<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
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 PAKISTAN INVESTMENT FUND, INC.
- --------------------------------------------------------------------------------
(Names of Registrant as Specified in Its Charters)
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 the 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:
------------------------------------------------------------------------
<PAGE> 2
THE PAKISTAN INVESTMENT 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
Pakistan Investment Fund, Inc. (the "Fund") will be held on Wednesday, April 30,
1997, at 9:45 a.m. (New York time), in Conference Room 3 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 an Investment Advisory Agreement between
the Fund, Morgan Stanley Asset Management Inc. and International Asset
Management Company Limited.
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 26, 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.
<PAGE> 3
THE PAKISTAN INVESTMENT 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 Pakistan
Investment 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 3
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 April 3, 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 stockholders will consider, among other matters, a New Management
Agreement and New Sub-Advisory Agreement (each defined below) (collectively, the
"New Advisory Agreements") 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 the Manager and an indirect parent of International Asset Management
Company Limited, the Fund's sub-adviser in Pakistan (the "Pakistan Adviser").
Pursuant to the Merger Agreement, the Fund's Manager will become a direct
subsidiary of the merged company and the Pakistan Adviser will become an
indirect subsidiary of such merged company, which will be called Morgan Stanley,
Dean Witter, Discover & Co. The Fund's New Advisory Agreements are identical to
the current forms of those agreements (collectively, the "Current Advisory
Agreements"), except for the dates of execution, effectiveness and termination.
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 and FOR the approval of
the New Sub-Advisory Agreement. 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
11,604,793 shares of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting.
<PAGE> 4
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
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 PAKISTAN
INVESTMENT 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., The Malaysia 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 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.
2
<PAGE> 5
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 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 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.
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
<PAGE> 6
Certain information regarding the Directors and officers of the Fund is set
forth below:
<TABLE>
<CAPTION>
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
- ------------------------------- -------------- --------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Barton M. Biggs*............... Director and Chairman, Director and Man- 64 10,000 -- ***
1221 Avenue of the Americas Chairman aging Director of Morgan
New York, New York 10020 of the Stanley Asset Management
Board Inc. and Chairman and Di-
since 1995 rector of Morgan Stanley
Asset Management Limited;
Managing Director of Mor-
gan Stanley & Co.
Incorporated; Director of
Morgan Stanley Group
Inc.; Director of the
Rand McNally Company;
Member of the Yale
Development Board; Direc-
tor and Chairman of the
Board of seventeen U.S.
registered investment
companies managed by
Morgan Stanley Asset
Management Inc.
Peter J. Chase................. Director Chairman and Chief 64 500 0 ***
1441 Paseo De Peralta since 1995 Financial Officer, High
Santa Fe, New Mexico 87501 Mesa Technologies, LLC;
Chairman of CGL, Inc.;
Principal/Owner,
Statements; Director of
thirteen U.S. registered
investment companies
managed by Morgan Stanley
Asset Management, Inc.;
John W. Croghan................ Nominee; Di- President of Lincoln 66 1,000 987.2825 ***
200 South Wacker Drive rector since Partners, a partnership
Chicago, Illinois 60606 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.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
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
- ------------------------------- -------------- --------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
David B. Gill.................. Director since Director of thirteen U.S. 70 505 679.1887 ***
26210 Ingleton Circle 1995 registered investment
Easton, Maryland 21601 companies managed by
Morgan Stanley Asset
Management Inc.; Di-
rector of the Mauritius
Fund Limited; Director of
Moneda Chile Fund
Limited; Director of 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.
Graham E. Jones................ Nominee; Di- Senior Vice President of 64 500 0 ***
330 Garfield Street rector since BGK Properties; Trustee of
Suite 200 1994 nine investment companies
Santa Fe, New Mexico 87501 managed by Weiss, Peck &
Greer; Trustee of eleven
investment companies man-
aged by Morgan Grenfell
Capital Management Incor-
porated; 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 President of John A. Levin 58 4,000 1,652.5541 ***
One Rockefeller Plaza since 1993 & Co., Inc.; Director of
New York, New York 10020 fourteen U.S. registered
investment companies
managed by Morgan Stanley
Asset Management
Inc.;Director and
President of Baker,
Fentress and Company.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
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
- ------------------------------- -------------- --------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
William G. Morton, Jr. ........ Director since Chairman and Chief 60 500 0 ***
1 Boston Place 1995 Executive Officer of Boston
Boston, Massachusetts 02108 Stock Exchange; Director
of Tandy Corporation;
Director of thirteen U.S.
registered investment
companies managed by
Morgan Stanley Asset Man-
agement Inc.
Warren J. Olsen*............... Director and Principal of Morgan Stanley 40 1,001 -- ***
1221 Avenue of the Americas President & Co. Incorporated and Mor-
New York, New York 10020 since 1993 gan Stanley Asset Manage-
ment Inc.; Director and
President of seventeen
U.S. registered
investment companies
managed by Morgan Stanley
Asset Management Inc.
James W. Grisham*.............. Vice President Principal of Morgan Stanley 55 100 -- ***
1221 Avenue of the Americas since 1993 & Co. Incorporated and Mor-
New York, New York 10020 gan Stanley Asset Manage-
ment Inc.; Officer of
various investment
companies managed by
Morgan Stanley Asset
Management Inc.
