SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MORGAN STANLEY EMERGING MARKETS FUND, INC.
- ----------------------------------------------------------------------------
(Names of Registrant as Specified in Its Charters)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by the registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________
(3) Filing Party:
_________________________________________________
(4) Date Filed:
_________________________________________________
PAGE
<PAGE>
Preliminary Copy
MORGAN STANLEY EMERGING MARKETS FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Morgan
Stanley Emerging Markets Fund, Inc. (the "Fund") will be held on Wednesday,
April 30, 1997, at [ ] (New York time), in Conference Room [ ] at 1221
Avenue of the Americas, 22nd Floor, New York, New York 10020, for the
following purposes:
1. To elect two Class II Directors for a term of three years.
2. To ratify or reject the selection by the Board of Directors of
Price Waterhouse LLP as independent accountants of the Fund for the
fiscal year ending December 31, 1997.
3. To approve or disapprove an Investment Advisory and Management
Agreement between the Fund and Morgan Stanley Asset Management Inc.
4. To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 24, 1997
are entitled to notice of, and to vote at, this Meeting or any adjournment
thereof.
VALERIE Y. LEWIS
SECRETARY
Dated: March [ ], 1997
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
PAGE
<PAGE>
Preliminary Copy
MORGAN STANLEY EMERGING MARKETS FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
---------------
PROXY STATEMENT
---------------
This statement is furnished by the Board of Directors of Morgan Stanley
Emerging Markets Fund, Inc. (the "Fund") in connection with the solicitation of
Proxies for use at the Annual Meeting of Stockholders (the "Meeting") to be
held on Wednesday, April 30, 1997, at [ ] (New York time), in Conference Room
[ ] at the principal executive office of Morgan Stanley Asset Management Inc.
(hereinafter "MSAM" or the "Manager"), 1221 Avenue of the Americas, 22nd Floor,
New York, New York 10020. It is expected that the Notice of Annual Meeting,
Proxy Statement and form of Proxy will first be mailed to stockholders on or
about [March 27, 1997].
The purpose of the Meeting and the matters to be acted upon are set forth
in the accompanying Notice of Annual Meeting of Stockholders. At the Meeting,
the Fund's stockholders will consider, among other matters, a New Advisory
Agreement (defined below) to take effect following the consummation of the
transactions contemplated by an Agreement and Plan of Merger, dated as of
February 4, 1997 (the "Merger Agreement"), between Dean Witter, Discover & Co.
("Dean Witter Discover") and Morgan Stanley Group Inc. ("MS Group"), the direct
parent of the Manager. Pursuant to the Merger Agreement, the Manager will
become a direct subsidiary of the merged company, which will be called Morgan
Stanley, Dean Witter, Discover & Co. The Fund's New Advisory Agreement is
identical to the Fund's Current Advisory Agreement (defined below), except for
the dates of execution, effectiveness and termination.
If the accompanying form of Proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. A Proxy may be revoked at any time prior to the time
it is voted by written notice to the Secretary of the Fund or by attendance at
the Meeting. If no instructions are specified, shares will be voted FOR the
election of the nominees for Directors, FOR ratification of Price Waterhouse
LLP as independent accountants of the Fund for the fiscal year ending December
31, 1997 and FOR the approval of the New Advisory Agreement. Abstentions and
broker non-votes are each included in the determination of the number of shares
present and voting at the Meeting.
The Board has fixed the close of business on March 24, 1997 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Meeting and at any adjournment thereof. On that date, the Fund had
[ ] shares of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting.
The expense of solicitation will be borne by the Fund and will include
reimbursement to brokerage firms and others for expenses in forwarding proxy
solicitation materials to beneficial owners. The solicitation of Proxies will
be largely by mail, but may include, without cost to the Fund, telephonic,
telegraphic or oral communications by regular employees of the Manager. The
solicitation of Proxies is also expected to include communications by employees
of Shareholder Communications Corporation, a proxy solicitation firm expected
to be engaged by the Fund at a cost not expected to exceed $5,000 plus
expenses. The Manager has agreed to reimburse the Fund for all incremental
expenses incurred by the Fund that would not have been incurred if the New
Advisory Agreement was not submitted to stockholders of the Fund for their
approval.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR
ITS FISCAL YEAR ENDED DECEMBER 31, 1996, TO ANY STOCKHOLDER REQUESTING SUCH
REPORT. REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE IN WRITING TO MORGAN
STANLEY EMERGING MARKETS FUND, INC., C/O CHASE GLOBAL FUNDS SERVICES COMPANY,
P.O. BOX 2798, BOSTON, MASSACHUSETTS 02208-2798, OR BY CALLING 1-800-221-6726.
<PAGE>
Chase Global Funds Services Company is an affiliate of the Fund's
administrator, The Chase Manhattan Bank ("Chase Bank"), and provides
administrative services to the Fund. The business address of Chase Bank and
Chase Global Funds Services Company is 73 Tremont Street, Boston, Massachusetts
02108.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF EACH OF THE
MATTERS MENTIONED IN ITEMS 1, 2 AND 3 OF THE NOTICE OF ANNUAL MEETING.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Meeting, two Directors will be elected to hold office for a term
of three years and until their successors are duly elected and qualified. It
is the intention of the persons named in the accompanying form of Proxy to
vote, on behalf of the stockholders, for the election of John W. Croghan and
Graham E. Jones as Class II Directors.
On or about the same date as the Meeting, each of the other closed-end,
U.S. registered investment companies advised by MSAM (except Morgan Stanley
India Investment Fund, Inc.) also is holding a meeting of stockholders at
which, among other things, such stockholders are considering a proposal to
elect as directors of such other investment companies the same people nominated
to be Directors of the Fund. Accordingly, if elected, all of the nominees for
Directors of the Fund also will act as directors of The Brazilian Investment
Fund, Inc., The Latin American Discovery Fund, Inc., The Malaysia Fund, Inc.,
Morgan Stanley Africa Investment Fund, Inc., Morgan Stanley Asia-Pacific Fund,
Inc., Morgan Stanley Emerging Markets Debt Fund, Inc., Morgan Stanley Global
Opportunity Bond Fund, Inc., The Morgan Stanley High Yield Fund, Inc., Morgan
Stanley Russia & New Europe Fund, Inc., The Pakistan Investment Fund, Inc., The
Thai Fund, Inc. and The Turkish Investment Fund, Inc. (collectively, with the
Fund, the "MSAM closed-end funds"). The Board believes that this arrangement
enhances the ability of the Directors to deal expeditiously with administrative
matters common to the MSAM closed-end funds, such as evaluating the performance
of common service providers, including MSAM and the administrators, transfer
agents, custodians and accountants of the MSAM closed-end funds.
Pursuant to the Fund's By-laws, the terms of office of the Directors are
staggered. The Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with each class having a term of three years.
Each year the term of one class expires. Class I currently consists of Peter J.
Chase, David B. Gill and Warren J. Olsen. Class II currently consists of John
W. Croghan and Graham E. Jones. Class III currently consists of Barton M.
Biggs, John A. Levin and William G. Morton, Jr. Only the Directors in Class II
are being considered for election at this Meeting.
Pursuant to the Fund's By-Laws, each Director holds office until (i) the
expiration of his term and until his successor has been elected and qualified,
(ii) his death, (iii) his resignation, (iv) December 31 of the year in which he
reaches seventy-three years of age, or (v) his removal as provided by statute
or the Articles of Incorporation.
