pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.
)
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Morgan Stanley High Yield Fund, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and
the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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MORGAN
STANLEY HIGH YIELD FUND, INC.
c/o Morgan
Stanley Investment Management Inc.
522 Fifth Avenue New York, New York 10036
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [ ], 2010
The Special Meeting of Stockholders (Meeting) of
Morgan Stanley High Yield
Fund, Inc., a corporation organized under the laws of
Maryland (the Fund), will be held in Conference
Room [ ], 3rd Floor, 522 Fifth
Avenue, New York, New York 10036, on [ ], 2010
at [ ] a.m., New York City time, for the
following purposes:
Matters
to be Voted On:
1. To elect five Directors to serve until the year 2010
Annual Meeting, six Directors to serve until the year 2011
Annual Meeting and six Directors to serve until the year 2012
Annual Meeting or, in each case, until their successors shall
have been duly elected and qualified.
2. To approve a new investment advisory agreement between
the Fund and Invesco Advisers, Inc., including a
sub-advisory
agreement between Invesco Advisers, Inc. and certain of its
affiliates.
3. To transact such other business as may properly come
before the Meeting or any adjournments thereof.
Stockholders of record of the Fund as of the close of business
on [ ], 2010 are entitled to notice of and to
vote at the Meeting. If you cannot be present in person, your
management would greatly appreciate your filling in, signing and
returning the enclosed Proxy promptly in the envelope provided
for that purpose. Alternatively, if you are eligible to vote
telephonically by touchtone telephone or electronically on the
Internet (as discussed in the enclosed Proxy Statement) you may
do so in lieu of attending the Meeting in person.
In the event that holders of a majority of the Funds
shares of common stock issued and outstanding and entitled to
vote (a Quorum) are not present at the Meeting of
the Fund in person or by Proxy, or the vote required to approve
or reject any Proposal is not obtained at the Meeting of the
Fund, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote
of the holders of a majority of the Funds shares present
in person or by Proxy at the Meeting. The persons named as
Proxies will vote in favor of such adjournment those Proxies
which have been received by the date of the Meeting.
Mary E.
Mullin
Secretary
[ ], 2010
New York, New York
IMPORTANT
You can help avoid the necessity and expense of sending
follow-up
letters to ensure a Quorum by promptly returning the enclosed
Proxy. If you are unable to be present in person, please fill
in, sign and return the enclosed Proxy in order that the
necessary Quorum may be represented at the Meeting. The enclosed
envelope requires no postage if mailed in the United States.
Certain Stockholders will be able to vote telephonically by
touchtone telephone or electronically on the Internet by
following instructions contained on their proxy cards or on the
enclosed Voting Information Card.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON
[ ], 2010:
The Proxy Statement for the Special Meeting of Stockholders is
available on the Internet at the website address located on the
enclosed Proxy Card.
TABLE OF CONTENTS
MORGAN STANLEY HIGH YIELD FUND, INC.
c/o Morgan
Stanley Investment Management Inc.
522 Fifth Avenue New York, New York 10036
Special
Meeting of Stockholders
[ ],
2010
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the
Board) of
Morgan Stanley High Yield
Fund, Inc. (MSY) (the Fund) for use at the
Special Meeting of Stockholders of the Fund to be held on
[ ], 2010 (the Meeting), and at any
adjournments thereof. The first mailing of this Proxy Statement
is expected to be made on or about [ ], 2010.
If the enclosed form of Proxy is properly executed and returned
in time, or is submitted by telephone or Internet, to be voted
at the Meeting, the proxies named therein will vote the shares
of common stock with respect to the Fund (the
Shares) represented by the Proxy in accordance with
the instructions marked thereon. Unmarked proxies submitted by
stockholders of the Fund (Stockholders) will be
voted for each of the Nominees for election as Director of the
Fund and for the new investment advisory agreement between the
Fund and Invesco Advisers, Inc. (Invesco Advisers),
as set forth in the attached Notice of a Special Meeting of
Stockholders. A Proxy may be revoked at any time prior to its
exercise by any of the following: written notice of revocation
to the Secretary of the Fund, execution and delivery of a later
dated Proxy to the Secretary of the Fund (whether by mail or, as
discussed below, by touchtone telephone or the Internet) (if
returned and received in time to be voted), or attendance and
voting at the Meeting. Attendance at the Meeting will not in and
of itself revoke a Proxy. In order to revoke a Proxy in person,
a Stockholder must submit a subsequent Proxy. Shareholders whose
shares are held in street name by a broker of record and who
wish to vote in person at the Meetings must obtain a legal proxy
from their broker and present it at the Meetings to the
inspector of elections.
Stockholders of record of the Fund as of the close of business
on [ ], 2010, the record date for the
determination of Stockholders entitled to notice of and to vote
at the Meeting (the Record Date), are entitled to
one vote for each Share held and a fractional vote for a
fractional Share.
As of the Record Date, the Fund had
[ ] shares of common stock outstanding.
The cost of soliciting proxies for the Meeting of the Fund,
consisting principally of printing and mailing expenses, will be
borne by Morgan Stanley and Invesco Ltd. (Invesco)
and their affiliates. The solicitation of proxies will be
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by mail, telephone or otherwise through Directors, officers of
the Fund, or officers and employees of Morgan Stanley Investment
Management Inc., the Funds investment adviser (the
Current Adviser), Morgan Stanley Trust, Morgan
Stanley Services Company Inc. (Morgan Stanley
Services or the Administrator), Morgan
Stanley & Co. Incorporated
and/or
Morgan Stanley Smith Barney LLC, without special compensation
therefor. In addition, the Fund may employ Computershare
Fund Services, Inc. (Computershare
Fund Services) to make telephone calls to
Stockholders to remind them to vote. The Fund may also employ
Computershare Fund Services as Proxy solicitor if it
appears that the required number of votes to achieve a Quorum or
to approve any matter at the Meeting will not be received. The
transfer agent services for the Fund are currently provided by
Computershare Trust Company, N.A. (the Transfer
Agent).
Stockholders may be able to vote their Shares by touchtone
telephone or by Internet by following the instructions on the
Proxy Card or on the Voting Instruction Card accompanying
this Proxy Statement. The Internet procedures are designed to
authenticate a Stockholders identity to allow Stockholders
to vote their Shares and confirm that their instructions have
been properly recorded. To vote by Internet or by touchtone
telephone, Stockholders can access the website or call the
toll-free number listed on the Proxy Card or noted in the
enclosed voting instructions or Voting Information Card. To vote
by touchtone telephone or by Internet, Stockholders will need
the number that appears on the Proxy Card or Voting Information
Card in the shaded box.
In certain instances, Computershare Fund Services may call
Stockholders to ask if they would be willing to have their votes
recorded by telephone. The telephone voting procedure is
designed to authenticate Stockholders identities, to allow
Stockholders to authorize the voting of their Shares in
accordance with their instructions and to confirm that their
instructions have been recorded properly. No recommendation will
be made as to how a Stockholder should vote on any proposal
other than to refer to the recommendations of the Board. The
Fund has been advised by counsel that these procedures are
consistent with the requirements of applicable law. Stockholders
voting by telephone in this manner will be asked for identifying
information and will be given an opportunity to authorize
proxies to vote their Shares in accordance with their
instructions. To ensure that the Stockholders instructions
have been recorded correctly, they will receive a confirmation
of their instructions in the mail. A special toll-free number
set forth in the confirmation will be available in case the
information contained in the confirmation is incorrect. Although
a Stockholders vote may be taken by telephone, each
Stockholder will receive a copy of this Proxy Statement and may
vote by mail using the enclosed Proxy Card [or Voting
Information Card] or by touchtone telephone or the Internet as
set forth above. The last Proxy vote received in time to be
voted, whether by Proxy Card [or Voting Information Card],
touchtone telephone or Internet, will be the vote that is
counted and will revoke
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all previous votes by the Stockholder. In the event that
Computershare Fund Services is retained as Proxy solicitor,
Computershare Fund Services will be paid a project
management fee as well as telephone solicitation expenses
incurred for reminder calls, outbound telephone voting,
confirmation of telephone votes, inbound telephone contact,
obtaining Stockholders telephone numbers, and providing
additional materials upon Stockholder request. Such fees and
expenses will be borne by Morgan Stanley and Invesco and their
respective affiliates.
Only one copy of this Proxy Statement will be delivered to
multiple Stockholders sharing an address unless we have received
contrary instructions from one or more of the Stockholders. Upon
written or oral request, we will deliver a separate copy of this
Proxy Statement to a Stockholder at a shared address to which a
single copy of this Proxy Statement was delivered. Should any
Stockholder wish to receive a separate Proxy Statement or should
Stockholders sharing an address wish to receive a single Proxy
Statement in the future, please contact
(800) 231-2608
(toll-free).
PROPOSAL 1:
ELECTION OF DIRECTORS
On October 19, 2009, Morgan Stanley entered into a
definitive agreement to sell substantially all of its retail
asset management business to Invesco, a leading global
investment management company, located at 1555 Peachtree Street,
N.E., Suite 1800, Atlanta, Georgia 30309, in exchange for
$1.5 billion in cash and a minority interest in Invesco
stock (the Acquisition). Although there is no
assurance that the Acquisition will be completed, if the terms
and conditions of the Acquisition are satisfied
and/or
waived, the closing of the Acquisition is expected to take place
in mid-2010. In connection with this Acquisition, the Current
Adviser submitted to the Board of the Fund for its approval,
among other things, a proposal to adopt an entirely new Board
for the Fund.
The Funds Board is recommending that the Stockholders of
the Fund approve the Nominees for the Funds Board set
forth below. The Nominees to be elected to the Board of the Fund
are comprised primarily of independent trustees/directors who
serve other funds advised by affiliates of Invesco, as well as
two interested trustees/directors who serve other funds advised
by affiliates of Invesco, Martin L. Flanagan, the Chief
Executive Officer of Invesco, and Philip A. Taylor, the Head of
North American Retail and Senior Managing Director of Invesco.
Before determining that it was appropriate to propose the
Nominees for election to the Funds Board, the Board met
with Management of the Funds, Senior Management at Invesco and
Messrs. Flanagan and Taylor, and reviewed information about
the proposed Nominees qualifications and experience as
trustees/directors of registered investment companies. Based on
the information received, and in light of the Acquisition, the
Board of the Fund determined that it was appropriate to propose
the Nominees for election to the Board. By proposing
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these Nominees for election to the Funds Board, the Board
hopes to align the governance of the Fund with the governance of
other registered investment companies advised by affiliates of
Invesco. All current Directors will cease to serve as Directors
of the Fund in the event that the Stockholders of the Fund
approve the election of the Nominees set forth below and the
Acquisition is consummated.
The Nominees have been divided into three separate classes, each
class having a term of three years. The term of office of each
of the three classes will expire each succeeding year. Each
Nominee will, if elected, serve an initial term beginning from
the date of the consummation of the Acquisition and terminating
at the date of the Annual Meeting of Stockholders indicated in
the chart below or any adjournment thereof.
It is the intention of the persons named in the enclosed form of
Proxy, unless instructed by Proxy to withhold authority to vote
for the Nominees, to vote all validly executed Proxies for the
election of the following Nominees:
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Group I*
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Group II**
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Group III***
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Albert R. Dowden
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David C. Arch
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James T. Bunch
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Prema Mathai-Davis
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Bob R. Baker
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Bruce L. Crockett
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Lewis F. Pennock
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Frank S. Bayley
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Rod Dammeyer
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Hugo F. Sonnenschein
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Larry Soll
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Jack M. Fields
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Raymond Stickel, Jr.
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Philip A. Taylor
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Martin L. Flanagan
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Wayne W. Whalen
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Carl Frischling
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To serve until the year 2010 Annual Meeting or until their
successors have been duly elected and qualified. |
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To serve until the year 2011 Annual Meeting or until their
successors have been duly elected and qualified. |
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To serve until the year 2012 Annual Meeting or until their
successors have been duly elected and qualified. |
Should any of the Nominees become unable or unwilling to accept
nomination or election, the persons named in the Proxy will
exercise their voting power in favor of such person or persons
as the Board may recommend or, in the case of an independent
Director Nominee, as the independent Directors of the Fund may
recommend. All of the Nominees have consented to being named in
this Proxy Statement and to serve if elected. The Fund knows of
no reason why any of the said Nominees would be unable or
unwilling to accept nomination or election.
The table below sets forth the following information regarding
the Nominees for election as Directors, as well as the proposed
new executive officers of the Fund: their age, address, position
held or proposed to be held with the Fund and length of time
served, as applicable, their principal business occupations
during
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the past five years, the number of portfolios in the
Fund Complex overseen by each Director or Nominee Director
and other trusteeships/directorships, if any, held by the
Directors. The Fund Complex includes all open-end and
closed-end funds (including all of their portfolios) advised by
the Current Adviser and its affiliates. All Nominees, if elected
by Shareholders, will oversee 17 closed-end funds (including the
Funds) that are currently in the Fund Complex. Upon
consummation of the Acquisition, these 17 funds will become part
of the AIM Family of Funds. Upon consummation of the
Acquisition, these 17 funds will become part of the AIM Family
of Funds.
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Number of
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Position
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Funds in Fund
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Other
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Proposed to be
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Complex
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Trusteeship(s)/
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Name, Age and
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Held with the
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Principal Occupation(s)
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Overseen by
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Directorships(s)
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Address
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Fund
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During Past 5 Years
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Director
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Held by Director
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Interested Nominees
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Martin L.
Flanagan1
(49)
Two Peachtree Pointe
1555 Peachtree Street N.E.
Atlanta, Georgia 30309
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Proposed
Director
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Executive Director, Chief Executive Officer and President, Invesco (a global investment management firm); Trustee, The AIM Family of Funds®; Board of Governors, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business and adviser to the board of directors, Invesco Advisers.
Formerly: Chairman, Invesco Aim Advisors, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Director, Invesco; Chairman and Vice Chairman, Investment Company Institute.
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17
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Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
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1 Mr. Flanagan
will be considered an interested person of the Fund because he
is an advisor to the Board of Directors of Invesco Advisers, and
an officer and a director of Invesco, the ultimate parent of
Invesco Advisers.
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Number of
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Position
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Funds in Fund
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Other
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Proposed to be
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Complex
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Trusteeship(s)/
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Name, Age and
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Principal Occupation(s)
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Overseen by
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Directorships(s)
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Address
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Fund
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During Past 5 Years
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Director
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Held by Director
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Philip A.
Taylor2
(55)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
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Proposed Director
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Head of North American Retail and Senior Managing Director,
Invesco; Director, Chief Executive Officer and President, 1371
Preferred Inc. (holding company); Director, Chairman, Chief
Executive Officer and President, Invesco Aim Management Group,
Inc. (financial services holding company); Director and
President, INVESCO Funds Group, Inc. (registered investment
adviser and registered transfer agent) and AIM GP Canada Inc.
(general partner for limited partnerships); Director, Invesco
Aim Distributors, Inc. (registered broker dealer); Director and
Chairman, Invesco Aim Investment Services, Inc. (registered
transfer agent) and INVESCO Distributors, Inc. (registered
broker dealer); Director, Co-Chairman, Co-President &
Co-Chief Executive, Invesco Advisers (Formerly Invesco
Institutional, (N.A.), Inc. registered investment
adviser); Director, President and Chairman, INVESCO Inc.
(holding company) and Invesco Canada Holdings Inc. (holding
company); Chief Executive Officer, AIM Trimark Corporate Class
Inc. (corporate mutual fund company) and AIM Trimark Canada Fund
Inc. (corporate mutual fund company); Director and Chief
Executive Officer, Invesco Trimark Dealer Inc. and Invesco
Trimark Ltd./ Invesco Trimark Ltée Trustee, President and
Principal Executive Officer, The AIM Family of
Funds®
(other than AIM Treasurers Series Trust and Short-Term
Investments Trust); Trustee and Executive Vice President, The
AIM Family of
Funds®
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17
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Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
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2 Mr. Taylor
will be considered an interested person of the Fund because he
is an officer and a director of Invesco Advisers.
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Number of
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Position
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Funds in Fund
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Other
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Proposed to be
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Complex
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Trusteeship(s)/
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Name, Age and
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Held with the
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Principal Occupation(s)
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Overseen by
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Directorships(s)
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Address
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Fund
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During Past 5 Years
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Director
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Held by Director
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(AIM Treasurers Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC.
Formerly: Director, Chief Executive Officer and President, Invesco Aim Advisors, Inc.; Director, Chairman, Chief Executive Officer and President Invesco Aim Capital Management, Inc. (registered investment adviser) and Invesco AIM Private Asset Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds® (AIM Treasurers Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.
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Independent Nominees
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David C. Arch (64)
Blistex Inc.
1800 Swift Drive
Oak Brook, IL 60523
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Proposed Director
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Chairman and Chief Executive Officer of Blistex Inc., a consumer
health care products manufacturer.
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17
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Trustee/Director of 88 funds/portfolios in the Van Kampen Family
of
Funds®.
Member of the Heartland Alliance Advisory Board, a nonprofit
organization serving human needs based in Chicago. Board member
of the Illinois Manufacturers Association. Member of the
Board of Visitors, Institute for the Humanities, University of
Michigan.
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Number of
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Position
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Funds in Fund
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Other
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Proposed to be
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Complex
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Trusteeship(s)/
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Name, Age and
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Held with the
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Principal Occupation(s)
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Overseen by
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Directorships(s)
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Address
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Fund
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During Past 5 Years
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Director
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Held by Director
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Bob R. Baker (73)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
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Proposed Director
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Retired.
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Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
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Frank S. Bayley (70)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
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Proposed Director
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Retired.
Formerly: Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios).
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Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
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James T. Bunch (67)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
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Proposed Director
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Founder, Green, Manning & Bunch Ltd. (investment banking
firm).
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Trustee of 149 funds/portfolios in the AIM Family of
Funds®;
Board of Governors, Western Golf Association/Evans Scholars
Foundation and Executive Committee, United States Golf
Association.
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Bruce L. Crockett (65)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
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Proposed Director
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Chairman, Crockett Technology Associates (technology consulting
company).
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17
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Chairman of the Boards of Trustees of 149 funds/portfolios in
the AIM Family of
Funds®;
ACE Limited (insurance company); Captaris, Inc. (unified
messaging provider); and Investment Company Institute.