Michael F. Klein*.............. Vice President Principal of Morgan Stanley 37 0 -- ***
1221 Avenue of the Americas since 1996 & Co. Incorporated and Mor-
New York, New York 10020 gan Stanley Asset Manage-
ment 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 Stanley 36 702 -- ***
1221 Avenue of the Americas since 1993 & Co. Incorporated and Mor-
New York, New York 10020 gan Stanley Asset Manage-
ment Inc.; General
Counsel and Secretary of
Morgan Stanley Asset
Management Inc.; Officer
of various investment
companies managed by
Morgan Stanley Asset
Management Inc.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
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
- ------------------------------- -------------- --------------------------- --- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Stadler*............. Vice President Vice President of Morgan 42 0 -- ***
1221 Avenue of the Americas since 1993 Stanley & Co. Incorporated
New York, New York 10020 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 Vice President of Morgan 41 0 -- ***
1221 Avenue of the Americas since 1993 Stanley & Co. Incorporated
New York, New York 10020 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 Assistant Vice President 38 0 -- ***
73 Tremont Street since 1994 and Manager of Fund
Boston, Massachusetts 02108 Administration, Chase
Global Funds Services
Company; Officer of
various investment compa-
nies 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 0 -- ***
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..................................... 18,808 3,319.0253 ***
============ ============= ==========
</TABLE>
- ---------------
* "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 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.
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 $4,000. Each of the members of the Fund's Audit
Committee, which will consist of the Fund's Directors who are not
7
<PAGE> 10
"interested persons" of the Fund as defined in the 1940 Act, 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 $40,000.
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.
8
<PAGE> 11
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 "Fund Complex")
for their services as Directors of such investment companies for the fiscal year
ended December 31, 1996.
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT FROM FUND AND NUMBER OF FUNDS
COMPENSATION BENEFITS ACCRUED FUND COMPLEX PAID IN FUND COMPLEX
FROM FUND AS PART OF THE TO FOR WHICH
NAME OF DIRECTORS (2)(3) FUND'S EXPENSES DIRECTORS(2)(4) DIRECTOR SERVES(5)
- ------------------------------ ------------ --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Barton M. Biggs(1)............ $ 0 None $ 0 17
Peter J. Chase................ 4,000 None 57,691 13
John W. Croghan............... 4,750 None 73,925 13
David B. Gill................. 4,000 None 59,910 13
Graham E. Jones............... 4,000 None 60,546 13
John A. Levin................. 4,750 None 77,539 14
William G. Morton, Jr......... 4,750 None 67,893 13
Warren J. Olsen(1)............ 0 None 0 17
J. Antonio Quila(1)(6)........ 0 None 0 1
Altaf M. Saleem(1)(6)......... 0 None 0 1
Frederick B.
Whittemore(1)(6)............ 0 None 0 16
</TABLE>
- ---------------
(1) "Interested persons" of the Fund within the meaning of the 1940 Act.
(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 $4,750, Mr. Gill earned $4,000 and Mr. Levin earned
$4,750 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) Messrs. Quila, Saleem and Whittemore resigned as Directors 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.
9
<PAGE> 12
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 as defined in the 1940 Act, 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 AGREEMENTS
(PROPOSAL NO. 3 AND PROPOSAL NO. 4)
THE MANAGER AND THE PAKISTAN ADVISER
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
10
<PAGE> 13
American Capital, Inc. and Miller Anderson & Sherrerd, LLP), assets under
management (including assets under fiduciary advisory control) totaling
approximately $162.0 billion.
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.
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.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH MSAM OTHER INFORMATION
- ----------------------------------------------------- ----------------------------------------
<S> <C> <C>
Barton M. Biggs*......... Chairman, Director and Chairman and Director of Morgan Stanley
Managing Director 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 Stanley &
Managing Director Co. Incorporated; Director of Morgan
Stanley Asset Management Limited
James M. Allwin*......... President, Director and Managing Director of Morgan Stanley &
Managing Director Co. Incorporated; President of Morgan
Stanley Realty Inc.
Gordon S. Gray*.......... Director and Managing Managing Director of Morgan Stanley &
Director Co. Incorporated; Director of Morgan
Stanley Asset Management Limited
Dennis G. Sherva*........ Director and Managing Managing Director of Morgan Stanley &
Director Co. Incorporated
</TABLE>
- ---------------
* Business Address: 1221 Avenue of the Americas, New York, New York 10020
The Pakistan Adviser. The Fund also employs International Asset Management
Company Limited as its sub-adviser in Pakistan.
The Pakistan Adviser, a corporation formed on June 17, 1992 under the laws
of Pakistan, has acted as the Fund's investment adviser with respect to the
Fund's investments in Pakistan since the Fund commenced its investment
operations. The stockholders of the Pakistan Adviser are the Manager, National
Development Finance Corporation, Crescent Business Management (Pvt.) Ltd., Asian
Development Bank and Crescent Investment Bank Limited. National Development
Finance Corporation is wholly owned by the Government of Pakistan. Crescent
Business Management (Pvt.) Ltd. is a wholly owned subsidiary of Shakarganj Mills
Ltd. Asian Development Bank is owned by the countries which have contributed
capital to it, including Japan, the United States, the Peoples Republic of
China, India, Indonesia, Canada, the Republic of Korea and Australia. The
Pakistan Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended. The Pakistan Adviser is also registered with
the Pakistani
11
<PAGE> 14
Corporate Law Authority as an investment adviser under the Pakistan Investment
Companies and Investment Advisers Rules, 1971. At December 31, 1996, the
Pakistan Adviser was investment adviser to only one U.S. registered investment
company, the Fund.
