EX-99.77O RULE 10F-3

Morgan Stanley Asia-Pacific Fund, Inc.
Item 77O- Transactions effected pursuant to Rule 10f-3

Securities Purchased:	Matahari Department Store
Purchase/Trade Date:	 3/25/2013
Offering Price of Shares: IDR 10,850
Total Amount of Offering: 1,167,170,000 shares
Amount Purchased by Fund: 748,000 shares
Percentage of Offering Purchased by Fund: 0.064
Percentage of Fund's Total Assets: 0.25
Brokers:  CIMB, Morgan Stanley, UBS, Mandin Sekuritas,
Maybank, Standard Chartered
Purchased from:  CIMB Securities BHD
Firm Commitment Underwriting: YES
Issuer has over three years of continuous operations*: YES
Percent of offering purchased by Fund and all other
accounts advised by the adviser is less than 25%: YES
The underwriting commission, spread and profit is
reasonable and fair compared to the underwritings of
similar securities: YES
* Muni issuers must also have an investment grade rating
from at least one NRSRO; or if less than three years of
continuous operations, must have one of the three highest
rating categories from at least one NRSRO.

Securities Purchased:	BTS Rail Mass Transit Growth
Infrastructure Fund Foreign
Purchase/Trade Date:	4/5/2013
Offering Price of Shares: THB10.800
Total Amount of Offering: 5,788,000,000 shares
Amount Purchased by Fund: 2,589,400 shares
Percentage of Offering Purchased by Fund: 0.045
Percentage of Fund's Total Assets: 0.29
Brokers:  Morgan Stanley, UBS, Phatra Securities
Purchased from:  UBS Securities
Firm Commitment Underwriting: YES
Issuer has over three years of continuous operations*: YES
Percent of offering purchased by Fund and all other
accounts advised by the adviser is less than 25%: YES
The underwriting commission, spread and profit is
reasonable and fair compared to the underwritings of
similar securities: YES
* Muni issuers must also have an investment grade rating
from at least one NRSRO; or if less than three years of
continuous operations, must have one of the three highest
rating categories from at least one NRSRO.

EX-99.77Q2 ITEM 405

AMENDED AND RESTATED SUB-ADVISORY
AGREEMENT
       AGREEMENT made as of the 30th day of June, 2009,
by and between MORGAN STANLEY INVESTMENT
MANAGEMENT INC., a Delaware corporation (hereinafter
referred to as "MSIM"), and MORGAN STANLEY
INVESTMENT MANAGEMENT COMPANY, a corporation
organized under the laws of Singapore (hereinafter referred to as
the "Local Manager").
W I T N E S S T E T H:
       WHEREAS, Morgan Stanley Asia-Pacific Fund, Inc.
(the "Fund") is a Maryland corporation engaged in business as a
closed-end management investment company and is registered
under the Investment Company Act of 1940, as amended
(hereinafter referred to as the "Investment Company Act"); and
       WHEREAS, MSIM and the Local Manager are engaged
principally in rendering investment advisory services and are
registered as investment advisers under the Investment Advisors
Act of 1940, as amended; and
       WHEREAS, the Local Manager is the holder of a capital
markets services licence for fund management under the
Securities and Futures Act (Cap. 289) of Singapore or is exempt
from licensing under the Securities and Futures Act (Cap. 289)
of Singapore and is the holder of a financial adviser's licence
under the Financial Advisers Act (Cap. 110) of Singapore or is
exempt from licensing under the Financial Advisers Act (Cap.
110) of Singapore; and
       WHEREAS, MSIM has entered into an investment
advisory agreement (the "Advisory Agreement") with the Fund
dated March 13, 1997, pursuant to which MSIM provides
management and investment and advisory services to the Fund;
and
       WHEREAS, MSIM entered into an investment sub-
advisory agreement with the Local Manager with respect to the
Fund, effective as August 11, 2003 (the "Current Sub-Advisory
Agreement"); and
       WHEREAS, as of June 30, 2009, the Current Sub-
Advisory Agreement was amended and restated (this
"Agreement") to incorporate amendments thereto and to make
other ministerial changes designed to facilitate the administration
of this Agreement; and
       WHEREAS, the Local Manager is willing to provide
investment advisory services to MSIM in connection with the
Fund's operations on the terms and conditions hereinafter set
forth;
       NOW THEREFORE, in consideration of the premises
and the covenants hereinafter contained, the Local Manager and
MSIM hereby agree as follows:
ARTICLE I

Duties of the Local Manager
       MSIM hereby employs the Local Manager to act as
investment adviser to MSIM and to furnish the investment
advisory services described below, subject to the broad
supervision of MSIM and the Fund, for the period and on the
terms and conditions set forth in this Agreement.  The Local
Manager hereby accepts such employment and agrees during
such period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein
set forth for the compensation provided for herein.  The Local
Manager and its affiliates shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent
of the Fund.
       The Local Manager shall have the right to make
unsolicited calls on MSIM and shall provide MSIM with such
investment research, advice and supervision as the latter may
from time to time consider necessary for the proper supervision
of the assets of the Fund; shall furnish continuously an
investment program for the Fund and shall make
recommendations from time to time as to which securities shall
be purchased, sold or exchanged and what portion of the assets
of the Fund shall be held in the various securities in which the
Fund invests, options, futures, options on futures or cash; all of
the foregoing subject always to the restrictions of the Articles of
Incorporation and By-Laws of the Fund, as they may be
amended and/or restated from time to time, the provisions of the
Investment Company Act and the statements relating to the
Fund's investment objective(s), investment restrictions as the
same are set forth in the then-currently effective prospectus, if
any, relating to the shares of the Fund under the Securities Act of
1933, as amended (the "Prospectus") or such other applicable
disclosure document.  The Local Manager shall make
recommendations and effect transactions with respect to foreign
currency matters, including foreign exchange contracts, foreign
currency options, foreign currency futures and related options on
foreign currency futures and forward foreign currency
transactions.  The Local Manager shall also make
recommendations or take action as to the manner in which voting
rights, rights to consent to corporate action and any other rights
pertaining to the portfolio securities of the Fund shall be
exercised.
       The Local Manager will not hold money on behalf of
MSIM or the Fund, nor will the Local Manager be the registered
holder of the registered investments of MSIM or the Fund or be
the custodian of documents or other evidence of title.
ARTICLE II

Allocation of Charges and Expenses
       The Local Manager assumes and shall pay for
maintaining the staff and personnel necessary to perform its
obligations under this Agreement and shall at its own expense
provide the office space, equipment and facilities which it is
obligated to provide under Article I hereof and shall pay all
compensation of officers of the Fund and all Directors of the
Fund who are affiliated persons of the Local Manager.
ARTICLE III

Compensation of the Local Manager
       For the services rendered, the facilities furnished and
expenses assumed by the Local Manager, MSIM shall pay to the
Local Manager a fee in an amount to be determined from time to
time by MSIM and the Local Manager but in no event in excess
of the amount that MSIM actually received for providing
services to the Fund pursuant to the Advisory Agreement.  The
fee currently paid by MSIM to the Local Manager is set forth on
Schedule A, as may be amended from time to time.
ARTICLE IV

Limitation of Liability of the Local Manager
       The Local Manager shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the performance of sub-
advisory services rendered with respect to the Fund, except for
willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of
its obligations and duties hereunder.  As used in this Article IV,
the Local Manager shall include any affiliates of MSIM
performing services for MSIM contemplated hereby and
directors, officers and employees of the Local Manager and such
affiliates.
ARTICLE V

Activities of the Local Manager
       The services of the Local Manager to the Fund are not to
be deemed to be exclusive, the Local Manager and any person
controlled by or under common control with the Local Manager
(for purposes of this Article V referred to as "affiliates") being
free to render services to others.  It is understood that Directors,
officers, employees and shareholders of the Fund are or may
become interested in the Local Manager and its affiliates, as
directors, officers, employees and shareholders or otherwise and
that directors, officers, employees and shareholders of the Local
Manager and its affiliates are or may become similarly interested
in the Fund, and that the Local Manager and directors, officers,
employees, partners and shareholders of its affiliates may
become interested in the Fund as shareholders or otherwise.
ARTICLE VI

