<PAGE>
MORGAN STANLEY
GLOBAL OPPORTUNITY BOND FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS James W. Grisham
Frederick B. Whittemore VICE PRESIDENT
VICE-CHAIRMAN OF THE BOARD Michael F. Klein
OF DIRECTORS VICE PRESIDENT
Warren J. Olsen Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR VICE PRESIDENT
Peter J. Chase Joseph P. Stadler
DIRECTOR VICE PRESIDENT
John W. Croghan Valerie Y. Lewis
DIRECTOR SECRETARY
David B. Gill James R. Rooney
DIRECTOR TREASURER
Graham E. Jones Belinda A. Brady
DIRECTOR ASSISTANT TREASURER
John A. Levin
DIRECTOR
</TABLE>
- ---------------------------------------------
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 (International)
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank (Domestic)
770 Broadway
New York, New York 10003
- ---------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- ---------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
- ---------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse 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.
------------------------
MORGAN STANLEY
GLOBAL OPPORTUNITY
BOND FUND, INC.
---------------------
SEMI-ANNUAL REPORT
JUNE 30, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the six months ended June 30, 1996, the Morgan Stanley Global Opportunity
Bond Fund, Inc. (the "Fund") had a total return, based on net asset value per
share, of 11.28% compared to 13.38% for the J.P. Morgan Emerging Markets Bond
Index. For the period since the Fund's commencement of operations on May 27,
1994 through June 30, 1996, the Fund's total return, based on net asset value
per share, was 25.32% compared with 35.28% for the Index. On June 28, 1996, the
closing price of the Fund's shares on the New York Stock Exchange was $13.50,
representing a 0.9% discount to the Fund's net asset value per share.
A slow down in growth and declining inflation prompted a rally in G7 fixed
income markets in the second half of 1995. Markets, particularly in the U.S.
questioned the slowdown thesis in early 1996 and the yield curve moved up
120-150 basis points during the course of the first half of 1996. In what was to
become a regular feature of the market, any signs of growth in the economy
caused sharp sell-offs in the U.S. bond markets during 1996 year-to-date.
Emerging markets debt de-coupled from the U.S. bond market during 1996.
Improving credit stories in emerging market countries successfully counteracted
the negative influence of rising interest rates. Emerging market debt continues
to be viewed with skepticism and therefore remains mispriced and offers
potential above average risk adjusted returns. Its gradual acceptance by
mainstream institutional investors should drive spreads lower as the market
becomes more efficient.
The broadly diversified nature of the Fund's portfolio, both in terms of credit
and country risks, has reduced volatility and at the same time captured
attractive returns available in the market. The Fund's portfolio has been
defensively positioned to minimize the effect of rising rates, with a
concentration in floating-rate bonds and some investments in money-market
instruments in high-yielding foreign currencies, as well a greater degree of
diversification across countries in the emerging debt universe.
The non-performing loans of Russia, Panama and Peru and the high-yielding
sector, comprised of Venezuela and Ecuador, outperformed during 1996. Investors
were attracted by the possibility of dramatic spread tightening and high yields.
Among the major Latin countries, Brazil outperformed Argentina and Mexico on the
back of hopes that the politicians would deliver on constitutional and
structural reforms. The corporate Eurobond sector rallied as corporations
regained access to the capital markets and domestic economies bounced back from
recessions in 1995.
Mexican external debt trailed the market despite being able to refinance its
1996 amortizations at very attractive terms. Lingering concerns over the fragile
economic recovery in the domestic non-tradable sector and the need for an
adjustment in the nominal value of the exchange rate made investors shy away
from Mexican bonds. The local currency denominated treasury bills continued to
be the best performing sector. We allowed our investments in these instruments
to mature and have not re-invested proceeds into the local market as current
returns are not high enough to compensate us for the risk. The domestic
political situation continues to warrant a close watch as the investigation of
various financial scandals could unearth skeletons in the closets of the ruling
elites.
Based on the prospects of an economic rebound in 1996, Argentine assets
underperformed the market in the first half of 1996, despite signs that an
economic recovery was underway. We reduced our allocation to Argentina
marginally in 1996 as tax receipts continued to stagnate and the fiscal targets
agreed to with the IMF continued to look ambitious. High unemployment and low
consumer confidence continue to prove to be a drag on the recovery. Despite
abundant liquidity in the banking system, a consumption and trade led economic
recovery is taking a long time to take hold. Unless a durable and sustained
recovery becomes a reality in the second half, Argentina faces a difficult
economic future in the months ahead. Rising U.S. interest rates and a firm
dollar will prove to be a considerable headwind for the
2
<PAGE>
Convertibility Plan to weather. We do not anticipate making any changes to our
allocation to Argentina in the immediate future.
Brazil came under closer scrutiny as a leading academic questioned the
sustainability of the Real Plan. Questions related to its burgeoning internal
debt and overvalued exchange rates led some to draw parallels with Mexico's
situation in 1994. We do not believe that Brazil and Mexico should be put in the
same basket. Brazil's economic performance is far less dependent on external
capital, (in fact it could be argued that a withdrawal of short-term capital
will probably be of benefit) and the overvaluation of its currency is less
significant, for any comparisons to Mexico to set-off any alarm bells at this
juncture. There is no doubt that the long-run sustainability of the Real Plan
requires a fiscal adjustment. Political wrangling should not be allowed to
derail the process of stabilization. Progress towards implementing a fiscal
adjustment remains one of the elements that we would be watching for to justify
maintaining our allocation to Brazil. We increased our allocations towards the
end of the quarter as the administration sought to counteract market pressure
related to the stagnation of its various reform proposals in the legislature by
becoming more ambitious in the fields of privatization and de-regulation of the
economy. Our allocations to Brazil have remained largely unchanged for most of
the period.