The Manager owns approximately 37% of the outstanding shares of the
Pakistan Adviser and is the Pakistan Adviser's largest shareholder. The address
of the Pakistan Adviser is Nacon House, Fifth Floor, Maulana Deen Mohammad Wafai
Road, Karachi, Pakistan.
Certain information regarding the directors and principal executive
officers of the Pakistan Adviser is set forth below.
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION AND
NAME AND ADDRESS PAKISTAN ADVISER OTHER INFORMATION
- ------------------------------------- ----------------- ---------------------------------------
<S> <C> <C>
Altaf M. Saleem...................... Chairman Chief Executive of Shakarganj Mills
c/o Shakarganj Mill Limited Limited
Management House
Toba Road
Jhang, Pakistan
Marianne L. Hay...................... Chief Executive Managing Director of Morgan Stanley
Morgan Stanley Asset Management Inc. Officer Asset Management Inc., and Principal of
1221 Avenue of the Americas Morgan Stanley & Co. Incorporated
New York, New York 10020
Mehmood Ahmed........................ Director Senior Vice President of Crescent
c/o Crescent Investment Bank Ltd. Investment Bank Limited
45 Shahrah-i-Quaid-e-Azam
Lahore, Pakistan
Nessar Ahmed......................... Director President of Crescent Investment Bank
c/o Crescent Investment Bank Ltd. Limited
Sidco Avenue Centre
Karachi, Pakistan
Shahid Hassan........................ Director Executive Vice President of National
c/o National Development Finance Development Finance Corporation,
Corporation Pakistan
Finance and Trade Centre
Shahrah-i-Faisal
Karachi, Pakistan
G.M.Z. Kahn.......................... Director Senior Investment Officer of Asian
House No.6 Development Bank PRM, Pakistan Senior
Street No.90, G-6/3 Control Officer of Asian Development
Islamabad, Pakistan Bank, ADB, Philippines
Warren J. Olsen...................... Director Principal of Morgan Stanley Asset
Morgan Stanley Asset Management Inc. Management Inc. and Morgan Stanley &
1221 Avenue of the Americas Co., Incorporated
New York, New York 10020
</TABLE>
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;
12
<PAGE> 15
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 of 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 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, and the Pakistan Adviser will be an indirect
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
13
<PAGE> 16
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 the Pakistan Adviser or in
the manner in which the Manager and the Pakistan Adviser render services to the
Fund. Nor does the Manager anticipate that the Merger or any ancillary
transactions will have any adverse effect on the ability of the Manager or the
Pakistan Adviser to fulfill their respective obligations under the New Advisory
Agreements or to operate their businesses 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 management and
advisory agreement between the Fund and the Manager (the "New Management
Agreement") and a new investment advisory agreement between the Fund, the
Manager and the Pakistan Adviser (the "New Sub-Advisory Agreement"). The form of
each of the New Advisory Agreements is identical to the current form of each of
those agreements, except for the dates of execution, effectiveness and
termination. 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 each
of 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 Advisory Agreements, each
dated as of December 16, 1993, were last approved by stockholders of the Fund at
a meeting held on June 6, 1994.
The Current Management Agreement, dated as of December 16, 1993 (the
"Current Management Agreement"), provides that the Manager will supply
investment research and portfolio management, including the selection of
securities for the Fund to purchase, hold or sell and the selection of brokers
through whom the Fund's portfolio transactions are executed. 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 Current Management Agreement provides that the Manager shall not be
liable for any error of judgment or of law, or for any loss suffered by the Fund
in connection with the matters to which the Current Management Agreement relates
except a loss resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties.
Under the Current Management Agreement the Fund pays the Manager as
compensation for the services rendered an annual fee equal to 1.00% of the
Fund's average weekly net assets.
14
<PAGE> 17
The Manager's activities are subject to the review and supervision of the
Board to which the Manager renders periodic reports with respect to the Fund's
investment activities. The Current Management Agreement may be terminated by
either party, 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 its assignment.
The net assets of the Fund as of February 28, 1997, as well as other U.S.
registered investment companies advised by the Manager, and 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 is set forth at Annex B hereto.
Under the Current Management Agreement, the Manager is permitted to provide
investment advisory services to other clients, including clients who may invest
in securities in which the Fund may invest.
Pursuant to the Current Management Agreement, the Fund utilizes the
services of the Pakistan Adviser under a Sub-Advisory Agreement, dated as of
December 16, 1993 (the "Current Sub-Advisory Agreement").
The Current Sub-Advisory Agreement provides that, under the supervision of
the Fund's Board of Directors and MSAM, the Pakistan Adviser will provide to the
Fund a variety of services, including furnishing the Fund and MSAM with factual
information, research reports and investment recommendations regarding
investments in Pakistan, including reports (written and oral), analyses,
statistical information and advice concerning market trends, specific industries
and securities to be purchased or sold by the Fund, assisting the Fund in
identifying regulatory and other governmental requirements applicable to the
Fund in connection with the Fund's investment activities in Pakistan, assisting
the Fund in monitoring the execution of transactions and the settlement and
clearance of the Fund's securities transactions, and providing the Fund and MSAM
with information regarding Pakistani corporate actions, repatriation and
currency restrictions and such other matters as may be requested by the Fund or
MSAM.