The Board of Directors has an Audit Committee. The Audit Committee makes
recommendations to the full Board of Directors with respect to the engagement
of independent accountants and reviews with the independent accountants the
plan and results of the audit engagement and matters having a material effect
on the Fund's financial operations. The members of the Audit Committee are
currently John W. Croghan, John A. Levin and William G. Morton, Jr., none of
whom is an "interested person," as defined under the Investment Company Act of
1940, as amended (the "1940 Act"). The Chairman of the Audit Committee is Mr.
Levin. After the Meeting, the Audit Committee will continue to consist of
Directors of the Fund who are not "interested persons." The Audit Committee
met twice during the fiscal year ended December 31, 1996. The Board of
Directors does not have nominating or compensation committees or other
committees performing similar functions.
There were four meetings of the Board of Directors held during the fiscal
year ended December 31, 1996. For the fiscal year ended December 31, 1996,
each current Director, during his tenure, attended at least seventy-five
2
<PAGE>
percent of the aggregate number of meetings of the Board and of any committee
on which he served, except Mr. Biggs.
Each of the nominees for Director has consented to be named in this Proxy
Statement and to serve as a director of the Fund if elected. The Board of
Directors has no reason to believe that any of the nominees named above will
become unavailable for election as a director, but if that should occur before
the Meeting, Proxies will be voted for such persons as the Board of Directors
may recommend.
Certain information regarding the Directors and officers of the Fund is
set forth below:
<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND FEBRUARY 28, DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- -------- ------------------------------ --- ------------ -------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Barton M. Biggs* Director and Chairman, Director and 64 16,950 - ***
1221 Avenue of the Americas Chairman of the Managing Director of Morgan
New York, New York 10020 Board since Stanley Asset Management Inc.
1993 and Chairman and Director of
Morgan Stanley Asset
Management Limited; Managing
Director of Morgan Stanley &
Co. Incorporated; Director of
Morgan Stanley Group Inc.;
Member of the Investment
Advisory Council of The
Thailand Fund; Director of
the Rand McNally Company;
Member of the Yale
Development Board; Director
and Chairman of the Board of
seventeen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
Peter J. Chase Director Chairman and Chief Financial 64 525 0 ***
1441 Paseo De Peralta since 1995 Officer, High Mesa
Santa Fe, New Mexico 87501 Technologies, LLC; Chairman
of CGL, Inc.; Director of
thirteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management, Inc.; Member of
the Investment Advisory
Council of The Thailand Fund.
John W. Croghan Nominee; Chairman of Lincoln Capital 66 70,000 1,244.4562 ***
200 South Wacker Drive Director Management Company; Director
Chicago, Illinois 60606 since 1991 of St. Paul Bancorp, Inc. and
Lindsay Manufacturing Co.;
Director of thirteen U.S.
registered investment
companies managed by Morgan
Stanley Asset Management
Inc.; Previously Director of
Blockbuster Entertainment
Corporation.
3
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND FEBRUARY 28, DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- -------- ------------------------------ --- ------------ -------------------- ----------
David B. Gill Director Director of thirteen U.S. 70 2,124 713.2879 ***
26210 Ingleton Circle since 1991 registered investment
Easton, Maryland 21601 companies managed by Morgan
Stanley Asset Management
Inc.; Director of the
Mauritius Fund Limited;
Director of Moneda Chile Fund
Limited; Director of First
NIS Regional Fund SIAC;
Director of Commonwealth
Africa Investment Fund Ltd.;
Member of the Investment
Advisory Council of The
Thailand Fund; Chairman of
the Advisory Board of Advent
Latin American Private Equity
Fund; Chairman and Director
of Norinvest Bank; Director
of Surinvest International
Limited; Director of National
Registry Company; Previously
Director of Capital Markets
Department of the
International Finance
Corporation; Trustee,
Batterymarch Finance
Management; Chairman and
Director of Equity Fund of
Latin America S.A.; Director
of Commonwealth Equity Fund
Limited; and Director of
Global Securities, Inc.
Graham E. Jones Nominee; Senior Vice President of BGK 64 500 375.7496 ***
330 Garfield Street Director Properties; Trustee of nine
Suite 200 since 1995 investment companies managed
Santa Fe, New Mexico 87501 by Weiss, Peck & Greer,
Trustee of eleven investment
companies managed by Morgan
Grenfell Capital Management
Incorporated; Director of
thirteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.; Member of
the Investment Advisory
Council of The Thailand Fund;
Previously Chief Financial
Officer of Practice
Management Systems, Inc.
John A. Levin Director President of John A. Levin & 58 4,000 394.5878 ***
One Rockefeller Plaza since 1995 Co., Inc.; Director of
New York, New York 10020 fourteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
William G. Morton, Jr. Director Chairman and Chief Executive 60 200 0 ***
1 Boston Place since 1995 Officer of Boston Stock
Boston, Massachusetts 02108 Exchange; Director of Tandy
Corporation; Director of
thirteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
4
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND FEBRUARY 28, DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- -------- ------------------------------ --- ------------ -------------------- ----------
Warren J. Olsen* Director Principal of Morgan Stanley & 40 1,663 - ***
1221 Avenue of the Americas and President Co. Incorporated and Morgan
New York, New York 10020 since 1991 Stanley Asset Management
Inc.; Director and President
of seventeen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
James W. Grisham* Vice Principal of Morgan Stanley & 55 278 - ***
1221 Avenue of the Americas President since Co. Incorporated and Morgan
New York, New York 10020 1991 Stanley Asset Management
Inc.; Officer of various
investment companies managed
by Morgan Stanley Asset
Management Inc.
Michael F. Klein* Vice Principal of Morgan Stanley & 37 0 - ***
1221 Avenue of the Americas President since Co. Incorporated and Morgan
New York, New York 10020 1996 Stanley Asset Management Inc.
and previously a Vice
President thereof; Officer of
various investment companies
managed by Morgan Stanley
Asset Management Inc.;
Previously practiced law with
the New York law firm of
Rogers & Wells.
Harold J. Schaaff, Jr.* Vice Principal of Morgan Stanley & 36 0 - ***
1221 Avenue of the Americas President since Co. Incorporated and Morgan
New York, New York 10020 1991 Stanley Asset Management
Inc.; General Counsel and
Secretary of Morgan Stanley
Asset Management Inc.;
Officer of various investment
companies managed by Morgan
Stanley Asset Management Inc.
Joseph P. Stadler* Vice Vice President of Morgan 42 0 - ***
1221 Avenue of the Americas President since Stanley & Co. Incorporated
New York, New York 10020 1991 and Morgan Stanley Asset
Management Inc.; Officer of
various investment companies
managed by Morgan Stanley
Asset Management Inc.;
Previously with Price
Waterhouse LLP.
Valerie Y. Lewis* Secretary since Vice President of Morgan 41 0 - ***
1221 Avenue of the Americas 1991 Stanley & Co. Incorporated
New York, New York 10020 and Morgan Stanley Asset
Management Inc.; Officer of
various investment companies
managed by Morgan Stanley
Asset Management Inc.;
Previously with Citicorp.
5
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND FEBRUARY 28, DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- -------- ------------------------------ --- ------------ -------------------- ----------
James M. Rooney Treasurer since Assistant Vice President and 38 0 - ***
73 Tremont Street 1994 Manager of Fund
Boston, Massachusetts 02108 Administration, Chase Global
Funds Services Company;
Officer of various investment
companies managed by Morgan
Stanley Asset Management
Inc.; Previously Assistant
Vice President and Manager of
Fund Compliance and Control,
Scudder Stevens & Clark Inc.
and Audit Manager, Ernst &
Young LLP.
