497 1 file001.txt DEFINITIVE MATERIALS SUPPLEMENT DATED AUGUST 21, 2003 TO THE STATEMENT OF ADDITIONAL INFORMATION OF Active Assets California Tax-Free Trust, dated August 28, 2002 Active Assets Government Securities Trust, dated August 28, 2002 Active Assets Institutional Government Securities Trust, dated August 28, 2002 Active Assets Institutional Money Trust, dated August 28, 2002 Active Assets Money Trust, dated August 28, 2002 Active Assets Tax-Free Trust, dated August 28, 2002 Morgan Stanley 21st Century Trend Fund, dated September 30, 2002 Morgan Stanley Aggressive Equity Fund, dated September 30, 2002 Morgan Stanley All Star Growth Fund, dated September 30, 2002 Morgan Stanley Allocator Fund, dated December 31, 2002 Morgan Stanley American Opportunities Fund, dated February 28, 2002 Morgan Stanley Balanced Growth Fund, dated March 28, 2003 Morgan Stanley Balanced Income Fund, dated March 28, 2003 Morgan Stanley Biotechnology Fund, dated July 12, 2003 Morgan Stanley California Tax-Free Daily Income Trust, dated February 26, 2003 Morgan Stanley California Tax-Free Income Fund, dated February 28, 2003 Morgan Stanley Capital Opportunities Trust, dated January 30, 2003 Morgan Stanley Convertible Securities Trust, dated November 30, 2002 Morgan Stanley Developing Growth Securities Trust, dated November 29, 2002 Morgan Stanley Dividend Growth Securities Inc., dated April 29, 2003 Morgan Stanley Equity Fund, dated July 30, 2003 Morgan Stanley European Growth Fund Inc., dated December 30, 2002 Morgan Stanley Federal Securities Trust, dated February 5, 2003 Morgan Stanley Financial Services Trust, dated July 30, 2003 Moran Stanley Flexible Income Trust, dated April 22, 2003 Morgan Stanley Fund of Funds - Domestic Portfolio, dated November 29, 2002 Morgan Stanley Fund of Funds - International Portfolio, dated November 29, 2002 Morgan Stanley Fundamental Value Fund, dated September 6, 2002 Morgan Stanley Global Dividend Growth Securities, dated May 30, 2003 Morgan Stanley Global Utilities Fund, dated April 30, 2003 Morgan Stanley Growth Fund, dated May 30, 2003 Morgan Stanley Hawaii Municipal Trust, dated January 30, 2003 Morgan Stanley Health Sciences Trust, dated September 30, 2002 Morgan Stanley High Yield Securities Inc., dated September 30, 2002 Morgan Stanley Income Builder Fund, dated November 29, 2002 Morgan Stanley Information Fund, dated May 30, 2003 Morgan Stanley International Fund, dated December 30, 2002 Morgan Stanley International Value Equity Fund, dated October 30, 2002 Morgan Stanley KLD Social Index Fund, dated January 30, 2003 Morgan Stanley Latin American Growth Fund, dated March 28, 2003 Morgan Stanley Limited Duration Fund, dated June 30, 2003 Morgan Stanley Limited Duration U.S. Treasury Trust, dated July 30, 2003 Morgan Stanley Limited Term Municipal Trust, dated May 30, 2003 Morgan Stanley Liquid Asset Fund Inc., dated October 29, 2002 Morgan Stanley Market Leader Trust, dated October 30, 2002 Morgan Stanley Mid-Cap Value Fund, dated October 30, 2002 Morgan Stanley Multi-State Municipal Series Trust, dated January 31, 2003 Morgan Stanley Nasdaq-100 Index Fund, dated January 30, 2003 Morgan Stanley Natural Resource Development Securities Inc., dated April 29, 2003 Morgan Stanley New Discoveries Fund, dated October 31, 2002 Morgan Stanley New York Municipal Money Market Trust, dated February 26, 2003 Morgan Stanley New York Tax-Free Income Fund, dated February 28, 2003 Morgan Stanley Next Generation Trust, dated March 24, 2003 Morgan Stanley Pacific Growth Fund Inc., dated December 30, 2002 Morgan Stanley Prime Income Trust, dated January 30, 2003 Morgan Stanley Quality Income Trust, dated April 29, 2003 Morgan Stanley Real Estate Fund, dated January 30, 2003 Morgan Stanley S&P 500 Index Fund, dated October 30, 2002 Morgan Stanley Small-Mid Special Value Fund, dated June 30, 2003 Morgan Stanley Special Growth Fund, dated April 30, 2003 Morgan Stanley Special Value Fund, dated September 30, 2002 Morgan Stanley Strategist Fund, dated September 30, 2002 Morgan Stanley