-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S1YK3RMrotoXxfW5hxNEAIujBMiERjSnlWvVsQzxO2/xq04e9wYmBjCuv9wEB0Uq zCc05JgI6ZE9PqMqYmbJLQ== 0000912057-01-519178.txt : 20010611 0000912057-01-519178.hdr.sgml : 20010611 ACCESSION NUMBER: 0000912057-01-519178 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER EMERGING MARKETS DEBT FUND INC CENTRAL INDEX KEY: 0000904112 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133713706 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-07694 FILM NUMBER: 1657002 BUSINESS ADDRESS: STREET 1: 1221 AVENUE OF THE AMERICAS STREET 2: 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 6175578742 MAIL ADDRESS: STREET 1: 1221 AVENUE OF THE AMERIAS STREET 2: 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY EMERGING MARKETS DEBT FUND INC DATE OF NAME CHANGE: 19930714 N-30B-2 1 a2051209zn-30b_2.txt N-30B-2 MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC. DIRECTORS AND OFFICERS Barton M. Biggs CHAIRMAN OF THE BOARD OF DIRECTORS Ronald E. Robison PRESIDENT AND DIRECTOR John D. Barrett II DIRECTOR Gerard E. Jones DIRECTOR Graham E. Jones DIRECTOR John A. Levin DIRECTOR Andrew McNally IV DIRECTOR William G. Morton, Jr. DIRECTOR Samuel T. Reeves DIRECTOR Fergus Reid DIRECTOR Frederick O. Robertshaw DIRECTOR Stefanie V. Chang VICE PRESIDENT Arthur J. Lev VICE PRESIDENT Joseph P. Stadler VICE PRESIDENT Mary E. Mullin SECRETARY Belinda A. Brady TREASURER Robin L. Conkey ASSISTANT TREASURER INVESTMENT ADVISER Morgan Stanley Investment Management Inc. 1221 Avenue of the Americas New York, New York 10020 ADMINISTRATOR The Chase Manhattan Bank 73 Tremont Street Boston, Massachusetts 02108 CUSTODIAN 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 Clifford Chance Rogers & Wells LLP 200 Park Avenue New York, New York 10166 INDEPENDENT AUDITORS Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116 For additional Fund information, including the Fund's net asset value per share and information regarding the investments comprising the Fund's portfolio, please call 1-800-221-6726 or visit our website at www.morganstanley.com/im. FIRST QUARTER REPORT MORGAN STANLEY Investment Management MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC. [GRAPHIC] MARCH 31, 2001 MORGAN STANLEY INVESTMENT MANAGEMENT INC. INVESTMENT MANAGER LETTER TO SHAREHOLDERS For the three months ended March 31, 2001, the Morgan Stanley Emerging Markets Debt Fund, Inc. (the "Fund") had a total return, based on net asset value per share, of 1.29% compared to 2.27% for the J.P. Morgan Emerging Markets Bond Global Index (the "Index"). For the period from the Fund's commencement of operations on July 23, 1993 through March 31, 2001, the Fund's total return, based on net asset value per share, was 146.90% compared to 138.25% for the Index. On March 31, 2001, the closing price of the fund's shares on the New York Stock Exchange was $7.11, representing a 12.1% discount to the Fund's net asset value per share. MARKET OVERVIEW The first quarter of 2001 was volatile for emerging markets debt (EMD). As with most other financial markets, EMD was buoyed by the 100 basis point cut in U.S. interest rates in January. In February and March, EMD took its direction from volatile equity markets, while growing concerns over the magnitude of the slowdown in the U.S. economy caused prices to come under downward pressure. In addition, investors struggled with the implications of a devaluation in Turkey, weakening economic conditions in Argentina, increasing political noise in Brazil and Peru and the adverse impact of declining oil prices. Spreads on the