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Rod Dammeyer (69)
CAC, LLC
4370 La Jolla
Village Drive
Suite 685
San Diego,
CA 92122-1249
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Proposed Director
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President of CAC, LLC, a private company offering capital
investment and management advisory services.
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17
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Trustee/Director of 88 funds/portfolios in the Van Kampen Family
of
Funds®.
Director of Quidel Corporation and Stericycle, Inc. Prior to May
2008, Trustee of The Scripps Research Institute. Prior to
February 2008, Director of Ventana Medical Systems, Inc. Prior
to April 2007, Director of GATX Corporation. Prior to April
2004, Director of TheraSense, Inc. Prior to January 2004,
Director of TeleTech Holdings Inc. and Arris Group, Inc.
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Position
|
|
|
|
Funds in Fund
|
|
|
Other
|
|
|
Proposed to be
|
|
|
|
Complex
|
|
|
Trusteeship(s)/
|
Name, Age and
|
|
Held with the
|
|
Principal Occupation(s)
|
|
Overseen by
|
|
|
Directorships(s)
|
Address
|
|
Fund
|
|
During Past 5 Years
|
|
Director
|
|
|
Held by Director
|
|
Albert R. Dowden (68)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (registered investment company); and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company).
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Senior Vice President, AB Volvo; Director of various public and private corporations.
|
|
|
17
|
|
|
Trustee/Director of 149 funds/portfolios in the AIM Family of
Funds®;
Board of Natures Sunshine Products, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Jack M. Fields (57)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit).
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company).
|
|
|
17
|
|
|
Trustee/Director of 149 funds/portfolios in the AIM Family of
Funds®;
Administaff
|
|
|
|
|
|
|
|
|
|
|
|
Carl Frischling (72)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Partner, law firm of Kramer Levin Naftalis and Frankel LLP.
|
|
|
17
|
|
|
Trustee/Director of 149 funds/portfolios in the AIM Family of
Funds®;
Reich & Tang Funds (16 portfolios)
|
|
|
|
|
|
|
|
|
|
|
|
Prema Mathai-Davis (59)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Retired.
|
|
|
17
|
|
|
Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
|
|
|
|
|
|
|
|
|
|
|
|
Lewis F. Pennock (67)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Partner, law firm of Pennock & Cooper.
|
|
|
17
|
|
|
Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Position
|
|
|
|
Funds in Fund
|
|
|
Other
|
|
|
Proposed to be
|
|
|
|
Complex
|
|
|
Trusteeship(s)/
|
Name, Age and
|
|
Held with the
|
|
Principal Occupation(s)
|
|
Overseen by
|
|
|
Directorships(s)
|
Address
|
|
Fund
|
|
During Past 5 Years
|
|
Director
|
|
|
Held by Director
|
|
Larry Soll (67)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Retired.
|
|
|
17
|
|
|
Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
|
|
|
|
|
|
|
|
|
|
|
|
Hugo F. Sonnenschein (69)
1126 E. 59th Street
Chicago, IL 60637
|
|
Proposed Director
|
|
President Emeritus and Honorary Trustee of the University of
Chicago and the Adam Smith Distinguished Service Professor in
the Department of Economics at the University of Chicago. Prior
to July 2000, President of the University of Chicago.
|
|
|
17
|
|
|
Trustee/Director of 88 funds/portfolios in the Van Kampen Family
of
Funds®.
Trustee of the University of Rochester and a member of its
investment committee. Member of the National Academy of
Sciences, the American Philosophical Society and a fellow of the
American Academy of Arts and Sciences.
|
|
|
|
|
|
|
|
|
|
|
|
Raymond Stickel, Jr. (65)
11 Greenway Plaza
Suite 100
Houston, Texas
77046-1173
|
|
Proposed Director
|
|
Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25
portfolios)
|
|
|
17
|
|
|
Trustee of 149 funds/portfolios in the AIM Family of
Funds®.
|
|
|
|
|
|
|
|
|
|
|
|
Wayne W. Whalen (70)
155 North Wacker Drive
Chicago, IL 60606
|
|
Proposed Director
|
|
Partner in the law firm of Skadden, Arps, Slate, Meagher &
Flom LLP.
|
|
|
17
|
|
|
Chairman of the Boards, Trustee/Director of 88 funds/portfolios
in the Van Kampen Family of
Funds®.
Director of the Abraham Lincoln Presidential Library Foundation.
|
EQUITY
SECURITIES OWNED BY DIRECTORS
For each Nominee, the dollar range of equity securities
beneficially owned by the Directors in the Fund and in the
family of investment companies as of December 31, 2009 is
shown below. No information is shown for any current Directors,
as their terms of office will not continue if the Stockholders
approve the Nominees for election as Directors.
|
|
|
|
|
|
|
|
|
|
|
Aggregate Dollar Range of
|
|
|
|
|
Equity Securities in the
|
|
|
Dollar Range of
|
|
Funds and in the Family of
|
Name of Nominee
|
|
Equity Securities
|
|
Investment Companies
|
|
David C. Arch
|
|
|
None
|
|
|
None
|
Bob R. Baker
|
|
|
None
|
|
|
None
|
Frank S. Bayley
|
|
|
None
|
|
|
None
|
James T. Bunch
|
|
|
None
|
|
|
None
|
Bruce L. Crockett
|
|
|
None
|
|
|
None
|
Rod Dammeyer
|
|
|
None
|
|
|
None
|
Albert R. Dowden
|
|
|
None
|
|
|
None
|
Martin L. Flanagan
|
|
|
None
|
|
|
None
|
11
|
|
|
|
|
|
|
|
|
|
|
Aggregate Dollar Range of
|
|
|
|
|
Equity Securities in the
|
|
|
Dollar Range of
|
|
Funds and in the Family of
|
Name of Nominee
|
|
Equity Securities
|
|
Investment Companies
|
|
Jack M. Fields
|
|
|
None
|
|
|
None
|
Carl Frischling
|
|
|
None
|
|
|
None
|
Prema Mathai-Davis
|
|
|
None
|
|
|
None
|
Lewis F. Pennock
|
|
|
None
|
|
|
None
|
Larry Soll
|
|
|
None
|
|
|
None
|
Hugo F. Sonnenschein
|
|
|
None
|
|
|
None
|
Raymond Stickel, Jr.
|
|
|
None
|
|
|
None
|
Philip A. Taylor
|
|
|
None
|
|
|
None
|
Wayne W. Whalen
|
|
|
None
|
|
|
None
|
As to each independent Director and Nominee and his or her
immediate family members, no person owned beneficially or of
record securities in the Current Adviser, or a person (other
than a registered investment company) directly or indirectly
controlling, controlled by or under common control with the
Current Adviser as of December 31, 2009.
As of December 31, 2009, the aggregate number of Shares of
the Fund owned by the Funds officers and Nominees as a
group was less than one percent of the Funds outstanding
Shares.
12
PROPOSED
OFFICERS OF THE FUND
Below is information on the proposed officers of the Fund who
will take office with respect to the Fund in the event that
(i) the Stockholders of the Fund approve Proposal 2
and (ii) the Acquisition is consummated. The Stockholders
are not being asked to vote on the proposed officers of the
Fund. The Board of the Fund appoints the officers of the Fund.
|
|
|
|
|
|
|
|
|
Length of
|
|
|
Name, Age, Address and Position(s) to be Held with the
Fund*
|
|
Time Served**
|
|
Principal Occupation(s) During Past 5 Years
|
|
Philip A. Taylor (55)
President and Principal Executive Officer
|
|
|
N/A
|
|
|
Head of North American Retail and Senior Managing Director,
Invesco; Director, Chief Executive Officer and President, 1371
Preferred Inc. (holding company); Director, Chairman, Chief
Executive Officer and President, Invesco Aim Management Group,
Inc. (financial services holding company) Director and
President, INVESCO Funds Group, Inc. (registered investment
adviser and registered transfer agent) and AIM GP Canada Inc.
(general partner for limited partnerships); Director, Invesco
Aim Distributors, Inc. (registered broker dealer); Director and
Chairman, Invesco Aim Investment Services, Inc. (registered
transfer agent) and INVESCO Distributors, Inc. (registered
broker dealer); Director,
Co-Chairman,
Co-President & Co-Chief Executive, Invesco Advisers
(Formerly Invesco Institutional, (N.A.), Inc.
registered investment adviser); Director, President and
Chairman, INVESCO Inc. (holding company) and Invesco Canada
Holdings Inc. (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (corporate mutual fund company) and
AIM Trimark Canada Fund Inc. (corporate mutual fund company
Director and Chief Executive Officer, Invesco Trimark Dealer
Inc./courtage Invesco Trimark Inc. and Invesco Trimark
Ltd./Invesco Trimark Ltée); Trustee, President and
Principal Executive Officer, The AIM Family of
Funds®
(other than AIM Treasurers Series Trust and Short-Term
Investments Trust); Trustee and Executive Vice President, The
AIM Family of
Funds®
(AIM Treasurers Series Trust and Short-Term Investments
Trust only); and Manager, Invesco PowerShares Capital Management
LLC.
|
13
|
|
|
|
|
|
|
|
|
Length of
|
|
|
Name, Age, Address and Position(s) to be Held with the
Fund*
|
|
Time Served**
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
|
Formerly: Director, Chief Executive Officer and President,
Invesco Aim Advisors, Inc.; Director, Chairman, Chief Executive
Officer and President, Invesco Aim Capital Management, Inc.
(registered investment adviser) and Invesco Aim Private Asset
Management Inc.; President, Invesco Trimark Dealer Inc. and
Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and
President, AIM Trimark Corporate Class Inc. and AIM Trimark
Canada Fund Inc.; Senior Managing Director, Invesco Holding
Company Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (former registered broker dealer); President and
Principal Executive Officer, The AIM Family of
Funds®
(AIM Treasurers Series Trust, Short-Term Investments Trust
and Tax-Free Investments Trust only); President, AIM Trimark
Global Fund Inc. and AIM Trimark Canada Fund Inc.
|
John M. Zerr (47)
Senior Vice President, Chief Legal Officer and Secretary
|
|
|
N/A
|
|
|
Director, Senior Vice President, Secretary and General Counsel,
Invesco Aim Management Group, Inc.; Director, Senior Vice
President and Secretary, Invesco Aim Distributors, Inc.;
Director, Vice President and Secretary, Invesco Aim Investment
Services, Inc. and INVESCO Distributors, Inc.; Director and Vice
President, INVESCO Funds Group, Inc.; Senior Vice President,
Chief Legal Officer and Secretary, The AIM Family of
Funds®;
and Manager, Invesco PowerShares Capital Management LLC.; Senior
Vice President, Invesco Advisers (Formerly Invesco
Institutional, (N.A.), Inc. registered investment
adviser).
|
14
|
|
|
|
|
|
|
|
|
Length of
|
|
|
Name, Age, Address and Position(s) to be Held with the
Fund*
|
|
Time Served**
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
|
Formerly: Director, Senior Vice President, Secretary and General
Counsel, Invesco Aim Advisors, Inc. Vice President and
Secretary, Fund Management Company; Director, Senior Vice
President, Secretary and General Counsel, Vice President,
Invesco Aim Capital Management, Inc.; Chief Operating Officer
and General Counsel, Liberty Ridge Capital, Inc. (an investment
adviser); Vice President and Secretary, PBHG Funds (an
investment company) and PBHG Insurance Series Fund (an
investment company); Chief Operating Officer, General Counsel
and Secretary, Old Mutual Investment Partners (a broker dealer);
General Counsel and Secretary, Old Mutual Fund Services (an
administrator) and Old Mutual Shareholder Services (a
shareholder servicing center); Executive Vice President, General
Counsel and Secretary, Old Mutual Capital, Inc. (an investment
adviser); and Vice President and Secretary, Old Mutual Advisors
Funds (an investment company).
|
Lisa O. Brinkley (50)
Vice President
|
|
|
N/A
|
|
|
Global Compliance Director, Invesco; Chief Compliance Officer,
Invesco Aim Distributors, Inc. and Invesco Aim Investment
Services, Inc.; and Vice President, The AIM Family of
Funds®.
|
|
|
|
|
|
|
Formerly: Senior Vice President, Invesco Aim Management Group,
Inc.; Senior Vice President and Chief Compliance Officer,
Invesco Aim Advisors, Inc. and The AIM Family of
Funds®;
Vice President and Chief Compliance Officer, Invesco Aim Capital
Management, Inc. and Invesco Aim Distributors, Inc.; Vice
President, Invesco Aim Investment Services, Inc. and Fund
Management Company
|
Kevin M. Carome (53)
Vice President
|
|
|
N/A
|
|
|
General Counsel, Secretary and Senior Managing Director,
Invesco; Director, Invesco Holding Company Limited and INVESCO
Funds Group, Inc.; Director and Executive Vice President, IVZ,
Inc., Invesco Group Services, Inc., Invesco North American
Holdings, Inc. and Invesco Investments (Bermuda) Ltd.; and Vice
President, The AIM Family of
Funds®;
Director and Secretary, Invesco Advisers (Formerly Invesco
Institutional, (N.A.), Inc. registered investment
adviser.
|
15
|
|
|
|
|
|
|
|
|
Length of
|
|
|
Name, Age, Address and Position(s) to be Held with the
Fund*
|
|
Time Served**
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
|
Formerly: Secretary, Invesco North American Holdings, Inc.; Vice
President and Secretary, IVZ, Inc. and Invesco Group Services,
Inc.; Senior Managing Director and Secretary, Invesco Holding
Company Limited; Director, Senior Vice President, Secretary and
General Counsel, Invesco Aim Management Group, Inc. and Invesco
Aim Advisors, Inc.; Senior Vice President and Vice President,
Invesco Aim Distributors, Inc.; Director, General Counsel and
Vice President, Fund Management Company; Vice President, Invesco
Aim Capital Management, Inc. and Invesco Aim Investment
Services, Inc.; Senior Vice President, Chief Legal Officer and
Secretary, The AIM Family of
Funds®;
Director and Vice President, INVESCO Distributors, Inc.; and
Chief Executive Officer and President, INVESCO Funds Group, Inc.
|
Sheri Morris (45)
Vice President, Treasurer and Principal Financial Officer
|
|
|
N/A
|
|
|
Vice President, Invesco Advisers (Formerly Invesco
Institutional, (N.A.), Inc. registered investment
adviser); Vice President, Treasurer and Principal Financial
Officer, The AIM Family of
Funds®;.
|
|
|
|
|
|
|
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of
Funds®:
Vice President, Assistant Vice President, Invesco Aim Advisors,
Inc., Invesco Aim Capital Management, Inc. and Invesco Aim
Private Asset Management, Inc.
|
Karen Dunn Kelley (49)
Vice President
|
|
|
N/A
|
|
|
Head of Invescos World Wide Fixed Income and Cash
Management Group; Senior Vice President, Invesco Advisers
(Formerly Invesco Institutional (N.A.), Inc.
registered investment adviser); Executive Vice President,
Invesco Aim Distributors, Inc.; Senior Vice President, Invesco
Aim Management Group, Inc.; and Director, Invesco Mortgage
Capital Inc.; Vice President, The AIM Family of
Funds®
(other than AIM Treasurers Series Trust and Short-Term
Investments Trust); and President and Principal Executive
Officer, The AIM Family of
Funds®
(AIM Treasurers Series Trust and Short-Term Investments
Trust only).
|
16
|
|
|
|
|
|
|
|
|
Length of
|
|
|
Name, Age, Address and Position(s) to be Held with the
Fund*
|
|
Time Served**
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
|
Formerly: Vice President, Invesco Advisers (Formerly Invesco
Institutional, (N.A.), Inc. registered investment
adviser); Director of Cash Management and Senior Vice President
and Vice President, Invesco Aim Advisors, Inc.
|
|
|
|
|
|
|
President and Principal Executive Officer, Tax-Free Investments
Trust; Director and President, Fund Management Company; Director
of Cash Management, Senior Vice President, Chief Cash Management
Officer and Managing Director, Invesco Aim Capital Management,
Inc.; Vice President The AIM Family of
Funds®
(AIM Treasurers Series Trust, Short-Term Investments Trust
and Tax-Free Investments Trust only).
|
Lance A. Rejsek (42)
Anti-Money Laundering Compliance Officer
|
|
|
N/A
|
|
|
Anti-Money Laundering Compliance Officer, Invesco Advisers,
Invesco Aim Distributors, Inc., and Invesco Aim Investment
Services, Inc.
|
|
|
|
|
|
|
Formerly: Anti-Money Laundering Compliance Officer, Invesco Aim
Advisors, Inc., Invesco Aim Capital Management, Inc. and
Invesco Aim Private Asset Management, Inc; and Fund Management
Company
|
Todd L. Spillane (51)
Chief Compliance Officer
|
|
|
N/A
|
|
|
Senior Vice President, Invesco Aim Management Group, Inc.; Chief
Compliance Officer, The AIM Family of
Funds®,
INVESCO Private Capital Investments, Inc. (holding company),
Invesco Private Capital, Inc. (registered investment adviser)
and Invesco Senior Secured Management, Inc. (registered
investment adviser); Chief Compliance Officer and Senior Vice
President, Invesco Advisers (Formerly Invesco Institutional,
(N.A.), Inc. -registered investment adviser) and Vice President,
Invesco Aim Distributors, Inc. and Invesco Aim Investment
Services, Inc.
|
17
|
|
|
|
|
|
|
|
|
Length of
|
|
|
Name, Age, Address and Position(s) to be Held with the
Fund*
|
|
Time Served**
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
|
Formerly: Chief Compliance Officer, Invesco Global Asset
Management (N.A.), Inc. registered investment
adviser), Invesco Advisers (Formerly Invesco Institutional
(N.A.), Inc.) (registered investment adviser); Senior Vice
President and Chief Compliance Officer, Invesco Aim Advisors,
Inc. and Invesco Aim Capital Management, Inc.; and Invesco Aim
Private Asset Management, Inc. Vice President, Invesco Aim
Capital Management, Inc. and Fund Management Company.
|
|
|
|
*
|
|
The address of the proposed
Officers of the Fund is 11 Greenway Plaza, Suite 100,
Houston, Texas
77046-1173
unless otherwise noted.
|
|
**
|
|
Each Officer will serve for a
one-year term or until their successors are elected and
qualified.
|
Committees
of the Board
The Fund currently has an Audit Committee, a Compliance and
Insurance Committee, a Governance Committee and an Investment
Committee. During its most recent fiscal year end, on
December 31, 2009, the Board and Committees of the Fund
held the following meetings:
|
|
|
|
|
|
|
Number of Meetings
|
|
Board of Directors
|
|
|
8
|
|
Committee:
|
|
|
|
|
Audit Committee
|
|
|
4
|
|
Governance Committee
|
|
|
4
|
|
Compliance and Insurance Committee
|
|
|
4
|
|
Investment Committee
|
|
|
5
|
|
During the Funds most recent fiscal year end, each
Director attended at least 75% of the aggregate number of
meetings of the Board and any Committee on which he or she
served during the time such Director was a member of the Board.
