THIRD QUARTER REPORT September 30, 2002 Morgan Stanley Emerging Markets Fund, Inc. DIRECTORS AND OFFICERS Barton M. Biggs CHAIRMAN OF THE BOARD OF DIRECTORS Ronald E. Robison PRESIDENT AND DIRECTOR John D. Barrett II DIRECTOR Thomas P. Gerrity DIRECTOR Gerard E. Jones DIRECTOR Joseph J. Kearns DIRECTOR Vincent R. McLean DIRECTOR C. Oscar Morong, Jr. DIRECTOR William G. Morton, Jr. DIRECTOR Michael Nugent DIRECTOR Fergus Reid DIRECTOR Stefanie V. Chang VICE PRESIDENT Lorraine Truten VICE PRESIDENT James W. Garrett TREASURER Mary E. Mullin SECRETARY Belinda A. Brady ASSISTANT TREASURER INVESTMENT ADVISER Morgan Stanley Investment Management Inc. 1221 Avenue of the Americas New York, New York 10020 ADMINISTRATOR JPMorgan Chase Bank 73 Tremont Street Boston, Massachusetts 02108 CUSTODIAN JPMorgan Chase Bank 3 Chase MetroTech Center Brooklyn, New York 11245 STOCKHOLDER SERVICING AGENT American Stock Transfer & Trust Company 59 Maiden Lane New York, New York 10030 (800) 278-4353 LEGAL COUNSEL Clifford Chance Rogers & Wells LLP 200 Park Avenue New York, New York 10166 INDEPENDENT AUDITOR Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116 For additional Fund information, including the Fund's net asset value per share and information regarding the investments comprising the Fund's portfolio, please call 1-800-221-6726 or visit our website at www.morganstanley.com/im. (C) 2002 Morgan Stanley [MORGAN STANLEY LOGO] Morgan Stanley Emerging Markets Fund, Inc. Morgan Stanley Investment Management Inc. Investment Adviser MORGAN STANLEY EMERGING MARKETS FUND, INC. OVERVIEW LETTER TO STOCKHOLDERS For the nine months ended September 30, 2002, the Morgan Stanley Emerging Markets Fund, Inc. (the "Fund") had a total return, based on net asset value per share, of -12.92% compared with -14.73% for the Morgan Stanley Capital International (MSCI) Emerging Markets Free Net Index (the "Index"). On September 30, 2002, the closing price of the Fund's shares on the New York Stock Exchange was $7.82, representing a 15.9% discount to the Fund's net asset value per share. MARKET REVIEW Outperformance relative to the Index was primarily driven by country allocation, although stock selection also helped performance. In particular, our overweight exposure to Indonesia (+38.1%, Index return) and South Korea (+4.7%), and our underweight stance in Argentina (-62.1%) and Chile (-29.9%) contributed to performance. Stock selection in South Africa, India and Taiwan was also strong. Although the emerging markets have fallen 14.7% on a year-to-date basis, the asset class has been successful in outperforming developed equity markets, such as Europe, Australasia and the Far East (EAFE), which has fallen 21.0% and the S&P 500 Index, which has declined 28.2%. Both developed and emerging markets have been affected by concerns of a "double dip" in the developed economies, fears of a war with Iraq, high oil prices and fraudulent corporate accounting in the U.S. and abroad. Within the emerging markets, Latin America was the worst performing region declining 35.7% as Argentina and Brazil tumbled 62.1% and 51.2% respectively, given financial and political woes. Asian equity markets (-12.1%) struggled to shake off the malaise affecting most of the equity markets. Europe, the Middle East and Africa was the best performing region, losing 6.6%. Most recently, we have added to the Fund's exposure in Taiwan and Turkey. In Taiwan, following the market's recent sharp underperformance, we carefully added chosen securities within the technology and financials sector. MARKET OUTLOOK While a credible case can be made that economic uncertainty should remain high, we believe that the world markets have bottomed for this cycle. We believe the emerging markets are well positioned to both continue to outperform global markets and once sentiment has stabilized, to rebound sharply due to cheap relative valuations and leveraged exposure to the pick-up in global economic activity. Convergence opportunities, natural resource providers and domestic demand generators are all part of the case for emerging markets. On a bottom-up basis, we continue focusing on earnings visibility as a driver of medium-term returns. OTHER DEVELOPMENTS On July 30, 1998, the Fund commenced a share repurchase program for purposes of enhancing stockholder value and reducing the discount at which the Fund's shares traded from their net asset value. For the nine months ended September 30, 2002, the Fund repurchased 297,579 of its shares at an average discount of 15.38% from net asset value per share. Since the inception of the program, the Fund has repurchased 4,282,319 of its shares at an average discount of 20.28% from net asset value per share. The Fund expects to continue to repurchase its outstanding shares at such time and in such amounts as it believes will further the accomplishment of the foregoing objectives, subject to review by the Board of Directors. Sincerely, /s/ Ronald E. Robison Ronald E. Robison President and Director October 2002 2 MORGAN STANLEY EMERGING MARKETS FUND, INC. September 