1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENTS
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE MALAYSIA FUND, INC.
- --------------------------------------------------------------------------------
(Names of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
2
THE MALAYSIA FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of The
Malaysia Fund, Inc. (the "Fund") will be held on Wednesday, April 30, 1997, at
9:45 a.m. (New York time), in Conference Room 2 at 1221 Avenue of the Americas,
22nd Floor, New York, New York 10020, for the following purposes:
1. To elect two Class II Directors for a term of three years.
2. To ratify or reject the selection by the Board of Directors of
Price Waterhouse LLP as independent accountants of the Fund for the fiscal
year ending December 31, 1997.
3. To approve or disapprove an Investment Advisory and Management
Agreement between the Fund and Morgan Stanley Asset Management Inc.
4. To approve or disapprove a Research and Advisory Agreement among
the Fund, Morgan Stanley Asset Management Inc. and Arab-Malaysian
Consultant Sdn Bhd.
5. To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 24, 1997 are
entitled to notice of, and to vote at, this Meeting or any adjournment thereof.
VALERIE Y. LEWIS
Secretary
Dated: March 27, 1997
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY IN THE ENCLOSED SELF-
ADDRESSED ENVELOPE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF
FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
3
THE MALAYSIA FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
-------------------------------
PROXY STATEMENT
-------------------------------
This statement is furnished by the Board of Directors of The Malaysia Fund,
Inc. (the "Fund") in connection with the solicitation of Proxies for use at the
Annual Meeting of Stockholders (the "Meeting") to be held on Wednesday, April
30, 1997, at 9:45 a.m. (New York time), in Conference Room 2 at the principal
executive office of Morgan Stanley Asset Management Inc. (hereinafter "MSAM" or
the "Manager"), 1221 Avenue of the Americas, 22nd Floor, New York, New York
10020. It is expected that the Notice of Annual Meeting, Proxy Statement and
form of Proxy will first be mailed to stockholders on or about March 27, 1997.
The purpose of the Meeting and the matters to be acted upon are set forth
in the accompanying Notice of Annual Meeting of Stockholders. At the Meeting,
the Fund's stock-
holders will consider New Advisory Agreements (defined below) to take effect
following the consummation of the transactions contemplated by an Agreement and
Plan of Merger, dated as of February 4, 1997 (the "Merger Agreement"), between
Dean Witter, Discover & Co. ("Dean Witter Discover") and Morgan Stanley Group
Inc. ("MS Group"), the direct parent of MSAM, the Fund's investment manager.
Pursuant to the Merger Agreement, the Fund's investment manager will become a
direct subsidiary of the merged company, which will be called Morgan Stanley,
Dean Witter, Discover & Co. The Fund's New Advisory Agreements are substantially
identical to the Fund's Current Advisory Agreements (defined below), except for
the dates of execution.
If the accompanying form of Proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. A Proxy may be revoked at any time prior to the time
it is voted by written notice to the Secretary of the Fund or by attendance at
the Meeting. If no instructions are specified, shares will be voted FOR the
election of the nominees for Directors, FOR ratification of Price Waterhouse LLP
as independent accountants of the Fund for the fiscal year ending December 31,
1997, FOR the approval of the New Management Agreement (defined below) and FOR
the approval of the New Research Agreement (defined below). Abstentions and
broker non-votes are each included in the determination of the number of shares
present and voting at the Meeting.
The Board has fixed the close of business on March 24, 1997 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Meeting and at any adjournment thereof. On that date, the Fund had
9,732,968 shares of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting.
The expense of solicitation will be borne by the Fund and will include
reimbursement to brokerage firms and others for expenses in forwarding proxy
solicitation materials to beneficial owners. The solicitation of Proxies will be
largely by mail, but may include, without cost to the Fund, telephonic,
telegraphic or oral communications by regular employees of the Manager. The
4
solicitation of Proxies is also expected to include communications by employees
of Shareholder Communications Corporation, a proxy solicitation firm expected to
be engaged by the Fund at a cost not expected to exceed $5,000 plus expenses.
The Manager has agreed to reimburse the Fund for all incremental expenses
incurred by the Fund that would not have been incurred if the New Advisory
Agreements were not submitted to stockholders of the Fund for their approval.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1996, TO ANY STOCKHOLDER REQUESTING SUCH REPORT.
REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE IN WRITING TO THE MALAYSIA FUND,
INC., C/O CHASE GLOBAL FUNDS SERVICES COMPANY, P.O. BOX 2798, BOSTON,
MASSACHUSETTS 02208-2798, OR BY CALLING 1-800-221-6726.
Chase Global Funds Services Company is an affiliate of the Fund's
administrator, The Chase Manhattan Bank ("Chase Bank"), and provides
administrative services to the Fund. The business address of Chase Bank and
Chase Global Funds Services Company is 73 Tremont Street, Boston, Massachusetts
02108.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF EACH OF THE
MATTERS MENTIONED IN ITEMS 1, 2, 3 AND 4 OF THE NOTICE OF ANNUAL MEETING.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Meeting, two Directors will be elected to hold office for a term of
three years and until their successors are duly elected and qualified. It is the
intention of the persons named in the accompanying form of Proxy to vote, on
behalf of the stockholders, for the election of John W. Croghan and Graham E.
Jones as Class II Directors.
On or about the same date as the Meeting, each of the other closed-end,
U.S. registered investment companies advised by MSAM (except Morgan Stanley
India Investment Fund, Inc.) also is holding a meeting of stockholders at which,
among other things, such stockholders are considering a proposal to elect as
directors of such other investment companies the same people nominated to be
Directors of the Fund. Accordingly, if elected, all of the nominees for
Directors of the Fund also will act as directors of: The Brazilian Investment
Fund, Inc., The Latin American Discovery Fund, Inc., Morgan Stanley Africa
Investment Fund, Inc., Morgan Stanley Asia-Pacific Fund, Inc., Morgan Stanley
Emerging Markets Debt Fund, Inc., Morgan Stanley Emerging Markets Fund, Inc.,
Morgan Stanley Global Opportunity Bond Fund, Inc., The Morgan Stanley High Yield
Fund, Inc., Morgan Stanley Russia & New Europe Fund, Inc., The Pakistan
Investment Fund, Inc., The Thai Fund, Inc. and The Turkish Investment Fund, Inc.
(collectively, with the Fund, the "MSAM closed-end funds"). The Board believes
that this arrangement enhances the ability of the Directors to deal
expeditiously with administrative matters common to the MSAM closed-end funds,
such as evaluating the performance of common service providers, including MSAM
and the administrators, transfer agents, custodians and accountants of the MSAM
closed-end funds.
Pursuant to the Fund's By-laws, the terms of office of the Directors are
staggered. The Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with each class having a term of three years.
Each year the term of one class expires. Class I currently consists of
2
5
Peter J. Chase, David B. Gill and Warren J. Olsen. Class II currently consists
of John W. Croghan and Graham E. Jones. Class III currently consists of Barton
M. Biggs, John A. Levin, Dato Malek Merican and William G. Morton, Jr. Only the
Directors in Class II are being considered for election at this Meeting.
Pursuant to the Fund's By-Laws, each Director holds office until (i) the
expiration of his term and until his successor has been elected and qualified,
(ii) his death, (iii) his resignation, (iv) December 31 of the year in which he
reaches seventy-three years of age, or (v) his removal as provided by statute or
the Articles of Incorporation.
The Board of Directors has an Audit Committee. The Audit Committee makes
recommendations to the full Board of Directors with respect to the engagement of
independent accountants and reviews with the independent accountants the plan
and results of the audit engagement and matters having a material effect on the
Fund's financial operations. The members of the Audit Committee are currently
John W. Croghan, John A. Levin and William G. Morton, Jr., none of whom is an
"interested person," as defined under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Chairman of the Audit Committee is Mr. Levin.
After the Meeting, the Audit Committee will continue to consist of Directors of
the Fund who are not "interested persons." The Audit Committee met twice during
the fiscal year ended December 31, 1996. The Board of Directors does not have
nominating or compensation committees or other committees performing similar
functions.
There were four meetings of the Board of Directors held during the fiscal
year ended December 31, 1996. For the fiscal year ended December 31, 1996, each
current Director, during his tenure, attended at least seventy-five percent of
the aggregate number of meetings of the Board and of any committee on which he
served, except Mr. Biggs, who attended two of the four meetings of the Board.
Each of the nominees for Director has consented to be named in this Proxy
Statement and to serve as a director of the Fund if elected. The Board of
Directors has no reason to believe that any of the nominees named above will
become unavailable for election as a director, but if that should occur before
the Meeting, Proxies will be voted for such persons as the Board of Directors
may recommend.
3
6
Certain information regarding the Directors and officers of the Fund is set
forth below:
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- --------------- ------------------------- --- ------------------- ------------- ----------
Barton M. Biggs*............... Director and Chairman, Director and 64 7,306 -- ***
1221 Avenue of the Americas Chairman of Managing Director of
New York, New York 10020 the Board Morgan Stanley Asset
since 1995 Management Inc. and
Chairman and Director
of Morgan Stanley Asset
Management Limited;
Managing Director of
Morgan Stanley & Co.
