MORGAN STANLEY INSTITUTIONAL FUND INC Form 485BPOS Filed

SECURITIES AND EXCHANGE COMMISSION

FORM 485BPOS Post-effective amendments [Rule 485(b)]

Filing Date: 2016-12-13 SEC Accession No. 0001104659-16-161877

(HTML Version on secdatabase.com)

FILER MORGAN STANLEY INSTITUTIONAL FUND INC Mailing Address Business Address 522 FIFTH AVENUE 522 FIFTH AVENUE CIK:836487| IRS No.: 000000000 | State of Incorp.:MD | Fiscal Year End: 1231 NEW YORK NY 10036 NEW YORK NY 10036 Type: 485BPOS | Act: 33 | File No.: 033-23166 | Film No.: 162048833 800-548-7786 MORGAN STANLEY INSTITUTIONAL FUND INC Mailing Address Business Address 522 FIFTH AVENUE 522 FIFTH AVENUE CIK:836487| IRS No.: 000000000 | State of Incorp.:MD | Fiscal Year End: 1231 NEW YORK NY 10036 NEW YORK NY 10036 Type: 485BPOS | Act: 40 | File No.: 811-05624 | Film No.: 162048834 800-548-7786

Copyright © 2016 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As filed with the Securities and Exchange Commission on December 13, 2016. 1933 Act File No. 033-23166 1940 Act File No. 811-05624

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D. C. 20549

FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x Pre-Effective Amendment No. o Post-Effective Amendment No. 157 x and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x Amendment No. 158 x

Morgan Stanley Institutional Fund, Inc. (Exact Name of Registrant as Specified in Charter) 522 Fifth Avenue New York, New York 10036 (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (800) 548-7786 Mary E. Mullin, Esq. Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, New York 10036 (Name and Address of Agent for Service)

Copy To: Stuart M. Strauss, Esq. Carl Frischling, Esq. Dechert LLP Perkins Coie LLP 1095 Avenue of the 30 Rockefeller Plaza Americas

It is proposed that this filing will become effective (check appropriate box) immediately upon filing pursuant to X paragraph (b) on (date) pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a) (1) on (date) pursuant to paragraph (a) (1) 75 days after filing pursuant to paragraph (a) (2) On (date) pursuant to paragraph (a) (2) of rule 485.

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc. Emerging Markets Breakout Nations Portfolio Prospectus December 13, 2016

Ticker Portfolio Symbol

Emerging Markets Breakout Nations

Class A EMAPX

Class C EMCPX

Class IS EMSPX

The Securities and Exchange Commission ("SEC") has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

FSVPRO-00

Table of Contents

Page Portfolio Summary 1

Details of the Portfolio 6

Additional Information about the Portfolio's Investment Strategies and Related Risks 9 Fund Management 15 Shareholder Information 16 Financial Highlights 26

Morgan Stanley Institutional Fund, Inc. Prospectus Portfolio Summary Emerging Markets Breakout Nations Portfolio

Objective Annual Portfolio Operating Expenses (expenses that you pay each The Emerging Markets Breakout Nations Portfolio (the year as a percentage of the value of your investment) "Portfolio") seeks long-term capital appreciation. Class I Class A Class C Class IS Advisory Fee 0.90 % 0.90 % 0.90 % 0.90 % Fees and Expenses Distribution and/ The table below describes the fees and expenses that you may or Shareholder pay if you buy and hold shares of the Portfolio. For purchases of Service (12b-1) Class A shares, you may qualify for a sales charge discount if the Fee None 0.25 % 1.00 % None cumulative net asset value ("NAV") of Class A shares of the Portfolio being purchased in a single transaction, together with Other 3 the NAV of any Class A, Class C and Class L shares of the Expenses 1.46 % 1.53 % 1.53 % 1.38 % Portfolio of Morgan Stanley Institutional Fund, Inc. (the "Fund") Total Annual already held in Related Accounts as of the date of the transaction Portfolio as well as Class A, Class C and Class L shares of any other Operating Morgan Stanley Multi-Class Fund (as defined in the section of Expenses* 2.36 % 2.68 % 3.43 % 2.28 % this Prospectus entitled "Shareholder InformationExchange Fee Waiver and/ Privilege" and including shares of Morgan Stanley Money or Expense Reimbursement* 1.17 % 1.17 % 1.17 % 1.18 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Market Funds (as defined in the section of this Prospectus Total Annual 1 entitled "Shareholder InformationExchange Privilege") which Portfolio you acquired in an exchange from Class A shares of the Portfolio Operating or Class A shares of another Morgan Stanley Multi-Class Fund) Expenses After held in Related Accounts (as defined in the section of this Fee Waiver and/ Prospectus entitled "Shareholder InformationSales Charges or Expense Applicable to Purchases of Class A Shares") which you acquired Reimbursement* 1.19 % 1.51 % 2.26 % 1.10 % in an exchange from Class A shares of the Portfolio or Class A shares of another Morgan Stanley Multi-Class Fund already held Example in Related Accounts as of the date of the transaction, amounts to The example below is intended to help you compare the cost of $25,000 or more. More information about this combined investing in the Portfolio with the cost of investing in other purchase discount and other discounts is available from your mutual funds. authorized financial intermediary and on page 18 of this The example assumes that you invest $10,000 in the Portfolio, Prospectus in the section entitled "Shareholder your investment has a 5% return each year and that the InformationSales Charges Applicable to Purchases of Class A Portfolio's operating expenses remain the same (except that the Shares." example incorporates the fee waiver and/or expense

