<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY
EMERGING MARKETS
DEBT FUND, INC.
- --------------------------------------------------------------------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1998
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
MORGAN STANLEY
EMERGING MARKETS DEBT FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Valerie Y. Lewis
SECRETARY
Joanna M. Haigney
TREASURER
Belinda A. Brady
ASSISTANT TREASURER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(800) 730-6001
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10168
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the nine months ended September 30, 1998, the Morgan Stanley Emerging
Markets Debt Fund, Inc. (the "Fund") had a total return, based on net asset
value per share, of -40.44% compared to -22.08% for the J.P. Morgan Emerging
Markets Bond Plus Index (the "Index"). For the one year ended September 30,
1998, and for the period since the Fund's commencement of operations on July
23, 1993 through September 30, 1998, the Fund's total return, based on net
asset value per share, was -44.39% and 39.77%, respectively, compared to
- -25.29% and 49.62%, respectively, for the Index. On September 30, 1998, the
closing price of the Fund's shares on the New York Stock Exchange was $7.50,
representing a 15.2% premium to the Fund's net asset value per share.
For the three months ended September 30, 1998 the Fund had a total return,
based on net asset value per share, of -38.89% compared to -21.23% for the
Index. The Index since January 1, 1998 is down -22.08% which highlights the
fact that the vast majority of the negative price action has occurred during
the third quarter.
In August, investor sensitivity to deteriorating credit fundamentals and a
worsened global environment for emerging countries reached a breakpoint and
precipitated the largest and broadest sell-off in emerging market debt
history. The sell-off transitioned from a focus on fundamentals to a
technically driven liquidation when Russia defaulted on its domestic debt
(ruble denominated T-bills) on August 17. The Russian restructuring forced
many market participants to sell non-Russian assets to meet margin calls,
thereby contaminating all emerging countries. Spreads on the broad emerging
market debt benchmark widened by 861 basis points during that month.
GLOBAL MARKET ENVIRONMENT
There have been several global events that have created a more precarious
investment environment over the course of this year.
Those events include:
- - The continued policy paralysis and deepening recession in Japan, which have
raised fears of currency devaluation in China, and a prolonged Asian
recession.
- - The collapse of the oil and commodity prices caused difficulty for several
emerging market countries particularly, Russia, Venezuela, Chile and
Ecuador.
- - The decline of the U.S. Equity markets this summer.
- - The decline of Emerging Markets Equity by over 38% year to date.
After having been underweight Russia in the spring, our investment strategy
included accumulating Russian debt in May and June because we felt the market
had overshot and was mispricing Russian risk. In retrospect, we underestimated
the risk associated with Russian assets. We had assigned a low probability to
the scenario in which Russia would devalue its currency and default on its
domestic debt. Much to our dismay, this scenario was played out.
From late July to mid-August the market sold off, due to both fundamental and
technical reasons. Hedge funds, trading desks and other leveraged market
participants were forced to liquidate to meet margin calls due to large losses
in ruble denominated debt.
As the prices for all Russian bonds fell (the Russian U.S. dollar debt bond
index returned -78% as of August 31, 1998 year to date), the Russian banks came
under considerable stress because of the decline in their asset portfolios and a
decrease in amount of funds available to them. On August 17, 1998, Russia
announced:
- - The ruble would float within a wider band (an effective devaluation).
- - The Russian domestic debt (GKO and OFZ's) which are scheduled to mature
before December 31, 1999 would be restructured.
- - A 90 day moratorium on payment of foreign debts held by major Russian
banks.
All of the Russian bonds owned by our Fund are denominated in U.S. dollars and
are not in default. They are also not subject to the short term debt moratorium
imposed in mid August and the Russian government has reiterated its intention to
continue to service its U.S. dollar denominated debt.
While the Russian debt owned by the Fund is not directly affected by the
devaluation of the ruble, the devaluation is a symptom of the poor health of the
Russian economy. The value of the U.S. dollar bonds fell dramatically in August
and are currently trading at distressed levels.