Incorporated; Director
of Morgan Stanley Group
Inc.; Member of the
Investment Advisory
Council of The Thailand
Fund; Director of the
Rand McNally Company;
Member of the Yale
Development Board;
Director and Chairman
of the Board of
seventeen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.
Peter J. Chase................. Director since Chairman and Chief 64 594 -- ***
1441 Paseo De Peralta 1987 Financial Officer, High
Santa Fe, New Mexico 87501 Mesa Technologies, LLC;
Chairman of CGL, Inc.;
Principal/Owner of
STATEMENTS; Director of
thirteen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.
4
7
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- ------------------------- ------ ----- ---
John W. Croghan................ Nominee; President of Lincoln 66 1,000 336 ***
200 South Wacker Drive Director Partners, a partnership
Chicago, Illinois 60606 since 1995 of Lincoln Capital
Management Company;
Director of St. Paul
Bancorp, Inc. and
Lindsay Manufacturing
Co.; Director of
thirteen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.;
Previously Director of
Blockbuster
Entertainment
Corporation.
David B. Gill.................. Director since Director of thirteen U.S. 70 599 -- ***
26210 Ingleton Circle 1995 registered investment
Easton, Maryland 21601 companies managed by
Morgan Stanley Asset
Management Inc.;
Director of the
Mauritius Fund Limited;
Director of Moneda
Chile Fund Limited;
Director of First NIS
Regional Fund SIAC;
Director of
Commonwealth Africa
Investment Fund Ltd.;
Chairman of the
Advisory Board of
Advent Latin American
Private Equity Fund;
Chairman and Director
of Norinvest Bank;
Director of Surinvest
International Limited;
Director of National
Registry Company;
Previously Director of
Capital Markets
Department of the
International Finance
Corporation; Trustee,
Batterymarch Finance
Management; Chairman
and Director of Equity
Fund of Latin America
S.A.; Director of
Commonwealth Equity
Fund Limited; and
Director of Global
Securities, Inc.
5
8
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- ------------------------- ------ ----- ---
Graham E. Jones................ Nominee; Senior Vice President of 64 2,667 676 ***
330 Garfield Street Director BGK Properties; Trustee
Suite 200 since 1987 of nine investment
Santa Fe, New Mexico 87501 companies managed by
Weiss, Peck & Greer,
Trustee of eleven
investment companies
managed by Morgan
Grenfell Capital
Management
Incorporated; Director
of thirteen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.;
Previously Chief
Financial Officer of
Practice Management
Systems, Inc.
John A. Levin.................. Director since President of John A. 58 1,000 230 ***
One Rockefeller Plaza 1995 Levin & Co., Inc.;
New York, New York 10020 Director and President
of Baker, Fentress &
Company; Director of
fourteen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.
Dato Malek Merican*............ Director since Director, Arab-Malaysian 63 -- -- ***
15 Jalan Chempenai 1988 Merchant Bank Berhad;
Damansara Heights AMMB Holdings Bhd;
50490 Kuala Lumpur Arab-Malaysian
Malaysia Consultant Sdn Bhd;
Frasers Securities Pte
Ltd, Singapore; Frasers
International Pte Ltd,
Singapore; Malaysian
Emerging Companies
Growth Fund Ltd; Isetan
of Japan Sdn Bhd;
Kumpualan Kseena Sdn
Bhd and its group of
companies; Pheim Asset
Management (Asia) Pte
Ltd, Singapore; Asean
Emerging Companies
Growth Fund Ltd. and
The Victoria Fund Ltd;
Trustee, Tun Abdul
Razak Foundation.
6
9
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- ------------------------- ------ ----- ---
William G. Morton, Jr.......... Director since Chairman and Chief 60 599 -- ***
1 Boston Place 1994 Executive Officer of
Boston, Massachusetts 02108 Boston Stock Exchange;
Director of Tandy
Corporation; Director
of thirteen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.
Warren J. Olsen*............... Director since Principal of Morgan 40 1,034 -- ***
1231 Avenue of the Americas 1994 and Stanley & Co.
New York, New York 10020 President Incorporated and Morgan
since 1989 Stanley Asset
Management Inc.;
Director of sixteen and
President of seventeen
U.S. registered
investment companies
managed by Morgan
Stanley Asset
Management Inc.
James W. Grisham*.............. Vice President Principal of Morgan 55 -- -- ***
1221 Avenue of the Americas since 1992 Stanley & Co.
New York, New York, 10028 Incorporated and Morgan
Stanley Asset
Management Inc.;
Officer of various
investment companies
managed by Morgan
Stanley Asset
Management Inc.
Michael F. Klein*.............. Vice President Principal of Morgan 37 -- -- ***
1221 Avenue of the Americas since 1996 Stanley & Co.
New York, New York, 10028 Incorporated and Morgan
Stanley Asset
Management Inc. and
previously a Vice
President thereof;
Officer of various
investment companies
managed by Morgan
Stanley Asset
Management Inc.;
Previously practiced
law with the New York
law firm of Rogers &
Wells.
Harold J. Schaaff, Jr.*........ Vice President Principal of Morgan 36 357 -- ***
1221 Avenue of the Americas since 1992 Stanley & Co.
New York, New York, 10028 Incorporated and Morgan
Stanley Asset
Management Inc.;
General Counsel and
Secretary of Morgan
Stanley Asset
Management Inc.;
Officer of various
investment companies
managed by Morgan
Stanley Asset
Management Inc.
7
10
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
OWNED AS OF OWNED UNDER
POSITION WITH PRINCIPAL OCCUPATIONS MARCH 24, DEFERRED FEE
NAME AND ADDRESS THE FUND AND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS+ PERCENTAGE
- ------------------------------- --------------- ------------------------- --- ------------------- ------------- ----------
Joseph P. Stadler*............. Vice President Vice President of Morgan 42 -- -- ***
1221 Avenue of the Americas since 1994 Stanley & Co.
New York, New York, 10028 Incorporated and Morgan
Stanley Asset
Management Inc.;
Officer of various
investment companies
managed by Morgan
Stanley Asset
Management Inc.;
Previously with Price
Waterhouse LLP.
Valerie Y. Lewis*.............. Secretary since Vice President of Morgan 41 -- -- ***
1221 Avenue of the Americas 1990 Stanley & Co.
New York, New York, 10028 Incorporated and Morgan
Stanley Asset
Management Inc.;
Officer of various
investment companies
managed by Morgan
Stanley Asset
Management Inc.;
Previously with
Citicorp.
James M. Rooney................ Treasurer since Assistant Vice President 38 -- -- ***
73 Tremont Street 1994 and Manager of Fund
Boston, Massachusetts Administration, Chase
Global Funds Services
Company; Officer of
various investment
companies managed by
Morgan Stanley Asset
Management Inc.;
Previously Assistant
Vice President and
Manager of Fund
Compliance and Control,
Scudder Stevens & Clark
Inc. and Audit Manager,
Ernst & Young LLP.
Belinda Brady.................. Assistant Manager, Fund 28 -- -- ***
73 Tremont Street Treasurer Administration, Chase
Boston, Massachusetts 02108 since 1996 Global Funds Services
Company; Officer of
various investment
companies managed by
Morgan Stanley Asset
Management Inc.;
Previously with Price
Waterhouse LLP.
All Directors and Officers as a
Group......................... 15,156 1,242 ***
====== ===== ===
- ---------------
* "Interested person" within the meaning of the 1940 Act. Mr. Biggs is
chairman, director and managing director of the Manager, and Messrs. Olsen,
Grisham, Klein, Schaaff and Stadler and Ms. Lewis are officers of the
Manager.
** This information has been furnished by each nominee, director and officer.
*** Less than 1%.
+ Indicates share equivalents owned by the Directors and held in cash accounts
by the Fund on behalf of the Directors in connection with the deferred fee
arrangements described below.
Each officer of the Fund will hold such office until a successor has been
duly elected and qualified.
8
11
The Fund pays each of its Directors who is not a director, officer or
employee of MSAM or its affiliates, in addition to certain out-of-pocket
expenses, an annual fee of $4,500 ($4,000 in 1996) plus certain out-of-pocket
expenses. Each of the members of the Fund's Audit Committee, which will consist
of the Fund's Directors who are not "interested persons" of the Fund as defined
in the 1940 Act, as amended, will receive an additional fee of $750 for serving
on such committee. Aggregate fees and expenses paid or payable to the Board of
Directors for the fiscal year ended December 31, 1996 were approximately
$29,763.