For annual or special Stockholder meetings, Directors may, but
are not required to, attend the meetings; and for the last
annual Stockholder meeting for the Fund, no Directors attended
the meeting.
If elected, the newly comprised Board of the Fund will have an
Audit Committee, a Compliance Committee, a Governance Committee,
an Investments Committee and a Valuation, Distribution and Proxy
Oversight Committee. A description of each Committee is set
forth in Appendix A.
18
Stockholder
Communications
Stockholders may send communications to the Funds current
Board and each of the Nominees in the event that they are
elected by Stockholders and take office. Stockholders should
send communications intended for the Funds Board by
addressing the communications directly to the Board (or
individual Board members or Nominees)
and/or
otherwise clearly indicating in the salutation that the
communication is for the Board (or individual Board members or
Nominees) and by sending the communication to either the
Funds office (or individual Board members or Nominees) at
the address specified above. Other Stockholder communications
received by the Fund not directly addressed and sent to the
Funds Board will be reviewed and generally responded to by
management, and will be forwarded to the Board only at
managements discretion based on the matters contained
therein.
Compensation
of Current Directors
Each current Director (except for the Chairperson of the Board)
receives an annual retainer fee of $200,000 for serving certain
of the funds advised by the Current Adviser and its affiliates,
including the Fund. The current Chairperson of the Audit
Committee receives an additional annual retainer fee for serving
those funds of $75,000 and the current Investment Committee
Chairperson receives an additional annual retainer fee for
serving those funds of $60,000. Other current Committee
Chairpersons receive an additional annual retainer fee for
serving those funds of $30,000 and the current Investment
Sub-Committee
Chairperson receives an additional annual retainer fee for
serving those funds of $15,000. The aggregate compensation paid
to each current Director is paid by the Fund and the other funds
advised by the Current Adviser and its affiliates, and is
allocated on a pro rata basis among the Fund and the
other funds based on the relative net assets of each of the
funds. The current Chairman of the funds receives a total annual
retainer fee of $400,000 for his services as Chairperson of the
Board of the fund and for administrative services provided to
the Board.
The Fund also reimburses the current Directors for travel and
other
out-of-pocket
expenses incurred by them in connection with attending such
meetings. Current Directors of the Fund who are employed by the
Current Adviser receive no compensation or expense reimbursement
from the Fund for their services as Director.
Effective April 1, 2004, the Fund began a Deferred
Compensation Plan (the DC Plan), which allows each
Director to defer payment of all, or a portion, of the fees he
or she receives for serving on the Board throughout the year.
Each eligible Director generally may elect to have the deferred
amounts credited with a return equal to the total return on the
Fund (or portfolios thereof) that are offered as investment
options under the DC Plan. At the Directors election,
distributions are either in one lump sum payment, or in the form
of equal annual installments
19
over a period of five years. The rights of an eligible Director
and the beneficiaries to the amounts held under the DC Plan are
unsecured and such amounts are subject to the claims of the
creditors of the Fund.
The compensation of the new Board of the Fund will be determined
by that Board and may be different from the current compensation.
Vote
Required
Assuming a Quorum is present, approval of Proposal 1 with
respect to the Fund will require the affirmative vote of a
majority of the Funds Shares represented in person or by
proxy at the Meeting and entitled to vote at the Meeting. The
holders of Shares of the Fund will have equal voting rights
(i.e., one vote per Share) and will vote together as a
single class with respect to the approval of the Nominees for
election as Directors.
The Board, including the independent Directors, unanimously
recommends that you vote FOR the election for each
of the Nominee Directors.
20
PROPOSAL 2:
APPROVAL OF NEW ADVISORY AGREEMENT (INCLUDING A MASTER
SUB-ADVISORY
AGREEMENT)
Background
on the Acquisition
On October 19, 2009, Morgan Stanley entered into a
definitive agreement to sell substantially all of its retail
asset management business to Invesco, a leading global
investment management company, in exchange for $1.5 billion
in cash and a minority interest in Invesco stock. Consummation
of the Acquisition is subject to certain terms and conditions,
including that, prior to closing of the Acquisition, the
shareholders of the funds included in the Acquisition, including
the Fund, must approve certain proposals. Another condition to
the closing of the Acquisition is that clients
and/or fund
shareholders representing a minimum amount of assets transferred
to Invesco approve by a certain date the proposals related to
their participation in the Acquisition. The Acquisition, if
consummated, will combine certain Morgan Stanley Funds and the
AIM Family of Funds onto a single operating platform and will
create a larger fund family that will offer a broader range of
equity, fixed-income, alternative and other investment options.
The Acquisition also presents the opportunity to achieve asset
growth through combined distribution networks, to achieve
economies of scale, and to operate with greater efficiency and
lower overall costs.
In connection with the Acquisition, the Stockholders of the Fund
are being asked to approve a new investment advisory agreement
with Invesco Advisers, an affiliate of Invesco (the New
Advisory Agreement) and a proposed master
sub-advisory
agreement (the
Sub-Advisory
Agreement and, together with the New Advisory Agreement,
the New Advisory Agreements) between Invesco
Advisers and Invesco Asset Management Deutschland, GmbH, Invesco
Asset Management Ltd., Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Hong Kong Limited, Invesco
Senior Secured Management, Inc. and Invesco Trimark Ltd.
(collectively, the Affiliated
Sub-Advisers).
Approval of the New Advisory Agreement shall be deemed to also
be approval of the
Sub-Advisory
Agreement. If approved by the Stockholders of the Fund, the New
Advisory Agreements will be effective upon consummation of the
Acquisition. Although there is no assurance that the Acquisition
will be completed, if the terms and conditions of the
Acquisition are satisfied
and/or
waived, the closing of the Acquisition is expected to take place
in mid-2010.
In connection with the Acquisition, the Current Adviser
submitted to the Board of the Fund for its approval, among other
things, the New Advisory Agreements. The Board of the Fund
approved the New Advisory Agreements for the Fund and is hereby
recommending that the Stockholders of the Fund approve the New
Advisory Agreements with respect to the Fund.
21
Approval
of the New Advisory Agreements
The New Advisory Agreement is similar to the Funds Current
Advisory Agreement. The differences between the New Advisory
Agreement and the Current Advisory Agreement are discussed below
in the section entitled New Advisory Agreement.
The Board of the Fund, including the independent Directors, at
several meetings held during the third and fourth quarters of
2009 and early 2010, carefully considered the matter on behalf
of the Fund. The Funds Board, for the reasons discussed
below in the section entitled Board Considerations,
unanimously approved the New Advisory Agreements, and the Board
unanimously recommends that the Stockholders approve the New
Advisory Agreements for the Fund to be effective following the
consummation of the Acquisition.
The number of shares of the Fund that you hold will not change
as a result of the Acquisition. You will still own the same
number of Shares in the Fund, and the net asset value of your
investment will not change as a result of the Acquisition.
Furthermore, the Acquisition will not result in any change in
the Funds investment objectives or principal investment
strategies. The Acquisition is also not expected to result in a
change in the investment operations of the Fund or in any
changes in the investment approach with respect to the
management of the Fund. It is expected that Andrew Findling will
continue as portfolio manager of the Fund in the event that
Stockholders of the Fund approve this Proposal 2 and the
Acquisition is consummated, but that Dennis Schaney will not
continue as portfolio manager of the Fund.
Current
Advisory Agreement
The Current Adviser currently serves as the investment adviser
for the Fund pursuant to its Current Advisory Agreement. The
Funds Current Advisory Agreement was most recently
approved by Stockholders on April 30, 1997, and the
Funds Board, including a majority of the independent
Directors, most recently approved the continuation of the
Current Advisory Agreement on June 19, 2009.
Under the Funds Current Advisory Agreement, the Fund pays
to its Current Adviser as compensation for services rendered by
the Current Adviser 0.70% of the Funds average weekly net
assets. The Fund, under its Current Advisory Agreement, paid
$425,946 in advisory fees during the Funds most recent
fiscal year. The Fund further pays to the Current Adviser an
administration fee of 0.08% of the Funds weekly net
assets, which the Current Adviser has agreed to limit to
0.02435% of the Funds average weekly net assets plus
$24,000 per annum. The administration fees paid by the Fund
under its administration agreement with the Current Adviser
during the Funds most recent fiscal year end amounted to
$38,807.
22
Invesco
Advisers, Inc.
Invesco Advisers is registered as an investment adviser under
the Investment Advisers Act of 1940. Invesco Advisers is a
wholly owned subsidiary of Invesco and serves as the investment
adviser for the AIM Family of Funds and manages the investment
operations and performs, or arranges for the performance of, the
day-to-day
management of the AIM Family of Funds. Invesco Advisers is
located at Two Peachtree Pointe, 1555 Peachtree Street N.E.,
Atlanta, Georgia 30309 and has acted as an investment adviser
since its organization in 1976. Invesco Advisers currently
advises or manages over 225 investment portfolios, encompassing
a broad range of investment objectives and, as of
December 31, 2009, had assets under management totaling
$144.7 billion.
Invesco
Invesco, the ultimate parent of Invesco Advisers, is a leading
independent global investment management company, dedicated to
helping people worldwide build their financial security. Invesco
provides a comprehensive array of enduring solutions for retail,
institutional and
high-net-worth
clients around the world. Operating in 20 countries, Invesco had
$418.8 billion in assets under management as of
December 31, 2009. Invesco is organized under the laws of
Bermuda, and its common shares are listed and traded on the New
York Stock Exchange under the symbol IVZ. Invesco is
located at Two Peachtree Pointe, 1555 Peachtree Street N.E.,
Atlanta, Georgia 30309.
New
Advisory Agreements
It is proposed that the Fund enter into a New Advisory Agreement
with Invesco Advisers, to become effective upon the later of
(i) the date of Stockholder approval of the New Advisory
Agreement or (ii) the consummation of the Acquisition.
Under Section 15(a) of the Investment Company Act of 1940,
as amended (the Investment Company Act), the New
Advisory Agreement for the Fund requires the approval of
(i) the Board, including a majority of the independent
Directors, and (ii) the Stockholders of the Fund.
The New Advisory Agreement contains substantially the same terms
as the Current Advisory Agreement, except that (i) the
effective date of the New Advisory Agreement will change and the
term of the New Advisory Agreement will be from the later of the
date of the consummation of the Acquisition or the date that
Stockholders of the Fund approve this Proposal 2 and will
be in effect until June 30, 2011, (ii) the New
Advisory Agreement provides that Invesco Advisers may delegate
any or all of its rights, duties or obligations under such New
Advisory Agreement to one or more affiliated investment
sub-advisers
(the Affiliated
Sub-Advisers),
(iii) the termination provision provides for
60 days notice of termination of the New Advisory
Agreement by the Fund or Invesco Advisers rather than
30 days as in the Current Advisory Agreement, (iv) the
New
23
Advisory Agreement contains a provision that specifically
discusses the terms of the Funds securities lending
activities and (v) the New Advisory Agreement will be
governed by the laws of the State of Texas rather than New York.
As compensation for its services to the Fund under the New
Advisory Agreement, Invesco Advisers will be entitled to receive
from the Fund fees calculated at the same rate as those charged
under the Funds Current Advisory Agreement. A form of the
Funds New Advisory Agreement is attached to this Proxy
Statement as Appendix B and the description of the
Funds New Advisory Agreement is qualified in its entirety
by reference to Appendix B.
It is anticipated that the Fund will enter into a Master
Administrative Services Agreement (Administrative Services
Agreement) pursuant to which Invesco Advisers may perform
or arrange for the provision of certain accounting and other
administrative services to the Fund which are not required to be
performed by Invesco Advisers under the New Advisory Agreement.
The Administrative Services Agreement provides that it will
remain in effect and continue from year to year only if such
continuance is specifically approved at least annually by the
Funds Board, including the independent Directors, by votes
cast in person at a meeting called for such purpose. Under the
Administrative Services Agreement, Invesco Advisers will be
entitled to receive from the Fund reimbursement of its costs or
such reasonable compensation as may be approved by the Board.
Invesco Advisers will be reimbursed for the services of its
principal financial officer and her staff and any expenses
related to fund accounting services.
Based upon the considerations described below under Board
Considerations, the Funds Board, including the
independent Directors, unanimously approved the New Advisory
Agreements for the Fund.
Duties and Obligations. The New Advisory
Agreement for the Fund provides that, subject to the direction
and control of the Board, Invesco Advisers shall (i) act as
investment adviser for and supervise and manage the investment
and reinvestment of the Funds assets, (ii) supervise
the investment program of the Fund and the composition of its
investment portfolio and (iii) decide on and arrange for
the purchase and sale of securities and other assets held in the
investment portfolio of the Fund. In addition, the New Advisory
Agreement provides that Invesco Advisers shall take, on behalf
of the Fund, all actions that appear to the Fund to be necessary
to carry into effect such purchase and sale programs and
supervisory functions as aforesaid. The duties and obligations
of Invesco Advisers in managing the assets of the Fund under the
Funds New Advisory Agreement are substantially the same as
the duties and obligations of the Current Adviser under the
Current Advisory Agreement.
Delegation to
Sub-Advisers. Under
the terms of the proposed New Advisory Agreement for the Fund,
Invesco Advisers may delegate any or all of its
24
rights, duties or obligations under such New Advisory Agreement
to the Affiliated
Sub-Advisers
in accordance with the
Sub-Advisory
Agreement and applicable law. A form of the
Sub-Advisory
Agreement is attached hereto as Appendix C and the
description of the Funds
Sub-Advisory
Agreement is qualified in its entirety by reference to
Appendix C.
Terms of
the
Sub-Advisory
Agreement
Duties of the Affiliated
Sub-Advisers. The
Sub-Advisory
Agreement provides that Invesco Advisers may, in its discretion,
appoint one or more of the Affiliated
Sub-Advisers
to provide: (i) investment advice to the Fund for all or a
portion of its investments; (ii) placement orders for the
purchase and sale of portfolio securities or other investments
for the Fund; or (iii) discretionary investment management
of all or a portion of the investments of the Fund.
Compensation. Invesco Advisers will pay all of
the
sub-advisory
fees of the Affiliated
Sub-Advisers.
Invesco Advisers will pay all of the
sub-advisory
fees of the Affiliated
Sub-Advisers.
The
Sub-Advisory
Agreement provides that, to the extent an Affiliated
Sub-Adviser
manages a portion of the Funds investments, the fee that
Invesco Advisers will pay such Affiliated
Sub-Adviser,
computed daily and paid monthly, will equal (i) 40% of the
monthly compensation that Invesco Advisers receives from the
Fund pursuant to its advisory agreement with the Fund,
multiplied by (ii) a fraction equal to the net assets of
the Fund as to which the Affiliated
Sub-Adviser
shall have provided discretionary investment management services
for that month divided by the net assets of the Fund for that
month. In no event shall the aggregate monthly fees paid to the
Affiliated
Sub-Advisers
under the
Sub-Advisory
Agreement for the Fund exceed 40% of the monthly compensation
Invesco Advisers receives from the Fund pursuant to its advisory
agreement with the Fund, as reduced to reflect contractual or
voluntary fee waivers or expense limitations by Invesco
Advisers, if any. The
Sub-Advisory
Agreement for the Fund further provides that if, for any fiscal
year of the Fund, the amount of the advisory fee that the Fund
would otherwise be obligated to pay to Invesco Advisers is
reduced because of contractual or voluntary fee waivers or
expense limitations by Invesco Advisers, the fee payable to each
Affiliated
Sub-Adviser
will be reduced proportionately; and to the extent that Invesco
Advisers reimburses the Fund as a result of such expense
limitations, such Affiliated
Sub-Adviser
will reimburse Invesco Advisers for such reimbursement payments
in the same proportion that the fee payable to such Affiliated
Sub-Adviser
bears to the advisory fee.
Liability. The
Sub-Advisory
Agreement for the Fund provides that the Affiliated
Sub-Advisers
will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the
performance of the
Sub-Advisory
Agreement, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of an Affiliated
Sub-Adviser
in the
25
performance of its duties or from reckless disregard of its
duties and obligations thereunder.
Term and Termination. Assuming approval by the
Funds stockholders, the
Sub-Advisory
Agreement for the Fund shall continue for an initial term of two
years from the effective date of the
Sub-Advisory
Agreement, and shall continue thereafter if approved annually
(i) by the Board or the holders of a majority of the
outstanding voting securities of the Fund and (ii) by a
majority of the Directors who are not interested
persons of any party to the
Sub-Advisory
Agreement. The
Sub-Advisory
Agreement may be terminated with respect to an Affiliated
Sub-Adviser
by the Board, a majority of the outstanding voting securities of
the Fund, or any party on sixty days written notice should
the
Sub-Advisory
Agreement be terminated for an Affiliated
Sub-Adviser,
Invesco Advisers will assume the duties and responsibilities of
the Affiliated
Sub-Adviser
unless and until Invesco Advisers appoints another Affiliated
Sub-Adviser
to perform such duties and responsibilities. In addition, the
Sub-Advisory
Agreement will terminate automatically if assigned, as defined
in the 1940 Act.
Compensation. The New Advisory Agreement for
the Fund does not result in any change in the advisory fee rate
payable by the Fund. The Fund will continue to bear all of the
ordinary business expenses incurred in the operations of the
Fund and the offering of its shares.
Securities lending. The New Advisory Agreement
stipulates that Invesco will provide certain services to the
Fund in connection with any securities lending practices the
Fund may adopt.