Compliance with Applicable Laws and Regulations
       The Local Manager shall obtain and at all times maintain
and comply with the terms of all relevant authorisations,
licences, consents, approvals and registrations and comply with
all relevant laws and regulations, necessary for the purpose of
performing any of its duties and obligations under this
Agreement.  The Local Manager shall inform MSIM as soon as
possible if at any time the Local Manager becomes unable to
comply with the terms of or maintain any such authorisations,
licences, consents, approvals or registrations.
ARTICLE VII

Duration and Termination of this Agreement
       This Agreement shall become effective with respect to
the Fund for an initial period of up to two years from the
effective date set forth opposite the Fund's name on Schedule A
hereto, and thereafter, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the
Fund or by the vote of a majority of the outstanding voting
securities of the Fund and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of
voting on such approval.
       This Agreement may be terminated at any time, without
the payment of any penalty, by MSIM, by the Board of Directors
of the Fund or by vote of a majority of the outstanding voting
securities of the Fund, or by the Local Manager, on sixty days'
written notice to the other party.  This Agreement shall
automatically terminate in the event of its assignment or in the
event of the termination of the Advisory Agreement.  Any
termination shall be without prejudice to the completion of
transactions already initiated.
ARTICLE VIII

Amendments to this Agreement
       This Agreement may be amended by the parties only if
such amendment is specifically approved by (i) the Directors of
the Fund or by the vote of a majority of outstanding voting
securities of the Fund and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE IX

Definitions of Certain Terms
       The terms "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person" and "interested
person" used in this Agreement, shall have the respective
meanings specified in the Investment Company Act and the rules
and regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission
under said Act.
ARTICLE X

Governing Law
       This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions
of the Investment Company Act.  To the extent that the
applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.

       IN WITNESS WHEREOF, the parties hereto have
executed and delivered this Agreement as of the date first above
written.
MORGAN STANLEY INVESTMENT MANAGEMENT INC.
By: /s/ Randy Takian
Name:  Randy Takian
Title:  President
MORGAN STANLEY INVESTMENT MANAGEMENT
COMPANY
By: /s/ James Cheng
Name:  James Cheng
Title:  Managing Director


SCHEDULE A
As of December 10, 2009

Name of Fund
Morgan Stanley Asia-Pacific Fund, Inc.

Effective Date of Agreement and any
amendments entered into prior to June 30, 2009
Effective Date: 08/11/03

Fee
The Fund may have portfolio managers from one or more sub-advisers.
Effective January 1, 2009, the   Investment Adviser will retain
50% of the net advisory fees it receives from the Fund,
after taking into account any fee waivers.  The remaining 50%
will be split between the Investment Adviser, the Local Manager
and any other sub-adviser, and paid out on a monthly
basis, based on the relative percentage of assets under
management of the Fund managed by the Local Manager, each
other sub-adviser and the Investment Adviser, as may be determined
periodically.



15613860.3. BUSINESS6


15613860.3.BUSINESS
Sch. A-1
15613860.3.BUSINESS

EX-99.77Q2 ITEM 405

AMENDED AND RESTATED SUB-ADVISORY
AGREEMENT
       AGREEMENT made as of the 30th day of May, 2013, by
and between MORGAN STANLEY INVESTMENT
MANAGEMENT INC., a Delaware corporation (hereinafter
referred to as the "Investment Adviser"), and MORGAN
STANLEY INVESTMENT MANAGEMENT LIMITED, a
company incorporated under the laws of England (hereinafter
referred to as the "Local Manager").
W I T N E S S E T H :
       WHEREAS, Morgan Stanley Asia-Pacific Fund, Inc. (the
"Fund") is a Maryland corporation engaged in business as a
closed-end management investment company and is registered
under the Investment Company Act of 1940, as amended
(hereinafter referred to as the "Investment Company Act"); and
       WHEREAS, the Investment Adviser and the Local
Manager are engaged principally in rendering investment
advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940, as amended (the "Advisers
Act"); and
       WHEREAS, the Local Manager is regulated by the
Financial Conduct Authority in the United Kingdom; and
       WHEREAS, the Investment Adviser has entered into an
investment advisory agreement (the "Advisory Agreement")
with the Fund dated March 13, 1997, as amended from time to
time, pursuant to which the Investment Adviser provides
management and investment and advisory services to the Fund;
and
       WHEREAS, the Investment Adviser entered into an
investment sub-advisory agreement with the Local Manager with
respect to the Fund, effective as of May 10, 2010 (the "Current
Sub-Advisory Agreement"); and
       WHEREAS, as of May 30, 2013, the Current Sub-
Advisory Agreement is hereby amended and restated (this
"Agreement") to remove references to the United Kingdom's
Financial Services Authority, which has been abolished, and
replace them with references to the Financial Conduct Authority,
which is a new agency performing a similar but expanded
function as the Financial Services Authority; and
       WHEREAS, the Local Manager is willing to provide
investment advisory services to the Investment Adviser in
connection with the Fund's operations on the terms and
conditions hereinafter set forth and including the terms and
conditions contained in the Annex to this Agreement; provided
however, that nothing in the Annex to this Agreement shall
authorize conduct prohibited under the Investment Company Act
or the Advisers Act;
       NOW THEREFORE, in consideration of the premises
and the covenants hereinafter contained, the Local Manager and
the Investment Adviser hereby agree as follows:
ARTICLE I

DUTIES OF THE LOCAL MANAGER
       The Investment Adviser hereby employs the Local
Manager to act as discretionary investment manager to the
Investment Adviser and to furnish the investment management
services described below, subject to the broad supervision of the
Investment Adviser and the Board of Directors of the Fund (the
"Board of Directors" or the "Directors"), for the period and on
the terms and conditions set forth in this Agreement.  The Local
Manager hereby accepts such employment and agrees during
such period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein
set forth for the compensation provided for herein.  The
Investment Adviser and its affiliates shall for all purposes herein
be deemed a Professional Client as defined under the rules and
guidance promulgated by the Financial Conduct Authority in the
FCA Handbook (hereinafter referred to as the "FCA Rules").
The Investment Adviser has the right to request to be treated as a
retail client.  Classification as a retail client requires the Local
Manager to exercise a higher level of protective care under the
regulatory system.  However, the Local Manager is not obliged to
accept any such request.  The Investment Adviser should be
aware that professional clients will not be entitled to certain
protections afforded by the FCA Rules to retail clients.  For the
avoidance of doubt, the Local Manager will, for purposes of the
FCA Rules, only treat the Investment Adviser (but not the Fund)
as its customer from both a regulatory and a contractual
perspective.  The Local Manager and its affiliates shall for all
purposes herein each be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
       The Local Manager shall have full discretion, power and
authority on the Fund's behalf to buy, sell, retain, exchange or
otherwise deal in investments and other assets, make deposits,
subscribe to issues and offers for sale and accept placings of any
investments, enter into foreign currency transactions on a spot or
forward basis, effect transactions on any markets, take all day-to-
day decisions and otherwise act as the Local Manager judges
appropriate in relation to the investment and reinvestment of the
portfolio of assets of the Fund.  This includes performing all acts
and executing all documents which the Local Manager
reasonably considers incidental thereto, including (without
limitation) power to execute and deliver all applications, requests,
or claims for refund, reduction, repayment or credit of, or
exemption or relief from, any withholding tax or similar taxes in
any jurisdiction in which such applications, requests or claims
may be made.  Subject to guidelines adopted by the Fund, the
Local Manager shall also make recommendations or take action
as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the portfolio of
assets of the Fund shall be exercised.  All of the foregoing is
subject always to the restrictions of the Articles of Incorporation
and By-Laws of the Fund, as they may be amended and/or
restated from time to time and as provided to the Local Manager
by the Investment Adviser, the provisions of the Investment
Company Act and the statements relating to the Fund's
investment objective(s), investment policies and investment
restrictions as the same are set forth in the then-currently
effective prospectus, if any, relating to the shares of the Fund
under the Securities Act of 1933, as amended (the "Prospectus"),
or such other applicable disclosure document, as well as to the
supervision of the Investment Adviser and the Board of Directors
of the Fund.
       The Local Manager will not hold money on behalf of the
Investment Adviser or the Fund, nor will the Local Manager be
the registered holder of the registered investments of the
Investment Adviser or the Fund or be the custodian of documents
or other evidence of title.
       The Local Manager may, where reasonable, employ
agents (including affiliates) to perform any administrative,
dealing or ancillary services required to enable the Local
Manager to perform its services under this Agreement.
ARTICLE II