Each of the Directors who is not an "affiliated person" of MSAM within the
meaning of the 1940 Act may enter into a deferred fee arrangement (the "Fee
Arrangement") with the Fund, pursuant to which such Director may defer to a
later date the receipt of his Director's fees. The deferred fees owed by the
Fund are credited to a bookkeeping account maintained by the Fund on behalf of
such Director and accrue income from and after the date of credit in an amount
equal to the amount that would have been earned had such fees (and all income
earned thereon) been invested and reinvested either (i) in shares of the Fund or
(ii) at a rate equal to the prevailing rate applicable to 90-day United States
Treasury Bills at the beginning of each calendar quarter for which this rate is
in effect, whichever method is elected by the Director.
Under the Fee Arrangement, deferred Director's fees (including the return
accrued thereon) will become payable in cash upon such Director's resignation
from the Board of Directors in generally equal annual installments over a period
of five years (unless the Fund has agreed to a longer or shorter payment period)
beginning on the first day of the year following the year in which such
Director's resignation occurred. In the event of a Director's death, remaining
amounts payable to him under the Fee Arrangement will thereafter be payable to
his designated beneficiary; in all other events, a Director's right to receive
payments is non-transferable. Under the Fee Arrangement, the Board of Directors
of the Fund, in its sole discretion, has reserved the right, at the request of a
Director or otherwise, to accelerate or extend the payment of amounts in the
deferred fee account at any time after the termination of such Director's
service as a director. In addition, in the event of liquidation, dissolution or
winding up of the Fund or the distribution of all or substantially all of the
Fund's assets and property to its stockholders (other than in connection with a
reorganization or merger into another fund advised by MSAM), all unpaid amounts
in the deferred fee account maintained by the Fund will be paid in a lump sum to
the Directors participating in the Fee Arrangement on the effective date
thereof.
Currently, Messrs. Croghan, Jones and Levin are the only Directors who have
entered into the Fee Arrangement with the Fund.
Set forth below is a table showing the aggregate compensation paid by the
Fund to each of its Directors, as well as the total compensation paid to each
Director of the Fund by the Fund and by other U.S. registered investment
companies advised by MSAM or its affiliates, (collectively, the
9
12
"Fund Complex") for their services as Directors of such investment companies for
the fiscal year ended December 31, 1996.
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION NUMBER OF FUNDS
COMPENSATION BENEFITS ACCRUED FROM FUND AND IN FUND COMPLEX
FROM FUND AS PART OF THE FUND COMPLEX PAID FOR WHICH
NAME OF DIRECTORS (2)(3) FUND'S EXPENSES TO DIRECTORS(2)(4) DIRECTOR SERVES(5)
- --------------------- --------------- --------------------- ------------------ --------------------
Barton M. Biggs(1) $ 0 None $ 0 17
Peter J. Chase 4,135 None 57,691 13
John W. Croghan 5,539 None 73,925 13
David B. Gill 4,135 None 59,910 13
Graham E. Jones 5,791 None 60,546 13
John A. Levin 5,278 None 77,539 14
Dato Malek Merican 0 None 0 1
William G. Morton,
Jr. 4,885 None 67,893 13
Warren J. Olsen(1) 0 None 0 17
Frederick B.
Whittemore(1)(6) 0 None 0 16
- ---------------
(1) "Interested persons" of the Fund within the meaning of the 1940 Act. Messrs.
Biggs and Olsen do not receive any compensation from the Fund or any other
investment company in the Fund Complex for their services as a director of
such investment companies.
(2) The amounts reflected in this table include amounts payable by the Fund and
the Fund Complex for services rendered during the fiscal year ended December
31, 1996, regardless of whether such amounts were actually received by the
Directors during such fiscal year.
(3) Mr. Croghan earned $5,539, Mr. Jones earned $4,657 and Mr. Levin earned
$4,730 in deferred compensation from the Fund, pursuant to the deferred fee
arrangements described above, including any capital gains or losses or
interest associated therewith, during the fiscal year ended December 31,
1996. Such amounts are included in these Directors' respective aggregate
compensation from the Fund reported in this table.
(4) Mr. Croghan earned $72,671, Mr. Gill earned $21,027, Mr. Jones earned
$21,605 and Mr. Levin earned $70,597 in deferred compensation from the Fund
and the Fund Complex, pursuant to the deferred fee arrangements described
above, including any capital gains or losses or interest associated
therewith, during the fiscal year ended December 31, 1996. Such amounts are
included in these Directors' respective compensations from the Fund and the
Fund Complex reported in this table.
(5) Indicates the total number of boards of directors of investment companies in
the Fund Complex, including the Fund, on which the Director served at any
time during the fiscal year ended December 31, 1996.
(6) Mr. Whittemore resigned as a Director of the Fund effective March 14, 1997.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Fund's officers and directors, and persons who own more than ten percent of
a registered class of the Fund's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"Commission") and the New York Stock Exchange, Inc. The Fund believes that its
officers and Directors complied with all applicable filing requirements for the
fiscal year ended December 31, 1996.
The election of Messrs. Croghan and Jones requires the affirmative vote of
a majority of the votes cast at a meeting at which a quorum is present. Under
the Fund's By-laws, the presence in person or by proxy of stockholders entitled
to cast a majority of the votes entitled to be cast thereat shall constitute a
quorum. For this purpose, abstentions and broker non-votes will be counted in
determining whether a quorum is present at the Meeting, but will not be counted
as votes cast at the Meeting.
10
13
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF THE TWO NOMINEES AS DIRECTORS.
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected Price Waterhouse LLP as
independent accountants for the Fund for the fiscal year ending December 31,
1997. The ratification of the selection of independent accountants is to be
voted on at the Meeting, and it is intended that the persons named in the
accompanying Proxy will vote for Price Waterhouse LLP. Price Waterhouse LLP acts
as the independent accountants for certain of the other investment companies
advised by MSAM. Although it is not expected that a representative of Price
Waterhouse LLP will attend the Meeting, a representative will be available by
telephone to respond to stockholder questions, if any.
The Board's policy regarding engaging independent accountants' services is
that management may engage the Fund's principal independent accountants to
perform any services normally provided by independent accounting firms, provided
that such services meet any and all of the independence requirements of the
American Institute of Certified Public Accountants and the Securities and
Exchange Commission. In accordance with this policy, the Audit Committee reviews
and approves all services provided by the independent accountants prior to their
being rendered. The Board of Directors also receives a report from its Audit
Committee relating to all services that have been performed by the Fund's
independent accountants.
The ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at a meeting at which a quorum
is present. For this purpose, abstentions and broker non-votes will be counted
in determining whether a quorum is present at the Meeting, but will not be
counted as votes cast at the Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 2.
APPROVAL OF NEW ADVISORY CONTRACTS
(PROPOSALS NO. 3 AND NO. 4)
THE MANAGER
MSAM acts as investment manager for the Fund. The Manager has acted as
investment manager for the Fund since the Fund commenced its investment
operations.
The Manager currently is a wholly-owned subsidiary of MS Group and is
registered under the U.S. Investment Advisers Act of 1940, as amended. The
Manager provides portfolio management and named fiduciary services to various
closed-end and open-end investment companies, taxable and nontaxable
institutions, international organizations and individuals investing in United
States and international equities and fixed income securities. At December 31,
1996, MSAM had, together with its affiliated investment management companies
(which include Van Kampen American Capital, Inc. and Miller Anderson & Sherrerd,
LLP), assets under management (including assets under fiduciary advisory
control) totaling approximately $162 billion.
11
14
As an investment adviser, MSAM emphasizes a global investment strategy and
benefits from research coverage of a broad spectrum of investment opportunities
worldwide. MSAM draws upon the capabilities of its asset management specialists
located in its various offices throughout the world. It also draws upon the
research capabilities of MS Group and its other affiliates, as well as the
research and investment ideas of other companies whose brokerage services MSAM
utilizes. For the fiscal year ended December 31, 1996, the Fund paid
approximately $1.4 million in brokerage commissions, of which approximately
$96,600 was paid by the Fund to affiliates of the Malaysian Adviser (defined
below) and no brokerage commissions were paid by the Fund to affiliates of MSAM.
The address of the Manager is 1221 Avenue of the Americas, New York, New
York 10020. The principal address of MS Group is 1585 Broadway, New York, New
York 10036.
Certain information regarding the directors and the principal executive
officers of the Manager is set forth below.
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH MSAM OTHER INFORMATION
- ----------------------------- ----------------------------- -----------------------------
Barton M. Biggs*............. Chairman, Director and Chairman and Director of
Managing Director Morgan Stanley Asset
Management Limited; Managing
Director of Morgan Stanley &
Co. Incorporated; Director of
Morgan Stanley Group Inc.
Peter A. Nadosy*............. Vice Chairman, Director and Managing Director of Morgan
Managing Director Stanley & Co. Incorporated;
Director of Morgan Stanley
Asset Management Limited
James M. Allwin*............. President, Director and Managing Director of Morgan
Managing Director Stanley & Co. Incorporated;
President of Morgan Stanley
Realty Inc.