Shareholder Fees (fees paid directly from your investment) reimbursement arrangement for only the first year). Although Class I Class A Class C Class IS your actual costs may be higher or lower, based on these assumptions your costs would be: Maximum sales If You SOLD Your Shares: charge 1 Year 3 Years (load) Class I $ 121 $ 624 imposed on Class A $ 671 $ 1,208 purchases Class C $ 329 $ 945 (as Class IS $ 112 $ 599 a percentage If You HELD Your Shares: of offering 1 Year 3 Years price) None 5.25 % None None Class I $ 121 $ 624 Maximum Class A $ 671 $ 1,208 deferred Class C $ 229 $ 945 sales Class IS $ 112 $ 599 charge 1 Investments that are not subject to any sales charges at the time of (load) purchase are subject to a contingent deferred sales charge ("CDSC") of (as a 1.00% that will be imposed if you sell your shares within 18 months after percentage the last day of the month of purchase, except for certain specific based on circumstances. See "Shareholder InformationHow to Redeem Portfolio the Shares" for further information about the CDSC waiver categories. lesser of the 2 offering The Class C CDSC is only applicable if you sell your shares within one price year after the last day of the month of purchase. See "Shareholder or NAV at InformationHow to Redeem Portfolio Shares" for a complete discussion redemption) None None1 1.00 %2 None of the CDSC. Redemption Emerging Markets Breakout Nations Fee Portfolio (Cont'd) (as a percentage 2.00 % 2.00 % 2.00 % 2.00 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of the emerging markets, whose capital markets have traditionally been amount difficult for foreign investors to enter or are in early stages of redeemed capital market and/or economic development. The countries that on comprise frontier emerging markets may change from time to redemptions time. The Portfolio may invest in equity securities of companies made within operating in frontier emerging market countries that exist now 30 days of and/or in the future. Under normal circumstances, no more than purchase) 30% of the Portfolio's assets, determined at the time of investment, will be invested in equity securities of issuers located 3 Other expenses have been estimated for the current fiscal year. in frontier emerging market countries. * The Portfolio's "Adviser," Morgan Stanley Investment Management Inc., The equity securities in which the Portfolio may primarily invest has agreed to reduce its advisory fee and/or reimburse the Portfolio so include common and preferred stocks, convertible securities and that Total Annual Portfolio Operating Expenses, excluding certain equity-linked securities, rights, warrants, depositary receipts, investment related expenses, taxes, interest and other extraordinary limited partnership interests and other specialty securities having expenses (including litigation), will not exceed 1.20% for Class I, 1.55% equity features. The Portfolio may invest in American Depositary for Class A, 2.30% for Class C and 1.10% for Class IS. The fee waivers Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and and/or expense reimbursement will continue for at least one year or until other types of depositary receipts with respect to companies such time as the Fund's Board of Directors acts to discontinue all or a operating in emerging market and frontier emerging market portion of such waivers and/or reimbursements when it deems such countries and securities of other open- and closed-end investment action is appropriate. companies, including exchange-traded funds ("ETFs"). The Portfolio Turnover Portfolio may hold or have exposure to equity securities of The Portfolio pays transaction costs, such as commissions, when companies in any industry or sector. it buys and sells securities (or "turns over" its portfolio). A The Portfolio may, but it is not required to, use derivative higher portfolio turnover rate may indicate higher transaction instruments for a variety of purposes, including hedging, risk costs and may result in higher taxes when Portfolio shares are management, portfolio management or to earn income. The held in a taxable account. These costs, which are not reflected in Portfolio's use of derivatives may involve the purchase and sale Total Annual Portfolio Operating Expenses or in the Example, of derivative instruments such as futures, options, swaps, affect Portfolio performance. Because the Portfolio had not contracts for difference ("CFDs"), structured investments and commenced operations as of the most recent fiscal year end, no other related instruments and techniques. The Portfolio may portfolio turnover rate is available for the Portfolio. utilize foreign currency forward exchange contracts, which are Principal Investment Strategies also derivatives, in connection with its investments in foreign The Adviser seeks to maximize returns by investing primarily in securities. Derivative instruments used by the Portfolio will be equity securities in emerging markets, which include frontier counted toward the Portfolio's 80% policy discussed above to the emerging markets. extent they have economic characteristics similar to the securities included within that policy. The Adviser's investment approach combines top-down country allocation with bottom-up stock selection. The Adviser allocates Principal Risks the Portfolio's assets among emerging markets based on relative There is no assurance that the Portfolio will achieve its economic, political and social fundamentals, stock valuations and investment objective, and you can lose money investing in this investor sentiment. To manage risk, the Adviser emphasizes Portfolio. The principal risks of investing in the Portfolio macroeconomic and fundamental research. include:

Under normal circumstances, at least 80% of the Portfolio's • Equity Securities. In general, prices of equity securities are assets will be invested in equity securities of issuers located in more volatile than those of fixed income securities. The prices of emerging market countries, which include frontier emerging equity securities fluctuate, and sometimes widely fluctuate, in market countries. This policy may be changed without response to activities specific to the issuer of the security as well shareholder approval; however, you would be notified upon 60