Under the Current Sub-Advisory Agreement, the Fund pays the Pakistan
Adviser a fee, computed weekly and payable monthly in Pakastani Rupees, at an
annual rate of 0.30% of the Fund's average weekly net assets. The Current
Sub-Advisory Agreement contains provisions regarding limitations of liability,
indemnification and termination identical to those contained in the Current
Management Agreement described above.
Currently, the Fund is the only U.S. registered investment company to which
the Pakistan Adviser provide advisory services. For the fiscal year ended
December 31, 1996, the Pakistan Adviser received $222,000 in advisory fees from
the Fund.
THE NEW ADVISORY AGREEMENTS. The Board approved each of the New Advisory
Agreements on March 13, 1997, the forms of which are attached as Annex A. The
form of each of the proposed New Advisory Agreements is identical to each of the
current forms of those agreements, except for the dates of execution,
effectiveness and termination.
The investment advisory fees as a percentage of net assets payable by the
Fund to the Manager and the Pakistan Adviser will be the same under the New
Advisory Agreements as under their respective Current Advisory Agreements. If
the investment advisory fees under the New
15
<PAGE> 18
Advisory Agreements had been in effect for the Fund's most recently completed
fiscal year, advisory fees paid to the Manager and the Pakistan Adviser by the
Fund would have been identical to those paid under their respective 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 each
of the New Advisory Agreements for the Fund and recommended each of the
Agreements for approval by the stockholders of the Fund. Each of 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. Each of 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 terms of each of the Fund's Current Advisory Agreements and the
corresponding New Advisory Agreements, including their terms relating to the
services to be provided thereunder by the Manager and the Pakistan Adviser and
the fees and expenses payable by the Fund, are identical, except for the dates
of execution, effectiveness and termination. The Board also considered other
possible benefits to the Manager and the Pakistan Adviser 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 and the Pakistan Adviser to provide advisory services to the Fund.
The Board also considered the skills and capabilities of the Manager and the
Pakistan Adviser. In this regard, the Board was informed of the resources of
Morgan Stanley, Dean Witter, Discover & Co. to be made available to the Manager
and the Pakistan Adviser.
The Board also weighed the effect on the Fund of the Manager and the
Pakistan Adviser 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 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 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
16
<PAGE> 19
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 one or both of
the New Advisory Agreements, the current Advisory Agreement or Agreements not
approved 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 an agreement or agreements in lieu of the
New Advisory Agreement or Agreements not approved. In the event the Merger is
not consummated, the Manager would continue to serve as investment manager of
the Fund, and the Pakistan Adviser would continue to serve as sub-adviser of the
Fund, each pursuant to the terms of the applicable Current Advisory Agreement.
STOCKHOLDER APPROVAL
To become effective, each of 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. Each of 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 each of 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 ADVISORY AGREEMENTS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Fund's management, the following persons owned
beneficially more than 5% of the Fund's outstanding shares at March 24, 1997:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------- --------------------------------- ----------------
<S> <C> <C>
Morgan Stanley Group Inc. ....... 29,571 shares, with shared voting 5.0%
1585 Broadway power and shared dispositive
New York, New York 10036 power; 555,539 shares, with no
voting power and shared
dispositive power(1)
Hermes Investment Management 6.24%
Limited*....................... 742,600 shares with sole voting
Standon House and dispositive power(2)
21 Massell Street
London, E1 8 AA,
United Kingdom
</TABLE>
- ---------------
* Hermes Investment Management Limited is a wholly owned subsidiary of Hermes
Pensions Management Limited, and therefore, Hermes Pensions Management
Limited is deemed to beneficially own the shares reported above.
(1) Based on a Schedule 13G filed with the Commission on February 7, 1997.
(2) Based on a Schedule 13D filed with the Commission on June 20, 1996.
17
<PAGE> 20
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
December 3, 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 26, 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
<PAGE> 21
ANNEX A
INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
AGREEMENT, dated as of March 13, 1997, between THE PAKISTAN INVESTMENT
FUND, INC., a Maryland corporation (the "Fund"), and MORGAN STANLEY ASSET
MANAGEMENT INC., a Delaware corporation (the "Investment Manager").
WHEREAS, the Fund is a closed-end, non-diversified management investment
company registered under the U.S. Investment Company Act of 1940, as amended
(the "1940 Act"), shares of common stock of which are registered under the
Securities Act of 1933, as amended; and
WHEREAS, the Fund's investment objective is long-term capital appreciation,
which it seeks to achieve by investing primarily in equity securities of
Pakistani issuers (as defined in the Prospectus dated December 16, 1993 (the
"Prospectus") contained in the Fund's Registration Statement on Form N-2 (File
Nos. 33-47270 and 811-6636) (the "Registration Statement")); and
WHEREAS, the Fund desires to retain the Investment Manager to render
investment management services with respect to its assets and the Investment
Manager is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants hereafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Appointment of Investment Manager.