2
<PAGE>
Due to the events that occurred in the third quarter, we have had to reevaluate
our position in Russian debt and have reduced the Russian weighting in the
portfolio to under 3%. The country has lost its economic anchor (stable
currency and low inflation) and these events have increased the scope for
political uncertainty. The change in leadership, which was announced on August
24, is evidence of the fragile political landscape. We expect both the
political and economic climate to remain worrisome in the near term. Russian
foreign exchange reserves are extremely low and they will likely rely on capital
controls to prevent a complete run on the ruble. The Russians will also have to
renegotiate the terms of their existing IMF agreement before receiving any
further money. We have also re-positioned the portfolio with higher quality
credits, such as Colombia and Panama and with uncorrellated credits such as
Turkey and Bulgaria.
RECENT EVENTS
In September, emerging debt markets rebounded smartly from August's dramatic
sell off. During the month, the market benefited from a slight increase in
commodity prices, a reduction in U.S. rates and most importantly from supportive
comments from members of the G7, the IMF and the World Bank, who expressed their
desire to stop economic chaos from spreading any further. These factors caused
the market to jump by almost 10% with Venezuela, Bulgaria and Morocco leading
the pack and Mexico, Brazil and Russia lagging. The market effectively
decoupled from events in Russia during September, as every country within the
Index posted positive results except Russia, which was down 23.81%. In the
Fund, an underweight in Venezuela, which rebounded by 34.05%, and an overweight
in corporate euro-bonds, which in general significantly underperformed sovereign
debt, hurt our Fund's performance for September.
Broadly speaking, corporate euro-bonds did not rally with sovereign debt in
September, as the dramatic sell-off in August raised the premium demanded by
investors for liquidity. Corporate securities which represent less than 15% of
the Fund are less liquid than sovereign securities. In addition, many of the
macro economic policies prescribed by the IMF to shore up fiscal imbalances,
such as tight monetary policy, decreased government expenditures and increased
taxes, would limit economic growth and adversely impact business conditions.
During September, Venezuela benefited from an increase in oil prices and a
decline in the lead held by the ex-coup leader Chavez in presidential
pre-election polls. Chavez has made frequent non-investor friendly statements
throughout his campaign and has openly discussed restructuring Venezuela's
external debt. While the market was relieved by a decrease in his lead, we
still view the political situation in Venezuela as too risky and remain
underweight.
OUTLOOK
Over the next few months, the ability of the asset class to enjoy a sustained
rally is largely in the hands of Brazil. We will be watching to see how quickly
and decisively the authorities act towards addressing fiscal imbalances and
securing multilateral aid. An aid package alone will not cure Brazil's
ailments. Any aid must be coupled with a significant fiscal adjustment, which
would include large spending cuts and structural reform. As would be imagined,
implementing large spending cuts is politically difficult. In addition, the
government must carefully manage its monetary policy to avoid a recession. We
will continue to underweight Brazil in this environment. There are no easy
answers for Brazil and we expect the road to recovery to be strewn with potholes
of disappointment. Without further clarity with regard to Brazil, the market's
upside potential will be limited. During the next quarter, the global backdrop
will likely remain problematic and liquidity for emerging market countries will
remain constrained. These factors coupled with year-end selling pressure should
cause volatility to remain high.
In a broad sense, we believe that Emerging Market Debt is still an attractive
asset class and are optimistic that over the long term, high absolute and
relative returns should be realized. We do not believe that many emerging
market countries will default on their external debt payments in the near term.
At current yield levels of close to 15% the market has priced in a higher
probability of default than we feel is warranted. There is no denying that the
fundamental environment has been damaging to many developing countries this
year. In fact, the vast majority of emerging countries have suffered a series
of setbacks such as, larger fiscal deficits, higher inflation rates and ratings
downgrades, after many years of structural reforms, mass privatizations and
stabilization efforts. However, we remain encouraged by the response of most
administrations to both internal and external shocks. In essence, crisis has
and will continue to force governments to make the hard adjustments that were
put off in easier times. In the medium term, we believe that investors should
be rewarded for investments in certain coun-
3
<PAGE>
tries that are trading at very attractive valuations due to the markets
indiscriminate sell off.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
October 1998
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED.
- -------------------------------------------------------------------------------
EFFECTIVE OCTOBER 1998, THOMAS L. BENNETT, STEPHEN F. ESSER AND ABIGAIL L.
MCKENNA HAVE ASSUMED PRIMARY RESPONSIBILITY FOR THE DAY-TO-DAY MANAGEMENT OF THE
FUND'S ASSETS. THOMAS L. BENNETT, A MANAGING DIRECTOR OF MORGAN STANLEY & CO.