Belinda Brady Assistant Manager, Fund Administration, 28 0 - ***
73 Tremont Street Treasurer since Chase Global Funds Services
Boston, Massachusetts 02108 1996 Company; Officer of various
investment companies managed
by Morgan Stanley Asset
Management Inc.;
Previously with Price
Waterhouse LLP.
All Directors and Officers as a Group 96,240 2,728.0815 ***
====== ========== ===
- --------------------
* "Interested person" within the meaning of the 1940 Act. Mr. Biggs is chairman, director and managing director of the Manager,
and Messrs. Olsen, Grisham, Klein, Schaaff and Stadler and Ms. Lewis are officers of the Manager.
** This information has been furnished by each nominee and officer.
*** Less than 1%.
<dagger> Indicates share equivalents owned by the Directors and held in cash accounts by the Fund on behalf of the Directors in
connection with the deferred fee arrangements described below.
</TABLE>
Each officer of the Fund will hold such office until a successor has been
duly elected and qualified.
The Fund pays each of its Directors who is not a director, officer or
employee of MSAM or its affiliates, in addition to certain out-of-pocket
expenses, an annual fee of $6,000. Each of the members of the Fund's Audit
Committee, which will consist of the Fund's Directors who are not "interested
persons" of the Fund as defined in the 1940 Act, will receive an additional fee
of $1,100 for serving on such committee. Aggregate fees and expenses paid or
payable to the Board of Directors for the fiscal year ended December 31, 1996
were approximately $85,000.
Each of the Directors who is not an "affiliated person" of MSAM within
the meaning of the 1940 Act may enter into a deferred fee arrangement (the "Fee
Arrangement") with the Fund, pursuant to which such Director may defer to a
later date the receipt of his Director's fees. The deferred fees owed by the
Fund are credited to a bookkeeping account maintained by the Fund on behalf of
such Director and accrue income from and after the date of credit in an amount
equal to the amount that would have been earned had such fees (and all income
earned thereon) been invested and reinvested either (i) in shares of the Fund
or (ii) at a rate equal to the prevailing rate applicable to 90-day United
States Treasury Bills at the beginning of each calendar quarter for which this
rate is in effect, whichever method is elected by the Director.
Under the Fee Arrangement, deferred Director's fees (including the return
accrued thereon) will become payable in cash upon such Director's resignation
from the Board of Directors in generally equal annual installments over a
period of five years (unless the Fund has agreed to a longer or shorter payment
period) beginning on the first day of the year following the year in which such
Director's resignation occurred. In the event of a Director's death, remaining
amounts payable to him under the Fee Arrangement will thereafter be payable to
his designated beneficiary; in all other events, a Director's right to receive
payments is non-transferable. Under the Fee Arrangement, the Board of
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<PAGE>
Directors of the Fund, in its sole discretion, has reserved the right, at the
request of a Director or otherwise, to accelerate or extend the payment of
amounts in the deferred fee account at any time after the termination of such
Director's service as a director. In addition, in the event of liquidation,
dissolution or winding up of the Fund or the distribution of all or
substantially all of the Fund's assets and property to its stockholders (other
than in connection with a reorganization or merger into another fund advised by
MSAM), all unpaid amounts in the deferred fee account maintained by the Fund
will be paid in a lump sum to the Directors participating in the Fee
Arrangement on the effective date thereof.
Currently, Messrs. Croghan, Gill, Jones and Levin are the only Directors
who have entered into the Fee Arrangement with the Fund.
Set forth below is a table showing the aggregate compensation paid by the
Fund to each of its Directors, as well as the total compensation paid to each
Director of the Fund by the Fund and by other U.S. registered investment
companies advised by MSAM or its affiliates, (collectively, the "Fund Complex")
for their services as Directors of such investment companies for the fiscal
year ended December 31, 1996.
<TABLE>
<CAPTION>
PENSION OR NUMBER OF
RETIREMENT TOTAL COMPENSATION FUNDS IN
AGGREGATE BENEFITS ACCRUED FROM FUND AND FUND COMPLEX
COMPENSATION AS PART OF THE FUND COMPLEX PAID FOR WHICH
NAME OF DIRECTORS FROM FUND(2)(3) FUND'S EXPENSES TO DIRECTORS(2)(4) DIRECTOR SERVES(5)
- ------------------------------ ----------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Barton M. Biggs(1) $ 0 None $ 0 17
Peter J. Chase 6,000 None 57,691 13
John W. Croghan 8,154 None 73,925 13
David B. Gill 6,697 None 59,910 13
Graham E. Jones 6,323 None 60,546 13
John A. Levin 7,324 None 77,539 14
William G. Morton, Jr. 7,100 None 67,893 13
Warren J. Olsen(1) 0 None 0 17
Frederick B. Whittemore(1)(6) 0 None 0 16
- --------------------
(1) "Interested persons" of the Fund within the meaning of the 1940 Act.
(2) The amounts reflected in this table include amounts payable by the Fund and the Fund Complex for services rendered during the
fiscal year ended December 31, 1996, regardless of whether such amounts were actually received by the Directors during such
fiscal year.
(3) Mr. Croghan earned $8,154, Mr. Gill earned $697, Mr. Jones earned $4,823 and Mr. Levin earned $6,504 in deferred compensation
from the Fund, pursuant to the deferred fee arrangements described above, including any capital gains or losses or interest
associated therewith, during the fiscal year ended December 31, 1996. Such amounts are included in these Directors'
respective aggregate compensation from the Fund reported in this table.
(4) Mr. Croghan earned $72,671, Mr. Gill earned $21,027, Mr. Jones earned $21,605 and Mr. Levin earned $70,597 in deferred
compensation from the Fund and the Fund Complex, pursuant to the deferred fee arrangements described above, including any
capital gains or losses or interest associated therewith, during the fiscal year ended December 31, 1996. Such amounts are
included in these Directors' respective compensations from the Fund and the Fund Complex reported in this table.
(5) Indicates the total number of boards of directors of investment companies in the Fund Complex, including the Fund, on which
the Director served at any time during the fiscal year ended December 31, 1996.
(6) Mr. Whittemore resigned as a Director of the Fund effective March [ ], 1997.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Fund's officers and directors, and persons who own more than ten
percent of a registered class of the Fund's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission") and the New York Stock Exchange, Inc. [The Fund
believes that its officers and Directors complied with all applicable filing
requirements for the fiscal year ended December 31, 1996.]
The election of Messrs. Croghan and Jones requires the affirmative vote
of a majority of the votes cast at a meeting at which a quorum is present.
Under the Fund's By-laws, the presence in person or by proxy of stockholders
entitled to cast a majority of the votes entitled to be cast thereat shall
7
<PAGE>
constitute a quorum. For this purpose, abstentions and broker non-votes will be
counted in determining whether a quorum is present at the Meeting, but will not
be counted as votes cast at the Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF THE TWO NOMINEES AS DIRECTORS.
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors of the Fund, including a majority of the Directors
who are not "interested persons" of the Fund, as defined in the 1940 Act, has
selected Price Waterhouse LLP as independent accountants for the Fund for the
fiscal year ending December 31, 1997. The ratification of the selection of
independent accountants is to be voted on at the Meeting, and it is intended
that the persons named in the accompanying Proxy will vote for Price Waterhouse
LLP. Price Waterhouse LLP acts as the independent accountants for certain of
the other investment companies advised by MSAM. Although it is not expected
that a representative of Price Waterhouse LLP will attend the Meeting, a
representative will be available by telephone to respond to stockholder
questions, if any.
