Edgar Filing: EMERGING MARKETS INCOME FUND INC

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

September 21, 2002

Dear Shareholder:

We are pleased to provide the annual report for The Emerging Markets Income Fund
Inc ("Fund") for the year ended August 31, 2002. In this report, we summarize
what we believe to be the period's prevailing economic and market conditions and
outline our investment strategy. A detailed summary of the Fund's performance
can be found in the appropriate sections that follow. We hope you find this
report to be useful and informative.

Special Notice to Shareholders

We are pleased to report that R. Jay Gerken, a managing director of Salomon
Smith Barney Inc., has been elected Co-Chairman of the Board of the Fund
replacing Heath B. McLendon, who has been appointed chairman of Salomon Smith
Barney Inc.'s new Equity Research Policy Committee. Previously, Jay managed the
Smith Barney Growth and Income Fund for six years; developed and managed the
Smith Barney Allocation Series Inc. from inception in 1996 through the end of
2001; and was responsible for the investment design and implementation of
Citigroup Asset Management's college savings programs with the states of
Illinois and Colorado.

Performance Review 1

During the year ended August 31, 2002, the Fund distributed income dividends to
shareholders totaling $1.65 per share. The table below shows the annualized
distribution rate and twelve-month total return based on the Fund's August 31,
2002 net asset value ("NAV") per share and its New York Stock Exchange ("NYSE")
closing price. 2

Price Annualized Twelve-Month
Per Share Distribution Rate 3 Total Return 3
--------------- ---------------- -----------
$11.80 (NAV) 13.98% 3.94%
$12.30 (NYSE) 13.41% 6.10%

-----------------

1 Past performance is not indicative of future results.

2 The NAV is calculated by subtracting total liabilities from the closing
value of all securities held by the Fund (plus all other assets) and
dividing the result (total net assets) by the total number of the Fund's
shares outstanding. The NAV fluctuates with the changes in the market price
of securities in which the Fund has invested. However, the price at which
an investor may buy or sell shares of the Fund is at their market (NYSE)
price as determined by supply of and demand for the Fund's shares.

3 Total returns are based on changes in NAV or the market price,
respectively. Total returns assume the reinvestment of all dividends and/or
capital gains distributions in additional shares. Annualized distribution
rate is the Fund's current quarterly income dividend rate, annualized, and
then divided by the NAV or the market price noted in this report. The
annualized distribution rate assumes a current quarterly income dividend
rate of $0.4125 for four quarters. This rate is as of August 31, 2002 and
is subject to change. The important difference between a total return and
an annualized distribution rate is that the total return takes into
consideration a number of factors including the fluctuation of the NAV or
the market price during the period reported. The NAV fluctuation includes
the effects of unrealized appreciation or depreciation in the Fund.
Accordingly, since an annualized distribution rate only reflects the
current quarterly income dividend rate annualized, it should not be used as
the sole indicator to judge the return you receive from your Fund
investment.

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

In comparison, the Lipper Inc. ("Lipper") 4 peer group, the emerging markets
debt closed-end funds category returned 2.67% for the same period.

Investment Strategy

The Fund's primary investment objective is to seek high current income. As a
secondary objective, the Fund will seek capital appreciation. Under normal
conditions, the Fund will invest at least 80% of its net assets plus any
borrowings for investment purposes in debt securities of government and
government-related issuers located in emerging market countries (including
participations in loans between governments and financial institutions), and of
entities organized to restructure outstanding debt of such issuers, and in debt
securities of corporate issuers located in emerging market countries. An
"emerging market country" is any country that is considered to be an emerging or
developing country by the International Bank for Reconstruction and Development
("World Bank"). Under normal market conditions, at least 85% of the Fund's total
assets will be invested in U.S. dollar-denominated securities.

Portfolio Manager Market and Fund Overview

The period was characterized by a number of developments that affected
investors' assessment of risk. The September 11th terrorist attacks; war in
Afghanistan; volatile and declining equity markets; and corporate scandals
including Enron, WorldCom, Tyco and Adelphia all contributed to heightened risk
aversion. Despite this volatile environment, we believe that many emerging
market countries (aside from Argentina and Brazil) performed well.

As measured by the J.P. Morgan Emerging Markets Bond Index Plus ("EMBI+") 5,
emerging markets debt 6 returned a negative 1.07% for the period. Political
developments drove performance in Brazil (down 8.94% for the period). Brazil's
large weighting, which now accounts for 19.18% of the EMBI+'s market
capitalization, dominated overall returns for the period. Argentina (down 62.05%
for the period) also weighed on the asset class but it currently does not have
the impact it once did, as Argentina now accounts for only 2% of the EMBI+'s
composition, down from 22% in January 2001. On what we feel is a positive note,
fourteen out of seventeen countries outperformed the EMBI+ return for the Fund's
annual period.

Oil prices, an important driver of value in emerging markets, experienced
considerable price volatility during the period. Oil prices traded in a range
from $17.45 to $30.11 per barrel, and closed the period at $28.98 per barrel. At
a recent meeting, Organization of Petroleum Exporting Countries ("OPEC") 7
maintained its production quota at an eleven-year low of 21.7 million barrels a
day.

---------------
4 Lipper is an independent mutual-fund tracking organization. Average annual
returns are based on the year ended August 31, 2002, calculated among 12
funds in the emerging markets debt closed-end funds category.

5 The EMBI+ is a total-return index that tracks the traded market for U.S.
dollar-denominated Brady and other similar sovereign restructured bonds
traded in the emerging markets. Please note that an investor cannot invest
directly in an index.

6 Investing in foreign securities is subject to certain risks not associated
with domestic investing, such as currency fluctuations and changes in
political and economic conditions. These risks are magnified in emerging or
developing markets.

7 OPEC is an international organization of 11 developing countries, each of
which are heavily reliant on oil revenues as its main source of income.
Membership is open to any country which is a substantial net exporter of
oil and which shares the ideals of the Organization.

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Return volatility 8 for emerging markets debt varied over the period, with an
average return volatility for the period of 11.78%. Volatility for the period
was highest during the fourth calendar quarter of 2001 in the aftermath of the
September 11th terrorist attacks and the demise of the Argentine economy.
Volatility for the month of August increased to 15.16% as investors responded to
weakness in Brazil, as well as problems in the high yield market.

Latin American Debt

As measured by the EMBI+, Latin American debt returned negative 14.28% for the
annual period. Latin America was affected by the turmoil in Argentina and more
recently, by political and fiscal uncertainty in Brazil. Ecuador's inability to
reach an agreement with the International Monetary Fund ("IMF") 9 weighed on the
markets recently.

Ecuadorian debt returned 6.95% for the annual period, as measured by the EMBI+.
The country continues to post positive Gross Domestic Product ("GDP") 10 growth
and improving credit fundamentals due to better tax collection and higher oil
prices. We believe that Ecuador's inability to secure an IMF agreement in June
of 2002 is behind the spread widening and recent poor performance. On a positive
note, Ecuador recently appointed a new Finance Minister, Minister Arosemena. We
believe the new minister will help Ecuador reach an agreement with the IMF.

Brazilian debt returned negative 8.94% for the annual period, as measured by the
EMBI+, one of the worst performers in the index. Price volatility in Brazil has
been primarily driven by political and fiscal uncertainty in the country.
Investors have focused on the outcome of the upcoming October 6th Presidential
election.

Argentine debt returned negative 62.05% for the year, as measured by the EMBI+.
Following the country's default on all external debt obligations in December
2001, policymakers have continued to struggle to free the economy from
recession. We believe that Argentina must resolve a number of major issues
before it can talk with investors about restructuring. Those issues include
electing a new president, choosing a currency and resolving the banking crisis.
Much uncertainty remains over how the situation in Argentina will play out over
the next 12-18 months. We remain underweight Argentina and continue to monitor
developments there very closely.