Venezuela's economic performance in 1995 deteriorated and as a result we had
reduced our exposure to that country. The country was pushed into seeking IMF
support to stabilize its economy. We raised our exposure to Venezuela as it
became clear that it had no other alternatives but to reverse the populist
policies it had pursued in the past and implement an orthodox stabilization
program designed in conjuction with the IMF.
We increased exposure to Russian non-performing loans as we expect economic
stabilization and relative political stability to return after a long period of
economic transition. To finance deficits and attract foreign capital, Russia
would need to normalize relations with its external creditors. Despite
pre-election jitters Russian loans were our best performing asset in 1996. Based
on the proposed terms of their restructuring, Russian risk was being priced at
absurdly high levels. Cheap valuations and a dramatic reduction in political
risk prompted a sharp rally in the loans in 1996. We reduced our exposure into
the post-election euphoric rally in prices.
Other high yielding markets of Ecuador and Bulgaria witnessed volatility as
Ecuador braced for the second round of its Presidential elections and Bulgaria
coped with economic distress after swallowing the bitter pill of an IMF program.
Despite a negative U.S. rate environment in the first half of 1996, emerging
debt has performed well. Improvement in the economic fortunes of most of the
countries included in the universe has delivered handsome returns. What is
underway is the dramatic re-rating of this asset class, a process that was
interrupted by the Mexican crisis of 1994. Barring changes in the economic
outlook of the various countries, this process has not yet been finished.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Robert E. Angevine
PORTFOLIO MANAGER
[SIGNATURE]
Paul Ghaffari
PORTFOLIO MANAGER
July 24, 1996
3
<PAGE>
Morgan Stanley Global Opportunity Bond Fund, Inc.
Investment Summary as of June 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION (UNAUDITED)
TOTAL RETURN (%)
----------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (1)(3)
---------------------------- ---------------------------- ----------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C>
---------------------------- ---------------------------- ----------------------------
FISCAL YEAR TO DATE 14.62% -- 11.28% -- 13.38% --
ONE YEAR 24.23 24.23% 23.52 23.52% 32.40 32.40%
SINCE INCEPTION* 24.21 10.90 25.32 11.37 35.28 15.51
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
A BAR CHART REFLECTING THE DATA BELOW IS REFLECTED HERE.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31: ENDED JUNE 30, 1996
1994* 1995 (UNAUDITED)
<S> <C> <C> <C>
Net Asset Value Per Share $12.25 $12.99 $13.62
Market Value Per Share $12.50 $12.50 $13.50
Premium/(Discount) 2.0% -3.8% -0.9%
Income Dividends $0.91 $1.59 $0.80
Fund Total Return (2) -6.42% 20.34% 11.28%
Index Total Return (1)
(3)** -6.45% 27.54% 13.38%
</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 Index is a market weighted index
composed of all Brady bonds outstanding and includes Argentina, Brazil,
Bulgaria, Mexico, Nigeria, the Philippines, Poland and Venezuela.
* The Fund commenced operations on May 27, 1994.
** Unaudited.
4
<PAGE>
Morgan Stanley Global Opportunity Bond Fund, Inc.
Portfolio Summary as of June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Debt Securities 98.8%
Short-Term Investments 1.2%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
United States 31.9%
Russia 15.9%
Mexico 14.1%
Venezuela 13.3%
Brazil 11.4%
Argentina 7.8%
South Africa 3.6%
Poland 3.3%
Ecuador 1.7%
Turkey 1.2%
United Kingdom 0.6%
Colombia 0.5%
Netherlands 0.3%
Philippines 0.2%
Other -5.8%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
-----------
<C> <S> <C>
1. Republic of Russia Debt 15.9%
2. Republic of Venezuela Debt 13.3
3. Banamex Pagare 7.2
4. Lojas Americanas S.A. 4.4
5. Federative Republic of Brazil Debt 4.1
6. Republic of Argentina Debt 3.8
<CAPTION>
PERCENT OF
NET ASSETS
-----------
<C> <S> <C>
7. Republic of South Africa Debt 3.6%
8. Empresas ICA Sociedad Controladora S.A. 3.5
9. Republic of Poland Debt 3.3
10. Iochpe Maxion 2.9
-----
62.0%
-----
-----
</TABLE>
5
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS (UNAUDITED)
- ---------
JUNE 30, 1996
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- -----------------------------------------------------------------
- -------------
DEBT INSTRUMENTS (104.5%)
- --------------------------------------------------
- ----------
ARGENTINA (7.8%)
BONDS (7.8%)
Industrias Pescarmona S.A.