The Board's policy regarding engaging independent accountants' services
is that management may engage the Fund's principal independent accountants to
perform any services normally provided by independent accounting firms,
provided that such services meet any and all of the independence requirements
of the American Institute of Certified Public Accountants and the Securities
and Exchange Commission. In accordance with this policy, the Audit Committee
reviews and approves all services provided by the independent accountants prior
to their being rendered. The Board of Directors also receives a report from its
Audit Committee relating to all services that have been performed by the Fund's
independent accountants.
The ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at a meeting at which a quorum
is present. For this purpose, abstentions and broker non-votes will be counted
in determining whether a quorum is present at the Meeting, but will not be
counted as votes cast at the Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 2.
APPROVAL OF A NEW ADVISORY CONTRACT
(PROPOSAL NO. 3)
THE MANAGER
MSAM acts as investment manager for the Fund. The Manager has acted as
investment manager for the Fund since the Fund commenced its investment
operations.
The Manager currently is a wholly-owned subsidiary of MS Group and is
registered under the U.S. Investment Advisers Act of 1940, as amended. The
Manager provides portfolio management and named fiduciary services to various
closed-end and open-end investment companies, taxable and nontaxable
institutions, international organizations and individuals investing in United
States and international equities and fixed income securities. At December 31,
1996, MSAM had, together with its affiliated investment management companies
(which include Van Kampen American Capital, Inc. and Miller Anderson &
Sherrerd, LLP), assets under management (including assets under fiduciary
advisory control) totaling approximately $162.0 billion.
As an investment adviser, MSAM emphasizes a global investment strategy
and benefits from research coverage of a broad spectrum of investment
opportunities worldwide. MSAM draws upon the capabilities of its asset
management specialists located in its various offices throughout the world. It
also draws upon the research capabilities of MS Group and its other affiliates,
8
<PAGE>
as well as the research and investment ideas of other companies whose brokerage
services MSAM utilizes. For the fiscal year ended December 31, 1996, the Fund
paid approximately $1,841,561 in brokerage commissions, of which approximately
$124,000 was paid by the Fund to affiliates of the Manager, including Morgan
Stanley & Co.
The address of the Manager is 1221 Avenue of the Americas, New York, New
York 10020. The principal address of MS Group is 1585 Broadway, New York, New
York 10036.
Certain information regarding the directors and the principal executive
officers of the Manager is set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH MSAM OTHER INFORMATION
- ---------------- ------------------ -------------------------------------------
<S> <C> <C>
Barton M. Biggs* Chairman, Director and Managing Director Chairman and Director of Morgan Stanley Asset
Management Limited; Managing Director of
Morgan Stanley & Co. Incorporated; Director
of Morgan Stanley Group Inc.
Peter A. Nadosy* Vice Chairman, Director and Managing Managing Director of Morgan Stanley & Co.
Director Incorporated; Director of Morgan Stanley
Asset Management Limited
James M. Allwin* President, Director and Managing Managing Director of Morgan Stanley & Co.
Director Incorporated; President of Morgan Stanley
Realty Inc.
Gordon S. Gray* Director and Managing Director Managing Director of Morgan Stanley & Co.
Incorporated; Director of Morgan Stanley
Asset Management Limited
Dennis G. Sherva* Director and Managing Director Managing Director of Morgan Stanley & Co.
Incorporated
* Business Address: 1221 Avenue of the Americas, New York, New York 10020
</TABLE>
INFORMATION CONCERNING MORGAN STANLEY GROUP INC.
MS Group and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley & Co.
International provide a wide range of financial services on a global basis.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, real estate, project finance and
other corporate finance advisory activities; merchant banking and other
principal investment activities; stock brokerage and research services; asset
management; the trading of foreign exchange and commodities as well as
derivatives on a broad range or asset categories, rates and indices; real
estate advice, financing and investing; and global custody, securities
clearance services and securities lending.
INFORMATION CONCERNING DEAN WITTER, DISCOVER & CO.
Dean Witter Discover is a diversified financial services company offering
a broad range of nationally marketed credit and investment products with a
primary focus on individual customers. Dean Witter Discover has two principal
lines of business: credit services and securities. Its credit services
business consists primarily of the issuance, marketing and servicing of general
purpose credit cards and the provision of transaction processing services,
private-label credit cards services and real estate secured loans. It is the
largest single issuer of general purpose credit cards in the United States as
measured by number of accounts and cardmembers and the third largest originator
and servicer of credit card receivables, as measured by managed loans. Dean
Witter Discover's securities business is conducted primarily through its wholly
owned subsidiaries, Dean Witter Reynolds Inc. ("DWR") and Dean Witter
9
<PAGE>
InterCapital Inc. ("Intercapital"). DWR is a full-service securities firm
offering a wide variety of securities products, with a particular focus on
serving the investment needs of its individual clients through over 9,100
professional account executives located in 371 branch offices. DWR is among
the largest NYSE members and is a member of other major securities, futures and
options exchanges. Intercapital is a registered investment adviser that, along
with its subsidiaries, services investment companies, individual accounts and
institutional portfolios.
THE MERGER
Pursuant to the Merger Agreement, MS Group will be merged (the "Merger")
with and into Dean Witter Discover and the surviving corporation will be named
Morgan Stanley, Dean Witter, Discover & Co. Following the Merger, the Manager
will be a direct subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Under the terms of the Merger Agreement, each of MS Group's common shares
will be converted into the right to receive 1.65 shares of Morgan Stanley, Dean
Witter, Discover & Co. common stock and each issued and outstanding share of
Dean Witter Discover common stock will remain outstanding and will thereafter
represent one share of Morgan Stanley, Dean Witter, Discover & Co. common
stock. Following the Merger, MS Group's former shareholders will own
approximately 45% and Dean Witter Discover's former shareholders will own
approximately 55% of the outstanding shares of common stock of Morgan Stanley,
Dean Witter, Discover & Co.
The Merger is expected to be consummated in mid-1997 and is subject to
certain closing conditions, including certain regulatory approvals and the
approval of shareholders of both MS Group and Dean Witter Discover.
The Board of Directors of Morgan Stanley, Dean Witter, Discovery & Co.
will initially consist of fourteen members, two of whom will be MS Group
insiders and two of whom will be Dean Witter Discover insiders. The remaining
ten directors will be independent directors, with MS Group and Dean Witter
Discover each nominating five of the ten. The Chairman and Chief Executive
Officer of Morgan Stanley, Dean Witter, Discovery & Co. will be the current
Chairman and Chief Executive Officer of Dean Witter Discover, Phillip Purcell.
The President and Chief Operating Officer of Morgan Stanley, Dean Witter,
Discover & Co. will be the current President of MS Group, John Mack.
The Manager does not anticipate any reduction in the quality of services
now provided to the Fund and does not expect that the Merger will result in any
material changes in the business of the Manager or in the manner in which the
Manager renders services to the Fund. Nor does the Manager anticipate that the
Merger or any ancillary transactions will have any adverse effect on its
ability to fulfill its obligations under the New Advisory Agreement (as defined
below) with the Fund or to operate its business in a manner consistent with
past business practice.
THE ADVISORY AGREEMENTS
In anticipation of the Merger, a majority of the Directors of the Fund
who are not parties to the New Advisory Agreement or interested persons of any
such party ("Disinterested Directors") approved a new investment advisory
agreement (the "New Advisory Agreement") between the Fund and the Manager. The
form of the New Advisory Agreement is identical to the Fund's Current Advisory
Agreement, except for the dates of execution, effectiveness and termination.