Eastern European/Middle Eastern/African Debt

Non-Latin American debt, which represents 40% of the EMBI+'s market
capitalization, outperformed Latin American debt for the annual period,
returning 27.35% as measured by the EMBI+.

Russian debt, the best performer in the EMBI+ for the period, returned 40.09%.
The Russian economy continues to benefit from high domestic consumption and high
oil prices. Russia is now rated BB- (or equivalent) by all the major
credit-rating agencies.

-----------------
8 Return volatility is the standard deviation of monthly returns over the
period being measured.

9 The IMF is an international organization of 183 member countries,
established to promote international monetary cooperation, exchange
stability and orderly exchange arrangements.

10 GDP is a market value of goods and services produced by labor and property
in a given country.

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Turkish debt returned 19.14% for the annual period, as measured by the EMBI+. We
believe the country's strategic importance, combined with its improved relations
with the IMF, has attracted recent investor interest. Turkey's domestic economy
has stabilized with a return of confidence, a lowering of interest rates and a
stronger currency. Early in the summer, concerns over Prime Minister Ecevit's
health unsettled the market, ultimately leading to early elections. However, in
the fall of 2002, the tone in Turkey has become more positive in our opinion,
with the passage of key European Union accession legislation and the scheduling
of elections for November 3rd. We continue to remain overweight Turkish
sovereign debt relative to the EMBI+.

Bulgarian debt returned 15.80% for the period, as measured by the EMBI+. We
believe Bulgarian debt's outperformance of the EMBI+ for the period is due in
large part to what we feel is the government's outstanding fiscal performance
and active management of its liabilities.

Portfolio Manager Market and Fund Outlook

Emerging market returns were influenced by the regional events detailed above,
in the context of an extremely difficult environment for financial markets.
Emerging debt market sovereign spreads,11 as measured by the EMBI+, ended the
annual period at 886 basis points12 over U.S. Treasuries. We believe that
spreads are likely to remain volatile going forward, in line with the overall
cautious market sentiment.

Looking for Additional Information?

The Emerging Markets Income Fund Inc is traded on the New York Stock Exchange
under the symbol "EMD." Daily closing prices are available online under symbol
XEMDX and in most newspapers under the New York Stock Exchange listings.
Barron's and The Wall Street Journal's Monday editions carry closed-end fund
tables that provide weekly net asset value per share information. In addition,
the Fund issues a quarterly allocation press release that can be found on most
major financial web sites.

In a continuing effort to provide information concerning The Emerging Markets
Income Fund Inc, shareholders may call 1-888-777-0102 or 1-800-SALOMON (toll
free), Monday through Friday from 8:00 a.m. to 6:00 p.m. Eastern Standard Time
(EST), for the Fund's current net asset value, market price and other
information regarding the Fund's portfolio holdings and allocations.

---------------
11 Sovereign bonds are bonds issued by non-U.S. governments. Yield spread is
the difference between yields on securities of the same quality but
different maturities or the difference between yields on securities of the
same maturity but different quality.

12 A basis point is 0.01% or one one-hundredth of a percent.

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Thank you for your investment in The Emerging Markets Income Fund Inc. We look
forward to continuing to help you meet your investment objectives.

Sincerely,

/s/ R. Jay Gerken /s/ Stephen Treadway
R. Jay Gerken Stephen Treadway
Co-Chairman of the Board Co-Chairman of the Board

/s/ Peter J. Wilby /s/ James E. Graige
Peter J. Wilby James E. Craige
President and Portfolio Manager Executive Vice President
and Portfolio Manager

The information provided in this letter by the portfolio managers represents the
opinion of the portfolio managers and is not intended to be a forecast of future
events, a guarantee of future results or investment advice. Views expressed are
those of the portfolio managers and may differ from those of other portfolio
managers or of the firm as a whole. Furthermore, there is no assurance that
certain securities will remain in or out of the Fund or that the percentage of
the Fund's assets in various sectors will remain the same. Please refer to pages
6 through 8 for a list and percentage breakdown of the Fund's holdings. Also,
please note that any discussion of the Fund's holdings, the Fund's performance,
and the portfolio managers' views are as of August 31, 2002 and are subject to
change.

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Schedule of Investments
August 31, 2002

Face
Amount+ Security(a) Value
----------------------------------------------------------------------------------------------------

U.S. Government Agency and Obligation -- 7.9%
5,000,000 U.S. Treasury Notes, 4.375% due 8/15/12 (Cost -- $5,085,156) .. $ 5,085,156
-----------
Sovereign Bonds -- 82.1%
Argentina -- 3.1%
Republic of Argentina:
50 ARS 10.000% due 9/19/08 (b)...................................... 9
5,323,000 Due 4/10/05 (b) ............................................. 1,383,980
1,000,000 Zero coupon bond, Series E, due 10/15/03 .................... 605,000
-----------
1,988,989
-----------
Brazil -- 24.9%
Federal Republic of Brazil:
435,000 11.250% due 7/26/07.......................................... 305,587
3,300,000 11.500% due 3/12/08 ......................................... 2,297,625
1,050,000 9.375% due 4/7/08 ........................................... 640,500
4,275,000 14.500% due 10/15/09 ........................................ 3,259,687
12,525,000 12.000% due 4/15/10 ......................................... 8,235,188
327,000 12.250% due 3/6/30........................................... 191,295
1,729,412 NMB, Series L, 3.125% due 4/15/09 (c) ....................... 1,063,588
-----------
15,993,470
-----------
Bulgaria -- 4.8%
3,000,000 Republic of Bulgaria, 8.250% due 1/15/15 ...................... 3,101,250
-----------

Colombia -- 2.5%
Republic of Colombia:
1,750,000 11.750% due 2/25/20 ......................................... 1,561,875
100,000 8.375% due 2/15/27........................................... 68,000
-----------
1,629,875
-----------
Costa Rica -- 0.6%
350,000 Republic of Costa Rica, 9.995% due 8/1/20 (d).................. 394,625
-----------
Ecuador -- 7.4%
Republic of Ecuador:
700,000 12.000% due 11/15/12......................................... 406,000
9,562,000 6.000% due 8/15/30 (c) ...................................... 4,063,850
726,000 6.000% due 8/15/30 (c)(d).................................... 308,550
-----------
4,778,400
-----------
Mexico -- 5.0%
3,000,000 United Mexican States, 8.375% due 1/14/11 ..................... 3,217,500
-----------

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See Notes to Financial Statements.
Page 6

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Schedule of Investments (continued)
August 31, 2002

Face
Amount+ Security(a) Value
----------------------------------------------------------------------------------------------------

Peru -- 5.0%
Republic of Peru:
250,000 9.125% due 2/21/12........................................... $ 213,125
4,207,500 PDI Bond, 4.500% due 3/7/17 (c) ............................. 2,966,287
-----------
3,179,412
-----------
Philippines -- 0.8%
500,000 Republic of Philippines, 8.375% due 3/12/09.................... 508,425
-----------
Russia -- 18.7%
Russian Government:
6,450,000 12.750% due 6/24/28 ......................................... 7,764,187
6,025,000 5.000% due 3/31/30 (c) ...................................... 4,221,266
-----------
11,985,453
-----------
Turkey -- 5.1%
Republic of Turkey:
2,310,000 12.375% due 6/15/09 ......................................... 2,200,275
1,200,000 11.500% due 1/23/12 ......................................... 1,089,000
-----------
3,289,275
-----------
Uruguay -- 4.2%
Republic of Uruguay:
1,075,000 7.875% due 3/25/09 .......................................... 556,313
2,000,000 8.750% due 6/22/10 .......................................... 1,070,000
300,000 7.625% due 1/20/12........................................... 159,750
600,000 7.875% due 7/15/27........................................... 291,000
1,065,789 DCB, Series B, 2.875% due 2/19/07 (c)........................ 618,158
-----------
2,695,221
-----------
Total Sovereign Bonds (Cost -- $58,550,288).................... 52,761,895
-----------
Loan Participations (c)(e) -- 4.5%
3,197,025 Kingdom of Morocco, Tranche A, 2.5625% due 1/2/09
(CS First Boston Corp., J.P. Morgan Chase & Co.)
(Cost -- $2,921,075)......................................... 2,901,300
-----------
Corporate Bonds -- 4.5%
Mexico -- 4.5%

