UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File No. 811-08076
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Eleven Madison Avenue, New York, New York 10010
(Address of Principal Executive Offices) (Zip Code)
J. Kevin Gao, Esq.
The Emerging Markets Telecommunications Fund, Inc.
Eleven Madison Avenue
New York, New York 10010
Registrant's telephone number, including area code: (212) 325-2000
Date of fiscal year end: October 31st
Date of reporting period: November 1, 2005 to October 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
THE EMERGING MARKETS
TELECOMMUNICATIONS
FUND, INC.
ANNUAL REPORT
OCTOBER 31, 2006
[AMERICAN STOCK EXCHANGE(R) LISTED ETF LOGO]
ETF-AR-1006
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 25
Results of Annual Meeting of Shareholders 26
Description of InvestLink(SM) Program 27
Information Concerning Directors and Officers 30
Proxy Voting and Portfolio Holdings Information 34
LETTER TO SHAREHOLDERS
DECEMBER 14, 2006
DEAR SHAREHOLDER:
For the year ended October 31, 2006, The Emerging Markets Telecommunications
Fund, Inc. (the "Fund") had a return of 38.92% based on net asset value, versus
35.42% for the Morgan Stanley Capital International Emerging Markets Index*
(MSCI EM) and an increase of 37.81% for the telecommunications services
subsector of the MSCI EM. Based on market price, the Fund had a return of 46.65%
for the period.
MARKET REVIEW: EARNINGS GROWTH LEADS A STRONG YEAR
Emerging markets as a group, despite a short and sharp correction in the
May-June period, had strong overall returns (in absolute terms), thus
outperforming developed markets. Contributing to this performance was solid
earnings growth and a generally bullish mood from investors buoyed by oil prices
below US$60 per barrel. In this positive environment, emerging market stocks,
which reported good earnings growth, were generally rewarded with sharply higher
share prices.
Another significant contributor to the outperformance of the listed portfolio
during the period was the strategic focus on growth wireless stocks. Notable
positive contributors were Bharti (2.0% of the Fund as of October 31, 2006),
America Movil S.A. de C.V. (15.3% of the Fund as of October 31, 2006) and NII
Holdings Inc. (1.6% of the Fund as of October 31, 2006). Zero weighting in index
heavyweights KT Corp. and Chunghwa Telecom Co. Ltd., which both underperformed
by a substantial margin, also helped relative performance. The only notable
detractor from performance for the non-private placement holdings was poor stock
selection in Brazil. The private placement holdings, despite lagging for the
majority of the period, received a substantial boost late in the year after a
significant realization.
Ample liquidity at the corporate and private equity level provided fuel for a
number of mergers and acquisitions. The Fund benefited from this trend by
selling three holdings after receiving takeover bids for each company.
STRATEGIC REVIEW AND OUTLOOK: BUILDING ON INFRASTRUCTURE
The strong economic growth in emerging market economies continues to generate
large numbers of middle-class consumers eager to become members of the mobile
phone community. As our investments are poised to benefit from this trend, we
are maintaining our large overweight to growth wireless stocks.
During the most recent quarter, we added to our investment in Philippine Long
Distance Telephone Co. (PLDT) placing it among the top 10 Fund holdings at 2.4%
of the Fund as of October 31, 2006. Unlike most of its incumbent peers, this
company has discovered a new growth engine to replace the legacy fixed line
franchise.
Additionally, we have been increasing our exposure in the infrastructure sector,
providing what we believe is a good mix of earnings growth and dividend yield to
the portfolio. In fact, infrastructure investments now account for approximately
6% of the Fund. Chronic infrastructure bottlenecks in a host of emerging market
countries are providing a number of interesting investment opportunities in our
view. We will look to build further upon this theme in the coming months.
We are cautiously optimistic about the outlook for the sector and emerging
markets in general. The sheer size of the rally over the past 12 months suggests
to us that a small correction would not be unexpected in the near term. We would
use any such correction as an opportunity to add to our existing holdings.
PRIVATE PLACEMENTS UPDATE
As discussed in previous reports, most of the Fund's private placement holdings
are technology oriented venture-capital funds. Following a series of consecutive
write-downs related to the past difficult market environment for technology and
1
telecom providers, the most recent twelve-month period saw more widespread
stability and even had increases in valuations. Write-ups of these types of
investments typically lagged recovery in the public markets, as these 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.
During October 2006, the Fund wrote-up its investment in Independent Network
Television Holding Ltd. after the company signed a definitive agreement to be
acquired by another company. This transaction closed and the Fund received cash
in December 2006.
Despite fluctuating markets during the period, which were particularly
challenging in the last few months, several of these funds also benefited from
appreciation of underlying investments, primarily in those companies that had
already reached a level of maturity that allowed them to go public.
Distributions in this period increased significantly from the previous fiscal
year ($4.6 million as compared to $1.6 million); as a result of the improving
technology sector, in combination with the maturation of the underlying
portfolio companies, which is beginning to drive a growing number of liquidity
events (strategic sales or sales in the public markets). We would hope to see
this trend continue and accelerate over the coming quarters. With this improved
environment, the investment pace of the funds remained strong, with
approximately $1.3 million of capital calls made by the fund investments during
the period. We believe that recent investments made by general partners with
whom we have invested are being done at better valuations and at a later stage
in companies' development. Therefore, we hope that the results of such "post
technology bubble" will be amongst the most successful over time.
Respectfully,
/s/ Neil Gregson /s/ Steven B. Plump
------------------------------------- ----------------------------------------
Neil Gregson Steven B. Plump
Chief Investment Officer** Chief Executive Officer and President***
2
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 INVESTMENTS. 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.
** Neil Gregson, who is a Managing Director of Credit Suisse Asset Management,
Limited ("Credit Suisse Ltd."), is head of emerging market equities, based
in London. Prior to assuming this role in 2003, he was chief investment
officer for equities in Emerging Europe, the Middle East and Africa. Mr.
Gregson joined Credit Suisse Ltd. in 1990 after working as an investment
analyst in Johannesburg. Previously, he was a mining engineer with Anglo
American Corporation in South Africa. Mr. Gregson holds a BSc (Hons.) in
mining engineering from Nottingham University. He is also the Chief
Investment Officer of The First Israel Fund, Inc.
*** Steven B. Plump is a Managing Director of Credit Suisse Asset Management,
LLC ("Credit Suisse") and CEO/President of the Fund. He joined Warburg
Pincus Asset Management ("WPAM") in 1995 and came to Credit Suisse in 1999
when it acquired WPAM.