11.75%, 3/27/98 U.S.$ 1,250 U.S.$ 1,262
Metrogas S.A. 'B' 10.875%, 5/15/01 1,000 1,018
+++Republic of Argentina 'L' Bond
6.31%, 3/31/05 2,723 2,127
--------------
4,407
--------------
- -----------------------------------------------------------------
- -------------
BRAZIL (11.4%)
BONDS (11.4%)
Federative Republic of Brazil 'C' Bond
8.00%, 4/15/14 PIK 3,734 2,310
Iochpe Maxion 12.375%, 11/8/02 1,750 1,654
Lojas Americanas S.A. 11.00%, 6/4/04 2,500 2,463
--------------
6,427
--------------
- -----------------------------------------------------------------
- -------------
COLOMBIA (0.5%)
UNIT (0.5%)
*Occidente Y Caribe 0.00%, 3/15/04,
(Sr. Discount Note + 4 Warrants) 525 268
--------------
- -----------------------------------------------------------------
- -------------
ECUADOR (1.7%)
BOND (1.7%)
Republic of Ecuador Past Due Interest
Bond 6.06%, 3/1/15 PIK 2,083 949
--------------
- -----------------------------------------------------------------
- -------------
MEXICO (14.1%)
BONDS (14.1%)
Banamex Pagare Discount Bond, Zero
Coupon, 10/23/97 MXP 45,124 4,070
#Empresas ICA Sociedad Controladora
S.A. 11.875%, 5/30/01 U.S.$ 2,000 2,002
Grupo Elektra S.A. 12.75%, 5/15/01 1,000 1,009
National Financiera 17.00%, 2/26/99 ZAR 4,000 900
--------------
7,981
--------------
- -----------------------------------------------------------------
- -------------
NETHERLANDS (0.3%)
BOND (0.3%)
APP International Finance 11.75%,
10/1/05 U.S.$ 175 181
--------------
- -----------------------------------------------------------------
- -------------
PHILIPPINES (0.2%)
BOND (0.2%)
Philippine Long Distance Telephone Co.
9.25%, 6/30/06 115 115
--------------
- -----------------------------------------------------------------
- -------------
POLAND (3.3%)
NOTE (3.3%)
##Republic of Poland, Zero Coupon,
1/8/97 2,039 1,836
- -----------------------------------------------------------------
- -------------
RUSSIA (15.9%)
BOND (9.9%)
Ministry of Finance Tranche IV, 3.00%,
5/14/03 13,050 5,579
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
LOAN AGREEMENT (6.0%)
++Bank for Foreign Economic Affairs U.S.$ 7,000 U.S.$ 3,404
--------------
8,983
--------------
- -----------------------------------------------------------------
- -------------
SOUTH AFRICA (3.6%)
BONDS (3.6%)
Republic of South Africa
Series 147 11.50%, 5/30/00 ZAR 1,000 213
Series 153 13.00%, 8/31/10 5,240 1,068
Series 162 12.50%, 1/15/02 2,320 495
Series 175 9.00%, 10/15/02 800 140
Series 177 9.50%, 5/15/07 600 97
--------------
2,013
--------------
- -----------------------------------------------------------------
- -------------
UNITED KINGDOM (0.6%)
BOND (0.6%)
*Telewest plc 0.00%, 10/1/07 U.S.$ 585 346
--------------
- -----------------------------------------------------------------
- -------------
UNITED STATES (31.8%)
BONDS (30.4%)
Algoma Steel, Inc. 12.38%, 7/15/05 275 268
Big V Supermarkets, Inc. 'B' 11.00%,
2/15/04 60 56
*Brooks Fiber Properties 0.00%, 3/1/06 700 371
Cablevision Systems Corp. 9.875%,
5/15/06 320 308
Collins & Aikman Products 11.50%,
4/15/06 170 173
Comcast Cellular Corp.
'A' Zero Coupon, 3/5/00 100 69
'B' Zero Coupon, 3/5/00 335 230
Comcast Corp. 9.375%, 5/15/05 300 290
Continental Cablevision, Inc., 9.50%,
8/1/13 400 434
Courtyard By Marriott 'B' 10.75%,
2/1/08 400 391
Crown Paper 11.00%, 9/1/05 215 205
*Echostar Satellite Broadcast 0.00%,
3/15/04 575 357
Exide Corp. (Convertible) 2.90%,
12/15/05 80 44
G-I Holdings, Inc. 'B' Zero Coupon,
10/1/98 200 160
Gaylord Container Corp.
11.50%, 5/15/01 80 82
12.75%, 5/15/05 80 84
Grand Casinos 10.125%, 12/1/03 50 51
Harris Chemical 10.25%, 7/15/01 225 226
HMC Acquisition Properties 9.00%,
12/15/07 350 320
Home Holdings, Inc. 8.625%, 12/15/03 650 422
Homeside, Inc. 11.25%, 5/15/03 80 83
Host Marriott Travel 9.50%, 5/15/05 450 431
IMC Global, Inc. 9.25%, 10/1/00 450 461
Jet Equipment Trust 'C1' 11.79%,
6/15/13 175 196
La Quinta Inns, Inc. 9.25%, 5/15/03 80 81
Lenfest Communications 8.375%, 11/1/05 800 732
- -----------------------------------------------------------------
- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Lenifest Communications 10.50%,
6/15/06 U.S.$ 100 U.S.$ 100
*Marcus Cable Co. 0.00%, 12/15/05 850 525
Marvel Holdings, Inc., Zero Coupon,
4/15/98 1,150 911
MDC Holdings, Inc. 'B' 11.125%,
12/15/03 115 111
*MFS Communications 0.00%, 1/15/06 925 563
Midland Cogeneration Ventures 'C-94'
10.33%, 7/23/02 62 66
Midland Cogeneration Ventures 'C-91'
10.33%, 7/23/02 27 28
Midland Funding II 'A' 11.75%, 7/23/05 80 84
*Nextel Communications 0.00%, 8/15/04 1,600 952
#*Norcal Waste Systems, Inc., 12.75%,
11/15/05 500 526
Nuevo Energy Co. 9.50%, 4/15/06 115 114
Owen-Illinois, Inc. 11.00%, 12/1/03 350 376
Reliance Group Holdings, Inc. 9.00%,
11/15/00 395 392
Revlon Worldwide Corp. Zero Coupon,
3/15/98 525 437
RJR Nabisco 8.75%, 8/15/05 85 85
Rogers Cablesystems 'B' 10.00%,
3/15/05 425 421
SD Warren Co. 'B' 12.00%, 12/15/04 145 153
Sheffield Steel Corp. 12.00%, 11/1/01 150 132
#*Six Flags Theme Parks Inc., 'A'
0.00%, 6/15/05 850 724
Smith's Food & Drug Center, Inc.