PEMEX Project Funding Master Trust:
1,500,000 9.125% due 10/13/10 ......................................... 1,623,750
1,250,000 8.000% due 11/15/11 ......................................... 1,268,750
-----------
Total Corporate Bonds (Cost -- $2,843,524)..................... 2,892,500
-----------

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See Notes to Financial Statements.
Page 7

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Schedule of Investments (continued)
August 31, 2002

Warrants Security(a) Value
----------------------------------------------------------------------------------------------------

Warrants (d)(f) -- 0.0%
500 Asia Pulp and Paper, Expire 3/15/05 (Cost -- $0)............... $ 5
-----------

Face
Amount
----------------
Repurchase Agreement -- 1.0%
$ 621,000 State Street Bank and Trust Co., 1.770% due 9/3/02; Proceeds at
maturity -- $621,122; (Fully collateralized by U.S. Treasury
Bonds, 8.125% due 8/15/19; Market value -- $635,539)
(Cost -- $621,000)........................................... 621,000
-----------
Total Investments -- 100% (Cost -- $70,021,043*)............... $64,261,856
===========

-------------
+ Principal denominated in U.S. dollars unless otherwise indicated.

(a) All securities are segregated as collateral pursuant to a loan agreement.

(b) Security is currently in default.

(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers.

(e) Participation interests were acquired through the financial institutions
indicated parenthetically.

(f) Non-income producing security.

* Aggregate cost for Federal income tax purposes is substantially the same.

Abbreviations used in this schedule:
------------------------------------
ARS -- Argentina Peso.
DCB -- Debt Conversion Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.

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See Notes to Financial Statements.
Page 8

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Statement of Assets and Liabilities
August 31, 2002

ASSETS:
Investments, at value (Cost -- $70,021,043)........................................ $64,261,856
Foreign currency, at value (Cost -- $27,622)....................................... 7,613
Cash............................................................................... 771
Receivable for securities sold..................................................... 7,307,788
Interest receivable................................................................ 1,829,633
Receivable from manager............................................................ 39,452
Prepaid expenses................................................................... 13,172
-----------
Total Assets....................................................................... 73,460,285
-----------

LIABILITIES:
Loan payable (Note 4).............................................................. 20,000,000
Payable for securities purchased................................................... 5,097,639
Loan interest payable.............................................................. 105,561
Management fee payable ............................................................ 25,940
Advisory fee payable .............................................................. 18,529
Accrued expenses................................................................... 164,042
-----------
Total Liabilities.................................................................. 25,411,711
-----------
Total Net Assets..................................................................... $48,048,574
===========

NET ASSETS:
Common stock ($0.001 par value, 100,000,000 shares authorized;
4,071,103 shares outstanding).................................................... $ 4,071
Capital paid in excess of par value ............................................... 56,343,077
Undistributed net investment income................................................ 329,425
Accumulated net realized loss from security transactions........................... (2,848,803)
Net unrealized depreciation of investments and foreign currencies.................. (5,779,196)
-----------
Total Net Assets..................................................................... $48,048,574
===========

Net Asset Value, per share ($48,048,574 / 4,071,103 shares).......................... $11.80
======

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See Notes to Financial Statements.
Page 9

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Statement of Operations
For the Year Ended August 31, 2002

INCOME:
Interest (includes amortization of net premium/discount of $1,448,397)............. $ 8,288,703
-----------

EXPENSES:
Interest expense (Note 4).......................................................... 739,669
Management fee (Note 2)............................................................ 360,043
Advisory fee (Note 2).............................................................. 257,173
Audit and legal.................................................................... 82,838
Custody............................................................................ 58,326
Shareholder communications......................................................... 51,910
Directors' fees ................................................................... 32,211
Listing fees....................................................................... 22,587
Loan fees.......................................................................... 17,785
Shareholder and system servicing fees.............................................. 15,339
Other............................................................................. 28,412
-----------
Total Expenses..................................................................... 1,666,293
Less: Reimbursement from investment manager....................................... (155,182)
-----------
Net Expenses....................................................................... 1,511,111
-----------
Net Investment Income................................................................ 6,777,592
-----------

REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND
FOREIGN CURRENCIES (NOTES 3 AND 9):
Realized Loss From:
Security transactions (excluding short-term securities).......................... (1,432,398)
Foreign currency transactions.................................................... (1,200)
-----------
Net Realized Loss.................................................................. (1,433,598)
-----------

Change in Net Unrealized Depreciation From:
Security transactions ........................................................... (3,157,971)
Foreign currency transactions.................................................... (20,075)
-----------
Decrease in Net Unrealized Depreciation............................................ (3,178,046)
-----------
Net Loss on Investments and Foreign Currencies ...................................... (4,611,644)
-----------
Increase in Net Assets From Operations .............................................. $ 2,165,948
===========

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See Notes to Financial Statements.
Page 10

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Statements of Changes in Net Assets
For the Years Ended August 31,

2002 2001
-----------------------------------------------------------------------------------------------------

OPERATIONS:
Net investment income............................................. $ 6,777,592 $ 6,701,396
Net realized gain (loss).......................................... (1,433,598) 2,225,887
Decrease in net unrealized depreciation........................... (3,178,046) (6,675,414)
----------- -----------
Increase in Net Assets From Operations............................ 2,165,948 2,251,869
----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................. (6,689,090) (6,647,346)
----------- -----------
Decrease in Net Assets From Distributions to Shareholders......... (6,689,090) (6,647,346)
----------- -----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued on reinvestment of dividends
(28,215 and 22,128 shares issued, respectively)................ 362,926 291,491
----------- -----------
Increase in Net Assets From Capital Share Transactions............ 362,926 291,491
----------- -----------
Decrease in Net Assets.............................................. (4,160,216) (4,103,986)

NET ASSETS:
Beginning of year................................................. 52,208,790 56,312,776
----------- -----------
End of year*...................................................... $48,048,574 $52,208,790
=========== ===========
* Includes undistributed net investment income of:................. $329,425 $407,105
=========== ===========

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See Notes to Financial Statements.
Page 11

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Statement of Cash Flows
For the Year Ended August 31, 2002

CASH FLOWS PROVIDED BY (USED BY) OPERATING ACTIVITIES:
Purchases of long-term portfolio investments....................................... $(121,191,815)
Proceeds from disposition of long-term portfolio investments and principal paydowns 122,994,650
Net sales of short-term portfolio investments...................................... (64,356)
-------------
1,738,479

Net investment income.............................................................. 6,777,592
Accretion of discount on investments............................................... (1,473,640)
Amortization of premium on investments............................................. 25,243
Net change in receivables/payables related to operations........................... (547,225)
-------------
Net Cash Flows Provided by Operating Activities.................................... 6,520,449
-------------

CASH FLOWS PROVIDED BY (USED BY) FINANCING ACTIVITIES:
Cash dividends paid................................................................ (6,689,090)
Proceeds from reinvestment of dividends............................................ 362,926
-------------
Net Cash Flows Used by Financing Activities........................................ (6,326,164)
-------------

Net Increase in Cash................................................................. 194,285
Payable to bank, Beginning of year................................................... (185,901)
-------------
Cash, End of year.................................................................... $ 8,384
=============

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See Notes to Financial Statements.
Page 12

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements

Note 1. Organization and Significant Accounting Policies

The Emerging Markets Income Fund Inc ("Fund") was incorporated in Maryland on
July 30, 1992 and is registered as a non-diversified, closed-end, management
investment company under the Investment Company Act of 1940, as amended. The
Board of Directors authorized 100 million shares of $0.001 par value common
stock. The Fund's primary investment objective is to seek high current income.
As a secondary objective, the Fund seeks capital appreciation. In pursuit of
these objectives, the Fund under normal conditions invests at least 80% of its
net assets plus any borrowings for investment purposes in debt securities of
governments and government-related issuers located in emerging market countries
(including participations in loans between governments and financial
institutions), and of entities organized to restructure outstanding debt of such
issuers, and in debt securities if corporate issuers located in emerging market
countries.