30, 2002 Investment Summary Historical Information (Unaudited) TOTAL RETURN (%) ----------------------------------------------------------------------- MARKET VALUE(1) NET ASSET VALUE(2) INDEX(3) ----------------------------------------------------------------------- AVERAGE AVERAGE AVERAGE CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL ---------------------------------------------------------------------------------------------------- Year-to-Date (9.39)% -- (12.92)% -- (14.73)% -- One Year 15.00 15.00% 11.78 11.78% 7.93 7.93% Five Year (33.17) (7.75) (29.74) (6.81) (40.88) (9.98) Ten Year 31.29 2.76 53.44 4.37 10.73 1.02 Since Inception* 54.24 4.05 83.43 5.72 26.01 2.14 Past performance is not predictive of future performance. [CHART] Returns and Per Share Information NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------------------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 ------------------------------------------------------------------------------------------------------------------------------------ Net Asset Value Per Share $16.74 $28.20 $20.30 $ 14.69 $15.69 $ 15.52 $ 10.33 $21.26 $11.03 $10.68 $9.30 Market Value Per Share $18.13 $31.63 $21.50 $ 15.50 $13.88 $ 13.06 $ 8.13 $16.31 $ 8.75 $ 8.63 $7.82 Premium/(Discount) 8.3% 12.2% 5.9% 5.5% (11.5)% (15.9)% (21.3)% (23.3)% (20.7)% (19.2)% (15.9)% Income Dividends $ 0.01 -- -- -- $ 0.05 $ 0.01 $ 0.11 -- -- -- -- Capital Gains Distributions $ 0.01 $ 1.49 $ 6.50 $ 1.29 $ 0.98 $ 0.01 $ 2.18 -- $ 2.31 -- -- Fund Total Return(2) 13.94% 95.22%+ (5.33)% (16.30)%+ 13.84% (0.97)% (19.61)% 105.81% (36.74)% (3.17)% (12.92)% Index Total Return(3) 11.40% 74.84% (7.32)% (5.21)% 6.03% (11.59)% (25.34)% 66.48% (30.97)% (2.62)% (14.73)% (1) Assumes dividends and distributions, if any, were reinvested. (2) Total investment return based on net asset value per share reflects the effects of changes in net asset value on the performance of the Fund during each period, and assumes dividends and distributions, if any, were reinvested. These percentages are not an indication of the performance of a stockholder's investment in the Fund based on market value due to differences between the market price of the stock and the net asset value per share of the Fund. (3) The Morgan Stanley Capital International Emerging Markets Free Net Index is a market capitalization weighted index comprised of companies that are representative of the market structure of developing countries in Latin America, Asia, Eastern Europe, the Middle East and Africa. Dividends are assumed to be reinvested after deduction of withholding tax, applying the rate applicable to non-resident individuals who do not benefit from double taxation treaties. * The Fund commenced operations on November 1, 1991. + This return does not include the effect of the rights issued in connection with the rights offering. FOREIGN INVESTING INVOLVES CERTAIN RISKS, INCLUDING CURRENCY FLUCTUATIONS AND CONTROLS, RESTRICTIONS ON FOREIGN INVESTMENTS, LESS GOVERNMENTAL SUPERVISION AND REGULATION, LESS LIQUIDITY AND THE POTENTIAL FOR MARKET VOLATILITY AND POLITICAL INSTABILITY. IN ADDITION, INVESTING IN EMERGING MARKETS MAY INVOLVE A RELATIVELY HIGHER DEGREE OF VOLATILITY. 3 MORGAN STANLEY EMERGING MARKETS FUND, INC. September 30, 2002 (Unaudited) Portfolio Summary ALLOCATION OF TOTAL INVESTMENTS [CHART] Equity Securities 97.3% Short-Term Investments 2.7% INDUSTRIES [CHART] Other 49.5% Semiconductor Equipment & Products 13.8% Banks 11.8% Metals & Mining 10.4% Oil & Gas 8.4% Diversified Telecommunication Services 6.1% COUNTRY WEIGHTINGS [CHART] Other 38.0% South Korea 22.7% Taiwan 13.2% South Africa 11.0% Mexico 9.3% China 5.8% TEN LARGEST HOLDINGS* PERCENT OF NET ASSETS ---------------------------------------------------------------------- 1. Samsung Electronics Co., Ltd. (South Korea) 9.2% 2. Anglo American plc (South Africa) 3.9 3. Telmex (Mexico) 2.9 4. Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan) 2.8 5. LUKoil Holdings (Russia) 2.3 6. Teva Pharmaceutical Industries Ltd. (Israel) 1.8 7. POSCO (South Korea) 1.8 8. SK Telecom Co., Ltd. (South Korea) 1.6 9. Wal-Mart de Mexico (Mexico) 1.5 10. Hyundai Motor Co., Ltd. (South Korea) 1.5 ----- 29.3% ----- * Excludes Short-Term Investments 4 MORGAN STANLEY EMERGING MARKETS FUND, INC. STATEMENT OF NET ASSETS September 30, 2002 (Unaudited) Statement of Net Assets VALUE SHARES (000) ---------------------------------------------------------------------------------------- COMMON STOCKS (96.2%) (UNLESS OTHERWISE NOTED) ---------------------------------------------------------------------------------------- Brazil (4.2%) AEROSPACE & DEFENSE Embraer ADR 32,258 $ 429 ---------------------------------------------------------------------------------------- BANKS Banco Bradesco SA ADR 15,756 167 Banco Bradesco SA (Preferred) 44,088,143 93 Banco Itau SA ADR 9,260 145 Banco Itau SA (Preferred) 13,725,000 433 Banco Nacional SA (Preferred) 61,598,720 (a,b) --@ Unibanco SA GDR 19,100 136 ---------------------------------------------------------------------------------------- 