As filed with the Securities and Exchange Commission on July 17, 2009

Securities Act File No. 333-         

Investment Company Act File No. 811-07694

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-14

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.

(Exact Name of Registrant as Specified in Charter)

522 Fifth Avenue

New York, New York 10036

(Address of Principal Executive Offices)

(212) 296-6970

(Area Code and Telephone Number)

Stefanie V. Chang Yu, Esq.

Morgan Stanley Investment Management Inc.

522 Fifth Avenue

New York, New York 10036

(Name and Address of Agent for Service)

Copy to:

Approximate Date of Proposed Public Offering:

As soon as practicable after the effective date of this Registration Statement.

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

MORGAN STANLEY GLOBAL OPPORTUNITY BOND FUND, INC.

522 Fifth Avenue

New York, New York  10036

(800) 231-2608

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 18, 2009

To the stockholders of Morgan Stanley Global Opportunity Bond Fund, Inc.:

Notice is hereby given of a Special Meeting of the Stockholders of Morgan Stanley Global Opportunity Bond Fund, Inc. (“Global Opportunity Bond”) to be held in Conference Room [·], [·] Floor, 522 Fifth Avenue, New York, New York 10036, at [·] a.m., New York time, on November 18, 2009, and any adjournments or postponements thereof (the “Meeting”), for the following purposes:

1.             To consider and vote upon a proposal to approve the actions and transactions described in that certain Agreement and Plan of Reorganization, dated June 19, 2009 (the “Reorganization Agreement”), between Global Opportunity Bond and Morgan Stanley Emerging Markets Debt Fund, Inc. (“Emerging Markets Debt”), pursuant to which substantially all of the assets of Global Opportunity Bond would be transferred to Emerging Markets Debt and stockholders of Global Opportunity Bond would become stockholders of Emerging Markets Debt receiving shares of common stock of Emerging Markets Debt with a value equal to the value of their holdings in Global Opportunity Bond and Global Opportunity Bond would be dissolved (the “Reorganization”); and

2.             To act upon such other matters as may properly come before the Meeting, or any adjournments or postponements thereof.

The Reorganization is more fully described in the accompanying Proxy Statement and Prospectus and a copy of the Reorganization Agreement is attached as Exhibit A thereto, both of which are incorporated herein by reference and form a part of this Notice of Special Meeting of Stockholders.  Stockholders of record of Global Opportunity Bond at the close of business on September 4, 2009 are entitled to notice of, and to vote at, the Meeting.  Please read the Proxy Statement and Prospectus carefully before telling us, through your Proxy or in person, how you wish your shares to be voted.  Alternatively, if you are eligible to vote telephonically by touchtone telephone or electronically on the Internet (as discussed in the enclosed Proxy Statement) you may do so in lieu of attending the Meeting in person.  The Board of Directors of Global Opportunity Bond recommends you vote in favor of the Reorganization.  We urge you to sign, date and mail the enclosed Proxy promptly.

[·], 2009

You can help avoid the necessity and expense of sending follow-up letters to ensure a quorum by promptly returning the enclosed Proxy.  If you are unable to be present in person, please fill in, sign and return the enclosed Proxy in order that the necessary quorum be represented at the Meeting.  The enclosed envelope requires no postage if mailed in the United States.  Stockholders of Global Opportunity Bond will be able to vote telephonically by touchtone telephone or electronically on the Internet by following instructions on their Proxy Cards or on the enclosed Voting Information Card.

MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC.

522 Fifth Avenue
New York, New York  10036
(800) 231-2608

Acquisition of the Assets of
Morgan Stanley Global Opportunity Bond Fund, Inc.

By and in Exchange for Shares of Common Stock of
Morgan Stanley Emerging Markets Debt Fund, Inc.

This Proxy Statement and Prospectus is being furnished to stockholders of Morgan Stanley Global Opportunity Bond Fund, Inc. (“Global Opportunity Bond”) in connection with an Agreement and Plan of Reorganization, dated June 19, 2009 (the “Reorganization Agreement”), pursuant to which substantially all the assets of Global Opportunity Bond will be transferred to Morgan Stanley Emerging Markets Debt Fund, Inc. (“Emerging Markets Debt”) in exchange for shares of common stock (“common shares”) of Emerging Markets Debt and Global Opportity Bond will be dissolved (the “Reorganization”).  As a result of this transaction, stockholders of Global Opportunity Bond will become stockholders of Emerging Markets Debt and will receive common shares of Emerging Markets Debt with an aggregate net asset value (“NAV”) equal to the aggregate NAV of their holdings in Global Opportunity Bond.  The terms and conditions of this transaction are more fully described in this Proxy Statement and Prospectus and in the Reorganization Agreement between Global Opportunity Bond and Emerging Markets Debt attached hereto as Exhibit A.  The address of Global Opportunity Bond is that of Emerging Markets Debt set forth above.  This Proxy Statement also constitutes a Prospectus of Emerging Markets Debt, which is dated [·], 2009, filed by Emerging Markets Debt with the Securities and Exchange Commission (the “Commission”) as part of its Registration Statement on Form N-14 (the “Registration Statement”).

Emerging Markets Debt, a Maryland corporation, is a closed-end management investment company whose primary investment objective is to seek a high level of current income and, as a secondary investment objective, seeks capital appreciation.  Emerging Markets Debt seeks to achieve its investment objectives through investments primarily in debt securities of government and government-related issuers located in emerging market countries and of entities organized to restructure outstanding debt of such issuers.

This Proxy Statement and Prospectus sets forth concisely information about Emerging Markets Debt that stockholders of Global Opportunity Bond ought to know before voting on the Reorganization.  Enclosed and incorporated herein by reference is Emerging Markets Debt’s Annual Report for the fiscal year ended December 31, 2008.  A Statement of Additional Information, dated [·], 2009, relating to the Reorganization, described in this Proxy Statement and Prospectus has been filed with the Commission and is also incorporated herein by reference.  Such documents, including the Statement of Additional Information, as well as additional information about Emerging Markets Debt and Global Opportunity Bond, have been filed with the Commission and are available upon request without charge by calling (800) 231 2608 (toll-free) or by visiting the Commission’s website at www.sec.gov.  Currently, the common shares of Global Opportunity Bond and Emerging Markets Debt trade on the New York Stock Exchange (“NYSE”).  Reports, proxy statements and other information concerning Global Opportunity Bond and Emerging Markets Debt can be inspected at 20 Broad Street, New York, New York 10004.

Investors are advised to read and retain this Proxy Statement and Prospectus for future reference.

These securities have not been approved or disapproved by the Securities and Exchange Commission or any State Securities Commission, nor has the Securities and Exchange Commission or any State Securities Commission passed on the accuracy or adequacy of this Prospectus.  Any representation to the contrary is a criminal offense.

This Proxy Statement and Prospectus is dated [·], 2009.

TABLE OF CONTENTS

PROXY STATEMENT AND PROSPECTUS

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MORGAN STANLEY GLOBAL OPPORTUNITY BOND FUND, INC.

522 Fifth Avenue
New York, New York  10036
(800) 231-2608

PROXY STATEMENT AND PROSPECTUS

Special Meeting of Stockholders
to be Held November 18, 2009

INTRODUCTION

General

This Proxy Statement and Prospectus is being furnished to the stockholders of Morgan Stanley Global Opportunity Bond Fund, Inc., a Maryland corporation (“Global Opportunity Bond”), which is a closed-end, non-diversified management investment company, in connection with the solicitation by the Board of Directors (the “Board”) of Global Opportunity Bond of Proxies to be used at the Special Meeting of Stockholders of Global Opportunity Bond to be held in Conference Room [·],[·] Floor, 522 Fifth Avenue, New York, New York 10036, at [·] a.m., New York time, on November 18, 2009, and any adjournments or postponements thereof (the “Meeting”).  It is expected that the first mailing of this Proxy Statement and Prospectus will be made on or about [·], 2009.

At the Meeting, stockholders of Global Opportunity Bond will consider and vote upon the actions and transactions described in that certain Agreement and Plan of Reorganization, dated June 19, 2009 (the “Reorganization Agreement”), between Global Opportunity Bond and Morgan Stanley Emerging Markets Debt Fund, Inc. (“Emerging Markets Debt” and, together with Global Opportunity Bond, the “Funds”), pursuant to which substantially all of the assets of Global Opportunity Bond will be transferred to Emerging Markets Debt in exchange for shares of common stock (“common shares”) of Emerging Markets Debt and Global Opportunity Bond will be dissolved (the “Reorganization”).  As a result of the Reorganization, stockholders of Global Opportunity Bond will become stockholders of Emerging Markets Debt and will receive common shares of Emerging Markets Debt equal to the aggregate net asset value (“NAV”) of the aggregate NAV of their holdings in Global Opportunity Bond on the date of such Reorganization.  The common shares to be issued by Emerging Markets Debt pursuant to the Reorganization (the “Emerging Markets Debt Shares”) will be issued at NAV.  Further information relating to Global Opportunity Bond and Emerging Markets Debt is set forth herein.

Global Opportunity Bond and Emerging Markets Debt are non-diversified, closed-end management investment companies.  It is proposed that, upon approval of the Reorganization, stockholders of Global Opportunity Bond receive Emerging Markets Debt Shares equal to the aggregate NAV of the aggregate NAV of their holdings in Global Opportunity Bond on the date of the Reorganization.  The information concerning Global Opportunity Bond and Emerging Markets Debt contained herein has been supplied by Global Opportunity Bond and Emerging Markets Debt, respectively.  Each of Global Opportunity Bond and Emerging Markets Debt is referred to herein as a “Fund” and together as the “Funds.”  The fund resulting from the Reorganization is referred to as the “Combined Fund.”

Record Date; Share Information

The Board has fixed the close of business on September 4, 2009 as the record date (the “Record Date”) for the determination of the stockholders of Global Opportunity Bond entitled to notice of, and to vote at, the Meeting.  As of the Record Date, there were [·] common shares of Global Opportunity Bond issued and outstanding.  Stockholders of Global Opportunity Bond on the Record Date are entitled to one vote per common share and a fractional vote for a fractional share on each matter submitted to a vote at the Meeting.  A majority of the outstanding common shares entitled to vote, represented in person or by proxy, will constitute a quorum at the Meeting.

Proxies

The enclosed form of Proxy, if properly executed and returned, will be voted in accordance with the choice specified thereon.  The Proxy will be voted in favor of the Reorganization unless a choice is indicated to vote against or to abstain from voting on the Reorganization.  The Board knows of no business, other than that set forth in the Notice of Special Meeting of Stockholders, to be presented for consideration at the Meeting.  However, the Proxy confers discretionary authority upon the persons named therein to vote as they determine on other business, not currently contemplated, which may come before the Meeting.

Abstentions and “broker non-votes” will have the effect of votes against the Reorganization, and “broker non-votes” will not be deemed to be present at the meeting for purposes of determining whether a quorum is present.  Broker “non-votes” are common shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.  If a Global Opportunity Bond stockholder executes and returns a Proxy but fails to indicate how the votes should be cast, the Proxy will be voted in favor of the Reorganization Agreement.  The Proxy may be revoked at any time prior to the voting thereof by:  (i) delivering written notice of revocation to the Secretary of Global Opportunity Bond, 522 Fifth Avenue, New York, New York 10036; (ii) attending the Meeting and voting in person; or (iii) completing and returning a new Proxy (whether by mail or, as discussed below, by touchtone telephone or the Internet) (if returned and received in time to be voted).  Attendance at the Meeting will not in and of itself revoke a Proxy.

In the event that the necessary quorum to transact business or the vote required to approve or reject the Reorganization is not obtained at the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of Proxies.  Any such adjournment will require the affirmative vote of the holders of a majority of common shares of Global Opportunity Bond present in person or by proxy at the Meeting.  The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the Reorganization and will vote against any such adjournment those proxies required to be voted against the Reorganization.  Abstentions and “broker non-votes” will not be counted for purposes of approving an adjournment.

Expenses of Solicitation

The expenses of this solicitation, including the cost of preparing and mailing this Proxy Statement and Prospectus, will be borne by both Funds, which expenses are expected to approximate $71,025.  The expenses will be allocated among Global Opportunity Bond and Emerging Markets Debt in the amounts of $68,059 and $2,966, respectively.  [Global Opportunity Bond and Emerging Markets Debt will bear all of their respective other expenses associated with the Reorganization.]

The solicitation of Proxies will be by mail, which may be supplemented by solicitation by mail, telephone or otherwise through officers of Global Opportunity Bond or officers and regular employees of Morgan Stanley Investment Management Inc. (the “Adviser”) and/or Morgan Stanley Smith Barney, without special compensation therefor.  As described below, Global Opportunity Bond will employ Computershare Fund Services, Inc. (“Computershare”) to make telephone calls to stockholders of Global Opportunity Bond to remind them to vote.  In addition, Global Opportunity Bond may also employ Computershare as proxy solicitor if it appears that the required number of votes to achieve a quorum will not be received.  In the event that Computershare is retained as proxy solicitor, Computershare will be paid a project management fee as well as telephone solicitation expenses incurred for reminder calls, outbound telephone voting, confirmation of telephone votes, inbound telephone contact, obtaining stockholders’ telephone numbers and providing additional materials upon stockholder request, at an estimated cost of $[·] and the expenses outlined below.

Stockholders of Global Opportunity Bond will be able to vote their common shares by touchtone telephone or electronically on the Internet by following the instructions on the Proxy Card or on the Voting Information Card accompanying this Proxy Statement.  To vote by Internet or by telephone, stockholders can access the website or call the toll-free number listed on the Proxy Card or noted in the enclosed voting instructions.  To vote by touchtone telephone, stockholders will need the number that appears on the Proxy Card.

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In certain instances, Morgan Stanley or Computershare may call stockholders of Global Opportunity Bond to ask if they would be willing to have their votes recorded by telephone.  The telephone voting procedure is designed to authenticate stockholders’ identities, to allow stockholders to authorize the voting of their common shares in accordance with their instructions and to confirm that their instructions have been recorded properly.  No recommendation will be made as to how a stockholder should vote on any proposal other than to refer to the recommendations of the Board.  Global Opportunity Bond has been advised by counsel that these procedures are consistent with the requirements of applicable law.  Stockholders voting by telephone in this manner will be asked for identifying information and will be given an opportunity to authorize proxies to vote their common shares in accordance with their instructions.  To ensure that the stockholders’ instructions have been recorded correctly, stockholders will receive a confirmation of their instructions in the mail.  A special toll-free number set forth in the confirmation will be available in case the information contained in the confirmation is incorrect.  Although a stockholder’s vote may be taken by telephone, each stockholder will receive a copy of this Proxy Statement and may vote by mail using the enclosed Proxy Card or by touchtone telephone or electronically on the Internet as set forth above.  The last proxy vote received in time to be voted, whether by Proxy Card, touchtone telephone or the Internet, will be the last vote that is counted and will revoke all previous votes by the stockholder.

Vote Required

Approval of the Reorganization by the stockholders of Global Opportunity Bond requires the affirmative vote of a majority of  all votes entitled to be cast by the stockholders of Global Opportunity Bond on the matter.  If the Reorganization is not approved by stockholders of Global Opportunity Bond, Global Opportunity Bond will continue in existence and the Board will consider alternative actions.

FEE TABLE

The following table briefly describes the fees and expenses that the stockholders of the Funds bear directly and indirectly from an investment in the Funds.  These expenses are deducted from each respective Fund’s assets and are based on expenses paid by each Fund for its fiscal year ended December 31, 2008.  Global Opportunity Bond and Emerging Markets Debt each pays expenses for management of its assets and other services, and those expenses are reflected in the NAV per share of each Fund.  The table also sets forth pro forma fees for the Combined Fund reflecting what the fee schedule would have been on [December 31], 2008, if the Reorganization had been consummated twelve (12) months prior to that date.

Example

To attempt to show the effect of these expenses on an investment over time, the hypotheticals shown below have been created.  The example assumes that an investor invests $1,000 in either Global Opportunity Bond, Emerging Markets Debt or the Combined Fund, that the investment has a 5% return each year and that the operating expenses for each Fund remain the same (as set forth in the chart above).  Although a stockholder’s actual costs may be higher or lower, the tables below show a stockholder’s costs at the end of each period based on these assumptions depending upon whether or not a stockholder sold his common shares at the end of each period.

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The projected post-Reorganization pro forma Total Annual Fund Operating Expenses and Example presented above represent good faith estimates; however, there can be no assurance that any particular level of expenses or expense savings will be achieved, because expenses depend on a variety of factors, including the future level of fund assets, many of which are beyond the control of Emerging Markets Debt or the Adviser. Consequently, the Example should not be considered a representation of future expenses.  Actual expenses may be greater or less than those shown.