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America ("GAAP"). The preparation of financial statements in
accordance with GAAP requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results may differ from those estimates.

(a) SECURITIES VALUATION. In valuing the Fund's assets, all securities and
options for which market quotations are readily available are valued (i) at the
last sale price prior to the time of determination if there was a sale on the
date of determination, (ii) at the mean between the last current bid and asked
price if there was no sales price on such date and bid and asked quotations are
available, and (iii) at the bid price if there was no sales price on such date
and only bid quotations are available. Publicly traded foreign government debt
securities are typically traded internationally in the over-the-counter market,
and are valued at the mean between the last current bid and asked price as of
the close of business of that market. However, where the spread between bid and
asked price exceeds five percent of the par value of the security, the security
is valued at the bid price. Securities may also be valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost, unless the Board of Directors determines that
such valuation does not constitute fair value. Securities for which reliable
quotations are not readily available and all other securities and assets are
valued at fair value as determined in good faith by, or under procedures
established by, the Board of Directors.

(b) SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on the trade date. Interest income is accrued on a daily basis.
Discount and premium on securities purchased is accreted and amortized on an
effective yield basis over the life of the security. The Fund uses the specific
identification method for determining realized gain or loss on investments sold.

(c) FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are
maintained in U.S. dollars. Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the date of valuation using the 12:00 noon rate of exchange

Page 13

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

reported by Reuters. Purchases and sales of portfolio securities and income and
expense items denominated in foreign currencies are translated into U.S. dollars
at rates of exchange prevailing on the respective dates of such transactions.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from sales and maturities of forward currency contracts,
disposition of foreign currencies, currency gains and losses realized between
the trade and settlement dates on securities transactions and the difference
between the amount of income accrued and the U.S. dollar equivalent amount
actually received. The Fund does not isolate that portion of gains and losses on
investments which is due to changes in foreign exchange rates from that which is
due to changes in market prices of the securities. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
However, pursuant to U.S. federal income tax regulations, certain net foreign
exchange gains/losses included in realized gain/loss are included in or are a
reduction of ordinary income for federal income tax purposes.

(d) FEDERAL INCOME TAXES. It is the Fund's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income and capital
gains, if any, to its shareholders. Therefore, no federal income tax or excise
tax provision is required.

(e) REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Fund's policy to take possession, through its custodian, of the underlying
collateral and to monitor its value at the time the arrangement is entered into
and during the term of the repurchase agreement to ensure that it equals or
exceeds the repurchase price. In the event of default of the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. Under certain circumstances, in the
event of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral may be subject to legal proceedings.

(f) DISTRIBUTION OF INCOME AND GAINS. The Fund declares and pays dividends to
shareholders quarterly from net investment income. Net realized gains, if any,
in excess of loss carryovers are expected to be distributed annually. Dividends
and distributions to shareholders are recorded on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with federal income tax regulations,
which may differ from GAAP due primarily to differences in the treatment of
foreign currency gains/losses and deferral of wash sales and post-October losses
incurred by the Fund. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal income tax basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for tax purposes are reported as tax return of
capital.

(g) FORWARD FOREIGN CURRENCY CONTRACTS. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The contract is

Page 14

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

marked-to-market to reflect the change in the currency exchange rate. The change
in market value is recorded by the Fund as an unrealized gain or loss. The Fund
records a realized gain or loss on delivery of the currency or at the time the
forward foreign currency contract is extinguished (compensated) by entering into
a closing transaction prior to delivery. This gain or loss, if any, is included
in net realized gain (loss) on foreign currency transactions.

(h) OPTION CONTRACTS. When the Fund writes or purchases a call or a put option,
an amount equal to the premium received or paid by the Fund is recorded as a
liability or asset, the value of which is marked-to-market to reflect the
current market value of the option. When the option expires, the Fund realizes a
gain or loss equal to the amount of the premium received or paid. When the Fund
enters into a closing transaction by purchasing or selling an offsetting option,
it realizes a gain or loss without regard to any unrealized gain or loss on the
underlying security. When a written call option is exercised, the Fund realizes
a gain or loss from the sale of the underlying security and the proceeds from
such sale are increased by the premium originally received on the option. If a
written put option is exercised, the amount of the premium received reduces the
cost of the security that the Fund purchased upon exercise of the option.

(i) CASH FLOW INFORMATION. The Fund invests in securities and distributes
dividends from net investment income and net realized gains from investment
transactions which are paid in cash. These activities are reported in the
Statement of Changes in Net Assets. Additional information on cash receipts and
cash payments is presented in the Statement of Cash Flows. For the year ended
August 31, 2002, the Fund paid interest expense of $669,950.

(j) YEAR END TAX RECLASSIFICATIONS. The character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from GAAP. At August 31, 2002, reclassifications were made to the capital
accounts of the Fund to reflect permanent book/tax differences and income and
gains available for distributions under income tax regulations. Net investment
income, net realized loss and net assets were not affected by this change.

(k) CHANGE IN ACCOUNTING POLICY. In November 2000, the American Institute of
Certified Public Accountants ("AICPA") issued a revised version of the AICPA
Audit and Accounting Guide for Investment Companies ("Guide"). This revised
version is effective for financial statements issued for fiscal years beginning
after December 15, 2000. The revised Guide requires the Fund to amortize premium
and accrete all discounts on all fixed-income securities. The Fund adopted this
requirement September 1, 2001. This change does not affect the Fund's net asset
value, but does change the classification of certain amounts in the statement of
operations. For the year ended August 31, 2002, interest income decreased by
$25,243, net realized loss decreased by $15,389 and the change in net unrealized
depreciation of investments decreased by $9,854. In addition, the Fund recorded
adjustments to decrease the cost of securities and decrease accumulated
undistributed net investment income by $3,040 to reflect the cumulative effect
of this change up to the date of the adoption.

Page 15

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

Note 2. Management and Advisory Fees and Other Transactions

The Fund has entered into a management agreement with Salomon Brothers Asset
Management Inc ("Investment Manager"), a wholly owned subsidiary of Salomon
Smith Barney Holdings Inc., which is a subsidiary of Citigroup Inc.
("Citigroup"). The Investment Manager is responsible for the day-to-day
management of the Fund's investment portfolio as well as providing certain
clerical services relating to the Fund's operations, maintenance of the Fund's
records, preparation of reports and supervision of the Fund's arrangements with
its custodian and transfer and dividend paying agent. The management fee for
these services is payable monthly at an annual rate of 0.70% of the Fund's
average weekly net assets.