974 ---------------------------------------------------------------------------------------- BEVERAGES AmBev 1,346,000 148 AmBev (Preferred) ADR 139,729 1,498 ---------------------------------------------------------------------------------------- 1,646 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Brasil Telecom Participacoes SA (Preferred) 12,578,445 56 Brasil Telecom Participacoes SA (Preferred) ADR 12,412 276 Brasil Telecom SA (Preferred) 8,331,048 24 ---------------------------------------------------------------------------------------- 356 ---------------------------------------------------------------------------------------- ELECTRIC UTILITIES CEMIG ADR 31,790 170 CEMIG (Preferred) 25,454,961 139 ---------------------------------------------------------------------------------------- 309 ---------------------------------------------------------------------------------------- METALS & MINING CVRD ADR 12,600 287 CVRD (Preferred) ADR 35,662 772 CVRD (Preferred), 'A' 38,351 828 ---------------------------------------------------------------------------------------- 1,887 ---------------------------------------------------------------------------------------- MULTILINE RETAIL Lojas Arapua SA GDR 31,540 (a,b) --@ Lojas Arapua SA (Preferred) 30,412,000 (a,b) --@ ---------------------------------------------------------------------------------------- --@ ---------------------------------------------------------------------------------------- OIL & GAS Petrobras SA 3,900 42 Petrobras SA ADR 363 4 Petrobras SA (Preferred) 87,808 856 Petrobras SA (Preferred) ADR 17,648 168 ---------------------------------------------------------------------------------------- 1,070 ---------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS Votorantim Celulose e Papel SA ADR 20,600 288 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Celular CRT (Preferred), 'A' 3,512,547 299 Tele Celular Sul ADR 6,432 42 Telesp Celular SA ADR 3,200 (a) 6 ---------------------------------------------------------------------------------------- 347 ---------------------------------------------------------------------------------------- 7,306 ======================================================================================== Chile (0.3%) DIVERSIFIED TELECOMMUNICATION SERVICES Telefonica CTC Chile ADR 49,740 435 ---------------------------------------------------------------------------------------- ELECTRIC UTILITIES Enersis SA ADR 8,500 (a) 38 ---------------------------------------------------------------------------------------- 473 ======================================================================================== China (5.8%) AIRLINES China Southern Airlines Co., Ltd. 1,536,000 382 ---------------------------------------------------------------------------------------- CHEMICALS Sinopec Shanghai Petrochemical Co., Ltd., 'H' 4,632,000 (a) 511 ---------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES Travelsky Technology Ltd. 525,000 315 ---------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS TPV Technology Ltd. 1,290,000 373 ---------------------------------------------------------------------------------------- DISTRIBUTORS China Resources Enterprise Ltd. 136,000 126 ---------------------------------------------------------------------------------------- ELECTRIC UTILITIES Huaneng Power International, Inc., 'H' 1,632,000 1,276 ---------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Byd Co., Ltd. 201,000 (a) 407 ---------------------------------------------------------------------------------------- FOOD PRODUCTS People's Food Holdings Ltd. 1,010,000 537 ---------------------------------------------------------------------------------------- METALS & MINING Aluminum Corp. of China Ltd. 1,088,000 108 Yanzhou Coal Mining Co., Ltd. 'H' 1,412,000 466 ---------------------------------------------------------------------------------------- 574 ---------------------------------------------------------------------------------------- OIL & GAS CNOOC Ltd. 1,008,000 1,402 PetroChina Co., Ltd. 2,892,000 586 ---------------------------------------------------------------------------------------- 1,988 ---------------------------------------------------------------------------------------- TEXTILES & APPAREL Texwinca Holdings Ltd. 278,000 187 ---------------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE Cosco Pacific Ltd. 1,158,000 809 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES China Mobile (Hong Kong) Ltd. 1,097,000 (a) 2,532 ---------------------------------------------------------------------------------------- 10,017 ======================================================================================== 5 MORGAN STANLEY EMERGING MARKETS FUND, INC. STATEMENT OF NET ASSETS September 30, 2002 (Unaudited) Statement of Net Assets (Cont'd) VALUE SHARES (000) ---------------------------------------------------------------------------------------- Czech Republic (0.2%) BANKS Komercni Banka AS 4,200 $ 238 Komercni Banka AS GDR 8,100 152 ---------------------------------------------------------------------------------------- 