The purpose of the foregoing fee table is to assist the stockholder in understanding the various costs and expenses that a stockholder in each Fund will bear directly or indirectly.  For a more complete description of these costs and expenses, see “Synopsis—Comparison of Global Opportunity Bond and Emerging Markets Debt—Investment Advisory Fees; and Other Significant Fees” below.

SYNOPSIS

The following is a synopsis of certain information contained in this Proxy Statement and Prospectus.  This synopsis is only a summary and is qualified in its entirety by the more detailed information contained in this Proxy Statement and Prospectus and the Reorganization Agreement.  Stockholders should carefully review this Proxy Statement and Prospectus and the Reorganization Agreement in their entirety.

The Reorganization

The Reorganization Agreement provides for the acquisition by Emerging Markets Debt of substantially all of the assets and the assumption of substantially all of the liabilities of Global Opportunity Bond in exchange for newly-issued Emerging Markets Debt Shares.  The aggregate NAV of the Emerging Markets Debt Shares issued in the exchange will equal the aggregate value of the net assets of Global Opportunity Bond received by Emerging Markets Debt.  On or after the closing date scheduled for the Reorganization (the “Closing Date”), Global Opportunity Bond will distribute the Emerging Markets Debt Shares received by Global Opportunity Bond to stockholders of Global Opportunity Bond as of the Valuation Date (as defined below) in complete liquidation of Global Opportunity Bond, and Global Opportunity Bond will thereafter be deregistered under the Investment Company Act of 1940, as amended (the “1940 Act”) and dissolved under Maryland law, the state of its incorporation.  As a result of the Reorganization, each Global Opportunity Bond stockholder will receive that number of full and fractional Emerging Markets Debt Shares equal in value to such stockholder’s pro rata interest in the net assets of Global Opportunity Bond transferred to Emerging Markets Debt.  The Board has determined that the interests of stockholders of Global Opportunity Bond will not be diluted as a result of the Reorganization.  The “Valuation Date” is the third business day following the receipt of the requisite approval by the stockholders of Global Opportunity Bond of the Reorganization Agreement or at such other time as the Funds may agree, on which date the number of Emerging Markets Debt Shares to be delivered to Global Opportunity Bond will be determined.

At least one but not more than 20 business days prior to the Valuation Date, Global Opportunity Bond will declare and pay a dividend or dividends which, together with all previous such dividends, will have the effect of distributing to stockholders of Global Opportunity Bond substantially all of Global Opportunity Bond’s investment company taxable income for all periods since the inception of Global Opportunity Bond through and including the Valuation Date (computed without regard to any dividends paid deduction), and substantially all of Global Opportunity Bond’s net capital gain, if any, realized in such periods (after reduction for any capital loss carryovers).

For the reasons set forth below under “The Reorganization—The Board’s Considerations,” the Board, including the Directors who are not “interested persons” of Global Opportunity Bond (“Independent

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Directors”), as such term is defined in the 1940 Act, has concluded that the Reorganization is advisable and in the best interests of Global Opportunity Bond and its stockholders and recommends approval of the Reorganization Agreement.

Comparison of Global Opportunity Bond and Emerging Markets Debt

Global Opportunity Bond is a non-diversified closed-end management investment company, with assets of, as of June 30, 2009, approximately $[·] million, that invests in high yield bonds of issuers located throughout the world, including U.S. issuers and issuers in emerging market countries.  Emerging Markets Debt is a non-diversified closed-end management investment company and is significantly larger that Global Opportunity Bond, with assets of, as of June 30, 2009, approximately $[·] million.  Emerging Markets Debt pursues investment strategies that are similar to those of Global Opportunity Bond.

Investment Objectives and Policies.  The investment objectives and policies of the Funds are generally similar, except as outlined below  The following table shows the investment objectives and principal investment policies of each Fund.

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The principal differences between the Funds’ investment policies are more fully described under “Comparison of Investment Objectives, Policies and Restrictions” below.  The investment objectives of both Funds are fundamental and may not be changed without stockholder approval.

Investment Advisory Fees.  The Funds obtain advisory services from the Adviser.  Each Fund pays the Adviser a fee computed weekly and payable monthly at an annual rate of 1.00% of the Fund’s average weekly net assets.

Other Significant Fees.  The Funds pay additional fees in connection with their operations, including legal, auditing, transfer agent, Directors’ fees and custody fees.  See “Fee Table” above for the percentage of average net assets represented by such “Other Expenses.”

Each Fund is a closed-end investment company that currently has outstanding one class of common shares, par value $0.01 per common share.  The common shares are not subject to a sales charge or 12b-1 fee.  Currently, each Fund’s common shares trade on the NYSE (Global Opportunity Bond symbol: MGB; Emerging Markets Debt symbol: MSD) and may only be purchased and sold through a broker or dealer at the market price, plus a brokerage commission.

Business Structures.  Each Fund is organized as a Maryland corporation and is governed by its Charter, Bylaws and Maryland law.

Principal Risks

Each Fund is subject to the following principal risks: debt securities risk, foreign and emerging markets securities risk, sovereign debt risk, foreign currency risk, lower rated and unrated securities risk, derivatives risk, leverage risk and illiquid investments risk.  Global Opportunity Bond is subject to additional risks associated with investments in banks loans and mortgage-related securities, including  mortgage-backed securities, CMOs, CMBS and stripped mortgage-backed securities.  A description of each of these risks, and additional risks associated with an investment in the Funds, is provided under “Principal Risk Factors” below.

Tax Consequences of the Reorganization

As a condition to the Reorganization, Global Opportunity Bond has requested an opinion of Clifford Chance US LLP to the effect that the Reorganization will constitute a tax-free reorganization for federal income tax purposes, and that no gain or loss will be recognized by Global Opportunity Bond, Emerging Markets Debt or stockholders of Global Opportunity Bond for federal income tax purposes as a result of the transactions included in the Reorganization.  Receipt of such opinion is a condition to the Reorganization.  For further information about the tax consequences of the Reorganization, see “The Reorganization—Tax Aspects of the Reorganization” below.

Dividends

Each Fund declares dividends and normally pays dividends from net investment income quarterly.  Each Fund usually distributes net capital gains, if any, in December.  The Funds, however, may determine either to distribute or to retain all or part of any net long-term capital gains in any year for reinvestment.  Dividends and capital gains distributions are automatically reinvested in additional common shares of each Fund at NAV unless the stockholder elects to receive cash.

FINANCIAL HIGHLIGHTS

The financial highlights tables that follow are intended to help you understand the financial performance of the common shares of the Funds for the periods presented.  The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in each Fund (assuming reinvestment of all dividends and

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distributions).  The information has been audited by [·], the independent registered public accounting firm for the Funds (except for the information for the six months ended June 30, 2009).  [·]’s reports, along with each Fund’s financial statements, are included in each Fund’s Annual Report for the fiscal year ended December 31, 2008, which are available upon request.

Global Opportunity Bond

Emerging Markets Debt

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Financial Information

Additional financial information about each Fund is available in its respective Annual Report for the fiscal year ended December 31, 2008.

THE REORGANIZATION

The Proposal

The Board of Global Opportunity Bond, including the Independent Directors, having reviewed the financial position of Global Opportunity Bond and the prospects for achieving economies of scale through the Reorganization and having determined that the Reorganization is in the best interests of Global Opportunity Bond and its stockholders and that the interests of the stockholders of Global Opportunity Bond will not be diluted as a result thereof, recommends approval of the Reorganization by stockholders of Global Opportunity Bond.

The Board’s Considerations

At a meeting held on June 18-19, 2009, the Board, including the Independent Directors, unanimously approved, and declared advisable, the Reorganization Agreement and the Reorganization described therein, and determined to recommend that stockholders of Global Opportunity Bond approve the Reorganization.  In reaching this decision, the Board made an extensive inquiry into a number of factors, particularly the comparative expenses currently incurred in the operations of each Fund.  The Board also considered other factors, including, but not limited to, the general compatibility of the investment objectives, policies and restrictions of each Fund; the extent to which common shares of each Fund have historically traded at a discount or premium; the terms and conditions of the Reorganization which would affect the price of common shares to be issued in the Reorganization; the tax-free nature of the Reorganization; and any direct or indirect costs to be incurred by the Funds in connection with the Reorganization.

In recommending the Reorganization to stockholders of Global Opportunity Bond, the Board of Global Opportunity Bond considered that the Reorganization would have the following benefits to stockholders:

1.             Once the Reorganization is consummated, the expenses which would be borne by stockholders of the Combined Fund will be [substantially] lower on a percentage basis than the expenses of Global Opportunity Bond.  The Board noted that the annual advisory fee (as a percentage of net assets) payable by each Fund is the same.  The Board also considered that, to the extent that the Reorganization would result in stockholders of Global Opportunity Bond becoming stockholders of a combined larger fund, further economies of scale could be achieved since various fixed expenses (e.g., auditing and legal) can be spread over a larger number of common shares.

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2.             Stockholders of Global Opportunity Bond will be invested in a closed-end fund with similar investment objectives and policies taking into account a larger asset base and lower annual Fund operating expenses per common share.

3.             As of [·], 2009, Global Opportunity Bond common shares were trading at a [·]% discount to NAV.  If consummated, the Reorganization will give stockholders of Global Opportunity Bond the opportunity to capture the value of the discount between market price and NAV of the common shares, if any, at the time of the Reorganization because stockholders of Global Opportunity Bond will become holders of Emerging Markets Debt Shares with the same aggregate NAV as common shares of Global Opportunity Bond.  However, the Board of Global Opportunity Bond also noted that Emerging Market Debt is trading at a greater discount to NAV than Global Opportunity Bond.

4.             The Reorganization has been structured in a manner intended to qualify as a tax-free reorganization for federal income tax purposes, pursuant to which no gain or loss will be recognized by the Funds or their stockholders for federal income tax purposes as a result of transactions included in the Reorganization.

The Board also considered the fact that Global Opportunity Bond had a small amount of capital loss carryovers, but that it is not entirely certain how much of these capital loss carryovers it would be able to utilize in future years (as set forth in greater detail under “The Reorganization—Tax Aspects of the Reorganization”).  In light of the large reduction in annual Fund operating expenses and other potential benefits of the Reorganization, as well as the uncertainty regarding the extent to which any lost capital loss carryovers could have been utilized for the benefit of stockholders of Global Opportunity Bond, the Board concluded that the Reorganization was advisable and in the best interests of the stockholders of Global Opportunity Bond.

The Board of Emerging Markets Debt, including a majority of the Independent Directors, also has determined that the Reorganization is advisable and in the best interests of Emerging Markets Debt and its stockholders and that the interests of existing stockholders of Emerging Markets Debt will not be diluted as a result thereof.  In addition, the Board of Emerging Markets Debt determined that its stockholders will benefit as a result of the Reorganization from potential better pricing on portfolio transactions (given the larger asset base) following the elimination of a similar competing Morgan Stanley Fund.  Further, the Reorganization would create a clearer, more understandable offering of products, which should support a more focused marketing effort.  The transaction will enable Emerging Markets Debt to acquire investment securities which are consistent with Emerging Markets Debt’s investment objectives, without the brokerage costs attendant to the purchase of such securities in the market.  Accordingly, the Board of Emerging Markets Debt has approved the Reorganization Agreement and the Reorganization.

The Reorganization Agreement

The terms and conditions under which the Reorganization would be consummated, as summarized below, are set forth in the Reorganization Agreement.  This summary is qualified in its entirety by reference to the form of Reorganization Agreement, a copy of which is attached as Exhibit A to this Proxy Statement and Prospectus.

The Reorganization Agreement provides that (i) Global Opportunity Bond will transfer substantially all of its assets, including portfolio securities, cash, cash equivalents and receivables to Emerging Markets Debt on the Closing Date in exchange for the assumption by Emerging Markets Debt of substantially all of the liabilities of Global Opportunity Bond, including all expenses, costs, charges and reserves, as reflected on an unaudited statement of assets and liabilities of Global Opportunity Bond prepared by the Treasurer of Global Opportunity Bond as of the Valuation Date in accordance with generally accepted accounting principles consistently applied from the prior audited period, and the delivery of the Emerging Markets Debt Shares; (ii) the Emerging Markets Debt Shares would be distributed to stockholders of Global Opportunity Bond on the Closing Date or as soon as practicable thereafter; (iii) Global Opportunity Bond would be de-registered as an investment company under the 1940 Act and dissolved under Maryland law; and (iv) the outstanding common shares of Global Opportunity Bond would be canceled.

The number of Emerging Markets Debt Shares to be delivered to Global Opportunity Bond will be determined by dividing the aggregate NAV of the common shares of Global Opportunity Bond acquired by

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Emerging Markets Debt by the NAV per common share of Emerging Markets Debt; these values will be calculated as of the close of business of the NYSE on the Valuation Date.  As an illustration, assume that on the Valuation Date, common shares of Global Opportunity Bond had an aggregate NAV of $100,000.  If the NAV per Emerging Markets Debt Shares were $10 per share at the close of business on the Valuation Date, the number of Emerging Markets Debt Shares to be issued would be 10,000 ($100,000 ÷ $10).  These 10,000 Emerging Markets Debt Shares would be distributed to the former stockholders of Global Opportunity Bond.  This example is given for illustration purposes only and does not bear any relationship to the dollar amounts or common shares expected to be involved in the Reorganization.

On the Closing Date or as soon as practicable thereafter, Global Opportunity Bond will distribute pro rata to its stockholders of record as of the close of business on the Valuation Date, the Emerging Markets Debt Shares that it receives.  Emerging Markets Debt will cause its transfer agent to credit and confirm an appropriate number of Emerging Markets Debt Shares to each Global Opportunity Bond stockholder.

The Closing Date will be the Valuation Date or the next business day following the Valuation Date.  The consummation of the Reorganization is contingent upon the approval of the Reorganization by the stockholders of Global Opportunity Bond and the receipt of the other opinions and certificates set forth in Sections 6, 7 and 8 of the Reorganization Agreement and the occurrence of the events described in those Sections, certain of which may be waived by the Funds.  The Reorganization Agreement may be amended in any mutually agreeable manner.

The Reorganization Agreement may be terminated and the Reorganization abandoned at any time, before or after approval by stockholders of Global Opportunity Bond, by mutual consent of the Funds.  In addition, either party may terminate the Reorganization Agreement upon the occurrence of a material breach of the Reorganization Agreement by the other party or if, by May 18, 2010, any condition set forth in the Reorganization Agreement has not been fulfilled or waived by the party entitled to its benefits.

Under the Reorganization Agreement, within one year after the Closing Date, Global Opportunity Bond shall either pay or make provision for all of its liabilities to former stockholders of Global Opportunity Bond that received Emerging Markets Debt Shares.  Global Opportunity Bond shall be deregistered as an investment company and dissolved promptly following the distributions of Emerging Markets Debt Shares to stockholders of record of Global Opportunity Bond.

The effect of the Reorganization is that stockholders of Global Opportunity Bond who vote their common shares in favor of the Reorganization Agreement are electing to sell their common shares of Global Opportunity Bond (at NAV on the Valuation Date) and reinvest the proceeds in Emerging Markets Debt Shares at NAV, pursuant to a transaction designed to occur without recognition of taxable gain or loss for federal income tax purposes.  See “Tax Aspects of the Reorganization” below.  If Global Opportunity Bond recognizes net gain from the sale of securities prior to the Closing Date, substantially all of such gain, to the extent not offset by capital loss carryforwards, will be distributed to stockholders of Global Opportunity Bond on or prior to the Closing Date and will be taxable to stockholders of Global Opportunity Bond as capital gain.

Stockholders of Global Opportunity Bond will continue to be able to trade their common shares of Global Opportunity Bond on the NYSE until the close of business on the business day next preceding the Closing Date.

Tax Aspects of the Reorganization

Tax Consequences of the Reorganization to the Stockholders.  The Reorganization is intended to qualify for federal income tax purposes as a tax-free reorganization under Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the “Code”).