The Fund has also entered into an investment advisory agreement with PIMCO Funds
Advisors LLC ("Investment Advisor"), an indirect wholly-owned subsidiary of
Allianz Dresdner Asset Management of America L.P., formerly known as
PIMCOAdvisors L.P., a wholly-owned subsidiary of Allianz AG, to provide
financial, economic and political advice concerning emerging market countries
and also, as appropriate, to be involved in aiding the process of emerging
market country selection. The advisory fee for these services is payable monthly
at an annual rate of 0.50% of the Fund's average weekly net assets.

On November 27, 2000, the Management Agreement ("Management Agreement") between
the Fund and the Investment Manager terminated because the Investment Manager
inadvertently did not schedule the approval of the continuation of the Agreement
for action by the Board of Directors. On December 3, 2001 the Board of Directors
unanimously approved a new ManagementAgreement identical in terms to the
agreement that terminated, except for the effective date and certain
non-material changes. Stockholders of the Fund approved the new Management
Agreement on February 1, 2002. In addition, at the same Board and stockholder
meetings, the Board and Stockholders approved the retention by, and
reimbursement to, the Investment Manager of its costs incurred in connection
with the services it rendered to the Fund for the period November 28, 2000 until
February 1, 2002. As a result, the Fund was reimbursed $155,182 for management
fees paid in excess of the costs incurred by the Investment Manager during the
period.

At August 31, 2002, the Investment Manager owned 5,562 shares of the Fund.
Certain officers and/or directors of the Fund are officers and/or directors of
the Investment Manager or the Investment Adviser.

All officers and one director of the Fund are employees of the Investment
Manager and/or the Investment Adviser.

Note 3. Portfolio Activity

For the year ended August 31, 2002, the aggregate cost of purchases and proceeds
from sales of investments (including maturities, but excluding short-term
securities) were as follows:

Purchases ..................................................... $123,360,581
============
Sales ......................................................... $113,430,540
============

Page 16

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

At August 31, 2002, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:

Gross unrealized appreciation .................................. $ 665,461
Gross unrealized depreciation .................................. (6,424,648)
------------
Net unrealized depreciation .................................... $ (5,759,187)
============

Note 4. Loan

The Fund had outstanding a $20,000,000 loan pursuant to a secured loan agreement
with ING Barings (U.S.) Capital LLC which matured on November 20, 2001.

At August 31, 2002, the Fund had a $23,000,000 loan available pursuant to a
revolving credit and security agreement of which the Fund had $20,000,000
outstanding with CXC LLC, an affiliate of Citigroup, a commercial paper conduit
issuer for which Citicorp North America, Inc., an affiliate of the Investment
Manager, acts as administrative agent. The loans generally bear interest at a
variable rate based on the weighted average interest rates of the underlying
commercial paper or LIBOR, plus any applicable margin. Securities held by the
Fund are subject to a lien, granted to the lenders, to the extent of the
borrowing outstanding and any additional expenses.

Note 5. Loan Participations/Assignments

The Fund invests in fixed and floating rate loans arranged through private
negotiations between a foreign sovereign entity and one or more financial
institutions ("lenders"). The Fund's investment in any such loan may be in the
form of a participation in or an assignment of the loan. At August 31, 2002, the
total market value of the Fund's loan participations was $2,901,300.

In connection with purchasing loan participations, the Fund generally will have
no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not benefit directly from any collateral supporting the loan in
which it has purchased the participation. As a result, the Fund will assume the
credit risk of both the borrower and the lender that is selling the
participation. In the event of the insolvency of the lender selling the
participation, the Fund may be treated as a general creditor of the lender and
may not benefit from any set-off between the lender and the borrower.

When the Fund purchases assignments from lenders, the Fund will acquire direct
rights against the borrower on the loan, except that under certain circumstances
such rights may be more limited than those held by the assigning lender.

Note 6. "When and If" Issued Bonds

"When and if" issued bonds are recorded as investments in the Fund's portfolio
and marked-to-market to reflect the current value of the bonds. When the Fund
sells a "when and if" issued bond, an unrealized gain or loss is recorded equal
to the difference between the selling price and purchase

Page 17

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

cost of the bond. Settlement of trades (i.e., receipt and delivery) of the "when
and if" issued bond is contingent upon the successful issuance of such bond. In
the event its sponsor is unable to successfully issue the security, all trades
in "when and if" issued bonds become null and void, and, accordingly, the Fund
will reverse any gain or loss recorded on such transactions.

At August 31, 2002, the Fund did not hold any "when and if" issued bonds.

Note 7. Credit and Market Risk

The yields of emerging market debt obligations reflect, among other things,
perceived credit risk. The Fund's investment in securities rated below
investment grade typically involves risks not associated with higher rated
securities including, among others, overall greater risk of timely and ultimate
payment of interest and principal, greater market price volatility and less
liquid secondary market trading. The consequences of political, social, economic
or diplomatic changes may have disruptive effects on the market prices of
investments held by the Fund. The Fund's investment in non-dollar-denominated
securities may also result in foreign currency losses caused by devaluations and
exchange rate fluctuations. At August 31, 2002, the Fund has a concentration of
risk in sovereign debt of emerging market countries.

The net asset value and/or market value per share of the Fund could be
negatively affected if the Fund were required to liquidate assets in other than
an orderly manner and/or in adverse market conditions to repay any bank loans
outstanding.

Note 8. Option Contracts

The Fund may from time to time enter into option contracts. Premiums paid when
put or call options are purchased by the Fund, represent investments, which are
marked-to-market daily. When a purchased option expires, the Fund will realize a
loss in the amount of the premium paid. When the Fund enters into a closing
sales transaction, the Fund will realize a gain or loss depending on whether the
proceeds from the closing sales transaction are greater or less than the premium
paid for the option. When the Fund exercises a put option, it will realize a
gain or loss from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid. When the Fund exercises a
call option, the cost of the security which the Fund purchases upon exercise
will be increased by the premium originally paid.

At August 31, 2002, the Fund did not hold any purchased call or put option
contracts.

When the Fund writes a call or put option, an amount equal to the premium
received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain
equal to the amount of the premium received.

When the Fund enters into a closing purchase transaction, the Fund realizes a
gain or loss depending upon whether the cost of the closing transaction is
greater or less than the premium originally received, without regard to any
unrealized gain or loss on the underlying security, and the

Page 18

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

liability related to such option is eliminated. When a written call option is
exercised the proceeds of the security sold will be increased by the premium
originally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the Fund
purchased upon exercise. When written index options are exercised, settlement is
made in cash.

The Fund enters into options for hedging purposes. The risk associated with
purchasing options is limited to the premium originally paid. The risk in
writing a covered call option is that the Fund gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a put option is that the Fund is exposed to
the risk of loss if the market price of the underlying security declines.

For the year ended August 31, 2002, the Fund did not enter into any written
covered call or put option contracts.

Note 9. Forward Foreign Currency Contracts

The Fund enters into forward foreign currency contracts to facilitate settlement
of foreign currency denominated portfolio transactions or to manage foreign
currency exposure associated with foreign currency denominated securities.
Forward foreign currency contracts involve elements of market risk in excess of
the amount reflected in the Statement of Assets and Liabilities. The Fund bears
the risk of an unfavorable change in the foreign exchange rate underlying the
forward foreign currency contract. Risks may also arise upon entering into these
contracts from the potential inability of the counterparties to meet the terms
of their contracts.

At August 31, 2002, the Fund did not have any open forward foreign currency
contracts.

Note 10. Dividend Subsequent to August 31, 2002

On July 18, 2002, the Board of Directors of the Fund declared a common stock
dividend of $0.4125 per share from net investment income. The dividend was
payable on September 27, 2002 to shareholders of record September 17, 2002.