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document days' notice in writing of any changes. The Adviser generally as factors unrelated to the fundamental condition of the issuer, 2 considers selling an investment when it determines the company including general market, economic and political conditions. no longer satisfies its investment criteria. Morgan Stanley Institutional Fund, Inc. Prospectus Emerging market or developing countries are countries that Portfolio Summary major international financial institutions (such as the World Bank) or the Portfolio's benchmark index generally consider to Emerging Markets Breakout Nations be less economically mature than developed nations, such as the (Cont'd) United States or most nations in Western Europe. Emerging Portfolio market or developing countries can include every nation in the world except the United States, Canada, Japan, Australia, New rities in foreign currencies will change as a consequence of Zealand and most countries located in Western Europe. The term market movements in the value of those securities between the "frontier emerging markets" refers to those emerging market date on which the contract is entered into and the date it matures. countries outside the "mainstream" There is additional risk that such transactions could reduce or preclude the opportunity for gain if the value of the currency moves in the direction opposite to the position taken and that • Foreign and Emerging Market Securities. Investments in foreign foreign currency forward exchange contracts create exposure to markets entail special risks such as currency, political, economic currencies in which the Portfolio's securities are not and market risks. There also may be greater market volatility, denominated. The use of foreign currency forward exchange less reliable financial information, higher transaction and custody contracts involves the risk of loss from the insolvency or costs, decreased market liquidity and less government and bankruptcy of the counterparty to the contract or the failure of exchange regulation associated with investments in foreign the counterparty to make payments or otherwise comply with the markets. In addition, investments in certain foreign markets, terms of the contract. which have historically been considered stable, may become more volatile and subject to increased risk due to ongoing • Frontier Emerging Market Securities. Investing in the securities developments and changing conditions in such markets. of issuers operating in frontier emerging markets involves a high Moreover, the growing interconnectivity of global economies degree of risk and special considerations not typically associated and financial markets has increased the probability that adverse with investing in the securities of other foreign or U.S. issuers. In developments and conditions in one country or region will affect addition, the risks associated with investing in the securities of the stability of economies and financial markets in other issuers operating in emerging market countries are magnified countries or regions. Certain foreign markets may rely heavily on when investing in frontier emerging market countries. These particular industries or foreign capital and are more vulnerable to types of investments could be affected by factors not usually diplomatic developments, the imposition of economic sanctions associated with investments in U.S. issuers, including risks against a particular country or countries, organizations, entities associated with expropriation and/or nationalization, political or and/or individuals, changes in international trading patterns, social instability, pervasiveness of corruption and crime, armed trade barriers, and other protectionist or retaliatory measures. conflict, the impact on the economy of civil war, religious or Economic sanctions could, among other things, effectively ethnic unrest and the withdrawal or non-renewal of any license restrict or eliminate the Portfolio's ability to purchase or sell enabling the Portfolio to trade in securities of a particular securities or groups of securities for a substantial period of time, country, confiscatory taxation, restrictions on transfers of assets, and may make the Portfolio's investments in such securities lack of uniform accounting, auditing and financial reporting harder to value. Investments in foreign markets may also be standards, less publicly available financial and other information, adversely affected by governmental actions such as the diplomatic developments which could affect U.S. investments in imposition of capital controls, nationalization of companies or those countries and potential difficulties in enforcing contractual industries, expropriation of assets, or the imposition of punitive obligations. These risks and special considerations make taxes. The governments of certain countries may prohibit or investments in companies operating in frontier emerging market impose substantial restrictions on foreign investing in their countries highly speculative in nature and, accordingly, an capital markets or in certain sectors or industries. In addition, a investment in the Portfolio must be viewed as highly speculative foreign government may limit or cause delay in the convertibility in nature and may not be suitable for an investor who is not able or repatriation of its currency which would adversely affect the to afford the loss of his or her entire investment. To the extent

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document U.S. dollar value and/or liquidity of investments denominated in that the Portfolio invests a significant percentage of its assets in a 3 that currency. Certain foreign investments may become less single frontier emerging market country, the Portfolio will be liquid in response to market developments or adverse investor subject to heightened risk associated with investing in frontier perceptions, or become illiquid after purchase by the Portfolio, emerging market countries and additional risks associated with particularly during periods of market turmoil. When the Portfolio that particular country. From time to time, certain of the holds illiquid investments, its portfolio may be harder to value. companies in which the Portfolio expects to invest may operate The risks of investing in emerging market countries are greater in, or have dealings with, countries subject to sanctions or than risks associated with investments in foreign developed embargoes imposed by the U.S. Government and the United countries. Nations and/or countries identified by the U.S. Government as state sponsors of terrorism. A company may suffer damage to its The Portfolio's investments in foreign issuers may be reputation if it is identified as such a company and, as denominated in foreign currencies and therefore, to the extent unhedged, the value of the investment will fluctuate with the Emerging Markets Breakout Nations U.S. dollar exchange rates. To the extent hedged by the use of (Cont'd) foreign currency forward exchange contracts, the precise Portfolio matching of the foreign currency forward exchange contract amounts and the value of the securities involved will not a benchmark index selected for the Portfolio. Performance generally be possible because the future value of such secu- information for the Portfolio will be available online at www.morganstanley.com/im. an investor in such companies, the Portfolio will be indirectly Fund Management subject to those risks. Adviser. Morgan Stanley Investment Management Inc.

• Investment Company Securities. Subject to the limitations set Portfolio Managers. The Portfolio is managed by members of the forth in the Investment Company Act of 1940, as amended (the Emerging Markets Equity team. Information about the members "1940 Act"), or as otherwise permitted by the SEC, the Portfolio jointly and primarily responsible for the day-to-day management may acquire shares in other investment companies, including of the Portfolio is shown below: foreign investment companies and ETFs, which may be managed by the Adviser or its affiliates. The market value of the shares of Date Began other investment companies may differ from the NAV of the Title with Managing Portfolio. The shares of closed-end investment companies Name Adviser Portfolio frequently trade at a discount to their NAV. As a shareholder in Ruchir Managing Since an investment company, the Portfolio would bear its ratable share Sharma Director inception of that entity's expenses, including its investment advisory and Managing Since administration fees. At the same time, the Portfolio would Tim Drinkall Director inception continue to pay its own advisory and administration fees and Jitania Executive Since other expenses. As a result, the Portfolio and its shareholders, in Kandhari Director inception effect, will be absorbing duplicate levels of fees with respect to investments in other investment companies. Purchase and Sale of Portfolio Shares The minimum initial investment generally is $5,000,000 for • Liquidity. The Portfolio's investments in illiquid securities may Class I shares and $1,000 for each of Class A and Class C shares entail greater risk than investments in other types of securities. of the Portfolio. To purchase Class IS shares, an investor must These securities may be more difficult to sell, particularly in meet a minimum initial investment of $10,000,000 or be a times of market turmoil. Additionally, the market for certain defined contribution, defined benefit or other employer investments deemed liquid at the time of purchase may become sponsored employee benefit plan with minimum plan assets of illiquid under adverse market or economic conditions. Illiquid $250,000,000, whether or not qualified under the Internal securities may be more difficult to value. If the Portfolio is Revenue Code of 1986, as amended (the "Code"), in each case forced to sell an illiquid security to fund redemptions or for other subject to the discretion of the Adviser. The minimum initial cash needs, it may be forced to sell the security at a loss. investment may be waived for certain investments. For more