INCORPORATED ("MS&CO"), JOINED MORGAN STANLEY ASSET MANAGEMENT ("MSAM") IN 1996
AND HAS BEEN A PORTFOLIO MANAGER WITH MSAM'S AFFILIATE, MILLER ANDERSON &
SHERRERD, LLP ("MAS") SINCE 1984. STEPHEN F. ESSER, A MANAGING DIRECTOR OF
MS&CO JOINED MSAM IN 1996 AND HAS BEEN A PORTFOLIO MANAGER WITH MAS SINCE 1988.
ABIGAIL L. MCKENNA JOINED MSAM IN 1996 AND IS A VICE PRESIDENT OF MSAM AND
MS&CO. PRIOR TO JOINING MSAM, SHE WAS A SENIOR PORTFOLIO MANAGER AT MIMCO FROM
1995 TO 1996 AND A LIMITED PARTNER AT WEISS PECK & GREER FROM 1991 TO 1995,
WHERE SHE WAS RESPONSIBLE FOR THE TRADING AND MANAGEMENT OF CORPORATE BOND
PORTFOLIOS.
4
<PAGE>
Morgan Stanley Emerging Markets Debt Fund, Inc.
Investment Summary as of September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL TOTAL RETURN (%)
INFORMATION -------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
------------------------- ------------------------- -------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO DATE -32.12% -- -40.44% -- -22.08% --
ONE YEAR -31.57 -31.57% -44.39 -44.39% -25.29 -25.29%
SINCE INCEPTION* 61.02+ 9.61+ 39.77+ 6.66+ 49.62 8.07
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months
Ended
September 30,
1993* 1994 1995 1996 1997 1998
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share...... $ 18.96 $12.23 $12.40 $17.31 $15.21 $6.51
Market Value Per Share......... $ 18.13 $11.38 $12.50 $15.13 $15.38 $7.50
Premium/(Discount)............. -4.4% 7.0% 0.8% -12.6% 1.1% 15.2%
Income Dividends............... $ 0.16 $ 1.49 $ 1.72 $ 1.08 $ 1.27 $0.79
Capital Gains Distributions.... -- $ 0.41 -- -- $ 3.44 $2.94
Fund Total Return (2).......... 35.96% -25.95% 26.85%+ 50.98% 21.71% 40.44%
Index Total Return (3)......... 18.67% -18.93% 26.77% 39.31% 13.02% -22.08%
</TABLE>
(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
shareholder'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 J.P. Morgan Emerging Markets Bond Plus Index is a total return index
tracking the traded U.S. Dollar denominated instruments in the emerging
markets. The index is composed of Brady Bonds, benchmark Eurobonds, loans,
and Argentina domestic debt. Because the J.P. Morgan Emerging Markets
Bond Plus Index was not available prior to January 1, 1994, the performance
of the J.P. Morgan Emerging Markets Bond Index is shown for the period July
23, 1993 to December 31, 1993, and used for purposes of computing
cumulative performance of the benchmark index for that period.
* The Fund commenced operations on July 23, 1993.
+ This return does not include the effect of the rights issued in connection
with the Rights Offering.
5
<PAGE>
Morgan Stanley Emerging Markets Debt Fund, Inc.
Portfolio Summary as of September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Debt Instruments (100.0%)
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[CHART]
<TABLE>
<S> <C>
Other (7.1%)
Jamaica (2.4%)
Turkey (2.4%)
Russia (2.8%)
Korea (3.5%)
Colombia (3.7%)
Panama (3.8%)
Bulgaria (5.5%)
Brazil (13.7%)
Argentina (30.0%)
Mexico (25.1%)
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
INVESTMENTS
-----------
<S> <C>
1. Ministry of Finance
11.75%, 6/10/03 (Russia) 8.4%
2. United Mexican States
11.50%, 5/15/26 (Mexico) 7.0
3. Federative Republic of Brazil 'C' Bond PIK
8.00%, 4/15/14 (Brazil) 6.7
4. Russia Principal Note, PIK
3.313%, 12/15/20 (Russia) 5.6
5. Federative Republic of Brazil 'EI-L' Bond
6.625%, 4/15/06 (Brazil) 5.6
6. Government of Jamaica
12.00%, 7/19/99 (Jamaica) 5.2
7. Salomon Brothers Federative Republic of
Brazil Credit Linked Enhanced Note
9.00%, 1/15/99 (Brazil) 4.8
8. Federative Republic of Brazil
9.375%, 4/7/08 (Brazil) 4.6
9. Republic of Argentina
6.625%, 3/31/05 (Argentina) 4.5
10. United Mexican States Global Bond
9.875%, 9/15/16 (Mexico) 4.0
-----
56.4%
-----
-----
</TABLE>
6
<PAGE>
FINANCIAL STATEMENTS
- --------
STATEMENT OF NET ASSETS (UNAUDITED)
(SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS)
- --------
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DEBT INSTRUMENTS (100.0%)
- --------------------------------------------------------------------------------
ARGENTINA (30.0%)
CORPORATE (7.8%)
(b)Acindar Industries
11.555%, 11/12/98 U.S.$ 1,750 U.S.$ 1,698
(a)CIA International Telecom
10.375%, 8/1/04 ARP 5,650 3,390
(a)Nortel Inversora 'A'
6.00%, 3/31/07 U.S.$ 7,434 4,506
(a)Supercanal Holdings S.A.