Term and Termination. Assuming approval by the
Funds Stockholders, the New Advisory Agreement for the
Fund shall continue in force and effect for an initial term from
the effective date of the New Advisory Agreement, which shall be
the later of the date of the consummation of the Acquisition or
the date that Stockholders of the Fund approve this
Proposal 2 and will be in effect until June 30, 2011;
provided, however, that the Board intends to consider the
continuation of the New Advisory Agreement from year to year
after the initial term if approved annually (i) by the
Board or the holders of a majority of the outstanding voting
securities of the Fund and (ii) by a majority of the
Directors who are not interested persons of any
party to the New Advisory Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. The
New Advisory Agreement for the Fund may be terminated
(i) at any time by vote of the Funds Board or
Directors or by vote of a majority of the outstanding voting
securities of the Fund upon giving 60 days notice to
Invesco Advisers (which notice may be waived by Invesco
Advisers), or (ii) by Invesco Advisers on
60 days written notice to the Fund (which notice may
be waived by the Fund). The New Advisory Agreement for the Fund
will also immediately terminate in the event of its assignment,
as defined in the Investment Company Act. Except with
26
respect to the initial term of the New Advisory Agreement for
the Fund, these provisions of the New Advisory Agreement are
substantially similar to the provisions of the Current Advisory
Agreement.
Limitation of Liability. The New Advisory
Agreement for the Fund provides that Invesco Advisers will not
be liable for any error of judgment or mistake of law or for any
loss suffered by Invesco Advisers or by the Fund in connection
with the performance of the New Advisory Agreement, except a
loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties under the New
Advisory Agreement on the part of Invesco Advisers. These
provisions of the New Advisory Agreement for the Fund are
substantially similar to the provisions of the Current Advisory
Agreement for the Fund.
Interim
Advisory Agreement
In the event that the consummation of the Acquisition and the
termination of the Current Advisory Agreement occurs before
Stockholder approval of the New Advisory Agreement for the Fund
is obtained, it is anticipated that the Fund would rely on
Rule 15a-4
under the Investment Company Act, which permits the Funds
Board (including a majority of the independent Directors) to
approve and enter into an interim advisory agreement
(Interim Advisory Agreement) pursuant to which an
interim adviser may serve as investment adviser to the Fund for
up to 150 days following the termination of the Current
Advisory Agreement.
In approving an Interim Advisory Agreement, the Board, including
a majority of the independent Directors, would need to determine
that (A) the scope and quality of services to be provided
to the Fund under the Interim Advisory Agreement would be at
least equivalent to the scope and quality of services provided
under the Current Advisory Agreement; (B) the compensation
to be received by the interim adviser under the Interim Advisory
Agreement is no greater than the compensation the Current
Adviser would have received under the Current Advisory
Agreement; and (C) the Interim Advisory Agreement has the
same terms and conditions as the Current Advisory Agreement
except differences in the terms and conditions the Board,
including a majority of independent Directors, finds to be
immaterial; provided, however, such Interim Advisory Agreement
will change the effective date, termination date and
compensation arrangements such that:
(i) the Interim Advisory Agreement terminates upon the
earlier of the 150th day following the consummation of the
Acquisition or the effectiveness of the New Advisory Agreement;
(ii) the Board or a majority of the Funds outstanding
voting securities may terminate the Interim Advisory Agreement
at any time, without the
27
payment of any penalty, on not more than 10 calendar days
written notice to the interim adviser;
(iii) the compensation earned by the interim adviser under
the Interim Advisory Agreement will be held in an
interest-bearing escrow account with the Funds custodian
or a bank;
(iv) if a majority of the Funds outstanding voting
securities approve the New Advisory Agreement by the end of the
150-day
period, the amount in the escrow account (including interest
earned) will be paid to the interim adviser; and
(v) if a majority of the Funds outstanding voting
securities do not approve the Funds New Advisory
Agreement, the interim adviser will be paid, out of the escrow
account, the lesser of (a) any costs incurred in performing
the Interim Advisory Agreement (plus interest earned on that
amount while in escrow), or (b) the total amount in the
escrow account (plus interest earned).
The Board has not yet approved the Interim Advisory Agreement
for the Fund and there can be no guarantee that it will do so in
the future. In the event that the New Advisory Agreement is not
approved by the Funds Stockholders, the Board will take
such action as it believes to be in the best interest of the
Fund and its Stockholders.
Section 15(f)
of the Investment Company Act
Section 15(f) of the Investment Company Act provides that,
when a change in control of an investment adviser occurs, the
investment adviser or any of its affiliated persons may receive
any amount or benefit in connection with the change in control
as long as two conditions are met. The first condition specifies
that no unfair burden may be imposed on the
investment company as a result of an acquisition relating to the
change in control, or any express or implied terms, conditions
or understandings. The term unfair burden, as
defined in the Investment Company Act, includes any arrangement
during the two-year period after the acquisition whereby the
investment adviser (or predecessor or successor adviser), or any
interested person of any such investment adviser, receives or is
entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than
fees for bona fide investment advisory or other services) or
from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the
investment company (other than fees for bona fide principal
underwriting services). The second condition specifies that,
during the three-year period immediately following consummation
of the acquisition, at least 75% of the investment
companys board of directors must not be interested
persons (as defined in the Investment Company Act) of the
investment adviser or predecessor adviser.
28
Consummation of the Acquisition will constitute a change in
control of the Funds investment adviser because a new
entity will influence the management and policies of the Fund.
Therefore, Morgan Stanley and Invesco have agreed to comply with
the conditions of Section 15(f). Consistent with the first
condition of Section 15(f), Invesco has agreed that it will
use its reasonable best efforts to ensure that there is no
unfair burden imposed on the Fund as a result of the
Acquisition. With respect to the second condition of
Section 15(f), Invesco Advisers has agreed that it will use
reasonable best efforts to comply with and cause the Fund to
conduct its business to ensure that for a period of three years
after the closing of the Acquisition at least 75% of the
Directors of the Fund will not be interested persons
(as defined in the Investment Company Act) of Invesco Advisers
or Invesco. The Fund currently meets this condition and will
continue to meet this condition in the event that the Nominees
set forth in Proposal 1 are elected.
Board
Considerations
Current
Advisory Agreement
On June 19, 2009, the Board, including the independent
Directors, approved the renewal of the Funds Current
Advisory Agreement for another one-year term.
New
Advisory Agreements
At various meetings of the Board held during the third and
fourth quarters of 2009 and early 2010, the Board reviewed and
considered the proposed New Advisory Agreements, to determine
whether the New Advisory Agreements should be approved. Pursuant
to the proposed New Advisory Agreement, Invesco Advisers would
replace the Current Adviser to provide or procure investment
management services on behalf of the Fund. The Board also
considered the proposed
Sub-Advisory
Agreement between Invesco Advisers and the Affiliated
Sub-Advisers
to determine whether the
Sub-Advisory
Agreement should be approved. Following its review and
consideration, the Board determined that the proposed New
Advisory Agreements will enable Stockholders of the Fund to
obtain high quality services at a cost that is appropriate,
reasonable and in the best interests of its Stockholders. The
Board, including the independent Directors, approved the New
Advisory Agreements for the Fund and the appointment of Invesco
Advisers as investment adviser and the Affiliated
Sub-Advisers
as investment
sub-advisers
to the Fund.
In reaching its decision, the Board requested and obtained
information from Morgan Stanley, the Current Adviser, Invesco
Advisers and Invesco, including information obtained during
various meetings with Senior Management at Invesco, as it deemed
reasonably necessary to evaluate the New Advisory Agreements for
the Fund. In considering the Funds New Advisory
Agreements, the Board evaluated a number of factors and
considerations listed below that it
29
believed, in light of their own business judgment, to be
relevant to their determination.
1. The Board considered the reputation, financial strength
and resources of Invesco, one of the worlds leading
independent global investment management firms, the strength of
Invescos resources and investment capabilities and the
client-focused shareholder services offered by Invesco.
2. The Board discussed the challenges of positioning the
Fund on a common operating platform with Invesco, with
particular emphasis on ensuring portfolio management operations
properly migrate to Invesco as part of the Acquisition, to
ensure uninterrupted services for Stockholders and the
opportunity for the portfolio management of the Fund to
recognize savings from economies of scale when such savings
occur.
3. The Board noted the continuity of key investment
management personnel that would manage the Fund upon
consummation of the Acquisition, specifically noting that one of
the two people responsible for the portfolio management of the
Fund is expected to remain the same.
4. The Board noted that entering into the
Sub-Advisory
Agreement will provide Invesco Advisers with increased
flexibility in assigning portfolio managers to the Fund and will
give the Fund access to portfolio managers and investment
personnel located in other offices, including those outside the
United States, who may have more specialized expertise on local
companies, markets and economies or on various types of
investments and investment techniques.
5. The Board noted that, pursuant to the
Sub-Advisory
Agreement, Invesco Advisers will pay all of the
sub-advisory
fees of the Affiliated
Sub-Advisers
out of its management fees.
6. The Board noted the undertaking by Invesco and Morgan
Stanley or their respective affiliates to assume all of the
costs and expenses of preparing, printing, and mailing this
Proxy Statement and related solicitation expenses for the
approvals discussed herein. The Boards also noted that Invesco
Advisers will provide a two-year contractual guaranty that will
limit the total expense ratio of the Fund to its total expense
ratio prior to the Acquisition.
During the Boards extensive review process, the Board,
including the independent Directors, considered, among other
things, the following factors: the terms and conditions of the
proposed New Advisory Agreement, including the differences from
the Current Advisory Agreement; and the nature, scope and
quality of services that Invesco Advisers and its affiliates is
expected to provide to the Fund, including
sub-advisory
services and compliance services. The Board evaluated all
information available to it. The Board also based its decision
on the following considerations, among others, although it did
not identify any that was
30
all important or controlling of its discussions, and each
Director attributed different weights to the various factors.
Nature, Extent and Quality of Services. The
Board reviewed and considered the nature and extent of the
investment advisory services to be provided by Invesco Advisers
and the Affiliated
Sub-Advisers
under the New Advisory Agreements, including portfolio
management, investment research and fixed income securities
trading. The Board also reviewed and considered the nature and
extent of the non-advisory, administrative services to be
provided by Invesco Advisers under the administration agreement,
including accounting services and the provision of supplies,
office space and utilities at Invesco Advisers expense.
The Board was advised that there was no expected diminution in
the nature, quality and extent of services provided to the
Funds Stockholders.
The Board reviewed and considered the qualifications of Andrew
Findling, the portfolio manager who is expected to continue as
portfolio manager, noting the Dennis Schaney would not continue
to manage the Fund as a result of the New Advisory Agreements,
and the senior administrative managers and other key personnel
of Invesco Advisers who will provide the advisory and
administrative services to the Fund.
Performance, Fees and Expenses of the
Fund. The Board noted that Invesco Advisers and
the
Sub-Advisers
had not yet begun providing services to the Fund and, therefore,
concluded that performance was not a factor they needed to
address with respect to the approval of the New Advisory
Agreements. They also considered that management fees would not
increase under the New Advisory Agreement and that Invesco
Advisers would pay the fee under the
Sub-Advisory
Agreement out of its management fees. Furthermore, the Board
considered that Invesco Advisers will provide a two-year
contractual guaranty that will limit the total expense ratio of
the Fund to its total expense ratio prior to the Acquisition.
Economies of Scale. The Board considered the
benefits that the Stockholders of the Fund would be afforded as
a result of anticipated economies of scale.
Other Benefits of the Relationship. The Board
considered other benefits to Invesco Advisers and its affiliates
that may be derived from their relationship with the Fund and
other funds advised by Invesco Advisers.
Resources of the Adviser. The Board considered
whether Invesco Advisers and the Affiliated
Sub-Advisers
are financially sound and have the resources necessary to
perform their obligations under the New Advisory Agreements,
noting assurances that Invesco Advisers and the
Sub-Advisers
have the financial resources necessary to fulfill their
obligations under the New Advisory Agreements and the benefits
to the Fund of such a relationship.
31
General Conclusion. After considering and
weighing all of the above factors, the Board concluded that it
would be in the best interest of the Fund and its Stockholders
to approve the New Advisory Agreements with respect to the Fund.
In reaching this conclusion, the Board did not give particular
weight to any single factor referenced above. The Board
considered these factors over the course of numerous meetings,
some of which were in executive session with only the
independent Directors and their counsel present.
Additional
Information About Invesco Advisers
Principal Executive Officer and Board of
Directors. Martin L. Flanagan serves as an
advisor to the board of directors of Invesco Advisers. The
current members of the board of directors of Invesco Advisers
are:
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Name
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Title
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G. Mark Armour
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Co-Chairman, Co-President & Co-Chief Executive of Invesco
Advisers
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Philip A. Taylor
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Co-Chairman, Co-President & Co-Chief Executive of Invesco
Advisers
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John M. Zerr
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Senior Vice President, of Invesco Advisers
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Kevin M. Carome
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Secretary of Invesco Advisers
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Karen Dunn Kelley
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Senior Vice President of Invesco Advisers
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Lance A. Rejsek
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Anti-Money Laundering Compliance Officer of Invesco Advisers
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Todd L. Spillane
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Chief Compliance Officer and Senior Vice President of Invesco
Advisers
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David A. Hartley
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Treasurer and Chief Accounting Officer
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The address of each member of the board of directors of Invesco
Advisers is 1555 Peachtree Street, N.E., Atlanta, Georgia 30309.
Relationship with the Fund. It is proposed
that Martin L. Flanagan, Chief Executive Officer of Invesco,
serve as an advisor to the directors of Invesco Advisers, and
Philip A. Taylor, Director, Co-President & Co-Chief
Executive Officer of Invesco Advisers, each serve as a Director
of the Fund. No other Director of the Fund is an officer,
employee, director, general partner or stockholder of Invesco
Advisers or has any material direct or indirect interest in
Invesco Advisers or any other person controlling, controlled by
or under common control with Invesco Advisers. As a result of
Mr. Flanagans and Mr. Taylors position
with Invesco Advisers, Messrs. Flanagan and Taylor each
have a material interest in the Acquisition.
32
Additional
Information about the Affiliated
Sub-Advisers
The Affiliated
Sub-Advisers,
which have offices and personnel that are located in financial
centers around the world, have been formed in part for the
purpose of researching and compiling information and making
recommendations (i) on the markets and economies of various
countries and securities of companies located in such countries
and/or
(ii) on various types of investments and investment
techniques, and providing investment advisory services. The name
and mailing address of each Affiliated
Sub-Adviser
is listed below:
Invesco Asset Management Deutschland GmbH (Invesco
Deutschland) is a German corporation with limited
liability and has its principal office at An der Welle 5,
1st Floor, Frankfurt, Germany, 60322. Invesco Deutschland
has been an investment adviser since 1998.
Invesco Asset Management Limited (IAML) is a United
Kingdom corporation and has its principal office at 30 Finsbury
Square, London, EC2A 1AG, United Kingdom. IAML has been an
investment adviser since 2001.
Invesco Asset Management (Japan) Limited (Invesco
Japan) is a Japanese corporation and has its principal
office at 25th Floor, Shiroyama Trust Tower, 3-1,
Toranomon 4-chome, Minato-ku, Tokyo
105-6025,
Japan. Invesco Japan has been an investment adviser since 1996.
Invesco Australia Limited (Invesco Australia) is an
Australian public limited company and has its principal office
at 333 Collins Street, Level 26, Melbourne Vic 3000,
Australia. Invesco Australia has been an investment adviser
since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong) is a
Hong Kong corporation and has its principal office at
32nd Floor, Three Pacific Place, 1 Queens Road East,
Hong Kong. Invesco Hong Kong has been an investment adviser
since 1994.
Invesco Senior Secured Management, Inc. (ISSM) is a
company incorporated in the state of Delaware and has its
principal office at 1166 Avenue of the Americas, New York, New
York 10036. ISSM has been as an investment adviser since 1992.
Invesco Trimark Ltd. (Invesco Trimark) is a Canadian
corporation and has its principal office at 5140 Yonge Street,
Suite 900, Toronto, Ontario, Canada, M2N 6X7. Invesco
Trimark has been as an investment adviser since 1981.
Each of the Affiliated
Sub-Advisers
currently is registered with the Securities and Exchange
Commission as an investment adviser. Each of the Affiliated
Sub-Advisers
is an indirect wholly owned subsidiary of Invesco and an
affiliate of Invesco Advisers.
33
Vote
Required
With respect to Proposal 2, the New Advisory Agreements for
the Fund 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
in the Investment Company Act as the lesser of the vote of
(i) 67% or more of the voting securities of the Fund
entitled to vote thereon present at the Meeting or represented
by proxy, provided that the holders of more than 50% of the
outstanding voting securities of the Fund are present or
represented by proxy; or (ii) more than 50% of the
outstanding voting securities of the Fund entitled to vote
thereon. The holders of Shares of the Fund will have equal
voting rights (i.e., one vote per Share) and will vote
together as a single class with respect to the approval of the
New Advisory Agreements.
The Board, including the independent Directors, unanimously
recommends that you vote FOR the approval of the New
Advisory Agreement (including the
Sub-Advisory
Agreement) for the Fund.
Security
Ownership of Certain Beneficial Owners
To the knowledge of the management of the Fund, the following
persons owned beneficially more than 5% of the Funds
outstanding shares at the Record Date. This information is based
on publicly available Schedule 13D and 13G disclosures
filed with the SEC.
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Name and Address of
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Amount and Nature of
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Beneficial Owner
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Beneficial Ownership
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Percent of Class
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Bulldog Investors
General Partnership
60 Heritage Drive
Pleasantville, New York 10570
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1,615,493 Shares with sole voting power and sole
dispositive power
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13.86%
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Bulldog Investors,
Phillip Goldstein and
Andrew Dakos
Park 80 West
Plaza Two
Saddlebrook,
New Jersey 07663
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750,348 Shares with sole voting power and 899,473 Shares
with sole dispositive power
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7.69%
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ADDITIONAL
INFORMATION
In the event that the necessary Quorum to transact business or
the vote required to approve or reject any Proposal for the Fund
is not obtained at the Meeting of the Fund, the persons named as
proxies may propose one or more adjournments of the Meeting of
the Fund to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of
a majority
34
of the Funds shares present in person or by Proxy at the
Meeting. The persons named as Proxies will vote in favor of such
adjournment those Proxies which have been received by the date
of the Meeting.
Abstentions and broker non-votes will not count as
votes in favor of any proposal, but will be deemed to be present
at the Meeting of the Fund for purposes of determining a Quorum.
Broker non-votes are shares held in street name for
which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to
vote and for which the broker does not have discretionary voting
authority. Abstentions and broker non-votes
(i.e., Shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial
owner or the persons entitled to vote and (ii) the broker
does not have discretionary voting power on a particular matter)
will have the same effect as votes against Proposal 2.