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • Derivatives. A derivative instrument often has risks similar to information, please refer to the section of this Prospectus entitled 4 its underlying asset and may have additional risks, including "Shareholder InformationMinimum Investment Amounts." imperfect correlation between the value of the derivative and the Shares of the Portfolio may be purchased or sold on any day the underlying asset, risks of default by the counterparty to certain New York Stock Exchange ("NYSE") is open for business transactions, magnification of losses incurred due to changes in directly from the Fund by mail (c/o Boston Financial Data the market value of the securities, instruments, indices or interest Services, Inc., P.O. Box 219804, Kansas City, MO 64121-9804), rates to which the derivative instrument relates and risks that the by telephone (1-800-548-7786) or by contacting an authorized transactions may not be liquid. Certain derivative transactions third-party, such as a broker-dealer or other financial may give rise to a form of leverage. Leverage magnifies the intermediary that has entered into a selling agreement with the potential for gain and the risk of loss. Portfolio's "Distributor," Morgan Stanley Distribution, Inc. (each Shares of the Portfolio are not bank deposits and are not a "Financial Intermediary"). In addition, you can sell Portfolio guaranteed or insured by the Federal Deposit Insurance shares at any time by enrolling in a systematic withdrawal plan. Corporation or any other government agency. If you sell Class A shares or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. Performance Information For more information, please refer to the sections of this As of the date hereof, the Portfolio has not yet completed a full Prospectus entitled "Shareholder InformationHow To Purchase calendar year of investment operations. Upon the completion of a Portfolio Shares" and "How To Redeem Portfolio Shares." full calendar year of investment operations by the Portfolio, this section will include charts that provide some indication of the Tax Information risks of an investment in the Portfolio, by showing the difference The Portfolio intends to make distributions that may be taxed as in annual total returns, highest and lowest quarterly returns and ordinary income or capital gains, unless you are investing average annual total returns (before and after taxes) compared to through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

Morgan Stanley Institutional Fund, Inc. Prospectus Portfolio Summary

Emerging Markets Breakout Nations Portfolio (Cont'd)

Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the Portfolio through a Financial Intermediary (such as a bank), the Adviser and/or the Distributor may pay the Financial Intermediary for the sale of Portfolio shares and related services. These payments, which may be significant in amount, may create a conflict of interest by influencing the Financial Intermediary and your salesperson to recommend the Portfolio over another investment. Ask your salesperson or visit your Financial Intermediary's web site for more information.

Emerging Markets Breakout Nations Portfolio

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Objective market is in an emerging market country, (ii) alone or on a The Emerging Markets Breakout Nations Portfolio (the consolidated basis it derives 50% or more of its annual revenue "Portfolio") seeks long-term capital appreciation. from goods produced, sales made or services performed in emerging market countries or (iii) it is organized under the laws The Portfolio's investment objective may be changed by the of, or has a principal office in, an emerging market country. By Fund's Board of Directors without shareholder approval, but no applying this test, it is possible that a particular issuer could be change is anticipated. If the Portfolio's investment objective deemed to be from more than one emerging market country. changes, the Portfolio will notify shareholders and shareholders should consider whether the Portfolio remains an appropriate Emerging market or developing countries are countries that investment in light of the change. major international financial institutions (such as the World Bank) or the Portfolio's benchmark index generally consider to Approach be less economically mature than developed nations, such as the The Adviser seeks to maximize returns by investing primarily in United States or most nations in Western Europe. Emerging equity securities in emerging markets, which include frontier market or developing countries can include every nation in the emerging markets. The Adviser's investment approach combines world except the United States, Canada, Japan, Australia, New top-down country allocation with bottom-up stock selection. Zealand and most countries located in Western Europe. The term Investment selection criteria include attractive growth "frontier emerging markets" refers to those emerging market characteristics, reasonable valuations and company managements countries outside the "mainstream" emerging markets, whose with strong shareholder value orientation. capital markets have traditionally been difficult for foreign