The holders of a majority of the outstanding voting securities (within the
meaning of the 1940 Act) of the Fund are being asked to approve the New
Advisory Agreement. See "The New Advisory Agreement" below.
The following is a summary of the Current Advisory Agreement and the New
Advisory Agreement. The description of the New Advisory Agreement is qualified
by reference to Annex A.
THE CURRENT ADVISORY AGREEMENT. The Current Advisory Agreement, dated as
of October 25, 1991 (the "Current Advisory Agreement"), was last approved by
stockholders of the Fund at a meeting held on June 6, 1994.
10
<PAGE>
The Current Advisory Agreement provides that the Manager will supply
investment research and portfolio management, including the selection of
securities for the Fund to purchase, hold or sell and the selection of brokers
through whom the Fund's portfolio transactions are executed. The Manager also
administers the business affairs of the Fund, furnishes offices, necessary
facilities and equipment, provides administrative services, and permits its
officers and employees to serve without compensation as Directors and officers
of the Fund if duly elected to such positions.
The Current Advisory Agreement provides that the Manager shall not be
liable for any error of judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the Current Advisory Agreement
relates except a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.
Under the Current Advisory Agreement the Fund pays the Manager as
compensation for the services rendered an annual fee equal to 1.25% of the
Fund's average weekly net assets.
The Manager's activities are subject to the review and supervision of the
Board to which the Manager renders periodic reports with respect to the Fund's
investment activities. The Current Advisory Agreement may be terminated by
either party, at any time, without penalty, on 60 days' written notice, or upon
such shorter notice as may be mutually agreed upon, and will automatically
terminate in the event of its assignment.
The net assets of the Fund as of February 28, 1997, as well as other U.S.
registered investment companies advised by the Manager, and other U.S.
registered investment companies for which the Manager acts as sub-adviser, the
rates of compensation to the Manager, the aggregate amount of advisory fees
paid by the Fund to the Manager and the aggregate amount of any other material
payments by the Fund to the Manager is set forth at Annex B hereto.
Under the Current Advisory Agreement, the Manager is permitted to provide
investment advisory services to other clients, including clients who may invest
in securities in which the Fund may invest.
THE NEW ADVISORY AGREEMENT. The Board approved a proposed New Advisory
Agreement between the Fund and the Manager on March 13, 1997, the form of which
is attached as Annex A (the "New Advisory Agreement"). The form of the
proposed New Advisory Agreement is identical to the Current Advisory Agreement,
except for the dates of execution, effectiveness and termination.
The investment advisory fee as a percentage of net assets payable by the
Fund to the Manager will be the same under the New Advisory Agreement as under
the Current Advisory Agreement. If the investment advisory fee under the New
Advisory Agreement had been in effect for the Fund's most recently completed
fiscal year, advisory fees paid to the Manager by the Fund would have been
identical to those paid under the Current Advisory Agreement.
The Board of the Fund held a meeting on March 13, 1997, at which meeting
the Directors, including the Disinterested Directors, unanimously approved the
New Advisory Agreement for the Fund and recommended the Agreement for approval
by the stockholders of the Fund. The New Advisory Agreement would take effect
upon the later to occur of (i) the obtaining of stockholder approval or (ii)
the closing of the Merger. The New Advisory Agreement will continue in effect
for an initial two year term and thereafter for successive annual periods as
long as such continuance is approved in accordance with the 1940 Act.
In evaluating the New Advisory Agreement, the Board took into account
that the terms of the Fund's Current Advisory Agreement and its New Advisory
Agreement, including their terms relating to the services to be provided
thereunder by the Manager and the fees and expenses payable by the Fund, are
identical, except for the dates of execution, effectiveness and termination.
The Board also considered other possible benefits to the Manager and Morgan
Stanley, Dean Witter, Discover & Co. that may result from the Merger including
the continued use of Morgan Stanley & Co. and Dean Witter Discover brokers and
its affiliates, to the extent permitted by law, for brokerage services.
11
<PAGE>
The Board also examined the terms of the Merger Agreement and the
possible effects of the Merger upon the Manager's organization and upon the
ability of the Manager to provide advisory services to the Fund. The Board
also considered the skills and capabilities of the Manager. In this regard,
the Board was informed of the resources of Morgan Stanley, Dean Witter,
Discover & Co. to be made available to the Manager.
The Board also weighed the effect on the Fund of the Manager becoming an
affiliated person of Morgan Stanley, Dean Witter, Discover & Co. Following the
Merger, the 1940 Act will prohibit or impose certain conditions on the ability
of the Fund to engage in certain transactions with Morgan Stanley, Dean Witter,
Discover & Co. and its affiliates. For example, absent exemptive relief the
Fund will be prohibited from purchasing securities from Morgan Stanley & Co.
and DWR in transactions in which Morgan Stanley & Co. and/or DWR act as
principal. Currently the Fund is prohibited from making such purchases in only
those transactions which Morgan Stanley & Co. or an affiliate acts as
principal. The Fund will also have to satisfy certain conditions in order to
engage in securities transactions in which Morgan Stanley & Co. or DWR is
acting as an underwriter. The Fund is already required to satisfy such
conditions when engaging in transactions in which Morgan Stanley & Co. or an
affiliate is acting as an underwriter. In this connection, management of the
Manager represented to the Board that they do not believe these prohibitions or
conditions will have a material effect on the management or performance of the
Fund.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the
Disinterested Directors voting separately, unanimously approved the New
Advisory Agreement and voted to recommend its approval to the stockholders of
the Fund.
In the event that stockholders of the Fund do not approve the New
Advisory Agreement, the Current Advisory Agreement will remain in effect and
the Board will take such action as it deems in the best interest of the Fund
and its stockholders, which may include proposing that stockholders approve an
agreement in lieu of the New Advisory Agreement. In the event the Merger is not
consummated, the Manager would continue to serve as investment manager of the
Fund pursuant to the terms of the Current Advisory Agreement.
STOCKHOLDER APPROVAL
To become effective, the New Advisory Agreement must be approved by a
vote of a majority of the outstanding voting securities of the Fund. The "vote
of a majority of the outstanding voting securities" is defined under the 1940
Act as the lesser of the vote of (i) 67% or more of the shares of the Fund
entitled to vote thereon present at the Meeting if the holders of more than 50%
of such outstanding shares of the Fund are present in person or represented by
proxy, or (ii) more than 50% of such outstanding shares of the Fund entitled to
vote thereon. The New Advisory Agreement was unanimously approved by the Board
after consideration of all factors which they determined to be relevant to
their deliberations, including those discussed above. The Board also
unanimously determined to submit the New Advisory Agreement for consideration
by the stockholders of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE NEW ADVISORY AGREEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Fund's management, the following person owned
beneficially more than 5% of the Fund's outstanding shares at February 28,
1997:
12
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------- ----------------------------------------- ----------------
<S> <C> <C>
Morgan Stanley Group Inc. 1,160,771 shares with shared voting power 6.4%
1585 Broadway and shared dispositive power; 287,552
New York, New York 10036 shares with shared dispositive power but
no voting power(1)
- --------------------
* Includes 888,537 shares held by Morgan Stanley & Co. Incorporated, which comprise 3.9% of shares outstanding.
(1) Based on a Schedule 13G filed with the Commission on February 7, 1997.