ALLOCATION OF CHARGES AND EXPENSES
       The Local Manager assumes and shall pay for
maintaining the staff and personnel necessary to perform its
obligations under this Agreement and shall at its own expense
provide the office space, equipment and facilities which it is
obligated to provide under Article I hereof.
ARTICLE III

COMPENSATION OF THE LOCAL MANAGER
       For the services rendered, the facilities furnished and
expenses assumed by the Local Manager, the Investment Adviser
shall pay to the Local Manager a fee in an amount to be
determined from time to time by the Investment Adviser and the
Local Manager but in no event in excess of the amount that the
Investment Adviser actually received for providing services to the
Fund pursuant to the Advisory Agreement.  The fee currently
paid by the Investment Adviser to the Local Manager is set forth
on Schedule A, as may be amended from time to time.
ARTICLE IV

LIMITATION OF LIABILITY OF THE LOCAL MANAGER
       No warranty is given by the Local Manager as to the
performance or profitability of the Fund or any part thereof.
       If a percentage restriction contained in the Fund's
investment objective(s) or investment restrictions (as the same are
set forth in the Fund's then-currently effective Prospectus or such
other applicable disclosure document) is adhered to at the time of
investment, a later change in percentage resulting from a change
in values or assets will not constitute a violation of such
restriction.
       The Local Manager will not be responsible to the
Investment Adviser or the Fund for the solvency, actions or
omissions of any counterparty, broker, dealer, market-maker,
bank, custodian or sub-custodian, with whom it transacts business
on the Investment Adviser's behalf, other than affiliates of the
Local Manager.
       Nothing in this Agreement will exclude or restrict any
liability which the Local Manager has under the Financial
Services and Markets Act 2000 or the FCA Rules in relation to
the Investment Adviser and which may not be excluded or
restricted thereunder.
       The Local Manager shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the performance of
investment advisory services rendered with respect to the Fund,
except for willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder.  The exception in the
previous sentence shall apply to each limitation of the Local
Manager's liability contained in this Article IV.  As used in this
Article IV, the Local Manager shall include any affiliates of the
Local Manager performing services for the Local Manager
contemplated hereby and directors, officers and employees of the
Local Manager and such affiliates.
       It is understood and agreed that in furnishing the
investment advice and other services as herein provided, the
Local Manager shall use its best professional judgment to
perform its obligations hereunder which will provide favorable
results for the Fund.  The Local Manager shall not be liable to the
Fund or to any shareholder of the Fund to any greater degree than
the Investment Adviser, and the Investment Adviser shall
indemnify and hold the Local Manager harmless against any loss,
liability or cost incurred by the Local Manager towards the Fund
or to any shareholder of the Fund except to the extent that such
loss, liability or cost arises from the Local Manager's fraud,
willful misfeasance, bad faith or gross negligence in the
performance of the Local Manager's duties hereunder.
ARTICLE V

ACTIVITIES OF THE LOCAL MANAGER
       The services of the Local Manager to the Investment
Adviser in connection with the operations of the Fund are not to
be deemed to be exclusive, the Local Manager and any person
controlled by or under common control with the Local Manager
(for purposes of this Article V referred to as "affiliates") being
free to render services to others.  It is understood that the
Directors and any officers, employees and shareholders of the
Fund are or may become interested in the Local Manager and its
affiliates, as directors, officers, employees and shareholders or
otherwise and that directors, officers, employees and shareholders
of the Local Manager and its affiliates are or may become
similarly interested in the Fund, and that the Local Manager and
directors, officers, employees, partners and shareholders of its
affiliates may become interested in the Fund as shareholders or
otherwise.
ARTICLE VI

DURATION AND TERMINATION OF THIS AGREEMENT
       This Agreement shall become effective with respect to
the Fund for an initial period of up to two years from the effective
date set forth opposite the Fund's name on Schedule A hereto,
and thereafter, but only so long as such continuance is
specifically approved at least annually by (i) the Board of
Directors or by the vote of a majority of the outstanding voting
securities of the Fund and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of
voting on such approval.
       This Agreement may be terminated at any time, without
the payment of any penalty, by the Investment Adviser, by the
Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund, or by the Local
Manager, on sixty days' written notice to the other party.  This
Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the Advisory
Agreement.  Any termination shall be without prejudice to the
completion of transactions already initiated.
ARTICLE VII

AMENDMENTS TO THIS AGREEMENT
       This Agreement may be amended by the parties only if
such amendment is specifically approved by (i) the Directors of
the Fund or by the vote of a majority of outstanding voting
securities of the Fund and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE VIII

DEFINITIONS OF CERTAIN TERMS
       The terms "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person" and "interested
person" used in this Agreement, shall have the respective
meanings specified in the Investment Company Act and the rules
and regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission
under said Act.
ARTICLE IX

GOVERNING LAW
       This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions
of the Investment Company Act.  To the extent that the applicable
laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment
Company Act, the latter shall control.

       IN WITNESS WHEREOF, the parties hereto have
executed and delivered this Agreement as of the date first above
written.
MORGAN STANLEY INVESTMENT MANAGEMENT INC.
By:  /s/ Arthur Lev
Name: Arthur Lev
Title: Managing Director
MORGAN STANLEY INVESTMENT MANAGEMENT
LIMITED
By:  /s/ Andrew Onslow
Name:  Andrew Onslow
Title:  Director



SCHEDULE A
As of May 30, 2013


Name of Fund
Morgan Stanley Asia-Pacific Fund, Inc.

Effective Date of Agreement
Effective Date: 05/10/10

Fee
The Fund may have portfolio managers from one or more
sub-advisers.  The   Investment Adviser will retain 50% of the
net advisory fees it receives from the Fund, after taking into
account any fee waivers. The remaining 50% will be split
between the Investment Adviser, the Local Manager and
any other sub-adviser, and paid out on a monthly basis, based
on the relative percentage of assets under management of the
Fund managed by the Local Manager, each other sub-
adviser and the Investment Adviser, as may be
determined periodically.


SUB-ADVISORY AGREEMENT

ANNEX
1.   	REGULATORY STATUS

The Local Manager is authorised and regulated by the
Financial Conduct Authority (the "FCA"), the UK
supervisory authority whose registered office is at 25
The North Colonnade, Canary Wharf, London, United
Kingdom E14 5HS.

2.	ORDER EXECUTION
The Local Manager acknowledges its duty under the
FCA Rules to take all reasonable steps to obtain the best
possible result for the Investment Adviser (taking into
account the factors prescribed in the FCA Rules) when
executing orders resulting from decisions to deal in
designated investments (as defined in the FCA Rules)
and to act in accordance with the Investment Adviser's
best interests when placing orders in respect of
designated investments with other persons for execution
or when receiving and transmitting orders to other
persons for execution.  Information concerning the Local
Manager's policy for meeting those obligations (the
"Order Execution Policy Disclosure Statement") is
included as Schedule 1.  The Investment Adviser
acknowledges receipt of the Order Execution Policy
Disclosure Statement and confirms its consent to the
matters described in it.  For the avoidance of doubt and
as set out in the Order Execution Policy Disclosure
Statement, the Investment Adviser acknowledges that
specific instructions from the Investment Adviser in
relation to the execution of orders may prevent the Local
Manager from following its execution policy in relation
to such orders in respect of the elements of execution
covered by the instructions.