3
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
PORTFOLIO SUMMARY
OCTOBER 31, 2006 (UNAUDITED)
SECTOR ALLOCATION
[CHART]
31-OCT-06 31-OCT-05
Diversified Telecommunication Services 23.04% 31.48%
Household Durables 1.37% 0.00%
Independent Power Producers & Energy Traders 0.79% 1.14%
Media 4.59% 1.10%
Technology 0.81% 0.84%
Transport Infrastructure 1.14% 0.00%
Venture Capital 7.74% 10.88%
Water Utilities 1.62% 0.00%
Wireless Telecommunication Services 55.39% 51.89%
Other 1.32% 1.15%
Cash & Other Assets 2.19% 1.52%
AS A PERCENT OF NET ASSETS
GEOGRAPHIC ASSET BREAKDOWN
[CHART]
31-OCT-06 31-OCT-05
Africa 6.75% 7.65%
Asia 45.21% 39.05%
Europe 0.72% 4.33%
Latin America 29.05% 25.90%
Middle East 9.38% 14.29%
North America 2.39% 1.00%
Global 4.31% 6.26%
Cash & Other Assets 2.19% 1.52%
AS A PERCENT OF NET ASSETS
4
SUMMARY OF SECURITIES BY COUNTRY/REGION
[CHART]
31-OCT-06 31-OCT-05
Brazil 6.64% 8.83%
China 15.52% 13.69%
Egypt 2.88% 7.11%
India 3.40% 2.58%
Indonesia 4.17% 3.01%
Israel 4.79% 7.18%
Mexico 19.88% 15.69%
Phillipines 2.84% 1.26%
Russia 12.88% 8.37%
South Africa 6.75% 7.65%
South Korea 4.49% 3.70%
United States 2.39% 1.00%
Global 4.31% 6.26%
Other 6.87% 12.15%
AS A PERCENT OF NET ASSETS
TOP 10 HOLDINGS, BY ISSUER
COUNTRY/ PERCENT OF
HOLDING SECTOR REGION NET ASSETS
-------------------------------------------------------------------------------------------------------------------
1. America Movil S.A. de C.V. Wireless Telecommunication Services Mexico 15.3
2. China Mobile (Hong Kong) Ltd. Wireless Telecommunication Services China 14.4
3. MTN Group Ltd. Wireless Telecommunication Services South Africa 5.4
4. PT Telekomunikasi Indonesia Diversified Telecommunication Services Indonesia 4.2
5. Independent Network Television Holding Ltd. Media Russia 3.7
6. SK Telecom Co., Ltd. Wireless Telecommunication Services South Korea 3.6
7. Emerging Markets Ventures I, L.P. Venture Capital Global 3.4
8. Orascom Telecom Holding SAE Wireless Telecommunication Services Egypt 2.9
9. Philippine Long Distance Telephone Co. Diversified Telecommunication Services Philippines 2.4
10. Mobile Telesystems Wireless Telecommunication Services Russia 2.4
5
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
SCHEDULE OF INVESTMENTS
OCTOBER 31, 2006
NO. OF
DESCRIPTION SHARES/UNITS VALUE
--------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-97.81%
EQUITY OR EQUITY-LINKED SECURITIES OF
TELECOMMUNICATION COMPANIES IN EMERGING
COUNTRIES-89.93%
ASIA-1.74%
DIVERSIFIED TELECOMMUNICATION SERVICES-1.74%
TVG Asian Communications
Fund II, L.P.++++#
(Cost $2,438,479) 3,622,118 $ 2,642,404
-----------
BRAZIL-5.77%
DIVERSIFIED TELECOMMUNICATION SERVICES-3.21%
Brasil Telecom
Participacoes S.A. 74,500,000 912,956
Brasil Telecom
Participacoes S.A., ADR 22,000 736,340
Tele Norte Leste
Participacoes S.A. 47,300 1,411,478
Tele Norte Leste
Participacoes S.A., ADR[2] 124,800 1,805,856
Telecomunicacoes
de Sao Paulo S.A., ADR 200 4,710
-----------
4,871,340
-----------
MEDIA-0.93%
Net Servicos de
Comunicacao S.A., ADR+[2] 70,533 708,857
Vivax S.A.+ 43,600 709,469
-----------
1,418,326
-----------
WIRELESS TELECOMMUNICATION SERVICES-1.63%
Tim Participacoes S.A., ADR[2] 41,300 1,387,680
Vivo Participacoes S.A., ADR[2] 312,800 1,091,672
-----------
2,479,352
-----------
TOTAL BRAZIL (Cost $8,410,211) 8,769,018
-----------
CHINA-15.52%
DIVERSIFIED TELECOMMUNICATION SERVICES-1.13%
China Telecom Corp. Ltd. 4,543,000 $ 1,710,811
-----------
WIRELESS TELECOMMUNICATION SERVICES-14.39%
China Mobile (Hong Kong) Ltd. 1,360,000 11,044,279
China Mobile (Hong Kong) Ltd., ADR[2] 265,800 10,839,324
-----------
21,883,603
-----------
TOTAL CHINA (Cost $12,314,274) 23,594,414
-----------
EGYPT-2.88%
WIRELESS TELECOMMUNICATION SERVICES-2.88%
Orascom Telecom Holding SAE
(Cost $3,086,067) 77,301 4,382,538
-----------
INDIA-3.40%
DIVERSIFIED TELECOMMUNICATION SERVICES-1.40%
Mahanagar Telephone Nigam Ltd. 186,900 582,848
Reliance Communications Ltd.+ 184,124 1,545,223
-----------
2,128,071
-----------
WIRELESS TELECOMMUNICATION SERVICES-2.00%
Bharti Airtel Ltd.+ 258,874 3,041,722
-----------
TOTAL INDIA (Cost $3,484,816) 5,169,793
-----------
INDONESIA-4.17%
DIVERSIFIED TELECOMMUNICATION SERVICES-4.17%
PT Telekomunikasi Indonesia
(Cost $3,334,639) 6,918,500 6,338,799
-----------
ISRAEL-4.75%
DIVERSIFIED TELECOMMUNICATION SERVICES-0.52%
Lynx Photonic Networks* 375,394 344,048
Lynx Series E* 493,000 451,835
-----------
795,883
-----------
See accompanying notes to financial statements.
6
NO. OF
DESCRIPTION SHARES/UNITS VALUE
--------------------------------------------------------------------------------
TECHNOLOGY-0.81%
SVE Star Ventures
Enterprises GmbH & Co.
No. IX KG++++# 1,750,000 $ 1,236,232
-----------
VENTURE CAPITAL-3.42%
BPA Israel Ventures LLC++++# 1,674,587 1,083,965
Concord Ventures
Fund II L.P.++++# 3,840,000 946,771
Formula Ventures L.P.++++ 1,500,000 71,310
Giza GE Venture
Fund III, L.P.++++# 2,640,000 1,558,181
K.T. Concord Venture
Fund L.P.++++ 2,000,000 579,996
Neurone Ventures II, L.P++++# 573,684 163,962
Walden-Israel
Ventures III, L.P.++++# 1,070,438 788,185
-----------
5,192,370
-----------
TOTAL ISRAEL (Cost $11,023,674) 7,224,485
-----------
LATIN AMERICA-0.91%
VENTURE CAPITAL-0.91%
J.P. Morgan Latin America
Capital Partners
(Cayman), L.P.++++ 862,507 763,805
J.P. Morgan Latin America
Capital Partners
(Delaware), L.P.++++# 1,355,207 623,637
-----------
TOTAL LATIN AMERICA
(Cost $1,065,762) 1,387,442
-----------
MEXICO-17.37%
DIVERSIFIED TELECOMMUNICATION SERVICES-2.12%
Telefonos de Mexico S.A
de C.V., Class L, ADR[2] 122,200 3,224,858
-----------
WIRELESS TELECOMMUNICATION SERVICES-15.25%
America Movil S.A. de C.V.,
Series L, ADR[2] 540,700 23,179,809
-----------
TOTAL MEXICO (Cost $8,348,223) 26,404,667
-----------
MOROCCO-0.72%
DIVERSIFIED TELECOMMUNICATION SERVICES-0.72%
Maroc Telecom
(Cost $830,508) 73,406 $ 1,097,130
-----------
PHILIPPINES-2.39%
DIVERSIFIED TELECOMMUNICATION SERVICES-2.39%
Philippine Long Distance
Telephone Co.
(Cost $2,495,566) 76,100 3,633,730
-----------
POLAND-0.72%
DIVERSIFIED TELECOMMUNICATION SERVICES-0.72%
Telekomunikacja Polska S.A.
(Cost $1,004,035) 149,308 1,098,421
-----------
RUSSIA-12.88%
DIVERSIFIED TELECOMMUNICATION SERVICES-2.54%
Comstar United
Telesystems, GDR~ 295,144 2,051,251
Sibirtelecom 6,100,200 506,317
Uralsvyazinform 13,533,617 518,337
VolgaTelecom, ADR 104,200 781,500
-----------
3,857,405
-----------
MEDIA-3.66%
Independent Network
Television Holding Ltd.,
Series II++++ 9,091 5,568,916
-----------
WIRELESS TELECOMMUNICATION SERVICES-6.68%
Mobile Telesystems, ADR[2] 82,000 3,614,560
OAO Vimpel Communications, ADR+[2] 50,700 3,345,693
Sistema JSFC, GDR~ 97,452 2,582,478
Sistema JSFC, GDR[2] 23,272 616,708
-----------
10,159,439
-----------
TOTAL RUSSIA (Cost $11,961,202) 19,585,760
-----------
See accompanying notes to financial statements.
