<PAGE> 1
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. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 14a-12
Morgan Stanley Emerging Markets Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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> 2
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 11:45 a.m. (New York time), in Conference Room 3 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 26, 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> 3
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 11:45 a.m. (New York time), in Conference Room
3 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
22,824,350 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
<PAGE> 4
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.
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
2
<PAGE> 5
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 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.
3
<PAGE> 6
Certain information regarding the Directors and officers of the Fund is set
forth below:
<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ 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 Managing Director of Morgan
New York, New York 10020 the Board Stanley Asset Management
since 1993 Inc. and Chairman and
Director of Morgan Stanley
Asset Management Limited;
Managing Director of
Morgan Stanley & Co.
Incorporated; Director of
Morgan Stanley Group Inc.;
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 since Chairman and Chief Financial 64 525 0 ***
1441 Paseo De Peralta 1995 Officer, High Mesa
Santa Fe, New Mexico 87501 Technologies, LLC;
Chairman of CGL, Inc.;
Principal/Owner, State-
ments; Director of
thirteen U.S. registered
investment companies
managed by Morgan Stanley
Asset Management, Inc.
John W. Croghan................ Nominee; Di- President of Lincoln 66 70,000 1,244.4562 ***
200 South Wacker Drive rector since Partners, a partnership of
Chicago, Illinois 60606 1991 Lincoln Capital Management
Company; Director of St.
Paul Bancorp, Inc. and
Lindsay Manufacturing Co.;
Director of thirteen U.S.
registered investment
companies managed by Mor-
gan Stanley Asset Manage-
ment Inc.; Previously
Director of Blockbuster
Entertainment Corporation.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- --------------- ---------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
David B. Gill.................. Director since Director of thirteen U.S. 70 1,591 713.2879 ***
26210 Ingleton Circle 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.; Chairman of the
Advisory Board of Advent
Latin American Private Eq-
uity 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; Chair-
man 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
Suite 200 since 1995 nine investment companies
Santa Fe, New Mexico 87501 managed 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.;
Previously Chief Financial
Officer of Practice
Management Systems, Inc.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- --------------- ---------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
John A. Levin.................. Director since President of John A. Levin & 58 4,000 394.5878 ***
One Rockefeller Plaza 1995 Co., Inc.; Director of
New York, New York 10020 fourteen U.S. registered
investment companies
managed by Morgan Stanley
Asset Management Inc.;
Director and President of
Baker, Fentress & Company.
William G. Morton, Jr.......... Director since Chairman and Chief Executive 60 200 0 ***
1 Boston Place 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 Man-
agement Inc.
Warren J. Olsen*............... Director and Principal of Morgan 40 1,663 -- ***
1221 Avenue of the Americas President Stanley & Co. Incorporated
New York, New York 10020 since 1991 and Morgan Stanley Asset
Management Inc.; Director
and President of seventeen
U.S. registered in-
vestment companies managed
by Morgan Stanley Asset
Management Inc.
James W. Grisham*.............. Vice President Principal of Morgan 55 291 -- ***
1221 Avenue of the Americas since 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 Man-
agement Inc.
Michael F. Klein*.............. Vice President Principal of Morgan 37 0 -- ***
1221 Avenue of the Americas since 1996 Stanley & Co. Incorporated
New York, New York 10020 and Morgan Stanley Asset
Management Inc. and
previously a Vice
President thereof; Officer
of various investment
companies managed by
Morgan Stanley Asset
Management Inc.; Pre-
viously practiced law with
the New York law firm of
Rogers & Wells.
Harold J. Schaaff, Jr.*........ Vice President Principal of Morgan 36 0 -- ***
1221 Avenue of the Americas since 1991 Stanley & Co. Incorporated
New York, New York 10020..... and Morgan Stanley Asset
Management Inc.; General
Counsel and Secretary of
Morgan Stanley Asset
Management Inc.; Officer
of various investment
companies managed by Mor-
gan Stanley Asset Manage-
ment Inc.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- --------------- ---------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Stadler*............. Vice President Vice President of Morgan 42 0 -- ***
1221 Avenue of the Americas since 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.; Pre-
viously 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.; Pre-
viously with Citicorp.