Gordon S. Gray*.............. Director and Managing Managing Director of Morgan
Director Stanley & Co. Incorporated;
Director of Morgan Stanley
Asset Management Limited
Dennis G. Sherva*............ Director and Managing Managing Director of Morgan
Director Stanley & Co. Incorporated
- ---------------
* Business Address: 1221 Avenue of the Americas, New York, New York 10020
THE MALAYSIAN ADVISER
Arab-Malaysian Consultant Sdn Bhd (the "Malaysian Adviser"), acts as
Malaysian Adviser to the Fund and has acted in this capacity for the Fund since
the Fund commenced its investment operations. The Malaysian Adviser is a
Malaysian corporation and a wholly-owned subsidiary of Arab-Malaysian Merchant
Bank Berhad ("AMMB"), the largest merchant bank in Malaysia and the principal
operating entity of AMMB Holdings Berhad, which is controlled by Arab-Malaysian
Corporation Berhad ("AMCORP"). The mailing address of the Malaysian Adviser is
Bangunan Arab-Malaysian, Jalan Raja Chulan, P.O. Box 10233, 50708 Kuala Lumpur,
Malaysia. The mailing address of AMMB is Bangunan Arab-Malaysian, Jalan Raja
Chulan, P.O. Box 10233, 50708 Kuala Lumpur, Malaysia. The mailing address of
AMCORP is P.O. Box 11366, 50744 Kuala Lumpur, Malaysia.
12
15
Certain information regarding the directors and the principal executive
officers of the Malaysian Adviser is set forth below.
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH COMPANY OTHER INFORMATION
- -------------------------- -------------------------- --------------------------
Dato Malek Merican*....... Chairman and Director Bank Director
Cheah Tek Kuang*.......... Director Managing Director of Arab-
Malaysian Merchant Bank
Bhd.
Ho Heng Chuani*........... Director Senior General Manager of
Arab-Malaysian Merchant
Bank Bhd.
Lee Chin Har*............. Executive Director General Manager, Portfolio
Management Group of Arab-
Malaysian Merchant Bank
Bhd.
- ---------------
* Business Address: P.O. Box 10233, 50708 Kuala Lumpur, Malaysia.
INFORMATION CONCERNING MORGAN STANLEY GROUP INC.
MS Group and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley & Co.
International provide a wide range of financial services on a global basis.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, real estate, project finance and
other corporate finance advisory activities; merchant banking and other
principal investment activities; stock brokerage and research services; asset
management; the trading of foreign exchange and commodities as well as
derivatives on a broad range or asset categories, rates and indices; real estate
advice, financing and investing; and global custody, securities clearance
services and securities lending.
INFORMATION CONCERNING DEAN WITTER, DISCOVER & CO.
Dean Witter Discover is a diversified financial services company offering a
broad range of nationally marketed credit and investment products with a primary
focus on individual customers. Dean Witter Discover has two principal lines of
business: credit services and securities. Its credit services business consists
primarily of the issuance, marketing and servicing of general purpose credit
cards and the provision of transaction processing services, private-label credit
cards services and real estate secured loans. It is the largest single issuer of
general purpose credit cards in the United States as measured by number of
accounts and cardmembers and the third largest originator and servicer of credit
card receivables, as measured by managed loans. Dean Witter Discover's
securities business is conducted primarily through its wholly owned
subsidiaries, Dean Witter Reynolds Inc. ("DWR") and Dean Witter InterCapital
Inc. ("Intercapital"). DWR is a full-service securities firm offering a wide
variety of securities products, with a particular focus on serving the
investment needs of its individual clients through over 9,100 professional
account executives located in 371 branch offices. DWR is among the largest NYSE
members and is a
13
16
member of other major securities, futures and options exchanges. Intercapital is
a registered investment adviser that, along with its subsidiaries, services
investment companies, individual accounts and institutional portfolios.
THE MERGER
Pursuant to the Merger Agreement, MS Group will be merged (the "Merger")
with and into Dean Witter Discover and the surviving corporation will be named
Morgan Stanley, Dean Witter, Discover & Co. Following the Merger, the Manager
will be a direct subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Under the terms of the Merger Agreement, each of MS Group's common shares
will be converted into the right to receive 1.65 shares of Morgan Stanley, Dean
Witter, Discover & Co. common stock and each issued and outstanding share of
Dean Witter Discover common stock will remain outstanding and will thereafter
represent one share of Morgan Stanley, Dean Witter, Discover & Co. common stock.
Following the Merger, MS Group's former shareholders will own approximately 45%
and Dean Witter Discover's former shareholders will own approximately 55% of the
outstanding shares of common stock of Morgan Stanley, Dean Witter, Discover &
Co.
The Merger is expected to be consummated in mid-1997 and is subject to
certain closing conditions, including certain regulatory approvals and the
approval of shareholders of both MS Group and Dean Witter Discover.
The Board of Directors of Morgan Stanley, Dean Witter, Discover & Co. will
initially consist of fourteen members, two of whom will be MS Group insiders and
two of whom will be Dean Witter Discover insiders. The remaining ten directors
will be independent directors, with MS Group and Dean Witter Discover each
nominating five of the ten. The Chairman and Chief Executive Officer of Morgan
Stanley, Dean Witter, Discover & Co. will be the current Chairman and Chief
Executive Officer of Dean Witter Discover, Phillip Purcell. The President and
Chief Operating Officer of Morgan Stanley, Dean Witter, Discover & Co. will be
the current President of MS Group, John Mack.
The Manager does not anticipate any reduction in the quality of services
now provided to the Fund and does not expect that the Merger will result in any
material changes in the business of the Manager or in the manner in which the
Manager renders services to the Fund. Nor does the Manager anticipate that the
Merger or any ancillary transactions will have any adverse effect on its ability
to fulfill its obligations under the New Advisory Agreement (as defined below)
with the Fund or to operate its business in a manner consistent with past
business practice.
THE ADVISORY AGREEMENTS
In anticipation of the Merger, a majority of the Directors of the Fund who
are not parties to the New Advisory Agreements or interested persons of any such
party ("Disinterested Directors") approved a new investment advisory and
management agreement (the "New Management Agreement") between the Fund and the
Manager, as well as a new research and advisory agreement (the "New Research
Agreement") among the Fund, the Manager and the Malaysian Adviser. The New
Management Agreement and the New Research Agreement are herein referred to
collectively as the "New Advisory Agreements". The forms of the New Advisory
Agreements are substantially identical to the Fund's Current Advisory
Agreements, except for the dates of
14
17
execution. The holders of a majority of the outstanding voting securities
(within the meaning of the 1940 Act) of the Fund are being asked to approve the
New Advisory Agreements. See "The New Advisory Agreements" below.
The following is a summary of the Current Advisory Agreements and the New
Advisory Agreements. The description of the New Advisory Agreements is qualified
by reference to Annex A.
THE CURRENT ADVISORY AGREEMENTS. The current investment advisory and
management agreement, dated as of May 1, 1987 (the "Current Management
Agreement"), between the Fund and the Manager and the current research and
advisory agreement, dated as of May 1, 1987 (the "Current Research Agreement"),
among the Fund, the Manager and the Malaysian Adviser, were last approved by
stockholders of the Fund at a meeting held on March 31, 1988. The Current
Management Agreement and the Current Research Agreement are herein referred to
collectively as the "Current Advisory Agreements".
Under the Current Management Agreement, the Manager is responsible for the
investment and reinvestment of the assets of the Fund, subject to the
supervision of the Fund's Directors. The Manager also administers the business
affairs of the Fund, furnishes offices, necessary facilities and equipment,
provides administrative services, and permits its officers and employees to
serve without compensation as Directors and officers of the Fund if duly elected
to such positions. The Fund pays the Manager for services performed a monthly
fee at an annual rate of 0.90% of the first $50 million of the Fund's average
weekly net assets, 0.70% of such assets in excess of $50 million up to and
including $100 million and 0.50% of the excess over $100 million.
Under the terms of the Current Research Agreement, the Malaysian Adviser
provides such investment advice, research and assistance as the Manager may
reasonably request. Such information will be evaluated by the Manager's research
department and portfolio managers in light of their own expertise and their
information from other sources, as part of their overall determination of
investment decisions for the Fund.
For its services, the Malaysian Adviser will receive from the Fund a
monthly fee at the annual rate of 0.25% of the first $50 million of the Fund's
average weekly net assets, 0.15% of such assets in excess of $50 million up to
and including $100 million and 0.10% of the excess over $100 million of such
assets. The aggregate fee paid to the Malaysian Adviser for the fiscal year
ended December 31, 1996 was U.S. $304,050. The aggregate fees paid by the Fund
to the Manager and the Malaysian Adviser are higher than advisory fees paid by
most other investment companies, primarily because of the Fund's objective of
investing in Malaysian securities, and the additional time and expense required
of the Manager and the Malaysian Adviser in pursuing such objective.
The net assets of the Fund as of February 28, 1997, as well as the net
assets of other U.S. registered investment companies advised by the Manager, and
the other U.S. registered investment companies for which the Manager acts as
sub-adviser, the rates of compensation to the Manager, the aggregate amount of
advisory fees paid by the Fund to the Manager and the aggregate amount of any
other material payments by the Fund to the Manager are set forth in Annex B
hereto.