7
NO. OF
DESCRIPTION SHARES/UNITS VALUE
--------------------------------------------------------------------------------
SOUTH AFRICA-6.75%
DIVERSIFIED TELECOMMUNICATION SERVICES-1.31%
Telkom South Africa Ltd. 107,827 $ 1,991,817
------------
WIRELESS TELECOMMUNICATION SERVICES-5.44%
MTN Group Ltd. 911,793 8,275,409
------------
TOTAL SOUTH AFRICA
(Cost $8,024,627) 10,267,226
------------
SOUTH KOREA-4.49%
WIRELESS TELECOMMUNICATION SERVICES-4.49%
KT Freetel Co., Ltd. 45,500 1,394,369
SK Telecom Co., Ltd. 21,190 4,589,409
SK Telecom Co., Ltd., ADR 35,000 842,800
------------
TOTAL SOUTH KOREA
(Cost $6,274,755) 6,826,578
------------
THAILAND-0.17%
DIVERSIFIED TELECOMMUNICATION SERVICES-0.17%
True Corporation Public
Company Ltd,
Foreign Registered+ 1,145,900 262,134
True Corporation Public
Company Ltd.,
Foreign Registered, Warrants
(expiring 04/03/08)+ 1,717,483 0
------------
TOTAL THAILAND (Cost $267,797) 262,134
------------
TURKEY-0.99%
WIRELESS TELECOMMUNICATION SERVICES-0.99%
Turkcell Iletisim Hizmetleri AS
(Cost $1,067,673) 280,404 1,510,817
------------
GLOBAL-4.31%
DIVERSIFIED TELECOMMUNICATION SERVICES-0.90%
TeleSoft Partners L.P.++++ 1,250,000 105,506
TeleSoft Partners II
QP, L.P.++++# 1,920,000 1,261,630
------------
1,367,136
------------
VENTURE CAPITAL-3.41%
Emerging Markets
Ventures I, L.P.++++# 7,248,829 $ 5,176,870
------------
TOTAL GLOBAL (Cost $6,232,756) 6,544,006
------------
TOTAL EMERGING COUNTRIES
(Cost $91,665,064) 136,739,362
------------
EQUITY SECURITIES OF TELECOMMUNICATION
COMPANIES IN DEVELOPED COUNTRIES-2.39%
UNITED STATES-2.39%
INTERNET SOFTWARE & SERVICES-0.75%
Technology Crossover
Ventures IV, L.P.++++# 1,807,600 1,139,287
------------
WIRELESS TELECOMMUNICATION SERVICES-1.64%
NII Holdings Inc., Class B+ 38,300 2,490,649
------------
TOTAL DEVELOPED COUNTRIES
(Cost $2,553,978) 3,629,936
------------
EQUITY SECURITIES OF COMPANIES PROVIDING OTHER
ESSENTIAL SERVICES IN THE DEVELOPMENT OF AN
EMERGING COUNTRY'S INFRASTRUCTURE-5.49%
ARGENTINA-0.00%
INVESTMENT & HOLDING COMPANIES-0.00%
Exxel Capital Partners V, L.P.++++
(Cost $380,520) 1,897,761 0
------------
BRAZIL-0.87%
ELECTRIC UTILITIES-0.53%
Terna Participacoes S.A.+ 76,700 810,050
------------
INDEPENDENT POWER PRODUCERS &
ENERGY TRADERS-0.34%
AES Tiete S.A., PN 20,143,000 511,960
------------
TOTAL BRAZIL (Cost $1,110,503) 1,322,010
------------
See accompanying notes to financial statements.
8
NO. OF
DESCRIPTION SHARES/UNITS VALUE
--------------------------------------------------------------------------------
CHILE-1.62%
WATER UTILITIES-1.62%
Inversiones Aguas
Metropolitanas S.A., ADR~
(Cost $2,080,064) 111,800 $ 2,468,186
------------
ISRAEL-0.04%
INVESTMENT & HOLDING COMPANIES-0.04%
The Renaissance Fund LDC++++
(Cost $482,671) 160 52,395
------------
MEXICO-2.51%
HOUSEHOLD DURABLES-1.37%
Urbi, Desarrollos Urbanos,
S.A. de C.V.+ 682,320 2,080,298
------------
TRANSPORTATION INFRASTRUCTURE-1.14%
Grupo Aeroportuario del
Pacifico S.A. de C.V., ADR[2] 46,100 1,739,814
------------
TOTAL MEXICO
(Cost $3,295,974) 3,820,112
------------
PHILIPPINES-0.45%
INDEPENDENT POWER PRODUCERS &
ENERGY TRADERS-0.45%
First Gen Corporation
(Cost $576,524) 634,900 687,817
------------
TOTAL OTHER ESSENTIAL SERVICES
(Cost $7,926,256) 8,350,520
------------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES
(Cost $102,145,298) 148,719,818
------------
PRINCIPAL
AMOUNT
(000'S)
------------
SHORT-TERM INVESTMENTS-17.37%
GRAND CAYMAN-2.52%
Bank of America, overnight
deposit, 4.36% 11/01/06**
(Cost $3,828,000) $ 3,828 3,828,000
------------
UNITED STATES-14.85%
Bear, Stearns & Co. Inc.,
repurchase agreement
(Agreement dated 10/31/2006
to be repurchased at
$673), 2.66%***,
11/01/06, collateralized by U.S.
Treasury Strips**** $ 1 $ 673
Bear, Stearns & Co. Inc.,
repurchase agreement
(Agreement dated 10/31/2006
to be repurchased at
$22,584,993), 5.31%*****,
11/01/06, collateralized by U.S.
Treasury Strips**** 22,582 22,581,661
------------
TOTAL UNITED STATES
(Cost $22,582,334) 22,582,334
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $26,410,334) 26,410,334
------------
TOTAL INVESTMENTS-115.18%
(Cost $128,555,632) (Notes B,E,G) 175,130,152
------------
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(15.18)% (23,085,057)
------------
NET ASSETS-100.00% $152,045,095
============
----------
+ 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 B and H).
# As of October 31, 2006, the aggregate amount of open commitments for the
Fund is $4,139,663. (See Note H).
[2] Security or a portion thereof is out on loan.
* 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 B).
~ SEC Rule 144A security. Such securities are traded only among "qualified
institutional buyers."
** Variable rate account. Rate resets on a daily basis; amounts are
available on the same business day.
*** Interest rate after any rebate earned by borrower of securities.
**** Represents security purchased with cash collateral received for
securities on loan.
***** Interest rate before any rebate earned by borrower of securities.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
PN Preferred Shares.
See accompanying notes to financial statements.
9
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2006
ASSETS
Investments, at value, including collateral for securities
on loan of $22,582,334 (1)
(Cost $128,555,632) (Notes B,E,G) $175,130,152
Cash (including $7,619 of foreign currencies with a cost of
$7,654) 7,636
Receivables:
Investments sold 326,925
Dividends receivable 139,627
Prepaid expenses 4,433
------------
Total Assets 175,608,773
------------
LIABILITIES
Payables:
Upon return of securities loaned (Note B) 22,582,334
Investments purchased 653,620
Investment advisory fee (Note C) 104,731
Directors' fees 34,330
Administration fees (Note C) 9,954
Other accrued expenses 178,709
------------
Total Liabilities 23,563,678
------------
NET ASSETS (applicable to 8,606,361 shares of common stock
outstanding) (Note D) $152,045,095
============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 8,606,361 shares issued and
outstanding (100,000,000 shares authorized) $ 8,606
Paid-in capital 165,689,206
Undistributed net investment income 185,463
Accumulated net realized loss on investments and foreign
currency related transactions (60,412,919)
Net unrealized appreciation in value of investments and
translation of other assets and liabilities denominated
in foreign currencies 46,574,739
------------
Net assets applicable to shares outstanding $152,045,095
============
NET ASSET VALUE PER SHARE ($152,045,095/8,606,361) $ 17.67
============
MARKET PRICE PER SHARE $ 16.00
============
----------
(1) Includes securities out on loan to brokers with a market value of
$22,592,971.
See accompanying notes to financial statements.
10
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2006
INVESTMENT INCOME
Income (Note B):
Dividends $ 2,786,223
Interest 135,167
Securities lending 42,711
Less: Investment loss allocated from partnerships (631,331)
Less: Foreign taxes withheld (186,497)
-----------
Total Investment Income 2,146,273
-----------
Expenses:
Investment advisory fees (Note C) 1,364,960
Custodian fees 150,036
Administration fees (Note C) 100,493
Directors' fees 95,187
Legal fees 88,053
Printing (Note C) 81,378
Audit and tax fees 60,311
Accounting fees 40,098
Shareholder servicing fees 19,936
Indian capital gains tax 18,323
Insurance 10,570
Stock exchange listing fees 5,191
Brazilian taxes (Note B) 3,788
Miscellaneous 17,983
-----------
Total Expenses 2,056,307
Less: Fee waivers (Note C) (27,519)
-----------
Net Expenses 2,028,788
-----------
Net Investment Income 117,485
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain from:
Investments 13,397,162
Foreign currency related transactions 67,978
Net change in unrealized appreciation in value of
investments and translation of other assets and
liabilities denominated in foreign currencies 28,947,017
-----------
Net realized and unrealized gain on investments and foreign
currency related transactions 42,412,157
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $42,529,642
===========
See accompanying notes to financial statements.