390 ---------------------------------------------------------------------------------------- Hungary (1.6%) BANKS OTP Bank Rt. 143,441 1,176 OTP Bank Rt. GDR 24,200 397 ---------------------------------------------------------------------------------------- 1,573 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Matav Rt. 100,736 307 Matav Rt. ADR 23,699 367 ---------------------------------------------------------------------------------------- 674 ---------------------------------------------------------------------------------------- OIL & GAS MOL Magyar Olaj-es Gazipari Rt. 25,357 543 MOL Magyar Olaj-es Gazipari Rt. GDR 710 15 ---------------------------------------------------------------------------------------- 558 ---------------------------------------------------------------------------------------- 2,805 ======================================================================================== India (5.3%) AUTOMOBILES Hero Honda Motors Ltd. 131,200 705 Tata Engineering & Locomotive Co., Ltd. 82,000 (a) 225 ---------------------------------------------------------------------------------------- 930 ---------------------------------------------------------------------------------------- BANKS HDFC Bank Ltd. 10,700 48 HDFC Bank Ltd. ADR 18,200 258 State Bank of India Ltd. 229,550 1,121 ---------------------------------------------------------------------------------------- 1,427 ---------------------------------------------------------------------------------------- CHEMICALS Reliance Industries Ltd. 74,933 400 ---------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS Gujarat Ambuja Cements Ltd 102,500 347 ---------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Housing Development Finance Corp., Ltd. 29,210 363 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Mahanagar Telephone Nigam Ltd. 157,430 358 ---------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Bharat Heavy Electricals Ltd. 123,700 409 ---------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES Oil & Natural Gas Corp., Ltd. 53,000 374 ---------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS Colgate-Palmolive (India) Ltd. 73,190 199 Hindustan Lever Ltd. 105,000 375 ---------------------------------------------------------------------------------------- 574 ---------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES India Info.com PCL 116,052 (b) --@ ---------------------------------------------------------------------------------------- IT CONSULTING & SERVICES Infosys Technologies Ltd. 15,150 1,065 Wipro Ltd. 6,500 178 Wipro Ltd. ADR 6,000 166 ---------------------------------------------------------------------------------------- 1,409 ---------------------------------------------------------------------------------------- METALS & MINING Hindalco Industries Ltd. 28,100 304 Steel Authority of India Ltd. 1,105,066 (a) 147 Tata Iron & Steel Co., Ltd. 157,000 377 ---------------------------------------------------------------------------------------- 828 ---------------------------------------------------------------------------------------- OIL & GAS Bharat Petroleum Corp., Ltd. 52,850 188 Hindustan Petroleum Corp., Ltd. 66,500 231 ---------------------------------------------------------------------------------------- 419 ---------------------------------------------------------------------------------------- PHARMACEUTICALS Dr. Reddy's Laboratories Ltd. 14,000 241 Ranbaxy Laboratories Ltd. 29,000 550 ---------------------------------------------------------------------------------------- 791 ---------------------------------------------------------------------------------------- ROAD & RAIL Container Corp. of India Ltd. 107,600 509 ---------------------------------------------------------------------------------------- 9,138 ======================================================================================== Indonesia (2.7%) AUTOMOBILES Astra International Tbk PT 4,008,500 (a) 1,192 ---------------------------------------------------------------------------------------- BANKS Bank Central Asia Tbk PT 2,635,500 652 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Telekomunikasi Indonesia Tbk PT 4,179,500 1,731 ---------------------------------------------------------------------------------------- MULTILINE RETAIL Ramayana Lestari Sentosa Tbk PT 42,000 15 ---------------------------------------------------------------------------------------- TOBACCO Bentoel Internasional Investama Tbk PT 6,661,500 (a) 85 Hanjaya Mandala Sampoerna Tbk PT 2,627,000 986 ---------------------------------------------------------------------------------------- 1,071 ---------------------------------------------------------------------------------------- 4,661 ======================================================================================== Israel (4.1%) AEROSPACE & DEFENSE Elbit Systems Ltd. 1 --@ ---------------------------------------------------------------------------------------- 6 MORGAN STANLEY EMERGING MARKETS FUND, INC. STATEMENT OF NET ASSETS September 30, 