As a condition to the Reorganization, the Funds have requested an opinion of Clifford Chance US LLP to the effect that, based on certain assumptions, facts, the terms of the Reorganization Agreement and representations set forth in the Reorganization Agreement or otherwise provided by the Funds:

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1.             The transfer of Global Opportunity Bond’s assets in exchange for Emerging Markets Debt Shares and the assumption by Emerging Markets Debt of certain stated liabilities of Global Opportunity Bond followed by the distribution by Global Opportunity Bond of the Emerging Markets Debt Shares to stockholders of Global Opportunity Bond in exchange for their common shares of Global Opportunity Bond pursuant to and in accordance with the terms of the Reorganization Agreement will constitute a “reorganization” within the meaning of Section 368(a)(1)(C) of the Code, and the Funds will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code;

2.             No gain or loss will be recognized by Emerging Markets Debt upon the receipt of the assets of Global Opportunity Bond solely in exchange for the Emerging Markets Debt Shares and the assumption by Emerging Markets Debt of the stated liabilities of Global Opportunity Bond;

3.             No gain or loss will be recognized by Global Opportunity Bond upon the transfer of the assets of Global Opportunity Bond to Emerging Markets Debt in exchange for Emerging Markets Debt Shares and the assumption by Emerging Markets Debt of the stated liabilities or upon the distribution of Emerging Markets Debt Shares to stockholders of Global Opportunity Bond in exchange for their common shares of Global Opportunity Bond;

4.             No gain or loss will be recognized by stockholders of Global Opportunity Bond upon the exchange of the common shares of Global Opportunity Bond for the Emerging Markets Debt Shares;

5.             The aggregate tax basis for the Emerging Markets Debt Shares received by each of the stockholders of Global Opportunity Bond pursuant to the Reorganization will be the same as the aggregate tax basis of the common shares in Global Opportunity Bond held by each such stockholder immediately prior to the Reorganization;

6.             The holding period of the Emerging Markets Debt Shares to be received by each Global Opportunity Bond stockholder will include the period during which the common shares in Global Opportunity Bond surrendered in exchange therefor were held (provided such common shares in Global Opportunity Bond were held as capital assets on the date of the Reorganization);

7.             The tax basis of the assets of Global Opportunity Bond acquired by Emerging Markets Debt will be the same as the tax basis of such assets of Global Opportunity Bond immediately prior to the Reorganization; and

8.             The holding period of the assets of Global Opportunity Bond in the hands of Emerging Markets Debt will include the period during which those assets were held by Global Opportunity Bond.

The advice of counsel is not binding on the Internal Revenue Service (the “IRS”) or the courts and neither Fund has sought a ruling with respect to the tax treatment of the Reorganization.  The opinion of counsel, if delivered, will be based on the Code, regulations issued by the Treasury Department under the Code, court decisions and administrative pronouncements issued by the IRS with respect to all of the foregoing, all as in effect on the date of the opinion, and all of which may be repealed, revoked or modified thereafter, possibly on a retroactive basis.

Stockholders of the Funds should consult their tax advisors regarding the effect, if any, of the proposed Reorganization in light of their individual circumstances.  Because the foregoing discussion only relates to federal income tax consequences of the proposed Reorganization, stockholders of the Funds should also consult their tax advisors as to state and local tax consequences, if any, of the proposed Reorganization.

Tax Consequences of the Reorganization to Global Opportunity Bond and Emerging Markets Debt.  Under the Code, the Reorganization may result in limitations on the utilization of the capital loss carryovers of Global Opportunity Bond.  The effect of any such limitations will depend on the existence and amount of each Fund’s capital loss carryovers, built-in capital losses and built-in capital gains at the time of the Reorganization.  In general, a fund will have built-in capital gains if the fair market value of its assets on the date of the Reorganization exceeds its tax basis in such assets and a fund will have built-in capital losses if its tax basis in its assets exceeds the fair market value of such assets on the date of the Reorganization.

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As of its fiscal year ended December 31, 2008, Global Opportunity Bond had approximately $15,139,000 of estimated capital loss carryovers.  Additionally, as of December 31, 2008, Global Opportunity Bond had approximately $6,075,000 of built-in capital gains.  Emerging Markets Debt had approximately $8,660,000 of capital loss carryovers (as of December 31, 2008) and $39,588,000 of built-in capital gains (as of December 31, 2008).

Under the Code, assuming certain continuity of business requirements are followed after the Reorganization, each Fund’s capital loss carryovers can be carried forward for eight years from the year in which incurred.  The capital loss carryovers generally can be used in each of those eight years to offset any capital gains that are realized by the Combined Fund in that year, but only to the extent that capital gains exceed the capital losses (if any) that are realized by the Combined Fund in that year.

In general, following the Reorganization, the Combined Fund’s ability to utilize the capital loss carryovers of the Funds will be subject to the following limitations:

1.             The Combined Fund can utilize the capital loss carryovers of Global Opportunity Bond to offset against capital gains from sales of assets owned by Global Opportunity Bond immediately before the Reorganization, but only to the extent that (x) such sales occur within a period ending approximately five years after the Reorganization and (y) the capital gains from such sales do not exceed the built-in capital gains of Global Opportunity Bond on the date of the Reorganization;

2.             In addition to being able to utilize the capital loss carryovers of Global Opportunity Bond as described in paragraph 1, assuming certain continuity of business requirements are satisfied following the Reorganization, the Combined Fund also will be able to utilize a further amount of the capital loss carryovers of Global Opportunity Bond to offset against other capital gains each year.  This amount is determined based on certain facts as of the date of the Reorganization; and

3.             The Combined Fund can utilize the capital loss carryovers of Emerging Markets Debt to offset all capital gains realized by the Combined Fund after the Reorganization, other than capital gains described in paragraph 1.

It is not entirely certain how much of its capital loss carryovers Global Opportunity Bond would be able to utilize in future years if the Reorganization did not occur.  The amount of capital loss carryovers that Global Opportunity Bond could utilize in future years if the Reorganization did not occur would depend on, among other things, whether the Fund participated in some other transaction in the future that resulted in limitations being imposed on Global Opportunity Bond’s utilization of capital loss carryovers; the amount of capital gains that Global Opportunity Bond would be able to realize in future years before its capital loss carryovers expired; and the amount of capital losses that Global Opportunity Bond would realize in future years.  The Reorganization conceivably may result in the Combined Fund being unable to utilize capital loss carryovers that could have been used by Global Opportunity Bond if the transaction did not occur.  Nevertheless, in view of the relatively small amount of capital loss carryovers of Global Opportunity Bond that are at issue, it is not expected that the Reorganization will result in any loss of those carryovers.

Description of Common Shares

The Emerging Markets Debt Shares will, when issued, be fully paid and non-assessable by Emerging Markets Debt and transferable without restrictions and will have no preemptive rights.

Appraisal Rights

Stockholders of the Funds will have no appraisal rights in connection with the Reorganization.

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Capitalization Table (unaudited)

The following table sets forth the capitalization of Emerging Markets Debt and Global Opportunity Bond as of [December 31, 2008] and on a pro forma combined basis as if the Reorganization had occurred on that date:

*                 The pro forma net assets and NAV per share reflect the payment of reorganization expenses of approximately $[·] by Global Opportunity Bond.

COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Investment Objectives and Policies

The investment objectives and policies of the Funds are similar.  Global Opportunity Bond’s primary investment objective it to seek to produce high current income.  Emerging Markets Debt’s primary investment objective is to seek high current income.  As a secondary investment objective, both Funds seek capital appreciation.

Global Opportunity Bond

Global Opportunity Bond seeks to achieve its investment objective through investments primarily in high yield bonds of issuers located throughout the world, including U.S. issuers and issuers in emerging countries.  Under normal market circumstances, Global Opportunity Bond invests at least 80% of its net assets in bonds.  Global Opportunity Bond invests at least 65% of its total assets in high yield bonds.  Global Opportunity Bond may also invest up to 35% of its total assets in high yielding fixed income equity instruments such as preferred stock.  Global Opportunity Bond allocates its assets among three types of investments: (i) high yield non-investment grade bonds of U.S. and non-U.S. corporate issuers, (ii) emerging country bonds and (iii) high yield investment grade bonds of U.S. and non-U.S. issuers, including corporations, trusts, partnerships, government and government-related entities and supranational entities.

Global Opportunity Bond may also invest in mortgage-backed securities, mortgage pass-through securities, CMOs, CMBs, repurchase agreements, private placements and restricted securities, warrants, zero coupon, pay-in-kind and deferred securities, loan and loan participations, swaps, asset-backed securities, non-agency mortgage securities and cross currency hedging transactions.

Emerging Markets Debt

Under normal market circumstances, Emerging Markets Debt invests at least 80% of its assets in debt securities of government and government related issuers located in emerging countries, entities organized to restructure outstanding debt of such issuers and debt securities of corporate issuers located in or organized under the laws of emerging countries.  Emerging Markets Debt seeks to achieve its investment objective by investing at least 65% of its total assets in debt securities of government and government-related issuers located in emerging market countries (including participations in loans between governments and financial institutions), and of entities organized to restructure outstanding debt of such issuers.  In addition, Emerging Markets Debt may invest up to 35% of its total assets in debt securities of corporate issuers located in or organized under the laws of emerging countries.

Emerging Markets Debt’s investments in government and government-related and restructured debt securities consist of (i) debt securities or obligations issued or guaranteed by governments, governmental agencies or instrumentalities and political subdivisions located in emerging countries (including participations in loans between governments and financial institutions), (ii) debt securities or obligations issued by governments owned, controlled or sponsored entities located in emerging countries, and (iii) interests in issuers organized and operated from the

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purpose or restructuring the investment characteristics of securities issued by any of the entities described above.  Emerging Markets Debt’s investments in debt securities of corporate issuers located in emerging countries may include securities issued by (i) banks located in emerging countries or by branches of emerging country banks located outside the country or (ii) by companies organized under the laws of an emerging country.

The Adviser invests the assets of Emerging Markets Debt in emerging country debt securities that provide a level of current income, while at the same time holding the potential for capital appreciation if the perceived creditworthiness of the issuer improves due to improving economic, financial, political, social or other conditions in the country in which the issuer is located.

Emerging country debt securities held by Emerging Markets Debt take the form of bonds, notes, bills, debentures, warrants, bank debt obligations, short-term paper, loan participations, loan assignments and interest issued by entities organized and operated for the purpose of restructuring the investments characteristics of instruments issued by emerging country issuers.  A substantial portion of Emerging Markets Debt’s assets may be invested in non-U.S. dollar-denominated securities.

The investment objectives of the Funds are fundamental and may not be changed without stockholder approval.  The foregoing discussion is a summary of the investment policies of the Funds.

Investment Restrictions

The investment restrictions adopted by the Funds as fundamental policies are similar.  A fundamental investment restriction cannot be changed without the vote of a majority of the outstanding voting securities of the Fund.  The 1940 Act defines a majority as the lesser of (a) 67% or more of the common shares represented at a meeting of stockholders, if the holders of more than 50% of the outstanding common shares of the fund are present or represented by proxy; or (b) more than 50% of the outstanding common shares of the fund.  Each Fund’s investment restrictions are included under the section “Investment Restrictions” in the Statement of Additional Information.

INFORMATION ABOUT THE FUNDS

General

The Funds are Maryland corporations registered under the 1940 Act, as non-diversified, closed-end management investment companies.  Global Opportunity Bond commenced operations on March 31, 1994 and Emerging Markets Debt commenced operations on May 6, 1993.

Global Opportunity Bond’s primary objective is to seek to produce high current income and, as a secondary objective, capital appreciation.  Global Opportunity Bond will seek to achieve its investment objectives by investing primarily in high yield bonds of issuers located throughout the world, including U.S. issuers and issuers in emerging countries.  Common shares of Global Opportunity Bond are not issued, insured or guaranteed as to value or yield by the U.S. Government, its agencies or instrumentalities.

Emerging Markets Debt’s primary investment objective is to seek high current income and, as a secondary objective, to seek capital appreciation, through investments primarily in debt securities of government and government-related issuers located in emerging market countries and of entities organized to restructure outstanding debt of such issuers.

Management of the Funds

Board of Directors of the Funds.  The Board of each Fund oversees the management of the Fund, but does not itself manage the Fund.  Each Fund’s Directors review various services provided by or under the direction of the Adviser to ensure that each Fund’s general investment policies and programs are properly carried out.  The Directors also conduct their review to ensure that administrative services are provided to the Funds in a satisfactory manner.

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Under state law, the duties of the Directors are generally characterized as a duty of loyalty and a duty of care.  The duty of loyalty requires a Director to exercise his or her powers in the interest of each Fund and not the Director’s own interest or the interest of another person or organization.  A Director satisfies his or her duty of care by acting in good faith with the care of an ordinarily prudent person and in a manner the Director reasonably believes to be in the best interest of each Fund and its stockholders.

Investment Adviser.  Morgan Stanley Investment Management Inc. serves as each Fund’s investment adviser.  The Adviser is a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the “Advisers Act”).  The Adviser provides portfolio management services to taxable and nontaxable institutions, international organizations and individuals investing in United States and international equity and fixed income securities.  As of June 30, 2009, the Adviser, together with its affiliated asset management companies, had $355.5 billion of assets under management or supervision.  The Adviser’s principal address is 522 Fifth Avenue, New York, New York 10036.  The Adviser currently acts as adviser for [68] funds registered under the 1940 Act.

Investment Advisory Agreement

The Adviser provides investment advisory services to each Fund under the terms of each Fund’s Investment Advisory and Management Agreement (each, an “Investment Advisory Agreement”).  Pursuant to each Investment Advisory 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.

Each Investment Advisory Agreement continues in effect from year to year provided such continuance is specifically approved at least annually by (i) a vote of a majority of those members of the Board who are not “interested persons” of the Adviser or the Fund, cast in person at a meeting called for the purpose of voting on such approval, and (ii) by a majority vote of either the Fund’s Board or the Fund’s outstanding voting securities.  The Investment Advisory Agreement may be terminated at any time without payment of penalty by the Fund or by the Adviser upon 60 days’ written notice.  The Investment Advisory Agreement will automatically terminate in the event of its assignment, as defined under the 1940 Act.

A discussion of each Fund’s basis for approving its Investment Advisory Agreement is included in its Semi-Annual Report for the period ended June 30, 2009.

Portfolio Management

Global Opportunity Bond is managed within the Taxable Fixed Income and Taxable High Yield teams. The teams consist of portfolio managers and analysts.  Current members of the teams jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are Eric J. Baurmeister, Federico L. Kaune, Abigail L. McKenna and Dennis Schaney, each a Managing Director of the Adviser.  Mr. Baurmeister has been associated with the Adviser in an investment management capacity since 1997 and joined the team managing the Fund in July 2003.  Mr. Kaune has been associated with the Adviser in an investment management capacity since 2002 and joined the team managing the Fund in July 2003.  Ms. McKenna has been associated with the Adviser in an investment management capacity since 1996 and joined the team managing the Fund in July 2003.  Mr. Schaney has been associated with the Adviser in an investment management capacity since September 2008 and began managing the Fund in October 2008.  Prior to September 2008, Mr. Schaney served as Global Head of Fixed Income at Credit Suisse Asset Management (October 2003 to April 2007) and, prior to that, as Head of Leveraged Finance at BlackRock, Inc. (January 1998 to October 2003).

Emerging Markets Debt is managed within the Emerging Markets Debt team.  The team consists of portfolio managers and analysts.  Current members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are Eric J. Baurmeister, Federico L. Kaune and Abigail L. McKenna, each a Managing Director of the Adviser.  Mr. Baurmeister has been associated with the Adviser in an investment management capacity since 1997 and joined the team managing the Fund in July 2002.  Ms. McKenna has been associated with the Adviser in an investment management capacity since 1996 and joined the team managing the Fund in July 2002.  Mr. Kaune has been associated with the Adviser in an investment management capacity since 2002 and joined the team managing the Fund in August 2002.

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The composition of each team may change from time to time.

Subsequent to the consummation of the Reorganization, Messrs. Baurmeister, Kaune and Ms. McKenna will continue to be primarily responsible for the day-to-day management of the Combined Fund.  The Statement of Additional Information to this Proxy Statement and Prospectus that is incorporated by reference herein provides additional information about the portfolio managers’ compensation structure, other accounts managed by the portfolio managers and the portfolio managers’ ownership of securities in the Funds.

Administrator

Pursuant to an Administration Agreement with Morgan Stanley Investment Management Inc., each Fund pays an administration fee equal to 0.08% of the Fund’s average weekly net assets.  Morgan Stanley Investment Management Inc. has agreed to limit the administration fee for each Fund through a waiver so that it will be no greater than 0.02435% of the Fund’s average weekly net assets plus $24,000 per annum.  This waiver is voluntary and may be terminated at any time.

Other Service Providers

JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, serves as custodian for each Fund (the “Custodian”) and has custody of all securities and cash of each Fund.  The Custodian holds cash, securities, and other assets of the Funds as required by the 1940 Act.  Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.  Any of the Funds’ cash balances with the Custodian in excess of $250,000 (a temporary increase from $100,000, which is due to expire on December 31, 2013) are unprotected by federal deposit insurance.  Such balances may, at times, be substantial.

Computershare Inc. and Computershare Trust Company, N.A. (collectively, the “Transfer Agent”) act as each Fund’s dividend paying agent, transfer agent and the registrar for each Fund’s common shares.  The Transfer Agent charges each Fund an annual per stockholder account fee and is reimbursed for its out-of-pocket expenses.

Security Ownership of Certain Beneficial Owners

The following persons were known to own of record or beneficially 5% or more of the outstanding common shares of the Funds as of the Record Date:

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(1)          This information is based on publicly available Schedule 13D and 13G disclosures filed with the Securities and Exchange Commission.