The Local Manager will act in good faith and with due
diligence in its choice and use of brokers or dealers
("Broker") to place client orders or execute client
transactions.  Subject thereto and to the FCA Rules, the
Local Manager may execute or arrange for the execution
of transactions for the Investment Adviser on such
markets or exchanges (including markets or exchanges
that are not Regulated Markets or MTFs) and with or
through such Brokers (but excluding any Affiliate) as it
thinks fit.  All transactions will be effected in accordance
with the rules and regulations of the relevant market or
exchange, and the Local Manager may take all such steps
as may be required or permitted by such rules and
regulations and/or by appropriate market practice. For
purposes of this Agreement, "Multilateral Trading
Facility" (also "MTF") has the meaning given in the
FCA Rules (in summary, an investment exchange or
multilateral trading platform other than a Regulated
Market); and "Regulated Market" has the meaning given
in the FCA Rules (in summary, an investment exchange
or multilateral trading platform which, in either case, is
regulated within the EEA as a "regulated market" under
the Markets in Financial Instruments Directive).

The Investment Adviser expressly instructs the Local
Manager not to make public immediately any limit order
relating to transactions in respect of the Fund which is
not immediately executed under prevailing market
conditions where the Local Manager believes it is in the
Investment Adviser's interests not to do so.

The Local Manager may aggregate transactions for the
Fund with transactions of other clients of the Local
Manager and of its employees and of clients of its
affiliate and its employees and will promptly allocate
such aggregated transactions among the participating
accounts on a fair and equitable basis in accordance its
order allocation policy established in compliance with
the requirements of the FCA Rules.  The Investment
Adviser recognises that the Local Manager will
aggregate transactions only where it reasonably believes
that it is likely that the aggregation will operate overall to
the advantage of the Fund.  However, on occasion the
aggregation may operate to the disadvantage of the Fund
in relation to a particular order.  The Local Manager will
provide a copy of its order allocation policy to the
Investment Adviser upon request.

3.	DEALING ARRANGEMENTS
The Local Manager's policy regarding its Dealing
Arrangements, including details of the goods and
services that relate to the execution of trades and those
that relate to the provision of research are set out in
Schedule 2.  The Local Manager shall provide the
Investment Adviser with details of its Dealing
Arrangements with the frequency required by the FCA
Rules.  For purposes of this Agreement, "Dealing
Arrangements" means arrangements entered into by the
Local Manager as permitted by the FCA Rules for the
receipt or payment of money, goods or services that
relate to the execution of trades or the provision of
research under which the Local Manager executes or
arranges for the execution of orders in designated
investments.

4.	MATERIAL INTERESTS
The Local Manager and any of its affiliates (an
"Affiliate") may, subject to the limitations of the U.S.
Investment Company Act of 1940, as amended, and to
the overriding principles of suitability and best execution
and without prior reference to the Investment Adviser,
effect transactions in which the Local Manager or
Affiliate has, directly or indirectly, a material interest or
a relationship of any description with another party,
which may involve a potential conflict with the Local
Manager's duty to the Investment Adviser.  Neither the
Local Manager nor any Affiliate shall be liable to
account to the Investment Adviser for any profit,
commission or remuneration made or received from or
by reason of such transactions or any connected
transactions nor will the Local Manager's fees, unless
otherwise provided, be abated.  For example, such
potential conflicting interests or duties may arise
because:

*	any of the Local Manager's or Affiliate's
directors or employees is a director of, holds or
deals in securities of, or is otherwise interested in
any company whose securities are held or dealt
in on behalf of the Investment Adviser;
*	the transaction is in the securities of a company
for which an Affiliate has provided corporate
finance advice, underwritten, managed or
arranged an issue or offer for sale;
*	the Local Manager may act as agent for the
Investment Adviser in relation to transactions in
which it is also acting as agent for the account of
other clients and/or an Affiliate;
*	the transaction is in units or shares of a collective
investment scheme (regulated or unregulated) of
which the Local Manager or any Affiliate is the
manager, operator, banker, adviser, custodian or
trustee; or
*	The Local Manager may act as agent for a
counterparty and also act as agent on behalf of
the Investment Adviser and in the course of so
acting may charge a commission to either the
counterparty or the Investment Adviser.
Nothing in the Agreement shall oblige the Local
Manager or any Affiliate to accept responsibilities more
extensive than those set out in the Agreement or shall
give rise to any fiduciary or equitable duties which
would prevent or hinder either: (i) the Local Manager or
any Affiliate performing investment management or
other services for any person or entity other than the
Investment Adviser or from making investments on their
own behalf and the performance of such services for
others or investment on their own behalf will not be
deemed to violate or give rise to any duty or obligation to
the Investment Adviser; or (ii) the Local Manager
effecting any transaction with or for the Investment
Adviser with an Affiliate; or (iii) such Affiliate acting
both as market-maker and broker, principal or agent,
dealing with other Affiliates and other clients and
generally effecting transactions as provided above nor
from retaining any remuneration received in respect
thereof.

5.	RECORDS AND REPORTS

5.1	The Local Manager will keep accurate and detailed
records with respect to all receipts, investments, sales,
disbursements and other transactions carried out by the
Local Manager for the Investment Adviser or with the
Fund.

5.2	All records held pursuant to this clause by the Local
Manager shall be open to inspection by the Investment
Adviser or the Fund and the Local Manager will provide
the Investment Adviser and the Fund with such access as
it itself has to records held by any relevant third party, in
each case at reasonable times during business hours and
upon the giving of reasonable notice by the Investment
Adviser or the Fund.

5.3	The Local Manager shall, not later than 10 working days
following the end of each calendar month, furnish to the
Investment Adviser a statement showing all transactions
that have occurred in the Fund and a monthly listing of
all investments and cash balances held as of the end of
such month.

5.4	The monthly statement will show the cost or amount
realised (in the case of any relevant new purchase or
sale) and, where available, the current value (where
applicable) of each investment held in the Fund and any
income arising on the Fund's account during the relevant
calendar month, and will also include a statement
showing the measure of the performance of the assets of
the Fund.  The basis of all valuations will be as stated in
the first monthly statement, unless otherwise agreed.

5.5	The Local Manager will not provide the Investment
Adviser with an individual trade confirmation of each
portfolio transaction unless the Investment Adviser has
specifically requested the Local Manager to do so.

6.	FORCE MAJEURE

	The Local Manager shall not be responsible or liable to
the Investment Adviser or the Fund for any failure or
delay in the performance of its obligations under this
Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God;
earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities; computer (hardware or
software) or communications services; accidents; labor
disputes; acts of civil or military authority or
governmental actions; it being understood that the Local
Manager shall use reasonable efforts which are
consistent with accepted practices in the investment
management industry to resume performance as soon as
practicable under the circumstances.

7.	COMPLAINTS

	The Local Manager maintains procedures in accordance
with FCA Rules for the effective consideration and
handling of client complaints.  Complaints will be
considered promptly by the appropriate supervisory
manager who is not personally involved in the subject
matter of the complaint.  Where appropriate, the
complaint will be passed to the Compliance Officer.

8.	RECORDING OF TELEPHONE INSTRUCTIONS
All instructions received from the Investment Adviser by
telephone will be binding as if received in writing.  The
Local Manager may record telephone conversations with
the Investment Adviser and produce such recordings in
evidence if the Local Manager sees fit to do so.  In some
circumstances, when the Investment Adviser is dealing
with the Local Manager, data may be collected about the
Investment Adviser and the Investment Adviser's
officers or employees indirectly from monitoring devices
or other means (for example, telephone logs and
recordings).  In these circumstances, the data are not
accessed on a routine basis but access is possible.
Access could occur, for instance, in situations where the
data are needed to clarify or confirm instructions
provided by the Investment Adviser, for compliance or
billing purposes.