STOCKHOLDER
PROPOSALS
Any Stockholder who desires to bring a proposal at the
Funds Annual Meeting of Stockholders in 2010 must deliver
written notice thereof to the Secretary of the Fund not before
March 19, 2010 and not later than April 18, 2010, in
the manner and form required by the Funds By-Laws. The
Fund will furnish, without charge, a copy of its By-Laws to any
Stockholder of the Fund requesting the By-Laws. Requests for the
Funds By-Laws should be made in writing to the Fund,
c/o Morgan
Stanley Investment Management Inc., 522 Fifth Avenue, Legal
Department 19th Floor, New York, New York
10036, if made prior to consummation of the Acquisition.
Requests made after the consummation of the Acquisition should
be addressed to Two Peachtree Pointe, 1555 Peachtree Street
N.E., Atlanta, Georgia 30309.
REPORTS
TO STOCKHOLDERS
The Funds most recent Annual Report for the Funds
most recent fiscal year end and the most recent Semi-Annual
Report succeeding the Annual Report have been previously sent to
Stockholders and are available without charge upon request from
Morgan Stanleys Client Relations Department, 2800 Post Oak
Blvd., 44th Floor, Houston, Texas 77056,
(800) 221-6726
(toll-free) or by visiting www.morganstanley.com/im.
INTEREST
OF CERTAIN PERSONS
Morgan Stanley, the Current Adviser, Morgan Stanley Trust,
Morgan Stanley Services, Morgan Stanley & Co.
Incorporated
and/or
Morgan Stanley Smith Barney LLC and certain of their respective
directors, officers, and employees, including persons who are
Directors or Officers of the Fund, may be deemed to have an
interest in certain of the Proposals described in this Proxy
Statement to the extent that certain of such companies and their
affiliates have contractual and
35
other arrangements, described elsewhere in this Proxy Statement,
pursuant to which they are paid fees by the Fund, and certain of
those individuals are compensated for performing services
relating to the Fund and may also own shares of Morgan Stanley.
Such companies and persons may thus be deemed to derive benefits
from the approvals by Stockholders of such Proposals.
OTHER
BUSINESS
The management of the Fund knows of no other matters which may
be presented at the Meeting. However, if any matters not now
known properly come before the Meeting, it is the intention of
the persons named in the enclosed form of Proxy, or their
substitutes, to vote all shares that they are entitled to vote
on any such matter, utilizing such Proxy in accordance with
their best judgment on such matters.
By Order of the Board of Directors,
Mary E. Mullin
Secretary
36
APPENDIX A
DESCRIPTIONS
OF COMMITTEES OF THE BOARD
If elected, the newly comprised Board of the Fund will have an
Audit Committee, a Compliance Committee, a Governance Committee,
an Investments Committee and a Valuation, Distribution and Proxy
Oversight Committee. Members that will comprise each Committee
following the consummation of the Acquisition will be determined
by the newly comprised Board.
The Audit Committees primary purposes will be to:
(i) oversee qualifications and performance of the Board in
oversight of the independent registered public accountant,
independence and performance; (ii) appoint independent
registered public accountants for the Fund;
(iii) pre-approve all permissible audit and non-audit
services that are provided to the Fund by their independent
registered public accountants to the extent required by
Section 10A(h) and (i) of the Securities Exchange Act
of 1934; (iv) pre-approve, in accordance with
Rule 2-01(c)(7)(ii)
of
Regulation S-X,
certain non-audit services provided by the Funds
independent registered public accountants to the Funds
investment adviser and certain other affiliated entities;
(v) review the audit and tax plans prepared by the
independent registered public accountants; (vi) review the
Funds audited financial statements; (vii) review the
process that management uses to evaluate and certify disclosure
controls and procedures in
Form N-CSR;
(viii) review the process for preparation and review of the
Funds stockholder reports; (ix) review certain tax
procedures maintained by the Fund; (x) review modified or
omitted officer certifications and disclosures; (xi) review
any internal audits of the Fund; (xii) establish procedures
regarding questionable accounting or auditing matters and other
alleged violations; (xiii) set hiring policies for
employees and proposed employees of the Fund who are employees
or former employees of the independent registered public
accountants; and (xiv) remain informed of (a) the
Funds accounting systems and controls, (b) regulatory
changes and new accounting pronouncements that affect the
Funds net asset value calculations and financial statement
reporting requirements, and (c) communications with
regulators regarding accounting and financial reporting matters
that pertain to the Fund. A copy of the proposed Audit Committee
Charter for the Fund is attached hereto as Appendix D. The
Stockholders of the Fund are not being asked to approve the
Audit Committee Charter.
The Compliance Committee will be responsible for
(i) recommending to the Board and the independent Directors
the appointment, compensation and removal of the Funds
Chief Compliance Officer; (ii) recommending to the
independent Directors the appointment, compensation and removal
of the Funds Senior Officer appointed pursuant to the
terms of the Assurances of Discontinuance entered into by the
New York Attorney General, Invesco Advisers and INVESCO Funds
Group, Inc. (IFG); (iii) recommending to the
independent Directors the
Appendix A-1
appointment and removal of Invesco Advisers independent
Compliance Consultant (the Compliance Consultant)
and reviewing the report prepared by the Compliance Consultant
upon its compliance review of Invesco Advisers (the
Report) and any objections made by Invesco Advisers
with respect to the Report; (iv) reviewing any report
prepared by a third party who is not an interested person of
Invesco Advisers, upon the conclusion by such third party of a
compliance review of Invesco Advisers; (v) reviewing all
reports on compliance matters from the Funds Chief
Compliance Officer, (vi) reviewing all recommendations made
by the Senior Officer regarding Invesco Advisers
compliance procedures, (vii) reviewing all reports from the
Senior Officer of any violations of state and federal securities
laws, the Colorado Consumer Protection Act, or breaches of
Invesco Advisers fiduciary duties to Fund stockholders and
of Invesco Advisers Code of Ethics; (viii) overseeing
all of the compliance policies and procedures of the Fund and
their service providers adopted pursuant to
Rule 38a-1
of the Investment Company Act; (ix) from time to time,
reviewing certain matters related to redemption fee waivers and
recommending to the Board whether or not to approve such
matters; (x) receiving and reviewing quarterly reports on
the activities of Invesco Advisers Internal Compliance
Controls Committee; (xi) reviewing all reports made by
Invesco Advisers Chief Compliance Officer;
(xii) reviewing and recommending to the independent
Directors whether to approve procedures to investigate matters
brought to the attention of Invesco Advisers ombudsman;
(xiii) risk management oversight with respect to the Fund
and, in connection therewith, receiving and overseeing risk
management reports from Invesco that are applicable to the Fund
or their service providers; and (xiv) overseeing potential
conflicts of interest that are reported to the Compliance
Committee by Invesco Advisers, the Chief Compliance Officer, the
Senior Officer
and/or the
Compliance Consultant.
The Governance Committee will be responsible for
(i) nominating persons who will qualify as independent
directors for (a) election as directors in connection with
meetings of stockholders of the Fund that are called to vote on
the election of directors, (b) appointment by the Board as
directors in connection with filling vacancies that arise in
between meetings of stockholders; (ii) reviewing the size
of the Board, and recommending to the Board whether the size of
the Board shall be increased or decreased; (iii) nominating
the Chairperson of the Board; (iv) monitoring the
composition of the Board and each committee of the Board, and
monitoring the qualifications of all directors;
(v) recommending persons to serve as members of each
committee of the Board (other than the Compliance Committee), as
well as persons who shall serve as the chair and vice chair of
each such committee; (vi) reviewing and recommending the
amount of compensation payable to the independent directors;
(vii) overseeing the selection of independent legal counsel
to the independent directors; (viii) reviewing and
approving the compensation paid to independent legal counsel to
the independent directors; (ix) reviewing and approving the
compensation paid to counsel and other advisers,
Appendix A-2
if any, to the Committees of the Board; and (x) reviewing
as they deem appropriate administrative
and/or
logistical matters pertaining to the operations of the Board. A
copy of the proposed Governance Committee Charter for the Fund
is attached hereto as Appendix E. The Stockholders of the
Fund are not being asked to approve the Governance Committee
Charter.
The Investments Committees primary purposes will be to
(i) assist the Board in its oversight of the investment
management services provided by Invesco Advisers and the
Sub-Advisers;
and (ii) review all proposed and existing advisory,
sub-advisory
and distribution arrangements for the Fund, and to recommend
what action the full Board and the independent Directors take
regarding the approval of all such proposed arrangements and the
continuance of all such existing arrangements.
It is expected that, following the consummation of the
Acquisition, the Investments Committee will establish three
Sub-Committees.
The
Sub-Committees
will be responsible for: (i) reviewing the performance,
fees and expenses of the Fund; (ii) reviewing with the
applicable portfolio managers from time to time the investment
objective(s), policies, strategies and limitations of the Fund;
(iii) evaluating the investment advisory,
sub-advisory
and distribution arrangements in effect or proposed for the
Fund, unless the Investments Committee takes such action
directly; (iv) being familiar with the registration
statements and periodic stockholder reports applicable to their
Fund; and (v) such other investment-related matters as the
Investments Committee may delegate to the
Sub-Committee
from time to time.
The primary purposes of the Valuation, Distribution and Proxy
Oversight Committee are: (a) to address issues requiring
action or oversight by the Board of the Fund (i) in the
valuation of the Funds portfolio securities consistent
with the Pricing Procedures, (ii) in oversight of the
creation and maintenance by the principal underwriters of the
Fund of an effective distribution and marketing system to build
and maintain an adequate asset base and to create and maintain
economies of scale for the Fund, (iii) in the review of
existing distribution arrangements for the Fund under
Rule 12b-1
and Section 15 of the Investment Company Act, and
(iv) in the oversight of proxy voting on portfolio
securities of the Fund; and (b) to make regular reports to
the full Board of the Fund.
The Valuation, Distribution and Proxy Oversight Committee will
be responsible for (a) with regard to valuation,
(i) developing an understanding of the valuation process
and the Pricing Procedures, (ii) reviewing the Pricing
Procedures and making recommendations to the full Board with
respect thereto, (iii) reviewing the reports described in
the Pricing Procedures and other information from Invesco
Advisers regarding fair value determinations made pursuant to
the Pricing Procedures by Invesco Advisers internal
valuation committee and making reports and recommendations to
the full Board with respect thereto, (iv) receiving the
reports of Invesco Advisers internal valuation committee
Appendix A-3
requesting approval of any changes to pricing vendors or pricing
methodologies as required by the Pricing Procedures and the
annual report of Invesco Advisers evaluating the pricing
vendors, approving changes to pricing vendors and pricing
methodologies as provided in the Pricing Procedures, and
recommending annually the pricing vendors for approval by the
full Board; (v) upon request of Invesco Advisers, assisting
Invesco Advisers internal valuation committee or the full
Board in resolving particular fair valuation issues;
(vi) reviewing the reports described in the Procedures for
Determining the Liquidity of Securities (the Liquidity
Procedures) and other information from Invesco Advisers
regarding liquidity determinations made pursuant to the
Liquidity Procedures by Invesco Advisers and making reports and
recommendations to the full Board with respect thereto, and
(vii) overseeing actual or potential conflicts of interest
by investment personnel or others that could affect their input
or recommendations regarding pricing or liquidity issues;
(b) with regard to distribution, (i) developing an
understanding of mutual fund distribution and marketing channels
and legal, regulatory and market developments regarding
distribution, (ii) reviewing periodic distribution and
marketing determinations and annual approval of distribution
arrangements and making reports and recommendations to the full
Board with respect thereto, and (iii) reviewing other
information from the principal underwriters to the Fund
regarding distribution and marketing of the Fund and making
recommendations to the full Board with respect thereto; and
(c) with regard to proxy voting, (i) overseeing the
implementation of the Proxy Voting Guidelines (the
Guidelines) and the Proxy Policies and Procedures
(the Proxy Procedures) by Invesco Advisers and the
Sub-Advisors,
reviewing the Quarterly Proxy Voting Report and making
recommendations to the full Board with respect thereto,
(ii) reviewing the Guidelines and the Proxy Procedures and
information provided by Invesco Advisers and the
Sub-Advisors
regarding industry developments and best practices in connection
with proxy voting and making recommendations to the full Board
with respect thereto, and (iii) in implementing its
responsibilities in this area, assisting Invesco Advisers in
resolving particular proxy voting issues.
Appendix A-4
APPENDIX B
FORM OF
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this day
of ,
2010, by and between the registered investment companies as set
forth on Appendix I (each, a Fund and
collectively, the Funds), as the same may be amended
from time to time, and Invesco Advisers, Inc., a Delaware
corporation (the Adviser).
RECITALS
WHEREAS, each Fund is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as a
closed-end management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers
Act of 1940, as amended (the Advisers Act), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, each Fund and the Adviser desire to enter into an
agreement to provide for investment advisory services to the
Funds upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Adviser
shall act as investment adviser for the Funds and shall, in such
capacity, supervise all aspects of the Funds operations,
including the investment and reinvestment of cash, securities or
other properties comprising the Funds assets, subject at
all times to the policies and control of the Board of
Trustees/Directors of each Fund (the Board of
Trustees/Directors). The Adviser shall give each Fund the
benefit of its best judgment, efforts and facilities in
rendering its services as investment adviser.
2. Investment Analysis and
Implementation. In carrying out its obligations
under Section 1 hereof, the Adviser shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Funds, and whether concerning the
individual issuers whose securities are included in the assets
of the Funds or the activities in which such issuers engage, or
with respect to securities which the Adviser considers desirable
for inclusion in the Funds assets;
Appendix B-1
(c) determine which issuers and securities shall be
represented in the Funds investment portfolios and
regularly report thereon to the Board of Trustees/Directors;
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and
regularly report thereon to the Board of
Trustees/Directors; and
(e) take, on behalf of each Fund, all actions which appear
to the Funds necessary to carry into effect such purchase and
sale programs and supervisory functions as aforesaid, including
but not limited to the placing of orders for the purchase and
sale of securities for the Funds.
3. Securities Lending Duties and
Fees. The Adviser agrees to provide the following
services in connection with the securities lending activities of
each Fund: (a) oversee participation in the securities
lending program to ensure compliance with all applicable
regulatory and investment guidelines; (b) assist the
securities lending agent or principal (the Agent) in
determining which specific securities are available for loan;
(c) monitor the Agent to ensure that securities loans are
effected in accordance with the Advisers instructions and
with procedures adopted by the Board of Trustees/Directors;
(d) prepare appropriate periodic reports for, and seek
appropriate approvals from, the Board of Trustees/Directors with
respect to securities lending activities; (e) respond to
Agent inquiries; and (f) perform such other duties as
necessary.
As compensation for such services provided by the Adviser in
connection with securities lending activities of each Fund, a
lending Fund shall pay the Adviser a fee equal to 25% of the net
monthly interest or fee income retained or paid to the Fund from
such activities.
4. Delegation of
Responsibilities. The Adviser is authorized to
delegate any or all of its rights, duties and obligations under
this Agreement to one or more
sub-advisors,
and may enter into agreements with
sub-advisers,
and may replace any such
sub-advisors
from time to time in its discretion, in accordance with the 1940
Act, the Advisers Act, and rules and regulations thereunder, as
such statutes, rules and regulations are amended from time to
time or are interpreted from time to time by the staff of the
Securities and Exchange Commission (SEC), and if
applicable, exemptive orders or similar relief granted by the
SEC and upon receipt of approval of such
sub-advisors
by the Board of Trustees/Directors and by shareholders (unless
any such approval is not required by such statutes, rules,
regulations, interpretations, orders or similar relief).
5. Independent Contractors. The
Adviser and any
sub-advisors
shall for all purposes herein be deemed to be independent
contractors and shall, unless otherwise expressly provided or
authorized, have no authority to
Appendix B-2
act for or represent each Fund in any way or otherwise be deemed
to be an agent of each Fund.
6. Control by Board of
Trustees/Directors. Any investment program
undertaken by the Adviser pursuant to this Agreement, as well as
any other activities undertaken by the Adviser on behalf of the
Funds, shall at all times be subject to any directives of the
Board of Trustees/Directors.
7. Compliance with Applicable
Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the
Advisers Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of each
Fund, as the same may be amended from time to time under the
Securities Act of 1933 and the 1940 Act;
(c) the provisions of each Funds Articles of
Incorporation or Declaration of Trust, as applicable, (together,
the Declaration) as the same may be amended from
time to time;
(d) the provisions of the by-laws of each Fund, as the same
may be amended from time to time; and
(e) any other applicable provisions of state, federal or
foreign law.
8. Broker-Dealer Relationships. The
Adviser is responsible for decisions to buy and sell securities
for the Funds, broker-dealer selection, and negotiation of
brokerage commission rates.
(a) The Advisers primary consideration in effecting a
security transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Adviser will take the following into
consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size
of and the difficulty in executing the order; and the value of
the expected contribution of the broker-dealer to the investment
performance of the Funds on a continuing basis. Accordingly, the
price to the Funds in any transaction may be less favorable than
that available from another broker-dealer if the difference is
reasonably justified by other aspects of the fund execution
services offered.
(c) Subject to such policies as the Board of
Trustees/Directors may from time to time determine, the Adviser
shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason
of its having caused the Funds to pay a broker or dealer that
provides brokerage and research services to the Adviser an
Appendix B-3
amount of commission for effecting a fund investment transaction
in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the
Advisers overall responsibilities with respect to a
particular Fund and to other clients of the Adviser as to which
the Adviser exercises investment discretion. The Adviser is
further authorized to allocate the orders placed by it on behalf
of the Funds to such brokers and dealers who also provide
research or statistical material, or other services to the
Funds, to the Adviser, or to any
sub-advisor.
Such allocation shall be in such amounts and proportions as the
Adviser shall determine and the Adviser will report on said
allocations regularly to the Board of Trustees/Directors
indicating the brokers to whom such allocations have been made
and the basis therefor.
(d) With respect to one or more Funds, to the extent the
Adviser does not delegate trading responsibility to one or more
sub-advisors,
in making decisions regarding broker-dealer relationships, the
Adviser may take into consideration the recommendations of any
sub-advisor
appointed to provide investment research or advisory services in
connection with the Funds, and may take into consideration any
research services provided to such
sub-advisor
by broker-dealers.