11.25%, 5/15/07 285 289
Southland Corp. 5.00%, 12/15/03 565 443
Stone Container Corp. 10.75%, 10/1/02 400 404
TCI Communications, Inc. 7.875%,
2/15/26 565 494
Time Warner, Inc. 'K' 10.25%, 7/1/16
PIK 1 549
TLC Beatrice International Holdings
11.50%, 10/1/05 255 259
Trump Atlantic City 11.25%, 5/1/06 400 401
Unisys Corp. 12.00%, 4/15/03 220 223
Viacom, Inc. 8.00%, 7/7/06 600 549
Westpoint Stevens, Inc. 9.375%,
12/15/05 340 331
--------------
17,167
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.4%)
Aircraft Lease Portfolio
Securitization Ltd. 1996-1 P1 'D'
12.75%, 6/15/06 375 375
DR Securitized Lease Trust 1993-K1 A1
6.66%, 8/15/10 171 129
DR Securitized Lease Trust 1994-K1 A
7.60%, 8/15/07 369 310
--------------
814
--------------
17,981
--------------
- -----------------------------------------------------------------
- -------------
VENEZUELA (13.3%)
BONDS (13.3%)
+++Republic of Venezuela Front Loaded
Interest Rate Reduction Bond 'A'
6.38%, 3/31/07 4,500 3,257
+++Republic of Venezuela Debt
Conversion Bond 'DL' 6.63%, 12/18/07 6,000 4,245
--------------
7,502
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
(000)
<S> <C> <C>
- -----------------------------------------------------------------
- -------------
TOTAL DEBT INSTRUMENTS
(Cost U.S.$58,791) U.S.$ 58,989
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
NO. OF
WARRANTS
<S> <C> <C>
- ---------------------------------------------------------
- ------------
WARRANTS (0.1%)
- ---------------------------------------------------------
- ------------
UNITED STATES (0.1%)
+Petro Stopping Centers L.P., expiring
7/15/97 1,000 33
+Sheffield Steel Corp., expiring
11/1/01 750 2
--------------
35
--------------
- -----------------------------------------------------------------
- -------------
TOTAL WARRANTS
(Cost U.S.$4) 35
--------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
SHORT-TERM INVESTMENT (1.2%)
- -----------------------------------------------------------------
- -------------
TURKEY (1.2%)
TREASURY BILL
Zero Coupon, 7/10/96
(Cost U.S.$888) TRL 60,000,000 710
--------------
- -----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (105.8%)
(Cost U.S.$59,683) 59,734
--------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS (4.3%)
Receivable for Investments Sold U.S.$ 1,545
Interest Receivable 843
Deferred Organization Costs 17
Other Assets 12 2,417
--------------- --------------
- -----------------------------------------------------------------
- -------------
LIABILITIES (-10.1%)
Payable for:
Investments Purchased (2,240)
Dividends Declared (1,658)
Bank Overdraft (1,581)
Investment Advisory Fees (46)
Professional Fees (41)
Shareholder Reporting Expenses (38)
Administration Fees (13)
Directors' Fees and Expenses (13)
Custodian Fees (10)
Other Liabilities (37) (5,677)
--------------- --------------
- -----------------------------------------------------------------
- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
(000)
- ---------------------------------------------------------
- ------------
<S> <C> <C>
NET ASSETS (100%)
Applicable to 4,145,999 issued and outstanding
U.S.$0.01 par value shares (100,000,000 shares
authorized) U.S.$ 56,474
--------------
--------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 13.62
--------------
--------------
- -----------------------------------------------------------------
- -------------
AT JUNE 30, 1996, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------
Common Stock U.S.$ 41
Capital Surplus 57,664
Undistributed Net Investment Income 721
Accumulated Net Realized Loss (1,985)
Unrealized Appreciation on Investments
and Foreign Currency
Translations 33
- -----------------------------------------------------------------
- -------------
TOTAL NET ASSETS U.S.$ 56,474
--------------
--------------
- -----------------------------------------------------------------
- -------------
</TABLE>
+ -- Non-income producing.
++ -- Non-income producing -- in default.
+++ -- Variable/floating rate security -- rate disclosed is as of June 30,
1996.
# -- 144A security -- certain conditions for public sale may exist.
## -- Security's redemption value is linked to the Republic of Poland Treasury
Bill maturing on 1/1/97 and to the Polish Zloty and Deutsche Mark at
maturity.