The Current Advisory Agreements provide that neither the Manager nor the
Malaysian Adviser shall be liable for any error of judgment or of law, or for
any loss suffered by the Fund in
15
18
connection with the matters to which the Current Advisory Agreements relate
except a loss resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of their obligations or duties.
The Current Advisory Agreements may be terminated by any party thereto, at
any time, without penalty, on 60 days' written notice, or upon such shorter
notice as may be mutually agreed upon, and will automatically terminate in the
event of their assignment.
Under the Current Advisory Agreements, the Manager and the Malaysian
Adviser are permitted to provide investment advisory services to other clients,
including clients who may invest in securities in which the Fund may invest.
THE NEW ADVISORY AGREEMENTS. The Board approved the proposed new advisory
agreements on March 13, 1997, the forms of which are attached as Annex A (the
"New Advisory Agreements"). The forms of the proposed New Advisory Agreements
are substantially identical to the Current Advisory Agreements, except for the
dates of execution.
The investment advisory fees as a percentage of net assets payable by the
Fund to the Manager and the Malaysian Adviser will be the same under the New
Advisory Agreements as under the Current Advisory Agreements. If the investment
advisory fee under the New Advisory Agreements had been in effect for the Fund's
most recently completed fiscal year, advisory fees paid to the Manager and the
Malaysian Adviser by the Fund would have been identical to those paid under the
Current Advisory Agreements.
The Board of the Fund held a meeting on March 13, 1997, at which meeting
the Directors, including the Disinterested Directors, unanimously approved the
New Advisory Agreements for the Fund and recommended the Agreements for approval
by the stockholders of the Fund. The New Advisory Agreements would take effect
upon the later to occur of (i) the obtaining of stockholder approval or (ii) the
closing of the Merger. The New Advisory Agreements will continue in effect for
an initial two year term and thereafter for successive annual periods as long as
such continuance is approved in accordance with the 1940 Act.
In evaluating the New Advisory Agreements, the Board took into account that
the Fund's Current Advisory Agreements and the New Advisory Agreements,
including their terms relating to the services to be provided thereunder by the
Manager and the Malaysian Adviser and the fees and expenses payable by the Fund,
are substantially identical, except for the dates of execution. The Board also
considered other possible benefits to the Manager and Morgan Stanley, Dean
Witter, Discover & Co. that may result from the Merger including the continued
use of Morgan Stanley & Co. and Dean Witter Discover brokers and its affiliates,
to the extent permitted by law, for brokerage services.
The Board also examined the terms of the Merger Agreement and the possible
effects of the Merger upon the Manager's organization and upon the ability of
the Manager to provide advisory services to the Fund. The Board also considered
the skills and capabilities of the Manager. In this regard, the Board was
informed of the resources of Morgan Stanley, Dean Witter, Discover & Co. to be
made available to the Manager.
The Board also weighed the effect on the Fund of the Manager becoming an
affiliated person of Morgan Stanley, Dean Witter, Discover & Co. Following the
Merger, the 1940 Act will prohibit or impose certain conditions on the ability
of the Fund to engage in certain transactions with
16
19
Morgan Stanley, Dean Witter, Discover & Co. and its affiliates. For example,
absent exemptive relief the Fund will be prohibited from purchasing securities
from Morgan Stanley & Co. and DWR in transactions in which Morgan Stanley & Co.
and/or DWR act as principal. Currently the Fund is prohibited from making such
purchases in only those transactions in which Morgan Stanley & Co. or an
affiliate acts as principal. The Fund will also have to satisfy certain
conditions in order to engage in securities transactions in which Morgan Stanley
& Co. or DWR is acting as an underwriter. The Fund is already required to
satisfy such conditions when engaging in transactions in which Morgan Stanley &
Co. or an affiliate is acting as an underwriter. In this connection, management
of the Manager represented to the Board that they do not believe these
prohibitions or conditions will have a material effect on the management or
performance of the Fund.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the Disinterested
Directors voting separately, unanimously approved the New Advisory Agreements
and voted to recommend their approval to the stockholders of the Fund.
In the event that stockholders of the Fund do not approve either or both of
the New Advisory Agreements, the respective current agreements will remain in
effect and the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve agreements in lieu of the New Advisory Agreements. In the event the
Merger is not consummated, the Manager and the Malaysian Adviser would continue
to serve in their respective capacities to the Fund pursuant to the terms of the
Current Advisory Agreements.
STOCKHOLDER APPROVAL
To become effective, the New Advisory Agreements must be approved by a vote
of a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Advisory Agreements were unanimously approved by the Board
after consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also unanimously
determined to submit the New Advisory Agreements for consideration by the
stockholders of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW MANAGEMENT AGREEMENT AND "FOR" THE APPROVAL OF THE NEW RESEARCH
AGREEMENT.
17
20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Fund's management, the following person owned
beneficially more than 5% of the Fund's outstanding shares at March 24, 1997:
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------------ -------------------------- ----------------
President and Fellows of Harvard 760,319 7.8%
College*................................
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA 02210
- ---------------
* Based on a Schedule 13G filed with the Commission on February 14, 1997. The
Harvard University Master Trust Fund holds an additional 21,500 shares.
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
A stockholders' proposal intended to be presented at the Fund's Annual
Meeting of Stockholders in 1998 must be received by the Fund on or before
November 27, 1997, in order to be included in the Fund's proxy statement and
form of proxy relating to that meeting.
VALERIE Y. LEWIS
Secretary
Dated: March 27, 1997
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
18
21
ANNEX A
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Agreement, dated and effective as of , 1997 between THE
MALAYSIA FUND, INC., a Maryland corporation (herein referred to as the "Fund"),
and MORGAN STANLEY ASSET MANAGEMENT INC., a Delaware corporation (herein
referred to as the "Manager").
WITNESSETH: That in consideration of the mutual covenants herein contained,
it is agreed by the parties as follows:
1. The Manager hereby undertakes and agrees, upon the terms and conditions
herein set forth, (i) to make investment decisions for the Fund, to prepare and
make available to the Fund research and statistical data in connection
therewith, and to supervise the acquisition and disposition of securities by the
Fund, including the selection of brokers or dealers to carry out the
transactions, all in accordance with the Fund's investment objectives and
policies and in accordance with guidelines and directions from the Fund's Board
of Directors; (ii) to assist the Fund as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Fund's Board of Directors; (iii) to maintain or cause to be maintained for the
Fund all books and records required under the Investment Company Act of 1940, as
amended (the "1940 Act"), to the extent that such books and records are not
maintained or furnished by the administrator, custodian or other agents of the
Fund; (iv) to furnish at the Manager's expense for the use of the Fund such
office space and facilities as the Fund may require for its reasonable needs in
the City of New York, and to furnish at the Manager's expense clerical services
in the United States related to research, statistical and investment work; and
(v) to pay the reasonable salaries, fees and expenses of such of the Fund's
officers and employees (including the Fund's share of payroll taxes) and any
fees and expenses of such of the Fund's directors as are directors, officers or
employees of the Manager, provided, however, that the Fund, and not the Manager,
shall bear travel expenses of directors and officers of the Fund who are
managing directors, and officers or employees of the Manager to the extent that
such expenses relate to attendance at meetings of the Board of Directors of the
Fund or any committees thereof. The Manager shall bear all expenses arising out
of its duties hereunder but shall not be responsible for any expenses of the
Fund other than those specifically allocated to the Manager in this paragraph 1.
In particular, but without limiting the generality of the foregoing, the Manager
shall not be responsible, except to the extent of the reasonable compensation of
such of the Fund's employees as are managing directors, officers or employees of
the Manager whose services may be involved, for the following expenses of the
Fund: organization expenses (but not the overhead or employee costs of the
Manager or of the Malaysian Adviser); legal fees and expenses [of counsel
(United States, Malaysian and Singapore) to the Fund and if such counsel are
retained by the directors who are not "interested persons" of the Fund, of such
counsel]; auditing and accounting expenses; taxes and governmental fees; New
York Stock Exchange listing fees; dues and expenses incurred in connection with
membership in investment company organizations; fees and expenses of the Fund's
administrator, custodian, subcustodians, transfer agents and registrars;
expenses for portfolio pricing services by a pricing agent, if any; expenses of
preparing share certificates and other expenses in connection with the issuance,
offering and underwriting of shares issued by the Fund; expenses relating to
investor and public relations; expenses of registering or qualifying securities
of the Fund for public sale;
A-1
22
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; brokerage commissions or other costs of acquiring
or disposing of any portfolio holding of the Fund; expenses of preparation and
distribution of reports, notices and dividends to shareholders; expenses of the
dividend reinvestment and share purchase plan (except for brokerage expenses
paid by participants in such Plan); costs of stationery; any litigation
expenses; and costs of stockholders' and other meetings.
