<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>a2054448zn-30d.txt
<DESCRIPTION>N-30D
<TEXT>
<Page>

SEMI-ANNUAL REPORT

[MORGAN STANLEY LOGO]

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.

JUNE 30, 2001

MORGAN STANLEY
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER

<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.
OVERVIEW

LETTER TO SHAREHOLDERS

For the six months ended June 30, 2001, the Morgan Stanley Emerging Markets Debt
Fund, Inc. (the "Fund") had a total return, based on net asset value per share,
of 6.16% compared to 5.82% 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 June 30, 2001, the Fund's cumulative total return,
based on net asset value per share, was 158.76% compared to 146.53% for the
Index. On June 30, 2001, the closing price of the Fund's shares on the New York
Stock Exchange was $7.46, representing a 9.5% discount to the Fund's net asset
value per share.

MARKET OVERVIEW
Emerging markets debt (EMD) enjoyed strong but volatile performance during the
first half of 2001. Argentina, and to a lessor extent Turkey, dominated the
headlines and led to significant moves in asset prices--both upward and
downward. EMD was also influenced by global financial considerations: emerging
market asset prices reacted with concern to data suggesting that the U.S.
slowdown might end up being longer--and possibly deeper--than expected. This was
compounded by the unexpected sharp slowdown in Europe and by the weakening in
commodity prices.

Financial stress in Argentina and Turkey started in early
April when it looked increasingly likely that both countries would be unable to
service their debt. An asset price recovery attempt ensued as Argentina
implemented a debt-re-profiling exercise and as the international official
community came to Turkey's rescue. The rally, though, proved short-lived.
Towards quarter-end, both countries' asset prices came under repeated pressure.
Brazil suffered from the financial stresses in Argentina and Turkey during the
quarter. The Brazilian currency weakened to lows not seen since the 1999
devaluation. The Brazilian central bank reacted fairly aggressively by raising
interest rates and securing an important pipeline of international bridge
financing.

Fortunately, the Argentina/Turkey stress did not propagate
indiscriminately across all emerging countries. The Russian economy continued to
perform strongly, helped not only by high oil prices, but also by a determined
push to transform the economy away from its undistinguished past. Meanwhile, the
Bulgarians elected a new Parliament whose new composition is generally committed
to the objective of European Union convergence. The Philippines Parliament
promulgated (after a 7-year delay) a key reform law, which should radically
alter the country's power sector.

During the first half of 2001, the portfolio's construction was based on two
self-reinforcing considerations: that the weak global economy is clouding the
outlook for emerging markets; and that systemically important credits (e.g.,
Argentina, Turkey, and to a lesser extent, Brazil) possess particularly weak
fundamentals. At the portfolio level, these considerations translated into a
generally defensive stance. Throughout the second quarter, the Fund emphasized
lower beta and shorter duration instruments. In terms of country selection, the
Fund generally had a material underweight in Argentina and smaller underweights
in Turkey and Brazil. Two sets of countries were over-weighted: those with an
idiosyncratically favorable dynamic that dominates overall market considerations
(e.g., Russia, Morocco, and Bulgaria) and those with fundamentals sufficiently
strong enough to survive the global slowdown and Argentina/Turkey contagion
(e.g., Mexico, Qatar, and Panama).

Our underweights to Argentina, and to a lesser extent Brazil, were the major
reasons for the Fund's outperformance relative to the Index. In addition,
overweight positions in Russia, Mexico, and Panama also added to returns. Our
overall defensive portfolio stance helped the Fund in February, April and June,
but detracted from returns in January and May when the market rallied.

MARKET OUTLOOK
As mentioned above, we continue to be concerned about the situation in
Argentina. The country's recent debt restructuring will reduce its short-term
cash outlays, but it will do nothing to address the country's economic problems.
We are continuing to maintain a large underweight to this country relative to
our Index along with maintaining an overall defensive portfolio.

OTHER DEVELOPMENTS
As noted in the Fund's first quarter report, the Fund's financial report
presents our new format. If you have any questions or comments on the new look
of the report, please contact us through our website, www.morganstanley.com/im,
or call us at 1-800-221-6726. We appreciate your continued support.

Sincerely,

/s/ Ronald E. Robison
Ronald E. Robison
PRESIDENT AND DIRECTOR

July 2001

                                       2
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.
JUNE 30, 2001 (UNAUDITED)

INVESTMENT SUMMARY
HISTORICAL INFORMATION

<Table>
<Caption>
                                                                      TOTAL RETURN (%)
                                      ----------------------------------------------------------------------------------
                                           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>
Year to date                              14.91%         --           6.16%         --             5.82%           --
One Year                                  21.61        21.61%        12.27        12.27%          13.20          13.20%
Five Year                                 62.65        10.22         69.67        11.15           75.73          11.94
Since Inception(*)                       134.27        11.32        158.76        12.72          146.53          12.04
Past Performance is not predictive of future performance.
</Table>

[CHART]

RETURNS AND PER SHARE INFORMATION

<Table>
<Caption>
                                                             YEAR ENDED DECEMBER 31,                                   SIX MONTHS
                              ----------------------------------------------------------------------------------------    ENDED
                                                                                                                         JUNE 30,
                              1993(*)    1994       1995        1996       1997       1998        1999       2000        2001
 ---------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>        <C>        <C>         <C>        <C>         <C>        <C>        <C>           <C>
 Net Asset Value Per Share  $18.96     $12.23     $12.40      $17.31     $15.21      $7.01      $ 8.36     $ 8.22        $8.24
----------------------------------------------------------------------------------------------------------------------------------
 Market Value Per Share     $18.13     $11.38     $12.50      $15.13     $15.38      $7.19      $ 6.81     $ 6.88        $7.46
----------------------------------------------------------------------------------------------------------------------------------
 Premium/(Discount)           -4.4%      -7.0%       0.8%      -12.6%       1.1%       2.6%      -18.5%     -16.3%        -9.5%
----------------------------------------------------------------------------------------------------------------------------------
 Income Dividends           $ 0.16     $ 1.49     $ 1.72      $ 1.08     $ 1.27      $1.41      $ 1.01     $ 1.08        $0.42
----------------------------------------------------------------------------------------------------------------------------------
 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%     13.50%        6.16%
----------------------------------------------------------------------------------------------------------------------------------
 Index Total Return(3)       18.67%    -18.35%     26.38%      35.23%     11.95%    -11.54%      24.18%     14.41%        5.82%
----------------------------------------------------------------------------------------------------------------------------------
</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 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
<Page>

