the securities comprise. The final column represents the distribution
received from each investment.
NUMBER FAIR PERCENT
OF ACQUISITION VALUE AT VALUE PER OF NET DISTRIBUTIONS
SECURITY UNITS/SHARES DATE(S) COST 10/31/2004 UNIT/SHARE ASSETS RECEIVED
-------- ------------ ------------------- ------------ ------------ ---------- ------- -------------
BPW Israel Ventures
LLC 1,156,470 10/05/00 - 06/30/03 $ 875,853 $ 669,069 $ 0.58 0.77
17,250 12/26/03 16,032 9,980 0.58 0.01
291,878 02/11/04 271,262 168,864 0.58 0.20
17,250 07/01/04 16,032 9,980 0.58 0.01
------------ ------------ ------------ -------
1,482,848 1,179,179 857,893 0.99 --
------------ ------------ ------------ ------- -------------
Concord Ventures II
Fund L.P. 3,280,000 03/29/00 - 07/15/03 2,524,584 1,172,116 0.36 1.36
120,000 03/02/04 115,789 42,882 0.36 0.05
120,000 08/19/04 115,788 42,882 0.36 0.05
------------ ------------ ------------ -------
3,520,000 2,756,161 1,257,880 1.46 --
------------ ------------ ------------ ------- -------------
Emerging Markets
Ventures I, L.P. 7,075,037 01/22/98 - 06/30/03 4,936,563 4,976,947 0.70 5.76
36,095 12/30/03 34,207 25,391 0.70 0.03
34,674 07/06/04 32,861 24,391 0.70 0.03
------------ ------------ ------------ -------
7,145,806 5,003,631 5,026,729 5.82 $ 1,169,680
------------ ------------ ------------ ------- -------------
Exxel Capital
Partners V, L.P. 1,897,761 05/11/98 - 12/03/98 449,172 0 0.00 0.00 205,185
------------ ------------ ------------ ------- -------------
Formula Ventures
L.P. 1,467,094 08/06/99 - 07/24/03 601,316 210,381 0.14 0.24
32,895 06/14/04 33,778 4,717 0.14 0.01
------------ ------------ ------------ -------
1,499,989 635,094 215,098 0.25 318,280
------------ ------------ ------------ ------- -------------
Giza GE Venture
Fund III, L.P. 1,540,000 01/31/00 - 04/30/03 1,046,285 836,944 0.54 0.97
165,000 12/10/03 145,075 89,673 0.54 0.10
165,000 03/15/04 145,075 89,672 0.54 0.10
247,500 10/11/04 247,500 134,509 0.54 0.16
------------ ------------ ------------ -------
2,117,500 1,583,935 1,150,798 1.33 64,135
------------ ------------ ------------ ------- -------------
Independent Network
Television
Holding Ltd.,
Series II 1,000,000 07/06/98 1,000,000 1,000,000 1.00 1.16 --
------------ ------------ ------------ ------- -------------
International
Wireless
Communications
Holdings Corp. 15,092 12/08/97 414,568 0 0.00 0.00 10,564
------------ ------------ ------------ ------- -------------
J.P. Morgan
Latin America
Capital
Partners
(Cayman), L.P. 803,879 04/10/00 - 05/28/03 780,246 670,298 0.83 0.78 28
------------ ------------ ------------ ------- -------------
21
NUMBER FAIR PERCENT
OF ACQUISITION VALUE AT VALUE PER OF NET DISTRIBUTIONS
SECURITY UNITS/SHARES DATE(S) COST 10/31/2004 UNIT/SHARE ASSETS RECEIVED
-------- ------------ ------------------- ------------ ------------ ---------- ------- -------------
J.P. Morgan Latin
America
Capital
Partners
(Delaware),
L.P. 1,183,058 04/10/00 - 04/17/03 $ 552,548 $ 446,285 $ 0.38 0.52
94,159 03/26/04 43,977 35,520 0.38 0.04
------------ ------------ ------------ -------
1,277,217 596,525 481,805 0.56 $ 594,742
------------ ------------ ------------ ------- -------------
K.T. Concord
Venture Fund L.P. 2,000,000 12/08/97 - 09/29/00 1,692,236 880,156 0.44 1.02 659,477
------------ ------------ ------------ ------- -------------
Neurone Ventures
II, L.P. 337,500 11/24/00 - 06/23/03 199,044 153,686 0.46 0.18
67,500 05/26/04 55,443 30,737 0.46 0.03
11,184 08/26/04 0 5,093 0.46 0.01
22,500 09/24/04 19,102 10,246 0.46 0.01
------------ ------------ ------------ -------
438,684 273,589 199,762 0.23 29,075
------------ ------------ ------------ ------- -------------
SVE Star Ventures
Enterprises
GmbH & Co. No.