[As of the Record Date, the Directors and officers of Global Opportunity Bond and Emerging Markets Debt, each as a group, owned less than 1% of the outstanding common shares of Global Opportunity Bond and Emerging Markets Debt, respectively.]

Description of Capital Stock

The authorized capital stock of each Fund is 100,000,000 shares of common stock ($0.01 par value).  Common shares of each Fund, when issued, will be fully paid and nonassessable and will have no conversion, preemptive or other subscription rights.  Holders of common shares of the Funds are entitled to one vote per share on all matters to be voted upon by stockholders of such Fund and are not able to cumulate their votes in the election of Directors.  Thus, holders of more than 50% of the common shares voting for the election of Directors have the power to elect 100% of the Directors.

All common shares have equal rights to receive such dividends and distributions, if any, as may be declared by the Board with respect to the common shares out of funds legally available therefor.  In the event of liquidation, dissolution or winding up of a Fund, each common shares is entitled to receive its proportion of the Fund’s assets remaining after payment of all debts and expenses.  With respect to Global Opportunity Bond, in the event of liquidation, dissolution or winding up of the Fund, in addition to the above, stockholders may received any preferential liquidating distribution to holder of any preferred stock issued by Global Opportunity Bond.  Global Opportunity Bond has not issued preferred stock.

Each Fund is a closed-end investment company, and as such its stockholders do not have the right to cause the Fund to redeem their common shares.  Each Fund, however, may repurchase common shares from time to time in the open market or in private transactions when it can do so at prices at or below the current NAV per share on terms that represent a favorable investment opportunity.  Subject to its investment limitations, the Fund may borrow to finance the repurchase of common shares.  However, the payment of interest on such borrowings will increase the Fund’s expenses and consequently reduce net income.  In addition, the Fund is required under the 1940 Act to maintain “asset coverage” of not less than 300% of its “senior securities representing indebtedness” as such terms are defined in the 1940 Act.

Each Fund’s common shares trade in the open market at a price which is a function of several factors, including their NAV and yield.  The common shares of closed-end investment companies frequently sell at a discount from, but sometimes at a premium over, their NAVs.  There can be no assurance that it will be possible for investors to resell common shares of the Fund at or above the price at which common shares are offered by this Prospectus or that the market price of the Fund’s common shares will equal or exceed NAV.  Since the Fund may repurchase its common shares at prices below their NAV or make a tender offer for its common shares, the NAV of those common shares that remain outstanding will be increased, but the effect of such repurchases on the market price of the remaining common shares cannot be predicted.

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Any offer by a Fund to repurchase common shares will be made at a price based upon the NAV of the common shares at the close of business on or within 14 days after the last date of the offer.  Each offer will be made and stockholders notified in accordance with the requirements of the U.S. Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act, either by publication or mailing or both.  Each offering document will contain such information as is prescribed by such laws and the rules and regulations promulgated thereunder.  When a repurchase offer is authorized by the Fund’s Board, a stockholder wishing to accept the offer may be required to offer to sell all (but not less than all) of the common shares owned by such stockholder (or attributed to him for federal income tax purposes under Section 318 of the Code).  Each Fund will purchase all common shares tendered in accordance with the terms of the offer unless it determines to accept none of them (based upon one of the conditions set forth below).  Persons tendering common shares may be required to pay a service charge to help defray certain costs of the transfer agent.  Any such service charges will not be deducted from the consideration paid for the tendered common shares.  During the period of a repurchase offer, each Fund’s stockholders will be able to determine the Fund’s current NAV (which will be calculated weekly) by use of a toll-free telephone number.

Each Fund’s Charter and By-Laws, as well as Maryland law, include provisions that could limit the ability of others to acquire control of the Funds, to modify the structure of the Funds or to cause it to engage in certain transactions.  These provisions, described below, also could have the effect of depriving stockholders of an opportunity to sell their common shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of a Fund in a tender offer or similar transaction.  In the opinion of the Funds, however, these provisions offer several possible advantages.  They potentially require persons seeking control of a Fund to negotiate with its management regarding the price to be paid for the common shares required to obtain such control, they promote continuity and stability and they enhance each Fund’s ability to pursue long-term strategies that are consistent with its investment objectives.

The Directors of each Fund are divided into three classes, each having a term of three years, with the term of one class expiring each year.  In addition, a Director may be removed from office only with cause and only by a majority of such Fund’s stockholders, and the affirmative vote of 75% or more of such Fund’s outstanding common shares is required to amend, alter or repeal the provisions in such Fund’s Charter relating to removal of Directors.  These provisions could delay the replacement of a majority of the Directors and have the effect of making changes in the Board more difficult than if such provisions were not in place.

The affirmative vote of the holders of 75% or more of the outstanding common shares is required to (1) convert the Fund from a closed-end to an open-end investment company, (2) merge or consolidate with any other entity, (3) dissolve or liquidate the Fund, (4) sell all or substantially all of its assets, (5) cease to be an investment company registered under the 1940 Act, (6) issue to any person securities in exchange for property worth $1,000,000 or more, exclusive of sales of securities in connection with a public offering, issuance of securities pursuant to a dividend reinvestment plan or other stock dividend or issuance of securities upon the exercise of any stock subscription rights, or (7) amend, alter or repeal the above provisions in each Fund’s Charter. However, if such action has been approved or authorized by the affirmative vote of at least 70% of the entire Board, the affirmative vote of only a majority of the outstanding common shares would be required for approval, except in the case of the issuance of securities, in which no stockholder vote would be required unless otherwise required by applicable law.  The principal purpose of the above provisions is to increase each Fund’s ability to resist takeover attempts and attempts to change the fundamental nature of the business of the Fund that are not supported by either the Board or a large majority of the stockholders.  These provisions make it more difficult to liquidate, take over or open-end the Fund and thereby are intended to discourage investors from purchasing its common shares with the hope of making a quick profit by forcing the Fund to change its structure.  These provisions, however, would apply to all actions proposed by anyone, including management, and would make changes in each Fund’s structure accomplished through a transaction covered by the provisions more difficult to achieve.  The foregoing provisions also could impede or prevent transactions in which holders of common shares might obtain prices for their common shares in excess of the current market prices at which the Fund’s common shares were then trading.  Although these provisions could have the effect of depriving stockholders of an opportunity to sell their common shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of each Fund, the Fund believes the conversion of the Fund from a closed-end to an open-end investment company to eliminate the discount may not be desired by stockholders, who purchased their common shares in preference to stock of the many mutual funds available.

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Each Fund holds annual meetings as required by the rules of the NYSE.  Under Maryland law and the Funds’ By-laws, each Fund will call a special meeting of its stockholders upon the written request of stockholders entitled to cast at least 25% of all the votes at such meeting.  Such request for such a special meeting must state the purpose of the meeting and the matters proposed to be acted on at it.  The secretary of each Fund shall (i) inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting, and (ii) on payment of these costs to the Fund notify each stockholder entitled to notice of the meeting.  Notwithstanding the above, under Maryland law and each Fund’s By-laws, unless requested by stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of the stockholders held during the preceding 12 months.

Preferred Stock

Global Opportunity Bond’s Charter provides that the Board may classify or reclassify any unissued shares of capital stock into one or more additional or other classes or series, with rights as determined by the Board, by action of the Board without the approval of the holders of common shares.  Holders of common shares have no preemptive rights to purchase shares of preferred stock that might be issued.  To date, Global Opportunity Bond has not classified any unissued shares of capital stock into, or issued, preferred stock of any class or series.

Trading History and Share Price Data

Each Fund’s common shares are listed and traded on the NYSE.  The following table shows the high and low closing prices on the NYSE per common share of each Fund, the high and low NAV per share and the discount or premium to NAV represented by the quotation for each quarter since March 2007.

GLOBAL OPPORTUNITY BOND

(1)          As reported by Bloomberg.

EMERGING MARKETS DEBT

(1)   As reported by Bloomberg.

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Shares of closed-end management companies frequently trade at discounts from their NAVs, and the Funds’ common shares have also traded at a discount in recent times.

There can be no assurance that the Funds’ common shares will trade in the future above, at or below NAV.

DIVIDENDS AND DISTRIBUTIONS;
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

It is each Fund’s present policy, which may be changed by the Board, to distribute to stockholders, at least quarterly, dividends of its net investment income from earnings on its investments.  Each Fund also expects to distribute any net realized capital gains to stockholders on an annual basis.  Distributions to stockholders are normally subject to federal income tax in the stockholders’ hands when the distributions are paid.  This is true whether stockholders take distributions in cash or reinvest them in Fund common shares.  Distributions to stockholders also may be subject to state and local income tax.  Any distributions of net investment income and any short-term capital gain distributions are taxable to stockholders as ordinary income.  Long-term capital gain distributions are taxable as long-term capital gains, no matter how long stockholders have owned common shares in the Funds.  Stockholders who are not subject to income tax will not be required to pay tax on distributions.  Every January, stockholders will be sent a statement showing the taxable distributions paid to them in the previous year.  This statement provides information on stockholders’ dividends and capital gains for tax purposes.

All persons becoming registered holders of common shares of each Fund (other than brokers and nominees of banks or other financial institutions) will automatically be included in the Fund’s Dividend  Reinvestment and Cash Purchase Plan (the “Plan”), unless Computershare Trust Company, N.A. (the “Plan Agent”) is otherwise instructed by the stockholder in writing.  All distributions under the Plan will automatically be reinvested in common shares of the applicable Fund in full and fractional common shares as described below.  Stockholders who elect not to participate in the Plan will receive all distributions in cash paid by check in U.S. dollars mailed directly to the stockholder of record by the dividend paying agent.

Details of the Plan

The Plan Agent serves as agent for the stockholders in administering the Plan.  If the Directors of a Fund declare an income dividend or realized capital gains distribution payable either in the Fund’s common shares or in cash, as stockholders may have elected, non-participants in the Plan will receive cash and participants in the Plan will receive common shares, to be issued by the Fund or to be purchased in the open market by the Plan Agent.  If the market price per share on the valuation date equals or exceeds NAV per share on that date, the Fund will issue new common shares to participants at NAV unless the NAV is less than 95% of the market price on the valuation date, in which case, at 95% of the market price.  The valuation date will be the dividend or  distribution payment date or, if that date is not a trading day on the exchange on which each Fund’s common shares are then listed, the next preceding trading day.  If the NAV exceeds the market price of a Fund’s common shares at such time, or if a Fund should declare a dividend or capital gains distribution payable only in cash, the Plan Agent will, as agent for the participants, buy the Fund’s common shares in the open market, or elsewhere, with the cash in respect of the dividend or distribution, for the participants’ account on, or shortly after, the payment date.

Participants in the Plan have the option of making additional voluntary cash payments to the Plan Agent, quarterly, in any amount from $100 to $3,000, for investment in Fund common shares. The Plan Agent uses all funds received from participants (as well as any dividends and capital gains distributions received in cash) to purchase  shares of common stock on the open market on or about the 15th day of March, June, September, and December.  No participant has any authority to direct the time or price at which the Plan Agent may purchase the common shares on its behalf. Any voluntary cash payments received more than 35 days prior to such date will be returned by the Plan Agent, and interest will not be paid on any such amounts. To avoid unnecessary cash accumulations, and also to allow ample time for receipt and processing by the Plan Agent, participants should send in voluntary cash payments to be received by the Plan Agent approximately two business days before the 15th day of March, June, September and December.  A participant may withdraw a voluntary cash payment by written notice, if the notice is received by the Plan Agent not less than 48 hours before such payment is to be invested.

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The Plan Agent maintains all stockholder accounts in the Plan and furnishes written confirmations of all transactions in the account, including information needed by stockholders for personal and tax records. Common shares in the account of each Plan participant are held by the Plan Agent in non-certificated form in the name of the participant, and each stockholder’s proxy includes those common shares purchased pursuant to the Plan.

In the case of stockholders, such as banks, brokers or nominees, which hold common shares for others who are the beneficial owners, the Plan Agent administers the Plan on the basis of the number of common shares certified from time to time by the stockholder as representing the total amount registered in the stockholder’s name and held for the account of beneficial owners who are participating in the Plan.

The automatic reinvestment of dividend and distributions will not relieve participants of any income tax that may be payable on such dividends or distributions.

There is no charge to participants for reinvesting dividends or distributions.  The Plan Agent’s fees for the handling of the reinvestment of dividends and distributions are paid by each Fund.  However, each participant’s account is charged a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open market purchases in connection with the reinvestment of dividends or capital gains distributions.  Brokerage charges for purchasing small amounts of stock for individual accounts through the Plan are generally less than the usual brokerage charges, because the Plan Agent purchases stock for all participants in blocks and prorates the lower commission thus attainable.

Each Fund reserves the right to amend, suspend or terminate the Plan as applied to any voluntary cash payment made and any dividend or distribution paid subsequent to notice of the change sent to all stockholders at least 30 days before the record date for the dividend or distribution. The Plan also may be amended or terminated by the Plan Agent by at least 30 days’ written notice to all stockholders.

PRINCIPAL RISK FACTORS

The common share price and return of the Funds will fluctuate with changes in the market value of their respective portfolio securities.  The market value of the Funds’ portfolio securities will increase or decrease due to a variety of economic, market and political factors which cannot be predicted.  The principal risks associated with an investment in the Funds are summarized below.

Debt Securities Risk.  Each Fund may invest in debt securities.  All debt securities are subject to two types of risk:  credit risk and interest rate risk.  Credit risk refers to the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt.  Interest rate risk refers to fluctuations in the value of a debt security resulting from changes in the general level of interest rates.  When the general level of interest rates goes up, the prices of most debt securities go down.  When the general level of interest rates goes down, the prices of most debt securities go up.  (Zero coupon securities are typically subject to greater price fluctuations than comparable securities that pay interest.)

Foreign Securities Risk.  Each Fund may invest in foreign securities.  Investing in foreign securities involves certain special considerations that are not typically associated with investments in the securities of U.S. issuers.  Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards and may have policies that are not comparable to those of domestic issuers.  As a result, there may be less information available about foreign issuers than about domestic issuers.  Securities of some foreign issuers may be less liquid and more volatile than securities of comparable domestic issuers.  There is generally less government supervision and regulation of stock exchanges, brokers and listed issuers than in the United States.  In addition, with respect to certain foreign countries, there is a possibility of expropriation or confiscatory taxation, political and social instability, or diplomatic development which could affect U.S. investments in those countries.  The costs of investing in foreign countries frequently are higher than the costs of investing in the United States.  Although the Adviser endeavors to achieve the most favorable execution costs in portfolio transactions, fixed commissions on many foreign stock exchanges are generally higher than negotiated commissions on U.S. exchanges.

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Investments in securities of foreign issuers generally will be denominated in foreign currencies.  Accordingly, the value of the Fund’s assets, as measured in U.S. dollars may be affected favorably or unfavorably by changes in currency exchange rates and in exchange control regulations.  The Fund may incur costs in connection with conversions between various currencies.  See “—Foreign Currency Considerations.”

Certain foreign governments levy withholding or other taxes on dividend and interest income.  Although in some countries a portion of these taxes are recoverable, the non recovered portion of foreign withholding taxes will reduce the income received from investments in such countries.

From time to time, certain of the companies in which the Fund expects to invest may operate in, or have dealings with, countries subject to sanctions or embargoes imposed by the U.S. government and the United Nations and/or countries identified by the U.S. Government as state sponsors of terrorism.  A company may suffer damage to its reputation if it is identified as a company which operates in, or has dealings with, countries subject to sanctions or embargoes imposed by the U.S. Government and the United Nations and/or countries identified by the U.S. government as state sponsors of terrorism.  As an investor in such companies, a Fund will be indirectly subject to those risks.

The foreign securities in which the Funds may invest will be issued (in the case of Emerging Markets Debt) and may be issued (in the case of Global Opportunity Bond) by issuers located in emerging market or developing countries. Compared to the United States and other developed countries, emerging market or developing countries may have relatively unstable governments, economies based on only a few industries and securities markets that trade a small number of securities. Securities issued by companies located in these countries tend to be especially volatile and may be less liquid than securities traded in developed countries. In the past, securities in these countries have been characterized by greater potential loss than securities of companies located in developed countries.

A portion of each Fund’s investments in emerging markets securities may include investments in microfinance loans.  Microfinance loans are typically very small loans (microcredit) made for providing the means for people who are not served by traditional banking systems to expand their business or finance their families’ basic needs by providing access to affordable credit.  Microfinance loans carry many of the same risks associated with investing in emerging markets countries, but because some of the microfinance loans may be used to fund crop growing and livestock, microfinance loans may also be subject to climate and geography risk.  In addition, most micro-clients have low incomes and little or no previous credit history.  As a result, there is no assurance that  microcredit clients will be able to repay the microfinance loans.

The economies of individual emerging market or developing countries may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency depreciation, capital reinvestment, resource self-sufficiency and balance of payments position.  Further, the economies of developing countries generally are heavily dependent upon international trade and, accordingly, have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures.  These economies also have been, and may continue to be, adversely effected by economic conditions in the countries with which they trade.