Index tightened by 78 basis points in January, but widened by over 100 basis points during February and March. The Fund underperformed, relative to the index, in January mostly due to the defensive stance that we took in the fall of 2000. This defensive posture caused us to lag during the large rally as the Fed eased interest rates. Conversely, this stance was the major reason we outperformed relative to the index in both February and March as the market sold off. Other factors contributing to performance were the Fund's overweights in Bulgaria, Morocco and Qatar along with underweights in Argentina and Turkey. Finally, good security selection in Brazil and Mexico also added to returns. Other negative contributors were our corporate bond holdings in Indonesia and Poland along with underweights in Colombia and Peru. As previously mentioned, the Fund was well positioned for the March sell-off. We had adopted a defensive strategy by concentrating investments in shorter duration instruments and in credits typically less correlated with the overall Index. In March we reduced holdings in the typically more volatile credits (e.g., Brazil and Russia), and raised exposure to "defensive" credits such as Korea and Panama. The short-term outlook for EMD will most likely remain hostage to the situation in Argentina. The appointment of Dominigo Cavallo in Argentina has succeeded in bringing back a modicum of stability to financial markets but uncertainties loom large. Turkish authorities will be facing a very difficult month as they try to roll over large amounts of domestic debt in the face of a deteriorating banking system. Elections in Peru and Bulgaria may also produce noisy headlines. In addition, the uncertainties surrounding the global economic environment are starting to have a direct effect on a number of emerging economies either through slower exports and widening of external imbalances (e.g., Mexico, Korea, and the Philippines), or through interrupted access to needed international capital. Opposing this, EMD may be supported by the reinvestment of large coupons and amortization payments in March and April. Notwithstanding last month's sell off, your EMD team considers the above considerations as sufficiently dominant to dictate a continuation of the Fund's defensive stance. OTHER DEVELOPMENTS As part of an ongoing global branding initiative, Morgan Stanley Dean Witter has changed its brand name to "Morgan Stanley." In connection with this change, the name of the Fund has been changed effective May 1, 2001, to Morgan Stanley Emerging Markets Debt Fund, Inc. The new name appears in this quarterly report and, beginning on May 21, 2001, will be shown in the financial press and on the Fund's website. In addition to the name change, the cover of this quarterly report introduces the new look of the Fund's financial reports to shareholders. The semi-annual report to shareholders dated June 30, 2001 will present the new look throughout the report. We appreciate your continued support. If you have any questions or comments on these changes, please contact us through our website, www.morganstanley.com/im, or call us at 1-800-221-6726. Sincerely, /s/ Ronald E. Robison Ronald E. Robison PRESIDENT AND DIRECTOR April 2001 IN MAY 2001, ERIC J. BAURMEISTER AND AMER R. BISAT JOINED STEPHEN F. ESSER AND ABIGAIL L. MCKENNA IN THE DAY-TO-DAY MANAGEMENT OF THE FUND. MR. BAURMEISTER, A VICE PRESIDENT OF MORGAN STANLEY INVESTMENT MANAGEMENT, JOINED MORGAN STANLEY INVESTMENT MANAGEMENT IN 1997 AND PRIOR TO THAT WAS A PORTFOLIO MANAGER AT MIMCO. MR. BISAT, A PRINCIPAL OF MORGAN STANLEY INVESTMENT MANAGEMENT, JOINED MORGAN STANLEY INVESTMENT MANAGEMENT IN 1999. PRIOR TO THAT HE WAS HEAD OF EUROPEAN EMERGING MARKETS ECONOMIC RESEARCH AT SALOMON SMITH BARNEY FROM 1998 TO 1999, AND FROM 1980 TO 1998 WORKED AS A SENIOR ECONOMIST WITH THE INTERNATIONAL MONETARY FUND. Morgan Stanley Emerging Markets Debt Fund, Inc. Investment Summary as of March 31, 2001 (Unaudited)