IX KG 1,000,000 12/21/00 - 08/18/03 765,586 584,320 0.58 0.68
250,000 08/09/04 239,420 146,080 0.58 0.17
------------ ------------ ------------ -------
1,250,000 1,005,006 730,400 0.85 --
------------ ------------ ------------ ------- -------------
Technology
Crossover
Ventures IV, L.P. 1,440,400 03/08/00 - 11/14/03 694,548 748,906 0.52 0.87
86,400 01/15/04 75,614 44,922 0.52 0.05
37,000 06/30/04 33,120 19,237 0.52 0.02
------------ ------------ ------------ -------
1,563,800 803,282 813,065 0.94 718,360
------------ ------------ ------------ ------- -------------
Telesoft Partners
L.P. 1,250,000 07/22/97 - 06/07/01 713,241 134,875 0.11 0.15 7,180,939
------------ ------------ ------------ ------- -------------
Telesoft Partners
II QP, L.P. 1,140,000 07/14/00 - 12/12/02 714,878 855,937 0.75 0.99
120,000 12/08/03 101,124 90,099 0.75 0.10
240,000 06/03/04 202,248 180,197 0.75 0.21
------------ ------------ ------------ -------
1,500,000 1,018,250 1,126,233 1.30 113,986
------------ ------------ ------------ ------- -------------
The Renaissance
Fund LDC 160 03/30/94 - 03/21/97 484,061 95,232 595.20 0.11 1,497,612
------------ ------------ ------------ ------- -------------
TVG Asian
Communications
Fund II, L.P. 2,930,599 06/07/00 - 11/07/03 2,479,492 2,209,338 0.75 2.56
77,775 12/31/03 77,775 58,634 0.75 0.07
------------ ------------ ------------ -------
3,008,374 2,557,267 2,267,972 2.63 401,677
------------ ------------ ------------ ------- -------------
Walden-Israel
Ventures III,
L.P. 340,313 02/23/01 - 10/09/03 236,804 217,562 0.64 0.26
83,875 02/02/04 77,249 53,621 0.64 0.06
68,750 05/27/04 63,319 43,952 0.64 0.05
------------ ------------ ------------ -------
492,938 377,372 315,135 0.37 --
------------ ------------ ------------ ------- -------------
Total $ 23,322,815 $ 17,223,331 19.95 $ 12,963,740
============ ============ ======= =============
The Fund may incur certain costs in connection with the disposition of the above
securities.
22
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. For
the eleven months ended October 31, 2004, the Fund repurchased 484,200 of its
shares for a total cost of $3,835,755 at a weighted discount of 14.39% from net
asset value. The Fund had no repurchases for the fiscal year ended November 30,
2003. 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 REGISTERED PUBLIC ACCOUNTING FIRM
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 October 31, 2004, the results of
its operations and its cash flows for the eleven months then ended, the changes
in its net assets for eleven months and the year ended November 30, 2003, and
the financial highlights for each of the periods presented, 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 the standards of the Public Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2004 by
correspondence with the custodian and private equity issuers, provide a
reasonable basis for our opinion.
As explained in Note A, the financial statements include securities valued at
$18,515,687 (21.44% 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
December 15, 2004
24
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED)
The InvestLink(SM) Program is sponsored and administered by EquiServe Trust
Company, N.A., with EquiServe, Inc. acting as service agent to the
aforementioned and, not by The Emerging Markets Telecommunications Fund, Inc.
(the "Fund"). EquiServe Trust Company, N.A., 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
25
anticipated market value of $100,000.00 or more are expected to be submitted in
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 Trust Company, N.A., 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
26
information as 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 Trust Company, N.A.
27
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 Lead Director; Since 1996; Professor of Finance and 8 Director of The
c/o Credit Suisse Asset Nominating current term Economics, Graduate Adams Express
Management, LLC Committee ends at the School of Business, Company (a
Attn:General Counsel Chairman and 2007 annual Columbia University closed-end
466 Lexington Avenue Audit Committee meeting since 1971 investment company);
New York, New York Member Director of
10017-3140 Petroleum and
Resources
Date of Birth: 10/02/41 Corporation (a
closed-end
investment company)
James J. Cattano Director; Since 1993; President, Primary 4 None
c/o Primary Resources, Inc. Nominating current term Resources Inc. (an
55 Old Field Point Road Committee ends at the international trading
Greenwich, Connecticut Member and 2007 annual and manufacturing
06830 Audit Committee meeting company specializing in
Chairman the sale of agricultural
Date of Birth: 06/24/43 commodities throughout
Latin American markets)
since October 1996
George W. Landau Director; Since 1993; Senior Advisor, Latin 5 Director of GAM
c/o Credit Suisse Asset Nominating and current term America, The Coca-Cola Funds, Inc.