PORTFOLIO SUMMARY

ALLOCATION OF TOTAL INVESTMENTS

[CHART]

<Table>
----------------------------------------------------
<S>                                  <C>
Debt Securities                      99.2%
Short-Term Investments                0.5
Equity Securities                     0.3
</Table>

COUNTRY WEIGHTINGS

[CHART]

<Table>
----------------------------------------------------
<S>                                  <C>
Brazil                               20.3%
Mexico                               18.4
Russia                               14.7
Argentina                             7.0
Morocco                               5.1
Bulgaria                              3.8
Panama                                3.5
Eucador                               3.2
South Korea                           3.1
Egypt                                 3.0
Other                                17.9
</Table>

TEN LARGEST HOLDINGS

<Table>
<Caption>
                                                     PERCENT OF                                                       PERCENT OF
                                                      TOTAL                                                             TOTAL
                                                   INVESTMENTS                                                       INVESTMENTS
--------------------------------------------------------------------------------------------------------------------------------
<S>   <C>                                                  <C>    <C>     <C>                                               <C>
1.    Federative Republic of Brazil Bond PIK 'C'           7.1%   6.      Russian Federation
         8.00%, 4/15/14 (Brazil)                                             12.75%, 6/24/28 (Russia)                        4.9
2.    Republic of Argentina Par Bond 'L-GP'                       7.      Russian Federation
         6.00%, 3/31/23 (Argentina)                        6.6               5.00%, 3/31/30 (Russia)                         4.8
3.    United Mexican States Global Bond                           8.      United Mexican States Discount Bond 'D'
         8.38%, 1/14/11 (Mexico)                           5.9               8.13%, 12/30/19 (Mexico)                        4.2
4.    Morocco R&C 'A'                                             9.      United Mexican States Discount Bond 'A'
         5.09%, 1/1/09 (Morocco)                           5.1               9.88%, 2/1/10 (Mexico)                          3.9
5.    Federative Republic of Brazil Debt                          10.     Federative Republic of Brazil Discount Bond
         Conversion 5.50%, 4/15/12 (Brazil)                5.0               'Z-L' 5.44%, 4/15/24 (Brazil)                   3.2
                                                                                                                            -----
                                                                                                                            50.7%
                                                                                                                            =====
</Table>

                                       4
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.
FINANCIAL STATEMENTS
JUNE 30, 2001 (UNAUDITED)

STATEMENT OF NET ASSETS

<Table>
<Caption>
                                             FACE
                                            AMOUNT               VALUE
                                             (000)               (000)
----------------------------------------------------------------------
DEBT INSTRUMENTS (99.3%)
======================================================================
<S>                                     <C>                   <C>
ALGERIA (0.4%)
SOVEREIGN (0.4%)
   Algerian Loan Agreement
     Tranche 1
     7.19%, 3/31/10                       $    843            $    735
======================================================================
ARGENTINA (7.0%)
SOVEREIGN (7.0%)
   Republic of Argentina
     4.81%, 3/31/23                          1,450 (a)             907
   Republic of Argentina Par Bond
     'L-GP'
     6.00%, 3/31/23                         19,000 (b)          12,537
----------------------------------------------------------------------
                                                                13,444
======================================================================
BRAZIL (20.3%)
SOVEREIGN (20.3%)
   Federative Republic of Brazil
     Bond 'L'
     5.50%, 4/15/09                          3,341 (a)           2,715
   Federative Republic of Brazil
     Global Bond
     9.63%, 7/15/05                          4,200               3,955
   Federative Republic of Brazil
     'C-L' Bond
     8.00%, 4/15/14                             44                  32
   Federative Republic of Brazil
     Bond 'EI' (Registered)
     5.63%, 4/15/06                            920 (a)             814
   Federative Republic of Brazil
     Bond 'EI-L'
     5.44%, 4/15/06                          2,320 (a)           2,056
   Federative Republic of Brazil
     Bond PIK 'C'
     8.00%, 4/15/14                         18,286 (c)          13,486
   Federative Republic of Brazil Debt
     Conversion
     5 .50%, 4/15/12                        13,500 (a,c)         9,484
   Federative Republic of Brazil
     Discount Bond 'Z-L'
     5.44%, 4/15/24                          8,350 (a)           6,085
----------------------------------------------------------------------
                                                                38,627
======================================================================
BULGARIA (3.8%)
SOVEREIGN (3.8%)
   Republic of Bulgaria Discount
     Bond 'A' Euro
     6.31%, 7/28/24                          3,350 (a)           2,638
----------------------------------------------------------------------
   Republic of Bulgaria Front-
     Loaded Interest Reduction
     Bond,
     3.00%, 7/28/12                       $  5,650 (b)        $  4,570
----------------------------------------------------------------------
                                                                 7,208
======================================================================
CROATIA (0.8%)
SOVEREIGN (0.8%)
   Croatia Government International
     Bond
     6.25%, 7/31/10                          1,555 (a)           1,520
======================================================================
ECUADOR (3.2%)
SOVEREIGN (3.2%)
   Republic of Ecuador
     4.00%, 8/15/30                          6,300 (b)           2,712
     12.00%, 11/15/12                        4,800               3,353
----------------------------------------------------------------------
                                                                 6,065
======================================================================
EGYPT (3.0%)
SOVEREIGN (3.0%)
   Arab Republic of Egypt
     8.75%, 7/11/11                          5,700 (d)           5,693
======================================================================
INDIA (0.0%)
SOVEREIGN (0.0%)
   Surashtra Cement and
     Chemical Ltd.
     19.00%, 6/26/00                    INR 30,000 (e,f)           --@
======================================================================
INDONESIA (0.8%)
CORPORATE (0.8%)
   Indah Kiat International Finance 'B'
     11.88%, 6/15/02                      $    900 (e)             243
   Pindo Deli Finance
     (Mauritius)
     10.75%, 10/1/07                         4,300 (d,e)           602
   Tjiwi Kimia Finance Mauritius Ltd.
     10.00%, 8/1/04                            250                  37
   Tjiwi Kimia International Global Bond
     13.25%, 8/1/01                          4,300                 650
----------------------------------------------------------------------
                                                                 1,532
======================================================================
IVORY COAST (0.7%)
SOVEREIGN (0.7%)
   Republic of Ivory Coast Bond
     2.00%, 3/29/18                          3,183 (b,e)           525
   Republic of Ivory Coast Front-Load
     Interest Reduction Bond
     2.00%, 3/29/18                          4,550 (b,e)           739
----------------------------------------------------------------------
                                                                 1,264
======================================================================
</Table>