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.; Pre-
viously 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 28 0 -- ***
73 Tremont Street Treasurer Administration, Chase Global
Boston, Massachusetts 02108 since 1996... Funds Services Company;
Officer of various
investment companies man-
aged by Morgan Stanley
Asset Management Inc.;
Previously with Price
Waterhouse LLP.
------ ------------- ---
All Directors and Officers as a Group....................................... 95,720 2,728.0815 ***
=========== ============= ==========
</TABLE>
- ---------------
* "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%.
+ 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.
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
7
<PAGE> 10
"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 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
8
<PAGE> 11
"Fund Complex") for their services as Directors of such investment companies for
the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION NUMBER OF FUNDS
COMPENSATION BENEFITS ACCRUED FROM FUND AND IN FUND COMPLEX
FROM FUND AS PART OF THE FUND COMPLEX PAID FOR WHICH
NAME OF DIRECTORS (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
</TABLE>
- ---------------
(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 14, 1997.
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 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.
9
<PAGE> 12
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
10
<PAGE> 13
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, 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 Chairman and Director of Morgan
Director 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 Director of Morgan
Managing Director Stanley & Co. Incorporated;
Director of Morgan Stanley
Asset Management Limited
James M. Allwin*..... President, Director and Managing Director of Morgan
Managing Director Stanley & Co. 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
</TABLE>
- ---------------
* Business Address: 1221 Avenue of the Americas, New York, New York 10020
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 of asset categories, rates and indices; real estate
advice, financing and investing; and global custody, securities clearance
services and securities lending.
11
<PAGE> 14
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, privatelabel 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 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, Discover & 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, Discover & 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
12
<PAGE> 15
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.
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.
13
<PAGE> 16
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.
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
14
<PAGE> 17
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 March 24, 1997:
<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 6.3%
1585 Broadway voting power and shared
New York, New York 10036 dispositive power; 287,552
shares with shared dispositive
power but no voting power(1)
</TABLE>
- ---------------
(1) Based on a Schedule 13G filed with the Commission on February 7, 1997.
15
<PAGE> 18
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 26, 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.
16
<PAGE> 19
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
A-1
<PAGE> 20
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.
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
A-2
<PAGE> 21
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 (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.
A-3
<PAGE> 22
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 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> 23
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>
AGGREGATE
AMOUNT
OF
ADVISORY/ AMOUNT OF
SUBADVISORY OTHER MATERIAL
NET ASSETS AS FEE FOR THE PAYMENTS TO ASSET MANAGEMENT FEE AS PERCENTAGE
OF LAST THE MANAGER OF AVERAGE NET ASSETS
FEBRUARY 28, FISCAL FOR THE LAST (ANNUAL RATE OF MSAM'S
INVESTMENT COMPANY 1997 YEAR(1) FISCAL YEAR COMPENSATION)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
<S> <C> <C> <C> <C>
Morgan Stanley Institutional Fund, Inc.*(2)
- -- 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(3) 0 0 0 1.25% 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 0.80% 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(4) 38,303,227 274,000 0 1.00% of average daily net assets
- -- Growth and Income Fund(3) 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
- -- MicroCap Portfolio(3) 0 0 0 1.00% 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 0.35% of average daily net assets
Portfolio(3)