11
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FISCAL YEARS ENDED
OCTOBER 31,
-----------------------------
2006 2005
------------ -------------
INCREASE IN NET ASSETS
Operations:
Net investment income $ 117,485 $ 144,112
Net realized gain on investments and foreign
currency related transactions 13,465,140 15,094,287
Net change in unrealized appreciation in
value of investments and translation of
other assets and liabilities denominated
in foreign currencies 28,947,017 8,684,985
------------ ------------
Net increase in net assets resulting from
operations 42,529,642 23,923,384
------------ ------------
Capital share transactions (Note I):
Cost of 26,500 and 47,160 shares purchased
under the share repurchase program,
respectively (307,233) (451,752)
------------ ------------
Total increase in net assets 42,222,409 23,471,632
------------ ------------
NET ASSETS
Beginning of year 109,822,686 86,351,054
------------ ------------
End of year $152,045,095* $109,822,686
============ ============
----------
* Includes undistributed net investment income of $185,463.
See accompanying notes to financial statements.
12
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2006
DECREASE IN CASH FROM
Operating Activities:
Investment income received $ 2,773,320
Operating expenses paid (1,922,638)
Purchases of long-term portfolio investments (51,734,900)
Proceeds from disposition of long-term portfolio
investments 54,213,128
Net purchase of short-term portfolio investments (3,022,000)
Cost of shares repurchased (307,233)
------------
Net decrease in cash from operating activities $ (323)
Cash at beginning of year 7,959
------------
Cash at end of year $ 7,636
============
RECONCILIATION OF NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET DECREASE IN CASH
FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations $ 42,529,642
Adjustments:
Increase in accrued expenses $ 104,150
Increase in receivables (4,284)
Decrease in prepaid expenses 2,000
Net decrease in cash from investment transactions (543,772)
Cost of shares repurchased (307,233)
Net investment loss allocated from partnerships 631,331
Net realized and unrealized gain on investments and
foreign currency related transactions (42,412,157)
------------
Total adjustments (42,529,965)
------------
NET DECREASE IN CASH FROM OPERATING ACTIVITIES $ (323)
============
See accompanying notes to financial statements.
13
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
FINANCIAL HIGHLIGHTS~
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
FOR THE FISCAL FOR THE FOR THE FISCAL YEARS
YEARS ENDED ELEVEN MONTHS ENDED
OCTOBER 31, ENDED NOVEMBER 30,
------------------- OCTOBER 31, ------------------------------
2006 2005 2004~~ 2003 2002 2001
-------- -------- ------------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 12.72 $ 9.95 $ 8.17 $ 7.30 $ 8.42 $ 10.35
-------- -------- ------- ------- ------- -------
Net investment income/(loss) 0.01+ 0.02+ 0.01+ (0.10)+ (0.15)+++ (0.12)++
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 4.93 2.74 1.70 0.97 (1.03) (1.88)
-------- -------- ------- ------- ------- -------
Net increase/(decrease) in net assets resulting from
operations 4.94 2.76 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 0.01 0.01 0.07 -- 0.06 0.07
-------- -------- ------- ------- ------- -------
Net asset value, end of period $ 17.67 $ 12.72 $ 9.95 $ 8.17 $ 7.30 $ 8.42
-------- -------- ------- ------- ------- -------
Market value, end of period $ 16.00 $ 10.91 $ 8.52 $ 6.85 $ 6.22 $ 6.88
-------- -------- ------- ------- ------- -------
Total investment return (a) 46.65% 28.05% 24.38% 10.13% (9.59)% (10.50)%
-------- -------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $152,045 $109,823 $86,351 $74,899 $66,937 $90,771
Ratio of expenses to average net assets (b) 1.62% 1.93% 1.81%(c) 1.77% 1.90% 1.76%
Ratio of expenses to average net assets, excluding
taxes 1.60% 1.92% 1.81%(c) 1.77% 1.77% 1.74%
Ratio of net investment income/(loss) to average net
assets 0.09% 0.15% 0.13%(c) (1.33)% (1.89)% (1.18)%
Portfolio turnover rate 39.79% 80.95% 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.
~~ On August 9, 2004, the Fund's Board of Directors approved a change in the
Fund's fiscal year-end from November 30 to October 31. The financial
highlights for 2004 represent the eleven-month period beginning on December
1, 2003 and ending October 31, 2004.
+ 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
------------- -------- ------- -------- --------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 18.36 $ 12.13 $ 16.37 $ 21.54 $ 20.95
-------- -------- ------- -------- --------
Net investment income/(loss) (0.14)+ (0.20)+ (0.04)+ (0.06) 0.10
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions (4.78) 6.14 (2.41) (1.40) 2.86
-------- -------- ------- -------- --------
Net increase/(decrease) in net assets resulting from
operations (4.92) 5.94 (2.45) (1.46) 2.96
-------- -------- ------- -------- --------
Dividends and distributions to shareholders:
Net investment income -- -- -- (0.09) (0.27)
Net realized gain on investments and foreign
currency related transactions (3.09) -- (1.96) (3.62) (2.10)
-------- -------- ------- -------- --------
Total dividends and distributions to shareholders (3.09) -- (1.96) (3.71) (2.37)
-------- -------- ------- -------- --------
Anti-dilutive impact due to capital shares tendered
or repurchased -- 0.29 0.17 -- --
-------- -------- ------- -------- --------
Net asset value, end of period $ 10.35 $ 18.36 $ 12.13 $ 16.37 $ 21.54
-------- -------- ------- -------- --------
Market value, end of period $ 7.688 $ 13.508 $ 9.819 $ 13.008 $ 17.385
-------- -------- ------- -------- --------
Total investment return (a) (28.46)% 37.58% (9.99)% (4.57)% 14.31%
-------- -------- ------- -------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $131,325 $130,300 $94,026 $138,023 $181,627
Ratio of expenses to average net assets (b) 1.91%(c) 2.24% 2.09% 2.32% 1.90%
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%
Portfolio turnover rate 51.72% 113.75% 179.66% 162.58% 42.14%
15
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2006
NOTE A. ORGANIZATION
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.
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
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. 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. Investments in mutual funds are valued at the mutual
fund's closing net asset value per share on the day of valuation.
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. When fair-value pricing is employed, the prices of securities used
by a fund to calculate its net asset value may differ from quoted or published
prices for the same securities. At October 31, 2006, the Fund held 16.15% 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
$23,410,239 and fair value of $24,558,935. 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 time
deposit available through 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 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 fiscal year ended October 31, 2006, the Fund did not incur such expense.
For the fiscal year ended October 31, 2006, the Fund earned $175,256 in capital
gains from investments in Indian securities, for which it paid $18,323 in
capital gains tax.
Brazil imposes a CONTRIBUCAO PROVISORIA SOBRE MOVIMENTACAOES FINANCIERAS
("CPMF") tax that applies to foreign exchange transactions related to dividends
carried out by financial institutions. The tax rate is 0.38%. For the fiscal
year ended October 31, 2006, the Fund incurred $3,788 of such expense.
For Chilean securities 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 would owe if the securities were sold on valuation date. Taxes on
foreign income are recorded when the related income is recorded. For the fiscal
year ended October 31, 2006, the Fund accrued no such expense.
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. federal 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
17
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, 2006, was $22,592,971, for which the Fund has received cash as
collateral of $22,582,334. Such cash collateral was reinvested into an overnight
repurchase agreement with Bear, Stearns & Co. Inc. ("Bear Stearns"), which was
in turn collateralized by U.S. Treasury Strips with a value of $23,241,361.
Security loans are required at all times to have collateral at least equal to
100% 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. During the
fiscal year ended October 31, 2006, total earnings from the investment of cash
collateral received by the Fund in a securities lending arrangement with Bear,
Stearns Securities Corp. as the sole borrower was $341,561, of which $298,850
was rebated to Bear, Stearns Securities Corp. The Fund retained $42,711 from the
cash collateral investment.
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.
18
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.
Further, companies whose securities are not publicly traded may not be subject
to the disclosures and other investor protection requirements applicable to
companies whose securities are publicly traded.