9.	CONFIDENTIALITY AND DISCLOSURE

	The Local Manager and the Investment Adviser
undertake to keep private and confidential all information
acquired in connection with this Agreement, and not to
disclose such information to any person except to the
extent that:

(a)	the other party gives prior consent; or

(b)	the Local Manager is required to disclose the
information by the FCA, the Bank of England, the
London Stock Exchange or any other recognised
investment exchange, the City Panel on Takeovers
and Mergers or any other regulatory authority
having jurisdiction over the Local Manager or the
performance by it of its obligations under this
Agreement or by English Law; or

(c)	disclosure to a counterparty to a transaction
effected for the Fund is required as a condition to
such transaction; or

(d)	disclosure is necessary to enable the Local
Manager to perform its obligations under this
Agreement.



10.	DATA PROTECTION

10.1	The Local Manager will, in connection with the Sub-
Advisory Agreement, comply (where applicable) with
the UK Data Protection Act 1998 and other applicable
data protection laws and regulations (together, the "Data
Protection Laws").

10.2	The Investment Adviser will comply (where applicable)
with the Data Protection Laws and (where applicable)
take all reasonable steps to ensure that it has obtained all
necessary consents for the Local Manager to process any
personal data for the purposes of the Agreement.
11.	RISK DISCLOSURE
11.1	The Investment Adviser's attention is drawn to Schedule
3 which provides important information as to the nature
and risks of certain investments which may comprise the
Fund and a description of certain provisions of the
industry standard master agreements and their
consequences.  The Investment Adviser represents and
warrants to the Local Manager that it has read,
understood, and accepts the provisions of Schedule 3.


Schedule 1

ORDER EXECUTION POLICY DISCLOSURE
STATEMENT


Transaction Execution Arrangements
Morgan Stanley Investment Management Limited (the "Local
Manager") has established and implemented transaction
execution arrangements that are designed to allow the Local
Manager to take all reasonable steps to obtain the best possible
result when executing or placing orders as portfolio manager on
behalf of its clients in relation to financial instruments that form
part, or may become part, of one or more investment portfolios
managed by the Local Manager for that or those clients (each a
"Transaction").  For the purposes of this document: any
reference to the Local Manager "executing an order" is a
reference to the Local Manager, as agent, entering into a
Transaction on behalf of a client with another person that acts as
principal to that Transaction, any reference to the Local Manager
"placing an order" is a reference to the Local Manager, as agent,
arranging for a Transaction to be entered into by another person
that acts as agent on behalf of a client when entering into that
Transaction, and any reference to the Local Manager "effecting a
Transaction" is a reference to the Local Manager either placing
or executing an order.

As part of its transaction execution arrangements, the Local
Manager has an order execution policy in place that is designed
to ensure that the Local Manager complies with its duty to obtain
the best possible result when effecting a Transaction for one or
more clients (the "Order Execution Policy").

This document is intended to provide the Local Manager's clients
with a summary of the Local Manager's Order Execution Policy.
Nothing herein is intended to place upon the Local Manager
fiduciary or other duties or responsibilities over and above the
specific obligations provided for in the investment management
agreement between the Local Manager and a client.

The quality of execution
Where the Local Manager effects a Transaction for its
professional clients, subject to any specific instructions received
from a client, the Local Manager will determine the best possible
result taking the following factors into account: (a)  price; (b)
costs; (c) speed; (d) likelihood of execution or settlement; (e) size
of the Transaction; (f) nature of the Transaction; and (g) any
other consideration relevant to the Transaction, including
availability of liquidity, the impact on the market of the
Transaction and the Local Manager's operational costs.

Price is normally judged with reference to normal market size for
the relevant financial instrument.  Where trades are outside of
normal market size and in sizeable volume or made on an over
the counter basis, it is not generally possible to source a quote for
price from Brokers because a declaration of intention to deal
could result in market/security price sensitivity.  As a result, the
Local Manager must then determine what is likely to be the best
execution venue without being able to get firm quotes, but there
can be no guarantee that it will be.

In certain circumstances, the relevant execution venue may not
be able to provide sufficient immediately available liquidity to
carry the contemplated Transaction out in full at the time
required. In addition, other circumstances may dictate that the
best immediately available price for a Transaction may not be the
best possible result for that Transaction.  Where, in the Local
Manager's opinion, those circumstances occur the Local
Manager may need to split the Transaction up into multiple
Transactions with a view to obtaining the best possible result in
relation to the original Transaction by completing that
Transaction over a period of time using a variety of execution
venues.

The Local Manager will determine the relative importance of
each factor using the following criteria: (a) the characteristics of
the Investment Adviser; (b) the characteristics and nature of the
Transaction, including whether any specific instructions are
given by the Investment Adviser; (c) the characteristics of the
financial instruments that are the subject of the Transaction; and
(d) the characteristics of the execution venues to which the
Transaction can be directed.

While the Local Manager will take all reasonable steps, based on
the resources available to it, to satisfy itself that it has processes
in place that can reasonably be expected to lead to the delivery of
the best possible result, the Local Manager does not guarantee
that it will always be able to obtain the best possible result in
relation to each Transaction.

Specific Instructions
Where a client provides the Local Manager with a specific
instruction in relation to a proposed Transaction or any particular
aspect of that Transaction (including, but not limited to, a
direction to execute on a particular venue) the Local Manager
will effect that Transaction in accordance with those instructions.
Specific instructions may prevent the Local Manager from
following some or all of the steps provided for in the Order
Execution Policy which are designed to obtain the best possible
result in respect of the elements covered by those instructions.

In following such instructions, the Local Manager will be
deemed to have taken all reasonable steps to provide the best
possible result in respect of the relevant Transaction or aspect of
that Transaction covered by the specific instructions. To the
extent that specific instructions are not comprehensive, the Local
Manager will determine any non-specified components in
accordance with its Order Execution Policy.

Selection of Execution Venues
The Local Manager includes in its Order Execution Policy those
execution venues (sources of liquidity) that enable the Local
Manager to obtain on a consistent basis the best possible result in
relation to the Transactions. The Local Manager may use one or
more of the following venues types: (a) Regulated Markets; (b)
Multilateral Trading Facilities; (c) Systematic Internalisers; (d)
third party investment firms; and/or (e) non-EU entities
performing similar functions. In this document, the terms
"Regulated Market", "Multilateral Trading Facility" and
"Systematic Internaliser" have the meaning given to them in the
Markets in Financial Instruments Directive.

Certain Transactions may be effected outside a Regulated Market
or a Multilateral Trading Facility where the Local Manager
believes it can achieve the best possible result by doing so.

The Local Manager assesses product-by-product which venues
are likely to provide the best possible result, it also monitors the
execution of all Transactions on that venue if an order has been
placed with another person and keeps informed of relevant
market information. For certain financial instruments, there may
be only one execution venue available and in such circumstances,
the Local Manager will presume that it has obtained the best
possible result if it effects a Transaction in that venue.

If a Transaction is effected by placing an order with another
person for execution, the Local Manager will either determine
the ultimate execution venue itself and instruct the other person
accordingly, or the Local Manager will use all reasonable efforts
to satisfy itself that the other person has arrangements in place to
enable the Local Manager to comply with the Local Manager's
obligation to obtain the best possible result in relation to the
relevant Transaction.

Approval of brokers, monitoring and review
The Local Manager's Order Execution Policy provides for a
broker approval procedure. Apart from a broker's
commission/commission equivalent rates, the Local Manager
will consider the following matters when selecting and approving
a broker: (a) reliability, integrity and reputation in the industry;
(b) execution capabilities, including block positioning, speed of
execution and quality and responsiveness of its trading desk; (c)
knowledge of, and access to, the markets for the securities being
traded; (d) ability to obtain price improvement; (e) ability to
maintain confidentiality; (f) ability to handle non-traditional
trades; (g) technology infrastructure; and (h) clearance and
settlement capabilities.

In addition, in certain circumstances and in some markets, a
broker's research capabilities may be considered relevant factors
in connection with the selection and approval of a broker. This
may include a broker's coverage of certain industries in which
the Local Manager may seek to invest on behalf of its clients, the
quality of the broker's research, as well as the reputation and
standing of the broker's analysts, their investment strategies,
timing, accuracy of statistical information and idea generation.

The Local Manager monitors the quality of the execution
services provided by approved brokers and reviews each broker's
performance on a regular basis, taking the above factors into
account. the Local Manager meets with the most significant
brokers periodically to review the service and performance levels
provided.