2. In connection with the rendering of the services required under
paragraph 1, the Manager has entered into an agreement (the "AMC Agreement")
dated the date hereof with Arab-Malaysian Consultant Sdn Bhd ("AMC"), which is
regularly to furnish investment advisory services to the Manager pursuant to
such agreement, and the Manager may contract with or consult with such banks,
other securities firms or other parties in Malaysia or elsewhere as it may deem
appropriate to obtain information and advice, including investment
recommendations, advice regarding economic factors and trends, advice as to
currency exchange matters, and clerical and accounting services and other
assistance, but any fee, compensation or expenses to be paid to any such parties
shall be paid by the Manager, and no obligation shall be incurred on the Fund's
behalf in any such respect (except as to Arab-Malaysian Consultant Sdn Bhd for
which the Fund shall pay such fees pursuant to such agreement). It is understood
that, in accordance with its terms, the AMC Agreement becomes effective upon the
effective date of the registration of AMC as an adviser under the Investment
Advisers Act of 1940 and, accordingly, that the Manager is not authorized to
consult with AMC prior to such date.
3. The Fund agrees to pay in United States dollars to the Manager, as full
compensation for the services to be rendered and expenses to be borne by the
Manager hereunder, a monthly fee equal to 1/12 of 0.90% of the first $50 million
of average weekly net assets, 1/12 of 0.70% of such assets in excess of $50
million and up to and including $100 million and 1/12 of 0.50% of the excess of
such assets over $100 million. For purposes of computing the monthly fee, the
value of the net assets of the Fund shall be determined as of the close of
business on the last business day of each week for each week where the last
business day of the week falls within that month divided by the number of such
weeks and the aggregate value of such assets shall be divided by the number of
such weeks. The fee for the period from the end of the last month ending prior
to termination of this Agreement, for whatever reason, to the date of
termination shall be based on the value of the net assets of the Fund determined
as of the close of business on the date of termination and the fee for such
period and for the period from the date on which the Fund receives the net
proceeds of the sale of its shares of common stock in the initial public
offering thereof through the end of the month in which such proceeds are
received shall be prorated according to the proportion which such period bears
to a full monthly period. Each payment of a monthly fee to the Manager shall be
made within the ten days next following the day as of which such payment is so
computed.
The value of the net assets of the Fund shall be determined pursuant to the
applicable provisions of the Articles of Incorporation and by-laws of the Fund.
4. The Manager agrees that it will not make a short sale of any capital
stock of the Fund, or purchase any share of the capital stock of the Fund
otherwise than for investment.
5. Nothing herein shall be construed as prohibiting the Manager from
providing investment advisory services to, or entering into investment advisory
agreements with, other clients (including other registered investment
companies), including clients which may invest in securities of
A-2
23
Malaysian issuers, or from utilizing (in providing such services) information
furnished to the Manager by Arab Malaysian Consultant Sdn Bhd and others as
contemplated by section 2 of this Agreement; nor shall anything herein be
construed as constituting the Manager an agent of the Fund.
6. The Manager may rely on information reasonably believed by it to be
accurate and reliable. Neither the Manager nor its officers, directors,
employees, agents or controlling persons as defined in the Investment Company
Act shall be subject to any lability for any act or omission, error of judgment
or mistake of law, or for any loss suffered by the Fund, in the course of,
connected with or arising out of any services to be rendered hereunder, except
by reason of wilful misfeasance, bad faith or gross negligence on the part of
the Manager in the performance of its duties or by reason of reckless disregard
on the part of the Manager of its obligations and duties under this Agreement.
Any person, even though also employed by the Manager, who may be or become an
employee of the Fund and paid by the Fund shall be deemed, when acting within
the scope of his employment by the Fund, to be acting in such employment solely
for the Fund and not as an employee or agent of the Manager.
7. This Agreement shall remain in effect for a period of two years from
the date hereof, and shall continue in effect thereafter, but only so long as
such continuance is specifically approved at least annually by the affirmative
vote of (i) a majority of the members of the Fund's Board of Directors who are
not interested persons of the Fund or of the Manager or of any entity regularly
furnishing investment advisory services with respect to the Fund pursuant to an
agreement with the Manager, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) a majority of the Fund's Board of Directors
or the holders of a majority of the outstanding voting securities of the Fund.
This Agreement may nevertheless be terminated at any time without penalty,
on 60 days' written notice, by the Fund's Board of Directors, by vote of holders
of a majority of the outstanding voting securities of the Fund, or by the
Manager. This Agreement shall automatically be terminated in the event of its
assignment, provided that an assignment to a corporate successor to all or
substantially all of the Manager's business or to a wholly-owned subsidiary of
such corporate successor which does not result in a change of actual control or
management of the Manager's business shall not be deemed to be an assignment for
the purposes of this Agreement. Any such notice shall be deemed given when
received by the addressee.
8. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto other than pursuant to Section 7.
It may be amended by mutual agreement, but only after authorization of such
amendment by the affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Fund, and (ii) a majority of the members of
the Fund's Board of Directors who are not interested persons of the Fund or of
the Manager or of any entity regularly furnishing investment advisory services
with respect to the Fund pursuant to any agreement with the Manager, cast in
person at a meeting called for the purpose of voting on such approval.
9. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act. As used herein, the terms "interested
person,", "assignment," and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act.
A-3
24
IN WITNESS WHEREOF, the parties have executed this Agreement by their
officers thereunto duly authorized as of the day and year first written above.
THE MALAYSIA FUND, INC.
By
-----------------------------------------------
MORGAN STANLEY ASSET MANAGEMENT INC.
By
-----------------------------------------------
A-4
25
RESEARCH AND ADVISORY AGREEMENT
MORGAN STANLEY
ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
, 1997
Arab-Malaysian Consultant Sdn Bhd
Bangunan Arab-Malaysian, 22nd Floor
Jala Raja Chulan
Kuala Lumpur 50200
Dear Sirs:
We have entered into an Investment Advisory and Management Agreement (the
"Management Agreement") dated as of , 1997 with The Malaysia Fund,
Inc., a Maryland corporation (the "Fund"), pursuant to which we act as
investment adviser to and manager of the Fund. A copy of the Management
Agreement has been previously furnished to you. In furtherance of such duties to
the Fund, and with the approval and agreement of the Fund, we wish to avail
ourselves of your investment advisory services. Accordingly, with the acceptance
of the Fund, we hereby agree with you as follows for the duration of this
Agreement:
1. You agree to furnish to us such investment advice, research and
assistance, as we shall from time to time reasonably request. In that
connection, you agree to continue to maintain a separate staff within your
organization to furnish such services exclusively to us. In addition, for the
benefit of the Fund, you agree to pay the fees and expenses of any directors or
officers of the Fund who are directors, officers or employees of you or of any
of your affiliates, except that the Fund shall bear travel expenses of one (but
not more than one) director, officer or employee of you or any of your
affiliates who is not a resident in the United States to the extent such
expenses relate to his attendance as a director at meetings of the Board of
Directors of the Fund in the United States and shall also bear the travel
expenses of any other director, officer or employee of you or of any of your
affiliates who is resident in the United States to the extent such expenses
relate to his attendance as a director at meetings of the Board of Directors
outside of the United States.
2. The Fund agrees to pay in United States dollars to you, as compensation
for the services to be rendered by you hereunder, a monthly fee equal to 1/12 of
0.25% of the value of the net assets of the Fund up to and including $50
million; 1/12 of 0.15% of the value of the net assets of the Fund over $50
million up to and including $100 million and 1/12 of 0.10% of the value of the
net assets of the Fund over $100 million. For purposes of computing the monthly
fee, the value of the net assets of the Fund shall be determined as of the close
of business on the last business day of each week for each week where the last
business day of the week falls within that month divided by the number of such
weeks and the aggregate value of such assets shall be divided by the number of
such weeks. The fee for the period from the end of the last month ending prior
to termination of this Agreement for whatever reason, to the date of termination
shall be based on the value of the net assets of the Fund determined as of the
close of business on the date of termination and the fee for the period from the
date on which the Fund receives the net proceeds of the sale of its shares of
common stock in the initial public offering thereof through the end of the month
in which such proceeds are received shall be prorated according to the
proportion which such period bears to a
26
full monthly period. Each payment of a monthly fee shall be made by us to you
within the fifteen days next following the day as of which such payment is so
computed.
The value of the net assets of the Fund shall be determined pursuant to the
applicable provisions of the Certificate of Incorporation and By-laws of the
Fund.
We agree to work with you, in order to make our relationship as productive
as possible for the benefit of the Fund and to further the development of your
ability to provide the services contemplated by Section 1. To this end we agree
to work closely with your employees and to work with you to assist you in
developing your research techniques, procedures and analysis. We will furnish
you with informal memoranda reflecting our understanding of our working
procedures with you, which may be revised as you work with us pursuant to this
Agreement. We agree not to furnish, without your consent, to any person other
than our personnel and directors and representatives of the Fund any tangible
research material that is prepared by you, that is not publicly available, or
which has been marked by you as being confidential.