* -- Step Bond -- coupon rate increases in increments to maturity. Rate
dislcosed is as of June 30, 1996. 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.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------
- -------------
JUNE 30, 1996 EXCHANGE RATES:
- -----------------------------------------------------
MXP Mexican Peso 7.583 = U.S. $1.00
ZAR South African Rand 4.333 = U.S. $1.00
TRL Turkish Lira 82,100.000 = U.S. $1.00
- -----------------------------------------------------
- -------------
</TABLE>
SUMMARY OF TOTAL INVESTMENTS BY INDUSTRY
CLASSIFICATION -- JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT
VALUE OF NET
INDUSTRY (000) ASSETS
<S> <C> <C>
- --------------------------------------------------------------
- ------------
Aerospace & Defense U.S.$ 197 0.3%
Automotive 44 0.1
Banking 4,071 7.2
Beverages 85 0.2
Chemicals 687 1.2
Collateralized Mortgage Obligations 814 1.4
Coal, Gas & Oil 1,017 1.8
Construction & Housing 2,195 3.9
Electronics 1,009 1.8
Energy 114 0.2
Entertainment & Leisure 2,585 4.6
Finance 181 0.3
Food 603 1.1
Foreign Government & Agency Obligations 23,926 42.4
Forest Products & Paper 153 0.3
Gaming & Lodging 955 1.7
Insurance 814 1.4
Loan Agreements 3,404 6.0
Metals 402 0.7
Miscellaneous Materials & Commodities 1,262 2.2
Multi-Industry 3,133 5.5
Packaging & Container 376 0.7
Personal Care Products 437 0.8
Real Estate 320 0.6
Retail -- General 2,939 5.2
Services 1,075 1.9
Software Services 224 0.4
Telecommunications 6,203 11.0
Textiles & Apparel 331 0.6
Utilities 178 0.3
------------ ------
U.S.$ 59,734 105.8%
------------ ------
------------ ------
- ---------------------------------------------------------
- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
(UNAUDITED)
STATEMENT OF OPERATIONS (000)
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest................................................................................ U.S.$4,447
- ---------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees................................................................ 279
Administrative Fees..................................................................... 77
Professional Fees....................................................................... 44
Annual Meeting and Proxy Expense........................................................ 39
Interest Expense........................................................................ 34
Shareholder Reporting Expenses.......................................................... 28
Custodian Fees.......................................................................... 21
Directors' Fees and Expenses............................................................ 15
Transfer Agent Fees..................................................................... 9
Other Expenses.......................................................................... 22
- ---------------------------------------------------------------------------------------------------------------
Total Expenses........................................................................ 568
- ---------------------------------------------------------------------------------------------------------------
Net Investment Income............................................................... 3,879
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)
Investment Securities Sold.............................................................. 3,333
Foreign Currency Transactions........................................................... (108)
- ---------------------------------------------------------------------------------------------------------------
Net Realized Gain................................................................... 3,225
- ---------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
Appreciation on Investments............................................................. (1,152)
Appreciation on Foreign Currency Translations........................................... (8)
- ---------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation/Depreciation...................................... (1,160)
- ---------------------------------------------------------------------------------------------------------------
Total Net Realized Gain and Change in Unrealized Appreciation/Depreciation.................. 2,065
- ---------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... U.S.$5,944
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income............................................... U.S.$ 3,879 U.S.$ 6,657
Net Realized Gain (Loss)............................................ 3,225 (3,777)
Change in Unrealized Appreciation/Depreciation...................... (1,160) 6,731
- ---------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations................ 5,944 9,611
- ---------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income............................................... (3,317) (6,562)
- ---------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Reinvestment of Distributions (15,950 shares)....................... -- 191
- ---------------------------------------------------------------------------------------------------------------
Total Increase...................................................... 2,627 3,240
Net Assets:
Beginning of Period................................................. 53,847 50,607
- ---------------------------------------------------------------------------------------------------------------
End of Period (including undistributed net investment income of
U.S.$721 and U.S.$159, respectively)............................... U.S.$ 56,474 U.S.$ 53,847
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS PERIOD FROM
ENDED YEAR ENDED MAY 27, 1994*
JUNE 30, 1996 DECEMBER 31, TO DECEMBER 31,
SELECTED PER SHARE DATA AND RATIOS: (UNAUDITED) 1995 1994
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.................................. U.S.$ 12.99 U.S.$ 12.25 U.S.$ 14.10
- ------------------------------------------------------------------------------------------------------------------------
Offering Costs........................................................ -- -- (0.17)
- ------------------------------------------------------------------------------------------------------------------------
Net Investment Income................................................. 0.94 1.61 0.95
Net Realized and Unrealized Gain (Loss) on Investments................ 0.49 0.72 (1.72)
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................. 1.43 2.33 (0.77)
- ------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income............................................. (0.80) (1.59 ) (0.91)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD........................................ U.S.$ 13.62 U.S.$ 12.99 U.S.$ 12.25
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END OF PERIOD................................. U.S.$ 13.50 U.S.$ 12.50 U.S.$ 12.50
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN:
Market Value...................................................... 14.62% 13.49% (4.51)%
Net Asset Value (1)............................................... 11.28% 20.34% (6.42)%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS)................................. U.S.$56,474 U.S.$53,847 U.S.$50,607
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses Before Interest Expense to Average Net Assets....... 1.92%** 1.95% 1.75%**
Ratio of Expenses After Interest Expense to Average Net Assets........ 2.04%** 2.06% 2.97%**
Ratio of Net Investment Income to Average Net Assets.................. 13.96%** 13.07% 11.90%**
Portfolio Turnover Rate............................................... 152% 160% 86%
- ------------------------------------------------------------------------------------------------------------------------
*Commencement of operations.