Management, LLC Audit Committee ends at the Company since 1988
Attn:General Counsel Member 2006 annual Advisor of Guardian
466 Lexington Avenue meeting Industries (a glass
New York, New York manufacturer) since 1992
10017-3140
Date of Birth: 03/04/20
Martin M. Torino Director; Since 1993; Chief Executive Officer 3 None
c/o Credit Suisse Asset Nominating and current term and Director of Celsur
Management, LLC Audit Committee ends at the Logistica S.A.
Attn: General Counsel Member 2005 annual (Logistics) since 2002;
466 Lexington Avenue meeting Chairman of the Board of
New York, New York Ingenio y Refineria San
10017-3140 Martin Del Tabacal S.A.
(sugar refinery) from
Date of Birth: 08/14/49 August 1996 to 2000
28
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
--------------------------- ------------------ ------------------ ------------------------ ------------- --------------------
INTERESTED DIRECTOR
William W. Priest, Jr.* Director Since 1997; Chief Executive Officer 48 Director of Globe
c/o Epoch Investment current term of J Net Enterprises, Wireless, LLC
Partners ends at the Inc. (technology holding (maritime
667 Madison Avenue 2005 annual company) since June communication
New York, New York meeting 2004; Chief Executive company); Director
10021 Officer of Epoch of InfraRed X
Investment Partners, (medical device
Date of Birth: 09/24/41 Inc. since April 2004; company) Director of
Co-Managing Partner, J Net Enterprises,
Steinberg Priest & Inc.
Sloane Capital
Management, LLC from
2001 to March 2004;
Chairman and Managing
Director of CSAM from
2000 to February 2001,
Chief Executive Officer
and Managing Director of
CSAM from 1990 to 2000
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
--------------------------- ------------------ ------------------ -------------------------------------------------------------
OFFICERS
Michael E. Kenneally** Chairman of the Since 2004 Chairman and Global Chief Executive Officer of CSAM since
c/o Credit Suisse Asset Fund, Chief 2003; Chairman and Chief Investment Officer of Banc of
Management, LLC Executive America Capital Management from 1998 to March 2003
466 Lexington Avenue Officer and
New York, New York President
10017-3140
Date of Birth: 03/30/54
Emily Alejos Chief Investment Since 1999 Director of CSAM since January 1999; Vice President of CSAM
c/o Credit Suisse Asset Officer from 1997 to January 1999; Associated with CSAM since 1997;
Management, LLC Officer of other Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 10/27/63
* 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, up to December 31, 2002, he was
retained by CSAM to provide consulting services.
** Effective August 9, 2004, Michael E. Kenneally was appointed as Chairman of
the Fund, Chief Executive Officer and President of the Fund.
Joseph D. Gallagher who previously held these positions has resigned
effective August 9, 2004.
29
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
--------------------------- ------------------ ------------------ -------------------------------------------------------------
OFFICERS--(CONCLUDED)
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration of CSAM;
c/o Credit Suisse Asset Officer and Associated with CSAM since 1984; Officer of other Credit
Management, LLC Secretary Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 11/15/59
Emidio Morizio Chief Since 2004 Vice President and Global Head of Compliance of CSAM;
Credit Suisse Asset Compliance Associated with CSAM since July 2000; Vice President and
Management, LLC Officer Director of Compliance of Forstmann-Leff Associates from 1998
466 Lexington Avenue to June 2000; Officer of other Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 09/21/66
Ajay Mehra Chief Since 2004 Director and Deputy General Counsel of CSAM since September
Credit Suisse Asset Legal Officer 2004; Senior Associate of Sherman & Sterling LLP from
Management, LLC September 2000 to September 2004; Senior Counsel of the SEC
466 Lexington Avenue Division of Investment Management from June 1997 to September
New York, New York 2000; Officer of other Credit Suisse Funds
10017-3140
Date of Birth: 08/14/70
J. Kevin Gao Senior Vice Since 2004 Vice President and legal counsel of CSAM; Associated with
Credit Suisse Asset President CSAM since July 2003; Associated with the law firm of Willkie
Management, LLC Farr & Gallagher LLP from 1998 to 2003; Officer of other
466 Lexington Avenue Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 10/12/67
Robert M. Rizza Treasurer Since 1999 Assistant Vice President of CSAM since January 2001;
c/o Credit Suisse Asset Associated with CSAM since 1998; Officer of other Credit
Management, LLC Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 12/09/65
ANNUAL CERTIFICATIONS (UNAUDITED)
The Fund's Chief Executive Officer has filed an annual certification with the
NYSE that, as of the date of the certification, he was unaware of any violation
by the Fund of the NYSE's corporate governance listing standards. The Fund's
Chief Executive Officer and Chief Financial Officer have also filed
certifications with the SEC as part of the Fund's Form N-CSR filings that cover
certain public disclosure documents of the Fund, including its annual and
semi-annual reports to stockholders.