Tax-Exempt Securities Trust, dated February 28, 2003 Morgan Stanley Tax-Free Daily Income Trust, dated February 28, 2003 Morgan Stanley Tax-Managed Growth Fund, dated October 30, 2002 Morgan Stanley Technology Fund, dated October 30, 2002 Morgan Stanley Total Market Index Fund, dated September 30, 2002 Morgan Stanley Total Return Trust, dated October 1, 2002 Morgan Stanley U.S. Government Money Market Trust, dated March 28, 2003 Morgan Stanley U.S. Government Securities Trust, dated April 30, 2003 Morgan Stanley Utilities Fund, dated February 28, 2003 Morgan Stanley Value Fund, dated November 29, 2002 Morgan Stanley Value-Added Market Series - Equity Portfolio, dated August 30, 2002 Effective July 31, 2003, the Board of Directors/Trustees (for ease of reference referred to herein as "Directors") of the Fund approved Joseph J. Kearns and Fergus Reid to serve as Independent Directors on the Board of the Fund, thereby consolidating the existing Board of the Fund with the Board of Directors/Trustees of the open-end and closed-end registered investment companies managed by Morgan Stanley Investment Advisors Inc., Morgan Stanley Investment Management Inc. and Morgan Stanley Investments LP. In addition, the Board of Directors of the Fund approved modifications to Director compensation, also effective July 31, 2003. The disclosure in the sections of the Fund's Statement of Additional Information referenced below is hereby modified to reflect the following: III. MANAGEMENT OF THE FUND B. MANAGEMENT INFORMATION Section III, sub-section B entitled Management of the Fund--Management Information is hereby amended as follows: DIRECTORS AND OFFICERS. The Board of the Fund consists of ten Directors. These same individuals also serve as directors or trustees for all of the funds advised by the Investment Manager (the "Retail Funds") and certain of the funds advised by Morgan Stanley Investment Management Inc., Morgan Stanley Investments LP and Morgan Stanley AIP GP LP (the "Institutional Funds"). Seven Directors have no affiliation or business connection with the Investment Manager or any of its affiliated persons and do not own any stock or other securities issued by the Investment Manager's parent company, Morgan Stanley. These are the "non-interested" or "Independent" Directors. The other three Directors (the "Management Directors") are affiliated with the Investment Manager. The Independent Directors of the Fund, their term of office and length of time served, their principal business occupations during the past five years, the number of portfolios in the Fund Complex (defined below) overseen by each Independent Director (as of July 31, 2003) and other directorships, if any, held by the Directors, are shown below. The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Manager and any funds that have an investment advisor that is an affiliated person of the Investment Manager (including but not limited to Morgan Stanley Investment Management Inc. and Morgan Stanley Investments LP).
NUMBER OF PORTFOLIOS IN FUND PRINCIPAL COMPLEX POSITION(S) LENGTH OF OCCUPATION(S) OVERSEEN OTHER NAME, AGE AND ADDRESS HELD WITH TIME DURING PAST 5 BY DIRECTORSHIPS OF INDEPENDENT DIRECTOR REGISTRANT SERVED* YEARS** DIRECTOR HELD BY DIRECTOR ------------------------- ------------- ------------ ------------------------------ ----------- ----------------- Michael Bozic (62) Director Since Retired; Director or Trustee 216 Director of c/o Mayer, Brown, Rowe April 1994 of the Retail Funds and Weirton Steel & Maw LLP TCW/DW Term Trust 2003 Corporation. Counsel to the (since April 1994) and the Independent Directors Institutional Funds (since 1675 Broadway July 2003); formerly Vice New York, NY Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co.
--------- * This is the earliest date the Director began serving the Retail Funds. Each Director serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Director/Trustee for the Retail and Institutional Funds reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds as applicable.