(e) Subject to the other provisions of this Section 8,
the 1940 Act, the Securities Exchange Act of 1934, and rules and
regulations thereunder, as such statutes, rules and regulations
are amended from time to time or are interpreted from time to
time by the staff of the SEC, any exemptive orders issued by the
SEC, and any other applicable provisions of law, the Adviser may
select brokers or dealers with which it or the Funds are
affiliated.
10. Compensation. The compensation
that each Fund shall pay the Adviser is set forth in
Appendix II attached hereto.
11. Expenses of the Funds. All of
the ordinary business expenses incurred in the operations of the
Funds and the offering of their shares shall be borne by the
Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Funds include but are not limited to
brokerage commissions, taxes, legal, accounting, auditing, or
governmental fees, the cost of preparing share certificates,
custodian, transfer and shareholder service agent costs,
expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses
relating to trustees and shareholder meetings, the cost of
preparing and distributing reports and notices to shareholders,
the fees and other expenses incurred by the Funds in connection
with membership in investment company
Appendix B-4
organizations and the cost of printing copies of prospectuses
and statements of additional information distributed to the
Funds shareholders.
12. Services to Other Companies or
Accounts. Each Fund understands that the Adviser
now acts, will continue to act and may act in the future as
investment manager or adviser to fiduciary and other managed
accounts, and as investment manager or adviser to other
investment companies, including any offshore entities, or
accounts, and each Fund has no objection to the Adviser so
acting, provided that whenever a Fund and one or more other
investment companies or accounts managed or advised by the
Adviser have available funds for investment, investments
suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each
company and account. Each Fund recognizes that in some cases
this procedure may adversely affect the size of the positions
obtainable and the prices realized for the Funds.
13. Non-Exclusivity. Each Fund
understands that the persons employed by the Adviser to assist
in the performance of the Advisers duties under this
Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or
restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
Each Fund further understands and agrees that officers or
directors of the Adviser may serve as officers or trustees of a
Fund, and that officers or trustees of the Funds may serve as
officers or directors of the Adviser to the extent permitted by
law; and that the officers and directors of the Adviser are not
prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as
partners, officers, directors or trustees of any other firm or
trust, including other investment advisory companies.
14. Effective Date, Term and
Approval. This Agreement shall become effective
with respect to a Fund, if approved by the shareholders of such
Fund, on the Effective Date for such Fund, as set forth in
Appendix I attached hereto. If so approved, this Agreement
shall thereafter continue in force and effect with respect to a
Fund for two years, and may be continued from year to year
thereafter, provided that the continuation of the Agreement is
specifically approved at least annually:
(a) (i) by the Funds Board of Trustees/Directors
or (ii) by the vote of a majority of the outstanding
voting securities of such Fund (as defined in
Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the
Funds directors/trustees who are not parties to this
Agreement or interested persons (as defined in the
1940 Act) of a party to this Agreement (other than as
Appendix B-5
directors/trustees of the Fund), by votes cast in person at a
meeting specifically called for such purpose.
14. Termination. This Agreement may
be terminated as to a Fund at any time, without the payment of
any penalty, by vote of the Funds Board of
Trustees/Directors or by vote of a majority of the outstanding
voting securities of the applicable Fund, or by the Adviser, on
sixty (60) days written notice to the other party.
The notice provided for herein may be waived by the party
entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term
assignment for purposes of this paragraph having the
meaning defined in Section 2(a)(4) of the 1940 Act.
15. Amendment. No amendment of this
Agreement shall be effective unless it is in writing and signed
by the party against which enforcement of the amendment is
sought.
16. Liability of Adviser and
Fund. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Adviser or any of its
officers, directors or employees, the Adviser shall not be
subject to liability to a Fund or to any shareholder of such
Fund for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security. Any
liability of the Adviser to one Fund shall not automatically
impart liability on the part of the Adviser to any other Fund.
No Fund shall be liable for the obligations of any other Fund.
17. Liability of
Shareholders. Notice is hereby given that, as
provided by applicable law, the obligations of or arising out of
this Agreement are not binding upon any of the shareholders of a
Fund individually but are binding only upon the assets and
property of the Fund and that the shareholders shall be
entitled, to the fullest extent permitted by applicable law, to
the same limitation on personal liability as shareholders of
private corporations for profit.
18. Limited Liability of Massachusetts Business
Trusts. The Declaration of Trust, together with
all amendments thereto establishing each Fund identified in
Appendix I as a Massachusetts business trust (the
Declaration), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that
the name of such Funds refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or
agent of such Funds shall be held to any personal liability, nor
shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in
connection with the affairs of such Funds, but the
Trust Estate only shall be liable.
19. Notices. Any notices under this
Agreement shall be in writing, addressed and delivered,
telecopied or mailed postage paid, to the other party entitled
to receipt thereof at such address as such party may designate
for the
Appendix B-6
receipt of such notice. Until further notice to the other party,
it is agreed that the address of each Fund and that of the
Adviser shall be 11 Greenway Plaza, Suite 100,
Houston,
Texas 77046-1173.
20. Questions of
Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in
or otherwise derived from a term or provision of the 1940 Act or
the Advisers Act shall be resolved by reference to such term or
provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to said
Acts. In addition, where the effect of a requirement of the 1940
Act or the Advisers Act reflected in any provision of the
Agreement is revised by rule, regulation or order of the SEC,
such provision shall be deemed to incorporate the effect of such
rule, regulation or order. Subject to the foregoing, this
Agreement shall be governed by and construed in accordance with
the laws (without reference to conflicts of law provisions) of
the State of Texas.
21. License Agreement. Each Fund
shall have the non-exclusive right to use the name
[AIM] to designate any current or future series of
shares only so long as Invesco Advisers, Inc. serves as
investment manager or adviser to the Fund with respect to such
series of shares.
Appendix B-7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective
officers on the day and year first written above.
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Attest:
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By:
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Assistant Secretary
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President
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(SEAL)
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Invesco Advisers, Inc.
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Attest:
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By:
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Assistant Secretary
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President
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(SEAL)
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Appendix B-8
APPENDIX I
FUNDS AND EFFECTIVE DATES
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Name of Fund
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Effective Date of Advisory Agreement
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Morgan Stanley High Yield Fund, Inc. (Maryland Corporation)
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Appendix B-9
APPENDIX II
COMPENSATION TO THE ADVISER
The Fund shall pay the Adviser, out of the assets of the Fund,
as full compensation for all services rendered, an advisory fee
set forth below.
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Fund
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Annual Rate
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Morgan Stanley High Yield Fund, Inc.
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0.70% as a percentage of average weekly net assets
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Appendix B-10
APPENDIX C
FORM OF
SUB-ADVISORY
CONTRACT
This contract is made as
of ,
2010, by and among Invesco Advisers, Inc. (the
Adviser) and each of Invesco Asset Management
Deutschland GmbH; Invesco Asset Management Limited; Invesco
Asset Management (Japan) Limited; Invesco Australia Limited;
Invesco Hong Kong Limited; Invesco Senior Secured Management,
Inc. and Invesco Trimark Ltd. (each a
Sub-Adviser
and, collectively, the
Sub-Advisers).
WHEREAS:
A) The Adviser has entered into an investment advisory
agreement with each of the registered investment companies as
set forth on Exhibit I (each, a Fund and
collectively, the Funds), as the same may be amended
from time to time, each a closed-end management investment
company registered under the Investment Company Act of 1940, as
amended (the 1940 Act);
B) The Adviser is authorized to delegate certain, any or
all of its rights, duties and obligations under investment
advisory agreements to
sub-advisers,
including
sub-advisers
that are affiliated with the Adviser;
C) Each
Sub-Adviser
represents that it is registered with the U.S. Securities
and Exchange Commission (SEC) as an investment
adviser under the Investment Advisers Act of 1940
(Advisers Act), or will be so registered prior to
providing any services to any of the Funds under this Contract,
and engages in the business of acting as an investment
adviser; and
D) The
Sub-Advisers
and their affiliates have personnel in various locations
throughout the world and have been formed in part for the
purpose of researching and compiling information and
recommendations on the economies of various countries and
securities of issuers located in such countries or on various
types of investments and investment techniques, and providing
investment advisory services in connection therewith.
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. Appointment. The Adviser hereby
appoints each
Sub-Adviser
as a
sub-adviser
of each Fund for the period and on the terms set forth herein.
Each
Sub-Adviser
accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Duties as
Sub-Adviser. Subject
to paragraph 7 below, the Adviser may, in its discretion,
appoint each
Sub-Adviser
to perform one or more of the following services with respect to
all or a portion of the investments of
Appendix C-1
each Fund. The services and the portion of the investments of
each Fund to be advised or managed by each
Sub-Adviser
shall be as agreed upon from time to time by the Adviser and the
Sub-Advisers.
Each
Sub-Adviser
shall pay the salaries and fees of all personnel of such
Sub-Adviser
performing services for the Funds related to research,
statistical and investment activities.
(a) Investment Advice. If
and to the extent requested by the Adviser, each
Sub-Adviser
shall provide investment advice to one or more of the Funds and
the Adviser with respect to all or a portion of the investments
of such Fund(s) or with respect to various investment
techniques, and in connection with such advice shall furnish
such Fund(s) and the Adviser with such factual information,
research reports and investment recommendations as the Adviser
may reasonably require.
(b) Order Execution. If and
to the extent requested by the Adviser, each
Sub-Adviser
shall place orders for the purchase and sale of portfolio
securities or other investments for one or more of the Funds. In
so doing, each
Sub-Adviser
agrees that it shall comply with paragraph 3 below.
(c) Discretionary Investment
Management. If and to the extent requested by
the Adviser, each
Sub-Adviser
shall, subject to the supervision of each Funds Board of
Trustees/Directors (the Board) and the Adviser,
manage all or a portion of the investments of one or more of the
Funds in accordance with the investment objectives, policies and
limitations provided in such Funds Registration Statement
and such other limitations as the Fund or the Adviser may impose
by notice to the applicable
Sub-Adviser(s)
and otherwise in accordance with paragraph 5 below. With
respect to the portion of the investments of a Fund under its
management, each
Sub-Adviser
is authorized to: (i) make investment decisions on behalf
of the Fund with regard to any stock, bond, other security or
investment instrument, including but not limited to foreign
currencies, futures, options and other derivatives, and with
regard to borrowing money; (ii) place orders for the
purchase and sale of securities or other investment instruments
with such brokers and dealers as the
Sub-Adviser
may select; and (iii) upon the request of the Adviser,
provide additional investment management services to the Fund,
including but not limited to managing the Funds cash and
cash equivalents and lending securities on behalf of the Fund.
In selecting brokers or dealers to execute trades for the Funds,
each
Sub-Adviser
will comply with its written policies and procedures regarding
brokerage and trading, which policies and procedures shall have
been approved by the Board. All discretionary investment
management and any other activities of each
Sub-Adviser
shall at all times be subject to the control and direction of
the Adviser and the Board.
3. Broker-Dealer
Relationships. Each
Sub-Adviser
agrees that, in placing orders with brokers and dealers, it will
attempt to obtain the best net result in terms of price and
execution. Consistent with this obligation, each
Appendix C-2
Sub-Adviser
may, in its discretion, purchase and sell portfolio securities
from and to brokers and dealers who sell shares of the Funds or
provide the Funds, the Advisers other clients, or a
Sub-Advisers
other clients with research, analysis, advice and similar
services. Each
Sub-Adviser
may pay to brokers and dealers, in return for such research and
analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to such
Sub-Adviser
determining in good faith that such commission or spread is
reasonable in terms either of the particular transaction or of
the overall responsibility of the Adviser and such
Sub-Adviser
to the Funds and their other clients and that the total
commissions or spreads paid by each Fund will be reasonable in
relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to
a
Sub-Adviser,
or any affiliated person thereof, except in accordance with the
applicable securities laws and the rules and regulations
thereunder and any exemptive orders currently in effect.
Whenever a
Sub-Adviser
simultaneously places orders to purchase or sell the same
security on behalf of a Fund and one or more other accounts
advised by such
Sub-Adviser,
such orders will be allocated as to price and amount among all
such accounts in a manner believed to be equitable to each
account.
4. Books and Records. Each
Sub-Adviser
will maintain all required books and records with respect to the
securities transactions of the Funds, and will furnish the Board
and the Adviser with such periodic and special reports as the
Board or the Adviser reasonably may request. Each
Sub-Adviser
hereby agrees that all records which it maintains for the
Adviser are the property of the Adviser, and agrees to preserve
for the periods prescribed by applicable law any records which
it maintains for the Adviser and which are required to be
maintained, and further agrees to surrender promptly to the
Adviser any records which it maintains for the Adviser upon
request by the Adviser.
5. Further Duties.
(a) In all matters relating to the performance of this
Contract, each
Sub-Adviser
will act in conformity with the Articles of Incorporation or
Declaration of Trust, as applicable, By-Laws and Registration
Statement of each Fund and with the instructions and directions
of the Adviser and the Board and will comply with the
requirements of the 1940 Act, the rules, regulations, exemptive
orders and no-action positions thereunder, and all other
applicable laws and regulations.
(b) Each
Sub-Adviser
shall maintain compliance procedures for the Funds that it and
the Adviser reasonably believe are adequate to ensure compliance
with the federal securities laws (as defined in
Rule 38a-1
under the 1940 Act) and the investment objective(s) and policies
as stated in the Funds prospectuses and statements of
additional information. Each
Appendix C-3
Sub-Adviser
at its expense will provide the Adviser or the Funds Chief
Compliance Officer with such compliance reports relating to its
duties under this Contract as may be requested from time to
time. Notwithstanding the foregoing, each
Sub-Adviser
will promptly report to the Adviser any material violations of
the federal securities laws (as defined in
Rule 38a-1
under the 1940 Act) that it is or should be aware of or of any
material violation of the
Sub-Advisers
compliance policies and procedures that pertain to the Funds.
(c) Each
Sub-Adviser
at its expense will make available to the Board and the Adviser
at reasonable times its portfolio managers and other appropriate
personnel, either in person or, at the mutual convenience of the
Adviser and the
Sub-Adviser,
by telephone, in order to review the investment policies,
performance and other investment related information regarding
the Funds and to consult with the Board and the Adviser
regarding the Funds investment affairs, including
economic, statistical and investment matters related to the
Sub-Advisers
duties hereunder, and will provide periodic reports to the
Adviser relating to the investment strategies it employs. Each
Sub-Adviser
and its personnel shall also cooperate fully with counsel and
auditors for, and the Chief Compliance Officer of, the Adviser
and the Fund.
(d) Each
Sub-Adviser
will assist in the fair valuation of portfolio securities held
by the Funds. The
Sub-Adviser
will use its reasonable efforts to provide, based upon its own
expertise, and to arrange with parties independent of the
Sub-Adviser
such as broker-dealers for the provision of, valuation
information or prices for securities for which prices are deemed
by the Adviser or the Funds administrator not to be
readily available in the ordinary course of business from an
automated pricing service. In addition, each
Sub-Adviser
will assist the Funds and their agents in determining whether
prices obtained for valuation purposes accurately reflect market
price information relating to the assets of the Funds at such
times as the Adviser shall reasonably request, including but not
limited to, the hours after the close of a securities market and
prior to the daily determination of a Funds net asset
value per share.
(e) Each
Sub-Adviser
represents and warrants that it has adopted a code of ethics
meeting the requirements of
Rule 17j-1
under the 1940 Act and the requirements of
Rule 204A-1
under the Advisers Act and has provided the Adviser and the
Board a copy of such code of ethics, together with evidence of
its adoption, and will promptly provide copies of any changes
thereto, together with evidence of their adoption. Upon request
of the Adviser, but in any event no less frequently than
annually, each
Sub-Adviser
will supply the Adviser a written report that (A) describes
any issues arising under the code of ethics or procedures since
the
Sub-Advisers
last report, including but not limited to material violations of
the code of ethics or procedures and sanctions imposed in
response to the material violations; and (B) certifies
Appendix C-4
that the procedures contained in the
Sub-Advisers
code of ethics are reasonably designed to prevent access
persons from violating the code of ethics.
(f) Upon request of the Adviser, each
Sub-Adviser
will review draft reports to shareholders and other documents
provided or available to it and provide comments on a timely
basis. In addition, each
Sub-Adviser
and each officer and portfolio manager thereof designated by the
Adviser will provide on a timely basis such certifications or
sub-certifications
as the Adviser may reasonably request in order to support and
facilitate certifications required to be provided by the
Funds Principal Executive Officer and Principal Financial
Officer and will adopt such disclosure controls and procedures
in support of the disclosure controls and procedures adopted by
the Funds as the Adviser, deems are reasonably necessary.
(g) Unless otherwise directed by the Adviser or the Board,
each
Sub-Adviser
will vote all proxies received in accordance with the
Advisers proxy voting policy or, if the
Sub-Adviser
has a proxy voting policy approved by the Board, the
Sub-Advisers
proxy voting policy. Each
Sub-Adviser
shall maintain and shall forward to the Funds or their
designated agent such proxy voting information as is necessary
for the Funds to timely file proxy voting results in accordance
with
Rule 30b1-4
under the 1940 Act.
(h) Each
Sub-Adviser
shall provide the Funds custodian on each business day
with information relating to all transactions concerning the
assets of the Funds and shall provide the Adviser with such
information upon request of the Adviser.
6. Services Not Exclusive. The
services furnished by each
Sub-Adviser
hereunder are not to be deemed exclusive and such
Sub-Adviser
shall be free to furnish similar services to others so long as
its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of
any director, officer or employee of a
Sub-Adviser,
who may also be a Director/Trustee, officer or employee of a
Fund, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of
any other business, whether of a similar nature or a dissimilar
nature.
7. Use of Subsidiaries and
Affiliates. Each
Sub-Adviser
may perform any or all of the services contemplated hereunder,
including but not limited to providing investment advice to the
Funds pursuant to paragraph 2(a) above and placing orders
for the purchase and sale of portfolio securities or other
investments for the Funds pursuant to paragraph 2(b) above,
directly or through such of its subsidiaries or other
affiliates, including each of the other
Sub-Advisers,
as such
Sub-Adviser
shall determine; provided, however, that performance of such
services through such subsidiaries
Appendix C-5
or other affiliates shall have been approved, when required by
the 1940 Act, by (i) a vote of a majority of that
Funds independent Directors/Trustees who are not parties
to this Contract or interested persons (as defined
in the 1940 Act) of a party to this Contract, other than as
Board members (Independent Directors/Trustees), cast
in person at a meeting called for the purpose of voting on such
approval,
and/or
(ii) a vote of a majority of that Funds outstanding
voting securities.