**Annualized.
(1)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. This
percentage is 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 of the Fund.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
- ------------
The Morgan Stanley Global Opportunity Bond Fund, Inc. (the "Fund"), was
incorporated in Maryland on March 31, 1994, and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's primary objective is to produce high
current income and as a secondary objective to seek capital appreciation through
investments primarily in high yield bonds.
A. The following significant accounting policies, which are in conformity with
generally accepted accounting principles for investment companies, are
consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: In valuing the Fund's assets, all listed securities for
which market quotations are readily available are valued at the last sale
price on the valuation date, or if there was no sale on such date, at the
mean between the current bid and asked prices or the bid price if only bid
quotations are available. Securities which are traded over-the-counter are
valued at the average of the mean of the current bid and asked prices
obtained from reputable brokers. Securities may be valued by independent
pricing services which use prices provided by market-makers or estimates of
market values obtained from yield data relating to investments or securities
with similar characteristics. Short-term securities which mature in 60 days
or less are valued at amortized cost. All other securities and assets for
which market values are not readily available (including investments which
are subject to limitations as to their sale) are valued at fair value as
determined in good faith by the Board of Directors (the "Board") although
the actual calculations may be done by others.
2. TAXES: It is the Fund's intention to continue to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly, no
provision for U.S. Federal income taxes is required in the financial
statements.
The Fund may be subject to taxes imposed by countries in which it invests.
Such taxes are generally based on either income or gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation as such income and/or gains
are earned.
3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying securities, with a market value at least equal to the amount of
the repurchase transaction, including principal and accrued interest. To the
extent that any repurchase transaction exceeds one business day, the value
of the collateral is marked-to-market on a daily basis to determine the
adequacy of the collateral. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the counter-party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.
4. REVERSE REPURCHASE AGREEMENTS: In order to leverage the Fund, the Fund may
enter into reverse repurchase agreements with institutions that the Fund's
investment adviser has determined are creditworthy. Under a reverse
repurchase agreement, the Fund sells securities and agrees to repurchase
them at a mutually agreed upon date and price. Reverse repurchase agreements
involve the risk that the market value of the securities purchased with the
proceeds from the sale of securities received by the Fund may decline below
the price of the securities the Fund is obligated to repurchase. Securities
subject to repurchase under reverse repurchase agreements, if any, are
designated as such in the Statement of Net Assets. There were no reverse
repurchase agreements outstanding at June 30, 1996.
The average weekly balance of reverse repurchase agreements outstanding
during the six months ended June 30, 1996 was approximately $1,093,000 at a
weighted average interest rate of 6.02%.
5. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into
U.S. dollars at the mean of the bid and asked prices of such currencies
against U.S. dollars last quoted by a major bank as follows:
- investments, other assets and liabilities at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the prevailing rates of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the period, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from
11
<PAGE>
changes in the market prices of securities sold during the period. Accordingly,
realized and unrealized foreign currency gains (losses) are included in the
reported net realized and unrealized gains (losses) on investment transactions
and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of forward foreign
currency exchange contracts, disposition of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of investment income and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized currency gains
(losses) from valuing foreign currency denominated assets and liabilities at
period end exchange rates are reflected as a component of unrealized
appreciation (depreciation) in the Statement of Net Assets. The change in net
unrealized currency gains (losses) for the period is reflected in the Statement
of Operations.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the possibility of lower
levels of governmental supervision and regulation of foreign securities markets
and the possibility of political or economic instability.
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into
forward foreign currency exchange contracts to attempt to protect securities
and related receivables and payables against changes in future foreign
exchange rates. A forward foreign currency exchange contract is an agreement
between two parties to buy or sell currency at a set price on a future date.
The market value of the contract will fluctuate with changes in currency
exchange rates. The contract is marked-to-market daily and the change in
market value is recorded by the Fund as unrealized gain or loss. The Fund
records realized gains or losses when the contract is closed equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms
of their contracts and is generally limited to the amount of unrealized gain
on the contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
7. LOAN AGREEMENTS: The Fund may invest in fixed and floating rate loans
("Loans") arranged through private negotiations between an issuer of
sovereign debt obligations and one or more financial institutions
("Lenders") deemed to be creditworthy by the investment adviser. The Fund's
investments in Loans may be in the form of participations in Loans
("Participations") or assignments of all or a portion of Loans
("Assignments") from third parties. The Fund's investment in Participations
typically results in the Fund having a contractual relationship with only
the Lender and not with the borrower. The Fund has the right to receive
payments of principal, interest and any fees to which it is entitled only
from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. The Fund generally has no right to
enforce compliance by the borrower with the terms of the loan agreement. As
a result, the Fund may be subject to the credit risk of both the borrower
and the Lender that is selling the Participation. When the Fund purchases
Assignments from Lenders it acquires direct rights against the borrower on
the Loan. Because Assignments are arranged through private negotiations
between potential assignees and potential assignors, the rights and
obligations acquired by the Fund as the purchaser of an Assignment may
differ from, and be more limited than, those held by the assigning Lender.