    The accompanying notes are an integral part of the financial statements

                                       5
<Page>

<Table>
<Caption>
                                              FACE
                                            AMOUNT               VALUE
                                             (000)               (000)
----------------------------------------------------------------------
<S>                                       <C>                 <C>
MALAYSIA (1.7%)
CORPORATE (1.7%)
   TM Global Inc.
     8.00%, 12/7/10                       $  3,200 (d)        $  3,176
======================================================================
MEXICO (18.2%)
CORPORATE (4.2%)
   Grupo Iusacell SA de CV
     14.25%, 12/1/06                         1,300 (d)           1,385
   Pemex Project Funding Master
     Trust
     8.50%, 2/15/08                          1,700 (d)           1,751
   Petroleos Mexicanos
     9.50%, 9/15/27                          2,700               2,882
   TV Azteca 'B'
     10.50%, 2/15/07                         2,000               1,903
----------------------------------------------------------------------
                                                                 7,921
----------------------------------------------------------------------
SOVEREIGN (14.0%)
   United Mexican States Discount
     Bond 'A'
     9.88%, 2/1/10                           6,850               7,463
   United Mexican States Discount
     Bond 'D'
     8.13%, 12/30/19                         8,450               7,985
   United Mexican States Global
     Bond
     8.38%, 1/14/11                         11,171              11,244
----------------------------------------------------------------------
                                                                26,692
----------------------------------------------------------------------
                                                                34,613
======================================================================
MOROCCO (5.1%)
SOVEREIGN (5.1%)
   Morocco R&C 'A'
     5.09%, 1/1/09                          10,618 (a)           9,768
======================================================================
NIGERIA (0.7%)
SOVEREIGN (0.7%)
   Central Bank of Nigeria Par Bond
     6.25%, 11/15/20                         2,000               1,276
   Nigeria Promissory Notes,
     Series RC
     5.09%, 1/5/10                             300                 114
----------------------------------------------------------------------
                                                                 1,390
======================================================================
PANAMA (3.5%)
SOVEREIGN (3.5%)
   Republic of Panama
     9.38%, 4/1/29                           1,000               1,033
     9.63%, 2/8/11                           4,400               4,404
----------------------------------------------------------------------
   Republic of Panama, PDI PIK
     6.44%, 7/17/16                       $  1,599 (a)        $  1,288
----------------------------------------------------------------------
                                                                 6,725
======================================================================
PERU (0.6%)
SOVEREIGN (0.6%)
   Republic of Peru Front-Loaded
     Interest Reduction Bond
     4.50%, 3/7/17                           1,600 (b)           1,102
======================================================================
PHILIPPINES (1.2%)
CORPORATE (0.2%)
   Bayan Telecommunications, Inc.
     13.50%, 7/15/06                         1,800 (d,e)           329
----------------------------------------------------------------------
SOVEREIGN (1.0%)
   Republic of Philippines
     9.50%, 10/21/24                         2,000               1,972
----------------------------------------------------------------------
                                                                 2,301
======================================================================
POLAND (1.8%)
CORPORATE (0.7%)
   Netia Holdings II BV, 'B'
     13.13%, 6/15/09                         1,400                 602
   PTC International Finance II SA
     11.25%, 12/1/09                           900                 882
----------------------------------------------------------------------
                                                                 1,484
----------------------------------------------------------------------
SOVEREIGN (1.1%)
   Republic of Poland
     6.00%, 10/27/14                         2,100 (b)           2,066
----------------------------------------------------------------------
                                                                 3,550
======================================================================
QATAR (2.2%)
SOVEREIGN (2.2%)
   State of Qatar
     9.75%, 6/15/30                          3,700               4,143
======================================================================
RUSSIA (14.7%)
SOVEREIGN (14.7%)
   Russian Federation
     5.00%, 3/31/30                         19,396 (b,d)         9,189
     5.00%, 3/31/30                          8,290 (b)           3,913
     8.25%, 3/31/10                          1,600               1,226
     8.25%, 3/31/10                          5,626 (d)           4,311
     12.75%, 6/24/28                         9,450               9,308
----------------------------------------------------------------------
                                                                27,947
======================================================================
</Table>