Prior governmental approval for foreign investments may be required under certain circumstances in some emerging market or developing countries, and the extent of foreign investment in certain fixed income securities and domestic companies may be subject to limitation in other emerging market or developing countries.  Foreign ownership limitations also may be imposed by the charters of individual companies in emerging market or developing countries to prevent, among other concerns, violation of foreign investment limitations.  Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some emerging countries.  The Funds could be adversely affected by delays in, or a refusal to grant, any required governmental registration or approval for such repatriation. Any investment subject to such repatriation controls will be considered illiquid if it appears reasonably likely that this process will take more than seven days.

Investment in emerging market or developing countries may entail purchasing securities issued by or on behalf of entities that are insolvent, bankrupt, in default or otherwise engaged in an attempt to reorganize or reschedule their obligations and in entities that have little or no proven credit rating or credit history.  In any such

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case, the issuer’s poor or deteriorating financial condition may increase the likelihood that the Funds will experience losses or diminution in available gains due to bankruptcy, insolvency or fraud.  Emerging market or developing countries also pose the risk of nationalization, expropriation or confiscatory taxation, political changes, government regulation, social instability or diplomatic development (including war) that could affect adversely the economies of such countries or the value of a fund’s investments in those countries. In addition, it may be difficult to obtain and enforce a judgment in a court outside the United States.

Investments in emerging markets may also be exposed to an extra degree of custodial and/or market risk, especially where the securities purchased are not traded on an official exchange or where ownership records regarding the securities are maintained by an unregulated entity (or even the issuer itself).

Sovereign Debt Securities Risk.  Each Fund may invest in emerging market countries’ government debt securities, i.e., sovereign debt securities.  Investments in sovereign debt are subject to the risk that a government entity may delay or refuse to pay interest or repay principal on its sovereign debt. Some of these reasons may include cash flow problems, insufficient foreign currency reserves, political considerations, the relative size of its debt position to its economy or its failure to put in place economic reforms required by the International Monetary Fund or other multilateral agencies. If a government entity defaults, it may ask for more time in which to pay or for further loans. There is no legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by which all or part of the sovereign debt that a government entity has not repaid may be collected.

Foreign Currency Considerations.  Each Fund will invest directly in debt obligations of issuers located in emerging market countries that are denominated in the local currency.  The Funds are subject to the risk that those currencies will decline in value relative to the U.S. dollar.  The values of the currencies of the emerging market countries in which the Funds may invest may be subject to a high degree of fluctuation due to changes in interest rates, the effects of monetary policies issued by the United States, foreign governments, central banks or supranational entities, the imposition of currency controls or other national or global political or economic developments.  Therefore, the Funds’ exposure to foreign currencies may result in reduced returns to the Fund.

Each Fund will compute and expect to distribute its income in U.S. dollars, and the computation of income is made on the date that the income is earned by the Funds at the foreign exchange rate in effect on that date.  If the value of the foreign currencies in which each Fund receives its income falls relative to the U.S. dollar between the earning of the income and the time at which the Fund converts the foreign currencies to U.S. dollars, the Fund may be required to liquidate securities in order to make distributions if the Fund has insufficient cash in U.S. dollars to meet distribution requirements.  The liquidation of investments, if required, may have an adverse impact on the Fund’s performance.

Since each Fund may invest in debt obligations of issuers located in emerging market countries that are denominated in the local currency, changes in foreign currency exchange rates will affect the value of securities in the Fund’s portfolio and the unrealized appreciation or depreciation of investments.  In addition to changes in the value of the Funds’ portfolio investments resulting from currency fluctuations, the Funds may incur costs in connection with conversions between various currencies.  Foreign exchange dealers realize a profit based on the difference between the prices at which they are buying and selling various currencies.  Thus, a dealer normally will offer to sell a foreign currency to a Fund at one rate, while offering a lesser rate of exchange should the Fund desire immediately to resell that currency to the dealer.  The Funds will conduct their foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward, futures or options contracts to purchase or sell foreign currencies.

Lower Rated and Unrated Securities Risk.  Each Fund may invest without limitation in securities that are generally considered to have a credit quality rated below investment grade by a nationally recognized statistical rating organization such as Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Rating Group, a division of The McGraw-Hill Companies, Inc. (“S&P”).  Non-investment grade securities (that is, rated Ba1 or lower by Moody’s or BB+ or lower by S&P) are commonly referred to as “junk bonds” and are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions.  Each Fund may invest in defaulted securities.  Some of the emerging country debt securities held by the Funds, which may not be paying

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interest currently or may be in payment default, may be comparable to securities rated as low as C by Moody’s or CCC or lower by S&P.  These securities are considered to have extremely poor prospects of ever attaining any real investment standing, to have a current identifiable vulnerability to default, to be unlikely to have the capacity to pay interest and repay principal when due in the event of adverse business, financial or economic conditions and/or to be in default or not current in the payment of interest or principal.

Debt instruments rated below investment grade and unrated debt instruments typically involve greater risk.  Securities rated below investment grade and unrated securities are especially subject to adverse changes in general economic conditions, to changes in the financial condition of their issuers and to price fluctuation in response to changes in interest rates.  During periods of economic downturn or rising interest rates, issuers of instruments rated below investment grade and unrated instruments may experience financial stress that could adversely affect their ability to make payments of principal and interest and increase the possibility of default.  Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may also decrease the values and liquidity of securities rated below investment grade and unrated securities especially in a market characterized by a low volume of trading.

Repurchase Agreements.  Each Fund may invest in repurchase agreements.  Global Opportunity Bond may only enter into repurchase agreements with brokers, dealers or banks that meet the credit guidelines established by the Fund’s Board of Directors.  When cash may be available for only a few days, it may be invested by a Fund in repurchase agreements until such time as it may otherwise be invested or used for payments of obligations of the Fund. These agreements, which may be viewed as a type of secured lending by a Fund, typically involve the acquisition by the Fund of debt securities from a selling financial institution such as a bank, savings and loan association or broker-dealer.  The agreement provides that a Fund will sell back to the institution, and that the institution will repurchase, the underlying security serving as collateral at a specified price and at a fixed time in the future, usually not more than seven days from the date of purchase.  The collateral will be marked-to-market daily to determine that the value of the collateral, as specified in the agreement, does not decrease below the purchase price plus accrued interest.  If such decrease occurs, additional collateral will be requested and, when received, added to the account to maintain full collateralization.  Each Fund will accrue interest from the institution until the time when the repurchase is to occur.   Although this date is deemed by a Fund to be the maturity date of a repurchase agreement, the maturities of securities subject to repurchase agreements are not subject to any limits.

While repurchase agreements involve certain risks not associated with direct investments in debt securities, each Fund follows procedures approved by the Directors that are designed to minimize such risks.  These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose financial condition will be continually monitored by the Adviser.  In addition, as described above, the value of the collateral underlying the repurchase agreement will be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement.  In the event of a default or bankruptcy by a selling financial institution, each Fund will seek to liquidate such collateral.  However, the exercising of a Fund’s right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss.

Futures.  Each Fund may purchase and sell futures contracts.  Futures contracts provide for the sale by one party and purchase by another party of a specified amount of a specified security, index, instrument or basket of instruments.  Futures contracts (secured by cash, government or other liquid securities deposited with brokers or custodians as “initial margin”) are valued based upon their quoted daily settlement prices; changes in initial settlement value (represented by cash paid to or received from brokers as (“variation margin”) are accounted for as unrealized appreciation (depreciation).

The Funds may use futures contracts in order to manage their exposure to the stock and bond markets, to hedge against unfavorable changes in the value of securities or to remain fully invested and to reduce transaction costs.  Risks arise from the possible movements in security values underlying these instruments.  The change in value of futures contracts primarily corresponds with the value of their underlying instruments, which may not correlate with the change in value of the hedged investments.  In addition, there is the risk that the Funds may not be able to enter into a closing transaction because of an illiquid secondary market.

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Options.  Each Fund may write covered call and put options on portfolio securities and other financial instruments.  The liabilities are subsequently adjusted to reflect 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 Funds, in exchange for the premium, forego the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase.  By writing a put option, the Funds, in exchange for  the premium, accept the risk of having to purchase a security at an exercise price that is above the current market price.

The Funds may purchase call and put options on its securities or other financial instruments.  The Funds may purchase call options to protect against an increase in the price of the security or financial instrument it anticipates purchasing.  The Funds may purchase put options on securities which it holds or other financial instruments to protect against a decline in the value of the security or financial instrument or to close out covered written put positions.   Risks may arise from an imperfect correlation between the change in market value of the securities purchased or sold by the Fund and from the possible lack of a liquid secondary market for an option. The maximum exposure to loss for any purchased option is limited to the premium initially paid for the option.

Swaps.  Each Fund may enter into swap transactions.  A swap is a derivative in the form of an agreement to exchange the return generated by one instrument for the return generated by another instrument.  The payment streams are calculated by reference to a specified index and agreed upon notional amount.  The currency swaps in which the Funds may enter will generally involve an agreement to pay interest streams in one currency based on a specified index in exchange for receiving interest streams denominated in another currency.  Such swaps may involve initial and final exchanges that correspond to the agreed upon national amount.

The swaps in which the Funds may engage also include rate caps, floors and collars under which one party pays a single or periodic fixed amount(s) (or premium), and the other party pays periodic amounts based on the movement of a specified index.  Swaps do not involve the delivery of securities, other underlying assets or principal.  Accordingly, the risk of loss with respect to swaps is limited to the net amount of payments that the Funds are contractually obligated to make.  If the other party to a swap defaults, the Funds’ risk of loss consists of the net amount of payments that the Funds are contractually entitled to receive.  Currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency.  Therefore, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations.  If there is a default by the counterparty, the Funds may have contractual remedies pursuant to the agreements related to the transaction.  The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation.  Caps, floors and collars are more recent innovations for which standardized documentation has not yet been fully developed and, accordingly, they are less liquid than swaps.

Interest rate and total rate of return swaps do not involve the delivery of securities, other underlying assets, or principal.  Accordingly, the risk of loss with respect to interest rate and total rate of return swaps is limited to the net amount of interest payments that the Funds are contractually obligated to make.  If the other party to an interest rate or total rate of return swap defaults, the Funds’ risk of loss consists of the net amount of interest payments that the Funds are contractually entitled to receive.  In contrast, currency swaps may involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency.  Therefore, the entire principal value of a currency swap may be subject to the risk that the other party to the swap will default on its contractual delivery obligations.  If there is a default by the counterparty, the Funds may have contractual remedies pursuant to the agreements related to the transaction.

Options on Swaps.  Each Fund may engage in options on swaps for hedging purposes or to manage and mitigate the credit and interest rate.  A swap option is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement at some designated future time on specified terms.  Each Fund may write (sell) and purchase put and call swap options.  The use of swap options involves risks, including, among others, changes in the market value of securities held by the Fund, and of swap options relating to those securities may not be proportionate, (ii) there may not be a liquid market to sell a swap option, which could result in difficulty closing a position, (iii) swap options can

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magnify the extent of losses incurred due to changes in the market value of the securities to which they relate and (iv) counterparty risk.

Each Fund will usually enter into swaps on a net basis, i.e., the two payment streams are netted out in a cash settlement on the payment date or dates specified in the instrument, with the Fund receiving or paying, as the case may be, only the net amount of the two payments.  Each Fund’s obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the maintenance of a segregated account consisting of cash or liquid securities to avoid any potential leveraging of the Fund.  Each Fund may enter into OTC derivatives transactions (swaps, caps, floors, puts, etc., but excluding foreign exchange contracts) with counterparties that are approved by the Adviser in accordance with guidelines established by the Board.  These guidelines provide for a minimum credit rating for each counterparty and various credit enhancement techniques (for example, collateralization of amounts due from Counterparties) to limit exposure to counterparties with ratings below AA by S&P or Aa by Moody’s.

Credit Default Swaps.  Each Fund may enter into credit default swap contracts for hedging purposes or to add leverage to the Fund.  As the seller in a credit default swap contract, a Fund would be required to pay the par (or other agreed-upon) value of a referenced debt obligation to the counterparty in the event of a default by a third party, such as a U.S. or foreign corporate issuer, on the debt obligation.  In return, a Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred.  If no default occurs, a Fund would keep the stream of payments and would have no payment obligations.  As the seller, a Fund would effectively add leverage to its portfolio because the Fund would be subject to investment exposure on the notional amount of the swap.

Each Fund may also purchase credit default swap contracts in order to hedge against the risk of default of debt securities held in its portfolio, in which case the Fund would function as the counterparty referenced in the preceding paragraph.  This would involve the risk that the investment may expire worthless and would generate income only in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit downgrade or other indication of financial instability).  It would also involve credit risk that the seller may fail to satisfy its payment obligations to the Fund in the event of a default.

Forward Foreign Currency Exchange Contracts.  Each Fund may enter into forward foreign currency exchange contracts (“forward contracts”) as a hedge against fluctuations in future foreign exchange rates.  A forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract.  Each Fund may conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis through forward currency contracts or through non-deliverable forward currency transactions.  A currency spot transaction is a cash-settled contract to buy or sell a specified quantity of currency for physical settlement at the spot rate prevailing in the foreign currency exchange market.  A forward currency transaction is a contract to buy or sell a specified quantity of currency at a specified date in the future at a specified price which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract.  Forward currency contracts may be used to increase or reduce exposure to currency price movements.  A non-deliverable forward currency transaction is a synthetic short-term forward contract on a thinly traded or non-convertible foreign currency where the gain or loss is the difference between a specified exchange rate and the spot rate at the time of settlement.  Non-deliverable forward currency contracts allow investors to hedge or gain exposure to local currency movements of certain markets without actually dealing in the underlying markets.  The demand for non-deliverable forward currency contracts arises principally out of regulatory and liquidity issues in the underlying currency.  Non-deliverable forward currency contracts are used to gain exposure to foreign currencies which are not internationally traded and do not have a forward market for foreign investors.  Non-deliverable forward currency contracts are cash settled transactions and in certain less developed countries, such contracts may be relatively illiquid.  Forward contracts are traded in the interbank market conducted directly between currency traders (usually large, commercial and investment banks) and their customers.  Forward contracts only will be entered into with U.S. banks and their foreign branches, insurance companies and other dealers or foreign banks whose assets total $1 billion or more.  A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades.

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Each Fund may enter into forward contracts under various circumstances.  The typical use of a forward contract is to “lock in” the price of a security in U.S. dollars or some other foreign currency, which the Fund is holding in its portfolio.  By entering into a forward contract for the purchase or sale, for a fixed amount of dollars or other currency, of the amount of foreign currency involved in the underlying security transactions, the Fund may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the security is denominated during the period between the date on which the security is purchased or sold and the date on which payment is made or received.

The Adviser also may from time to time utilize forward contracts for other purposes.  For example, they may be used to hedge a foreign security held in the portfolio or a security which pays out principal tied to an exchange rate between the U.S. dollar and a foreign currency, against a decline in value of the applicable foreign currency.  They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased are denominated.  At times, the Funds may enter into “cross-currency” hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated.

Each Fund will not enter into forward contracts or maintain a net exposure to these contracts where the consummation of the contracts would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Fund’s portfolio securities.

When required by law, each Fund will cause its custodian bank to earmark cash, U.S. government securities or other appropriate liquid portfolio securities in an amount equal to the value of the Fund’s total assets committed to the consummation of forward contracts entered into under the circumstances set forth above.  If the value of the securities so earmarked declines, additional cash or securities will be earmarked on a daily basis so that the value of such securities will equal the amount of the Fund’s commitments with respect to such contracts.

Although each Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis.  It will, however, do so from time to time, and investors should be aware of the costs of currency conversion.  Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the spread between the prices at which they are buying and selling various currencies.  Thus, a dealer may offer to sell a foreign currency to a  Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer.

Each Fund may be limited in its ability to enter into hedging transactions involving forward contracts by the Code requirements relating to qualification as a regulated investment company.

Forward contracts may limit gains on portfolio securities that could otherwise be realized had they not been utilized and could result in losses.  The contracts also may increase a Fund’s volatility and may involve a significant amount of risk relative to the investment of cash.

Structured Products.  Each Fund may invest a portion of its assets in structured investments, structured notes and other types of similarly structured products consistent with the Fund’s investment objectives and policies.  Generally, structured investments are interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities.  These investment entities may be structured as trusts or other types of pooled investment vehicles.  This type of restructuring generally involves the deposit with or purchase by an entity of the underlying investments and the issuance by that entity of one or more classes of securities backed by, or representing interests in, the underlying investments or referencing an indicator related to such investments.  The cash flow or rate of return on the underlying investments may be apportioned among the newly issued securities to create different investment characteristics, such as varying maturities, credit quality, payment priorities and interest rate provisions.  The cash flow or rate of return on a structured investment may be determined by applying a multiplier to the rate of total return on the underlying investments or referenced indicator.