2002 (Unaudited) Statement of Net Assets (Cont'd) VALUE SHARES (000) ---------------------------------------------------------------------------------------- Israel (Cont'd) COMMUNICATIONS EQUIPMENT ECI Telecom Ltd. 180,332 (a) $ 306 ---------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES Check Point Software Technologies Ltd. 158,444 (a) 2,177 RADWARE Ltd. 42,425 (a) 281 ---------------------------------------------------------------------------------------- 2,458 ---------------------------------------------------------------------------------------- PHARMACEUTICALS Teva Pharmaceutical Industries Ltd. 12,420 828 Teva Pharmaceutical Industries Ltd. ADR 34,607 2,319 ---------------------------------------------------------------------------------------- 3,147 ---------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS Zoran Corp. 68,900 (a) 758 ---------------------------------------------------------------------------------------- SOFTWARE TTI Team Telecom International Ltd. 58,937 (a) 400 ---------------------------------------------------------------------------------------- 7,069 ======================================================================================== Malaysia (4.6%) AUTOMOBILES Perusahaan Otomobil Nasional Bhd 193,000 394 Tan Chong Motor Holdings Bhd 326,000 89 ---------------------------------------------------------------------------------------- 483 ---------------------------------------------------------------------------------------- BANKS Commerce Asset Holdings Bhd 550,000 437 Malayan Banking Bhd 798,900 1,682 Public Bank Bhd 971,875 593 ---------------------------------------------------------------------------------------- 2,712 ---------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING Gamuda Bhd 802,000 1,192 ---------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS AMMB Holdings Bhd 477,000 510 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Technology Resources Industries Bhd 1,853,000 (a) 1,000 ---------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE Magnum Corp. Bhd 1,288,000 807 Resorts World Bhd 240,000 568 ---------------------------------------------------------------------------------------- 1,375 ---------------------------------------------------------------------------------------- REAL ESTATE SP Setia Bhd 570,500 359 ---------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS Malaysian Pacific Industries Bhd 118,000 354 ---------------------------------------------------------------------------------------- 7,985 ======================================================================================== Mexico (9.3%) BANKS Grupo Financiero BBVA Bancomer, 'B' 2,549,181 (a) 1,810 ---------------------------------------------------------------------------------------- BEVERAGES Femsa ADR 39 1 Femsa UBD 350,775 1,189 Grupo Modelo SA, 'C' 363,800 912 ---------------------------------------------------------------------------------------- 2,102 ---------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS Cemex SA 162,007 677 Cemex SA ADR 32,121 669 ---------------------------------------------------------------------------------------- 1,346 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Telmex, 'L' ADR 176,875 4,979 ---------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS Kimberly-Clark de Mexico SA, 'A' 158,658 355 ---------------------------------------------------------------------------------------- MULTILINE RETAIL Wal-Mart de Mexico ADR 28,162 681 Wal-Mart de Mexico, 'C' 304,748 639 Wal-Mart de Mexico, 'V' 520,819 1,262 ---------------------------------------------------------------------------------------- 2,582 ---------------------------------------------------------------------------------------- TRANSPORTATION INFRASTRUCTURE Grupo Aeroportuario del Sureste SA ADR 26,450 291 Grupo Aeroportuario del Sureste SA, 'B' 149,200 161 ---------------------------------------------------------------------------------------- 452 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES America Movil SA de CV ADR 204,627 2,472 ---------------------------------------------------------------------------------------- 16,098 ======================================================================================== Philippines (0.2%) REAL ESTATE Ayala Land, Inc. 2,814,500 300 ---------------------------------------------------------------------------------------- Poland (1.7%) BANKS Bank Pekao SA 46,132 938 ---------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Telekomunikacja Polska SA 36,751 (a) 103 Telekomunikacja Polska SA GDR 115,117 (a) 320 ---------------------------------------------------------------------------------------- 423 ---------------------------------------------------------------------------------------- MULTILINE RETAIL Eastbridge NV 33,600 (b) 1,344 ---------------------------------------------------------------------------------------- 7 MORGAN STANLEY EMERGING MARKETS FUND, INC. STATEMENT OF NET ASSETS September 30, 2002 (Unaudited) Statement of Net Assets (Cont'd) VALUE SHARES (000) ---------------------------------------------------------------------------------------- Poland (Cont'd) OIL & GAS Polski Koncern Naftowy Orlen SA 36,581 $ 143 ---------------------------------------------------------------------------------------- 2,848 ======================================================================================== Russia (4.7%) METALS & MINING MMC Norilsk Nickel ADR 7,670 126 ---------------------------------------------------------------------------------------- OIL & GAS Gazprom ADR 22,700 252 LUKoil Holdings ADR 63,819 3,882 Surgutneftegaz ADR 77,025 1,271 Surgutneftegaz ADR (Preferred) 23,039 518 Yukos ADR 15,536 2,091 ---------------------------------------------------------------------------------------- 8,014 ---------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS Alliance Cellulose Ltd. 'B' 156,075 (b) --@ ---------------------------------------------------------------------------------------- 8,140 ======================================================================================== South Africa (11.0%) BANKS FirstRand Ltd. 537,520 334 Nedcor Ltd. 25,500 240 Standard Bank Group Ltd. 171,280 466 ---------------------------------------------------------------------------------------- 1,040 ---------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES Barloworld Ltd. 186,110 1,041 Bidvest Group Ltd. 134,715 546 ---------------------------------------------------------------------------------------- 1,587 ---------------------------------------------------------------------------------------- INSURANCE Liberty Group Ltd. 38,720 192 Old Mutual plc 109,700 120 Old Mutual plc (London Shares) 1,084,930 1,187 Sanlam Ltd. 682,310 485 ---------------------------------------------------------------------------------------- 1,984 ---------------------------------------------------------------------------------------- METALS & MINING Anglo American Platinum Corp., Ltd. 40,370 1,355 Anglo American plc 261,988 3,317 Anglo American plc (London Shares) 275,310 3,477 Gold Fields Ltd. 156,100 2,013 Gold Fields Ltd. ADR 7,700 98 Impala Platinum Holdings Ltd. 12,720 676 ---------------------------------------------------------------------------------------- 10,936 ---------------------------------------------------------------------------------------- OIL & GAS Sasol Ltd. 199,770 2,251 ---------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS Sappi Ltd. 66,670 766 Sappi Ltd. ADR 11,970 137 ---------------------------------------------------------------------------------------- 903 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES M-Cell Ltd. 206,340 (a) 162 ---------------------------------------------------------------------------------------- 18,863 ======================================================================================== South Korea (22.7%) AUTO COMPONENTS Hyundai Mobis 63,400 1,244 ---------------------------------------------------------------------------------------- AUTOMOBILES Hyundai Motor Co., Ltd. 88,430 2,018 Hyundai Motor Co., Ltd. (Preferred) 47,900 533 ---------------------------------------------------------------------------------------- 2,551 ---------------------------------------------------------------------------------------- BANKS Kookmin Bank 38,008 1,391 Shinhan Financial Group Co., Ltd. 162,530 1,841 ---------------------------------------------------------------------------------------- 3,232 ---------------------------------------------------------------------------------------- CHEMICALS LG Chem Ltd. 52,940 1,407 ---------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING Hyundai Development Co. 125,080 (a) 702 ---------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Daishin Securities Co. 18,060 230 LG Investment & Securities Co., Ltd. 28,350 331 Samsung Securities Co., Ltd. 45,720 (a) 1,114 Seoul Securities Co., Ltd. 136,200 501 ---------------------------------------------------------------------------------------- 2,176 ---------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Samsung Electro-Mechanics Co., Ltd. 35,447 1,276 ---------------------------------------------------------------------------------------- FOOD PRODUCTS Tongyang Confectionery Corp. 14,000 631 ---------------------------------------------------------------------------------------- HOUSEHOLD DURABLES LG Electronics Ltd. 51,857 (a) 1,414 ---------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS LG Household & Health Care Ltd. 18,400 602 ---------------------------------------------------------------------------------------- INSURANCE Hyundai Marine & Fire Insurance Co., Ltd. 20,730 456 ---------------------------------------------------------------------------------------- MEDIA CJ39 Shopping Corp. 23,504 1,080 ---------------------------------------------------------------------------------------- METALS & MINING POSCO 35,440 3,087 ---------------------------------------------------------------------------------------- 8 MORGAN STANLEY EMERGING MARKETS FUND, INC. STATEMENT OF NET ASSETS September 30, 2002 (Unaudited) Statement of Net