    The accompanying notes are an integral part of the financial statements

                                      6
<Page>

<Table>
<Caption>
                                             FACE
                                            AMOUNT               VALUE
                                             (000)               (000)
-----------------------------------------------------------------------
<S>                                       <C>                 <C>
SOUTH KOREA (3.1%)
CORPORATE (2.1%)
   Korea Electric Power
     6.38%, 12/1/03                       $  1,900            $  1,919
     7.75%, 4/1/13                           2,100               2,120
----------------------------------------------------------------------
                                                                 4,039
----------------------------------------------------------------------
SOVEREIGN (1.0%)
   Republic of South Korea
     8.88%, 4/15/08                          1,600               1,801
----------------------------------------------------------------------
                                                                 5,840
======================================================================
TUNISIA (1.0%)
SOVEREIGN (1.0%)
   Banque Centrale de Tunisie
     8.25%, 9/19/27                          2,000               1,890
======================================================================
TURKEY (2.3%)
CORPORATE (0.3%)
   Cellco Finance NV
     15.00%, 8/1/05                            710                 594
----------------------------------------------------------------------
SOVEREIGN (2.0%)
   Republic of Turkey
     11.88%, 1/15/30                         4,600               3,806
----------------------------------------------------------------------
                                                                 4,400
======================================================================
UKRAINE (0.4%)
SOVEREIGN (0.4%)
   Ukraine Government
     11.00%, 3/15/07                         1,116                 861
======================================================================
VENEZUELA (2.8%)
SOVEREIGN (2.8%)
   Republic of Venezuela Global Bond
     9.25%, 9/15/27                          2,000               1,368
   Republic of Venezuela Par Bond
     6.75%, 3/31/20                          5,200               3,926
----------------------------------------------------------------------
                                                                 5,294
======================================================================
TOTAL DEBT INSTRUMENTS
   (Cost $192,912)                                             189,088
----------------------------------------------------------------------

<Caption>
                                            NO. OF
                                            RIGHTS
                                             (000)
----------------------------------------------------------------------
<S>                                        <C>
RIGHTS(0.2%)
======================================================================
MEXICO (0.2%)
   United Mexican States,
     Value Recovery Rights
(Cost $--@)                                 45,419 (f)             450
======================================================================
<Caption>
                                            NO. OF              VALUE
                                          WARRANTS               (000)
----------------------------------------------------------------------
<S>                                         <C>               <C>
WARRANTS(0.0%)
======================================================================
COLOMBIA (0.0%)
   Occidente y Caribe,
     expiring 3/15/04                       69,200 (d,f)      $    69
======================================================================
NIGERIA (0.0%)
   Central Bank of Nigeria,
     expiring 11/15/20                       1,250 (f)              --@
======================================================================
TOTAL WARRANTS
   (Cost $44)                                                       69
======================================================================
<Caption>

                                              FACE
                                            AMOUNT
                                             (000)
----------------------------------------------------------------------
<S>                                       <C>                     <C>
SHORT-TERM INVESTMENTS(0.4%)
======================================================================
UNITED STATES (0.4%)
REPURCHASE AGREEMENT
   J.P. Morgan Securities Inc., 3.70%,
     dated 06/29/01, due 07/02/01
   (Cost $825)                            $    825 (g)            825
======================================================================
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (0.1%)
INDIA (0.1%)
(Interest Bearing Demand
Account)
     Indian Rupee
     (Cost $94)                         INR  4,381                 93
======================================================================
</Table>

    The accompanying notes are an integral part of the financial statements

                                       7
<Page>

<Table>
<Caption>
                                            AMOUNT               VALUE
                                             (000)               (000)
----------------------------------------------------------------------
<S>                                       <C>                 <C>
TOTAL INVESTMENTS(100.0%)
   (COST $193,875)                                            $190,525
======================================================================
OTHER ASSETS
   Cash                                   $    274
   Interest Receivable                       5,215
   Receivable for Investments Sold          10,694
   Other                                        31              16,214
======================================================================
LIABILITIES
   Payable For:
     Reverse Repurchase
        Agreements                         (14,190)
     Investments Purchased                  (5,693)
     Dividends Declared                     (4,630)
     Investment Advisory Fees                 (158)
     Directors' Fees and Expenses              (85)
     Shareholder Reporting
        Expenses                               (70)
     Professional Fees                         (51)
     Administrative Fees                       (26)
     Custodian Fees                            (25)
     Other Liabilities                         (36)            (24,964)
======================================================================
NET ASSETS
======================================================================
   Applicable to 22,046,681,
     issued and outstanding $0.001
     par value shares (100,000,000
     shares authorized)                                       $181,775
======================================================================
 NET ASSET VALUE PER SHARE                                    $   8.24
----------------------------------------------------------------------
 AT JUNE 30, 2001, NET ASSETS
 CONSISTED OF:
   Common Stock                                               $    220
   Paid-in Capital                                             279,105
   Undistributed Net Investment Income                             609
   Accumulated Net Realized Loss                               (94,814)
   Unrealized Depreciation on
     Investments and Foreign
     Currency Translations                                      (3,345)
======================================================================
 TOTAL NET ASSETS                                             $181,775
======================================================================
</Table>

(a) --Variable/floating rate security - rate disclosed is as of
      June 30, 2001.
(b) --Step Bond - coupon rate increases in increments to maturity. Rate
      disclosed is as of June 30, 2001. Maturity date disclosed is ultimate
      maturity.
(c) --Denotes all or a portion of securities subject to repurchase
      Under the Reverse Repurchase Agreements as of June 30,
      2001. See note A-4
(d) --144A Security - Certain conditions for public sale may
      exist.
(e) --Security is in default.
(f) --Non-income producing.
(g) --The repurchase agreement is fully collateralized by U.S. government
      and/or agency obligations based on market Prices at the date of this
      schedule of investments. The investment in the repurchase agreement is
      through participation in a joint account with affiliated funds.
PIK --Payment-in-Kind. Income may be paid in additional securities or cash at
      the discretion of the issuer.
@ --  Amount is less than $500.