(a) The Fund hereby employs the Investment Manager for the period and on
the terms and conditions set forth herein, subject at all times to the
supervision of the Board of Directors of the Fund, to:
(i) Make all investment decisions for the assets of the Fund and
manage the investment and reinvestment of those assets in accordance with
the investment objective and policies of the Fund, as set forth in the
Fund's Prospectus, and subject always to the restrictions of the Fund's
Articles of Incorporation and By-Laws, as amended or restated from time to
time, the provisions of the 1940 Act and the Fund's investment objective
and policies and investment restrictions, as the same are set forth in the
Fund's Prospectus. Should the Board of Directors of the Fund at any time
make any definite determination as to investment policy and notify the
Investment Manager thereof, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Manager shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies of the Fund and to place all
orders for the purchase or sale of portfolio securities for the Fund with
brokers or dealers selected by it and, in connection therewith, the
Investment Manager is authorized as agent of the Fund to give instructions
to the custodians from time to time of the Fund's assets as to deliveries
of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of
such orders, the Investment Manager is directed at all times to seek to
obtain for the Fund the most favorable net results
1
<PAGE> 22
as determined by the Board of Directors of the Fund. Subject to this
requirement and the provisions of the 1940 Act, the U.S. Securities
Exchange Act of 1934, as amended, and any other applicable provisions of
law, nothing shall prohibit the Investment Manager from selecting brokers
or dealers with which it or the Fund is affiliated or which provide the
Investment Manager with investment research services as described in the
Fund's Prospectus;
(ii) Prepare and make available to the Fund research and statistical
data in connection therewith; and
(iii) Maintain or cause to be maintained for the Fund all books and
records required under the 1940 Act, to the extent that such books and
records are not maintained or furnished by administrators, custodians or
other agents of the Fund.
(b) The Investment Manager accepts such employment and agrees during the
term of this Agreement to render such services, to permit any of its directors,
officers or employees to serve without compensation as directors or officers of
the Fund if elected to such positions, and to assume the obligations set forth
herein for the compensation herein provided. The Investment Manager shall for
all purposes herein provided be deemed to be an independent contractor and,
unless otherwise expressly provided or authorized, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. Compensation. For the services and facilities described in Section 1,
the Fund agrees to pay in United States dollars to the Investment Manager, a
fee, computed weekly and payable monthly, at an annual rate of 1.00% of the
Fund's average weekly net assets. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration on the
basis of the number of days that this Agreement is in effect during such month
and year, respectively.
3. Investment in Fund Stock. The Investment 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 other than for investment.
4. Non-Exclusivity of Services. Nothing herein shall be construed as
prohibiting the Investment Manager from providing investment advisory services
to, or entering into investment advisory agreements with, any other clients
(including other registered investment companies), including clients which may
invest in Pakistani equity securities, so long as the Investment Manager's
services to the Fund are not impaired thereby.
5. Standard of Care; Indemnification.
(a) The Investment Manager may rely on information reasonably believed by
it to be accurate and reliable. Neither the Investment Manager nor its officers,
directors, employees, agents or controlling persons (as defined in the 1940 Act)
shall be subject to any liability 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 willful misfeasance, bad faith or gross negligence on the part of
the Investment Manager in the performance of its duties or by reason of reckless
disregard on the part of the Investment Manager of its obligations and duties
under this Agreement. Any person, even though also employed by the Investment
Manager, who may be or become an employee of the Fund shall be deemed, when
2
<PAGE> 23
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 Investment
Manager.
(b) The Fund agrees to indemnify and hold harmless the Investment Manager,
its officers, directors, employees, agents, shareholders, controlling persons or
other affiliates (each an "Indemnified Party"), for any losses, costs and
expenses incurred or suffered by any Indemnified Party arising from any action,
proceeding or claims which may be brought against such Indemnified Party in
connection with the performance or non-performance in good faith of its
functions under this Agreement, except losses, costs and expenses resulting from
willful misfeasance, bad faith or gross negligence in the performance of such
Indemnified Party's duties or from reckless disregard on the part of such
Indemnified Party of such Indemnified Party's obligations and duties under this
Agreement.
6. Allocation of Charges and Expenses.
(a) The Investment Manager shall assume and pay for maintaining its staff
and personnel, and shall, at its own expense, provide the equipment, office
space and facilities necessary to perform its obligations hereunder. The
Investment Manager shall pay the salaries and expenses of such of the Fund's
officers and employees and any fees and expenses of such of the Fund's directors
who are directors, officers or employees of the Investment Manager or any of its
affiliates, provided, however, that the Fund, and not the Investment Manager,
shall bear travel expenses or an appropriate fraction thereof of directors and
officers of the Fund who are directors, officers or employees of the Investment
Manager to the extent that such expenses relate to attendance at meetings of the
Board of Directors of the Fund or any committees thereof.
(b) In addition to the fee of the Investment Manager, the Fund shall assume
and pay the following expenses: organization expenses (but not the overhead or
employee costs of the Investment Manager); legal fees and expenses of counsel to
the Fund; 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
custodians, sub-custodians, investment advisers, transfer agents and registrars;
fees and expenses with respect to administration, except as may be herein
expressly provided otherwise; 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; 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 stockholders; expenses of the
dividend reinvestment and cash purchase plan; costs of stationery; any
litigation expenses; and costs of stockholders' and other meetings.
7. Potential Conflicts of Interest.
(a) Subject to applicable statutes and regulations, it is understood that
directors, officers or agents of the Fund are or may be interested in the
Investment Manager or its affiliates as directors, officers, employees, agents,
shareholders or otherwise, and that the directors, officers, employees, agents
or shareholders of the Investment Manager or its affiliates may be interested in
the Fund as directors, officers, agents or otherwise.