30
PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how The Emerging Markets Telecommunications Fund, Inc.
(the "Fund") voted proxies related to its portfolio securities during the
12-month period ended June 30, 2004 as well as the policies and procedures that
the Fund uses to determine how to vote proxies relating to its portfolio
securities are available:
- By calling 1-800-293-1232;
- On the Fund's website, www.csam.com/us
- On the website of the Securities and Exchange Commission,
http://www.sec.gov.
The Fund files a complete schedule of its portfolio holdings for the first and
third quarters of its fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the SEC's Public Reference Room may be obtained by calling
1-800-SEC-0330.
31
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve 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 Mid-Cap Growth Fund
Credit Suisse New York Municipal Fund
Credit Suisse Select Equity Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value 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, private equity, 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
SUMMARY OF GENERAL INFORMATION (UNAUDITED)
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, 2004, CSAM managed over $27 billion in
the U.S. and, together with its global affiliates, managed assets of over $308
billion in 15 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, Inc. 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/us.
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 Lead Director
James J. Cattano Director
George W. Landau Director
William W. Priest, Jr. Director
Martin M. Torino Director
Michael E. Kenneally Chairman of the Fund,
Chief Executive Officer
and President
Emily Alejos Chief Investment Officer
J. Kevin Gao Senior Vice President
Ajay Mehra Chief Legal Officer
Emidio Morizio Chief Compliance Officer
Michael A. Pignataro Chief Financial Officer and
Secretary
Robert M. Rizza Treasurer
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, NY 10017
INVESTMENT SUB-ADVISERS
Credit Suisse Asset Management (Australia) Limited
Level 32, Gateway Building
1 Macquarie Place
Sydney NSW 2000
Credit Suisse Asset Management Limited
Beaufort House
15 St. Botolph Street
London EC3A 7JJ, England
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
EquiServe Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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-04
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
12(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended October 31, 2004. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended October 31, 2004.
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.
(a) through (d). The information in the table below is provided for services
rendered to the registrant by its independent registered public accounting firm,
PricewaterhouseCoopers LLP ("PwC"), for its fiscal years ended November 30, 2003
and October 31, 2004.
2003 2004
Audit Fees $ 51,000 $ 51,000
Audit-Related Fees(1) $ 3,000 $ 4,500
Tax Fees(2) $ 7,482 $ 7,482
All Other Fees -- --
Total $ 61,482 $ 62,982
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements ($3,000 per year), and the
registrant's third quarter 2004 Form N-Q filing ($1,500).
(2) Tax services in connection with the registrant's excise tax calculations
and review of the registrant's applicable tax returns.
The information in the table below is provided with respect to non-audit
services that directly relate to the registrant's operations and financial
reporting and that were rendered by PwC to the registrant's investment adviser,
Credit Suisse Asset Management, LLC ("CSAM"), and any service provider to the
registrant controlling, controlled by or under common control with CSAM that
provided ongoing services to the registrant ("Covered Services Provider"), for
the registrant's fiscal years ended November 30, 2003 and October 31, 2004.
2003 2004
Audit-Related Fees N/A N/A
2
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
(e)(1) Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and permissible
non-audit services to be provided by the independent registered public
accounting firm to the registrant and (ii) all permissible non-audit services to
be provided by the independent registered public accounting firm to CSAM and any
Covered Services Provider if the engagement relates directly to the operations
and financial reporting of the registrant. The Committee may delegate its
responsibility to pre-approve any such audit and permissible non-audit services
to the Chairperson of the Committee, and the Chairperson shall report to the
Committee, at its next regularly scheduled meeting after the Chairperson's
pre-approval of such services, his or her decision(s). The Committee may also
establish detailed pre-approval policies and procedures for pre-approval of such
services in accordance with applicable laws, including the delegation of some or
all of the Committee's pre-approval responsibilities to other persons (other
than CSAM or the registrant's officers). Pre-approval by the Committee of any
permissible non-audit services shall not be required so long as: (i) the
aggregate amount of all such permissible non-audit services provided to the
registrant, CSAM and any Covered Services Provider constitutes not more than 5%
of the total amount of revenues paid by the registrant to its independent
registered public accounting firm during the fiscal year in which the
permissible non-audit services are provided; (ii) the permissible non-audit
services were not recognized by the registrant at the time of the engagement to
be non-audit services; and (iii) such services are promptly brought to the
attention of the Committee and approved by the Committee (or its delegate(s))
prior to the completion of the audit.