<Table>
<Caption>
======================================================================
JUNE 30, 2001 EXCHANGE RATE:
----------------------------------------------------------------------
<S>                                                <C>           <C>
INR Indian Rupee                                   47.040= U.S.   $1.00
======================================================================
</Table>

    The accompanying notes are an integral part of the financial statements

                                       8
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.
FINANCIAL STATEMENTS

<Table>
<Caption>
STATEMENT OF OPERATIONS                                                                                 SIX MONTHS ENDED
                                                                                                         JUNE 30, 2001
                                                                                                          (UNAUDITED)
                                                                                                             (000)
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                              <C>
INVESTMENT INCOME
      Interest                                                                                                   $11,298
========================================================================================================================
EXPENSES
      Investment Advisory Fees                                                                                       911
      Interest Expense on Borrowings                                                                                 380
      Administrative Fees                                                                                            112
      Professional Fees                                                                                               65
      Shareholder Reporting Expenses                                                                                  57
      Custodian Fees                                                                                                  26
      Directors' Fees and Expenses                                                                                    10
      Transfer Agent Fees                                                                                             10
      Other Expenses                                                                                                  39
------------------------------------------------------------------------------------------------------------------------
        Total Expenses                                                                                             1,610
========================================================================================================================
          Net Investment Income                                                                                    9,688
========================================================================================================================
NET REALIZED GAIN (LOSS) ON:
      Investment Securities Sold (net of foreign tax expense of $71)                                                  70
      Foreign Currency Transactions                                                                                   (7)
------------------------------------------------------------------------------------------------------------------------
        Net Realized Gain                                                                                             63
========================================================================================================================
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON:
      Investments                                                                                                     77
      Foreign Currency Translations                                                                                   73
------------------------------------------------------------------------------------------------------------------------
       Change in Unrealized Appreciation/Depreciation                                                                150
------------------------------------------------------------------------------------------------------------------------
Net Realized Gain and Change in Unrealized Appreciation/Depreciation                                                 213
========================================================================================================================
      NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                                       $ 9,901
========================================================================================================================
</Table>

<Table>
<Caption>
                                                                               SIX MONTHS ENDED
                                                                                 JUNE 30, 2001           YEAR ENDED
STATEMENT OF CHANGES IN NET ASSETS                                                (UNAUDITED)         DECEMBER 31, 2000
                                                                                     (000)                  (000)
------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                      <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
   Net Investment Income                                                          $   9,688                $   27,076
   Net Realized Gain                                                                     63                    16,378
   Change in Unrealized Appreciation/Depreciation                                       150                   (22,689)
------------------------------------------------------------------------------------------------------------------------
   Net Increase in Net Assets Resulting from Operations                               9,901                     20765
------------------------------------------------------------------------------------------------------------------------
Distributions
   Net Investment Income                                                             (9,260)                  (23,900)
------------------------------------------------------------------------------------------------------------------------
   Total Increase (Decrease)                                                            641                    (3,135)
------------------------------------------------------------------------------------------------------------------------
Net Assets:
   Beginning of Period                                                              181,134                   184,269
------------------------------------------------------------------------------------------------------------------------
   End of Period (including undistributed net investment income of $609
   and $181, respectively                                                         $ 181,775                $  181,134
========================================================================================================================
</Table>

    The accompanying notes are an integral part of the financial statements

                                       9
<Page>

<Table>
<Caption>
                                                                                                         SIX MONTHS ENDED
                                                                                                          JUNE 30, 2001
STATEMENT OF CASH FLOWS                                                                                    (UNAUDITED)
                                                                                                              (000)
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Proceeds from Sales and Maturities of Investments                                                       $     301,410
   Purchases of Investments                                                                                     (305,395)
   Net Increase in Short-Term Investments                                                                           (825)
   Net Realized Loss on Foreign Currency Transactions                                                               (101)
   Net Investment Income                                                                                           9,688
   ADJUSTMENTS TO RECONCILE NET INVESTMENT INCOME TO NET CASH PROVIDED BY OPERATING
   ACTIVITIES:
      Net Increase in Receivables Related to Operations                                                             (625)
      Net Decrease in Payables Related to Operations                                                                (101)
      Accretion/Amortization of Discounts and Premiums                                                            (1,335)
-------------------------------------------------------------------------------------------------------------------------
   Net Cash Provided by Operating Activities                                                                       2,716
-------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash Received for Reverse Repurchase Agreements                                                                12,690
   Cash Distributions Paid                                                                                       (13,980)
   Cash Paid to Bank                                                                                              (1,152)
-------------------------------------------------------------------------------------------------------------------------
   Net Cash Used for Financing Activities                                                                         (2,442)
-------------------------------------------------------------------------------------------------------------------------
   Net Increase in Cash                                                                                              274
CASH AT BEGINNING OF PERIOD                                                                                           --
-------------------------------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD                                                                                      $          274
-------------------------------------------------------------------------------------------------------------------------
</Table>