Note 11. Capital Loss Carryforward

At August 31, 2002, the Fund had, for Federal income tax purposes, a capital
loss carryforward of approximately $1,220,000, available to offset future
capital gains. To the extent that these carryforward losses are used to offset
capital gains, it is probable that any gains so offset will not be distributed.
The amount and expiration of the carryforwards are indicated below. Expiration
occurs on August 31 of the year indicated:

2007 2010
--------- ---------
Carryforward Amounts ....................... $1,163,000 $57,000

Page 19

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Notes to Financial Statements (continued)

Note 12. Subsequent Event

On October 22, 2002, PIMCO Funds Advisors LLC ("PIMCO Advisors") and Salomon
Brothers Asset Management Inc ("SBAM") reached an agreement for SBAM to acquire
the investment management and advisory business of PIMCO Advisors with respect
to the Fund. Upon the consummation of the transaction contemplated by the
agreement between PIMCO Advisors and SBAM, PIMCO Advisors will cease to act as
investment adviser to the Fund and SBAM will be responsible for all investment
management, advisory and administrative services to the Fund. The closing of the
transaction under the agreement between PIMCO Advisors and SBAM is subject to a
number of conditions, including stockholder approval of new advisory and
administration agreements.

The Board of Directors of the Fund has approved the continuation of the existing
investment advisory arrangements with PIMCO Advisors and SBAM for the Fund until
the earlier of the closing of the transaction under the agreement between PIMCO
Advisors and SBAM or October 31, 2003. In addition, the Board of Directors of
the Fund has approved a new investment advisory and administration agreement
between the Fund and SBAM. Under the new agreement, the aggregate advisory fees
payable by the Fund will be reduced. The new agreement will be submitted for
stockholder approval at the Annual Meeting to be held on or about December 11,
2002.

Page 20

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Financial Highlights

Data for a share of common stock outstanding throughout the year ended August
31, unless otherwise noted:

2002(1) 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------

Net Asset Value, Beginning of Year..... $12.91 $14.01 $11.16 $ 7.83 $21.89
------ ------ ------ ------- ------
Income (Loss) From Operations:
Net investment income (2)........... 1.67 1.68 1.72 1.88 2.02
Net realized and unrealized gain (loss) (2) (1.13) (1.13) 2.78 3.83 (10.84)
------ ------ ------ ------- ------
Total Income (Loss) From Operations.... 0.54 0.55 4.50 5.71 (8.82)
------ ------ ------ ------- ------
Less Distributions From:
Net investment income............... (1.65) (1.65) (1.65) (2.41) (2.03)
Net realized gains.................. -- -- -- -- (2.98)
Capital............................. -- -- -- (0.02) --
Distributions in excess of net realized
capital gains....................... -- -- -- -- (0.23)
------ ------ ------ ------- ------
Total Distributions.................... (1.65) (1.65) (1.65) (2.43) (5.24)
------ ------ ------ ------- ------
Increase in Net Asset Value
Due to Shares Issued on
Reinvestment of Dividends........... -- -- -- 0.05 --
------ ------ ------ ------- ------
Net Asset Value, End of Year........... $11.80 $12.91 $14.01 $11.16 $ 7.83
====== ====== ====== ====== ======
Market Value, End of Year.............. $12.30 $13.15 $13.9375 $12.50 $ 9.50
====== ====== ======== ====== ======
Total Return, Based on Market
Price Per Share (3)................. 6.10% 7.14% 27.51% 62.97% (35.00)%
Ratios to Average Net Assets:
Total expenses, including interest
expense........................... 2.96% 4.76% 5.00% 5.03% 3.79%
Total expenses, excluding interest
expense (operating expenses)...... 1.51% 1.71% 1.73% 1.85% 1.73%
Net investment income (2)........... 13.24% 12.87% 13.33% 18.13% 11.56%
Supplemental Data:
Net assets, end of year (000s)...... $48,049 $52,209 $56,313 $44,377 $29,523
Portfolio turnover rate ............ 168% 195% 136% 87% 141%
Loan outstanding, end of year (000s) $20,000 $20,000 $20,000 $20,000 $20,000
Weighted average loan (000s)........ $20,000 $20,000 $20,000 $20,000 $20,000
Weighted average interest rate on loans 3.70% 7.94% 8.26% 6.48% 6.44%
Before applicable reimbursement from SBAM,
net investment income per share and
expense ratios would have been:
Net investment income............... $1.63 -- -- -- --
Expense ratio, including interest
expense........................... 3.26% -- -- -- --
Expense ratio, excluding interest
expense (operating expenses)...... 1.81% -- -- -- --

-----------------------------------------------------------------------------------------------------------

(1) Per share amounts have been calculated using the monthly average shares
method.

(2) Without the adoption of the change in the accounting method discussed in
Note 1 to the financial statements, for the year ended August 31, 2002,
those amounts would have been $1.68, $1.14 and 13.29% for net investment
income, net realized and unrealized loss and ratio of net investment income
to average net assets, respectively. Per share, ratios and supplemental
data for the periods prior to September 1, 2001 have not been restated to
reflect this change in presentation.

(3) For the purpose of this calculation, dividends are assumed to be reinvested
at prices obtained under the Fund's dividend reinvestment plan and the
broker commission paid to purchase or sell a share is excluded.

Page 21

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Report of Independent Accountants

To the Board of Directors and Shareholders of
The Emerging Markets Income Fund Inc

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of The Emerging Markets
Income Fund Inc ("Fund") at August 31, 2002, the results of its operations and
cash flows for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at August 31, 2002 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
October 23, 2002

Page 22

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Additional Information (unaudited)

Information about Directors and Officers

The business and affairs of The Emerging Markets Income Fund Inc ("Fund") are
managed under the direction of the Board of Directors. Information pertaining to
the Directors and Officers of the Fund is set forth below.

Number of
Portfolios Advised
by SBAM,(2)
SBAM and PIMCO
Advisors,(3) and
PIMCO Advisors(4)
Term of Principal and Overseen by
Position(s) Office(1) and Occupation(s) Director Other
Held with Length of During Past (including Directorships
Name, Address, and Age Fund(1) Time Served 5 Years the Fund) Held by Director
----------------------------------------------------------------------------------------------------------

NON-INTERESTED
DIRECTORS:

Leslie H. Gelb Director and Since President, 4(2) Britannica.com;
The Council on Member of 1994 The Council on 6(3) Director of 2
Foreign Relations the Audit Foreign Relations; 0(4) registered
58 East 68th Street Committee, formerly, Columnist, investment
New York, NY 10021 Class I Deputy Editorial companies advised
Age 64 Page Editor and by Advantage
Editor, Op-Ed Page, Advisers, Inc.
The New York ("Advantage")
Times

Riordan Roett Director and Since Professor and 4(2) The Latin America
The Johns Hopkins University Member of 1995 Director, Latin 6(3) Equity Fund, Inc.
1740 Massachusetts Ave. NW the Audit America Studies 0(4)
Washington, DC 20036 Committee, Program, Paul H.
Age 63 Class I Nitze School of
Advanced
International
Studies, The Johns
Hopkins University

Jeswald W. Salacuse Director and Since Henry J. Braker 4(2) Director of 2
Tufts University Member of 1994 Professor of 6(3) registered
The Fletcher School of Law the Audit Commercial Law 1(4) investment
& Diplomacy Committee, and formerly Dean, companies advised
Packard Avenue Class II The Fletcher by Advantage
Medford, MA 02155 School of Law &
Age 64 Diplomacy, Tufts
University

Page 23

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Additional Information (unaudited) (continued)

INTERESTED DIRECTORS:

R. Jay Gerken Director and Since Managing Director 184(2) None
Salomon Smith Barney Inc. Co-Chairman, 2002 of Salomon Smith 6(3)
125 Broad Street, 9th Floor Class II Barney Inc. ("SSB") 0(4)
New York, NY 10004
Age 51