NUMBER OF PORTFOLIOS IN FUND PRINCIPAL COMPLEX POSITION(S) LENGTH OF OCCUPATION(S) OVERSEEN OTHER NAME, AGE AND ADDRESS HELD WITH TIME DURING PAST 5 BY DIRECTORSHIPS OF INDEPENDENT DIRECTOR REGISTRANT SERVED* YEARS** DIRECTOR HELD BY DIRECTOR ------------------------- ------------- ----------- ----------------------------- ----------- ----------------- Edwin J. Garn (70) Director Since Director or Trustee of the 216 Director of c/o Summit Ventures LLC January Retail Funds and TCW/DW Franklin Covey 1 Utah Center 1993 Term Trust 2003 (since (time 201 S. Main Street January 1993) and the management Salt Lake City, UT Institutional Funds (since systems), BMW July 2003); member of the Bank of North Utah Regional Advisory America, Inc. Board of Pacific Corp.; (industrial loan formerly United corporation), States Senator (R- Utah) United Space (1974-1992) and Chairman, Alliance (joint Senate Banking Committee venture (1980-1986), Mayor of Salt between Lake City, Utah Lockheed (1971-1974), Astronaut, Martin and the Space Shuttle Discovery Boeing (April 12-19, 1985), and Company) and Vice Chairman, Huntsman Nuskin Asia Corporation (chemical Pacific company). (multilevel marketing); member of the board of various civic and charitable organizations.
--------- * This is the earliest date the Director began serving the Retail Funds. Each Director serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Director/Trustee for the Retail and Institutional Funds reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds as applicable.
NUMBER OF PORTFOLIOS IN FUND PRINCIPAL COMPLEX POSITION(S) LENGTH OF OCCUPATION(S) OVERSEEN OTHER NAME, AGE AND ADDRESS HELD WITH TIME DURING PAST 5 BY DIRECTORSHIPS OF INDEPENDENT DIRECTOR REGISTRANT SERVED* YEARS** DIRECTOR HELD BY DIRECTOR ---------------------------- ------------- ------------ -------------------------------- ----------- ----------------- Wayne E. Hedien (69) Director Since Retired; Director or Trustee 216 Director of The c/o Mayer, Brown, Rowe September of the Retail Funds and PMI Group Inc. & Maw LLP 1997 TCW/DW Term Trust 2003 (private Counsel to the (since September 1997) mortgage Independent Directors and the Institutional Funds insurance); 1675 Broadway (since July 2003); formerly Trustee and New York, NY associated with the Allstate Vice Chairman Companies (1966-1994), of The Field most recently as Chairman Museum of of The Allstate Corporation Natural History; (March 1993-December 1994) director of and Chairman and Chief various other Executive Officer of its business and wholly-owned subsidiary, charitable Allstate Insurance Company organizations. (July 1989-December 1994). Dr. Manuel H. Johnson (54) Director Since July Chairman of the Audit 216 Director of c/o Johnson Smick 1991 Committee and Director or NVR, Inc. International, Inc. Trustee of the Retail Funds (home 2099 Pennsylvania Avenue and TCW/DW Term Trust construction); N.W. 2003 (since July 1991) and Chairman and Suite 950 the Institutional Funds (since Trustee of the Washington, D.C. July 2003); Senior Partner, Financial Johnson Smick International, Accounting Inc., a consulting firm; Co- Foundation Chairman and a founder of (oversight the Group of Seven Council organization of (G7C), an international the Financial economic commission; Accounting formerly Vice Chairman of Standards the Board of Governors of Board); the Federal Reserve System Director of RBS and Assistant Secretary of Greenwich the U.S. Treasury. Capital Holdings (financial holding company).
--------- * This is the earliest date the Director began serving the Retail Funds. Each Director serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Director/Trustee for the Retail and Institutional Funds reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds as applicable.