    The accompanying notes are an integral part of the financial statements

                                       10
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.
FINANCIAL HIGHLIGHTS

SELECTED PER SHARE DATA AND RATIOS

<Table>
<Caption>

                                   SIX MONTHS ENDED                       YEAR ENDED DECEMBER 31,
                                    JUNE 30, 2001        ----------------------------------------------------------------
                                     (UNAUDITED)          2000            1999           1998         1997           1996
-------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>            <C>            <C>          <C>             <C>
NET ASSET VALUE, BEGINNING OF
 PERIOD                              $   8.22        $   8.36       $   7.01       $  15.21     $  17.31       $  12.40
-------------------------------------------------------------------------------------------------------------------------
Net Investment Income                    0.44            1.23           1.09           1.27         1.34           1.75
Net Realized and Unrealized
  Gain (Loss) on Investments             0.00+          (0.29)          1.27          (5.12)        1.27           4.24
-------------------------------------------------------------------------------------------------------------------------
    Total from Investment
      Operations                         0.44            0.94           2.36          (3.85)        2.61           5.99
-------------------------------------------------------------------------------------------------------------------------
Distributions:
   Net Investment Income                (0.42)          (1.08)         (1.00)         (1.39)       (1.27)         (1.08)
   In Excess of Net Investment
     Income                                --              --          (0.01)         (0.02)          --              --
   Net Realized Gains                      --              --             --             --        (3.44)             --
   In Excess of Net Realized
     Gains                                 --              --             --          (2.94)          --              --
-------------------------------------------------------------------------------------------------------------------------
     Total Distributions                (0.42)          (1.08)         (1.01)         (4.35)       (4.71)         (1.08)
-------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
  OF PERIOD                          $   8.24        $   8.22       $   8.36       $   7.01     $  15.21       $  17.31
-------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END
  OF PERIOD                          $   7.46        $   6.88       $   6.81       $   7.19     $  15.38       $  15.13
-------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN:
  Market Value                          14.91%          16.49%          8.55%        (32.04%)      40.81%         30.86%
  Net Asset Value (1)                    6.16%          13.50%         36.58%        (33.00%)      21.71%         50.98%
-------------------------------------------------------------------------------------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
  (THOUSANDS)                        $181,775        $181,134       $184,269       $153,084     $327,556       $ 372,644
-------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average
  Net Assets                             1.77%*          2.32%          2.28%          2.75%        2.27%          2.59%
Ratio of Expenses Excluding
  Interest Expdnse to Average Net
  Assets                                 1.35%*          1.34%          1.35%          1.47%        1.51%          1.38%
Ratio of Net Investment Income
  to Average Net Assets                 10.65%*         14.31%         14.53%         12.50%        8.80%         12.14%
Portfolio Turnover Rate                   164%            272%           178%           308%         361%           373%
-------------------------------------------------------------------------------------------------------------------------
</Table>

*    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
     per share of the Fund.
+    Amount is less than $0.01.

    The accompanying notes are an integral part of the financial statements

                                       11
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.
JUNE 30, 2001 (UNAUDITED)

NOTES TO FINANCIAL STATEMENTS

     Morgan Stanley Emerging Markets Debt Fund, Inc. (the "Fund") was
incorporated in Maryland on May 6, 1993, 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 investment objective is to produce high
current income and as a secondary objective, to seek capital appreciation,
through investments primarily in debt securities.

A. ACCOUNTING POLICIES: The following significant accounting policies are in
conformity with generally accepted accounting principles for investment
companies. Such policies 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 mean of the current bid and asked prices obtained from
     reputable brokers. Securities may be valued by independent pricing
     services. The prices provided by a pricing service take into account broker
     dealer market price quotations for institutional size trading in similar
     groups of securities, security quality, maturity, coupon and other security
     characteristics as well as any developments related to the specific
     securities. 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, if any) are valued at fair value as
     determined in good faith under procedures approved by the Board of
     Directors.

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 earned or repatriated. The
     Fund accrues such taxes when the related income is earned.

3.   REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements under
     which the Fund lends excess cash and takes possession of securities with an
     agreement that the counterparty will repurchase such securities. In
     connection with transactions in repurchase agreements, a bank as custodian
     for the Fund takes possession of the underlying securities (collateral),
     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.

     The Fund, along with other affiliated investment companies, may utilize a
     joint trading account for the purpose of entering into one or more
     repurchase agreements.

4.   REVERSE REPURCHASE AGREEMENTS: 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. Reverse repurchase
     agreements also involve credit risk with the counterparty to the extent
     that the value of securities subject to repurchase exceed the Fund's
     liability under the reverse repurchase agreement. Securities subject to
     repurchase under reverse repurchase agreements, if any, are designated as
     such in the Statement of Net Assets.

                                       12
<Page>

At June 30, 2001, the Fund had reverse repurchase agreements outstanding with
Salomon Brothers as follows:

<Table>
<Caption>
                                                     MATURITY IN LESS
                                                      THAN 365 DAYS
                                                    -------------------
<S>                                                  <C>
Value of Securities Subject to                       $     4,875,000
  Repurchase
Liability Under Reverse                              $    14,190,000
   Repurchase Agreement
Interest Rate                                                   4.00%
</Table>

The average weekly balance of reverse repurchase agreements outstanding during
the six months ended June 30, 2001, was approximately $11,492,000 at a weighted
average interest rate of 5.26%.

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 changes in the market
     prices of securities sold during the period. Accordingly, realized and
     unrealized foreign currency gains (losses) due to securities transactions
     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 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) on
     investments and foreign currency translations in the Statement of Net
     Assets. The change in net unrealized currency gains (losses) on foreign
     currency translations 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.

The Fund may use derivatives to achieve its investment objectives. The Fund may
engage in transactions in futures contracts on foreign currencies, stock
indices, as well as in options, swaps and structured notes. Consistent with the
Fund's investment objectives and policies, the Fund may use derivatives for
non-hedging as well as hedging purposes.