Structured notes are derivative securities for which the amount of principal repayment and/or interest payments is based on the movement of one or more “factors.”  These factors include, but are not limited to, currency

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exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices.  Some of these factors may or may not correlate to the total rate of return on one or more underlying instruments referenced in such notes.  In some cases, the impact of the movements of these factors may increase or decrease through the use of multipliers or deflators.  The Fund will use structured notes consistent with its investment objectives and policies.

The cash flow or rate of return on a structured investment may be determined by applying a multiplier to the rate of total return on the underlying investments or referenced indicator.  Application of a multiplier is comparable to the use of financial leverage, a speculative technique.  Leverage magnifies the potential for gain and the risk of loss.  As a result, a relatively small decline in the value of the underlying investments or referenced indicator could result in a relatively large loss in the value of a structured product.  Holders of structured products bear risks of the underlying investments, index or reference obligation and are subject to counterparty risk.  The Fund may have the right to receive payments to which it is entitled only from the structured product, and generally does not have direct rights against the issuer.  While certain structured investment vehicles enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the same securities, investors in structured vehicles generally pay their share of the investment vehicle’s administrative and other expenses.  Certain structured products may be thinly traded or have a limited trading market and may have the effect of increasing the Fund’s illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified buyers for these securities.

Investments in structured notes involve risks including interest rate risk, credit risk and market risk.  Where a Fund’s investments in structured notes are based upon the movement of one or more factors, including currency exchange rates, interest rates, referenced bonds and stock indices, depending on the factor used and the use of multipliers or deflators, changes in interest rates and movement of the factor may cause significant price fluctuations.  Additionally, changes in the reference instrument or security may cause the interest rate on the structured note to be reduced to zero and any further changes in the reference instrument may then reduce the principal amount payable on maturity.  Structured notes may be less liquid than other types of securities and more volatile than the reference instrument or security underlying the note.

Cross Currency Hedging.  Each Fund may enter into cross currency hedges, which involve the sale of one currency against the positive exposure to a different currency.  Cross currency hedges may be used for hedging  purposes or to establish an active exposure to the exchange rate between any two currencies.  Hedging a Fund’s currency risks involves the risk of mismatching the Fund’s obligations under a forward or futures contract with the value of securities denominated in a particular currency.  For cross currency hedges, there is an additional risk to the extent that these transactions create exposure to currencies in which a Fund’s securities are not denominated.

General Leverage Risk.  There can be no assurance that the Funds will utilize leverage, or that, if utilized, they will be successful during any period in which it is employed.  The use of leverage by a Fund would result in additional risks to the Fund’s stockholders than if leverage had not been used and can magnify the effect of any losses.  If the income and gains earned on securities to which the Funds have exposure through the use of leverage are greater than a Fund’s costs of borrowing, the Fund’s returns will be greater than if leverage had not been used.  Conversely, if the income and gains from those securities do not cover the payments due in connection with the leverage used, the return will be less than if the economic leverage had not been used.  The Adviser nevertheless may determine to continue to use leverage if it believes that the benefits to the Funds’ stockholders will in the long-term outweigh the potential risk of a reduced return.  There is no assurance that the Funds’ leverage strategy will be successful.  During periods in which the Funds are using leverage, the fees paid by the Funds for investment advisory services will be higher than if the Funds did not use leverage. Leverage involves risks and special considerations that stockholders should consider, including: (i) the likelihood of greater volatility of NAV, market price and dividend rate of the common shares than a comparable portfolio without leverage; (ii) when the Funds use leverage, the fees payable to the Adviser will be higher than if the Funds did not use leverage; (ii) the use of leverage may increase operating costs, which may reduce the Funds’ total return; and (iv) the effect of leverage in a declining market, which is likely to cause greater decline in the NAV of the common shares than if the Funds were not leveraged, which may result in a greater decline in the market price of the common shares.

Each Fund may be required to sell assets at a loss, or at an inopportune time, in order to redeem or pay off leverage, resulting in a decrease in the NAV of the Fund.  The Adviser, in its discretion, will continue the Fund’s use

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of leverage where it believes that the benefits of maintaining the leveraged position will outweigh any current reduced return to current stockholders.

While each Fund may consider reducing leverage in response to actual or anticipated changes in interest rates in an effort to mitigate the increased volatility of current income and NAV associated with leverage, there can, however, be no assurance that the Fund will actually reduce leverage in the future or that a reduction, if any, will benefit the common stockholders.  Changes in the future direction of interest rates are very difficult to predict accurately.  If each Fund were to reduce leverage based on a prediction about future changes to interest rates, and that prediction turned out to be incorrect, the reduction in leverage would likely reduce the income and/or total returns to common stockholders as compared to a situation where the Fund had not reduced leverage.  The Funds may decide that this risk outweighs the likelihood of achieving the desired reduction to volatility in income and share price if the prediction turned out to be correct and determine not to reduce leverage.

Reverse Repurchase Agreements.  Each Fund’s use of reverse repurchase agreements involve many of the same risks involved in the Funds’ use of leverage, as the proceeds from reverse repurchase agreements generally will be invested in additional securities.  There is a risk that the market value of the securities acquired in the reverse repurchase agreement may decline below the price of the securities that the Funds have sold but remain obligated to repurchase.  In addition, there is a risk that the market value of the securities retained by the Funds may decline.

If the buyer of securities under a reverse repurchase agreement were to file for bankruptcy or experience insolvency, the Funds may be adversely affected.  Also, in entering into repurchase agreements, the Funds would bear the risk of loss to the extent that the proceeds of the reverse repurchase agreement are less than the value of the underlying securities.  In addition, due to the interest costs associated with reverse repurchase agreements, the Funds’ NAV will decline, and, in some cases, the Funds may be worse off than if they had not used such instruments.

Illiquid Investments Risk.  Investment of each Fund’s assets in relatively illiquid securities and loans may restrict the ability of the Fund to dispose of its investments in a timely fashion and for a fair price, as well as its ability to take advantage of market opportunities.  The risks associated with illiquidity will be particularly acute in situations in which a Fund’s operations require cash, such as when a Fund pays dividends or distributions or if a Fund repurchases common shares, and could result in the Fund borrowing to meet short-term cash requirements or incurring capital losses on the sale of illiquid investments.

Risks of Lending Portfolio Securities.  There may be risks of delay and costs involved in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially.  These delays and costs could be greater for foreign securities.  However, loans will be made only to borrowers deemed by the Adviser to be creditworthy and when, in the judgment of the Adviser, the income that can be earned from such securities loans justifies the attendant risk.  All relevant facts and circumstances, including the creditworthiness of the broker, dealer, bank or institution, will be considered in making decisions with respect to the lending of securities, subject to review by the Funds’ Board.  The Funds also bears the risk that the reinvestment of collateral will result in a principal loss.  Finally, there is the risk that the price of the securities will increase while they are on loan and the collateral will not be adequate to cover their value.

Short Sales.  Each Fund may sell securities short.  Each Fund is obligated to replace the borrowed securities at their market price at the time of replacement.   Each 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.  Each 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 Funds will either place in a segregated account  with its custodian or denote on its 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 Funds 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.

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Tax Risk.  Each Fund elects to be treated and qualify each year as a “regulated investment company” under the Code.  If each Fund qualifies as a regulated investment company, it generally will not be subject to U.S. federal income tax on its net investment income, including net capital gain, distributed (or deemed distributed, as described below) to stockholders, provided that, for each taxable year, the Fund distributes (or is treated as distributing) to its stockholders an amount equal to or exceeding 90% of its “investment company taxable income” as that term is defined in the Internal Revenue Code of 1986, as amended (the “Code”) (which includes, among other things, dividends, taxable interest and the excess of any net short term capital gains over net long-term capital losses, as reduced by certain deductible expenses).  Each Fund intends to distribute annually all or substantially all of its investment company taxable income and net capital gain.  In order for a Fund to qualify as a regulated investment company in any taxable year, the Fund must meet certain asset diversification tests and at least 90% of its gross income for such year must be certain types of qualifying income.  Foreign currency gains will generally be treated as qualifying income for purposes of the 90% gross income requirement as long as such gains are derived with respect to the business of investing in such currencies.  However, the U.S. Treasury Department has authority to issue regulations in the future that could treat some or all of the Fund’s foreign currency gains as non qualifying income, thereby jeopardizing a Fund’s status as a regulated investment company for all years to which the regulations are applicable.  If for any taxable year a Fund did not qualify as a regulated investment company, it would be treated as a corporation subject to U.S. federal income tax, thereby subjecting any income earned by the Fund to tax at the corporate level at a 35% U.S. federal tax rate and, when such income is distributed, to a further tax at the stockholder level to the extent of the Fund’s current or accumulated earnings and profits.

Net Asset Value Discount.  Frequently, shares of closed-end investment companies, such as the Funds, trade at a price below their NAV, commonly referred to as a “discount.”  Historically, shares of closed-end funds have traded at a discount to their NAV and the Funds cannot predict whether their common shares will trade at a discount to their NAV.  Before making an investment decision, a prospective investor should consider the suitability of this investment with respect to the investor’s investment objectives and personal situation.

Non-Diversification Risk.  Each Fund is classified as a “non-diversified” investment company under the 1940 Act, which means that the Fund is not limited by the 1940 Act in the proportion of its assets that may be invested in the securities of a single issuer.  As a non-diversified investment company, each Fund may invest a greater proportion of its assets in the securities of a smaller number of issuers and, as a result, may be subject to greater risk with respect to portfolio securities.  However, each Fund intends to comply with the diversification requirements imposed by the Code for qualification as a regulated investment company.

Risks of Investing in Other Investment Companies.   Subject to the limitations set forth in the 1940 Act, each Fund may acquire shares in other investment companies, including foreign investment companies.  The market value of the shares of other investment companies may differ from the NAV of the particular fund.  As a stockholder in an investment company, the Fund would bear its ratable share of that entity’s expenses, including its investment advisory and administration fees.  At the same time, the Funds would continue to pay their own advisory and administration fees and other expenses.  As a result, the Funds and their stockholders, in effect, will be absorbing duplicate levels of fees with respect to investments in other investment companies.

Temporary Investments.  With respect to Global Opportunity Bond, during periods in which the Adviser believes that changes in economic, financial or political conditions make it advisable to do so, Global Opportunity Bond may for temporary defensive purposes, invest part or all of its assets in cash or in certain short-term (less than 12 months to maturity) debt securities including certificated of deposit, commercial paper, notes, obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and repurchase agreements involving such government securities.

With respect to Emerging Markets Debt, during periods in which the Adviser believes changes in economic, financial and political conditions make it advisable, the Emerging Markets Debt may, for temporary defensive purposes, reduce its holdings in emerging market debt securities and invest in certain other short term (less than 12 months to maturity) and medium-term (not greater than 5 years to maturity) debt securities or cash. The short-term and medium-term debt securities in which Emerging Markets Debt may invest consist of: obligations issued or guaranteed by the U.S. Government , its agencies or instrumentalities, bank deposits and bank obligations of U.S. or emerging country banks denominated in any currency, floating rate securities and other instruments denominated in any currency issued by international development agencies, finance company and corporate

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commercial paper and other short term corporate debt obligations of U.S. corporations meeting the Emerging Markets Debt’s credit quality standards and repurchase agreements with banks and broker-dealers with respect to such securities.

Anti-Takeover Provisions.  Each Fund’s Charter and Bylaws, as well as Maryland law, include provisions that could limit the ability of other entities or persons to acquire control of the Fund or convert the Fund to open-end status and delay or limit the ability of other persons to acquire control of the Fund.  These provisions could deprive the Fund’s common stockholders of opportunities to sell their common shares at a premium over the then-current market price of the common shares or at NAV.

Corporate Debt Obligations Risk.  Emerging Markets Debt may invest in debt securities of corporate issuers.  Prices of corporate debt obligations fluctuate and, in particular, are subject to several key risks including, but not limited to, interest-rate risk, credit risk, prepayment risk and spread risk.  The market value of a corporate bond also may be affected by the credit rating of the corporation, the corporation’s performance and perceptions of the corporation in the market place.  There is a risk that the issuers of the corporate debt obligations in which the Fund may invest may not be able to meet their obligations on interest or principal payments at the time called for by an instrument.

Bank Loans. Each Fund may invest in bank loans.  Bank loans generally are negotiated between a borrower and several financial institutional lenders represented by one or more lenders acting as agent of all the lenders.  The agent is responsible for negotiating the loan agreement that establishes the terms and conditions of the loan and the rights of the borrower and the lenders, monitoring any collateral, and collecting principal and interest on the loan.  By investing in a loan, a Fund becomes a member of a syndicate of lenders.  Certain public bank loans are illiquid, meaning each Fund may not be able to sell them quickly at a fair price.  Illiquid securities are  also difficult to value.  To the extent a bank loan has been deemed illiquid, it will be subject to a Fund’s restrictions on investment in illiquid securities.  The secondary market for bank loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

Bank loans are subject to the risk of default.  Default in the payment of interest or principal on a loan will result in a reduction of income to a Fund, a reduction in the value of the loan, and a potential decrease in the Fund’s NAV.  The risk of default will increase in the event of an economic downturn or a substantial increase in interest rates.  Because public bank loans usually rank lower in priority of payment to senior loans, they present a greater degree of investment risk due to the fact that the cash flow or other property of the borrower securing the bank loan may be insufficient to meet scheduled payments after meeting the payment obligations of the senior secured obligations of the borrower. These bank loans may exhibit greater price volatility as well.  As  discussed above, however, because bank loans reside higher in the capital structure than high yield bonds, default losses have been historically lower in the bank loan market.  Bank loans that are rated below investment grade share the same risks of other below investment grade securities.

Asset-Backed Securities.  Global Opportunity Bond may invest in asset-backed securities.  Asset-backed securities have risk characteristics similar to mortgage-backed securities.  Like mortgage-backed securities, they generally decrease in value as a result of interest rate increases, but may benefit less than other fixed income securities from declining interest rates, principally because of prepayments.  Also, as in the case of mortgage-backed securities, prepayments generally increase during a period of declining interest rates although other factors, such as changes in credit use and payment patterns, may also influence prepayment rates.  Asset-backed securities also involve the risk that various federal and state consumer laws and other legal, regulatory and economic factors may result in the collateral backing the securities being insufficient to support payment on the securities.

The securitization techniques used to develop mortgage-backed securities are also applied to a broad range of other assets.  Various types of assets, primarily automobile and credit card receivables and home equity loans, are being securitized in pass-through structures similar to the mortgage pass-through structures.  New instruments and variations of existing mortgage-backed securities and asset-backed securities continue to be developed.  Global Opportunity Bond may invest in any of these instruments or variations.

Mortgage-Backed Securities.  Global Opportunity Bond may invest in mortgage-backed securities.  Mortgage-backed securities in which the Funds may invest have different risk characteristics than traditional debt

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securities.  Although generally the value of fixed-income securities increases during periods of falling interest rates and decreases during periods of rising interest rates, this is not always the case with mortgage-backed securities.  This is due to the fact that principal on underlying mortgages may be prepaid at any time, as well as other factors.  Generally, prepayments will increase during periods of falling interest rates and decrease during periods of rising interest rates.  The rate of prepayments also may be influenced by economic and other factors.  Prepayment risk includes the possibility that, as interest rates fall, securities with stated interest rates may have the principal prepaid earlier than expected, requiring the Funds to invest the proceeds at generally lower interest rates.  Investments in mortgage-backed securities are made based upon, among other things, expectations regarding the rate of prepayments on underlying mortgage pools.  Rates of prepayment, faster or slower than expected by each Fund’s Adviser, could reduce the Fund’s yield, increase the volatility of the Fund and/or cause a decline in NAV.  Certain mortgage-backed securities may be more volatile and less liquid than other traditional types of debt securities.

Collateralized Mortgage Obligations.  Global Opportunity Bond may invest in CMOs.  CMOs are debt obligations collateralized by mortgage loans or mortgage pass-through securities (collectively, “Mortgage Assets”).  The principal and interest on the Mortgage Assets comprising a CMO may be allocated among the several classes of a CMO in many ways.  The general goal in allocating cash flows on Mortgage Assets to the various classes of a CMO is to create certain tranches on which the expected cash flows have a higher degree of predictability than do the underlying Mortgage Assets.  As a general matter, the more predictable the cash flow is on a particular CMO tranche, the lower the anticipated yield on that tranche at the time of issue will be relative to the prevailing market yields on the Mortgage Assets.  As part of the process of creating more predictable cash flows on certain tranches of a CMO, one or more tranches generally must be created that absorb most of the changes in the cash flows on the underlying Mortgage Assets.  The yields on these tranches are generally higher than prevailing market yields on other mortgage-related securities with similar average lives.  Principal prepayments on the underlying Mortgage Assets may cause the CMOs to be retired substantially earlier than their stated maturities or final distribution dates.  Because of the uncertainty of the cash flows on these tranches, the market prices and yields of these tranches are more volatile and may increase or decrease in value substantially with changes in interest rates and/or the rates of prepayment.