Process investors to enter or are in early stages of capital market and/or The Adviser actively selects positions in a limited number of economic development. Frontier emerging market countries in emerging market countries, applying its investment framework to which the Fund currently may invest include Argentina, Bahrain, determine a country's future economic growth and equity return Bangladesh, Botswana, Bulgaria, Croatia, Ecuador, Egypt, potential, independent of any particular index. Estonia, Georgia, Ghana, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Laos, Latvia, Lebanon, Lithuania, Mauritius, Morocco, The Adviser's global strategists analyze the global economic Namibia, Nigeria, Oman, Pakistan, Panama, Qatar, Romania, environment, particularly its impact on emerging markets, which Saudi Arabia, Serbia, Slovenia, Sri Lanka, Trinidad & Tobago, include frontier emerging markets, and allocate the Portfolio's Tunisia, Ukraine, United Arab Emirates and Vietnam. The assets among emerging markets based on relative economic, countries that comprise frontier emerging markets may change political and social fundamentals, stock valuations and investor from time to time. The Portfolio may invest in equity securities sentiment. The Adviser invests in countries based on the work of of companies operating in frontier emerging market countries country specialists who conduct extensive fundamental analysis that exist now and/or in the future. Under normal circumstances, of companies within these markets and seeks to identify no more than 30% of the Portfolio's assets, determined at the companies with strong earnings growth prospects. The Adviser time of investment, will be invested in equity securities of issuers uses a proprietary framework to rank countries relative to one located in frontier emerging market countries. another and relative to their own past and selects the highest ranked emerging market and frontier emerging market countries. The equity securities in which the Portfolio may primarily invest Country weightings are a function of the Adviser's conviction include common and preferred stocks, convertible securities and levels, the size of the economy, and liquidity. Country portfolios equity-linked securities, rights, warrants, depositary receipts, are implemented through stock selection within each country. To limited partnership interests and other specialty securities having manage risk, the Adviser emphasizes macroeconomic and equity features. The Portfolio may invest in ADRs, GDRs and fundamental research. The Adviser generally considers selling a other types of depositary receipts with respect to companies portfolio holding when it determines that the holding no longer operating in emerging market and frontier emerging market satisfies its investment criteria. countries and securities of other open- and closed-end investment companies, including ETFs. The Portfolio may hold or have Under normal circumstances, at least 80% of the Portfolio's exposure to equity securities of companies in any industry or assets will be invested in equity securities of issuers located in sector. emerging market countries, which include frontier emerging market countries. This policy may be changed without

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shareholder approval; however, you would be notified upon 60 The Portfolio may, but it is not required to, use derivative 6 days' notice in writing of any changes. instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. The Adviser considers an issuer to be located in an emerging Derivatives are financial instruments whose value is based on the market country if (i) its principal securities trading value of an underlying asset, interest

Morgan Stanley Institutional Fund, Inc. Prospectus Details of the Portfolio

Emerging Markets Breakout Nations Portfolio (Cont'd) rate, index or financial instrument. The Portfolio's use of zations, entities and/or individuals, changes in international derivatives may involve the purchase and sale of derivative trading patterns, trade barriers, and other protectionist or instruments such as futures, options, swaps, CFDs, structured retaliatory measures. Economic sanctions could, among other investments and other related instruments and techniques. The things, effectively restrict or eliminate the Portfolio's ability to Portfolio may utilize foreign currency forward exchange purchase or sell securities or groups of securities for a substantial contracts, which are also derivatives, in connection with its period of time, and may make the Portfolio's investments in such investments in foreign securities. Derivative instruments used by securities harder to value. International trade barriers or the Portfolio will be counted toward the Portfolio's 80% policy economic sanctions against foreign countries, organizations, discussed above to the extent they have economic characteristics entities and/or individuals, may adversely affect the Portfolio's similar to the securities included within that policy. foreign holdings or exposures. Investments in foreign markets may also be adversely affected by governmental actions such as Risks the imposition of capital controls, nationalization of companies The Portfolio's principal investment strategies are subject to the or industries, expropriation of assets, or the imposition of following principal risks: punitive taxes. Governmental actions can have a significant Investing in the Portfolio may be appropriate for you if you are effect on the economic conditions in foreign countries, which willing to accept the risks and uncertainties of investing in a also may adversely affect the value and liquidity of the portfolio of equity securities of issuers in emerging markets. In Portfolio's investments. For example, the governments of certain general, prices of equity securities are more volatile than those of countries may prohibit or impose substantial restrictions on fixed income securities. The prices of equity securities fluctuate, foreign investing in their capital markets or in certain sectors or and sometimes widely fluctuate, in response to activities specific industries. In addition, a foreign government may limit or cause to the issuer of the security as well as factors unrelated to the delay in the convertibility or repatriation of its currency which fundamental condition of the issuer, including general market, would adversely affect the U.S. dollar value and/or liquidity of economic and political conditions. investments denominated in that currency. Any of these actions could severely affect security prices, impair the Portfolio's ability To the extent that the Portfolio invests in convertible securities, to purchase or sell foreign securities or transfer the Portfolio's and the convertible security's investment value is greater than its assets back into the United States, or otherwise adversely affect conversion value, its price will be likely to increase when interest the Portfolio's operations. Certain foreign investments may rates fall and decrease when interest rates rise. If the conversion become less liquid in response to market developments or value exceeds the investment value, the price of the convertible adverse investor perceptions, or become illiquid after purchase security will tend to fluctuate directly with the price of the by the Portfolio, particularly during periods of market turmoil. underlying security. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or Investing in the securities of foreign issuers, particularly those when dealers are unwilling to make a market for certain located in emerging market or developing countries, entails the securities. When the Portfolio holds illiquid investments, its risk that news and events unique to a country or region will affect portfolio may be harder to value. those markets and their issuers. The value of the Portfolio's shares may vary widely in response to political and economic The Portfolio's investments in foreign issuers may be factors affecting companies in foreign countries. These same denominated in foreign currencies and therefore, to the extent

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document events will not necessarily have an effect on the U.S. economy or unhedged, the value of the investment will fluctuate with the 7 similar issuers located in the United States. In addition, U.S. dollar exchange rates. To the extent hedged by the use of investments in certain foreign markets, which have historically foreign currency forward exchange contracts, the precise been considered stable, may become more volatile and subject to matching of the foreign currency forward exchange contract increased risk due to ongoing developments and changing amounts and the value of the securities involved will not conditions in such markets. Moreover, the growing generally be possible because the future value of such securities interconnectivity of global economies and financial markets has in foreign currencies will change as a consequence of market increased the probability that adverse developments and movements in the value of those securities between the date on conditions in one country or region will affect the stability of which the contract is entered into and the date it matures. economies and financial markets in other countries or regions. Furthermore, such transactions could reduce or preclude the opportunity for gain if the value of the currency moves in the Certain foreign markets may rely heavily on particular industries direction opposite to the position taken. There is additional risk or foreign capital and are more vulnerable to diplomatic to the extent that foreign currency forward exchange contracts developments, the imposition of economic sanctions against a create exposure to currencies in which the Portfolio's securities particular country or countries, organi- are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered

Emerging Markets Breakout Nations Portfolio (Cont'd) into such contracts. The use of foreign currency forward conditions, such as the levels and liquidity of the global and local exchange contracts involves the risk of loss from the insolvency financial and asset markets, the absolute and relative level and or bankruptcy of the counterparty to the contract or the failure of volatility of interest rates and equity prices, investor sentiment, the counterparty to make payments or otherwise comply with the inflation, and the availability and cost of credit. Adverse terms of the contract. developments in these conditions can have a greater adverse effect on the banking industry of a frontier emerging market The financial markets of frontier emerging market countries economy than on other industries of its economy. Factors that have, for the most part, substantially less volume than more have an adverse impact on the banking industry may have a developed markets, and securities of many companies are less disproportionate impact on the Portfolio's performance. liquid and their prices are more volatile than securities of comparable companies in more sizeable markets. There are also Subject to the limitations set forth in the 1940 Act or as varying levels of government supervision and regulation of otherwise permitted by the SEC, the Portfolio may acquire shares exchanges, financial institutions and issuers in various countries. in other investment companies, including foreign investment In addition, the manner in which foreign investors may invest in companies and ETFs, which may be managed by the Adviser or securities in certain countries, as well as limitations on such its affiliates. The market value of the shares of other investment investments, may affect the investment operations of the companies may differ from the NAV of the particular Portfolio. Portfolio. The shares of closed-end investment companies frequently trade at a discount to their NAV. As a shareholder in an investment Investments in securities of issuers operating in frontier emerging company, the Portfolio would bear its ratable share of that market countries may also be exposed to an extra degree of entity's expenses, including its investment advisory and custodial ownership and/or market risk, especially where the administration fees. At the same time, the Portfolio would securities purchased are not traded on an official exchange or continue to pay its own advisory and administration fees and where ownership records regarding the securities are maintained other expenses. As a result, the Portfolio and its stockholders, in by an unregulated entity (or even the issuer itself). In some effect, will be absorbing duplicate levels of fees with respect to countries, market practice may require that payment shall be investments in other investment companies. made prior to receipt of the security which is being purchased, or that delivery of a security must be made before payment is The Portfolio's investments in illiquid securities may entail received. In such cases, default by a broker or bank through greater risk than investments in other types of securities. These

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document whom the relevant transaction is effected might result in a loss securities may be more difficult to sell, particularly in times of 8 being suffered by the Portfolio. In addition, there is generally less market turmoil. Additionally, the market for certain investments governmental supervision and regulation of stock exchanges, deemed liquid at the time of purchase may become illiquid under brokers and listed issuers than in the United States. The Adviser adverse market or economic conditions. Illiquid securities may will seek, where possible, to cause the Portfolio to use be more difficult to value. If the Portfolio is forced to sell an counterparties whose financial status is such that this risk is illiquid security to fund redemptions or for other cash needs, it reduced. However, there can be no certainty that the Adviser will may be forced to sell the security at a loss. be successful in eliminating this risk for the Portfolio, A derivative instrument often has risks similar to its underlying particularly as counterparties operating in frontier emerging asset and may have additional risks, including imperfect market countries frequently lack the substance or financial correlation between the value of the derivative and the resources of those in developed countries. There may also be a underlying asset, risks of default by the counterparty to certain danger that, because of uncertainties in the operation of transactions, magnification of losses incurred due to changes in settlement systems in individual markets, competing claims may the market value of the securities, instruments, indices or interest arise in respect of securities held by or to be transferred to the rates to which the derivative instrument relates, risks that the Portfolio. Furthermore, compensation schemes may be non- transactions may not be liquid and risks arising from margin existent or limited or inadequate to meet the Portfolio's claims in requirements. Certain derivative transactions may give rise to a any of these events. form of leverage. Leverage magnifies the potential for gain and Certain foreign governments levy withholding or other taxes on the risk of loss. dividend and interest income. Although in some countries a Please see "Additional Information about the Portfolio's portion of these taxes are recoverable, the non-recovered portion Investment Strategies and Related Risks" for further information of foreign withholding taxes will reduce the income received about these and other risks of investing in the Portfolio. from investments in such countries. Morgan Stanley Institutional Fund, Inc. Prospectus Investment opportunities in many frontier emerging markets may be in the banking industry. The banking industry can be affected Additional Information About the Portfolio's Investment by global and local economic Strategies and Related Risks

This section discusses additional information relating to the Portfolio's investment strategies, other types of investments that the Portfolio may make and related risk factors. The Portfolio's investment practices and limitations are described in more detail in the Statement of Additional Information ("SAI"), which is incorporated by reference and legally is a part of this Prospectus. For details on how to obtain a copy of the SAI and other reports and information, see the back cover of this Prospectus.

Equity Securities notes, asset-backed securities, mortgage securities, securities Equity securities may include common and preferred stocks, rated below investment grade (commonly referred to as "junk convertible securities and equity-linked securities, rights and bonds" or "high yield/high risk securities"), municipal bonds, warrants to purchase common stocks, depositary receipts, limited loan participations and assignments, zero coupon bonds, partnership interests and other specialty securities having equity convertible securities, Eurobonds, Brady Bonds, Yankee Bonds, features. The Portfolio may invest in equity securities that are repurchase agreements, commercial paper and cash equivalents. publicly-traded on securities exchanges or over-the-counter Fixed income securities are subject to the risk of the issuer's ("OTC") or in equity securities that are not publicly traded. inability to meet principal and interest payments on its Securities that are not publicly traded may be more difficult to obligations (i.e., credit risk) and are subject to price volatility sell and their value may fluctuate more dramatically than other resulting from, among other things, interest rate sensitivity, securities. The prices of convertible securities are affected by market perception of the creditworthiness of the issuer and changes similar to those of equity and fixed income securities. general market liquidity (i.e., market risk). The historically low Depositary receipts involve many of the same risks as those interest rate environment increases the risks associated with associated with direct investment in foreign securities. In rising interest rates, including the potential for periods of addition, the underlying issuers of certain depositary receipts, volatility and increased redemptions. The Portfolio may face a