The Fund may enter into repurchase agreements ("repos") on U.S. Government
securities with primary government securities dealers recognized by the Federal
Reserve Bank of New York and member banks of the Federal Reserve System and on
securities issued by the governments of foreign countries, their
instrumentalities and with creditworthy parties in 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, 2006, 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 C. AGREEMENTS
Credit Suisse Asset Management, LLC ("Credit Suisse"), serves as the Fund's
investment adviser with respect to all investments. Credit Suisse 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. Credit
Suisse has agreed to waive a portion of the advisory fee. For the fiscal year
ended October 31, 2006, Credit Suisse earned $1,364,960 for advisory services,
of which Credit Suisse waived $27,519. Credit Suisse will not recapture from the
fund any fees they waived during the fiscal year ended October 31, 2006. Credit
Suisse also provides certain administrative services to the Fund and is
reimbursed by the Fund for costs incurred on behalf of the Fund (up to $20,000
per annum). For the fiscal year ended October 31, 2006, Credit Suisse was
reimbursed $15,199 for administrative services rendered to the Fund.
Credit Suisse Asset Management Limited ("Credit Suisse Ltd. U.K.") and Credit
Suisse Asset Management Limited ("Credit Suisse Ltd. Australia"), affiliates of
Credit Suisse, are sub-investment advisers to the Fund. Credit Suisse Ltd. U.K.
and Credit Suisse Ltd. Australia's sub-investment advisory fees are paid by
Credit Suisse out of Credit Suisse's net 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 calculated weekly based
on the Fund's average weekly net assets. For the fiscal year ended October 31,
2006, BSFM earned $85,294 for administrative services.
19
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 the average month end Brazilian
assets of the Fund.
Merrill Corporation ("Merrill"), an affiliate of Credit Suisse, has been engaged
by the Fund to provide certain financial printing services. For the fiscal year
ended October 31, 2006, Merrill was paid $22,131 for its services to the Fund.
The Independent Directors receive fifty percent (50%) of their annual retainer
in the form of shares purchased by the Fund's transfer agent in the open market.
Directors as a group own less than 1% of the Fund's outstanding shares.
NOTE D. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 8,606,361 shares outstanding at October 31, 2006,
Credit Suisse owned 14,333 shares.
NOTE E. INVESTMENT IN SECURITIES
For the fiscal year ended October 31, 2006, purchases and sales of securities,
other than short-term investments, were $52,388,520 and $48,839,649,
respectively.
NOTE F. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by Credit Suisse
(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 fiscal year ended October 31, 2006, the Fund
had no borrowings under the Credit Facility.
NOTE G. 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. There were no
distributions made during the fiscal years ended October 31, 2005 and October
31, 2006.
The tax basis of components of distributable earnings differ from the amounts
reflected in the statement of Assets and Liabilities by temporary book/tax
differences. These differences are primarily due to losses deferred on wash
sales. At October 31, 2006, the components of distributable earnings on a tax
basis, for the Fund were as follows:
Undistributed ordinary income $ 185,463
Accumulated net realized loss (60,227,058)
Unrealized appreciation 46,388,878
------------
Total accumulated deficit $(13,652,717)
============
At October 31, 2006, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $60,227,058. This amount is subject to Internal Revenue
Code limitations. Capital loss carryforwards of $37,224,818, $17,356,479 and
$5,645,761 expire in 2009, 2010 and 2011, respectively. It is uncertain whether
the Fund will be able to realize the benefits before they expire. During the
fiscal year ended October 31, 2006, the Fund utilized capital loss carryforwards
of $13,246,512.
20
At October 31, 2006, 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 $128,741,493, $52,833,568,
$(6,444,909) and $46,388,659, respectively.
At October 31, 2006, the Fund reclassified $67,978 from accumulated net realized
loss on investments and foreign currency related transactions to accumulated net
investment income. Net assets were not affected by these reclassifications.
NOTE H. 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.
VALUE
NUMBER OF FAIR PER PERCENT
UNITS/ VALUE AT UNIT/ OF NET DISTRIBUTIONS OPEN
SECURITY SHARES ACQUISITION DATE(S) COST 10/31/06 SHARE ASSETS RECEIVED COMMITMENTS
-------- --------- ------------------- ---------- ---------- ------- ------- ------------- -----------
BPA Israel Ventures LLC 1,577,293 10/05/00 - 09/21/05 $1,134,016 $1,020,986 $ 0.65 0.67
97,294 12/09/05 95,178 62,979 0.65 0.04
--------- ---------- ---------- ---- ---------- --------
1,674,587 1,229,194 1,083,965 0.71 $ -- $625,413
--------- ---------- ---------- ---- ---------- --------
Concord Ventures Fund II L.P. 3,760,000 03/29/00 - 07/11/05 2,576,179 927,047 0.25 0.61
80,000 04/12/06 79,172 19,724 0.25 0.01
--------- ---------- ---------- ---- ---------- --------
3,840,000 2,655,351 946,771 0.62 151,554 160,000
--------- ---------- ---------- ---- ---------- --------
Emerging Markets Ventures
I, L.P. 7,215,129 01/22/98 - 06/30/05 4,637,931 5,152,803 0.71 3.39
33,700 01/10/06 31,936 24,067 0.71 0.02
--------- ---------- ---------- ---- ---------- --------
7,248,829 4,669,867 5,176,870 3.41 3,128,680 851,172
--------- ---------- ---------- ---- ---------- --------
Exxel Capital Partners
V, L.P. 1,897,761 05/11/98 - 12/03/98 380,520 0 0.00 0.00 205,185 --
--------- ---------- ---------- ---- ---------- --------
Formula Ventures L.P. 1,500,000 08/06/99 - 06/14/04 364,889 71,310 0.05 0.05 442,832 --
--------- ---------- ---------- ---- ---------- --------
Giza GE Venture Fund
III, L.P. 2,475,000 01/31/00 - 08/10/05 1,756,567 1,460,795 0.59 0.96
55,000 03/02/06 55,387 32,462 0.59 0.02
110,000 07/03/06 112,186 64,924 0.59 0.05
--------- ---------- ---------- ---- ---------- --------
2,640,000 1,924,140 1,558,181 1.03 269,219 110,000
--------- ---------- ---------- ---- ---------- --------
Independent Network
Television Holding Ltd,
Series II 9,091 07/06/98 1,000,000 5,568,916 612.57 3.66 -- --
--------- ---------- ---------- ---- ---------- --------
J.P. Morgan Latin America
Capital Partners (Cayman),
L.P. 835,097 04/10/00 - 08/02/05 563,711 739,532 0.89 0.49
27,410 06/27/06 29,736 24,273 0.89 0.01
--------- ---------- ---------- ---- ---------- --------
862,507 593,447 763,805 0.50 708,606 --
--------- ---------- ---------- ---- ---------- --------
21
VALUE
NUMBER OF FAIR PER PERCENT
UNITS/ VALUE AT UNIT/ OF NET DISTRIBUTIONS OPEN
SECURITY SHARES ACQUISITION DATE(S) COST 10/31/06 SHARE ASSETS RECEIVED COMMITMENTS
-------- --------- ------------------- ----------- ----------- ------- ------- ------------- -----------
J.P. Morgan Latin America
Capital Partners
(Delaware), L.P. 1,339,000 04/10/00 - 08/02/05 $ 461,329 $ 616,179 $ 0.46 0.41
3,998 12/27/05 0 1,840 0.46 0.00
12,209 03/09/06 10,986 5,618 0.46 0.00
--------- ----------- ----------- ----- ----------- ----------
1,355,207 472,315 623,637 0.41 $ 1,191,615 $ 640,026
--------- ----------- ----------- ----- ----------- ----------
K.T. Concord Venture
Fund L.P. 2,000,000 12/08/97 - 09/29/00 1,592,648 579,996 0.29 0.38 1,089,099 --
--------- ----------- ----------- ----- ----------- ----------
Neurone Ventures II, L.P. 536,184 11/24/00 - 08/15/05 140,893 153,244 0.29 0.10
37,500 04/17/06 26,734 10,718 0.29 0.01
--------- ----------- ----------- ----- ----------- ----------
573,684 167,627 163,962 0.11 248,989 187,500
--------- ----------- ----------- ----- ----------- ----------
SVE Star Ventures
Enterprises GmbH & Co.