Stephen Treadway Director and Since Managing Director of 0(2) None
PIMCO Funds Co-Chairman, 2000 Allianz Dresdner 6(3)
Distributors LLC Class III Asset Management 56(4)
2187 Atlantic Street, Suite 100 of America L.P.
Stamford, CT 06902 ("ADAMA") (formerly,
Age 54 PIMCO Advisors L.P.);
Managing Director
and Chief Executive
Officer of PIMCO
Funds Distributors
LLC ("PFD") since
May 1996; Managing
Director and Chief
Executive Officer,
PIMCO Advisors

OFFICERS:

Peter J. Wilby President Since Managing Director N/A N/A
SSB 2002 of SSB and Salomon
388 Greenwich Street Brothers Asset
New York, NY 10013 Executive Vice 1994- Management Inc.
Age 43 President 2002 ("SBAM") since
January 1996

Lewis E. Daidone Executive Vice Since Managing Director N/A N/A
SSB President and 2002 of SSB; Chief
125 Broad Street, 11th Floor Chief Financial Officer of
New York, NY 10004 Administrative the Smith Barney
Age 44 Officer Mutual Funds;
Director and Senior
Treasurer Since Vice President of
1998- Smith Barney Fund
2002 Management LLC
("SBFM") and
Travelers Investment
Adviser, Inc. ("TIA")

Page 24

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Additional Information (unaudited) (continued)

Irving P. David Chief Financial Since Director of SSB N/A N/A
SSB Officer and 2002
125 Broad Street, 10th Floor Treasurer
New York, NY 10004
Age 41 Controller Since
May-July
2002

James E. Craige Executive Vice Since Managing Director N/A N/A
SSB President 1999 of SSB and SBAM
388 Greenwich Street since December
New York, NY 10013 1998; Director of
Age 34 SSB and SBAM
since January 1998
and Vice President
of SSB and SBAM
from May 1992 to
January 1998

Thomas K. Flanagan Executive Vice Since Managing Director N/A N/A
SSB President 1994 of SSB and SBAM
388 Greenwich Street since December 1998;
New York, NY 10013 Prior to December
Age 49 1998, Director of
SSB and SBAM

Newton B. Schott, Jr. Executive Vice Since Chief N/A N/A
PFD President 1997 Administrative
2187 Atlantic Street, Suite 100 Officer, Managing
Stamford, CT 06902 Director and General
Age 60 Counsel of PFD and
Managing Director
and Chief Legal
Officer of
PIMCO Advisors

Brian S. Shlissel Executive Since Senior Vice N/A N/A
PIMCO Funds Advisors LLC Vice President 2002 President of ADAMA
1345 Avenue of the Americas since July 1999; Vice
New York, NY 10105 President of Mitchell
Age 37 Hutchins Asset
Management
(1993-1999)

Page 25

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Additional Information (unaudited) (continued)

Frances M. Guggino Controller Since Vice President, N/A N/A
Citibank, NA 2002 Citibank, NA
125 Broad Street, 10th Floor
New York, NY 10004
Age 40

Christina T. Sydor Secretary Since Managing Director N/A N/A
SSB 1998 of SSB; General
300 First Stamford Place Counsel and
Stamford, CT 06902 Secretary of
Age 51 SBFM and TIA

-------------------------------------------------------------------------------------------------------------

(1) The Fund's Board of Directors is divided into three classes: Class I, Class
II and Class III. The terms of office of the Class I, II and III Directors
expire at the Annual Meetings of Stockholders in the year 2004, year 2002
and year 2003, respectively, or thereafter in each case when their
respective successors are duly elected and qualified. The Fund's executive
officers are chosen each year at the first meeting of the Fund's Board of
Directors following the Annual Meeting of Stockholders, to hold office
until the meeting of the Board following the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified.

(2) Number of portfolios advised by SBAM or affiliates of SBAM.

(3) Number of portfolios advised by both SBAM or affiliates of SBAM and PIMCO
Funds Advisors LLC ("PIMCO Advisors") or affiliates of PIMCO Advisors.

(4) Number of portfolios advised by PIMCO Advisors or affiliates of PIMCO
Advisors.

Page 26

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Form of Terms and Conditions of Amended and Restated Dividend Reinvestment and
Cash Purchase Plan (unaudited)

Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosure is provided.

Each shareholder holding shares of common stock ("Shares") of The Emerging
Markets Income Fund Inc ("Fund") will be deemed to have elected to be a
participant in the Amended and Restated Dividend Reinvestment and Cash Purchase
Plan ("Plan"), unless the shareholder specifically elects in writing (addressed
to the Agent at the address below or to any nominee who holds Shares for the
shareholder in its name) to receive all income dividends and distributions of
capital gains in cash, paid by check, mailed directly to the record holder by or
under the direction of American Stock Transfer & Trust Company as the Fund's
dividend-paying agent ("Agent"). A shareholder whose Shares are held in the name
of a broker or nominee who does not provide an automatic reinvestment service
may be required to take such Shares out of "street name" and register such
Shares in the shareholder's name in order to participate, otherwise dividends
and distributions will be paid in cash to such shareholder by the broker or
nominee. Each participant in the Plan is referred to herein as a "Participant."
The Agent will act as Agent for each Participant, and will open accounts for
each Participant under the Plan in the same name as their Shares are registered.

Unless the Fund declares a dividend or distribution payable only in the form of
cash, the Agent will apply all dividends and distributions in the manner set
forth below.

If, on the determination date, the market price per Share equals or exceeds the
net asset value per Share on that date (such condition, a "market premium"), the
Agent will receive the dividend or distribution in newly issued Shares of the
Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a "market
discount"), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a "Trading Day") preceding the
payment date for the dividend or distribution. For purposes herein, "market
price" will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.

Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided, however, that such purchases
will, in any event, terminate on the earlier of (i) 60 days after the dividend
or distribution payment date and (ii) the Trading Day prior to the "ex-dividend"
date next succeeding the dividend or distribution payment date.

Page 27

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Form of Terms and Conditions of Amended and Restated Dividend Reinvestment and
Cash Purchase Plan (unaudited) (continued)

If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or (ii) a market discount shifts to a market premium
during the purchase period, then the Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued Shares (x) in the case of (i) above, at the close of business on
the date the Agent is required to terminate making open-market purchases as
specified in paragraph 4 above or (y) in the case of (ii) above, at the close of
business on the date such shift occurs; but in no event prior to the payment
date for the dividend or distribution.

In the event that all or part of a dividend or distribution amount is to be paid
in newly issued Shares, such Shares will be issued to Participants in accordance
with the following formula: (i) if, on the valuation date, the net asset value
per Share is less than or equal to the market price per Share, then the newly
issued Shares will be valued at net asset value per Share on the valuation date;
provided, however, that if the net asset value is less than 95% of the market
price on the valuation date, then such Shares will be issued at 95% of the
market price and (ii) if, on the valuation date, the net asset value per Share
is greater than the market price per Share, then the newly issued Shares will be
issued at the market price on the valuation date. The valuation date will be the
dividend or distribution payment date, except that with respect to Shares issued
pursuant to paragraph 5 above, the valuation date will be the date such Shares
are issued. If a date that would otherwise be a valuation date is not a Trading
Day, the valuation date will be the next preceding Trading Day.

Participants have the option of making additional cash payments to the Agent,
monthly, in a minimum amount of $250, for investment in Shares. The Agent will
use all such funds received from Participants to purchase Shares in the open
market on or about the first business day of each month. To avoid unnecessary
cash accumulations, and also to allow ample time for receipt and processing by
the Agent, Participants should send in voluntary cash payments to be received by
the Agent approximately 10 days before an applicable purchase date specified
above. A Participant may withdraw a voluntary cash payment by written notice, if
the notice is received by the Agent not less than 48 hours before such payment
is to be invested.