Commission Rates
The Local Manager effects Transactions on the basis of standard
commission rates for specific markets. The rates are negotiated
from time to time with each broker to ensure competitiveness,
taking into account market trends whilst seeking a commercial
balance so as to ensure the quality of services provided by the
brokers.



Schedule 2

INFORMATION ABOUT MORGAN STANLEY
INVESTMENT MANAGEMENT LIMITED'S USE OF
DEALING COMMISSIONS AND ACCEPTANCE OF NON-
MONETARY BENEFITS FROM BROKERS

Morgan Stanley Investment Management Limited's use of
dealing commissions and non-monetary benefits
Morgan Stanley Investment Management Limited (the "Local
Manager") will from time to time execute or place orders with
selected brokers as portfolio manager on behalf of its
professional clients in relation to financial instruments that form
part, or may become part, of one or more investment portfolios
managed by the Local Manager for its clients (each so executed
or placed order a "Transaction").

Although the Local Manager's investment decisions and the
corresponding Transactions are primarily based upon
fundamental analysis and a variety of primary and secondary
information sources, external research and market intelligence
from analysts employed by the brokers the Local Manager may
engage to effect Transactions is valuable in helping to make
informed investment decisions and in those circumstances, will
enhance the quality of the Fund management service provided by
the Local Manager to its clients. The available
research covers sectors and markets in detail and may generate
and stimulate new ideas and discussions. Some
research services will be produced for all clients of the relevant
broker, but the analysts may also provide research that has been
tailored to the Local Manager's specific request, including the
ability to discuss corporate developments in the immediate
aftermath of their announcement (together "Research
Services").

This document is intended to provide the Local Manager's
professional clients with information about the manner in which
the Local Manager, when effecting Transactions, may make
payments on behalf of its client to certain providers of Research
Services and about certain non-monetary benefits that the Local
Manager may receive from certain brokers in the course of its
dealings with such brokers.

The conditions upon which dealing commissions will be paid to
providers of Research Services
The Local Manager will only make payments to a broker in
consideration of the provision of Research Services when it is
satisfied using its reasonable judgement that the Research
Services received in return for the payments will reasonably
assist the Local Manager in the provision of its portfolio
management services to the investment advisers on whose behalf
the relevant Transactions are being effected and do not, and are
not likely to, impair compliance with the duty of the Local
Manager to act in the best interests of its clients (including,
without limitation, its obligation to take all reasonable steps to
obtain the best possible result when effecting a Transaction).

The manner in which dealing commissions are paid to
providers of research services
If the conditions for payment have been satisfied, the eligible
providers of Research Services may be remunerated for the
provision of Research Services as part of the Local Manager's
commission sharing arrangements. Under the commission
sharing arrangements, the Local Manager will instruct
participating brokers to record a certain portion of dealing
commission that is received pursuant to the completion of a
Transaction, based upon a previously agreed allocation, as
research credits (each a "Pool"). Each of the participating
brokers has undertaken to the Local Manager,
periodically, subject to an instruction from the Local Manager, to
make payments from their Pool to providers of Research Services
(including the administering broker itself) as the Local Manager
may specify in the instruction(s). Any balance that may remain
after allocation instructions have been carried out will be carried
forward to the next period.

The Local Manager allocates the Pools based on a periodic
assessment of the quality of the Research Services provided to
the Local Manager by the participating brokers during that
period. the Local Manager tends to consider, without limitation,
the quality of the analyst service, the sales service, and the
company meetings that have been arranged with senior
management of companies in which the Local Manager invests
for its clients.  Decisions are being taken based on a voting
system in which the Local Manager equity portfolio managers
participate. As part of a relationship management effort, the
Local Manager will meet periodically with those providers of
Research Services that the Local Manager deems most
significant.

The conditions upon which the Local Manager employees may
accept non-monetary benefits from brokers
The Local Manager's employees that interact with brokers may
from time to time receive certain non-monetary benefits in the
form of gifts. The Local Manager has detailed compliance
procedures relating to the standard of conduct expected from
employees in these circumstances which are designed to achieve
that receipt of such gifts does not, and is not likely to, impair
compliance with the duty of the Local Manager and its
employees to act in the best interests of its clients. Most gifts are
received during the holiday season and depending on the number
received gifts are either put into a raffle or allocated between
employees. Employees are allowed to accept invitations to attend
sporting, artistic or entertainment events from suppliers and
counterparties in accordance with guidelines and limits that are
detailed in the policy.


Schedule 3

INFORMATION ON THE NATURE AND RISKS OF
CERTAIN INVESTMENTS

The information contained in this notice cannot disclose
everything about the nature and risks of all financial instruments
in the Fund.  Rather it is a general description of the nature and
risks of financial instruments, which explains the nature of the
specific types of instruments which the Investment Adviser may
include in the Fund's investment guidelines (the "Investment
Guidelines"), as well as the risks particular to those
instruments.  The Investment Adviser should not include these
financial instruments in the Investment Guidelines unless the
Investment Adviser understand the nature of the financial
instruments the Investment Adviser is permitting Morgan
Stanley Investment Management Limited (the "Local
Manager") to enter into on the Investment Adviser's behalf and
the extent of the Investment Adviser's exposure to risk.  The
Investment Adviser should also be satisfied that such financial
instruments are suitable for the Fund in light of the Investment
Adviser's circumstances and financial position.  Certain
strategies, such as a spread position or "straddle", may be as
risky as a simple "long" or "short" position.  While financial
instruments can be utilised for the management of investment
risk, certain financial instruments are unsuitable for certain
investors.  Different financial instruments involve different
levels of exposure to risk, and in deciding whether to include
such instruments in the Investment Guidelines, the Investment
Adviser should be aware of the following points.