3
<PAGE> 24
(b) If the Investment Manager considers the purchase or sale of securities
for the Fund and other advisory clients of the Investment Manager at or about
the same time, transactions in such securities will be made for the Fund and
such other clients in a manner equitable to the Fund and such other clients or,
insofar as feasible, in accordance with guidelines which may be adopted by the
Board of Directors of the Fund.
8. Duration and Termination.
(a) This Agreement shall be effective for a period of two years commencing
on the later of (i) the date that the requisite stockholder approval as required
under Section 15 of the 1940 Act has been obtained or (ii) the date that the
Agreement and Plan of Merger, dated February 4, 1997, between Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. is consummated. Thereafter, this
Agreement will continue in effect from year to year, provided that such
continuance is specifically approved at least annually by (A) a vote of a
majority of the members of the Fund's Board of Directors who are neither parties
to this Agreement nor interested persons of the Fund or of the Investment
Manager or of any entity regularly furnishing investment advisory services with
respect to the Fund pursuant to an agreement with the Investment Manager, cast
in person at a meeting called for the purpose of voting on such approval, and
(B) a vote of a majority of either the Fund's Board of Directors or the Fund's
outstanding voting securities.
(b) This Agreement may nevertheless be terminated at any time without
payment of penalty by the Fund or by the Investment Manager upon 60 days'
written notice. This Agreement shall automatically be terminated in the event of
its assignment, provided, however, that a transaction which does not, in
accordance with the 1940 Act, result in a change of actual control or management
of the Investment Manager's business shall not be deemed to be an assignment for
the purposes of this Agreement.
(c) Termination of this Agreement shall not (i) affect the right of the
Investment Manager to receive payments of any unpaid balance of the compensation
described in Section 2 earned prior to such termination, or (ii) extinguish the
Investment Manager's right of indemnification under Section 5.
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.
9. Amendment. This Agreement 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 Investment Manager, cast in person at a meeting
called for the purpose of voting on such approval.
10. Governing Law. 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.
11. Notices. Any communication hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by mailing such
communication, air mail postage prepaid, on the date on which such telex or
facsimile is sent, to the address set forth below). Any communication or
document to be made or delivered by one person to another pursuant to this
4
<PAGE> 25
Agreement shall be made or delivered to that other person at the following
relevant address (unless that other person has by fifteen (15) days' notice to
the other specified another address):
If to the Investment Manager:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: General Counsel
Telephone No.: (212) 762-7188
Facsimile No.: (212) 762-7377
If to the Fund:
The Pakistan Investment Fund, Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: President
Telephone No.: (212) 296-7100
Facsimile No.: (212) 762-7326
Communications or documents made or delivered by personal delivery shall be
deemed to have been received on the day of such delivery. Communications or
documents made or delivered by telex or facsimile shall be deemed to have been
received, if by telex, when acknowledged by the addressee's correct answer back
code and, if by facsimile, upon production of a transmission report by the
machine from which the facsimile was sent which indicates that the facsimile was
sent in its entirety to the facsimile number of the recipient; provided that a
hard copy of the communication or document so made or delivered by telex or
facsimile was posted the same day as the communication or document was made or
delivered by electronic means.
12. Jurisdiction. Each party hereto irrevocably agrees that any suit,
action or proceeding against either of the Investment Manager or the Fund
arising out of or relating to this Agreement shall be subject exclusively to the
jurisdiction of the United States District Court for the Southern District of
New York or the Supreme Court of the State of New York, New York County, and
each party hereto irrevocably submits to the jurisdiction of each such court in
connection with any such suit, action or proceeding. Each party hereto waives
any objection to the laying of venue of any such suit, action or proceeding in
either such court, and waives any claim that such suit, action or proceeding has
been brought in an inconvenient forum. Each party hereto irrevocably consents to
service of process in connection with any such suit, action or proceeding by
mailing a copy thereof in English by registered or certified mail, postage
prepaid, to their respective addresses as set forth in this Agreement.
13. Representation and Warranty of the Investment Manager. The Investment
Manager represents and warrants that it is duly registered as an investment
adviser under the U.S. Investment Advisers Act of 1940, as amended, and that it
will use its reasonable efforts to maintain effective its registration during
the term of this Agreement.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5
<PAGE> 26
15. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties have executed this Investment Advisory and
Management Agreement by their officers thereunto duly authorized as of the day
and year first written above.
THE PAKISTAN INVESTMENT FUND, INC.
By: /s/ WARREN J. OLSEN
-------------------------------------------
Name: Warren J. Olsen
Title: President
MORGAN STANLEY ASSET MANAGEMENT INC.
By: /s/ WARREN J. OLSEN
-------------------------------------------
Name: Warren J. Olsen
Title: Principal
6
<PAGE> 27
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of March 13, 1997, by and among THE PAKISTAN INVESTMENT
FUND, INC., a Maryland corporation (the "Fund"), MORGAN STANLEY ASSET MANAGEMENT
INC., a Delaware corporation (the "Manager"), and INTERNATIONAL ASSET MANAGEMENT
COMPANY LIMITED, a corporation organized under the laws of Pakistan (the
"Adviser").