NUMBER OF PORTFOLIOS IN FUND PRINCIPAL COMPLEX POSITION(S) LENGTH OF OCCUPATION(S) OVERSEEN OTHER NAME, AGE AND ADDRESS HELD WITH TIME DURING PAST 5 BY DIRECTORSHIPS OF INDEPENDENT DIRECTOR REGISTRANT SERVED* YEARS** DIRECTOR HELD BY DIRECTOR --------------------------- ------------- ------------ -------------------------------- ----------- ----------------- Joseph J. Kearns (60) Director Since July Deputy Chairman of the 217 Director of PMB754 2003 Audit Committee and Electro Rent 23852 Pacific Coast Director or Trustee of the Corporation Highway Retail Funds and TCW/DW (equipment Malibu, CA Term Trust 2003 (since leasing), The July 2003) and the Ford Family Institutional Funds (since Foundation, August 1994); previously and the UCLA Chairman of the Audit Foundation. Committee of the Institutional Funds (October 2001- July 2003); President, Kearns & Associates LLC (investment consulting); formerly CFO of the J. Paul Getty Trust. Michael E. Nugent (67) Director Since July Chairman of the Insurance 216 Director of c/o Triumph Capital, L.P. 1991 Committee and Director or various 445 Park Avenue Trustee of the Retail Funds business New York, NY and TCW/DW Term Trust organizations. 2003 (since July 1991) and the Institutional Funds (since July 2001); General Partner of Triumph Capital, L.P., a private investment partnership; formerly Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988). Fergus Reid (70) Director Since July Chairman of the Governance 217 Trustee and 85 Charles Colman Blvd. 2003 Committee and Director or Director of Pawling, NY Trustee of the Retail Funds certain and TCW/DW Term Trust investment 2003 (since July 2003) and companies in the Institutional Funds (since the JPMorgan June 1992); Chairman of Funds complex Lumelite Plastics managed by JP Corporation. Morgan Investment Management Inc.
--------- * This is the earliest date the Director began serving the Retail Funds. Each Director serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Director/Trustee for the Retail and Institutional Funds reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds as applicable. The Directors who are affiliated with the Investment Manager or affiliates of the Investment Manager (as set forth below) and executive officers of the Fund, their term of office and length of time served, their principal business occupations during the past five years, the number of portfolios in the Fund Complex overseen by each Management Director (as of July 31, 2003) and the other directorships, if any, held by the Director, are shown below.
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN OTHER BY DIRECTORSHIPS NAME, AGE AND POSITION(S) LENGTH OF PRINCIPAL MANAGE- HELD BY ADDRESS OF HELD WITH TIME OCCUPATION(S) MENT MANAGEMENT MANAGEMENT DIRECTOR REGISTRANT SERVED* DURING PAST 5 YEARS** DIRECTOR DIRECTOR ------------------------------ -------------- ------------ -------------------------------- ----------- --------------- Charles A. Fiumefreddo (70) Chairman of Since July Chairman and Director or 216 None c/o Morgan Stanley Trust the Board 1991 Trustee of the Retail Funds Harborside Financial Center, and Director and TCW/DW Term Trust Plaza Two, 2003 (since July 1991) and Jersey City, NJ the Institutional Funds (since July 2003); formerly Chief Executive Officer of the Retail Funds and the TCW/DW Term Trust 2003 (until September 2002). James F. Higgins (55) Director Since June Director or Trustee of the 216 Director of c/o Morgan Stanley Trust 2000 Retail Funds and TCW/DW AXA Financial, Harborside Financial Center, Term Trust 2003 (since Inc. and The Plaza Two, June 2000) and the Equitable Life Jersey City, NJ Institutional Funds (since Assurance July 2003); Senior Advisor Society of the of Morgan Stanley (since United States August 2000); Director of (financial the Distributor and Dean services). Witter Realty Inc.; previously President and Chief Operating Officer of the Private Client Group of Morgan Stanley (May 1999-August 2000), and President and Chief Operating Officer of Individual Securities of Morgan Stanley (February 1997-May 1999).
--------- * This is the date the Director began serving the Retail Funds. Each Director serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Director/Trustee for the Retail and Institutional Funds reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds as applicable.
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN OTHER BY DIRECTORSHIPS NAME, AGE AND POSITION(S) LENGTH OF PRINCIPAL MANAGE- HELD BY ADDRESS OF HELD WITH TIME OCCUPATION(S) MENT MANAGEMENT MANAGEMENT DIRECTOR REGISTRANT SERVED* DURING PAST 5 YEARS** DIRECTOR DIRECTOR ------------------------ ------------- ------------ ------------------------------ ----------- --------------- Philip J. Purcell (59) Director Since Director or Trustee of the 216 Director of 1585 Broadway April 1994 Retail Funds and TCW/DW American New York, NY Term Trust 2003 (since Airlines Inc. April 1994) and the and its parent Institutional Funds (since company, July 2003); Chairman of the AMR Board of Directors and Chief Corporation. Executive Officer of Morgan Stanley and Morgan Stanley DW Inc.; Director of the Distributor; Chairman of the Board of Directors and Chief Executive Officer of Novus Credit Services Inc.; Director and/or officer of various Morgan Stanley subsidiaries.