</TABLE>
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any question as to an adjournment of the Meeting, the persons named
in the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
A stockholders' proposal intended to be presented at the Fund's Annual
Meeting of Stockholders in 1998 must be received by the Fund on or before
November 27, 1997, in order to be included in the Fund's proxy statement and
form of proxy relating to that meeting.
VALERIE Y. LEWIS
SECRETARY
Dated: March [ ], 1997
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
13
<PAGE>
ANNEX A
INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
Agreement, dated and effective as of March 13, 1997, between MORGAN
STANLEY EMERGING MARKETS FUND, INC., a Maryland corporation (the "Fund"), and
MORGAN STANLEY ASSET MANAGEMENT INC., a Delaware corporation (the "Investment
Manager").
WITNESSETH: That in consideration of the mutual covenants herein
contained, it is agreed by the parties as follows:
1. The Investment Manager hereby undertakes and agrees, upon the
terms and conditions herein set forth, (i) to make investment decisions for the
Fund, to prepare and make available to the Fund research and statistical data
in connection therewith, and to supervise the acquisition and disposition of
securities by the Fund, including the selection of brokers or dealers to carry
out the transactions, all in accordance with the Fund's investment objective
and policies and limitations, as the same are set forth in the prospectus
contained in the Fund's registration statement on Form N-2 filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended (the "1940 Act"),
and in accordance with guidelines and directions from the Fund's Board of
Directors; (ii) to assist the Fund as it may reasonably request in the conduct
of the Fund's business, subject to the direction and control of the Fund's
Board of Directors; (iii) to maintain or cause to be maintained for the Fund
all books and records required under the 1940 Act, to the extent that such
books and records are not maintained or furnished by the administrators,
custodians or other agents of the Fund; (iv) to furnish at the Investment
Manager's expense for the use of the Fund such office space and facilities as
the Fund may require for its reasonable needs, to the extent not furnished by
the Fund's administrators, custodians or other agents, and to furnish at the
Investment Manager's expense clerical services in the United States related to
research, statistical and investment work; and (v) to pay the salaries and
expenses of such of the Fund's officers and employees and any fees and expenses
of such of the Fund's Directors who are directors, officers or employees of the
Investment Manager or any of its affiliates, PROVIDED, HOWEVER, that the Fund,
and not the Investment Manager, shall bear travel expenses or an appropriate
fraction thereof of Directors and officers of the Fund who are directors,
officers or employees of the Investment Manager to the extent that such
expenses relate to attendance at meetings of the Board of Directors of the Fund
or any committees thereof. The Investment Manager shall bear all expenses
arising out of its duties hereunder but shall not be responsible for any
expenses of the Fund other than those specifically allocated to the Investment
Manager in this paragraph 1. In particular, but without limiting the
generality of the foregoing, the Investment Manager shall not be responsible
for the following expenses of the Fund: organization expenses (but not the
overhead or employee costs of the Investment Manager); legal fees and expenses
of counsel to the Fund; auditing and accounting expenses; taxes and
governmental fees; New York Stock Exchange listing fees; dues and expenses
incurred in connection with membership in investment company organizations;
fees and expenses of the Fund's custodian, subcustodians, transfer agents and
registrars; fees and expenses with respect to administration, except as may be
provided otherwise pursuant to administration agreements; expenses for
portfolio pricing services by a pricing agent, if any; expenses of preparing
share certificates and other expenses in connection with the issuance, offering
and underwriting of shares issued by the Fund; expenses relating to investor
and public relations; expenses of registering or qualifying securities of the
Fund for public sale; freight, insurance and other charges in connection with
the shipment of the Fund's portfolio securities; brokerage commissions or other
costs of acquiring or disposing of any portfolio holding of the Fund; expenses
of preparation and distribution of reports, notices and dividends to
shareholders; expenses of the dividend reinvestment and cash purchase plan
(except for brokerage expenses paid by participants in such plan); costs of
stationery; any litigation expenses; and costs of stockholders' and other
meetings.
A-1
<PAGE>
2. The Fund agrees to pay in United States dollars to the
Investment Manager for its services under this Agreement, a monthly fee, at an
annual rate of 1.25% of the Fund's average weekly net assets.
3. The Investment Manager agrees that it will not make a short
sale of any of the Fund, or purchase any share of the capital stock of the Fund
other than for investment.
4. Nothing herein shall be construed as prohibiting the
Investment Manager from providing investment advisory services to, or entering
into investment advisory agreements with, other clients (including other
registered investment companies), including clients which may invest in
emerging country equity securities; nor, except as explicitly provided herein,
shall anything herein be construed as constituting the Investment Manager as
agent of the Fund.
5. The Investment Manager may rely on information reasonably
believed by it to be accurate and reliable. Neither the Investment Manager nor
its officers, directors, employees, agents or controlling persons as defined in
the 1940 Act shall be subject to any liability for any act or omission, error
of judgment or mistake of law, or for any loss suffered by the Fund, in the
course of, connected with or arising out of any services to be rendered
hereunder, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
duties or by reason of reckless disregard on the part of the Investment Manager
of its obligations and duties under this Agreement. Any person, even though
also employed by the Investment Manager, who may be or become an employee of
the Fund shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not as an
employee or agent of the Investment Manager.
The Fund agrees to indemnify and hold harmless the Investment
Manager, its officers, directors, employees, agents, shareholders, or other
affiliates (each an "Indemnified Party"), for any losses, costs and expenses
incurred or suffered by any Indemnified Party arising from any action,
proceeding or claims which may be brought against such Indemnified Party in
connection with the performance or non-performance in good faith of its
functions under this Agreement, except losses, costs and expenses resulting
from willful misfeasance, bad faith or gross negligence in the performance of
such Indemnified Party's duties or from reckless disregard on the part of such
Indemnified Party of such Indemnified Party's obligations and duties under this
Agreement.
6. This Agreement shall be effective for a period of two years
commencing on the later of (i) the date that the requisite stockholder approval
as required under Section 15 of the 1940 Act has been obtained or (ii) the date
that the Agreement and Plan of Merger, dated February 4, 1997, between Dean
Witter, Discover & Co. and Morgan Stanley Group Inc. is consummated.
Thereafter, this Agreement will continue in effect from year to year, provided
that such continuance is specifically approved at least annually by the
affirmative vote of (a) a majority of the members of the Fund's Board of
Directors who are neither parties to this Agreement nor interested persons of
the Fund or of the Investment Manager or of any entity regularly furnishing
investment advisory services with respect to the Fund pursuant to an agreement
with the Investment Manager, cast in person at a meeting called for the purpose
of voting on such approval, and (b) a majority of either the Fund's Board of
Directors or the holders of a majority of the outstanding voting securities of
the Fund.
This Agreement may nevertheless be terminated at any time without
penalty, on 60 days' written notice, by the Fund's Board of Directors, by vote
of holders of a majority of the outstanding voting securities of the Fund, or
by the Investment Manager. This Agreement shall automatically be terminated in
the event of its assignment, PROVIDED, HOWEVER, that a transaction which does
not, in accordance with the 1940 Act, result in a change of actual control or
management of the Investment Manager's business shall not be deemed to be an
assignment for the purposes of this Agreement.
Termination of this Agreement shall not affect the right of the
Investment Manager to receive payments on any unpaid balance of the
compensation described in paragraph 2 earned prior to such termination.