8. Compensation.
(a) The only fees payable to the
Sub-Advisers
under this Contract are for providing discretionary investment
management services pursuant to paragraph 2(c) above. For
such services, the Adviser will pay each
Sub-Adviser
a fee, computed daily and paid monthly, equal to (i) 40% of
the monthly compensation that the Adviser receives from each
Fund pursuant to its advisory agreement with the Funds,
multiplied by (ii) the fraction equal to the net assets of
such Fund as to which the
Sub-Adviser
shall have provided discretionary investment management services
pursuant to paragraph 2(c) above for that month divided by
the net assets of such Fund for that month. This fee shall be
payable on or before the last business day of the next
succeeding calendar month. This fee shall be reduced to reflect
contractual or voluntary fee waivers or expense limitations by
the Adviser, if any, in effect from time to time as set forth in
paragraph 9 below. In no event shall the aggregate monthly
fees paid to the
Sub-Advisers
under this Contract exceed 40% of the monthly compensation that
the Adviser receives from each Fund pursuant to its advisory
agreement with the Funds, as reduced to reflect contractual or
voluntary fee waivers or expense limitations by the Adviser, if
any.
(b) If this Contract becomes effective or terminates before
the end of any month, the fees for the period from the effective
date to the end of the month or from the beginning of such month
to the date of termination, as the case may be, shall be
prorated according to the proportion which such period bears to
the full month in which such effectiveness or termination occurs.
(c) If a
Sub-Adviser
provides the services under paragraph 2(c) above to a Fund
for a period that is less than a full month, the fees for such
period shall be prorated according to the proportion which such
period bears to the applicable full month.
9. Fee Waivers and Expense
Limitations. If, for any fiscal year of a Fund,
the amount of the advisory fee which such Fund would otherwise
be obligated to pay to the Adviser is reduced because of
contractual or voluntary fee waivers or expense limitations by
the Adviser, the fee payable to each
Sub-Adviser
pursuant to paragraph 8 above shall be reduced
proportionately; and to the extent that the Adviser reimburses
the Fund as a result of such
Appendix C-6
expense limitations, such
Sub-Adviser
shall reimburse the Adviser that proportion of such
reimbursement payments which the fee payable to each
Sub-Adviser
pursuant to paragraph 8 above bears to the advisory fee
payable to the Adviser pursuant to its advisory agreement with
the Funds.
10. Limitation of Liability of
Sub-Adviser
and Indemnification. No
Sub-Adviser
shall be liable for any costs or liabilities arising from any
error of judgment or mistake of law or any loss suffered by a
Fund in connection with the matters to which this Contract
relates except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of such
Sub-Adviser
in the performance by such
Sub-Adviser
of its duties or from reckless disregard by such
Sub-Adviser
of its obligations and duties under this Contract. Any person,
even though also an officer, partner, employee, or agent of a
Sub-Adviser,
who may be or become a Director/Trustee, officer, employee or
agent of a Fund, shall be deemed, when rendering services to a
Fund or acting with respect to any business of a Fund, to be
rendering such service to or acting solely for the Fund and not
as an officer, partner, employee, or agent or one under the
control or direction of such
Sub-Adviser
even though paid by it.
11. Duration and Termination.
(a) This Contract shall become effective with respect to
each
Sub-Adviser
upon the later of the date hereabove written and the date that
such
Sub-Adviser
is registered with the SEC as an investment adviser under the
Advisers Act, if a
Sub-Adviser
is not so registered as of the date hereabove written; provided,
however, that this Contract shall not take effect with respect
to any Fund unless it has first been approved (i) by a vote
of a majority of the Independent Directors/Trustees, cast in
person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that
Funds outstanding voting securities, when required by the
1940 Act.
(b) Unless sooner terminated as provided herein, this
Contract shall continue in force and effect with respect to a
Fund for two years. Thereafter, if not terminated, with respect
to a Fund, this Contract shall continue automatically for
successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually
(i) by a vote of a majority of the Funds Independent
Directors/Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board
or by vote of a majority of the outstanding voting securities of
that Fund.
(c) Notwithstanding the foregoing, with respect to any
Fund(s) or any
Sub-Adviser(s),
this Contract may be terminated at any time, without the payment
of any penalty, (i) by vote of the Funds Board or by
a vote of a majority of the outstanding voting securities of
such Fund(s) on sixty days
Appendix C-7
written notice to such
Sub-Adviser(s);
or (ii) by the Adviser on sixty days written notice
to such
Sub-Adviser(s);
or (iii) by a
Sub-Adviser
on sixty days written notice to the applicable Fund.
Should this Contract be terminated with respect to a
Sub-Adviser,
the Adviser shall assume the duties and responsibilities of such
Sub-Adviser
unless and until the Adviser appoints another
Sub-Adviser
to perform such duties and responsibilities. Termination of this
Contract with respect to one or more Fund(s) or
Sub-Adviser(s)
shall not affect the continued effectiveness of this Contract
with respect to any remaining Fund(s) or
Sub-Adviser(s).
This Contract will automatically terminate in the event of its
assignment.
12. Amendment. No provision of this
Contract may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or
termination is sought, and, when required by the 1940 Act, no
amendment of this Contract shall be effective, as to a Fund,
until approved by vote of a majority of the Funds
outstanding voting securities.
13. Notices. Any notices under this
Contract shall be in writing, addressed and delivered,
telecopied or mailed postage paid, to the other party entitled
to receipt thereof at such address as such party may designate
for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of each Fund and the
Adviser shall be 11 Greenway Plaza, Suite 100,
Houston,
Texas 77046-1173.
Until further notice to the other party, it is agreed that the
address of each
Sub-Adviser
shall be set forth in Exhibit II attached hereto.
14. Governing Law. This Contract
shall be construed in accordance with the laws of the State of
Texas and the 1940 Act. To the extent that the applicable laws
of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
15. Multiple
Sub-Advisory
Agreements. This Contract has been signed by
multiple parties; namely the Adviser, on one hand, and each
Sub-Adviser,
on the other. The parties have signed one document for
administrative convenience to avoid a multiplicity of documents.
It is understood and agreed that this document shall constitute
a separate
sub-advisory
agreement between the Adviser and each
Sub-Adviser
with respect to each Fund, as if the Adviser and such
Sub-Adviser
had executed a separate
sub-advisory
agreement naming such
Sub-Adviser
as a
sub-adviser
to each Fund. With respect to any one
Sub-Adviser,
(i) references in this Contract to a
Sub-Adviser
or to each
Sub-Adviser
shall be deemed to refer only to such
Sub-Adviser,
and (ii) the term this Contract shall be
construed according to the foregoing provisions.
Appendix C-8
16. Miscellaneous. The captions in
this Contract 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. If any provision
of this Contract shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this
Contract shall not be affected thereby. This Contract shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective successors. Any question of
interpretation of any term or provision of this Contract having
a counterpart in or otherwise derived from a term or provision
of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the
Advisers Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of
the SEC issued pursuant to said Acts. In addition, where the
effect of a requirement of the 1940 Act or the Advisers Act
reflected in any provision of the Contract is revised by rule,
regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
Appendix C-9
IN WITNESS WHEREOF, the parties hereto have caused this Contract
to be executed by their officers designated as of the day and
year first above written.
INVESCO ADVISERS, INC.
Adviser
By:
Name:
Title:
Appendix C-10
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INVESCO ASSET MANAGEMENT DEUTSCHLAND GMBH
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INVESCO ASSET MANAGEMENT LIMITED
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Sub-Adviser
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Sub-Adviser
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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INVESCO ASSET MANAGEMENT (JAPAN) LIMITED
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INVESCO AUSTRALIA LIMITED
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Sub-Adviser
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Sub-Adviser
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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INVESCO HONG KONG LIMITED
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INVESCO SENIOR SECURED MANAGEMENT, INC.
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Sub-Adviser
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Sub-Adviser
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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INVESCO TRIMARK, LTD.
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Sub-Adviser
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By:
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Name:
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Title:
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Appendix C-11
EXHIBIT I
Funds
Morgan Stanley High Yield Fund, Inc.
Appendix C-12
EXHIBIT II
Addresses
of
Sub-Advisers
Invesco Asset Management Deutschland GmbH
Bleichstrasse
60-62
Frankfurt, Germany 60313
Invesco Asset Management Limited
30 Finsbury Square
London, United Kingdom
EC2A 1AG
ENGLAND
Invesco Asset Management (Japan) Limited
25th Floor, Shiroyama Trust Tower
3-1, Toranoman 4-chome, Minato-Ku
Tokyo, Japan
105-6025
Invesco Australia Limited
333 Collins Street, Level 26
Melbourne Vic 3000, Australia
Invesco Hong Kong Limited
32nd Floor
Three Pacific Place
1 Queens Road East
Hong Kong
Invesco Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
USA
Invesco Trimark Ltd.
5140 Yonge Street
Suite 900
Toronto, ON, M2N 6X7
Appendix C-13
APPENDIX D
CHARTER
OF THE
AUDIT COMMITTEES OF
THE AIM FUNDS
(EFFECTIVE JUNE 27, 2007)
The Boards of Trustees (Boards) of the AIM Funds
(collectively, the Funds) have established an Audit
Committee for each of the Funds (the Committees).
This Charter shall govern the membership, meetings,
responsibilities and other duties, and operations of the Audit
Committee of each of the Funds. References in this Charter to
the Committees shall mean the collective Audit
Committees of all Funds.
The mission of each Committee under this Charter, is to oversee:
(i) the integrity, quality and objectivity of each
Funds financial statements; (ii) each Funds
compliance with legal and regulatory requirements pertaining to
the audit function; (iii) the qualifications and
independence of the registered public accounting firm
(independent auditor); (iv) the performance of
each Funds internal audit function; and (v) the
performance of the independent auditor in conducting the audit
of each Funds financial statements. Each Committee will
prepare a report to the Board as required by the
U.S. Securities and Exchange Commission, including, if
necessary, any relationships between the independent auditor and
a Fund, or any other relationships, which come to the
Committees attention that may adversely affect the
independence of the independent auditor.
1. Membership.
a. Each Committee shall have at least three members. Each
member of the Committees shall be financially
literate, as such qualification is interpreted by the
Boards in their business judgment. In addition, at least one
member of the Committees must be an audit committee
financial expert as defined in
Form N-CSR.
Members of the Committees, as well as the Chair and Vice Chair
of the Committees, shall be recommended by the Governance
Committees of the Boards, and shall be appointed by a majority
of the independent trustees.
b. All of the members of the Committees shall be trustees
who (i) are not interested persons (as defined
in section 2(a)(19) of the Investment Company Act of 1940,
as amended (the 1940 Act)) of the Funds, of INVESCO
Funds Group, Inc. (IFG), or of A I M
Advisors, Inc. (AIM), and (ii) were not
directors, officers or employees of IFG or AIM at any point
during the preceding 10 years (independent
trustees). No member of any of the Committees shall, other
than in his or her capacity as a member of the Committees, the
Boards, or any other committees of the Boards, accept directly
or indirectly any consulting, advisory, or other compensatory
fee from the Funds, provided that, compensatory fees do not
include the receipt of fixed amounts of compensation under a
Appendix D-1
retirement plan (including deferred compensation) for prior
service with the Funds (provided that such compensation is not
contingent in any way on continued service). Each member of the
Committees shall be free of any material relationship with the
Funds (other than as a shareholder of the Funds), either
directly or as a partner, shareholder or officer of an
organization that has a relationship with the Funds.
c. The Committees shall have a Chair and a Vice Chair. The
Chair shall set the agenda for, and preside at, each meeting of
the Committees and shall engage in such other activities on
behalf of the Committees as shall be determined from time to
time by the Committees. The Vice Chair shall act as Chair in the
absence or inability to act of the Chair and shall engage in
such other activities on behalf of the Committees as shall be
determined from time to time by the Committees.
2. Responsibilities. The
responsibilities of the Committees are:
a. Appointment, compensation and oversight of the
Funds independent auditors. The Committees
shall be directly responsible for the appointment, compensation,
retention and oversight of the work of any independent auditors
engaged by the Funds, including resolution of any disagreements
between management and the auditor regarding financial
reporting. All of the foregoing shall be for the purpose of
preparing or issuing audit reports or performing other audit,
review or attest services, and each such independent auditor
must report directly to the Committees. In selecting independent
auditors for the Funds, the Committees may consider
recommendations made by management.
b. Oversight of independence of independent
auditors. The Committees shall receive and review
the written disclosures and the letter from the independent
auditors regarding their independence that are referred to in
Item 407(d)(3) of
Regulation S-K,
and shall discuss with the independent auditors their
independence. The Committees are responsible for taking
appropriate action in response to the independent auditors
written disclosures regarding their independence. The Committees
shall consider whether the provision by the independent auditors
of permissible non-audit services to (i) the Funds,
(ii) their advisors or (iii) any person that controls,
is controlled by or is under common control with such advisors
and that provides services to the Funds, is compatible with
maintaining the independent auditors independence. The
Committees are responsible for satisfying themselves of the
independent auditors independence.
c. Pre-approval of audit and permissible non-audit
services. To the extent required by
Section 10A(h) and (i) of the Exchange Act, the
Committees must pre-approve all audit and permissible non-audit
services that are proposed to be provided to the Funds by their
independent auditors before they are provided to the Funds. Such
pre-approval shall also include the
Appendix D-2
proposed fees to be charged by the independent auditors for such
services. The Committees may delegate the pre-approval of audit
and permissible non-audit services and related fees to the Chair
or Vice Chair of the Committees. Any such members decision
to pre-approve audit
and/or
non-audit services and related fees shall be presented to the
full Committees, solely for informational purposes, at their
next scheduled meeting.
d. Pre-approval of certain other non-audit
services. To the extent required by
Rule 2-01(c)(7)(ii)
of
Regulation S-X,
the Committees must pre-approve non-audit services to be
provided by the Funds independent auditors to the
Funds investment adviser and certain affiliated entities
that provide ongoing services to the Funds if the engagement
relates directly to the operations and financial reporting of
any Fund.
e. Review of audit and tax
plans. The Committees shall review, together with
management, the audit and tax plans prepared by the independent
auditors for the Funds.
f. Review of audited financial
statements. The Committees shall meet with
management and the independent auditors (i) to review and
discuss the Funds audited financial statements contained
in annual and other periodic reports to shareholders,
(ii) to review and discuss communications required to be
provided by the independent auditors regarding (A) critical
accounting policies and practices used by the Funds,
(B) alternative treatments of financial information within
generally accepted accounting principles and the risks of using
any such alternative treatments or disclosures, and
(C) material written communications between management and
the independent auditors, and (iii) to determine that the
independent auditors are satisfied with the disclosure and
content of the annual financial statements and the quality of
the Funds accounting and financial reporting policies,
procedures and internal controls over financial reporting
including the Funds critical accounting policies and
practices. The Committees also shall discuss with management and
the independent auditors the clarity, consistency and
completeness of the Funds accounting policies and
disclosures. The Committees shall review with the Funds
independent auditors any audit problems or difficulties the
auditors encountered in the course of the audit work, including
any restrictions on the scope of the independent auditors
activities or on access to requested information, any
significant disagreements with management and, in each case,
managements response. The foregoing review may occur
before or after the inclusion of the audited financial
statements in the annual report of any Fund.
g. Evaluation of independent
auditors. The Committees shall, at least
annually, obtain and review a report by the independent auditors
for each Fund, which report shall describe: (i) the
auditors internal quality control procedures;
(ii) any material issues raised by the most recent internal
Appendix D-3
quality control review, or peer review, of the auditors, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the auditors, and any
steps taken to deal with any such issues; and (iii) all
relationships between the independent auditors and the Funds.
After reviewing such report, the Committees shall evaluate the
auditors qualifications, performance and independence. The
evaluation shall include a review and evaluation of the lead
audit and tax partners and other senior professionals under
their direction. The Committees shall present to the Boards its
conclusions with respect to the auditors. In addition, on an
annual basis, the Committees shall obtain and review a report by
each Funds independent auditors regarding the
auditors financial stability.
h. Review of Disclosure Controls and
Procedures. On an annual basis, the Committees
shall review the process that management uses to evaluate and
certify disclosure controls and procedures in
Form N-CSR.
i. Review of shareholder report
process. On an annual basis, the Committees shall
review the process for preparation and review of the Funds
annual and semi-annual shareholder reports, including the role
of the independent auditors and Fund counsel in preparation and
review of such reports as well as any differences in procedures
or level of disclosure from that used with respect to annual
reports.
j. Review of tax procedures. On an
annual basis, the Committees shall meet with management and the
independent auditors to review the procedures maintained by the
Funds, if any, to: (1) maintain the qualification of the
Funds as regulated investment companies under the applicable
provisions of the Internal Revenue Code of 1986, as amended (the
Code); and (2) make distributions
and/or
Federal income tax payments sufficient to meet the minimum
distribution requirements of the Code and avoid imposition of
excise tax.
k. Review of modified or omitted officer
certifications. The Chair shall receive prompt
notice from the Chief Financial Officer of the Funds in the
event that certifications by officers of the Funds as to the
Funds financial statements, other financial information or
disclosure controls and procedures that are required by
applicable law to be included with or in the Funds
periodic reports filed with the SEC are not included or are
modified or qualified for any reason. The Committees shall
review any disclosures made by the Chief Executive Officer and
Chief Financial Officers of the Funds in their certification
process for the Funds periodic reports filed with the SEC
regarding any significant deficiencies in the design or
operation of internal controls, any material weaknesses in
internal controls and any fraud, whether or not material,
involving management or other employees having a significant
role in internal controls.