No. IX KG 1,500,000 12/21/00 - 03/30/05 1,207,334 1,059,627 0.71 0.70
250,000 05/04/06 248,663 176,605 0.71 0.11
--------- ----------- ----------- ----- ----------- ----------
1,750,000 1,455,997 1,236,232 0.81 -- 250,000
--------- ----------- ----------- ----- ----------- ----------
Technology Crossover
Ventures IV, L.P. 1,708,800 03/08/00 - 10/24/05 694,893 1,077,016 0.63 0.71
58,800 05/05/06 54,293 37,060 0.63 0.02
40,000 07/24/06 37,191 25,211 0.63 0.02
--------- ----------- ----------- ----- ----------- ----------
1,807,600 786,377 1,139,287 0.75 938,052 192,400
--------- ----------- ----------- ----- ----------- ----------
TeleSoft Partners L.P. 1,250,000 07/22/97 - 06/07/01 452,211 105,506 0.08 0.07 7,203,101 --
--------- ----------- ----------- ----- ----------- ----------
TeleSoft Partners II QP,
L.P. 1,740,000 07/14/00 - 12/09/04 934,505 1,143,352 0.66 0.75
180,000 6/6/06 176,173 118,278 0.66 0.08
--------- ----------- ----------- ----- ----------- ----------
1,920,000 1,110,678 1,261,630 0.83 467,815 480,000
--------- ----------- ----------- ----- ----------- ----------
The Renaissance Fund LDC 160 03/30/94 - 03/21/97 482,671 52,395 327.47 0.03 1,497,612 --
--------- ----------- ----------- ----- ----------- ----------
TVG Asian Communications
Fund II, L.P. 3,622,118 06/07/00 - 10/27/05 2,438,479 2,642,404 0.73 1.74 837,379 338,589
--------- ----------- ----------- ----- ----------- ----------
Walden-Israel Ventures III,
L.P. 774,813 02/23/01 - 06/09/05 506,909 570,510 0.74 0.38
89,375 11/22/05 76,218 65,809 0.74 0.04
89,375 03/29/06 76,933 65,809 0.74 0.04
116,875 08/01/06 114,576 86,057 0.74 0.06
--------- ----------- ----------- ----- ----------- ----------
1,070,438 774,636 788,185 0.52 728,770 304,563
--------- ----------- ----------- ----- ----------- ----------
Total $22,551,047 $23,763,052 15.63 $19,108,508 $4,139,663
=========== =========== ===== =========== ==========
The Fund may incur certain costs in connection with the disposition of the above
securities.
22
NOTE I. SHARE REPURCHASE PROGRAM/SELF-TENDER POLICY
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.
Open market purchases may also be made within the discretion of management if
the discount is less than 15%. 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 fiscal year ended
October 31, 2006, the Fund repurchased 26,500 of its shares for a total cost of
$307,233 at a weighted discount of 13.13% from its net asset value. For the
fiscal year ended October 31, 2005, the Fund repurchased 47,160 of its shares
for a total cost of $451,752 at a weighted discount of 14.31% from its net asset
value. The Board at the same time determined to suspend the Fund's annual
self-tender program that had been announced in June of 2000.
SELF-TENDER POLICY: In January 2005, the Fund adopted a policy to make annual
self-tenders for its shares of common stock. Each annual self-tender will be in
the amount equal to the net proceeds realized by the Fund during the year from
its illiquid private equity investments less any capital commitments that are
funded during that year, commencing with a self-tender in an amount equal to
such net proceeds as are realized by the Fund during 2005.
A self-tender will be made in any year only if the shares to be purchased under
this formula would equal 5% or more of the Fund's then outstanding shares;
otherwise, the amounts that would have been applied will be carried over in
calculating the amount to be applied in the next year. The price per share in
the self-tenders will be fixed at 95% of the net asset value of the Fund's
shares at the conclusion of the tender offer period, which is expected to occur
near the end of each calendar year.
Based upon distributions from private equity investments less capital
commitments during 2005, the Fund was not required to conduct a self-tender in
respect of that year. The self-tender policy may be modified or rescinded by the
Board of Directors based on economic or market conditions or other factors,
including such factors as a significant reduction in the percentage of the
Fund's net assets represented by private equity investments, a risk of material
adverse regulatory or tax consequences or a risk of the Fund's shares becoming
subject to a delisting by the American Stock Exchange.
NOTE J. RECENT ACCOUNTING PRONOUNCEMENTS
During June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation 48 ("FIN 48" or the "Interpretation"), ACCOUNTING FOR UNCERTAINTY
IN INCOME TAXES -- AN INTERPRETATION OF FASB STATEMENT 109. FIN 48 supplements
FASB Statement 109, ACCOUNTING FOR INCOME TAXES, by defining the confidence
level that a tax position must meet in order to be recognized in the financial
statements. FIN 48 prescribes a comprehensive model for how a fund should
recognize, measure, present, and disclose in its financial statements uncertain
tax positions that the fund has taken or expects to take on a tax return. FIN 48
requires that the tax effects of a position be recognized only if it is "more
likely than not" to be sustained based solely on its technical merits.
Management must be able to conclude that the tax law, regulations, case law, and
other objective information regarding the technical merits sufficiently support
the position's sustainability with a likelihood of more than 50 percent. FIN 48
is effective for fiscal periods beginning
23
after December 15, 2006. At adoption, the financial statements must be adjusted
to reflect only those tax positions that are more likely than not to be
sustained as of the adoption date.
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an
authoritative definition of fair value, sets out a framework for measuring fair
value, and requires additional disclosures about fair-value measurements. The
application of FAS 157 is required for fiscal years, beginning after November
15, 2007 and interim periods within those fiscal years.
At this time, management is evaluating the implications of FIN 48 and FAS 157
and their impact on the financial statements has not yet been determined.
24
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, 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, 2006, the results of
its operations and of cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the years (or 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 Company 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, 2006 by
correspondence with the custodian, brokers, and private equity issuers, provide
a reasonable basis for our opinion.
As explained in Note B, the financial statements include securities valued at
$24,558,935 (16.15% 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
Baltimore, Maryland
December 18, 2006
25
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On February 10, 2006, the Annual Meeting of Shareholders of The Emerging Markets
Telecommunications Fund, Inc. (the "Fund") was held and the following matter was
voted upon:
(1) To elect four directors to the Board of Directors of the Fund:
NAME OF DIRECTOR FOR WITHHELD
---------------- --------- --------
Walter Eberstadt (Class II) 7,572,324 173,547
Phillip Goldstein (Class I) 7,697,616 48,255
Steven N. Rappaport (Class II) 7,308,922 436,949
Martin M. Torino (Class I) 7,572,288 173,583
In addition to the directors elected at the meeting, Enrique R. Arzac and James
J. Cattano continue to serve as Directors of the Fund.
Effective December 6, 2005, Enrique R. Arzac was appointed as Chairman of the
Board. Michael E. Kenneally, who previously held this position, resigned
effective December 6, 2005.
Effective February 15, 2006, Lawrence Haber was appointed as a Director of the
Fund.
26
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED)
The InvestLink(SM) Program is sponsored and administered by Computershare Trust
Company N.A. ("Computershare"), not by the Fund. Computershare 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 Computershare. 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
27
Administrator during such time period. All sale requests having an anticipated
market value of $100,000.00 or more are expected to be submitted in 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.
Computershare, 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
semiannual 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.
28
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as 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: Computershare
Trust Company, N.A., InvestLink(SM) Program, P.O. Box 43010, Providence, RI
02940-3010.
InvestLink is a service mark of Computershare Trust Company, N.A.
29
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
TERM NUMBER OF
OF OFFICE PORTFOLIOS
AND IN FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS AND HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH FUND SERVED PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
--------------------------- ------------------- ------------ ------------------------- ------------ ---------------------------
INDEPENDENT DIRECTORS
Enrique R. Arzac Director; Since 1996; Professor of Finance and 42 Director of The Adams
c/o Credit Suisse Asset Chairman of the current term Economics, Graduate Express Company (a
Management, LLC Board; Nominating ends at the School of Business, closed-end investment
Attn: General Counsel Committee Chairman 2007 annual Columbia University since company); Director of
Eleven Madison Avenue and Audit Committee meeting 1971 Petroleum and Resources
New York, New York Member Corporation (a closed-end
10010-3629 investment company)
Date of Birth: 10/02/41
James J. Cattano Director; Since 1993; President, Primary 6 None
c/o Primary Resources, Inc. Nominating current term Resources Inc. (an
5100 Tamiami Trail N. Committee ends at the international trading and
Naples, FL Member and 2007 annual manufacturing company
34103 Audit Committee meeting specializing in the sale
Chairman of agricultural
Date of Birth: 06/24/43 commodities throughout
Latin American markets)
since October 1996
Walter Eberstadt Director; Since 2005 Limited Managing Director 1 None
Lazard Freres & Co. Nominating and in Lazard Freres & Co.