WHEREAS, the Fund is a closed-end, non-diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), shares of
common stock of which are registered under the Securities Act of 1933, as
amended; and
WHEREAS, the Fund's investment objective is long-term capital appreciation,
which it seeks to achieve by investing primarily in equity securities of
Pakistani issuers (as defined in the Prospectus dated December 16, 1993 (the
"Prospectus") contained in the Fund's Registration Statement on Form N-2 (File
Nos. 33-47270 and 811-6636) (the "Registration Statement")); and
WHEREAS, the Fund has retained the Manager, to provide certain investment
advisory and management services to the Fund; and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory and research services to the Manager with respect to the Fund, and the
Adviser is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and among the parties hereto as follows:
1. Appointment of Adviser:
(a) The Fund hereby employs the Adviser for the period and on the terms and
conditions set forth herein, subject at all times to the supervision of the
Board of Directors of the Fund, to:
(i) Furnish the Fund and the Manager with factual information,
research reports and investment recommendations regarding investments in
Pakistan, including reports (written and oral), analyses, statistical
information and advice concerning market trends, specific industries,
companies and securities to be purchased or sold by the Fund;
(ii) Assist the Fund in identifying regulatory and other governmental
requirements applicable to the Fund in connection with the Fund's
investment activities in Pakistan;
(iii) Assist the Fund in monitoring the execution of transactions and
the settlement and clearance of the Fund's securities transactions;
(iv) Provide the Fund and the Manager with information regarding
Pakistani corporate actions, repatriation and currency restrictions and
such other matters as may be requested by the Fund or the Manager from time
to time; and
(v) Arrange, if desired by the Fund, for officers and employees of the
Adviser to serve, without compensation from the Fund, as directors,
officers or agents of the Fund if duly
elected or appointed to such positions and subject to their individual
consent and to any limitations imposed by law.
1
<PAGE> 28
(b) The Adviser accepts such employment and agrees during the term of this
Agreement to render such services and to assume the obligations herein set forth
for the compensation herein provided. The Adviser shall for all purposes herein
provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
2. Compensation. For the services described in Section 1 hereof, the Fund
agrees to pay in Pakistani Rupees to the Adviser, a fee, computed weekly and
payable monthly, at an annual rate of .30% of the Fund's average weekly net
assets.
3. Investment in Fund Stock. The Adviser agrees that it will not make a
short sale of any capital stock of the Fund or purchase any capital stock of the
Fund other than for investment.
4. Non-Exclusivity of Services. Nothing herein shall be construed as
prohibiting the Adviser 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
Pakistani equity securities, so long as the Advisers's services to the Fund and
the Manager are not impaired thereby.
5. Standard of Care; Indemnification.
(a) The Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Adviser nor its officers, directors,
employees, agents or controlling persons (as defined in the 1940 Act) shall be
subject to any liability 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
willful misfeasance, bad faith or gross negligence on the part of the Adviser in
the performance of its duties or by reason of reckless disregard on the part of
the Adviser of its obligations and duties under this Agreement. Any person, even
though also employed by the Adviser, who may be or become an employee of 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 Adviser.
(b) The Fund agrees to indemnify and hold harmless the Adviser, its
officers, directors, employees, agents, shareholders, controlling persons or
other affiliates (each an "Indemnified Party"), for any losses, costs and
expenses incurred or suffered by any Indemnified Party arising from any action,
proceeding or claims which may be brought against such Indemnified Party in
connection with the performance or non-performance in good faith of its
functions under this Agreement, except losses, costs and expenses resulting from
willful misfeasance, bad faith or gross negligence in the performance of such
Indemnified Party's duties or from reckless disregard on the part of such
Indemnified Party of such Indemnified Party's obligations and duties under this
Agreement.
6. Allocation of Charges and Expenses.
(a) The Adviser shall assume and pay for maintaining its staff and
personnel, and shall, at its own expense, provide the equipment, office space
and facilities necessary to perform its obligations hereunder. The Adviser shall
pay the salaries and expenses of such of the Fund's officers and employees and
any fees and expenses of such of the Fund's directors who are directors,
officers or employees of the Adviser or any of its affiliates, provided,
however, that the Fund, and not the Adviser, shall bear travel expenses or an
appropriate fraction thereof of directors and officers of the
2
<PAGE> 29
Fund who are directors, officers or employees of the Adviser to the extent such
expenses relate to attendance at meetings of the Fund's Board of Directors or
any committee thereof.
(b) In addition to the fee of the Adviser, the Fund shall assume and pay
the following expenses: organization expenses (but not the overhead or employee
costs of the Adviser); legal fees and expenses of counsel to the Fund; 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 custodians,
subcustodians, investment manager and advisers, transfer agents and registrars;
fees and expenses with respect to administration; 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;
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 stockholders; expenses of the
dividend reinvestment and cash purchase plan; costs of stationery; any
litigation expenses; and costs stockholders' and other meetings.
7. Potential Conflicts of Interest. Subject to applicable statutes and
regulations, it is understood that directors, officers or agents of the Fund are
or may be interested in the Adviser as directors, officers, employees, agents,
shareholders or otherwise, and that the directors, officers, employees, agents
or shareholders of the Adviser may be interested in the Fund as a director,
officer, agent or otherwise.