11.50%, 5/15/05 2,500 1,450
-----------------
11,044
-----------------
SOVEREIGN (22.2%)
(b)Republic of Argentina
6.188%, 3/31/05 18,943 14,989
Republic of Argentina Global Bond
11.375%, 1/30/17 8,050 7,410
(c)Republic of Argentina Par Bond 'L-GP'
5.75%, 3/31/23 13,000 8,767
-----------------
31,166
-----------------
42,210
-----------------
- --------------------------------------------------------------------------------
BRAZIL (13.7%)
CORPORATE (1.0%)
(a)Globopar
10.625%, 12/5/08 2,650 1,391
-----------------
SOVEREIGN (12.7%)
Federative Republic of Brazil
9.375%, 4/7/08 10,640 6,597
(b)Federative Republic of Brazil
'EI-L' Bond
6.625%, 4/15/06 11,747 6,784
(b)Federative Republic of Brazil
Debt Conversion 'L' Bond
6.688%, 4/15/12 8,960 4,502
-----------------
17,883
-----------------
19,274
-----------------
- --------------------------------------------------------------------------------
BULGARIA (5.5%)
SOVEREIGN (5.5%)
(b)Republic of Bulgaria Discount
Bond 'A' Euro
6.688%, 7/28/24 4,960 3,162
(c)Republic of Bulgaria Front Loaded
Interest Reduction Bond
2.50%, 7/28/12 3,450 1,585
(b)Republic of Bulgaria Past Due
Interest Bond
6.688%, 7/28/11 5,090 3,003
-----------------
7,750
-----------------
- --------------------------------------------------------------------------------
COLOMBIA (3.7%)
SOVEREIGN (3.7%)
Republic of Colombia
(b)8.82%, 8/13/05 U.S.$ 4,120 U.S.$ 3,466
7.625%, 2/15/07 2,440 1,687
-----------------
5,153
-----------------
- --------------------------------------------------------------------------------
ECUADOR (1.9%)
CORPORATE (1.2%)
Conecel
14.00%, 5/1/02 3,150 1,638
-----------------
SOVEREIGN (0.7%)
(b)Republic of Ecuador Discount Bond
6.625%, 2/28/25 2,050 962
-----------------
2,600
-----------------
- --------------------------------------------------------------------------------
JAMAICA (2.4%)
SOVEREIGN (2.4%)
Government of Jamaica
12.00%, 7/19/99 3,400 3,332
-----------------
- --------------------------------------------------------------------------------
Korea (3.5%)
Corporate (1.8%)
Korea Electric Power Corp.