Following is a description of derivative instruments that the Fund may utilize
and their associated risks:

6.   FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into foreign
     currency exchange contracts generally to attempt to protect securities and
     related receivables and payables against changes in future foreign exchange
     rates and, in certain situations, to gain exposure to a foreign currency. A
     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

                                       13
<Page>

     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 and any
     intermediaries between the Lender and the Fund. 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.   FORWARD COMMITMENTS AND WHEN-ISSUED/DELAYED DELIVERY SECURITIES: The Fund
     may make forward commitments to purchase or sell securities. Payment and
     delivery for securities which have been purchased or sold on a forward
     commitment basis can take place a month or more (not to exceed 120 days)
     after the date of the transaction. Additionally, 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 either 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 or denotes such assets as
     segregated on the Fund's records. Purchasing securities on a forward
     commitment or 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.   SECURITIES SOLD SHORT: The Fund may sell securities short. A short sale is
     a transaction in which the Fund sells securities it may or may not own, but
     has borrowed, in anticipation of a decline in the market price of the
     securities. The Fund is obligated to replace the borrowed securities at
     their market price at the time of replacement. The Fund may have to pay a
     premium to borrow the securities as well as pay any dividends or interest
     payable on the securities until they are replaced. The Fund's obligation to
     replace the securities borrowed in connection with a short sale will
     generally be secured by collateral deposited with the broker that consists
     of cash, U.S. government securities or other liquid, high grade debt
     obligations. In addition, the Fund will either place in a segregated
     account with its custodian or denote as pledged on the custody records an
     amount of cash, U.S. government securities or other liquid high grade debt
     obligations equal to the difference, if any, between (1) the market value
     of the securities sold at the time they were sold short and (2) any cash,
     U.S. government securities or other liquid high grade debt obligations
     deposited as collateral with the broker in connection with the short sale
     (not including the proceeds of the short sale). Short sales by the Fund
     involve certain risks and special considerations. Possible losses from
     short sales differ from losses that could be incurred from a purchase of a
     security because losses from short sales may be unlimited, whereas losses
     from purchases cannot exceed the total amount invested.

                                       14
<Page>

10.  WRITTEN OPTIONS: The Fund may write covered call options in an attempt to
     increase the Fund's total return. The Fund will receive premiums that are
     recorded as liabilities and subsequently adjusted to the current value of
     the options written. Premiums received from writing options which expire
     are treated as realized gains. Premiums received from writing options which
     are exercised or are closed are added to or offset against the proceeds or
     amount paid on the transaction to determine the net realized gain or loss.
     By writing a covered call option, the Fund foregoes in exchange for the
     premium the opportunity for capital appreciation above the exercise price
     should the market price of the underlying security increase.

11.  SWAP AGREEMENTS: A swap is an agreement to exchange the return generated by
     one instrument for the return generated by another instrument. The
     following summarizes the types of swaps that the Fund may enter into:

     INTEREST RATE SWAPS: Interest rate swaps involve the exchange of
     commitments to pay and receive interest based on a notional principal
     amount. The Fund may utilize interest rate swaps in an attempt to increase
     income while limiting the Fund's exposure to market fluctuations in
     interest rates. Net periodic interest payments to be received or paid are
     accrued daily and are recorded in the Statement of Operations as an
     adjustment to interest income. Interest rate swaps are marked-to-market
     daily based upon quotations from market makers and the change, if any, is
     recorded as an unrealized gain or loss in the Statement of Operations.

     TOTAL RETURN SWAPS: Total return swaps involve commitments to pay interest
     in exchange for a market-linked return based on a notional amount and
     provide the Fund with the full benefit on an investment in a security
     without an initial cash outlay. To the extent the total return of the
     security or index underlying the transaction exceeds or falls short of the
     offsetting interest rate obligation, the Fund will receive a payment from
     or make a payment to the counterparty, respectively. Total return swaps are
     marked-to-market daily based upon quotations from market makers and the
     change, if any, is recorded as an unrealized gain or loss in the Statement
     of Operations. Payments received or made at the end of each measurement
     period are recorded as realized gain or loss in the Statement of
     Operations.

     Realized gains or losses on maturity or termination of interest rate and
     total return swaps are presented in the Statement of Operations. Because
     there is no organized market for these swap agreements, the value reported
     in the Statement of Net Assets may differ from that which would be realized
     in the event the Fund terminated its position in the agreement. Risks may
     arise upon entering into these agreements from the potential inability of
     the counterparties to meet the terms of the agreements and are generally
     limited to the amount of net interest payments to be received and/or
     favorable movements in the value of the underlying security, instrument or
     basket of instruments, if any, at the date of default.

     Risks also arise from potential losses from adverse market movements, and
     such losses could exceed the related amounts shown in the Statement of Net
     Assets.

12.  STRUCTURED SECURITIES: The Fund may invest in interests in entities
     organized and operated solely for the purpose of restructuring the
     investment characteristics of sovereign debt obligations. This type of
     restructuring involves the deposit with or purchase by an entity of
     specified instruments and the issuance by that entity of one or more
     classes of securities ("Structured Securities") backed by, or representing
     interests in, the underlying instruments. Structured Securities generally
     will expose the Fund to credit risks of the underlying instruments as well
     as of the issuer of the Structured Security. Structured Securities are
     typically sold in private placement transactions with no active trading
     market. Investments in Structured Securities may be more volatile than
     their underlying instruments, however, any loss is limited to the amount of
     the original investment.

13.  OVER-THE-COUNTER TRADING: Securities and other derivative instruments that
     may be purchased or sold by the Fund may consist of instruments not traded
     on an exchange. The risk of nonperformance by the obligor on such an
     instrument may be greater, and the ease with which the Fund can dispose of
     or enter into closing transactions with respect to such an instrument may
     be less, than in the case of an exchange-traded in-

                                       15
<Page>

     strument. In addition, significant disparities may exist between bid and
     asked prices for derivative instruments that are not traded on an exchange.
     Derivative instruments not traded on exchanges are also not subject to the
     same type of government regulation as exchange traded instruments, and many
     of the protections afforded to participants in a regulated environment may
     not be available in connection with such transactions.

During the six months ended June 30, 2001, the Fund's investments in derivative
instruments included foreign currency exchange contracts, structured securities
and over-the-counter trading.

14.  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-dividend
     date.

     The amount and character of income and capital gain distributions to be
     paid by the Fund are determined in accordance with Federal income tax
     regulations, which may differ from generally accepted accounting
     principles. The book/tax differences are either considered temporary or
     permanent in nature.

     Temporary differences are attributable to differing book and tax
     treatments for the timing of the recognition of gains and losses on
     certain investment transactions and the timing of the deductibility
     of certain expenses.