Assets (Cont'd) VALUE SHARES (000) ---------------------------------------------------------------------------------------- South Korea (Cont'd) MULTILINE RETAIL Shinsegae Co., Ltd. 4,520 $ 684 ---------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS Samsung Electronics Co., Ltd. 54,922 13,408 Samsung Electronics Co., Ltd. (Preferred) 20,110 2,418 ---------------------------------------------------------------------------------------- 15,826 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES SK Telecom Co., Ltd. 14,110 2,735 ---------------------------------------------------------------------------------------- 39,103 ======================================================================================== Taiwan (13.2%) AIRLINES Eva Airways Corp. 2,195,000 (a) 777 ---------------------------------------------------------------------------------------- BANKS Taipei Bank 1,386,000 (a) 1,264 Taishin Financial Holdings Co., Ltd. 3,234,000 (a) 1,298 ---------------------------------------------------------------------------------------- 2,562 ---------------------------------------------------------------------------------------- CHEMICALS Formosa Chemicals & Fibre Corp. 524,403 390 Formosa Plastics Corp. 157,000 150 ---------------------------------------------------------------------------------------- 540 ---------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT Accton Technology Corp. 947,975 (a) 1,441 ---------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS Asustek Computer, Inc. 499,553 1,175 Benq Corp. 468,160 590 Quanta Computer, Inc. 382,200 729 ---------------------------------------------------------------------------------------- 2,494 ---------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING CTCI Corp. 1,108,000 475 ---------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS Taiwan Cement Corp. 1,053,200 (a) 225 ---------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Chinatrust Financial Holding Co., Ltd. 3,267,748 (a) 2,296 Fubon Financial Holding Co., Ltd. 183,087 152 Sinopac Holdings Co. 2,522,162 (a) 1,035 ---------------------------------------------------------------------------------------- 3,483 ---------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT Phoenixtec Power Co., Ltd. 585,000 354 ---------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Hon Hai Precision Industry Co., Ltd. 579,300 1,936 ---------------------------------------------------------------------------------------- FOOD & DRUG RETAILING President Chain Store Corp. 4,633 7 ---------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS Largan Precision Co., Ltd. 105,300 556 Premier Image Technology Corp. 281,000 362 ---------------------------------------------------------------------------------------- 918 ---------------------------------------------------------------------------------------- METALS & MINING China Steel Corp. 1,208,816 520 ---------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS ASE Test Ltd. 39,500 (a) 140 Novatek Microelectronics Corp., Ltd. 282,000 554 Orient Semiconductor Electronics Ltd. 826,000 (a) 138 Siliconware Precision Industries Co. 1,102,692 (a) 572 Taiwan Semiconductor Manufacturing Co., Ltd. 3,955,334 (a) 4,662 Taiwan Semiconductor Manufacturing Co., Ltd. ADR 23,200 (a) 147 United Microelectronics Corp. 1,034,439 (a) 703 ---------------------------------------------------------------------------------------- 6,916 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Taiwan Cellular Corp. 183,143 169 ---------------------------------------------------------------------------------------- 22,817 ---------------------------------------------------------------------------------------- Thailand (1.7%) BANKS Bangkok Bank PCL 731,800 (a) 896 Thai Farmers Bank PCL 288,100 (a) 170 ---------------------------------------------------------------------------------------- 1,066 ---------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS Siam Cement (The) PCL NVDR 47,800 831 ---------------------------------------------------------------------------------------- HOUSEHOLD DURABLES Land & Houses PCL 178,800 273 ---------------------------------------------------------------------------------------- MEDIA BEC World PCL (Foreign) 77,100 360 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Advanced Info Service PCL (Foreign) 504,600 396 ---------------------------------------------------------------------------------------- 2,926 ======================================================================================== Turkey (2.6%) BANKS Akbank TAS 400,498,800 (a) 1,149 Turkiye Garanti Bankasi AS 739,008,928 (a) 648 Turkiye Is Bankasi AS 'C' 105,475,000 (a) 214 ---------------------------------------------------------------------------------------- 2,011 ---------------------------------------------------------------------------------------- 9 MORGAN STANLEY EMERGING MARKETS FUND, INC. STATEMENT OF NET ASSETS September 30, 2002 (Unaudited) Statement of Net Assets (Cont'd) VALUE SHARES (000) ---------------------------------------------------------------------------------------- Turkey (Cont'd) BEVERAGES Anadolu Efes Biracilik ve Malt Sanayii AS 9,117,000 (a) $ 146 ---------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS Koc Holding AS 65,800,000 (a) 616 ---------------------------------------------------------------------------------------- HOUSEHOLD DURABLES Arcelik AS 84,452,000 (a) 510 ---------------------------------------------------------------------------------------- MEDIA Hurriyet Gazetecilik ve Matbaacilik AS 221,923,175 (a) 469 ---------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES Turkcell Iletisim Hizmetleri AS 170,035,000 (a) 791 ---------------------------------------------------------------------------------------- 4,543 ======================================================================================== Venezuela (0.3%) DIVERSIFIED TELECOMMUNICATION SERVICES CANTV, 'D' ADR 45,243 477 ======================================================================================== TOTAL COMMON STOCKS (Cost $197,329) 165,959 ---------------------------------------------------------------------------------------- INVESTMENT COMPANIES (0.5%) ---------------------------------------------------------------------------------------- India (0.5%) Morgan Stanley Growth Fund (Cost $891) 4,694,400 (a,c) 821 ---------------------------------------------------------------------------------------- NO. OF RIGHTS ---------------------------------------------------------------------------------------- RIGHTS (0.0%) ---------------------------------------------------------------------------------------- Malaysia (0.0%) REAL ESTATE SP Setia Bhd, 10/20/02 162,999 18 ---------------------------------------------------------------------------------------- Mexico (0.0%) MEDIA Grupo Televisa SA, 10/3/02 11,029 (a,b) --@ ---------------------------------------------------------------------------------------- TOTAL RIGHTS (Cost $--@) 18 ---------------------------------------------------------------------------------------- FACE AMOUNT (000) ---------------------------------------------------------------------------------------- DEBT INSTRUMENTS (0.0%) ---------------------------------------------------------------------------------------- India (0.0%) BUILDING PRODUCTS DCM Shriram Investments Ltd. 0.00% INR 330 (b,d) --@ ---------------------------------------------------------------------------------------- METALS & MINING DCM Shriram Industries Ltd. 0.00% 335 (b,d) --@ Shri Ishar Alloy Steels Ltd. 15.00% 581 (b,d) --@ ---------------------------------------------------------------------------------------- --@ ---------------------------------------------------------------------------------------- TOTAL DEBT INSTRUMENTS (Cost $1,495) -- @ ---------------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (2.1%) ---------------------------------------------------------------------------------------- United States (2.1%) REPURCHASE AGREEMENT J.P. Morgan Securities Inc., 1.87%, dated 9/30/02, due 10/1/02 (Cost $3,576) $ 3,576 (e) 3,576 ---------------------------------------------------------------------------------------- FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.6%) ---------------------------------------------------------------------------------------- Brazilian Real BRL 143 38 Euro EUR 43 42 Hong Kong Dollar HKD 1 --@ Hungarian Forint HUF 275 1 Indian Rupee INR 13,132 272 Malaysian Ringgit MYR 163 43 South African Rand ZAR 137 13 South Korean Won KRW 246,595 202 Taiwan Dollar TWD 15,072 432 Turkish Lira TRL 10,294 --@ ---------------------------------------------------------------------------------------- TOTAL FOREIGN CURRENCIES (Cost $1,046) 1,043 ---------------------------------------------------------------------------------------- TOTAL INVESTMENTS (99.4%) (Cost $204,337) 171,417 ---------------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (0.6%) ---------------------------------------------------------------------------------------- Other Assets $ 3,279 Liabilities (2,263) 1,016 ---------------------------------------------------------------------------------------- NET ASSETS (100%) Applicable to 18,542,025 issued and outstanding $ 0.01 par value shares (100,000,000 shares authorized) $ 172,433 ---------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE $ 9.30 ---------------------------------------------------------------------------------------- (a)--Non-income producing. (b)--Investments valued at fair value. At September 30, 2002, the Fund held $1,344,000 of fair-valued securities, representing 0.8% of net assets (c)--Fund is advised by an affiliate. (d)--Security is in default. (e)--The repurchase agreement is fully collateralized by U.S. government and/or agency obligations based on market prices at the date of this statement of net assets. The investment in the repurchase agreement is through participation in a joint account with affiliated funds. @--Value is less than $500. ADR--American Depository Receipts. GDR--Global Depository Receipts. INR--Indian Rupee. PCL--Public Company Limited. 10