7. This Agreement may be amended by mutual agreement, but only
after authorization of such amendment by the affirmative vote of (i) the
holders of a majority of the outstanding voting securities of the Fund, and
A-2
<PAGE>
(ii) a majority of the members of the Fund's Board of Directors who are not
interested persons of the Fund or of the Investment Manager, cast in person at
a meeting called for the purpose of voting on such approval.
8. This Agreement shall be construed in accordance with the laws
of the State of New York, PROVIDED, HOWEVER, that nothing herein shall be
construed as being inconsistent with the 1940 Act. As used herein, the terms
"interested person," "assignment," and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act.
9. Any notice hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by mailing such notice,
air mail postage prepaid, on the day on which such telex or facsimile is sent
to the addresses set forth below) to the following addresses or telex or
facsimile numbers:
If to the Investment Manager:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: General Counsel
Telephone No. (212) 762-7188
Facsimile No. (212) 762-7377
If to the Fund:
Morgan Stanley Emerging Markets Fund Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: President
Telephone No. (212) 296-7100
Facsimile No. (212) 762-7326
or to such other address as to which the recipient shall have informed the
other parties in writing.
Notice given as provided above shall be deemed to have been given,
if by personal delivery, on the day of such delivery, and, if by telex or
facsimile and mail, on the date on which such telex or facsimile and
confirmatory letter are sent.
10. Each party hereto irrevocably agrees that any suit, action or
proceeding against either of the Investment Manager or the Fund arising out of
or relating to this Agreement shall be subject exclusively to the jurisdiction
of the United States District Court for the Southern District of New York or
the Supreme Court of the State of New York, New York County, and each party
hereto irrevocably submits to the jurisdiction of each such court in connection
with any such suit, action or proceeding. Each party hereto waives any
objection to the laying of venue of any such suit, action or proceeding in
either such court, and waives any claim that such suit, action or proceeding
has been brought in an inconvenient forum. Each party hereto irrevocably
consents to service of process in connection with any such suit, action or
proceeding by mailing a copy thereof in English by registered or certified
mail, postage prepaid, to their respective addresses as set forth in this
Agreement.
To the extent that any party hereto may now or hereafter be
entitled, in any jurisdiction in which judicial proceedings may at any time be
commenced with respect to this Agreement, to claim for itself or its revenues
or properties any immunity from suit, court jurisdiction, attachment prior to
judgment, attachment in aid of execution of a judgment, execution of a judgment
or from set-off, banker's lien, counterclaim or any other legal process or
remedy with respect to its obligations under this Agreement and/or to the
extent that in such jurisdiction there may be attributed to any such party such
an immunity (whether or not claimed), the parties hereto each hereby to the
A-3
<PAGE>
fullest extent permitted by applicable law irrevocably agrees not to claim, and
hereby to the fullest extent permitted by applicable law expressly waives, any
such immunity, including, without limitation, a complete waiver of immunity
pursuant to the United States Foreign Sovereign Immunities Act.
11. The Investment Manager represents and warrants that it is
duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and that it will use its reasonable efforts to maintain
effective its registration during the term of this Agreement.
12. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement by
their officers thereunto duly authorized as of the day and year first written
above.
MORGAN STANLEY EMERGING MARKETS FUND, INC.
By:/S/WARREN J. OLSEN
---------------------------------
Name: Warren J. Olsen
Title: President
MORGAN STANLEY ASSET MANAGEMENT INC.
By:/S/WARREN J. OLSEN
---------------------------------
Name: Warren J. Olsen
Title: Principal
A-4
<PAGE>
<PAGE>
ANNEX B
The following table indicates the size of each U.S. investment company
advised or sub-advised by the Manager, the amount of advisory fees or sub-
advisory fees paid to the Manager for the last fiscal year of such investment
company, the amount of other material fees paid to the Manager for such fiscal
year and the advisory fee rate. Average net assets are calculated on a daily
basis for open-end funds and on a weekly basis for closed-end funds.
<TABLE>
<CAPTION>
INVESTMENT COMPANY Net Assets as of Aggregate amount of Amount of Other Asset Management Fee as
FEBRUARY 28, 1997 Advisory / Material Payments to Percent
Subadvisory the Manager for of Average Net Assets
Fee for Last THE LAST FISCAL YEAR (ANNUAL RATE OF MSAM'S
FISCAL YEAR COMPENSATION)
<S> <C> <C> <C> <C>
Morgan Stanley Institutional Fund,
Inc. (1)
- -Active Country Allocation Portfolio $ 187,031,777 $ 1,168,571 $0 0.65% of average daily net
assets
- -Aggressive Equity Portfolio 121,791,751 400,006 0 0.80% of average daily net
assets
- -Asian Equity Portfolio 365,212,440 3,378,056 0 0.80% of average daily net
assets
- -Balanced Portfolio 7,573,877 74,832 0 0.50% of average daily net
assets
- -China Growth Portfolio (2) 0 0 0 1.00% of average daily net
assets
- -Emerging Growth Portfolio 82,677,378 1,024,956 0 1.00% of average daily net
assets
- -Emerging Markets Debt Portfolio 162,883,938 1,887,155 0 1.00% of average daily net
assets
- -Emerging Markets Portfolio 1,557,680,866 15,367,651 0 1.25% of average daily net
assets
- -Equity Growth Portfolio 467,132,622 1,192,888 0 0.60% of average daily net
assets
- -European Equity Portfolio 215,681,709 1,034,869 0 1.00% of average daily net
assets
- -Fixed Income Portfolio 122,195,042 559,304 0 0.35% of average daily net
assets
- -Global Equity Portfolio 87,115,900 630,346 0 0.80% of average daily net
assets
- -Global Fixed Income Portfolio 116,017,909 437,198 0 0.40% of average daily net
assets
- -Gold Portfolio(3) 38,303,227 274,000 0 1.00% of average daily net
assets
- -Growth and Income Fund (2) 0 0 0 0.75% of average daily net
assets
- -High Yield Portfolio 123,820,445 438,512 0 0.50% of average daily net
assets
- -International Equity Portfolio 2,412,774,091 15,860,657 0 0.80% of average daily net
assets
- -International Magnum Portfolio 124,710,803 381,756 0 0.80% of average daily net
assets
- -International Small Cap Portfolio 239,291,131 2,092,097 0 0.95% of average daily net
assets
- -Japanese Equity Portfolio 156,667,861 1,642,268 0 0.80% of average daily net
assets
- -Latin American Portfolio 55,950,497 287,055 0 1.10% of average daily net
assets
- -Money Market Portfolio 1,278,773,524 3,343,176 0 0.30% of average daily net
assets
- -Mortgaged-Backed Securities 0 0 0 0.30% of average daily net
Portfolio (2) assets
- -Municipal Bond Portfolio 43,819,386 134,963 0 0.30% of average daily net
assets
- -Municipal Money Market Portfolio 721,197,094 1,932,187 0 0.30% of average daily net
assets
- -Small Cap Value Equity Portfolio 29,921,023 345,122 0 0.85% of average daily net
assets
- -Technology Portfolio(4) 5,504,680 12,699 0 1.00% of average daily net
assets
- -U.S. Real Estate Portfolio 246,501,294 1,017,980 0 0.80% of average daily net
assets
- -Value Equity Portfolio 109,811,808 655,516 0 0.50% of average daily net
assets
Morgan Stanley Fund, Inc. (5)
- -American Value Fund 54,190,478 363,998 0 0.85% of average daily net
assets
- -Aggressive Equity Fund 30,105,256 31,323 0 0.90% of average daily net
assets
- -Asian Growth Fund 394,810,098 3,762,252 0 1.00% of average daily net
assets
- -Emerging Markets Fund 174,767,303 1,081,943 0 1.25% of average daily net
assets
- -Global Equity Allocation Fund 161,349,524 1,047,751 0 1.00% of average daily net
assets
- -Global Fixed Income Fund 9,525,078 121,568 0 0.75% of average daily net
assets
- -Government Obligations Money Market 122,965,353 0 0 0.45% of the first $250
(6) million
0.40% of the next $250
million
0.35% of the excess over
$500 million
- -High Yield Fund 16,444,430 12,710 0 0.75% of average daily net
assets
- -Japanese Equity Fund (2) 0 0 0 1.00% of average daily net
assets
- -International Magnum Fund 24,529,959 0 0 1.00% of average daily net
assets
- -Latin America Fund 53,413,053 218,502 0 1.25% of average daily net
assets
- -Money Market Fund (6) 153,358,157 0 0 0.45% of the first $250
million
0.40% of the next $250
million
0.35% of the excess over
$500 million
- -U.S. Real Estate Fund 21,362,116 8,641 0 1.00% of average daily net
asset
- -Worldwide High Income Fund 164,403,651 527,214 0 0.75% of average daily net
assets
Morgan Stanley Universal Funds, Inc.