1.	GENERAL

1.1	Returns

The value of investments and the income from them may
fluctuate and go down as well as up.  There is no guarantee that
the investment objective will actually be achieved or that the
Investment Adviser will get back the amount initially invested.
The value of investments may be affected by a variety of
factors, including economic and political developments, interest
rates and foreign exchange rates, as well as issuer-specific
events.
1.2	Currency Risk
Investments denominated in currencies other than the
Investment Adviser's base currency carry the risk of exchange-
rate movements.  A movement in exchange rates may have a
separate effect, unfavourable as well as favourable, on gains and
losses in the Fund.  Hedging techniques may, in certain
circumstances, be limited or not be successful.
1.3	Investments which are not Readily Realisable
The market for some investments may be restricted or illiquid.
Subject to the Investment Guidelines, the Local Manager may
effect transactions in such investments for the Fund.  There may
be no readily available market and from time to time there may
be difficulty in dealing in such investments or obtaining reliable
information about the value and extent of risks associated with
such investments.
2.	EQUITY SECURITIES AND DEBT SECURITIES
Buying equity securities (the most common form of which are
shares) will mean that the Investment Adviser will become a
member of the issuer company and participate fully in its
economic risk.  Holding equity securities will generally entitle
the Investment Adviser to receive any dividend distributed each
year (if any) out of the issuer's profits made during the reference
period.
On the other hand, buying debt securities (such as bonds and
certificates of deposit) will mean that the Investment Adviser is,
in effect, a lender to the company or entity that has issued the
securities.  Holding debt securities will entitle the Investment
Adviser to receive specified periodic interest payments, as well
as repayment of the principal at maturity.
Generally, holdings in equity securities will expose the
Investment Adviser to more risk than debt securities since
remuneration is tied more closely to the profitability of the
issuer.  In the event of insolvency of the issuer, the Investment
Adviser's claims for recovery of the Investment Adviser's
equity investment in the issuer will generally be subordinated to
the claims of both preferred or secured creditors and ordinary
unsecured creditors of the issuer.
There is an extra risk of losing money when shares are bought in
some smaller companies, such as penny shares.  There is a
usually big difference between the buying price and the selling
price of these shares.  If they have to be sold immediately, the
Investment Adviser may get back much less than was paid for
them.  The price may change quickly and it may go down as
well as up.
Holdings in debt securities, on the other hand, generally risk not
being remunerated only if the issuer is in a state of financial
distress.  Moreover, in the event of insolvency of the issuer, the
Investment Adviser is likely to be able to participate with other
creditors in the allotment of the proceeds from the sale of the
company's assets in priority to holders of equity securities.
If the Investment Guidelines allow the Local Manager to buy
equity or debt securities the Investment Adviser will be exposed
to both the specific risks associated with individual securities
held (and the financial soundness of their issuers), as well as the
systemic risks of the equity and debt securities markets.
3.	DERIVATIVES
3.1	Futures
Transactions in futures involve the obligation to make, or to
take, delivery of the underlying asset of the contract at a future
date, or in some cases to settle the Investment Adviser's position
with cash from the Fund or elsewhere.  Transactions in futures
carry a high degree of risk.  The "gearing" or "leverage" often
obtainable in futures trading means that a small deposit or down
payment can lead to large losses as well as gains.  It also means
that a relatively small market movement can lead to a
proportionately much larger movement in the value of the
Investment Adviser's investment, and this can work against the
Investment Adviser as well as for the Investment Adviser.
Futures transactions have a contingent liability, and the
Investment Adviser should be aware of the implications of this,
in particular the margining requirements, which are described in
paragraph 7.2 below.
3.2	Options
There are many different types of options with different
characteristics subject to different conditions:
3.2.1	Buying Options:
Allowing the Local Manager to buy options involves less risk
than allowing the Local Manager to sell options because, if the
price of the underlying asset moves against the Investment
Adviser, the Local Manager can simply allow the option to
lapse.  The maximum loss is limited to the premium, plus any
commission or other transaction charges.  However, if the Local
Manager buys a call option on a futures contract for the
Investment Adviser and later exercises the option, the
Investment Adviser will acquire the future.  This will expose the
Investment Adviser to the risks described under "futures" and
"contingent liability transactions".
3.2.2	Writing Options:
If the Investment Guidelines allow the Local Manager to write
an option for the Investment Adviser, the risk involved is
considerably greater than buying options.  The Investment
Adviser may be liable for margin to maintain its position and a
loss may be sustained well in excess of any premium received.
By allowing the Local Manager to write an option on the
Investment Adviser's behalf, the Investment Adviser accepts a
legal obligation to purchase or sell the underlying asset if the
option is exercised against the Investment Adviser, however far
the market price has moved away from the exercise price.  If the
Investment Adviser already owns the underlying asset which the
Local Manager has contracted on the Investment Adviser's
behalf to sell as part of the Fund (known as "covered call
options") the risk is reduced.  If the Investment Adviser does not
own the underlying asset (known as "uncovered call options")
the risk can be unlimited. Only experienced persons should
contemplate authorising the Local Manager to write uncovered
options, and then only after securing full details of the
applicable conditions and potential risk exposure.
3.2.3	Traditional Options:
A particular type of option (called a "traditional option") is
written by certain London Stock Exchange firms under special
exchange rules.  These may involve greater risk than other
options.  Two way prices are not usually quoted and there is no
exchange market on which to close out an open position.  It may
be difficult to assess the value of a traditional option or for the
seller of such an option to manage his exposure to risk.  Again,
the Investment Adviser should only provide for the Investment
Guidelines to permit the Local Manager to invest in "traditional
options" if the Investment Adviser is fully aware of the risks
involved.
3.2.4	Margin:

Certain options markets operate on a margined basis, under
which buyers do not pay the full premium on their option at the
time they purchase it.  In this situation the Fund (or the
Investment Adviser if there are insufficient assets in the Fund)
may subsequently be called upon to pay margin on the option up
to the level of the Investment Adviser's premium.  If the
Investment Adviser fails to do so as required, the Investment
Adviser's position may be closed or liquidated in the same way
as a futures position.
3.3	Contracts for Differences:
A contract for difference is a contract between two parties,
buyer and seller, stipulating that the seller will pay to the buyer
the difference between the current value of an asset and its value
at contract time.  Contracts for differences allow investors to
take long or short positions, and unlike futures contracts have no
fixed expiry date or contract size.  Trades are conducted on a
leveraged basis and these contracts can only be settled in cash.
Investing in a contract for differences carries the same risks as
investing in a future or option and the Investment Adviser
should be aware of these as set out in paragraphs 3.1 and 3.2
respectively.  Transactions in contracts for differences may also
have a contingent liability and the Investment Adviser should be
aware of the implications of this as set out in paragraph 7.2
below.  As with many leveraged products, maximum exposure
is not limited to the initial investment; it is possible to lose more
than one put in.
3.4	Off-Exchange Transactions in Derivatives:
It may not always be apparent whether or not a particular
derivative is on or off-exchange.
While some off-exchange markets are highly liquid, transactions
in off-exchange or non transferable derivatives may involve
greater risk than investing in on-exchange derivatives because
there is no exchange market on which to close out an open
position.  It may be impossible to liquidate an existing position,
to assess the value of the position arising from an off-exchange
transaction or to assess the exposure to risk.  Bid and offer
prices need not be quoted, and even where they are, they will be
established by dealers in these instruments and consequently it
may be difficult to establish what a fair price is.  The Investment
Adviser should only permit the Local Manager in the
Investment Guidelines to invest the Fund in off-exchange
derivatives transactions if the Investment Adviser is fully aware
of the risks involved.
3.5	ISDA Master Agreement
Where the Investment Adviser permits the Local Manager under
the Investment Guidelines to enter into derivative transactions,
these may be of the type that may be governed by the ISDA
Master Agreement.  The ISDA Master Agreement is a standard
agreement commonly used in the derivatives market which sets
forth key provisions governing the contractual relationship
between the parties to such agreement, including each of their
rights, liabilities and obligations.  If the Local Manager enters
into derivative transactions on the Investment Adviser's behalf,
the Local Manager may also enter into a Credit Support Annex.
The Credit Support Annex is an annex to the ISDA Master
Agreement and is used to document bilateral credit support
arrangements between parties for transactions governed by an
ISDA Master Agreement.
On each date on which a derivatives transaction is entered into,
the Investment Adviser will be deemed to have given various
representations and undertakings to each counterparty with
whom the Local Manager enters into an ISDA Master
Agreement on the Investment Adviser's behalf.
In certain circumstances, the Investment Adviser may be
required to pay an additional amount or receive a payment from
which an amount is required to be deducted or withheld, in each
case in respect of any deduction or withholding for on account
of any tax, or be required to pay any stamp tax levied or
imposed in respect of the execution or performance of the ISDA
Master Agreement.
Markets and exchanges require that anyone trading in
derivatives must advance collateral as security for initial and
variation margin requirements.  The Local Manager has been
authorised to instruct the Investment Adviser's custodian to
advance cash or other collateral acceptable to the counterparty
or broker to meet margin payments as required by the rules and
regulations of any market or exchange on which derivatives are
dealt by the Local Manager as the Investment Adviser's agent.
If, under the rules and regulations of any exchange or market,
adverse price movements occur and margin calls are made and
insufficient funds are available in the Portfolio to meet such
margin calls, the Local Manager may request that the
Investment Adviser make additional funds immediately
available until assets can be realised to cover the related margin
call.  If the Investment Adviser fails to makes such funds
available, the Investment Adviser's positions may be closed out
and liquidated, resulting in a loss to the Portfolio for which the
Local Manager shall not be liable.
4.	WARRANTS
If the Investment Guidelines so permit, the Local Manager may
effect transactions in warrants for the Fund.
4.1	Warrants:
A warrant is a time-limited right to subscribe for shares,
debentures, loan stock or government securities, and is
exercisable against the original issuer of the securities.
Warrants often involve a high degree of gearing, so that a
relatively small movement in the price of the underlying
security results in a disproportionately large movement,
favourable or unfavourable in the price of the warrant.  The
prices of warrants can therefore be volatile.  The Investment
Adviser should not include warrants in the Investment
Guidelines unless the Investment Adviser is prepared for the
Fund to sustain a total loss of the money the Investment Adviser
has invested plus any commission or other transaction charges.
Some other instruments are also called warrants but are actually
options (for example, a right to acquire securities which is
exercisable against someone other than the original issuer of the
securities, often called a "covered warrant").
If the Investment Adviser is considering including warrants in
the Investment Guidelines, it is essential to understand that the
right to subscribe which a warrant confers is invariably limited
in time.  Therefore, if the Investment Adviser fails to exercise
this right within the pre-determined time scale, the investment
becomes worthless.
4.2	Off-Exchange Transactions:
Transactions in off-exchange warrants may involve greater risk
than dealing in exchange traded warrants because there is no
exchange market through which to liquidate the Investment
Adviser's position or to assess the value of the warrant or the
exposure to risk.  Bid and offer prices need not be quoted, and
even where they are, they will be established by dealers in these
instruments and consequently it may be difficult to establish
what a fair price is.  The Investment Adviser should only permit
the Local Manager in the Investment Guidelines to invest the
Fund in off-exchange warrants if the Investment Adviser is fully
aware of the risks involved.
5.	COLLECTIVE INVESTMENT SCHEMES
Collective investment schemes (such as investment funds and
open-ended investment companies) invest funds paid by
purchasers of units or shares in the collective investment scheme
in the various types of asset provided for in their rules or
investment plans.  As such, collective investment schemes
generally allow unit holders and shareholders to achieve a high
degree of diversification at a relatively low cost.  Open-ended
investment funds, for example, allow savers to invest or
disinvest by buying or selling fund units on the basis of the
value of a unit, plus or minus relevant commissions (the value of
the unit being obtained by dividing the value of the entire
portfolio managed by the Fund, calculated at market prices, by
the number of units in circulation).
Allowing the Local Manager to purchase units or shares in a
collective investment scheme will expose the Investment
Adviser to the risks associated with the nature of the financial
instruments in which the collective investment scheme invests
and, where relevant, their concentration in a particular sector,
country, region or asset class.  Before allowing the Local
Manager to invest in collective investment schemes, the
Investment Adviser should make itself fully aware of the risks
associated with collective investment schemes, including
without limitation, the general risks identified in paragraph 1
above.
6.	EXCHANGE TRADED FUNDS
Exchange traded funds ("ETFs") are closed-ended collective
investment schemes, traded as shares on stock exchanges, and
typically replicate a stock market index, market sector,
commodity or basket of assets.  As such, they generally combine
the flexibility and tradeability of a share with the diversification
of a collective investment scheme.  Where the Investment
Guidelines permit the Local Manager to purchase ETFs, the
Investment Adviser will be exposed to similar risks as detailed
in respect of equity securities and collective investment
schemes, as well as the general risks detailed in paragraph 1.