====================================================================================================================== HISTORICAL INFORMATION TOTAL RETURN (%) ------------------------------------------------------------------------ MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3) --------------------- ------------------------ ---------------------- AVERAGE AVERAGE AVERAGE CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL ---------- ------ ---------- ------ ---------- ------ YEAR TO DATE 6.44% -- 1.29% -- 2.27% -- ONE YEAR 7.25 7.25% 5.50 5.50% 9.79 9.79% FIVE YEAR 59.18 9.74 83.33 12.89 86.02 13.22 SINCE INCEPTION* 116.99 10.60 146.90 12.47 138.25 11.96
[CHART]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. =================================================================================================================================== RETURNS AND PER SHARE INFORMATION YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31, 1993* 1994 1995 1996 1997 1998 1999 2000 2001 ----- ---- ---- ---- ---- ---- ---- ---- ---- Net Asset Value Per Share $ 18.96 $ 12.23 $ 12.40 $ 17.31 $ 15.21 $ 7.01 $ 8.36 $ 8.22 $ 8.09 Market Value Per Share $ 18.13 $ 11.38 $ 12.50 $ 15.13 $ 15.38 $ 7.19 $ 6.81 $ 6.88 $ 7.11 Premium/(Discount) -4.4% -7.0% 0.8% -12.6% 1.1% 2.6% -18.5% -16.3% -12.1% Income Dividends $ 0.16 $ 1.49 $ 1.72 $ 1.08 $ 1.27 $ 1.41 $ 1.01 $ 1.08 $ 0.21 Capital Gains Distributions -- $ 0.41 -- -- $ 3.44 $ 2.94 -- -- -- Fund Total Return(2) 35.96% -25.95% 26.85%+ 50.98% 21.71% -33.00% 36.58% 13.5% 1.29% JPM EMB Global Index Total Return(3) 18.67% -18.35% 26.38% 35.23% 11.95% -11.54% 24.18% 14.41% 2.27%
(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 Global Index (the "JPM EMB Global Index") tracks total returns for U.S. dollar-denominated debt instruments issued by emerging markets sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds and local market instruments. The JPM EMB Global Index includes coverage of 27 emerging market countries. Because JPM EMB Global 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. FOREIGN INVESTING INVOLVES CERTAIN RISKS, INCLUDING CURRENCY FLUCTUATIONS AND CONTROLS, RESTRICTIONS ON FOREIGN INVESTMENTS, LESS GOVERNMENTAL SUPERVISION AND REGULATION, LESS LIQUIDITY AND THE POTENTIAL FOR MARKET VOLATILITY AND POLITICAL INSTABILITY. 3 Morgan Stanley Emerging Markets Debt Fund, Inc. Investment Summary as of March 31, 2001 (Unaudited) ALLOCATION OF TOTAL INVESTMENTS [CHART] Debt Securities (100%) COUNTRY WEIGHTINGS [CHART] Other (15.7%) Panama (3.3%) Bulgaria (3.6%) Philippines (4.4%) South Korea (4.6%) Morocco (4.6%) Venezuela (6.9%) Argentina (9.7%) Mexico (18.5%) Brazil (17.0%) Russia (11.7%)
TEN LARGEST HOLDINGS [CHART]
PERCENT OF TOTAL INVESTMENTS ----------- 1. Republic of Argentina Par Bond 'L-GP' 6.00%, 3/31/23 (Argentina) 6.6% 2. United Mexican States Discount Bond 'A' 8.125%, 12/30/19 (Mexico) 6.3 3. Morocco R&C 'A', 7.56%, 1/1/19 (Morocco) 4.6 4. Russian Federation 8.25%, 6/24/28 (Russia) 4.0 5. Federative Republic of Brazil Global Bond 8.875%, 4/15/24 (Brazil) 3.7 6. Russian Federation 0.00%, 3/31/10 (Russia) 3.1 7. Federative Republic of Brazil Bond PIK 'C' 8.00%, 4/15/14 (Brazil) 2.9 8. Federative Republic of Brazil 10.25%, 1/11/06 (Brazil) 2.9 9. Republic of Venezuela Par Bond 6.75%, 3/31/23 (Venezuela) 2.7 8. Republic of Panama 9.625%, 2/8/11 (Panama) 2.7 ---- 39.5% ====