- -Asian Equity (7) 0 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Balanced (2) 0 0 0 0.50% of the first $500
million
0.45% of the next $500
million
0.40% of the excess over $1
billion
- -Core Equity (2) 0 0 0 0.55% of the first $500
million
0.50% of the next $500
million
0.45% of the excess over $1
billion
- -Emerging Markets Debt (2) 0 0 0 0.75% of the first $500
million
0.70% of the next $500
million
0.65% of the excess over $1
billion
- -Emerging Markets Equity 15,607,752 32,000 0 1.25% of the first $500
million
1.20% of the next $500
million
1.15% of the excess over $1
billion
- -Fixed Income (8) 8,126,150 0 0 0.40% of the first $500
million
0.35% of the next $500
million
0.30% of the excess over $1
billion
- -Global Equity (8) 5,225,659 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Growth (8) 2,843,221 0 0 0.55% of the first $500
million
0.50% of the next $500
million
0.45% of the excess over $1
billion
- -High Yield (8) 8,228,296 0 0 0.50% of the first $500
million
0.45% of the next $500
million
0.40% of the excess over $1
billion
- -International Fixed Income (2) 0 0 0 0.50% of the first $500
million
0.45% of the next $500
million
0.40% of the excess over $1
billion
- -International Magnum (8) 10,283,605 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Mid-Cap Growth (2) 0 0 0 0.75% of the first $500
million
0.70% of the next $500
million
0.65% of the excess over $1
billion
- -Mid-Cap Value (8) 3,126,150 0 0 0.75% of the first $500
million
0.70% of the next $500
million
0.65% of the excess over $1
billion
- -Money Market (2) 0 0 0 0.30% of the first $500
million
0.25% of the next $500
million
0.20% of the excess over $1
billion
- -Multi-Asset Class (2) 0 0 0 0.65% of the first $500
million
0.60% of the next $500
million
0.55% of the excess over $1
billion
- -U.S. Real Estate (7) 0 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Value (8) 3,167,098 0 0 0.55% of the first $500
million
0.50% of the next $500
million
0.45% of the excess over $1
billion
The Brazilian Investment Fund, Inc. 58,816,028 425,000 0 0.90% of the first 50
million
0.70% of the next 50 million
0.50% of the excess over 100
million
The Latin American Discovery Fund, 204,346,643 1,899,000 0 1.15% of average weekly net
Inc. assets
The Malaysia Fund, Inc. 192,501,967 1,330,000 0 0.90% of the first 50
million
0.70% of the next 50 million
0.50% of the excess over 100
million
Morgan Stanley Africa Investment 310,803,693 3,106,000 0 1.20% of average weekly net
Fund,Inc. assets
Morgan Stanley Asia-Pacific Fund, 854,649,586 8,796,000 0 1.00% of average weekly net
Inc.. assets
Morgan Stanley Emerging Markets Debt 321,966,172 3,125,000 0 1.00% of average weekly net
Fund, Inc. assets
Morgan Stanley Emerging Markets 407,981,941 4,713,000 0 1.25% of average weekly net
Fund, Inc. assets
Morgan Stanley Global Opportunity 65,384,292 585,000 0 1.00% of average weekly net
Bond Fund, Inc. assets
Morgan Stanley High Yield Fund, Inc. 129,972,796 842,000 0 0.70% of average weekly net
assets
Morgan Stanley India Investment 341,625,451 3,812,000 0 1.10% of average weekly net
Fund, Inc. assets
Morgan Stanley Russia & New Europe 142,333,723 400,000 0 1.60% of average weekly net
Fund, Inc. assets
The Pakistan Investment Fund, Inc. 67,931,758 743,000 0 1.00% of average weekly net
assets
The Thai Fund, Inc. 183,531,329 1,812,000 0 0.90% of the first 50
million
0.70% of the next 50 million
0.50% of the excess over 100
million
The Turkish Investment Fund, Inc. 51,846,955 359,000 0 0.95% of the first 50
million
0.75% of the next 50 million
0.55% of the excess over 100
million
(1) Includes Class A and Class B shares.
(2) Currently Inactive.
(3) Management fee includes a 0.40% sub-advisory fee payable by the Manager.
(4) Commenced operations March 16, 1996.
(5) Includes Class A, Class B and Class C shares. Fiscal year end June 30, 1996.
(6) Formerly, a portfolio of PCS Cash Fund, which was merged with and into Morgan Stanley Fund, Inc. on September 27, 1996.
(7) Commenced operations March 3, 1997.
(8) Commenced operations January 2, 1997.
</TABLE>
NG35163.3
<PAGE>
PROXY
MORGAN STANLEY EMERGING MARKETS FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints WARREN J. OLSEN,
MICHAEL F. KLEIN, VALERIE Y. LEWIS and HAROLD J. SCHAAFF, JR., and
each of them, as proxies for the undersigned, with full power of
substitution and resubstitution, and hereby authorizes said
proxies, and each of them, to represent and vote, as designated on
the reverse side, all stock of the above Company held of record by
the undersigned on March 24, 1997 at the Annual Meeting of
Stockholders to be held on April 30, 1997, and at any adjournment
thereof.
The undersigned hereby revokes any and all proxies with respect to
such stock heretofore given by the undersigned. The undersigned
acknowledges receipt of the Proxy Statement dated March [27], 1997.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
<PAGE>
[X] Please mark your votes as in this sample.
1. Election of the following nominees as Directors:
FOR WITHHELD
[ ] [ ] Class II Nominees:
John W. Croghan, and Graham E. Jones
______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
2. Ratification of the selection of Price Waterhouse LLP as
independent accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the Investment Advisory and Management Agreement
with Morgan Stanley Asset Management Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In the discretion of such proxies, upon any and all other
business as may properly come before the Meeting or any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE TWO CLASS II
NOMINEES AND IN FAVOR OF PROPOSAL NO. 2 AND PROPOSAL NO. 3
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY
JOINT TENANTS, EACH JOINT TENANT SHOULD SIGN.
SIGNATURES(S)___________________________________
DATE _______________, 1997
When signing as attorney, executor, administrator, trustee,
guardian or custodian, please sign full title as such. If a
corporation, please sign full corporate name by authorized officer
and indicate the signer's office.
If a partnership, please sign in partnership name. PLEASE MARK,
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