(e)(2) The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to the
registrant for which the pre-approval requirement was waived pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X:
2003 2004
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
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The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to CSAM
and any Covered Services Provider required to be approved pursuant to Rule
2-01(c)(7)(ii)of Regulation S-X, for the registrant's fiscal years ended
November 30, 2003 and October 31, 2004:
2003 2004
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
(f) Not Applicable.
(g) The aggregate fees billed by PwC for non-audit services rendered to the
registrant, CSAM and Covered Service Providers for the fiscal years ended
November 30, 2003 and October 31, 2004 were $10,482 and $11,982, respectively.
(h) Not Applicable.
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 Cattano,
George W. Landau and Martin Torino.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
4
CREDIT SUISSE ASSET MANAGEMENT, LLC
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
CSAM CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC ("CSAM") is a fiduciary that owes 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. 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
5
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
in 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;
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- 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
in 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.
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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 on a
case-by-case basis on auditor rotation proposals taking into
consideration: (1) tenure of audit firm; (2) establishment and
disclosure of a renewal process whereby the auditor is regularly
evaluated for both audit quality and competitive price; (3) length of
the rotation period advocated in the proposal, and (4) significant
audit related issues.
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
8
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-by-case 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, elected by and from the independent board
members with clearly delineated duties; (2) 2/3 independent board; (3)
all independent key committees; or (4) established governance
guidelines.
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
9
lacking any of these three panels. Generally withhold votes from
insiders and affiliated outsiders on boards that are not at least
majority independent.
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.
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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.
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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
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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
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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
14
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
15
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.
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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-for-dollar 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) value-for-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
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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 for shareholders proposals to
exclude pension fund income in the calculation of earnings used in
determining executive bonuses/compensation. Vote on a case-by-case
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 Option Proposals
Generally vote for shareholder proposals advocating the use of
performance-based equity awards (indexed, premium-priced, and
performance-vested options), unless: (1) the proposal is overly
restrictive; or (2) the company demonstrates that it is using a
substantial portion of performance-based awards for its top
executives.
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.
May 19, 2004
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Form N-CSR disclosure requirement is not yet effective with respect to the
registrant.
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ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
(C) TOTAL NUMBER OF (D) MAXIMUM NUMBER
(A) TOTAL (B) AVERAGE SHARES PURCHASED AS OF SHARES THAT MAY
NUMBER OF PRICE PAID PER PART OF PUBLICLY YET BE PURCHASE
PERIOD SHARES PURCHASED SHARE ANNOUNCED PLANS UNDER THE PLAN
------------------------------------------- ----------------- ----------------- ------------------------ ---------------------
June 1st through June 30th 37,600 $7.72 37,600 615,122
------------------------------------------- ----------------- ----------------- ------------------------ ---------------------
July 1st through July 31st 70,600 $7.70 70,600 544,522
------------------------------------------- ----------------- ----------------- ------------------------ ---------------------
August 1st through August 31st 29,600 $7.63 29,600 514,922
------------------------------------------- ----------------- ----------------- ------------------------ ---------------------
September 1st through September 30th 58,200 $7.94 58,200 456,722
------------------------------------------- ----------------- ----------------- ------------------------ ---------------------
October 1st through October 31st 24,500 $8.30 24,500 432,222
------------------------------------------- ----------------- ----------------- ------------------------ ---------------------
(a) The plan was announced December 4, 2003.
(b) 10% of the Fund's outstanding shares.
(c) There is no expiration date of the plan.
(d) Not applicable.
(e) Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors since the registrant
last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(g)
of Schedule 14A in its definitive proxy statement dated February 23, 2004.
ITEM 11. 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
second fiscal quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) 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.
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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/ Michael E. Kenneally
------------------------
Name: Michael E. Kenneally
Title: Chief Executive Officer
Date: January 7, 2005
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/ Michael E. Kenneally
------------------------
Name: Michael E. Kenneally
Title: Chief Executive Officer
Date: January 7, 2005
/s/ Michael A. Pignataro
------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: January 7, 2005
20