30 Rockefeller Plaza Audit Committee since 1969
New York, NY Member
10020
Date of Birth: 07/15/21
Phillip Goldstein Director; Since 2005 Investment Adviser, 2 Director, Brantley Capital
Opportunity Partners L.P. Nominating and Opportunity Partners L.P. Corporation; Director, The
60 Heritage Drive Audit Committee since 1992 Mexico Equity and Income
Pleasantville, NY Member Fund
10570
Date of Birth: 01/28/45
30
TERM NUMBER OF
OF OFFICE PORTFOLIOS
AND IN 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--(CONTINUED)
Steven N. Rappaport Director; Since 2006; Partner of Lehigh Court, 42 Director of Presstek, Inc.
Lehigh Court, LLC Nominating and current term LLC and RZ Capital (digital imaging
40 East 52nd Street Audit Committee ends at the (private investment technologies company);
New York, New York Member 2008 annual firms) since July 2002; Director of Wood Resources,
10022 meeting Transition Advisor to LLC (plywood manufacturing
SunGard Securities company)
Date of Birth: 07/10/48 Finance, Inc. from
February 2002 to July
2002; President of
SunGard Securities
Finance from 2001 to
February 2002; President
of Loanet, Inc. (on-line
accounting service) from
1997 to 2001
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 2006 annual (Logistics) since 2002;
Eleven Madison Avenue meeting Chairman of the Board of
New York, New York Ingenio y Refineria San
10010-3629 Martin Del Tabacal S.A.
(sugar refinery) from
Date of Birth: 08/14/49 August 1996 to 2000
INTERESTED DIRECTOR*
Lawrence D. Haber Director Since 2006 Managing Director and 6 None
c/o Credit Suisse Asset Chief Operating Officer
Management, LLC of Credit Suisse; Member
Eleven Madison Avenue of Credit Suisse's
New York, New York Management Committee;
10010-3629 Chief Financial Officer
of Merrill Lynch
Date of Birth: 06/27/51 Investment Managers from
1997 to 2003
* Mr. Haber is a director who is an "interested person" of the Fund as
defined under the Investment Company Act of 1940, as amended.
31
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
----------------------- ---------------- ---------- --------------------------------------------------------------------------
OFFICERS
Steven B. Plump Chief Executive Since 2005 Managing Director; Associated with Credit Suisse or its predecessor since
Credit Suisse Asset Officer and 1995; Officer of other Credit Suisse Funds
Management, LLC President
Eleven Madison Avenue
New York, New York
10010-3629
Date of Birth: 02/08/59
Neil Gregson Chief Investment Since 2005 Managing Director of Credit Suisse Asset Management Limited ("Credit
c/o Credit Suisse Asset Officer Suisse Ltd. U.K."); Associated with Credit Suisse LTD. U.K. since 1990
Management, LLC
Eleven Madison Avenue
New York, New York
10010-3629
Date of Birth: 05/10/62
Jonathan S. Ong Investment Since 2005 Director of Credit Suisse Asset Management Limited ("Credit Suisse Ltd.
c/o Credit Suisse Asset Officer Australia"); Associated with Credit Suisse Ltd. Australia since 1999
Management, LLC
Eleven Madison Avenue
New York, New York
10010-3629
Date of Birth: 08/03/67
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration of Credit Suisse;
Credit Suisse Asset Officer Associated with Credit Suisse or its predecessor since 1984; Officer
Management, LLC of other Credit Suisse Funds
Eleven Madison Avenue
New York, New York
10010-3629
Date of Birth: 11/15/59
Emidio Morizio Chief Compliance Since 2004 Director and Global Head of Compliance of Credit Suisse; Associated
Credit Suisse Asset Officer with Credit Suisse since July 2000; Officer of other Credit Suisse
Management, LLC Funds
Eleven Madison Avenue
New York, New York
10010-3629
Date of Birth: 09/21/66
32
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
----------------------- ---------------- ---------- --------------------------------------------------------------------------
OFFICERS--(CONTINUED)
J. Kevin Gao Chief Legal Since 2004 Director and Legal Counsel of Credit Suisse; Associated with Credit Suisse
Credit Suisse Asset Officer since since July 2003; Associated with the law firm of Willkie Farr & Gallagher
Management, LLC 2006 Senior Vice LLP from 1998 to 2003; Officer of other Credit Suisse Funds
Eleven Madison Avenue President and
New York, New York Secretary Since
10010-3629 2004
Date of Birth: 10/13/67
Robert Rizza Treasurer Since 1999 Vice President of Credit Suisse; Associated with Credit Suisse since 1998;
Credit Suisse Asset Officer of other Credit Suisse Funds
Management, LLC
Eleven Madison Avenue
New York, New York
10010-3629
Date of Birth: 12/09/65
33
PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12-month period ended June 30, of each year, 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.credit-suisse.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
1-202-551-8090.
34
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
CLOSED-END FUNDS
SINGLE COUNTRY
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)
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed above at 1-800-293-1232 or visit our website on the
Internet: www.credit-suisse.com/us.
OPEN-END FUNDS
Credit Suisse Large Cap Growth Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Commodity Return Strategy Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Small Cap Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Blend Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Mid-Cap Core Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Core 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. Performance
information current to the most recent month-end is available at
www.credit-suisse.com.
Credit Suisse Asset Management Securities, Inc., Distributor.
35
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SUMMARY OF GENERAL INFORMATION (UNAUDITED)
The Fund is a closed-end, non-diversified management investment company whose
shares trade on the American Stock Exchange, LLC ("AMEX"). The Fund's AMEX
trading symbol is ETF. 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, the Fund's investment adviser, is part of the Asset Management
business of Credit Suisse, a leading global financial services organization
headquartered in Zurich, with offices focused on asset management in 18
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". 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."
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 Chairman of the Board of Directors
James J. Cattano Director
Walter Eberstadt Director
Phillip Goldstein Director
Lawrence Haber Director
Steven N. Rappaport Director
Martin M. Torino Director
Steven B. Plump Chief Executive Officer and President
Neil Gregson Chief Investment Officer
Jonathan S. Ong Investment Officer
J. Kevin Gao Chief Legal Officer, Senior Vice President and Secretary
Emidio Morizio Chief Compliance Officer
Michael A. Pignataro Chief Financial Officer
Robert Rizza Treasurer
Karen Regan Assistant Secretary
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, NY 10010
INVESTMENT SUB-ADVISERS
Credit Suisse Asset Management 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
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
250 W. Pratt Street
Baltimore, MD 21201
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.
[AMERICAN STOCK EXCHANGE(R) LISTED ETF LOGO]
ETF-AR-1006
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, 2006. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended October 31, 2006.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's governing board has determined that it has two audit committee
financial experts serving on its audit committee: Enrique R. Arzac and Steven N.
Rappaport. Each 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 October 31, 2005
and October 31, 2006.
2005 2006
-----------------------------------------
Audit Fees $49,350 $50,800
Audit-Related Fees(1) $ 3,150 $ 3,250
Tax Fees(2) $ 7,860 $ 8,100
All Other Fees -- --
-----------------------------------------
Total $60,360 $62,150
-----------------------------------------
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements ($3,150 in 2005 and $3,250 in 2006).
(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 ("Credit Suisse"), and any service provider
to the registrant controlling, controlled by or under common control with Credit
Suisse that provided ongoing services to the registrant ("Covered Services
Provider"), for the registrant's fiscal years ended October 31, 2005 and October
31, 2006.
2005 2006
--------------------------------------
Audit-Related Fees N/A N/A
2
Tax Fees N/A N/A
All Other Fees $2,444,000 N/A
--------------------------------------
Total $2,444,000 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 Credit
Suisse 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 Credit Suisse 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, Credit Suisse 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:
2005 2006
--------------------------------
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
--------------------------------
3
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 Credit
Suisse 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
October 31, 2005 and October 31, 2006:
2005 2006
--------------------------------
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, Credit Suisse and Covered Service Providers for the fiscal years
ended October 31, 2005 and October 31, 2006 were $11,010 and $11,350,
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,
Walter Eberstadt, Phillip Goldstein, Steven N. Rappaport 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
CREDIT SUISSE CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC ("Credit Suisse") is a fiduciary that
owes each of its clients duties of care and loyalty with respect to proxy
voting. The duty of care requires Credit Suisse to monitor corporate events
and to vote proxies. To satisfy its duty of loyalty, Credit Suisse must
cast proxy votes in the best interests of each of its clients.