8. WHEN-ISSUED/DELAYED DELIVERY SECURITIES: The Fund may purchase securities on
a when-issued or delayed delivery basis. Securities purchased on a
when-issued or delayed delivery basis are purchased for delivery beyond the
normal settlement date at a stated price and yield, and no income accrues to
the Fund on such securities prior to delivery. When the Fund enters into a
purchase transaction on a when-issued or delayed delivery basis, it
establishes a segregated account in which it maintains liquid assets in an
amount at least equal in value to the Fund's commitments to purchase such
securities. Purchasing securities on a when-issued or delayed delivery basis
may involve a risk that the market price at the time of delivery may be
lower than the agreed-upon purchase price, in which case there could be an
unrealized loss at the time of delivery.
9. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Interest
income is recognized on the accrual basis and discounts and premiums on
investments purchased are accreted or amortized in accordance with the
effective yield method over their respective lives, except where collection
is in doubt. Distributions to shareholders are recorded on the ex-date.
The amount and character of income and capital gain distributions to be paid
are determined in accordance with Federal income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing book and tax treatments for foreign currency
transactions and the timing of the recognition of losses on securities.
12
<PAGE>
Permanent book and tax basis differences relating to shareholder
distributions may result in reclassifications to undistributed net
investment income (loss), accumulated net realized gain (loss) and capital
surplus.
Adjustments for permanent book-tax differences, if any, are not reflected in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
B. Morgan Stanley Asset Management Inc. (the "Adviser"), provides investment
advisory services to the Fund under the terms of an Investment Advisory and
Management Agreement (the "Agreement"). Under the Agreement, the Adviser is paid
a fee computed weekly and payable monthly at an annual rate of 1.00% of the
Fund's average weekly net assets.
C. The Chase Manhattan Bank, through its affiliate Chase Global Funds Services
Company (the "Administrator"), provides administrative services to the Fund
under an Administration Agreement. Under the Administration Agreement, the
Administrator is paid a fee computed weekly and payable monthly at an annual
rate of .08% of the Fund's average weekly net assets, plus $100,000 per annum.
In addition, the Fund is charged certain out-of-pocket expenses by the
Administrator. The Chase Manhattan Bank, acts as custodian for the Fund's assets
held in the United States.
D. Morgan Stanley Trust Company (the "International Custodian"), an affiliate
of the Adviser, acts as custodian for the Fund's assets held outside the United
States in accordance with a Custody Agreement. Custodian fees are payable
monthly based on assets under custody, investment purchase and sale activity, an
account maintenance fee, plus reimbursement for certain out-of-pocket expenses.
Investment transaction fees vary by country and security type. For the six
months ended June 30, 1996, the Fund incurred International Custodian fees of
$16,000, of which $7,000 was payable to the International Custodian at June 30,
1996. In addition, for the six months ended June 30, 1996, the Fund has earned
interest income of $7,000 and incurred interest expense of $33,000 on balances
with the International Custodian.
E. For the six months ended June 30, 1996, the Fund made purchases and sales
totaling $82,706,000 and $82,762,000, respectively, of investments other than
long-term U.S. Government securities and short-term investments. There were no
purchases and sales of long-term U.S. Government securities. At June 30, 1996,
the U.S. Federal income tax cost basis of securities was $59,683,000 and
accordingly, net unrealized appreciation for U.S. Federal income tax purposes
was $51,000 of which $1,854,000 related to appreciated securities and $1,803,000
related to depreciated securities. At December 31, 1995, the Fund had a capital
loss carryforward for U.S. Federal income tax purposes totaling approximately
$4,559,000 available to offset future capital gains of which $1,390,000 and
$3,169,000 will expire on December 31, 2002 and 2003, respectively. To the
extent that capital gains are offset, such gains will not be distributed to
shareholders. For the year ended December 31, 1995, the Fund expects to defer to
January 1, 1996 for U.S. Federal income tax purposes, post-October capital
losses of $162,000.
F. In connection with its organization and initial public offering of shares,
the Fund incurred $30,000 and $714,000 of organization and offering costs,
respectively. The organization costs are being amortized on a straight-line
basis over a five year period beginning May 27, 1994, the date the Fund
commenced operations. The offering costs were charged to capital.
G. At June 30, 1996, approximately 49% of the Fund's total investments consist
of high yield securities rated below investment grade. Investments in high yield
securities are accompanied by a greater degree of credit risk and the risk tends
to be more sensitive to economic conditions than higher-rated securities.
H. Each Director of the Fund who is not an officer of the Fund or an affiliated
person as defined under the Investment Company Act of 1940, as amended, may
elect to participate in the Directors' Deferred Compensation Plan (the "Plan").
Under the Plan, such Directors may elect to defer payment of a percentage of
their total fees earned as a Director of the Fund. These deferred portions are
treated, based on an election by the Director, as if they were either invested
in the Fund's shares or invested in U.S. Treasury Bills, as defined under the
Plan. The deferred fees payable, under the Plan, at June 30, 1996 totaled $3,000
and are included in Payable for Directors' Fees and Expenses on the Statement of
Net Assets.
I. During June 1996, the Board declared a distribution of $0.40 per share,
derived from net investment income, payable on July 15, 1996, to shareholders of
record on June 28, 1996.