--------- * This is the earliest date the Director began serving the Retail Funds. Each Director serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Director/Trustee for the Retail and Institutional Funds reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds as applicable.
POSITION(S) NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) EXECUTIVE OFFICER REGISTRANT TIME SERVED* DURING PAST 5 YEARS** ----------------------------- ------------ ---------------- ------------------------------- Mitchell M. Merin (49) President Since May 1999 President and Chief Operating 1221 Avenue of the Americas Officer of Morgan Stanley New York, NY Investment Management Inc.; President, Director and Chief Executive Officer of the Investment Manager and Morgan Stanley Services; Chairman, Chief Executive Officer and Director of the Distributor; Chairman and Director of the Transfer Agent; Director of various Morgan Stanley subsidiaries; President of Morgan Stanley Investments LP (since February 2003); President of the Institutional Funds (since July 2003) and President of the Retail Funds and TCW/DW Term Trust 2003 (since May 1999); Trustee (since July 2003) and President (since December 2002) of the Van Kampen Closed-End Funds; Trustee (since May 1999) and President (since October 2002) of the Van Kampen Open-End Funds.
--------- * This is the earliest date the Officers began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds as applicable.
POSITION(S) NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) EXECUTIVE OFFICER REGISTRANT TIME SERVED* DURING PAST 5 YEARS** ----------------------------- ---------------- --------------------- ---------------------------------- Barry Fink (48) Vice President Since February 1997 General Counsel (since 1221 Avenue of the Americas and May 2000) and Managing New York, NY General Director (since Counsel December 2000) of Morgan Stanley Investment Management; Managing Director (since December 2000), Secretary (since February 1997) and Director (since July 1998) of the Investment Manager and Morgan Stanley Services; Assistant Secretary of Morgan Stanley DW; Chief Legal Officer of Morgan Stanley Investments LP (since July 2002); Vice President of the Institutional Funds (since July 2003); Vice President and Secretary of the Distributor; previously Secretary of the Retail Funds (February 1997-July 2003); previously Vice President and Assistant General Counsel of the Investment Manager and Morgan Stanley Services (February 1997- December 2001).
--------- * This is the earliest date the Officers began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds as applicable.
POSITION(S) NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) EXECUTIVE OFFICER REGISTRANT TIME SERVED* DURING PAST 5 YEARS** ----------------------------- ---------------- ------------------ -------------------------------- Ronald E. Robison (64) Executive Vice Since April 2003 Chief Global Operations Officer 1221 Avenue of the Americas President and and Managing Director of New York, NY Principal Morgan Stanley Investment Executive Management Inc.; Managing Officer Director of Morgan Stanley & Co. Incorporated; Managing Director of Morgan Stanley; Managing Director, Chief Administrative Officer and Director of the Investment Manager and Morgan Stanley Services; Chief Executive Officer and Director of the Transfer Agent; Executive Vice President and Principal Executive Officer of the Institutional Funds (since July 2003) and the TCW/DW Term Trust 2003 (since April 2003); previously President of the Institutional Funds (March 2001- July 2003) and Director of the Institutional Funds (March 2001-July 2003). Joseph J. McAlinden (60) Vice President Since July 1995 Managing Director and Chief 1221 Avenue of the Americas Investment Officer of the New York, NY Investment Manager, Morgan Stanley Investment Management Inc. and Morgan Stanley Investments LP; Director of the Transfer Agent, Chief Investment Officer of the Van Kampen Funds; Vice President of the Institutional Funds (since July 2003) and the Retail Funds (since July 1995).
--------- * This is the earliest date the Officers began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds as applicable.