3. You agree that you will not make a short sale of any capital stock of
the Fund, or purchase any share of the capital stock of the Fund otherwise than
for investment.
4. Your services to us are not to be deemed exclusive and you are free to
render similar services to others, except as otherwise provided in Section 1
hereof.
5. Nothing herein shall be construed as constituting you an agent of us or
of the Fund.
6. You represent and warrant that you have applied for registration as an
investment adviser under the U.S. Investment Advisers Act of 1940, as amended
(the "Advisers Act"). You agree that you will notify us when you become so
registered and you agree to maintain such registration in effect during the term
of this Agreement.
7. Neither you nor any affiliate of yours shall receive any compensation
in connection with the placement or execution of any transaction for the
purchase or sale of securities or for the investment of funds on behalf of the
Fund, except that you or your affiliates may receive a commission, fee or other
remuneration for acting as broker in connection with the sale of securities to
or by the Fund, if permitted under the U.S. Investment Company Act of 1940, as
amended.
8. We and the Fund agree that you may rely on information reasonably
believed by you to be accurate and reliable. We and the Fund further agree that
neither you nor your officers, directors, employees, agents or any controlling
persons as defined in the Investment Company Act of 1940 shall be subject to any
liability for any act or omission in the course of, connected with or arising
out of any services to be rendered hereunder except by reason of wilful
misfeasance, bad faith or gross negligence in the performance of your duties or
by reason of reckless disregard of your obligations and duties under this
Agreement.
9. This Agreement becomes effective on the date on which your registration
as an investment adviser under the Advisers Act becomes effective. This
Agreement shall remain in effect for a period of two years from the date hereof
and shall continue in effect thereafter, but only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) a
majority of the members of the Fund's Board of Directors who are not interested
persons of the Fund, you or us, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) a majority of the Fund's Board of
Directors or the holders of a majority of the outstanding voting securities of
the Fund. This Agreement may nevertheless be terminated at any time, without
penalty, by the Fund's Board of Directors or by vote of holders of a majority of
the
2
27
outstanding voting securities of the Fund, upon 60 days' written notice
delivered or sent by registered mail, postage prepaid, to you, at your address
given above or at any other address of which you shall have notified us in
writing, or by you upon 60 days' written notice to us and to the Fund, and shall
automatically be terminated in the event of its assignment, provided that an
assignment to a corporate successor to all or substantially all of your business
or to a wholly-owned subsidiary of such corporate successor which does not
result in a change of actual control or management of your business shall not be
deemed to be an assignment for purposes of this Agreement. Any such notice shall
be deemed given when received by the addressee.
10. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto other than as permitted pursuant
to Section 9. It may be amended by mutual agreement, but only after
authorization of such amendment by the affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Fund; and (ii) a majority
of the members of the Fund's Board of Directors who are not interested persons
of the Fund, you or us, cast in person at a meeting called for the purpose of
voting on such approval.
11. Any notice hereunder shall be in writing and shall be delivered in
person or by telex (followed by mailing such notice, air mail postage paid, the
day on which such telex is sent)
Addressed
If to Morgan Stanley Asset Management Inc., to:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, N.Y. 10020
Attention:
(Telex No. )
If to Arab-Malaysian Consultant Sdn Bhd, to:
Bangunan Arab-Malaysian, 22nd Floor
Jala Raja Chulan, Kuala Lumpur 50200
Attention: Dato' Malek Merican
(Telex No. 60-3-238-2842)
or to such other address as to which the recipient shall have informed the other
party.
Notice given as provided above shall be deemed to have been given, if by
personal delivery, on the day of such delivery, and if by telex and mail, the
date on which such telex and confirmatory letter are sent.
12. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Investment Company Act of 1940, as amended. As used
herein the terms "interested person", "assignment", and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
3
28
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
MORGAN STANLEY ASSET MANAGEMENT INC.
By
-----------------------------------------------
Name:
Title:
The foregoing agreement is hereby accepted as of the date first above
written.
ARAB-MALAYSIAN CONSULTANT SDN BHD
By
-----------------------------------------------
Name:
Title:
Accepted:
THE MALAYSIA FUND, INC.
By
-----------------------------------------------
Name:
Title:
4
29
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
MORGAN STANLEY ASSET MANAGEMENT INC.
By
-----------------------------------------------
Name:
Title:
The foregoing agreement is hereby accepted as of the date first above
written.
ARAB-MALAYSIAN CONSULTANT SDN BHD
By
-----------------------------------------------
Name:
Title:
Accepted:
THE MALAYSIA FUND, INC.
By
-----------------------------------------------
Name:
Title:
5
30
ANNEX B
The following table indicates the size of each U.S. investment company
advised or sub-advised by the Manager, the amount of advisory fees or
sub-advisory fees paid to the Manager for the last fiscal year of such
investment company, the amount of other material fees paid to the Manager for
such fiscal year and the advisory fee rate. Average net assets are calculated on
a daily basis for open-end funds and on a weekly basis for closed-end funds.
AGGREGATE
AMOUNT
OF
ADVISORY/ AMOUNT OF
SUBADVISORY OTHER MATERIAL
NET ASSETS AS FEE FOR THE PAYMENTS TO ASSET MANAGEMENT FEE AS PERCENTAGE
OF LAST THE MANAGER OF AVERAGE NET ASSETS
FEBRUARY 28, FISCAL FOR THE LAST (ANNUAL RATE OF MSAM'S
INVESTMENT COMPANY 1997 YEAR(1) FISCAL YEAR COMPENSATION)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
Morgan Stanley Institutional Fund, Inc.*(2)
- -- Active Country Allocation Portfolio $ 187,031,777 $ 1,168,571 $0 0.65% of average daily net assets
- -- Aggressive Equity Portfolio 121,791,751 400,006 0 0.80% of average daily net assets
- -- Asian Equity Portfolio 365,212,440 3,378,056 0 0.80% of average daily net assets
- -- Balanced Portfolio 7,573,877 74,832 0 0.50% of average daily net assets
- -- China Growth Portfolio(3) 0 0 0 1.25% of average daily net assets
- -- Emerging Growth Portfolio 82,677,378 1,024,956 0 1.00% of average daily net assets
- -- Emerging Markets Debt Portfolio 162,883,938 1,887,155 0 1.00% of average daily net assets
- -- Emerging Markets Portfolio 1,557,680,866 15,367,651 0 1.25% of average daily net assets
- -- Equity Growth Portfolio 467,132,622 1,192,888 0 0.60% of average daily net assets
- -- European Equity Portfolio 215,681,709 1,034,869 0 0.80% of average daily net assets
- -- Fixed Income Portfolio 122,195,042 559,304 0 0.35% of average daily net assets
- -- Global Equity Portfolio 87,115,900 630,346 0 0.80% of average daily net assets
- -- Global Fixed Income Portfolio 116,017,909 437,198 0 0.40% of average daily net assets
- -- Gold Portfolio(4) 38,303,227 274,000 0 1.00% of average daily net assets
- -- Growth and Income Fund(3) 0 0 0 0.75% of average daily net assets
- -- High Yield Portfolio 123,820,445 438,512 0 0.50% of average daily net assets
- -- International Equity Portfolio 2,412,774,091 15,860,657 0 0.80% of average daily net assets
- -- International Magnum Portfolio 124,710,803 381,756 0 0.80% of average daily net assets
- -- International Small Cap Portfolio 239,291,131 2,092,097 0 0.95% of average daily net assets
- -- Japanese Equity Portfolio 156,667,861 1,642,268 0 0.80% of average daily net assets
- -- Latin American Portfolio 55,950,497 287,055 0 1.10% of average daily net assets
- -- MicroCap Portfolio(3) 0 0 0 1.00% of average daily net assets
- -- Money Market Portfolio 1,278,773,524 3,343,176 0 0.30% of average daily net assets
- -- Mortgaged-Backed Securities 0 0 0 0.35% of average daily net assets
Portfolio(3)
- -- Municipal Bond Portfolio 43,819,386 134,963 0 0.35% of average daily net assets
- -- Municipal Money Market Portfolio 721,197,094 1,932,187 0 0.30% of average daily net assets