8. Duration and Termination.
(a) This Agreement shall be effective for a period of two years commencing
on the later of (i) the date that the requisite stockholder approval as required
under Section 15 of the 1940 Act has been obtained or (ii) the date that the
Agreement and Plan of Merger, dated February 4, 1997, between Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. is consummated. Thereafter, this
Agreement will continue in effect from year to year, provided that such
continuance is specifically approved at least annually by (A) a vote of a
majority of the members of the Fund's Board of Directors who are neither parties
to this Agreement nor interested persons of the Fund or of the Investment
Manager or of any entity regularly furnishing investment advisory services with
respect to the Fund pursuant to an agreement with the Investment Manager, cast
in person at a meeting called for the purpose of voting on such approval, and
(B) a vote of a majority of either the Fund's Board of Directors or the Fund's
outstanding voting securities.
(b) This Agreement may nevertheless be terminated at any time without
payment of penalty by the Fund or by the Adviser upon 60 days' written notice.
This Agreement shall automatically be terminated in the event of its assignment,
provided, however, that a transaction which does not, in accordance with the
1940 Act, result in a change of actual control or management of the Adviser's
business shall not be deemed to be an assignment for the purposes of this
Agreement.
(c) Termination of this Agreement shall not (i) affect the right of the
Adviser to receive payments of any unpaid balance of the compensation described
in Section 2 earned prior to such termination, or (ii) extinguish the Adviser's
right of indemnification under Section 5.
3
<PAGE> 30
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.
9. Amendment. This Agreement 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 Adviser, cast in person at a meeting called for
the purpose of voting on such approval.
10. Governing Law. 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.
11. Notices. Any communication hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by mailing such
communication, air mail postage prepaid, on the day on which such telex or
facsimile is sent to the addresses set forth below). Any communication or
document to be made or delivered by one person to another pursuant to this
Agreement shall be made or delivered to that person at the following relevant
address (unless that other person has by fifteen (15) days' notice to the other
specified another address):
If to the Fund:
The Pakistan Investment Fund, Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: President
Telephone No.: (212) 762-7188
Facsimile No.: (212) 762-7377
If to the Manager:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: General Counsel
Telephone No.: (212) 296-7100
Facsimile No. (212) 762-7326
If to the Adviser:
International Asset Management
Company Limited
Nacon House
5th Floor
Maulana Deen Mohammad Wafi Road
Karachi, Pakistan
Attention: General Counsel
Telephone No.: 92-21-568-7271
Facsimile No.: 92-21-568-9625
4
<PAGE> 31
Communications or documents made or delivered by personal delivery shall be
deemed to have been received on the day of such delivery. Communications or
documents made or delivered by telex or facsimile shall be deemed to have been
received, if by telex, when acknowledged by the addressee's correct answer back
code and, if by facsimile, upon production of a transmission report by the
machine from which the facsimile was sent which indicates that the facsimile was
sent in its entirety to the facsimile number of the recipient; provided that a
hard copy of the communication or document so made or delivered by telex or
facsimile was posted the same day as the communication or document was made or
delivered by electronic means.
12. Jurisdiction. Each party hereto irrevocably agrees that any suit,
action or proceeding against either of the Adviser or the Fund arising out of or
relating to this Agreement shall be subject exclusively to the jurisdiction of
the United States District Court for the Southern District of New York or the
Supreme Court of the State of New York, New York County, and each party hereto
irrevocably submits to the jurisdiction of each such court in connection with
any such suit, action or proceeding. Each party hereto waives any objection to
the laying of venue of any such suit, action or proceeding in either such court,
and waives any claim that such suit, action or proceeding has been brought in an
inconvenient forum. Each party hereto irrevocably consents to service of process
in connection with any such suit, action or proceeding by mailing a copy thereof
in English by registered or certified mail, postage prepaid, to their respective
addresses as set forth in this Agreement.
13. Representation and Warranty of the Adviser. The Adviser represents
and warrants that it is duly registered and authorized as an investment adviser
under the U.S. Investment Advisers Act of 1940, as amended, and that it will use
all reasonable efforts to maintain effective its registration and authorization
until the termination of this Agreement.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
5
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Investment Advisory
Agreement by their officers thereunto duly authorized as of the day and year
first above written.
THE PAKISTAN INVESTMENT FUND, INC.
By: /s/ WARREN J. OLSEN
--------------------------------------------
Name: Warren J. Olsen
Title: President
MORGAN STANLEY ASSET MANAGEMENT INC.
By: /s/ WARREN J. OLSEN
--------------------------------------------
Name: Warren J. Olsen
Title: Principal
INTERNATIONAL ASSET MANAGEMENT
COMPANY LIMITED
By: /s/ MARIANNE L. HAY
--------------------------------------------
Name: Marianne L. Hay
Title: Chief Executive Officer
6
<PAGE> 33
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.
<TABLE>
<CAPTION>
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)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
B-1
<PAGE> 34
<TABLE>
<CAPTION>
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)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
<S> <C> <C> <C> <C>
- -- 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.
</TABLE>
B-2
<PAGE> 35
<TABLE>
<CAPTION>
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)
- --------------------------------------- -------------- ----------- -------------- ---------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
- ---------------
* 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
<PAGE> 36
PROXY
THE PAKISTAN INVESTMENT 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 26, 1997.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
<PAGE> 37
[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 Investment Advisory Agreement between the Fund, Morgan
Stanley Asset Management Inc. and International Asset Management Company
Limited.
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 AND PROPOSAL NO. 3.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT
TENANTS, EACH JOINT TENANT SHOULD SIGN.
SIGNATURE(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.