POSITION(S) NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) EXECUTIVE OFFICER REGISTRANT TIME SERVED* DURING PAST 5 YEARS** ------------------------------ ----------------- ------------------------- ------------------------------- Stefanie V. Chang (36) Vice President Since July 2003 Executive Director of Morgan 1221 Avenue of the Americas Stanley & Co. and Morgan New York, NY Stanley Investment Management Inc. and Vice President of the Institutional Funds (since December 1997) and the Retail Funds (since July 2003); formerly practiced law with the New York law firm of Rogers & Wells (now Clifford Chance LLP). Francis Smith (37) Treasurer and Treasurer since Executive Director of the c/o Morgan Stanley Trust Chief Financial July 2003 and Chief Investment Manager and Harborside Financial Center, Officer Financial Officer since Morgan Stanley Services (since Plaza Two, September 2002 December 2001); previously Jersey City, NJ Vice President of the Retail Funds (September 2002- July 2003); previously Vice President of the Investment Manager and Morgan Stanley Services (August 2000-November 2001) and Senior Manager at PricewaterhouseCoopers LLP (January 1998-August 2000). Thomas F. Caloia (57) Vice President Since July 2003 Executive Director (since c/o Morgan Stanley Trust December 2002) and Assistant Harborside Financial Center, Treasurer of the Investment Plaza Two, Manager, the Distributor and Jersey City, NJ Morgan Stanley Services; previously Treasurer of the Retail Funds (April 1989-July 2003); formerly First Vice President of the Investment Manager, the Distributor and Morgan Stanley Services.
--------- * This is the earliest date the Officers began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds as applicable.
POSITION(S) NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) EXECUTIVE OFFICER REGISTRANT TIME SERVED* DURING PAST 5 YEARS** ------------------------------ ----------------- ------------------------- ------------------------------- Mary E. Mullin (36) Secretary Since July 2003 Vice President of Morgan 1221 Avenue of the Americas Stanley & Co. Incorporated New York, NY and Morgan Stanley Investment Management Inc.; Secretary of the Institutional Funds (since June 1999) and the Retail Funds (since July 2003); formerly practiced law with the New York law firms of McDermott, Will & Emery and Skadden, Arps, Slate, Meagher & Flom LLP.
--------- * This is the earliest date the Officers began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected. ** The dates referenced below indicating commencement of service as Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds as applicable. In addition, the following individuals who are officers of the Investment Manager or its affiliates serve as assistant secretaries of the Fund: Sara Badler, Lou Anne D. McInnis, Carsten Otto, Ruth Rossi, Marilyn K. Cranney, Joanne Doldo, Natasha Kassian, Elisa Mitchell, Elizabeth Nelson, Sheldon Winicour and Bennett MacDougall. For each Director, the dollar range of equity securities beneficially owned by the Director in the Fund and in the Family of Investment Companies (Family of Investment Companies includes all of the registered investment companies advised by the Investment Manager) for the calendar year ended December 31, 2002 is set forth in the Fund's current Statement of Additional Information referenced above. Messrs. Kearns and Reid did not serve as Directors of the Fund during the calendar year ended December 31, 2002. As to each Independent Director and his immediate family members, no person owned beneficially or of record securities in an investment advisor or principal underwriter of the Fund, or a person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with an investment advisor or principal underwriter of the Fund. INDEPENDENT DIRECTORS AND THE COMMITTEES. Law and regulation establish both general guidelines and specific duties for the Independent Directors. The Retail Funds seek as Independent Directors individuals of distinction and experience in business and finance, government service or academia; these are people whose advice and counsel are in demand by others and for whom there is often competition. To accept a position on the Retail Funds' boards, such individuals may reject other attractive assignments because the Retail Funds make substantial demands on their time. All of the Independent Directors serve as members of the Audit Committee. In addition, three Directors including two Independent Directors, serve as members of the Insurance Committee, and three Independent Directors serve as members of the Governance Committee. The Independent Directors are charged with recommending to the full Board approval of management, advisory and administration contracts, Rule 12b-1 plans and distribution and underwriting agreements; continually reviewing Fund performance; checking on the pricing of portfolio securities, brokerage commissions, transfer agent costs and performance, and trading among funds in the same complex; and approving fidelity bond and related insurance coverage and allocations, as well as other matters that arise from time to time. The Independent Directors are required to select and nominate individuals to fill any Independent Director vacancy on the board of any fund that has a Rule 12b-1 plan of distribution. Most of the Retail Funds have a Rule 12b-1 plan. The Audit Committee is charged with recommending to the full Board the engagement or discharge of the Fund's independent auditors; directing investigations into