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document particularly unsponsored or unregistered depositary receipts, are heightened level of risk, especially since the Federal Reserve 9 under no obligation to distribute shareholder communications to Board has ended its quantitative easing program and has begun the holders of such receipts, or to pass through to them any to raise rates. The Portfolio may be subject to liquidity risk, voting rights with respect to the deposited securities. which may result from the lack of an active market and the reduced number and capacity of traditional market participants to A convertible security is a bond, debenture, note, preferred stock, make a market in fixed-income securities. Securities with longer right, warrant or other security that may be converted into or durations are likely to be more sensitive to changes in interest exchanged for a prescribed amount of common stock or other rates, generally making them more volatile than securities with security of the same or a different issuer or into cash within a shorter durations. Lower rated fixed income securities have particular period of time at a specified price or formula. A greater volatility because there is less certainty that principal and convertible security generally entitles the holder to receive interest payments will be made as scheduled. Fixed income interest paid or accrued on debt securities or the dividend paid on securities may be called (i.e., redeemed by the issuer) prior to preferred stock until the convertible security matures or is final maturity. If a callable security is called, the Portfolio may redeemed, converted or exchanged. Before conversion, have to reinvest the proceeds at a lower rate of interest. convertible securities generally have characteristics similar to both debt and equity securities. The value of convertible Price Volatility securities tends to decline as interest rates rise and, because of The value of your investment in the Portfolio is based on the the conversion feature, tends to vary with fluctuations in the market prices of the securities the Portfolio holds. These prices market value of the underlying securities. Convertible securities change daily due to economic and other events that affect ordinarily provide a stream of income with generally higher markets generally, as well as those that affect particular regions, yields than those of common stock of the same or similar issuers. countries, industries, companies or governments. These price Convertible securities generally rank senior to common stock in movements, sometimes called volatility, may be greater or less a corporation's capital structure but are usually subordinated to depending on the types of securities the Portfolio owns and the comparable nonconvertible securities. Convertible securities markets in which the securities trade. Over time, equity securities generally do not participate directly in any dividend increases or have generally shown gains superior to fixed income securities, decreases of the underlying securities although the market prices although they have tended to be more volatile in the short term. of convertible securities may be affected by any dividend Fixed income securities, regardless of credit quality, also changes or other changes in the underlying securities. experience price volatility, especially in response to interest rate changes. As a result of price volatility, there is a risk that you Fixed Income Securities may lose money by investing in the Portfolio. The Portfolio may invest in fixed income securities. Fixed income securities are securities that pay a fixed or a variable rate Foreign Investing of interest until a stated maturity date. Fixed income securities To the extent that the Portfolio invests in foreign issuers, there is include U.S. government securities, securities issued by federal the risk that news and events unique to a country or region will or federally sponsored agencies and instrumentalities, corporate affect those markets and their issuers. These same events will not bonds and necessarily have an effect on the U.S. economy or similar issuers located in the United States. in foreign markets may also be adversely affected by In addition, some of the Portfolio's securities, including governmental actions such as the imposition of capital controls, underlying securities represented by depositary receipts, may be nationalization of companies or industries, expropriation of denominated in foreign currencies. As a result, changes in the assets, or the imposition of punitive taxes. Governmental actions value of a country's currency compared to the U.S. dollar may can have a significant effect on the economic conditions in affect the value of the Portfolio's investments. These changes foreign countries, which also may adversely affect the value and may happen separately from, and in response to, events that do liquidity of the Portfolio's investments. For example, the not otherwise affect the value of the security in the issuer's home governments of certain countries may prohibit or impose country. These risks may be intensified for the Portfolio's substantial restrictions on foreign investing in their capital investments in securities of issuers located in emerging market or markets or in certain sectors or industries. In addition, a foreign developing countries. government may limit or cause delay in the convertibility or