Appendix D-4
l. Review of internal audits. The
Committees shall review (i) any internal audit plan
prepared for a Fund on accounting systems used to generate
information for financial reporting for the Funds, (ii) the
results of any internal audit, review, special investigation or
other procedures performed by internal audit staff or by
professionals hired by internal audit staff if such results
pertain to the accounting systems used to generate information
for financial reporting for the Funds, and (iii) any other
audit functions that such internal staff performs on accounting
systems used to generate information for financial reporting for
the Funds. Such internal staff shall report directly to the
Committees on matters covered by the preceding sentence. The
Committees shall also obtain assurances from the internal audit
staff that the audit plan of the independent auditors and any
audit plans of the internal audit staff are coordinated.
m. Establishment of procedures regarding
questionable accounting or auditing matters and other alleged
violations. The Committees shall establish
procedures for (i) the receipt, retention and treatment of
complaints received by the Funds regarding accounting, internal
accounting controls or auditing matters (Accounting
Complaints), (ii) the receipt, retention and
treatment of complaints received by the Funds regarding alleged
compliance violations or alleged fraudulent or criminal
activities with respect to the Funds (Compliance
Complaints) and (iii) the confidential, anonymous
submission by employees of the Funds, the Funds investment
advisor and the Funds principal underwriters of Accounting
Complaints and Compliance Complaints.
n. Knowledge of regulatory and accounting changes,
and correspondence. Members shall remain informed
by the management at AIM and the Funds independent
auditors regarding the Funds accounting system and
controls and are encouraged to use management at AIM,
independent auditors and whatever other resources they deem
appropriate to remain so informed. The Committees shall keep
apprised by management at AIM and the Funds independent
auditors of (i) regulatory changes and new accounting
pronouncements that affect net asset value calculations and
financial statement reporting requirements, and
(ii) communications with regulators regarding accounting
and financial reporting matters that pertain to the Funds.
o. Establishment of Hiring
Policies. The Committees shall set clear hiring
policies for employees and proposed employees of the Funds who
are employees or former employees of the independent auditors.
p. Review of Risk Management
Policies. The Committees shall review and discuss
policies with respect to risk assessment and risk management.
Appendix D-5
3. Meetings.
a. The Committees may meet separately or in conjunction
with meetings of the Boards of the Funds. Meetings of the
Committees may be held in person or by other means as permitted
by the Bylaws of the Funds; provided, however, that the
appointment of the independent auditors by the Committees must
be conducted at meetings held in person. The Committees shall
record minutes of their meetings and shall regularly report all
of their activities, findings and recommendations to the
independent trustees or the Boards, as applicable.
b. The Committees shall periodically meet separately with
management, and separately with the independent auditors. To the
extent that an internal audit staff exists (or there are other
personnel who are responsible for the internal audit function),
the Committees shall meet separately, periodically, with such
staff or personnel.
c. The Committees shall meet as deemed necessary by the
Committees with AIMs general counsel, Fund counsel,
counsel to the independent trustees of the Funds, and, if
applicable, independent counsel or other advisers to the
Committees, to be well informed on legal issues having the
possibility of impacting the financial reporting process. This
would include items of industry-wide importance and internal
issues such as litigation.
4. Votes Required for
Action. The Committees shall not take any
action in fulfilling their duties hereunder unless such action
is approved by a majority of the members of the Committees. A
majority of the independent trustees of the Funds shall ratify
the Committees appointment of independent auditors of the
Funds.
5. Good Faith Reliance. In
performing their duties under this charter, members of the
Committees shall be entitled to rely in good faith upon the
records of the Funds and upon such information, opinions,
reports and statements presented to the Committees by the
officers and employees of the Funds and of AIM, and by the
Funds independent auditors. Nothing in this Charter is
intended to impose, or should be interpreted to impose, on any
member of the Committees any additional duties or
responsibilities over and above those placed on the member in
his or her capacity as a trustee of the Funds under applicable
federal and state law.
6. Authority and
Funding. The Committees shall have the
authority to carry out their duties, including the authority to
engage independent counsel and other advisers, experts,
consultants or employees as they deem necessary to carry out
their duties, all at the expense of the appropriate Funds. The
Committees shall consult with the Governance Committee as to the
compensation to be paid to any special advisers, experts,
consultants or employees.
7. Review and Maintenance of
Charter. The Committees shall review this
Charter at least annually, and shall recommend any changes to
the Boards. This Charter may be amended only by the Boards, with
the approval of a majority of the
Appendix D-6
independent trustees. Each Fund shall maintain and preserve in
an easily accessible place a copy of the Committee Charter
established for such Fund and any amendment to such Charter.
8. Annual Performance
Evaluation. Each Committee shall conduct an
annual performance evaluation of the Committee.
Appendix D-7
APPENDIX E
CHARTER
OF THE
GOVERNANCE COMMITTEES OF
THE AIM FUNDS
(AMENDED EFFECTIVE MARCH 21, 2007)
The Boards of Trustees (Boards) of the AIM Funds
(collectively, the Funds) have established a
Governance Committee for each of the Funds. This Charter shall
govern the membership, duties and operations of the Governance
Committee of each of the Funds. References in this Charter to
the Committees shall mean the collective Governance
Committees of all Funds.
1. Membership.
a. Each member of the Committees shall be a trustee of the
Funds who is an Independent Trustee.
b. An Independent Trustee is a trustee who is
neither (i) a person who was a director, officer or
employee of INVESCO Funds Group, Inc. (IFG) or
A I M Advisors, Inc. (AIM) at any point
during the preceding 10 years prior to such trustees
initial election as a trustee, nor (ii) an interested
person within the meaning of the Investment Company Act of
1940, as amended (1940 Act), of the Funds or of IFG
or of AIM.
2. Chair and Vice Chair. The
Committees shall have a Chair and Vice Chair. The Chair shall
set the agenda for, and preside at, each meeting of the
Committees and shall engage in such other activities on behalf
of the Committees as shall be determined from time to time by
the Committees. The Vice Chair shall act as Chair in the absence
or inability to act of the Chair and shall engage in such other
activities on behalf of the Committees as shall be determined
from time to time by the Committees.
3. Responsibilities. Set
forth below are the responsibilities of the Committees.
a. Nomination of
Trustees. The Committees shall be responsible
for nominating persons who would qualify as Independent
Trustees, or who would not be interested persons of
the Funds (Qualified Candidates) for election as
trustees in connection with meetings of shareholders of the
Funds that are called to vote on the election of trustees. The
Committees shall also be responsible for nominating individuals
who are Qualified Candidates for appointment by the Boards as
trustees of the Funds in connection with filling vacancies that
arise in between meetings of shareholders. Vacancies may arise
either because of the death, retirement or resignation of a
trustee (provided the Boards do not reduce the size of the
Boards), or because of an increase in the size of the Boards.
The Committees are not responsible for, and the Boards are
responsible for,
Appendix E-1
nominating persons who do not qualify as Qualified Candidates
for election or appointment as trustees, unless such
responsibility is delegated to the Committees.
b. Evaluation of Potential
Nominees. The Committees shall consider a
number of factors in their evaluation of potential nominees.
Consistent with the 1940 Act, the Committees can consider
recommendations from management in its evaluation process. In
seeking out potential nominees and in nominating persons to
serve as Independent Trustees of the Funds, the Committees shall
not discriminate against any person based on his or her race,
religion, national origin, gender, physical disability and other
factors not relevant to the persons ability to serve as an
Independent Trustee. Evaluation by the Committees of a person as
a potential nominee to serve as a trustee, including a person
nominated by a shareholder, should result in the following
findings by the Committees:
(1) that, if such nominee is elected or appointed, at least
75% of the trustees will be Independent Trustees;
(2) that the person is otherwise qualified under applicable
laws and regulations to serve as a trustee of the Funds;
(3) that the person is willing to serve, and willing and
able to commit the time necessary for the performance of the
duties of a trustee;
(4) with respect to any potential nominee who will serve as
a member of the Audit Committees of the Funds, that the person
meets the requirements set forth in the Funds Audit
Committees Charter for service on such Committees;
(5) that the person can make a positive contribution to the
Boards and the Funds, with consideration being given to the
persons business experience, education and such other
factors as the Committees may consider relevant;
(6) that the person is of good character and high
integrity; and
(7) that the person has desirable personality traits
including independence, leadership and the ability to work with
the other members of the Boards.
The Committees may rely upon the counsel and advice of
Independent Legal Counsel in making the determinations set forth
in (1), (2), and (4) above.
c. Nominees Recommended by
Shareholders. The Committees shall consider
nominees recommended by a shareholder to serve as trustees,
provided: (i) that such person is a shareholder of record
at the time he or she submits such names and is entitled to vote
at the meeting of shareholders at which trustees will be
elected; and (ii) that the Committees shall make the final
determination of persons to be nominated. For each Fund, the
procedures to be followed by shareholders in submitting such
recommendations are set forth in the Funds Bylaws.
Appendix E-2
d. Recommendations as to Size of
Boards. The Committees shall review from time
to time the size of the Boards, and shall recommend to the
Boards whether the size of the Boards shall be increased or
decreased.
e. Chair of the Boards. The
Committees shall nominate the Chair of the Boards of the Funds.
In considering the qualifications of such Chair, consistent with
the governance undertakings set forth in the settlement orders
pertaining to market timing allegations entered into by AIM and
its affiliates (the Settlement Orders), the
Committees shall not nominate for Chair any person who
(i) is not an Independent Trustee; or (ii) who has an
Impermissible Relationship with the Funds, as such term is
described in the New York Attorney General Assurance of
Discontinuance. The Committees may rely upon the counsel and
advice of Independent Legal Counsel in making the determinations
set forth in this paragraph.
f. Monitoring Governance Undertakings in
Settlement Orders Pertaining to Trustee Qualifications.
(1) The Committees shall monitor the composition of the
Boards and each committee of the Boards, and shall monitor the
qualifications of all trustees, to ensure that the governance
undertakings in the Settlement Orders pertaining to trustee
qualifications are satisfied, including the requirements that at
least 75% of the trustees of the Funds are Independent Trustees,
and that the Chair of the Funds is an Independent Trustee, and
does not have any Impermissible Relationship. The Committees may
rely upon the counsel and advice of Independent Legal Counsel in
fulfilling the duties set forth in this paragraph.
(2) If at any time (i) less than 75% of the trustees
are Independent Trustees, or (ii) the Chair has an
Impermissible Relationship or is not an Independent Trustee, the
Committees shall, as promptly as practicable, and in any event
within 120 days (180 days to satisfy (i) above if
a shareholder vote is necessary), take such action as is
necessary so that (i) a minimum of 75% of the trustees are
Independent Trustees, and (ii) the Chair has no
Impermissible Relationship and is an Independent Trustee.
g. Additional
Requirements. As long as any Fund relies on
any of
Rule 10f-3,
Rule 12b-1,
Rule 15a-4(b)(2),
Rule 17a-7,
Rule 17a-8,
Rule 17d-1(d)(7),
Rule 17e-1,
Rule 17g-1(j),
Rule 18f-3
or
Rule 23c-3,
(i) a majority of the trustees of the Fund shall be
Independent Trustees, (ii) the selection and nomination of
any other Independent Trustees shall be committed to the
discretion of the existing Independent Trustees, and
(iii) any person who acts as legal counsel to the
Independent Trustees shall be independent legal
counsel, as defined in the 1940 Act.
h. Recommendation of Committee
Members. The Committees shall periodically
review the membership of each committee of the Boards. The
Committees shall from time to time recommend persons to serve as
members of each committee of the Boards (other than the
Compliance Committees), as well as
Appendix E-3
persons who shall serve as the chair and vice chair of each such
committee. Evaluation by the Committees of a person as a
potential committee member shall include the factors set forth
above under Evaluation of Potential Nominees, to the
extent that such factors are applicable or relevant. Other than
members of the Compliance Committees, all members of each of the
committees shall be appointed by a majority of the trustees of
the Funds. An individual may be recommended to serve on more
than one committee of a Board.
i. Review of
Compensation. At least annually, the
Committees shall review and recommend the amount of compensation
payable to the Independent Trustees of the Funds and report its
findings and recommendation to the Boards. Compensation shall be
based on the responsibilities and duties of the Independent
Trustees and the time required to perform these duties. The
Committees shall also make recommendations to the Boards
regarding matters related to compensation including deferred
compensation plans and retirement plans for the Independent
Trustees, and shall monitor any and all such retirement plans
and deferred compensation plans.
j. Coordination of Shareholder
Meetings. The Committees shall coordinate
with the Boards holding meetings of shareholders to elect
trustees commencing in 2008 and every fifth calendar year
thereafter;
k. Self-Evaluation
Function. The Committees shall consider,
oversee and implement an annual self-evaluation of the
performance of the Boards and all committees of the Boards. Such
self-evaluation shall include a consideration of the
effectiveness of the committee structure of the Boards and the
number of Funds on whose Boards each trustee serves. The
Committees shall review such self-evaluation and shall recommend
to the Boards such changes, if any, to the Boards and committees
as they determine are desirable, based upon such self-evaluation.
l. Requirement for and Selection of Independent
Legal Counsel. Any legal counsel to the
Independent Trustees must be independent legal
counsel as such term is defined in
Rule 0-1
under the 1940 Act (Independent Legal Counsel). The
Committees shall consider and oversee the selection of
Independent Legal Counsel to the Independent Trustees, and shall
recommend such selection to the Boards. In making such selection
and recommendation, the Committees will examine and monitor such
legal counsels client relationships, in accordance with
any applicable rules promulgated by the SEC, in order to
ascertain continued independence. The Committees shall also
review and approve the compensation paid to Independent Legal
Counsel.
m. Review of Boards Committee Expenses.
(1) Provided that the Committees are comprised solely of
Independent Trustees, the Committees shall review and approve
the compensation paid to Independent Legal Counsel and other
advisers, if any, to the Audit Committees of the Boards.
Appendix E-4
(2) The Committees shall review and approve the
compensation paid to counsel and other advisers, if any, to the
committees of the Boards other than the Audit Committees.
n. Operations of the
Boards. The Committees shall review as they
deem appropriate administrative
and/or
logistical matters pertaining to the operations of the Boards,
and shall recommend to the Boards such changes in this regard,
if any, as they determine are desirable.
4. Meetings. The Committees
may meet separately or in conjunction with meetings of the
Boards of the Funds. Meetings of the Committees may be held in
person or by other means as permitted by the Bylaws of the Funds.
5. Votes Required for
Action. The Committees shall not take any
action in fulfilling their duties hereunder unless such action
is approved by a majority of the Independent Trustees who are
members of the Committees.
6. Good Faith Reliance. In
performing their duties under this Charter, members of the
Committees shall be entitled to rely in good faith upon the
records of the Funds and upon such information, opinions,
reports and statements presented to the Committees by the
officers and employees of the Funds, AIM, affiliates of AIM and
the Funds service providers.
7. Authority. The Committees
shall have the authority to carry out their duties, including
the authority to engage independent counsel and other advisers,
experts or consultants as they deem necessary to carry out their
duties, all at the expense of the appropriate Funds.
8. Funding. The Funds shall
provide for appropriate funding, as determined by the
Committees, in their capacity as committees of the Boards, for
payment of (i) compensation to any Independent Legal
Counsel or other advisers employed by the Committees and
(ii) ordinary administrative expenses of the Committees
under the authority set forth in this Charter.
9. Minutes and Reports. The
Committees shall record minutes of their meetings and shall
regularly report all of their activities, findings and
recommendations to the Independent Trustees or the Boards, as
applicable.
10. Review of Charter. The
Committees shall review this Charter at least annually, and
shall recommend any changes to the Boards. This Charter may be
amended only by the Boards, with the approval of a majority of
the Independent Trustees.
11. Maintenance of
Charter. Each Fund shall maintain and
preserve in an easily accessible place a copy of the Committee
Charter established for such Fund and any amendment to such
Charter.
Appendix E-5
SPECIAL MEETING OF SHAREHOLDERS
OF MORGAN STANLEY HIGH YIELD FUND, INC.
TO BE HELD ON / /2010
Your vote is important. Thank you for voting.
To vote by Internet
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Read the Proxy Statement and have the voting instruction form below at hand. |
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Go to website www.proxyvote.com. |
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Follow the instructions provided on the website. |
To vote by Telephone
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Read the Proxy Statement and have the voting instruction form below at hand. |
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Call 1-800-454-8683. |
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Follow the instructions. |
To vote by Mail
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Read the Proxy Statement. |
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Check the appropriate boxes on the voting instruction form below. |
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Sign and date the voting instruction form. |
4) |
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Return the voting instruction form in the envelope provided. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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M16878-P84935 |
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Important Notice Regarding the Availability of Proxy Materials for
the Shareholder Meeting to be held on [ ], 2010.
The following material is available at www.proxyvote.com. Proxy Statement
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To withhold authority to vote for any individual nominee(s), mark
For All Except and write the number(s) of the nominee(s) on the line below. |
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This
proxy is solicited on behalf of the Board of
Trustees. |
For
All
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Withhold All
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For All
Except
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1. |
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Election of 17 Trustees:
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Nominees: |
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01)
David C. Arch |
10)
Carl Frishling |
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PLEASE X HERE ONLY IF YOU PLAN TO ATTEND THE
MEETING AND VOTE THESE SHARES IN PERSON |
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02) Bob R. Baker |
11) Prema Mathai-Davis
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03)
Frank S. Bayley |
12)
Lewis F. Pennock |
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04) James T. Bunch |
13) Larry Soll |
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05) Bruce L. Crockett |
14) Hugo F. Sonnenschein |
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06) Rod Dammeyer |
15) Raymond Stickel, Jr. |
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07) Albert R. Dowden |
16) Philip A. Taylor |
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08) Jack M. Fields |
17) Wayne W. Whalen |
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09) Martin L. Flanagan |
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For |
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Against
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2. |
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To approve a new
investment advisory agreement (including a master sub-advisory
agreement). |
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For |
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3. |
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To consider and act upon
any other business as may properly come before the Meeting or any adjournment thereof.
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The Special Meeting of Shareholders of the
above-mentioned Fund will be held on [ ], 2010 at
the principal offices of the Fund, 522 Fifth Avenue, New York, New York 10036, to vote
on the proposal set forth in the Notice of Special Meeting.
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This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder, and in the discretion of such proxies, upon any and all other matters as may properly
come before the Meeting or any adjournment thereof. If no direction is made, this proxy will be
voted FOR the Proposal.
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NOTE: Please sign exactly as your name appears on this voting instruction form. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or guardian or as custodian
for a minor, please give full title as such. If a corporation, please sign in full corporate name
and indicate the signers office. If a partner, sign in the partnership name.
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
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Signature [PLEASE SIGN ON LINE] |
Date |
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Signature
[Joint Owners] |
Date
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