     Permanent book and tax basis differences may result in reclassifications
     among undistributed net investment income (loss), accumulated net realized
     gain (loss) and paid-in capital.

     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. ADVISER: Morgan Stanley Investment Management Inc. (formerly Morgan
     Stanley Dean Witter Investment 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. ADMINISTRATOR: The Chase Manhattan Bank, through its corporate affiliate
     J.P. Morgan Investor 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 0.06% of the
     Fund's average weekly net assets, plus $100,000 per annum. In addition, the
     Fund is charged for certain out-of-pocket expenses incurred by the
     Administrator on its behalf.

     D. CUSTODIAN: The Chase Manhattan Bank serves as custodian for the Fund.
     Custody fees are payable monthly based on assets held in custody,
     investment purchase and sales activity and account maintenance fees, plus
     reimbursement for certain out-of-pocket expenses.

     E. OTHER: During the six months ended June 30, 2001, the Fund made
     purchases and sales totaling approximately $309,831,000 and $311,184,000
     respectively, of investment securities other than long-term U.S. Government
     securities, purchased options and short-term investments. There were no
     purchases or sales of long-term U.S. Government securities. At June 30,
     2001, the U.S. Federal income tax cost basis of securities was
     approximately $193,781,000 and, accordingly, net unrealized depreciation
     for U.S. Federal income tax purposes was $3,349,000, of which $6,055,000
     related to appreciated securities and $9,404,000 related to depreciated
     securities. At December 31, 2000, the Fund had a capital loss carryfor-ward
     for U.S. Federal income tax purposes of approximately $91,485,000 available
     to offset future capital gains, of which $77,686,000 will expire on
     December 31, 2006 and $13,799,000 will expire on December 31, 2007. To the
     extent that capital gains are offset, such gains will not be distributed to
     the shareholders.

                                       16
<Page>

     Net capital and currency losses incurred after October 31, and within the
     taxable year are deemed to arise on the first business day of the Fund's
     next taxable year. For the year ended December 31, 2000, the Fund deferred
     to January 1, 2001, for U.S. Federal income tax purposes, post-October
     capital losses of $1,724,000.

     A significant portion of the Fund's net assets consist of securities of
     issuers located in emerging markets or which are denominated in foreign
     currencies. Such investments may be concentrated in a limited number of
     countries and regions and may vary throughout the year. Changes in currency
     exchange rates will affect the value of and investment income from foreign
     currency denominated securities. Emerging market securities are often
     subject to greater price volatility, limited capitalization and liquidity,
     and higher rates of inflation than U.S. securities. In addition, emerging
     market securities may be subject to substantial governmental involvement in
     the economy and greater social, economic and political uncertainty.

     These investments may be traded by one market maker who may also be
     utilized by the Fund to provide pricing information used to value such
     securities. The amounts which will be realized upon disposition of the
     securities may differ from the value reflected on the Statement of Net
     Assets and the differences could be material.

     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. At June 30, 2001, the
     deferred fees payable under the Plan totaled $85,000 and are included in
     Payable for Directors' Fees and Expenses on the Statement of Net Assets.

     During June 2001, the Officers of the Fund, pursuant to authority granted
     by the Board of Directors declared a distribution of $0.21 per share,
     derived from net investment income, payable on July 13, 2001, to
     shareholders of record on June 29, 2001.

     F. SUPPLEMENTAL PROXY INFORMATION:

     The Annual Meeting of the Stockholders of the Fund was held on June 14,
     2001. The following is a summary of the proposal presented and the total
     number of shares voted:

     PROPOSAL:
     1. To elect the following Directors:

<Table>
<Caption>

                                         VOTES IN      VOTES
                                         FAVOR OF     AGAINST
                                        ----------   --------
<S>                                     <C>          <C>
Ronald E. Robison                       19,714,761   315,650
Gerard E. Jones                         19,740,236   290,175
Barton M. Biggs                         19,677,042   353,369
William G. Morton, Jr.                  19,771,372   259,039
John A. Levin                           19,689,005   341,406
</Table>

                                       17
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"), each
shareholder will be to have elected, unless Boston Equiserve (the "Plan Agent")
is otherwise instructed by the shareholder in 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, annually,
in any amount from $100 to $3,000, investment in Fund shares.

Dividend and capital gain distributions will be reinvested on the reinvestment
date. If the market price per equals or exceeds net asset value per share on the
reinvestment date, the Fund will issue shares to at net asset value. If net
asset value is less than 95% of the market price on the reinvestment date,
shares will 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 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 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, 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 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 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 to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for account of beneficial owners who are participating in the
Plan.

Shareholders who do not wish to have distributions automatically reinvested
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 Emerging Markets Debt Fund, Inc.
    Boston Equiserve
    Dividend Reinvestment Unit
    P.O. Box 1681
    Boston, MA 02105-1681
    1-800-730-6001

                                       18
<Page>

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.

DIRECTORS AND OFFICERS
Barton M. Biggs                    Fergus Reid
CHAIRMAN OF THE BOARD OF           DIRECTOR
DIRECTORS

Ronald E. Robison                  Frederick O. Robertshaw
PRESIDENT AND DIRECTOR             DIRECTOR

John D. Barrett II                 Stefanie V. Chang
DIRECTOR                           VICE PRESIDENT

Gerard E. Jones                    Arthur J. Lev
DIRECTOR                           VICE PRESIDENT

Graham E. Jones                    Joseph P. Stadler
DIRECTOR                           VICE PRESIDENT

John A. Levin                      Mary E. Mullin
DIRECTOR                           SECRETARY

Andrew McNally IV                  Belinda A. Brady
DIRECTOR                           TREASURER

William G. Morton, Jr.             Robin L. Conkey
DIRECTOR                           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.


</TEXT>
</DOCUMENT>