7.00%, 10/1/02 3,300 2,606
-----------------
SOVEREIGN (1.7%)
Korea Development Bank
7.125%, 9/17/01 2,700 2,328
-----------------
4,934
-----------------
- --------------------------------------------------------------------------------
MEXICO (25.1%)
CORPORATE (2.4%)
(a)Innova
12.875%, 4/1/07 3,390 1,882
(a,b)Petro Mexicanos
11.157%, 7/15/05 1,680 1,447
-----------------
3,329
-----------------
SOVEREIGN (22.7%)
National Finnciera
17.00%, 2/26/99 ZAR 12,000 1,837
United Mexican States
11.50%, 5/15/26 U.S.$ 6,130 5,946
(b)United Mexican States Discount
Bond 'A'
6.594%, 12/31/19 2,900 2,247
(b)United Mexican States Discount
Bond 'B'
6.477%, 12/31/19 250 194
(b)United Mexican States Discount
Bond 'C'
6.617%, 12/31/19 1,300 1,008
United Mexican States Global Bond
9.875%, 1/15/07 860 793
11.375%, 9/15/16 5,500 5,232
- --------------------------------------------------------------------------------
7
<PAGE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEXICO (Continued)
United Mexican States Par Bond 'W-B'
6.25%, 12/31/19 U.S.$ 19,763 U.S.$ 14,674
-----------------
31,931
-----------------
35,260
-----------------
- --------------------------------------------------------------------------------
NETHERLANDS (1.3%)
CORPORATE (1.3%)
(a)Cellco Finance NV
15.00%, 8/1/05 2,210 1,790
-----------------
- --------------------------------------------------------------------------------
PANAMA (3.8%)
SOVEREIGN (3.8%)
Republic of Panama
8.875%, 9/30/27 4,790 4,023
Republic of Panama Global Bond
8.875%, 9/30/27 1,640 1,378
-----------------
5,401
-----------------
- --------------------------------------------------------------------------------
PERU (1.9%)
SOVEREIGN (1.9%)
(c)Peru Past Due Interest Bond
0.00%, 3/7/17 1,680 853
(c)Republic of Peru Front Loaded
Interest Reduction Bond
3.25%, 3/7/17 3,550 1,602
(a) 3.25%, 3/7/17 598 270
-----------------
2,725
-----------------
- --------------------------------------------------------------------------------
RUSSIA (2.8%)
CORPORATE (0.1%)
(a) Unexim International Finance
9.875%, 8/1/00 1,500 90
9.875%, 8/1/00 910 55
-----------------
145
-----------------
SOVEREIGN (2.7%)
(b) Russia Principal Note, PIK
3.313%, 12/15/20 20,770 1,356
(a) Russian Federation
8.75%, 7/24/05 5,540 994
11.00%, 7/24/18 7,950 1,391
-----------------
3,741
-----------------
3,886
-----------------
- --------------------------------------------------------------------------------
TURKEY (2.4%)
SOVEREIGN (2.4%)
(a) Pera Financial Services
9.375%, 10/15/02 5,200 3,354
-----------------
- --------------------------------------------------------------------------------
VENEZUELA (2.0%)
SOVEREIGN (2.0%)
(b) Republic of Venezuela Debt
Conversion Bond 'DL'
6.625%, 12/18/07 4,976 2,849
-----------------
- --------------------------------------------------------------------------------
<CAPTION>
Value
(000)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL DEBT INSTRUMENTS
(Cost U.S.$175,308) U.S.$ 140,518
-----------------
- --------------------------------------------------------------------------------
NO. OF
RIGHTS
- --------------------------------------------------------------------------------
RIGHTS (0.0%)
- --------------------------------------------------------------------------------
MEXICO (0.0%)
United Mexican States Value
Recovery Rights, expiring
06/30/03 (Cost U.S.$0) 6,079,000 --
-----------------
- --------------------------------------------------------------------------------
<CAPTION>
NO. OF
WARRANTS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WARRANTS (0.0%)
- --------------------------------------------------------------------------------
NIGERIA (0.0%)
Central Bank of Nigeria, expiring
11/15/20 (Cost U.S.$0) 2,000 --
-----------------
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.0%)
French Franc FRF 7 1
German Mark DEM 1 1
-----------------
Cost U.S.$2) 2
-----------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(Cost U.S.$175,310) 140,520
-----------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES
Other Assets U.S.$ 21,391
Liabilities (19,937) 1,454
-----------------
- --------------------------------------------------------------------------------
NET ASSETS
Applicable to 21,797,893 issued and
outstanding U.S.$0.01 par value shares
(100,000,000 shares authorized) U.S.$ 141,974
----------------
----------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 6.51
----------------
----------------
- --------------------------------------------------------------------------------
</TABLE>
(a) -- 144A Security - certain conditions for public sale may exist.
(b) -- Variable/floating rate security -- rate disclosed is as of
September 30, 1998.
(c) -- Step Bond -- coupon rate increases in increments to maturity. Rate
disclosed is as of September 30, 1998. Maturity date disclosed is
the ultimate maturity.
PIK -- Payment-in-Kind. Income may be paid in additional securities or
cash at the discretion of the issuer.
8