Due to the possibility that prepayments (on home mortgages and other collateral) will alter the cash flow on CMOs, it is not possible to determine in advance the final maturity date or average life.  Faster prepayment will shorten the average life and slower prepayments will lengthen it.  In addition, if the collateral securing CMOs or any third-party guarantees are insufficient to make payments, the Funds could sustain a loss.

Commercial Mortgage-Backed Securities.  Global Opportunity Bond may invest in CMBS.  CMBS are generally multi-class or pass-through securities backed by a mortgage loan or a pool of mortgage loans secured by commercial property, such as industrial and warehouse properties, office buildings, retail space and shopping malls, multifamily properties and cooperative apartments.  Private lenders, such as banks or insurance companies, originate these loans and then sell the loans directly into a CMBS trust or other entity.  The commercial mortgage loans that underlie CMBS are generally not amortizing or not fully amortizing.  That is, at their maturity date, repayment of their remaining principal balance or “balloon” is due and is repaid through the attainment of an additional loan or sale of the property.  An extension of a final payment on commercial mortgages will increase the average life of the CMBS, generally resulting in lower yield for discount bonds and a higher yield for premium bonds.  Unlike most single family residential mortgages, commercial real estate property loans often contain provisions which substantially reduce the likelihood that such securities will be prepaid. The provisions generally impose significant prepayment penalties on loans and, in some cases, there may be prohibitions on principal prepayments for several years following origination.

CMBS are subject to credit risk and prepayment risk.  Although prepayment risk is present, it is of a lesser degree in the CMBS than in the residential mortgage market; commercial real estate property loans often contain provisions which substantially reduce the likelihood that such securities will be prepaid (e.g., significant prepayment penalties on loans and, in some cases, prohibition on principal payments for several years following origination).

Stripped Mortgage-Backed Securities.  Global Opportunity Bond may invest in stripped mortgage-backed securities.  Investments in each class of stripped mortgage-backed securities are extremely sensitive to changes in interest rates.  Interest-only stripped mortgage-backed securities tend to decrease in value substantially if interest rates decline and prepayment rates become more rapid.  Principal-only stripped

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mortgage-backed securities tend to decrease in value substantially if interest rates increase and the rate of prepayment decreases.  If Global Opportunity Bond invests in stripped mortgage-backed securities and interest rates move in a manner not anticipated by the management of Global Opportunity Bond, it is possible that Global Opportunity Bond could lose all or substantially all of its investment.

Additional Risk Considerations

Loan Participations and Assignments Risk.  Each Fund may invest in fixed and floating rate loans (“Loans”) arranged through private negotiations between an issuer of debt obligations and one or more financial institutions (“Lenders”).  Each Fund’s investments in Loans in most instances will be in the form of participations in Loans (“Participations”) or assignments of all or a portion of Loans (“Assignments”) from third parties.  In connection with purchasing Participations, the Funds generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loan, nor any rights of set-off against the borrower, and the Fund may not directly benefit from any collateral supporting the Loan in which it has purchased the Participation.  As a result, the Funds may be subject to the credit risk of both the borrower and the Lender that is selling the Participation.  In the event of the insolvency of the Lender selling a Participation, the Funds may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower.  Certain Participations may be structured in a manner designed to avoid purchasers of Participations being subject to the credit risk of the Lender with respect to the Participation, but even under such a structure, in the event of the Lender’s insolvency, the Lender’s servicing of the Participation may be delayed and the assignability of the Participation impaired.  The Funds will acquire Participations only if the Lender interpositioned between the Funds and the borrower is determined by the Adviser to be creditworthy.

Each Fund may have difficulty disposing of Assignments and Participations because to do so it will have to assign such securities to a third party.  Because there is no liquid market for such securities, the Funds anticipate that such securities could be sold only to a limited number of institutional investors.  The lack of a liquid secondary market may have an adverse impact on the value of such securities and the Fund’s ability to dispose of particular Assignments or Participations when necessary to meet the Funds’ liquidity needs or in response to a specific economic event such as a deterioration in the creditworthiness of the borrower.  The lack of a liquid secondary market for Assignments and Participations also may make it more difficult for the Funds to assign a value to these securities for purposes of valuing the Funds’ portfolio and calculating its NAV.

Zero Coupon Securities.  Certain debt obligations purchased by Global Opportunity Bond may take the form of zero coupon securities.  The interest earned on such securities is, implicitly, automatically compounded and paid out at maturity.  While such compounding at a constant rate eliminates the risk of receiving lower yields upon reinvestment of interest if prevailing interest rates decline, the owner of a zero coupon security will be unable to participate in higher yields upon reinvestment of interest received if prevailing interest rates rise.  For this reason, zero coupon securities are subject to substantially greater market price fluctuations during periods of changing prevailing interest rates than are comparable debt securities which make current distributions of interest.  Current federal tax law requires that a holder (such as the Fund) of a zero coupon security accrue a portion of the discount at which the security was purchased as income each year even though the Fund receives no interest payments in cash on the security during the year.

When-Issued and Delayed Delivery Securities.  From time to time, the Funds may purchase securities on a when-issued or delayed delivery basis. When these transactions are negotiated, the price is fixed at the time of the commitment, but delivery and payment can take place a month or more after the date of commitment.  While the Funds will only purchase securities on a when-issued and delayed delivery basis with the intention of acquiring the securities, the Funds may sell the securities before the settlement date, if it is deemed advisable. The securities so purchased or sold are subject to market fluctuation and no interest or dividends accrue to the purchaser prior to the settlement date.

At the time the Funds make the commitment to purchase or sell securities on a when-issued, and delayed delivery basis, it will record the transaction and thereafter reflect the value, each day, of such security purchased, or if a sale, the proceeds to be received, in determining its NAV.  At the time of delivery of the securities, their value may be more or less than the purchase or sale price.  An increase in the percentage of the Funds’ assets committed to the purchase of securities on a when-issued and delayed delivery basis may increase the volatility of its NAV. The

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Funds will also establish a segregated account on the Funds’ books in which it will continually maintain cash or cash equivalents or other liquid portfolio securities equal in value to commitments to purchase securities on a when-issued and delayed delivery basis.(1)

FINANCIAL STATEMENTS AND EXPERTS

The financial statements of the Funds, for the fiscal year ended December 31, 2008, that are incorporated by reference in the Statement of Additional Information relating to the Registration Statement on Form N-14 of which this Proxy Statement and Prospectus forms a part, have been audited by [·], independent registered public accounting firm.

LEGAL MATTERS

Certain legal matters concerning the issuance of Emerging Markets Debt Shares will be passed upon by Clifford Chance US LLP, New York, New York.  Such firm will rely on Ballard Spahr Andrews & Ingersoll, LLP as to matters of Maryland law.

ADDITIONAL INFORMATION

Additional information about the Funds is available, as applicable, in the following documents: (i) Emerging Markets Debt’s Annual Report for its fiscal year ended December 31, 2008, accompanying this Proxy Statement and Prospectus; and (iii) Global Opportunity Bond’s Annual Report for its fiscal year ended December 31, 2008.  The foregoing documents may be obtained without charge by calling (800) 231-2608 (toll-free).

Global Opportunity Bond and Emerging Markets Debt are subject to the informational requirements of the 1934 Act, and in accordance therewith, file reports and other information with the Commission.  Proxy material, reports and other information about Global Opportunity Bond and Emerging Markets Debt which are of public record can be viewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information about the Reference Room’s operations may be obtained by calling the Commission at (202) 551-8090.  Reports and other information about each Fund are available on the EDGAR Database on the Commission’s Internet site (www.sec.gov) and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address:  publicinfo@sec.gov or by writing the Public Reference Section of the Commission, Washington, D.C. 20549-1520.

OTHER BUSINESS

Management of Global Opportunity Bond knows of no business other than the matters specified above which will be presented at the Meeting.  Since matters not known at the time of the solicitation may come before the Meeting, the proxy as solicited confers discretionary authority with respect to such matters as properly come before the Meeting, including any adjournment(s) or postponement(s) thereof, and it is the intention of the persons named as attorneys-in-fact in the proxy to vote this proxy in accordance with their judgment on such matters.

[·], 2009

(1) Discuss whether this should be moved to SAI

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EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (“Agreement”) is made as of this 19th day of June, 2009, by and between MORGAN STANLEY EMERGING MARKETS DEBT FUND, INC., a Maryland corporation (“Emerging Markets Debt”), and MORGAN STANLEY GLOBAL OPPORTUNITY BOND FUND, INC., a Maryland corporation (“Global Opportunity Bond”).

This Agreement is intended to be and is adopted as a “plan of reorganization” within the meaning of Treas. Reg. 1.368-2(g), for a reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”).  The reorganization (“Reorganization”) will consist of the transfer to Emerging Markets Debt of substantially all of the assets of Global Opportunity Bond in exchange for the assumption by Emerging Markets Debt of all stated liabilities of Global Opportunity Bond and the issuance by Emerging Markets Debt of shares of common stock, par value $0.01 per share (the “Emerging Markets Debt Shares”), to be distributed, after the Closing Date hereinafter referred to, to the stockholders of Global Opportunity Bond in liquidation of Global Opportunity Bond as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement.

In consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

1.                                       THE REORGANIZATION AND LIQUIDATION OF GLOBAL OPPORTUNITY BOND

1.1           Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, Global Opportunity Bond agrees to assign, deliver and otherwise transfer the Global Opportunity Bond Assets (as defined in paragraph 1.2) to Emerging Markets Debt and Emerging Markets Debt agrees in exchange therefor to assume all of Global Opportunity Bond’s stated liabilities on the Closing Date as set forth in paragraph 1.3 and to deliver to Global Opportunity Bond the number of Emerging Markets Debt Shares, including fractional Emerging Markets Debt Shares, determined in the manner set forth in paragraph 2.3.  Such transactions shall take place at the closing provided for in paragraph 3.1 (“Closing”).

1.2           (a)           The “Global Opportunity Bond Assets” shall consist of all property, including without limitation, all cash, cash equivalents, securities and dividend and interest receivables owned by Global Opportunity Bond, and any deferred or prepaid expenses shown as an asset on Global Opportunity Bond’s books on the Valuation Date.

(b)           On or prior to the Valuation Date, Global Opportunity Bond will provide Emerging Markets Debt with a list of all of Global Opportunity Bond’s assets to be assigned, delivered and otherwise transferred to Emerging Markets Debt and a list of the stated liabilities to be assumed by Emerging Markets Debt pursuant to this Agreement.  Global Opportunity Bond reserves the right to sell any of the securities on such list but will not, without the prior approval of Emerging Markets Debt, acquire any additional securities other than securities of the type in which Emerging Markets Debt is permitted to invest and in amounts agreed to in writing by Emerging Markets Debt.  Emerging Markets Debt will, within a reasonable time prior to the Valuation Date, furnish Global Opportunity Bond with a statement of Emerging Markets Debt’ investment objective, policies and restrictions and a list of the securities, if any, on the list referred to in the first sentence of this paragraph that do not conform to Emerging Markets Debt’s investment objectives, policies and restrictions.  In the event that Global Opportunity Bond holds any investments that Emerging Markets Debt is not permitted to hold, Global Opportunity Bond will dispose of such securities on or prior to the Valuation Date.  In addition, if it is determined that the portfolios of Global Opportunity Bond and Emerging Markets Debt, when aggregated, would contain investments exceeding certain percentage limitations imposed upon Emerging Markets Debt with respect to such investments, Global Opportunity Bond if requested by Emerging Markets Debt will, on or prior to the Valuation Date, dispose of and/or reinvest a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing Date (as defined in paragraph 3.1).

1.3           Global Opportunity Bond will endeavor to discharge all of its liabilities and obligations on or prior to the Valuation Date.  Emerging Markets Debt will assume all stated liabilities, which includes, without limitation,

all expenses, costs, charges and reserves reflected on an unaudited Statement of Assets and Liabilities of Global Opportunity Bond prepared by the Treasurer of Global Opportunity Bond as of the Valuation Date in accordance with generally accepted accounting principles consistently applied from the prior audited period.

1.4           In order for Global Opportunity Bond to comply with Section 852(a)(1) of the Code and to avoid having any investment company taxable income or net capital gain (as defined in Sections 852(b)(2) and 1222(11) of the Code, respectively) in the short taxable year ending with its dissolution, Global Opportunity Bond will on or before the Valuation Date (a) declare a dividend in an amount large enough so that it will have declared dividends of substantially all of its investment company taxable income and net capital gain, if any, for such taxable year (determined without regard to any deduction for dividends paid) and (b) distribute such dividend.

1.5           On the Closing Date or as soon as practicable thereafter, Global Opportunity Bond will distribute Emerging Markets Debt Shares received by Global Opportunity Bond pursuant to paragraph 1.1 pro rata to its stockholders of record determined as of the close of business on the Valuation Date (“Stockholders of Global Opportunity Bond”).  Each Global Opportunity Bond Stockholder will receive Emerging Markets Debt Shares.  Such distribution will be accomplished by an instruction, signed by Global Opportunity Bond’s Secretary, to transfer Emerging Markets Debt Shares then credited to Global Opportunity Bond’s account on the books of Emerging Markets Debt to open accounts on the books of Emerging Markets Debt in the names of the Stockholders of Global Opportunity Bond and representing the respective pro rata number of Emerging Markets Debt Shares due such Stockholders of Global Opportunity Bond.

1.6           Ownership of Emerging Markets Debt Shares will be shown on the books of Emerging Markets Debt’s transfer agent.

1.7           Any transfer taxes payable upon issuance of Emerging Markets Debt Shares in a name other than the registered holder of Emerging Markets Debt Shares on Global Opportunity Bond’s books as of the close of business on the Valuation Date shall, as a condition of such issuance and transfer, be paid by the person to whom Emerging Markets Debt Shares are to be issued and transferred.

1.8           Any reporting responsibility of Global Opportunity Bond is and shall remain the responsibility of Global Opportunity Bond up to and including the date on which Global Opportunity Bond is terminated and deregistered pursuant to paragraph 1.9.

1.9           Within one year after the Closing Date, Global Opportunity Bond shall pay or make provision for the payment of all its liabilities and taxes.  If and to the extent that any trust, escrow account or other similar entity continues after the close of such one-year period in connection either with making provision for payment of liabilities or taxes or with distributions to stockholders of Global Opportunity Bond, such entity shall either (i) qualify as a liquidating trust under Section 7701 of the Code (and applicable Treasury Regulations thereunder) or other entity which does not constitute a continuation of Global Opportunity Bond for federal income tax purposes, or (ii) be subject to a waiver under Section 368(a)(2)(G)(ii) of the complete distribution requirement of Section 368(a)(2)(G)(i) of the Code.  Global Opportunity Bond shall be dissolved as a Maryland corporation and deregistered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), promptly following the making of all distributions pursuant to paragraph 1.5 (and, in any event, within one year after the Closing Date).

1.10         Copies of all books and records maintained on behalf of Global Opportunity Bond in connection with its obligations under the 1940 Act, the Code, state blue sky laws or otherwise in connection with this Agreement will promptly be delivered after the Closing to officers of Emerging Markets Debt or their designee, and Emerging Markets Debt or its designee shall comply with applicable record retention requirements to which Global Opportunity Bond is subject under the 1940 Act.

2.                                       VALUATION

2.1           The value of the Global Opportunity Bond Assets shall be the value of such assets computed as of 4:00 p.m. New York time on the third business day following the receipt of the requisite approval by stockholders of

Global Opportunity Bond of this Agreement or at such time on such earlier or later date after such approval as may be mutually agreed upon in writing (such time and date being hereinafter called the “Valuation Date”).

2.2           The net asset value of an Emerging Markets Debt Share shall be the net asset value per share computed on the Valuation Date.

2.3           The number of Emerging Markets Debt Shares (including fractional shares, if any) to be issued hereunder shall be determined, with respect to each class, by dividing the aggregate net asset value of each class of Global Opportunity Bond shares (determined in accordance with paragraph 2.1) by the net asset value per share of the corresponding class of shares of Emerging Markets Debt (determined in accordance with paragraph 2.2).

2.4           All computations of value shall be made by JPMorgan Chase Bank, N.A. in accordance with its regular practice in pricing Emerging Markets Debt.  Emerging Markets Debt shall cause Morgan Stanley Services to deliver a copy of its valuation report at the Closing.

3.                                       CLOSING AND CLOSING DATE

3.1           The Closing shall take place on the Valuation Date or on the next business day following the Valuation Date (the “Closing Date”).  The Closing shall be held as of 9:00 a.m. New York time, or at such other time as the parties may agree.  The Closing shall be held in a location mutually agreeable to the parties hereto.  All acts taking place at the Closing shall be deemed to take place simultaneously as of 9:00 a.m. New York time on the Closing Date unless otherwise provided.