4 INVESTMENTS (UNAUDITED) (SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS) MARCH 31, 2001
FACE AMOUNT VALUE (000) (000) - ---------------------------------------------------------------------------- DEBT INSTRUMENTS (100.0%) ALGERIA (2.3%) SOVEREIGN (2.3%) Algerian Loan Agreement Tranche 1 7.19%, 3/31/10 U.S.$ 3,293 U.S.$ 2,849 Algerian Loan Agreement Tranche 3 7.19%, 3/31/10 1,561 1,258 ------------------ 4,107 ------------------ ARGENTINA (9.7%) SOVEREIGN (9.7%) (a)Republic of Argentina 'L' 7.63%, 3/31/05 3,600 3,086 (a)Republic of Argentina Floating Rate Note 7.56%, 3/31/23 3,600 2,573 (b)Republic of Argentina Par Bond 'L- GP' (a)6.00%, 3/31/23 17,900 11,859 ------------------ 17,518 ------------------ BRAZIL (17.0%) SOVEREIGN (17.0%) Federative Republic of Brazil 8.875%, 4/15/24 9,850 6,715 10.25%, 1/11/06 5,300 5,141 11.00%, 8/17/40 2,250 1,753 Federative Republic of Brazil 'C-L' Bond 8.00%, 4/15/14 44 34 (a)Federative Republic of Brazil Bond 'EI' (Registered) 7.63%, 4/15/06 3,124 2,823 (a)Federative Republic of Brazil Bond 'EI-L' 7.63%, 4/15/06 2,552 2,306 Federative Republic of Brazil Bond PIK 'C' 8.00%, 4/15/14 6,773 5,206 (a)Federative Republic of Brazil Debt Conversion 7.69%, 4/15/12 3,500 2,491 (a)Federative Republic of Brazil Discount Bond 'Z-L' 7.63%, 4/15/24 5,650 4,255 ------------------ 30,724 ------------------ BULGARIA (3.6%) SOVEREIGN (3.6%) (a)Republic of Bulgaria Discount Bond 'A' Euro 7.75%, 7/28/24 3,650 2,724 (b)Republic of Bulgaria Front-Loaded Interest Reduction Bond 3.00%, 7/28/12 1,550 1,168 (a)Republic of Bulgaria Past Due Interest Bond 6.31%, 7/28/11 3,500 2,634 ------------------ 6,526 ------------------ COLOMBIA (0.8%) CORPORATE (0.8%) (b)Occidente y Caribe 'B' 14.00%, 3/15/04 1,950 1,462 ------------------ CROATIA (0.8%) SOVEREIGN (0.8%) (a)Croatia Government International Bond 6.25%, 7/31/10 1,555 1,507 ------------------ ECUADOR (0.4%) SOVEREIGN (0.4%) Republic of Ecuador (b)4.00%, 8/15/30 500 208 12.00%, 11/15/12 800 546 ------------------ 754 ------------------ INDIA (0.0%) CORPORATE (0.0%) Surashtra Cement and Chemical Ltd. 19.00%, 6/26/00 INR 30,000 INR -@ ------------------ INDONESIA (0.5%) CORPORATE (0.5%) Indah Kiat International Finance 'B' 11.875%, 6/15/02 U.S.$ 900 U.S.$ 252 Tjiwi Kimia International Global Bond 13.25%, 8/1/01 4,300 731 ------------------ 983 ------------------ IVORY COAST (0.7%) SOVEREIGN (0.7%) (a)Republic of Ivory Coast Front-Loaded Interest Reduction Bond 2.00%, 3/29/18 9,293 1,276 --------------------
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FACE AMOUNT VALUE (000) (000) - ---------------------------------------------------------------------------- MALAYSIA (2.1%) CORPORATE (2.1%) TM Global Inc. 8.00%, 12/7/10 U.S.$ 3,800 U.S.$ 3,869 ------------------ MEXICO (18.5%) CORPORATE (5.8%) Grupo Iusacell SA de CV 14.25%, 12/1/06 1,300 1,351 Pemex Project Funding Master Trust 8.50%, 2/15/08 3,900 3,871 Petroleos Mexicanos 9.50%, 9/15/27 3,100 3,247 TV Azteca 'B' 10.50%, 2/15/07 2,100 2,045 ------------------ 10,514 ------------------ SOVEREIGN (12.7%) United Mexican States (a)0.00%, 6/30/03 45,419 568 8.125%, 12/30/19 12,650 11,360 (a)United Mexican States Discount Bond 'A' 7.53%, 12/31/19 2,000 1,937 United Mexican States Discount Bond (Rights Attached) 6.25%, 12/31/19 6,050 5,412 United Mexican States, 'A' 9.875%, 2/1/10 3,350 3,596 ------------------ 22,873 ------------------ 33,387 ------------------ MOROCCO (4.6%) SOVEREIGN (4.6%) (a)Morocco R&C 'A' 7.56%, 1/1/09 9,418 8,299 ------------------ PANAMA (3.3%) SOVEREIGN (3.3%) Republic of Panama 9.375%, 4/1/29 1,000 1,008 9.625%, 2/8/11 4,900 4,899 ------------------ 5,907 ------------------ PERU (0.6%) SOVEREIGN (0.6%) (b)Republic of Peru Front-Loaded Interest Reduction Bond 4.50%, 3/7/17 1,600 1,092 ------------------ PHILIPPINES (4.4%) CORPORATE (0.2%) Bayan Telecommunications, Inc. 13.50%, 7/15/06 1,800 360 ------------------ SOVEREIGN (4.2%) Republic of Philippines 9.875%, 3/15/10 1,450 1,396 9.875%, 1/15/19 5,250 4,410 10.625%, 3/15/25 2,100 1,833 ------------------ 7,639 ------------------ 7,999 ------------------ POLAND (2.4%) CORPORATE (1.2%) Netia Holdings II BV, 'B' 13.125%, 6/15/09 1,500 1,185 PTC International Finance II SA 11.25%, 12/1/09 1,000 1,030 ------------------ 2,215 ------------------ SOVEREIGN (1.2%) Republic of Poland 6.00%, 10/27/14 2,100 2,048 ------------------ 4,263 ------------------ QATAR (2.4%) SOVEREIGN (2.4%) State of Qatar 9.75%, 6/15/30 4,100 4,348 ------------------ RUSSIA (11.7%) SOVEREIGN (11.7%) Russian Federation (a)0.00%, 3/31/30 13,744 5,532 (a)2.25%, 3/31/30 4,400 1,771 10.00%, 6/26/07 2,550 2,012 12.75%, 6/24/28 5,150 4,500 Russian Federation 8.25%, 3/31/10 10,826 7,280 ------------------ 21,095 ------------------ SOUTH KOREA (4.6%) CORPORATE (4.6%) Korea Electric Power Corp. 6.375%, 12/1/03 1,900 1,918 7.75%, 4/1/13 2,100 2,107 8.875%, 4/15/08 3,800 4,176 ------------------ 8,201 ------------------
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FACE AMOUNT VALUE (000) (000) - ----------------------------------------------------------------------------- TURKEY (0.9%) CORPORATE (0.9%) Cellco Finance 15.00%, 8/1/05 U.S.$ 1,910 U.S.$ 1,566 ------------------ UKRAINE (1.6%) SOVEREIGN (1.6%) Ukraine Government 11.00%, 3/15/07 4,074 2,813 ------------------ VENEZUELA (6.9%) SOVEREIGN (6.9%) (a)Republic of Venezuela Debt Conversion Bond 'DL' 7.38%, 12/18/07 3,500 2,914 Republic of Venezuela Global Bond 9.25%, 9/15/27 6,700 4,626 Republic of Venezuela Par Bond 6.75%, 3/31/20 6,450 4,934 ------------------ 12,474 ------------------ TOTAL DEBT INSTRUMENTS (Cost U.S.$188,196) 180,170 ------------------ NO. OF WARRANTS - ------------------------------------------------------------------------------ WARRANTS(0.0%) COLOMBIA (0.0%) Occidente y Caribe, expiring 3/15/04 69,200 43 VENEZUELA (0.0%) Venezuela Oil Warrants 12,530 -@ TOTAL WARRANTS (Cost U.S.$44) 43 ------------------ SHORT-TERM INVESTMENTS(0.0%) INDIA (0.0%) CASH & CASH EQUIVALENTS Indian Rupee 01/01/80 (Cost U.S.$2) INR 98 INR 2 ------------------ TOTAL INVESTMENTS(100.0%) (Cost $188,242) 180,215 ------------------ AMOUNT AMOUNT (000) (000) - ----------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES Other Assets 67,645 Liabilities (69,571) (1,926) ------------------------------------ NET ASSETS (100%) Applicable to 22,046,681, issued and outstanding U.S.$0.01 par value shares (100,000,000 shares authorized) U.S.$ 178,289 ------------------ NET ASSET VALUE PER SHARE U.S.$ 8.09 ------------------
(a) - Variable/floating rate security - rate disclosed is as of March 31, 2001. (b) - Step Bond - coupon rate increases in increments to maturity. Rate disclosed is as of March 31, 2001. Maturity date disclosed is ultimate maturity. @ - Value is less than U.S.$ 500. PIK - Payment-in-Kind. Income may be paid in additional securities or cash at the discretion of the issuer.
MARCH 31, 2001 EXCHANGE RATES: INR Indian Rupee 46.615=U.S.$1.00
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