Purchases by the Agent pursuant to paragraphs 4 and 7 above may be made on any
securities exchange on which the Shares are traded, in the over-the-counter
market or in negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Agent shall determine. Funds held by the Agent
uninvested will not bear interest, and it is understood that, in any event, the
Agent shall have no liability in connection with any inability to purchase
Shares within the time periods herein provided, or with the timing of any
purchases effected. The Agent shall have no responsibility as to the value of
the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price

Page 28

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Form of Terms and Conditions of Amended and Restated Dividend Reinvestment
and Cash Purchase Plan (unaudited) (continued)

per Share allocable to each Participant in connection with such purchases shall
be the average price (including brokerage commissions) of all Shares purchased
by the Agent.

The Agent will maintain all Participants' accounts in the Plan and will furnish
written confirmations of all transactions in each account, including information
needed by Participants for personal and tax records. The Agent will hold Shares
acquired pursuant to the Plan in noncertificated form in the Participant's name
or that of its nominee, and each Participant's proxy will include those Shares
purchased pursuant to the Plan. The Agent will forward to Participants any proxy
solicitation material and will vote any Shares so held for Participants only in
accordance with the proxy returned by Participants to the Fund. Upon written
request, the Agent will deliver to Participants, without charge, a certificate
or certificates for the full Shares.

The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants may from time to time have an undivided
fractional interest (computed to three decimal places) in a Share of the Fund,
no certificates for fractional shares will be issued. Dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's Shares at the time of termination less the pro rata
expense of any sale required to make such an adjustment.

Any share dividends or split shares distributed by the Fund on Shares held by
the Agent for Participants will be credited to their respective accounts. In the
event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.

The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.

Participants may terminate their accounts under the Plan by notifying the Agent
in writing. Such termination will be effective immediately if notice is received
by the Agent not less than 10 days prior to any dividend or distribution record
date; otherwise such termination will be effective on the first Trading Day
after the payment date for such dividend or distribution with respect to any
subsequent dividend or distribution. The Plan may be amended or terminated by
the Fund as applied to any voluntary cash payments made and any income dividend
or capital gains distribution paid subsequent to written notice of the change or
termination sent to Participants at least 30 days prior to the record date for
the income dividend or capital gains distribution. The Plan may be

Page 29

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Form of Terms and Conditions of Amended and Restated Dividend Reinvestment and
Cash Purchase Plan (unaudited) (continued)

amended or terminated by the Agent, with the Fund's prior written consent, on at
least 30 days' written notice to Participants. Notwithstanding the preceding two
sentences, the Agent or the Fund may amend or supplement the Plan at any time or
times when necessary or appropriate to comply with applicable law or rules or
policies of the Securities and Exchange Commission or any other regulatory
authority. Upon any termination, the Agent will cause a certificate or
certificates for the full Shares held by each Participant under the Plan and
cash adjustment for any fraction to be delivered to each Participant without
charge. If the Participant elects by notice to the Agent in writing in advance
of such termination to have the Agent sell part or all of a Participant's Shares
and remit the proceeds to the Participant, the Agent is authorized to deduct a
$2.50 fee plus brokerage commission for this transaction from the proceeds.

Any amendment or supplement shall be deemed to be accepted by each Participant
unless, prior to the effective date thereof, the Agent receives written notice
of the termination of the Participant's account under the Plan. Any such
amendment may include an appointment by the Agent in its place and stead of a
successor Agent under these terms and conditions, with full power and authority
to perform all or any of the acts to be performed by the Agent under these terms
and conditions. Upon any such appointment of an Agent for the purpose of
receiving dividends and distributions, the Fund will be authorized to pay to
such successor Agent, for each Participant's account, all dividends and
distributions payable on Shares of the Fund held in each Participant's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.

In the case of Participants, such as banks, broker-dealers or other nominees,
which hold Shares for others who are beneficial owners ("Nominee Holders"), the
Agent will administer the Plan on the basis of the number of Shares certified
from time to time by each Nominee Holder as representing the total amount
registered in the Nominee Holder's name and held for the account of beneficial
owners who are to participate in the Plan.

The Agent shall at all times act in good faith and use its best efforts within
reasonable limits to insure the accuracy of all services performed under this
Agreement and to comply with applicable law, but assumes no responsibility and
shall not be liable for loss or damage due to errors unless such error is caused
by its negligence, bad faith, or willful misconduct or that of its employees.

All correspondence concerning the Plan should be directed to the Agent at 59
Maiden Lane, New York, New York 10038.

-------------------------

The report is transmitted to the shareholders of the Fund for their information.
This is not a prospectus, circular or representation intended for use in the
purchase of shares of the Fund or any securities mentioned in this report.

Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.

Page 30

T H E E M E R G I N G M A R K E T S I N C O M E F U N D I N C

Directors The Emerging Markets Income Fund Inc
LESLIE H. GELB 125 Broad Street
President, The Council 10th Floor, MF-2
on Foreign Relations New York, New York 10004
R. JAY GERKEN Telephone 1-888-777-0102
Co-Chairman of the Board;
Managing Director, Salomon INVESTMENT MANAGER
Smith Barney Inc. Salomon Brothers Asset Management Inc
RIORDAN ROETT 388 Greenwich Street
Professor and Director, New York, New York 10013
Latin American Studies Program,
Paul H. Nitze School of Advanced INVESTMENT ADVISER
International Studies, PIMCO Funds Advisors LLC
The Johns Hopkins University 1345 Avenue of the Americas
JESWALD W. SALACUSE New York, New York 10105
Henry J. Braker Professor of
Commercial Law and formerly Dean, CUSTODIAN
The Fletcher School of Law & Diplomacy, State Street Bank and Trust Company
Tufts University 225 Franklin Street
STEPHEN TREADWAY Boston, Massachusetts 02110
Co-Chairman of the Board;
Managing Director, Allianz Dresdner DIVIDEND DISBURSING AND TRANSFER AGENT
Asset Management of America L.P. American Stock Transfer & Trust Company
Managing Director and 59 Maiden Lane
Chief Executive Officer, New York, New York 10038
PIMCO Funds Distributors LLC
INDEPENDENT ACCOUNTANTS
CHARLES F. BARBER, Emeritus PricewaterhouseCoopers LLP
Consultant; formerly Chairman, 1177 Avenue of the Americas
ASARCO Inc. New York, New York 10036

Officers LEGAL COUNSEL
R. JAY GERKEN Simpson Thacher & Bartlett
Co-Chairman of the Board 425 Lexington Avenue
STEPHEN TREADWAY New York, New York 10017
Co-Chairman of the Board
PETER J. WILBY NEW YORK STOCK EXCHANGE SYMBOL
President EMD
LEWIS E. DAIDONE
Executive Vice President and
Chief Administrative Officer
IRVING P. DAVID
Chief Financial Officer and Treasurer
JAMES E. CRAIGE
Executive Vice President
THOMAS K. FLANAGAN
Executive Vice President
NEWTON B. SCHOTT, JR.
Executive Vice President
BRIAN S. SHLISSEL
Executive Vice President
FRANCES M. GUGGINO
Controller
CHRISTINA T. SYDOR
Secretary

The Emerging Markets
Income Fund Inc

Annual Report
August 31, 2002

[Graphic]

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Salomon Brothers Asset Management
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American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
FIRST-CLASS MAIL
U.S. POSTAGE
PAID
BROOKLYN, NY
PERMIT No. 1726

EMDANN 8/02
02-3983