7.	MISCELLANEOUS
7.1	Overseas Markets:
Overseas markets may involve different risks to the Investment
Adviser's home markets.  In some cases the risks will be
greater. In drafting the Investment Guidelines to permit the
Local Manager to invest in overseas markets the Investment
Adviser should make itself fully aware of the risks and
protections (if any) which will operate in any relevant overseas
markets.  The potential for profit or loss from transactions on
overseas markets or in contracts denominated other than in the
Fund's base currency will be affected by fluctuations in
overseas exchange rates against the Fund's base currency.
7.2	Contingent Liability Investments:
Contingent liability investments are derivatives under the terms
of which the Client will or may be liable to make further
payments (other than charges, and whether or not secured by
margin) when the transaction falls to be completed or upon the
earlier closing out of the Investment Adviser's position.
Contingent liability investments which are margined require the
Fund (or the Investment Adviser if there are insufficient assets
in the Fund) to make a series of payments against the purchase
price, instead of paying the whole purchase price immediately.
If the Investment Adviser permits the Local Manager, as part of
the Investment Guidelines, to trade for the Fund in futures,
contracts for differences or write or otherwise deal on margin in
options for the Fund, the Investment Adviser may sustain a total
loss of the margin which the Local Manager, on the Investment
Adviser's behalf, deposits with a broker to establish or maintain
a position.  If the market moves against the Investment Adviser,
the Investment Adviser may be called upon to pay out of the
Fund (or the Investment Adviser's other assets if there are
insufficient assets in the Fund) substantial additional margin at
short notice to maintain the position.  If the Investment Adviser
fails to do so within the time required, the Investment Adviser's
position may be liquidated at a loss and the Investment Adviser
will be liable for any resulting deficit.
Even if a transaction is not margined, it may still carry an
obligation to make further payments in certain circumstances
over and above any amount paid when the contract was entered
into.  Contingent liability investments which are not traded on or
under the rules of a regulated market may expose the Investment
Adviser and the Fund to substantially greater risks.
7.3	Collateral:
If the Investment Adviser permits the Local Manager as part of
the Investment Guidelines to enter into transactions which
require the Investment Adviser to deposit collateral as security
with a broker, the way in which such collateral will be treated
will vary according to the type of transaction and where it is
traded.  There could be significant differences in the treatment
of the Investment Adviser's collateral depending on whether the
trading is on a regulated market, with the rules of that market
(and associated clearing house) applying, or is off-exchange.
Deposited collateral may lose its identity as the Investment
Adviser's property once dealings on the Investment Adviser's
behalf are undertaken.  Even if the Investment Adviser's
dealings should ultimately prove profitable, the Investment
Adviser may not get back the same assets which the Local
Manager deposited on the Investment Adviser's behalf and may
have to accept payment in cash.
7.4	Commissions:
The Investment Adviser is liable for all commissions and it may
be the case that charges are not expressed in money terms (but
for example, as a percentage of contract value).  In the case of
futures, when commission is charged as a percentage, it will
normally be as a percentage of the total contract value, and not
simply as a percentage of the Investment Adviser's initial
payment.
7.5	Suspensions of Trading:
Under certain trading conditions or the application of certain
rules in force in some markets (such as circuit breakers) it may
be difficult or impossible for the Local Manager to liquidate a
position held for the Investment Adviser.  This may occur, for
example, at times of rapid price movement if the price of an
investment rises or falls in one trading session to such an extent
that under the rules of the relevant exchange trading of that
investment is suspended or restricted.  Further, the Local
Manager placing a stop-loss order on the Investment Adviser's
behalf will not necessarily limit losses to the intended amounts
because market conditions may make it impossible to execute
such an order at the stipulated price.  Most electronic and
auction trading systems are supported by computerised systems
for order routing and trade checking, recording and clearing.
Like all automated procedures, these systems are subject to the
risk of stoppages and malfunctions, which may result in the
Investment Adviser's orders not being executed in accordance
with the Local Manager's instructions or remaining unexecuted.
7.6	Clearing House Protections:
On many exchanges, the performance of a transaction by a
broker (or the third party with whom he is dealing on the
Investment Adviser's behalf) is "guaranteed" by the exchange or
its clearing house.  However, this guarantee is unlikely in most
circumstances to cover the Investment Adviser and may not
protect the Investment Adviser if the broker or another party
defaults on its obligations to the Investment Adviser.  There is
no clearing house for traditional options, nor normally for
instruments which are not traded under the rules of a recognised
or designated investment exchange.
7.7	Insolvency:
A derivative broker's insolvency or default, or that of any other
brokers involved with the Investment Adviser's transaction, may
lead to positions being liquidated or closed out without the
Investment Adviser's or the Local Manager's consent or
knowledge.  In certain circumstances, the Investment Adviser
may not get back the actual assets which the Investment Adviser
lodged as collateral and the Investment Adviser may have to
accept any available payment in cash.


2
15658662.3.BUSINESS
15658662.3.BUSINESS
Sch. A-1
15658662.3.BUSINESS
Annex-2
15658662.3.BUSINESS
Annex-1
15658662.3.BUSINESS
Sch. 1-3
15658662.3.BUSINESS
Sch. 1-1
15658662.3.BUSINESS
Sch. 2-2
15658662.3.BUSINESS
Sch. 2-1
15658662.3.BUSINESS
Sch. 3-10
15658662.3.BUSINESS
Sch. 3-1
15658662.3.BUSINESS