- -- Small Cap Value Equity Portfolio 29,921,023 345,122 0 0.85% of average daily net assets
- -- Technology Portfolio(5) 5,504,680 12,699 0 1.00% of average daily net assets
- -- U.S. Real Estate Portfolio 246,501,294 1,017,980 0 0.80% of average daily net assets
- -- Value Equity Portfolio 109,811,808 655,516 0 0.50% of average daily net assets
Morgan Stanley Fund, Inc.*(6)
- -- American Value Fund 54,190,478 363,998 0 0.85% of average daily net assets
- -- Aggressive Equity Fund 30,105,256 31,323 0 0.90% of average daily net assets
- -- Asian Growth Fund 394,810,098 3,762,252 0 1.00% of average daily net assets
- -- Emerging Markets Fund 174,767,303 1,081,943 0 1.25% of average daily net assets
- -- Emerging Markets Debt Fund(3) 0 0 0 1.25% of average daily net assets
- -- Equity Growth Fund(3) 0 0 0 0.70% of average daily net assets
- -- European Equity Fund(3) 0 0 0 1.00% of average daily net assets
- -- Global Equity Allocation Fund 161,349,524 1,047,751 0 1.00% of average daily net assets
- -- Global Equity Fund(3) 0 0 0 1.00% of average daily net assets
- -- Global Fixed Income Fund 9,525,078 121,568 0 0.75% of average daily net assets
- -- Government Obligations Money 122,965,353 0 0 0.45% of the first $250 million
Market(7) 0.40% of the next $250 million
0.35% of the excess over $500 million
B-1
31
AGGREGATE
AMOUNT
OF
ADVISORY/ AMOUNT OF
SUBADVISORY OTHER MATERIAL
NET ASSETS AS FEE FOR THE PAYMENTS TO ASSET MANAGEMENT FEE AS PERCENTAGE
OF LAST THE MANAGER OF AVERAGE NET ASSETS
FEBRUARY 28, FISCAL FOR THE LAST (ANNUAL RATE OF MSAM'S
INVESTMENT COMPANY 1997 YEAR(1) FISCAL YEAR COMPENSATION)
- --------------------------------------- -------------- ----------- ---------------------------------------
- -- Growth and Income Fund(3) $ 0 $ 0 $0 1.00% of average daily net assets
- -- High Yield Fund 16,444,430 12,710 0 0.75% of average daily net assets
- -- Japanese Equity Fund(3) 0 0 0 1.00% of average daily net assets
- -- International Magnum Fund 24,529,959 0 0 0.80% of average daily net assets
- -- Latin America Fund 53,413,053 218,502 0 1.25% of average daily net assets
- -- Money Market Fund(7) 153,358,157 0 0 0.45% of the first $250 million
0.40% of the next $250 million
0.35% of the excess over $500 million
- -- Tax Free Money Market Fund(3) 0 0 0 0.45% of the first $250 million
0.40% of the next $250 million
0.35% of the excess over $500 million
- -- U.S. Real Estate Fund 21,362,116 8,641 0 1.00% of average daily net assets
- -- Worldwide High Income Fund 164,403,651 527,214 0 0.75% of average daily net assets
Morgan Stanley Universal Funds, Inc.*
- -- Asian Equity(3) 0 0 0 0.80% of the first $500 million
0.75% of the next $500 million
0.70% of the excess over $1 billion
- -- Emerging Markets Debt(3) 0 0 0 0.75% of the first $500 million
0.70% of the next $500 million
0.65% of the excess over $1 billion
- -- Emerging Markets Equity 15,607,752 32,000 0 1.25% of the first $500 million
1.20% of the next $500 million
1.15% of the excess over $1 billion
- -- Global Equity(8) 5,225,659 0 0 0.80% of the first $500 million
0.75% of the next $500 million
0.70% of the excess over $1 billion
- -- Growth(8) 2,843,221 0 0 0.55% of the first $500 million
0.50% of the next $500 million
0.45% of the excess over $1 billion
- -- International Magnum(8) 10,283,605 0 0 0.80% of the first $500 million
0.75% of the next $500 million
0.70% of the excess over $1 billion
- -- Money Market(3) $ 0 $ 0 $0 0.30% of the first $500 million
0.25% of the next $500 million
0.20% of the excess over $1 billion
- -- U.S. Real Estate(8) 0 0 0 0.80% of the first $500 million
0.75% of the next $500 million
0.70% of the excess over $1 billion
The Brazilian Investment Fund, Inc. 58,816,028 425,000 0 0.90% of the first $50 million
0.70% of the next $50 million
0.50% of the excess over $100 million
The Latin American Discovery Fund, Inc. 204,346,643 1,899,000 0 1.15% of average weekly net assets
The Malaysia Fund, Inc. 192,501,967 1,330,000 0 0.90% of the first $50 million
0.70% of the next $50 million
0.50% of the excess over $100 million
Morgan Stanley Africa Investment Fund, 310,803,693 3,106,000 0 1.20% of average weekly net assets
Inc.
Morgan Stanley Asia-Pacific Fund, Inc. 854,649,586 8,796,000 0 1.00% of average weekly net assets
Morgan Stanley Emerging Markets Debt 321,966,172 3,125,000 0 1.00% of average weekly net assets
Fund, Inc.
Morgan Stanley Emerging Markets Fund, 407,981,941 4,713,000 0 1.25% of average weekly net assets
Inc.
B-2
32
AGGREGATE
AMOUNT
OF
ADVISORY/ AMOUNT OF
SUBADVISORY OTHER MATERIAL
NET ASSETS AS FEE FOR THE PAYMENTS TO ASSET MANAGEMENT FEE AS PERCENTAGE
OF LAST THE MANAGER OF AVERAGE NET ASSETS
FEBRUARY 28, FISCAL FOR THE LAST (ANNUAL RATE OF MSAM'S
INVESTMENT COMPANY 1997 YEAR(1) FISCAL YEAR COMPENSATION)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
Morgan Stanley Global Opportunity Bond 65,384,292 585,000 0 1.00% of average weekly net assets
Fund, Inc.
Morgan Stanley High Yield Fund, Inc. 129,972,796 842,000 0 0.70% of average weekly net assets
Morgan Stanley India Investment Fund, 341,625,451 3,812,000 0 1.10% of average weekly net assets
Inc.
Morgan Stanley Russia & New Europe 142,333,723 400,000 0 1.60% of average weekly net assets
Fund, Inc.
The Pakistan Investment Fund, Inc. 67,931,758 743,000 0 1.00% of average weekly net assets
The Thai Fund, Inc. 183,531,329 1,812,000 0 0.90% of the first $50 million
0.70% of the next $50 million
0.50% of the excess over $100 million
The Turkish Investment Fund, Inc. 51,846,955 359,000 0 0.95% of the first $50 million
0.75% of the next $50 million
0.55% of the excess over $100 million
- ---------------
* With respect to each of Morgan Stanley Institutional Fund, Inc., Morgan
Stanley Fund, Inc. and Morgan Stanley Universal Funds, Inc., MSAM has
voluntarily agreed to a reduction in the fees payable to it and to
reimburse each portfolio, if necessary, if payment of advisory fees would
cause the total annual operating expenses of such portfolio to exceed
certain minimums.
(1) Net of any fees waived by the Manager for the last fiscal year.
(2) Includes Class A and Class B shares.
(3) Currently Inactive.
(4) Management fee includes a 0.40% sub-advisory fee payable by the Manager.
(5) Commenced operations March 16, 1996.
(6) Includes Class A, Class B and Class C shares. Fiscal year end June 30, 1996.
(7) Formerly, a portfolio of PCS Cash Fund, which was merged with and into
Morgan Stanley Fund, Inc. on September 27, 1996.
(8) Portfolio had not commenced operations as of December 31, 1996.
B-3
33
MALAYSIA FUND PROXY CARD
34
PROXY
THE MALAYSIA FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints WARREN J. OLSEN, MICHAEL F.
KLEIN, VALERIE Y. LEWIS and HAROLD J. SCHAAFF, JR., and each of them, as proxies
for the undersigned, with full power of substitution and resubstitution, and
hereby authorizes said proxies, and each of them, to represent and vote, as
designated on the reverse side, all stock of the above Company held of record by
the undersigned on March 24, 1997 at the Annual Meeting of Stockholders to be
held on April 30, 1997, and at any adjournment thereof.
The undersigned hereby revokes any and all proxies with respect to such
stock heretofore given by the undersigned. The undersigned acknowledges receipt
of the Proxy Statement dated March 27, 1997.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
35
[X] Please mark your votes as in this sample.
1. Election of the following nominees as Directors:
FOR WITHHELD Class II Nominees:
[ ] [ ] John W. Croghan and Graham E. Jones
-------------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
2. Ratification of the selection of Price Waterhouse LLP as independent
accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of the Investment Advisory and Management Agreement with Morgan
Stanley Asset Management Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Approval of the Research and Advisory Agreement among The Malaysia Fund,
Inc., Morgan Stanley Asset Management Inc. and Arab-Malaysian Consultant Sdn
Bhd.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In the discretion of such proxies, upon any and all other business as may
properly come before the Meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE TWO CLASS II NOMINEES AND IN FAVOR OF PROPOSAL NO. 2,
PROPOSAL NO. 3 AND PROPOSAL NO. 4.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT TENANTS,
EACH JOINT TENANT SHOULD SIGN.
SIGNATURES(S)
- -------------------------------------
DATE , 1997
-------------------
When signing as attorney, executor, administrator, trustee, guardian or
custodian, please sign full title as such. If a corporation, please sign full
corporate name by authorized officer and indicate the signer's office.
If a partnership, please sign in partnership name. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
2