- -- Municipal Bond Portfolio 43,819,386 134,963 0 0.35% 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(5) 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.*(6)
- -- 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
- -- Emerging Markets Debt Fund(3) 0 0 0 1.25% of average daily net assets
- -- Equity Growth Fund(3) 0 0 0 0.70% of average daily net assets
- -- European Equity Fund(3) 0 0 0 1.00% of average daily net assets
- -- Global Equity Allocation Fund 161,349,524 1,047,751 0 1.00% of average daily net assets
- -- Global Equity Fund(3) 0 0 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 122,965,353 0 0 0.45% of the first $250 million
Market(7) 0.40% of the next $250 million
0.35% of the excess over $500 million
</TABLE>
B-1
<PAGE> 24
<TABLE>
<CAPTION>
AGGREGATE
AMOUNT
OF
ADVISORY/ AMOUNT OF
SUBADVISORY OTHER MATERIAL
NET ASSETS AS FEE FOR THE PAYMENTS TO ASSET MANAGEMENT FEE AS PERCENTAGE
OF LAST THE MANAGER OF AVERAGE NET ASSETS
FEBRUARY 28, FISCAL FOR THE LAST (ANNUAL RATE OF MSAM'S
INVESTMENT COMPANY 1997 YEAR(1) FISCAL YEAR COMPENSATION)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
<S> <C> <C> <C> <C>
- -- Growth and Income Fund(3) $ 0 $ 0 $0 1.00% of average daily net assets
- -- High Yield Fund 16,444,430 12,710 0 0.75% of average daily net assets
- -- Japanese Equity Fund(3) 0 0 0 1.00% of average daily net assets
- -- International Magnum Fund 24,529,959 0 0 0.80% of average daily net assets
- -- Latin America Fund 53,413,053 218,502 0 1.25% of average daily net assets
- -- Money Market Fund(7) 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
- -- Tax Free Money Market Fund(3) 0 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 assets
- -- Worldwide High Income Fund 164,403,651 527,214 0 0.75% of average daily net assets
Morgan Stanley Universal Funds, Inc.*
- -- Asian Equity(3) 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
- -- Emerging Markets Debt(3) 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
- -- 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
- -- 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
</TABLE>
B-2
<PAGE> 25
<TABLE>
<CAPTION>
AGGREGATE
AMOUNT
OF
ADVISORY/ AMOUNT OF
SUBADVISORY OTHER MATERIAL
NET ASSETS AS FEE FOR THE PAYMENTS TO ASSET MANAGEMENT FEE AS PERCENTAGE
OF LAST THE MANAGER OF AVERAGE NET ASSETS
FEBRUARY 28, FISCAL FOR THE LAST (ANNUAL RATE OF MSAM'S
INVESTMENT COMPANY 1997 YEAR(1) FISCAL YEAR COMPENSATION)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
<S> <C> <C> <C> <C>
- -- Money Market(3) $ 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
- -- U.S. Real Estate(8) 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
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, Inc. 204,346,643 1,899,000 0 1.15% of average weekly net 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 Fund, 310,803,693 3,106,000 0 1.20% of average weekly net assets
Inc.
Morgan Stanley Asia-Pacific Fund, Inc. 854,649,586 8,796,000 0 1.00% of average weekly net assets
Morgan Stanley Emerging Markets Debt 321,966,172 3,125,000 0 1.00% of average weekly net assets
Fund, Inc.
Morgan Stanley Emerging Markets Fund, 407,981,941 4,713,000 0 1.25% of average weekly net assets
Inc.
Morgan Stanley Global Opportunity Bond 65,384,292 585,000 0 1.00% of average weekly net assets
Fund, Inc.
Morgan Stanley High Yield Fund, Inc. 129,972,796 842,000 0 0.70% of average weekly net assets
Morgan Stanley India Investment Fund, 341,625,451 3,812,000 0 1.10% of average weekly net assets
Inc.
Morgan Stanley Russia & New Europe 142,333,723 400,000 0 1.60% of average weekly net assets
Fund, Inc.
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
</TABLE>
- ---------------
* With respect to each of Morgan Stanley Institutional Fund, Inc., Morgan
Stanley Fund, Inc. and Morgan Stanley Universal Funds, Inc., MSAM has
voluntarily agreed to a reduction in the fees payable to it and to
reimburse each portfolio, if necessary, if payment of advisory fees would
cause the total annual operating expenses of such portfolio to exceed
certain minimums.
(1) Net of any fees waived by the Manager for the last fiscal year.
(2) Includes Class A and Class B shares.
(3) Currently Inactive.
(4) Management fee includes a 0.40% sub-advisory fee payable by the Manager.
(5) Commenced operations March 16, 1996.
(6) Includes Class A, Class B and Class C shares. Fiscal year end June 30, 1996.
(7) Formerly, a portfolio of PCS Cash Fund, which was merged with and into
Morgan Stanley Fund, Inc. on September 27, 1996.
(8) Portfolio had not commenced operations as of December 31, 1996.
B-3
<PAGE> 26
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 26, 1997.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
<PAGE> 27
[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.
SIGNATURE(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.