3.2           Portfolio securities held by Global Opportunity Bond and represented by a certificate or other written instrument shall be presented by it or on its behalf to JPMorgan Chase Bank, N.A. (the “Custodian”), as custodian for Emerging Markets Debt, for examination no later than five business days preceding the Valuation Date.  Such portfolio securities (together with any cash or other assets) shall be delivered by Global Opportunity Bond to the Custodian for the account of Emerging Markets Debt on or before the Closing Date in conformity with applicable custody provisions under the 1940 Act and duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof in accordance with the custom of brokers.  The portfolio securities shall be accompanied by all necessary federal and state stock transfer stamps or a check for the appropriate purchase price of such stamps.  Portfolio securities and instruments deposited with a securities depository (as defined in Rule 17f-4 under the 1940 Act) shall be delivered on or before the Closing Date by book-entry in accordance with customary practices of such depository and the Custodian.  The cash delivered shall be in the form of a Federal Funds wire, payable to the order of “JPMorgan Chase Bank, N.A., Custodian for Morgan Stanley Emerging Markets Debt Fund.”

3.3           In the event that on the Valuation Date, (a) the New York Stock Exchange shall be closed to trading or trading thereon shall be restricted or (b) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of both Funds, accurate appraisal of the value of the net assets of Emerging Markets Debt or the Global Opportunity Bond Assets is impracticable, the Valuation Date shall be postponed until the first business day after the day when trading shall have been fully resumed without restriction or disruption and reporting shall have been restored.

3.4           If requested, Global Opportunity Bond shall deliver to Emerging Markets Debt or its designee (a) at the Closing, a list, certified by its Secretary, of the names, addresses and taxpayer identification numbers of the Stockholders of Global Opportunity Bond and the number and percentage ownership of outstanding Global Opportunity Bond shares owned by each such Global Opportunity Bond Stockholder, all as of the Valuation Date, and (b) as soon as practicable after the Closing, all original documentation (including Internal Revenue Service forms, certificates, certifications and correspondence) relating to the Stockholders of Global Opportunity Bond’ taxpayer identification numbers and their liability for or exemption from back-up withholding.  Emerging Markets Debt shall issue and deliver to such Secretary a confirmation evidencing delivery of Emerging Markets Debt Shares to be credited on the Closing Date to Global Opportunity Bond or provide evidence satisfactory to Global Opportunity Bond that such Emerging Markets Debt Shares have been credited to Global Opportunity Bond’s account on the books of Emerging Markets Debt.  At the Closing, each party shall deliver to the other such bills of

sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request.

4.             COVENANTS OF EMERGING MARKETS DEBT AND GLOBAL OPPORTUNITY BOND

4.1           Except as otherwise expressly provided herein with respect to Global Opportunity Bond, the Funds each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include customary dividends and other distributions.

4.2           Emerging Markets Debt will prepare and file with the Securities and Exchange Commission (the “Commission”) a registration statement on Form N-14 under the Securities Act of 1933, as amended (the “1933 Act”), relating to Emerging Markets Debt Shares (“Registration Statement”).  Global Opportunity Bond will provide Emerging Markets Debt with the Proxy Materials as described in paragraph 4.3 below, for inclusion in the Registration Statement.  Global Opportunity Bond will further provide Emerging Markets Debt with such other information and documents relating to Global Opportunity Bond as are reasonably necessary for the preparation of the Registration Statement.

4.3           Global Opportunity Bond will call a meeting of its stockholders to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein.  Global Opportunity Bond will prepare the notice of meeting, form of proxy and proxy statement (collectively, “Proxy Materials”) to be used in connection with such meeting; provided that Emerging Markets Debt will furnish Global Opportunity Bond with such information relating to Emerging Markets Debt as is reasonably necessary for the preparation of the Proxy Materials.

4.4           Global Opportunity Bond will assist Emerging Markets Debt in obtaining such information as Emerging Markets Debt reasonably requests concerning the beneficial ownership of Global Opportunity Bond shares.

4.5           Subject to the provisions of this Agreement, Emerging Markets Debt and Global Opportunity Bond will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement.

4.6           Global Opportunity Bond shall furnish or cause to be furnished to Emerging Markets Debt within 30 days after the Closing Date a statement of Global Opportunity Bond’s assets and liabilities as of the Closing Date, which statement shall be certified by Global Opportunity Bond’s Treasurer and shall be in accordance with generally accepted accounting principles consistently applied.  As promptly as practicable, but in any case within 60 days after the Closing Date, Global Opportunity Bond shall furnish Emerging Markets Debt, in such form as is reasonably satisfactory to Emerging Markets Debt, a statement certified by Global Opportunity Bond’s Treasurer of Global Opportunity Bond’s earnings and profits for federal income tax purposes that will be carried over to Emerging Markets Debt pursuant to Section 381 of the Code.

4.7           As soon after the Closing Date as is reasonably practicable, Global Opportunity Bond (a) shall prepare and file all federal and other tax returns and reports of Global Opportunity Bond required by law to be filed with respect to all periods ending on or before the Closing Date but not theretofore filed and (b) shall pay all federal and other taxes shown as due thereon and/or all federal and other taxes that were unpaid as of the Closing Date, including without limitation, all taxes for which the provision for payment was made as of the Closing Date (as represented in paragraph 5.2(k)).

4.8           Emerging Markets Debt agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act and the 1940 Act and to make such filings required by the state Blue Sky and securities laws as it may deem appropriate in order to continue its operations after the Closing Date.

5.             REPRESENTATIONS AND WARRANTIES

5.1           Emerging Markets Debt represents and warrants to Global Opportunity Bond as follows:

(a)           Emerging Markets Debt is a validly existing Maryland corporation with full power to carry on its business as presently conducted;

(b)           Emerging Markets Debt is a duly registered, closed-end management investment company, and its registration with the Commission as an investment company under the 1940 Act and the registration of its shares under the 1933 Act are in full force and effect;

(c)           All of the issued and outstanding shares of Emerging Markets Debt have been offered and sold in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws.  Shares of Emerging Markets Debt are registered in all jurisdictions in which they are required to be registered under state securities laws and other laws, and said registrations, including any periodic reports or supplemental filings, are complete and current, all fees required to be paid have been paid, and Emerging Markets Debt is not subject to any stop order and is fully qualified to sell its shares in each state in which its shares have been registered;

(d)           Emerging Markets Debt is not in, and the execution, delivery and performance of this Agreement will not result in a, material violation of any provision of Emerging Markets Debt’s Charter or By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which Emerging Markets Debt is a party or by which it is bound;

(e)           No litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against Emerging Markets Debt or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business; and Emerging Markets Debt knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects, or is reasonably likely to materially and adversely affect, its business or its ability to consummate the transactions herein contemplated;

(f)            The Statement of Assets and Liabilities, Statement of Operations, Statement of Changes in Net Assets and Financial Highlights for the fiscal year ended December 31, 2008, of Emerging Markets Debt audited by [·], Emerging Markets Debt’s independent registered public accounting firm (copies of which will be furnished to Global Opportunity Bond), fairly present, in all material respects, Emerging Markets Debt’s financial condition as of such date in accordance with generally accepted accounting principles, and its results of such operations, changes in its net assets and financial highlights for such period, and as of such date there will be no known liabilities of Emerging Markets Debt (contingent or otherwise) not disclosed therein that would be required in accordance with generally accepted accounting principles to be disclosed therein;

(g)           All issued and outstanding Emerging Markets Debt Shares are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof.  Emerging Markets Debt does not have outstanding any options, warrants or other rights to subscribe for or purchase any of its shares;

(h)           The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of Emerging Markets Debt, and this Agreement constitutes a valid and binding obligation of Emerging Markets Debt enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles.  No other consents, authorizations or approvals are necessary in connection with Emerging Markets Debt’s performance of this Agreement;

(i)            Emerging Markets Debt Shares to be issued and delivered to Global Opportunity Bond, for the account of the Stockholders of Global Opportunity Bond, pursuant to the terms of this Agreement will at the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued Emerging Markets Debt Shares, and will be fully paid and non-assessable with no personal liability attaching to the ownership thereof;

(j)            All material federal and other tax returns and reports of Emerging Markets Debt required by law to be filed on or before the Closing Date have been filed and are correct, and all federal and other taxes shown as due or required to be shown as due on said returns and reports have been paid or provision has been made for the payment thereof, and to the best of Emerging Markets Debt’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to any such return;

(k)           For each taxable year since its inception, Emerging Markets Debt has met the requirements of Subchapter M of the Code for qualification and treatment as a “regulated investment company” and neither the execution or delivery of nor the performance of its obligations under this Agreement will adversely affect, and no other events are reasonably likely to occur which will adversely affect the ability of Emerging Markets Debt to continue to meet the requirements of Subchapter M of the Code;

(l)            Since December 31, 2008, there has been no change by Emerging Markets Debt in accounting methods, principles or practices, including those required by generally accepted accounting principles;

(m)          The information furnished or to be furnished by Emerging Markets Debt for use in registration statements, proxy materials and other documents which may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto; and

(n)           The Proxy Materials to be included in the Registration Statement (only insofar as they relate to Emerging Markets Debt) will, on the effective date of the Registration Statement and on the Closing Date, not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading.

5.2           Global Opportunity Bond represents and warrants to Emerging Markets Debt as follows:

(a)           Global Opportunity Bond is a validly existing Maryland corporation with full power to carry on its business as presently conducted;

(b)           Global Opportunity Bond is a duly registered, closed-end, management investment company, and its registration with the Commission as an investment company under the 1940 Act and the registration of its shares under the 1933 Act are in full force and effect;

(c)           All of the issued and outstanding shares of beneficial interest of Global Opportunity Bond have been offered and sold in compliance in all material respects with applicable requirements of the 1933 Act and state securities laws.  Shares of Global Opportunity Bond are registered in all jurisdictions in which they are required to be registered and said registrations, including any periodic reports or supplemental filings, are complete and current, all fees required to be paid have been paid, and Global Opportunity Bond is not subject to any stop order and is fully qualified to sell its shares in each state in which its shares have been registered;

(d)           Global Opportunity Bond is not in, and the execution, delivery and performance of this Agreement will not result in a, material violation of any provision of Global Opportunity Bond’s Charter or By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which Global Opportunity Bond is a party or by which it is bound;

(e)           No litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against Global Opportunity Bond or any of its properties or assets which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business; and Global Opportunity Bond knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects, or is reasonably likely to materially and adversely affect, its business or its ability to consummate the transactions herein contemplated;

(f)            The Statement of Assets and Liabilities, Statement of Operations, Statement of Changes in Net Assets and Financial Highlights of Global Opportunity Bond for the fiscal year ended December 31, 2008, audited by [·], Global Opportunity Bond’s independent registered public accounting firm (copies of which have been or will be furnished to Emerging Markets Debt) fairly present, in all material respects, Global Opportunity Bond’s financial condition as of such date, and its results of operations, changes in its net assets and financial highlights for such period in accordance with generally accepted accounting principles, and as of such date there were no known liabilities of Global Opportunity Bond (contingent or otherwise) not disclosed therein that would be required in accordance with generally accepted accounting principles to be disclosed therein;

(g)           Global Opportunity Bond has no material contracts or other commitments (other than this Agreement) that will be terminated with liability to it prior to the Closing Date;

(h)           All issued and outstanding shares of Global Opportunity Bond are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable with no personal liability attaching to the ownership thereof.  Global Opportunity Bond does not have outstanding any options, warrants or other rights to subscribe for or purchase any of its shares, nor is there outstanding any security convertible to any of its shares.  All such shares will, at the time of Closing, be held by the persons and in the amounts set forth in the list of stockholders submitted to Emerging Markets Debt pursuant to paragraph 3.4;

(i)            The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of Global Opportunity Bond, and subject to the approval of Global Opportunity Bond’s stockholders, this Agreement constitutes a valid and binding obligation of Global Opportunity Bond, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles.  No other consents, authorizations or approvals are necessary in connection with Global Opportunity Bond’s performance of this Agreement;

(j)            All material federal and other tax returns and reports of Global Opportunity Bond required by law to be filed on or before the Closing Date shall have been filed and are correct and all federal and other taxes shown as due or required to be shown as due on said returns and reports have been paid or provision has been made for the payment thereof, and to the best of Global Opportunity Bond’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to any such return;

(k)           For each taxable year since its inception, Global Opportunity Bond has met all the requirements of Subchapter M of the Code for qualification and treatment as a “regulated investment company” and neither the execution or delivery of nor the performance of its obligations under this Agreement will adversely affect, and no other events are reasonably likely to occur which will adversely affect the ability of Global Opportunity Bond to continue to meet the requirements of Subchapter M of the Code;

(l)            At the Closing Date, Global Opportunity Bond will have good and valid title to the Global Opportunity Bond Assets, subject to no liens (other than the obligation, if any, to pay the purchase price of portfolio securities purchased by Global Opportunity Bond which have not settled prior to the Closing Date), security interests or other encumbrances, and full right, power and authority to assign, deliver and otherwise transfer such assets hereunder, and upon delivery and payment for such assets, Emerging Markets Debt will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including any restrictions as might arise under the 1933 Act;

(m)          On the effective date of the Registration Statement, at the time of the meeting of Global Opportunity Bond’s stockholders and on the Closing Date, the Proxy Materials (exclusive of the currently effective Emerging Markets Debt Prospectus contained therein) will (i) comply in all material respects with the provisions of the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act and the regulations thereunder and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  Any other information furnished by Global Opportunity Bond for use in the Registration Statement or in any other manner that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete and shall comply in all material respects with applicable federal securities and other laws and regulations thereunder;

(n)           Global Opportunity Bond will, on or prior to the Valuation Date, declare one or more dividends or other distributions to stockholders that, together with all previous dividends and other distributions to stockholders, shall have the effect of distributing to the stockholders substantially all of its investment company taxable income and net capital gain, if any, through the Valuation Date (computed without regard to any deduction for dividends paid);

(o)           Global Opportunity Bond has maintained or has caused to be maintained on its behalf all books and accounts as required of a registered investment company in compliance with the requirements of Section 31 of the 1940 Act and the rules thereunder; and

(p)           Global Opportunity Bond is not acquiring Emerging Markets Debt Shares to be issued hereunder for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement.

6.             CONDITIONS PRECEDENT TO OBLIGATIONS OF GLOBAL OPPORTUNITY BOND

The obligations of Global Opportunity Bond to consummate the transactions provided for herein shall be subject, at its election, to the performance by Emerging Markets Debt of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:

6.1           All representations and warranties of Emerging Markets Debt contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of the Closing Date;

6.2           Emerging Markets Debt shall have delivered to Global Opportunity Bond a certificate of its President and Treasurer, in a form reasonably satisfactory to Global Opportunity Bond and dated as of the Closing Date, to the effect that the representations and warranties of Emerging Markets Debt made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as Global Opportunity Bond shall reasonably request;

6.3           Global Opportunity Bond shall have received a favorable opinion from Clifford Chance US LLP, counsel to Emerging Markets Debt, dated as of the Closing Date, to the effect that:

(a)           Emerging Markets Debt is a validly existing Maryland corporation, and has the power to own all of its properties and assets and to carry on its business as presently conducted (Maryland counsel may be relied upon in delivering such opinion); (b) Emerging Markets Debt is a duly registered, closed-end management investment company, and its registration with the Commission as an investment company under the 1940 Act is in full force and effect; (c) this Agreement has been duly authorized, executed and delivered by Emerging Markets Debt and, assuming that the Registration Statement complies with the 1933 Act, the 1934 Act and the 1940 Act and regulations thereunder and assuming due authorization, execution and delivery of this Agreement by Global Opportunity Bond, is a valid and binding obligation of Emerging Markets Debt enforceable against Emerging Markets Debt in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles; (d) Emerging Markets Debt Shares to be issued to Stockholders of Global Opportunity Bond as provided by this Agreement are duly authorized and upon such delivery will be validly issued, fully paid and non-assessable, and no stockholder of Emerging Markets Debt has any preemptive rights to subscription or purchase in respect thereof (Maryland counsel may be relied upon in delivering such opinion); (e) the execution and delivery of this Agreement did not, and the consummation of the transactions contemplated hereby will not, violate Emerging Markets Debt’s Article of Incorporation or By-Laws; and (f) to the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority of the United States or any state is required for the consummation by Emerging Markets Debt of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required under state securities laws; and

6.4           As of the Closing Date, there shall have been no material change in the investment objectives, policies and restrictions nor any increase in the investment advisory fees from those described in Emerging Markets Debt’s Annual Report dated December 31, 2008 and Statement of Additional Information dated December 31, 2008.