matters within the scope of the independent auditors' duties, including the power to retain outside specialists; reviewing with the independent auditors the audit plan and results of the auditing engagement; approving professional services provided by the independent auditors and other accounting firms prior to the performance of the services; reviewing the independence of the independent auditors; considering the range of audit and non-audit fees; reviewing the adequacy of the Fund's system of internal controls; and preparing and submitting Committee meeting minutes to the full Board. The Audit Committee currently consists of Messrs. Bozic, Garn, Hedien, Johnson, Kearns, Nugent and Reid. Messrs. Reid and Kearns were appointed to the Audit Committee on July 31, 2003. The number of Audit Committee meetings held by the Fund during its most recent fiscal year end is set forth in the Fund's current Statement of Additional Information referenced above. The Boards of the Retails Funds have a Governance Committee to (i) monitor and make recommendations on corporate governance matters and Board/committee policies and procedures; and (ii) oversee the periodic evaluations of the Board and any committees. The Governance Committee consists of Messrs. Reid, Bozic and Garn. The Governance Committee was established on July 31, 2003 and therefore no meetings were held during the Fund's most recent fiscal year end. Finally, the Boards of the Retail Funds have formed an Insurance Committee to review and monitor the insurance coverage maintained by the Fund. The Insurance Committee currently consists of Messrs. Nugent, Fiumefreddo and Hedien. The number of meetings held by the Insurance Committee during the Fund's most recent fiscal year end is set forth in the Fund's current Statement of Additional Information referenced above. ADVANTAGES OF HAVING THE SAME INDIVIDUALS AS INDEPENDENT DIRECTORS FOR THE RETAIL FUNDS AND INSTITUTIONAL FUNDS. The Independent Directors and the funds' management believe that having the same Independent Directors for each of the Retail Funds and Institutional Funds avoids the duplication of effort that would arise from having different groups of individuals serving as Independent Directors for each of the funds or even of sub-groups of funds. They believe that having the same individuals serve as Independent Directors of all the Retail Funds and Institutional Funds tends to increase their knowledge and expertise regarding matters which affect the Fund Complex generally and enhances their ability to negotiate on behalf of each fund with the fund's service providers. This arrangement also precludes the possibility of separate groups of Independent Directors arriving at conflicting decisions regarding operations and management of the funds and avoids the cost and confusion that would likely ensue. Finally, having the same Independent Directors serve on all fund boards enhances the ability of each fund to obtain, at modest cost to each separate fund, the services of Independent Directors of the caliber, experience and business acumen of the individuals who serve as Independent Directors of the Retail Funds and Institutional Funds. DIRECTOR AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust, Articles of Incorporation or Bylaws, as the case may be, provide that no Director, officer, employee or agent of the Fund is liable to the Fund or to a shareholder, nor is any Director, officer, employee or agent liable to any third persons in connection with the affairs of the Fund, except as such liability may arise from his/her or its own bad faith, willful misfeasance, gross negligence or reckless disregard of his/her or its duties. It also provides that all third persons shall look solely to the Fund property for satisfaction of claims arising in connection with the affairs of the Fund. With the exceptions stated, the organizational charter document provides that a Director, officer, employee or agent is entitled to be indemnified against all liability in connection with the affairs of the Fund. III. MANAGEMENT OF THE FUND C. COMPENSATION Section III, sub-section C entitled Management of the Fund--Compensation is hereby updated to include the following: Effective August 1, 2003, each Independent Director will receive an annual retainer fee of $168,000 for serving the Retail Funds and Institutional Funds. In addition, each Independent Director will receive $2,000 for attending each of the four quarterly board meetings and two performance meetings that occur each year. The Chairman of the Audit Committee will receive an additional annual retainer fee of $60,000. Other Committee Chairmen and the Deputy Chairman of the Audit Committee will receive an additional annual retainer fee of $30,000. The aggregate compensation paid to each Independent Director will be paid by the Retail Funds and Institutional Funds, and will be allocated on a pro rata basis among each of the operational funds/portfolios of the Retail Funds and Institutional Funds based on the relative net assets of each of the funds/portfolios of the Retail Funds and Institutional Funds. Prior to August 1, 2003, the Fund paid each Independent Director as described in Section III, sub-section C entitled Management of the Fund--Compensation,as set forth in the Fund's current Statement of Additional Information referenced above. Messrs. Kearns and Reid did not serve as Directors of the Fund during the Fund's most recent fiscal year end and therefore did not receive any compensation from the Fund for that period.