13
<PAGE>
J. SUPPLEMENTAL PROXY INFORMATION The Annual Meeting of the Stockholders of the
Morgan Stanley Global Opportunity Bond Fund, Inc. was held on June 5, 1996. The
following is a summary of each proposal presented and the total number of shares
voted:
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES VOTES
PROPOSAL: FAVOR OF AGAINST WITHHELD ABSTAINED
- ---------------------------------------------------------- --------- ------- -------- ---------
<C><S> <C> <C> <C> <C>
1. To elect the following Directors: Peter J. Chase....... 3,629,233 -- 67,756 --
David B. Gill.......................................... 3,629,233 -- 67,756 --
Warren J. Olsen........................................ 3,629,333 -- 67,656 --
2. To ratify the selection of Price Waterhouse LLP as
independent public accountants of the Fund............ 3,623,957 51,400 -- 21,632
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS* (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED GAIN NET INCREASE
(LOSS) AND CHANGE IN (DECREASE)
UNREALIZED IN NET ASSETS
NET INVESTMENT APPRECIATION/ RESULTING
INVESTMENT INCOME INCOME DEPRECIATION FROM OPERATIONS
------------------ ------------------ -------------------- --------------------
QUARTER ENDED AMOUNT PER SHARE AMOUNT PER SHARE AMOUNT PER SHARE AMOUNT PER SHARE
- ------------------------- ------- --------- ------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1996............ $2,294 $0.55 $2,033 $0.49 $ 2,107 $ 0.56 $ 4,140 $ 1.05
March 31, 1996........... 2,153 0.52 1,846 0.45 (42) (0.07) 1,804 0.38
------- --------- ------- --------- -------- --------- -------- ---------
Total.................. $4,447 $1.07 $3,879 $0.94 $ 2,065 $ 0.49 $ 5,944 $ 1.43
------- --------- ------- --------- -------- --------- -------- ---------
------- --------- ------- --------- -------- --------- -------- ---------
December 31, 1995........ $1,954 $0.48 $1,667 $0.41 $ 1,063 $ 0.25 $ 2,730 $ 0.66
September 30, 1995....... 1,686 0.41 1,454 0.35 1,317 0.32 2,771 0.67
June 30, 1995............ 1,999 0.48 1,760 0.42 6,230 1.52 7,990 1.94
March 31, 1995........... 2,066 0.50 1,776 0.43 (5,656) (1.37) (3,880) (0.94)
------- --------- ------- --------- -------- --------- -------- ---------
Total.................. $7,705 $1.87 $6,657 $1.61 $ 2,954 $ 0.72 $ 9,611 $ 2.33
------- --------- ------- --------- -------- --------- -------- ---------
------- --------- ------- --------- -------- --------- -------- ---------
December 31, 1994........ $2,443 $0.59 $1,994 $0.48 $(5,990) $(1.46) $(3,996) $(0.98)
September 30, 1994....... 1,912 0.46 1,505 0.36 2,051 0.53 3,556 0.89
June 30, 1994**.......... 575 0.14 445 0.11 (3,146) (0.79) (2,701) (0.68)
------- --------- ------- --------- -------- --------- -------- ---------
Total.................. $4,930 $1.19 $3,944 $0.95 $(7,085) $(1.72) $(3,141) $(0.77)
------- --------- ------- --------- -------- --------- -------- ---------
------- --------- ------- --------- -------- --------- -------- ---------
</TABLE>
________________________________________________________________________________
* Expressed in thousands of U.S. dollars except per share amounts.
** The Fund commenced operations on May 27, 1994
The Fund may purchase shares of its Common Stock in the open market at such
prices and in such amounts as the Board of Directors may deem advisable.
14
<PAGE>
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
each shareholder may elect by providing written instructions to American Stock
Transfer & Trust Company (the "Plan Agent") to have all distributions
automatically reinvested in Fund shares. Participants in the Plan have the
option of making additional voluntary cash payments to the Plan Agent,
quarterly, in any amount from $100 to $3,000, for investment in Fund shares.
Dividend and capital gain distributions will be reinvested on the
reinvestment date in full and fractional shares. If the market price per share
equals or exceeds net asset value per share on the reinvestment date, the Fund
will issue shares to participants at net asset value. If net asset value is less
than 95% of the market price on the reinvestment date, shares will be issued at
95% of the market price. If net asset value exceeds the market price on the
reinvestment date, participants will receive shares valued at market price. The
Fund may purchase shares of its Common Stock in the open market in connection
with dividend reinvestment requirements at the discretion of the Board of
Directors. Should the Fund declare a dividend or capital gain distribution
payable only in cash, the Plan Agent will purchase Fund shares for participants
in the open market as agent for the participants.
The Plan Agent's fees for the reinvestment of dividends and distributions
will be paid by the Fund. However, each participant's account will be charged a
pro rata share of brokerage commissions incurred on any open market purchases
effected on such participant's behalf. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. Although
shareholders in the Plan may receive no cash distributions, participation in the
Plan will not relieve participants of any income tax which may be payable on
such dividends or distributions.
In the case of shareholders, such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Participants who wish to withdraw from the Plan should notify the Plan Agent
in writing. There is no penalty for non-participation or withdrawal from the
Plan, and shareholders who have previously withdrawn from the Plan may rejoin at
any time. Requests for additional information or any correspondence concerning
the Plan should be directed to the Plan Agent at:
Morgan Stanley Global Opportunity Bond Fund, Inc.
American Stock Transfer & Trust Company
Dividend Reinvestment and Cash Purchase Plan
40 Wall Street
New York, NY 10005
1-800-278-4353
15