The Credit Suisse Funds, Credit Suisse Institutional Funds, and Credit
Suisse 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 Credit Suisse's
clients. The Policy addresses particular issues and gives a general
indication of how Credit Suisse 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 Credit Suisse'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
5
Policy that require a case-by-case analysis will be voted in accordance
with the vote recommendation of ISS. Proxy proposals not addressed by the
Policy will also be voted in accordance with the vote recommendation of
ISS. To the extent that the Proxy Voting Committee proposes to deviate from
the Policy or the ISS vote recommendation, the Committee shall obtain
client consent as described below.
Credit Suisse 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
Credit Suisse is part of the asset management business of Credit Suisse one
of the world's leading banks. As part of a global, full service
investment-bank, broker-dealer, and asset-management organization, Credit
Suisse 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 Credit Suisse for its
clients' accounts. The interests of Credit Suisse and/or its affiliates and
personnel may conflict with the interests of Credit Suisse's clients in
connection with any proxy issue. In addition, Credit Suisse 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
Credit Suisse 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 Credit Suisse
clients;
6
- a record of each vote cast on behalf of Credit Suisse clients;
- a copy of all documents created by Credit Suisse 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
Credit Suisse voted proxies, as well as a copy of any written
response.
Credit Suisse reserves the right to maintain certain required proxy records
with ISS in accordance with all applicable regulations.
Disclosure
Credit Suisse will describe the Policy to each client. Upon request, Credit
Suisse will provide any client with a copy of the Policy. Credit Suisse
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. Credit Suisse 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 Credit Suisse 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.
7
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.
10
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.
11
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
12
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
13
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.
16
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
17
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 17, 2006
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information pertaining to the Chief Investment Officer and Investment Officer of
The Emerging Markets Telecommunications Fund, Inc., as of October 31, 2006, is
set forth below.
18
Neil Gregson Managing Director of Credit Suisse Asset Management
Chief Investment Limited ("CSAML"); Associated with CSAML since 1990;
Officer Since 2005 Officer of other Credit Suisse Funds
Date of Birth: 05/10/62
Jonathon Ong Director of CSAML; Associated with CSAML since 1999
Investment Officer
Since 2005
Date of Birth: 08/03/67
Registered Investment Companies, Pooled Investment Vehicles and Other
Accounts Managed
As reported to the Registrant, the information in the following table
reflects the number of registered investment companies, pooled investment
vehicles and other accounts managed by Mr. Gregson and Mr. Ong and the total
assets managed within each category as of October 31, 2006.
REGISTERED INVESTMENT OTHER POOLED INVESTMENT
COMPANIES VEHICLES OTHER ACCOUNTS
-------------------------------------------------------------------------------
Neil Gregson 4 $478 million 3 $776 million 0 N/A
Jonathon Ong 3 $396 million 2 $397 million 0 N/A
No advisory fee is paid based on performance for any of the accounts listed
above.
Potential Conflicts of Interest
It is possible that conflicts of interest may arise in connection with
the portfolio managers' management of the Portfolio's investments on the one
hand and the investments of other accounts on the other. For example, the
portfolio managers may have conflicts of interest in allocating management time,
resources and investment opportunities among the Portfolio and other accounts
they advise. In addition due to differences in the investment strategies or
restrictions between the Portfolio and the other accounts, the portfolio
managers may take action with respect to another account that differs from the
action taken with respect to the Portfolio. Credit Suisse has adopted policies
and procedures that are designed to minimize the effects of these conflicts.
If Credit Suisse believes that the purchase or sale of a security is
in the best interest of more than one client, it may (but is not obligated to)
aggregate the orders to be sold or purchased to seek favorable execution or
lower brokerage commissions, to the extent permitted by applicable laws
19
and regulations. Credit Suisse may aggregate orders if all participating client
accounts benefit equally (i.e., all receive an average price of the aggregated
orders). In the event Credit Suisse aggregates an order for participating
accounts, the method of allocation will generally be determined prior to the
trade execution. Although no specific method of allocation of transactions (as
well as expenses incurred in the transactions) is expected to be used,
allocations will be designed to ensure that over time all clients receive fair
treatment consistent with Credit Suisse's fiduciary duty to its clients
(including its duty to seek to obtain best execution of client trades). The
accounts aggregated may include registered and unregistered investment companies
managed by Credit Suisse's affiliates and accounts in which Credit Suisse's
officers, directors, agents, employees or affiliates own interests. Applicant
may not be able to aggregate securities transactions for clients who direct the
use of a particular broker-dealer, and the client also may not benefit from any
improved execution or lower commissions that may be available for such
transactions.
Compensation
Credit Suisse's compensation to Neil Gregson set forth below includes
both a fixed base salary component and bonus component. The bonus component is
composed of two parts. The first part of the bonus component is discretionary
and generally is determined by considering various factors, such as business
growth, teamwork, management, corporate citizenship, etc. The second part of the
bonus generally is determined by the pre-tax investment performance of products,
including the Fund, for which the Portfolio Manager is responsible ("Performance
Based Bonus"). Credit Suisse considers both the short-term (generally one-year)
and long-term (generally three-years) performance of a portfolio manager
relative to selected benchmarks in determining the portfolio manager's bonus.
The following table sets forth the benchmarks and peer group used over one and
three year periods in determining the Portfolio Manager's Performance Based
Bonus.
PORTFOLIO MANAGER BENCHMARK PEER GROUP
--------------------------------------------------------------------------------------
Neil Gregson MSCI Eastern Europe Lipper Hindsight LUX Eastern Europe
MSCI Emerging Europe Lipper Hindsight Global Emerging
Markets
MSCI Weighted sub-sectors
Lipper Emerging Markets Fund
FT Gold Mines Index
Lipper Precious Metals
MSCI Global Emerging Markets
20
Jonathan Ong is compensated for his services by Credit Suisse. His
compensation consists of a fixed base salary and a discretionary bonus that is
not tied by formula to the performance of any fund or account. The factors taken
into account in determining his bonus include the Fund's performance, assets
held in the Fund and other accounts managed by him, business growth, team work,
management, corporate citizenship, etc.
A portion of the bonus may be paid in phantom shares of Credit Suisse
Group stock as deferred compensation. Phantom shares are shares representing an
unsecured right to receive on a particular date a specified number of registered
shares subject to certain terms and conditions. A portion of the bonus will
receive the notional return of the fund(s) the portfolio manager manages and a
portion of the bonus will receive the notional return of a basket of other
Credit Suisse funds along the product line of the portfolio manager.
Like all employees of Credit Suisse, portfolio managers participate in
Credit Suisse's profit sharing and 401(k) plans.
Securities Ownership. As of October 31, 2006, Mr. Gregson and Mr. Ong did not
own any shares of the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
(a) TOTAL (c) TOTAL NUMBER (d) MAXIMUM NUMBER
NUMBER OF (b) AVERAGE OF SHARES PURCHASED OF SHARES THAT MAY
SHARES PRICE PAID AS PART OF PUBLICLY YET BE PURCHASE
PERIOD PURCHASED PER SHARE ANNOUNCED PLANS UNDER THE PLAN
---------------------------------------------------------------------------------------------------------
May 1st through May 31st 0 $ 0.00 0 381,462
June 1st through June 30th 16,300 $11.40 16,300 365,162
July 1st through July 31st 6,600 $12.06 6,600 358,562
August 1st through August 31st 0 $ 0.00 0 358,562
September 1st through September 30th 0 $ 0.00 0 358,562
October 1st through October 31st 0 $ 0.00 0 358,562
(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.
21
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 January 19, 2006.
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/ Steven B. Plump
-----------------------------------
Name: Steven B. Plump
Title: Chief Executive Officer
Date: December 29, 2006
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/ Steven B. Plump
-----------------------------------
Name: Steven B. Plump
Title: Chief Executive Officer
Date: December 29, 2006
/s/ Michael A. Pignataro
-----------------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: December 29, 2006
23