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Foreign Securities repatriation of its currency which would adversely affect the U.S. Foreign issuers generally are subject to different accounting, dollar value and/or liquidity of investments denominated in that auditing and financial reporting standards than U.S. issuers. currency. Any of these actions could severely affect security There may be less information available to the public about prices, impair the Portfolio's ability to purchase or sell foreign foreign issuers. Securities of foreign issuers can be less liquid securities or transfer the Portfolio's assets back into the United and experience greater price movements. In addition, the prices States, or otherwise adversely affect the Portfolio's operations. of such securities may be susceptible to influence by large Certain foreign investments may become less liquid in response traders, due to the limited size of many foreign securities to market developments or adverse investor perceptions, or markets. Moreover, investments in certain foreign markets, become illiquid after purchase by the Portfolio, particularly which have historically been considered stable, may become during periods of market turmoil. Certain foreign investments more volatile and subject to increased risk due to ongoing may become illiquid when, for instance, there are few, if any, developments and changing conditions in such markets. Also, the interested buyers and sellers or when dealers are unwilling to growing interconnectivity of global economies and financial make a market for certain securities. When the Portfolio holds markets has increased the probability that adverse developments illiquid investments, its portfolio may be harder to value. and conditions in one country or region will affect the stability of The Portfolio may invest in debt obligations known as economies and financial markets in other countries or regions. In "sovereign debt," which are obligations of governmental issuers some foreign countries, there is also the risk of government in emerging market or developing countries and industrialized expropriation, excessive taxation, political or social instability, countries. Certain emerging market or developing countries are the imposition of currency controls or diplomatic developments among the largest debtors to commercial banks and foreign that could affect the Portfolio's investment. There also can be governments. The issuer or governmental authority that controls difficulty obtaining and enforcing judgments against issuers in the repayment of sovereign debt may not be willing or able to foreign countries. Foreign stock exchanges, broker-dealers and repay the principal and/or pay interest when due in accordance listed issuers may be subject to less government regulation and with the terms of such obligations. Uncertainty surrounding the oversight. The cost of investing in foreign securities, including level and sustainability of sovereign debt of certain countries that brokerage commissions and custodial expenses, can be higher are part of the European Union, including Greece, Spain, than in the United States. Portugal, Ireland and Italy, has increased volatility in the Certain foreign markets may rely heavily on particular industries financial markets. The ongoing bailout program on behalf of or foreign capital and are more vulnerable to diplomatic Greece exacerbates these concerns. In addition, a number of developments, the imposition of economic sanctions against a Latin American countries are among the largest debtors of particular country or countries, organizations, entities and/or developing countries and have a long history of reliance on individuals, changes in international trading patterns, trade foreign debt. Most recently, Argentina defaulted on certain barriers, and other protectionist or retaliatory measures. sovereign debt securities, which, among other things, has Economic sanctions could, among other things, effectively restricted its ability to issue new debt and increases the risk of restrict or eliminate the Portfolio's ability to purchase or sell additional defaults on other its sovereign debt securities securities or groups of securities for a substantial period of time, outstanding. Additional factors that may influence the ability or and may make the Portfolio's investments in such securities willingness to service debt include, but are not limited to, a harder to value. International trade barriers or economic country's cash flow situation, the availability of sufficient foreign sanctions against foreign countries, organizations, entities and/or exchange on the date a payment is due, the relative size of its individuals, may adversely affect the Portfolio's foreign holdings debt service burden to the economy as a whole and its or exposures. Investments government's policy towards the International Monetary Fund, the

Morgan Stanley Institutional Fund, Inc. Prospectus Additional Information About the Portfolio's Investment Strategies and Related Risks

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document World Bank and other multilateral agencies. A country whose or developing countries may be more precarious than in other exports are concentrated in a few commodities or whose countries. In addition, emerging market securities generally are economy depends on certain strategic imports could be less liquid and subject to wider price and currency fluctuations vulnerable to fluctuations in international prices of these than securities issued in more developed countries. These commodities or imports. If a foreign sovereign obligor cannot characteristics result in greater risk of price volatility in emerging generate sufficient earnings from foreign trade to service its market or developing countries, which may be heightened by external debt, it may need to depend on continuing loans and aid currency fluctuations relative to the U.S. dollar. from foreign governments, commercial banks and multilateral organizations, and inflows of foreign investment. The Foreign Currency The Portfolio's investments in foreign securities may be commitment on the part of these foreign governments, denominated in foreign currencies. The value of foreign multilateral organizations and others to make such disbursements currencies may fluctuate relative to the value of the U.S. dollar. may be conditioned on the government's implementation of Since the Portfolio may invest in such non-U.S. dollar- economic reforms and/or economic performance and the timely denominated securities and therefore may convert the value of service of its obligations. Failure to implement such reforms, such securities into U.S. dollars, changes in currency exchange achieve such levels of economic performance or repay principal rates can increase or decrease the U.S. dollar value of the or interest when due may result in the cancellation of such third- Portfolio's assets. Currency exchange rates may fluctuate parties' commitments to lend funds, which may further impair the significantly over short periods of time for a number of reasons, foreign sovereign obligor's ability or willingness to timely including changes in interest rates and the overall economic service its debts. In addition, there is no legal process for health of the issuer. Devaluation of a currency by a country's collecting on a sovereign debt that a government does not pay or government or banking authority also will have a significant bankruptcy proceeding by which all or part of the sovereign debt impact on the value of any investments denominated in that that a government entity has not repaid may be collected. currency. The Adviser may use derivatives to reduce this risk. In connection with its investments in foreign securities, the The Adviser may in its discretion choose not to hedge against Portfolio also may enter into contracts with banks, brokers or currency risk. In addition, certain market conditions may make it dealers to purchase or sell securities or foreign currencies at a impossible or uneconomical to hedge against currency risk. future date. A foreign currency forward exchange contract is a negotiated agreement between the contracting parties to Derivatives The Portfolio may, but is not required to, use derivative exchange a specified amount of currency at a specified future instruments for a variety of purposes, including hedging, risk time at a specified rate. The rate can be higher or lower than the management, portfolio management or to earn income. spot rate between the currencies that are the subject of the Derivatives are financial instruments whose value is based, in contract. Foreign currency forward exchange contracts may be part, on the value of an underlying asset, interest rate, index or used to protect against uncertainty in the level of future foreign financial instrument. Prevailing interest rates and volatility currency exchange rates or to gain or modify exposure to a levels, among other things, also affect the value of derivative particular currency. In addition, the Portfolio may use cross instruments. A derivative instrument often has risks similar to its currency hedging or proxy hedging with respect to currencies in underlying asset and may have additional risks, including which the Portfolio has or expects to have portfolio or currency imperfect correlation between the value of the derivative and the exposure. Cross currency hedges involve the sale of one currency underlying asset, risks of default by the counterparty to certain against the positive exposure to a different currency and may be transactions, magnification of losses incurred due to changes in used for hedging purposes or to establish an active exposure to the market value of the securities, instruments, indices or interest the exchange rate between any two currencies. rates to which the derivative instrument relates, risks that the Emerging Market Securities transactions may not be liquid and risks arising from margin The Portfolio may invest in emerging market or developing requirements. The use of derivatives involves risks that are countries, which are countries that major international financial different from, and possibly greater than, the risks associated institutions (such as the World Bank) or the Portfolio's with other portfolio investments. Derivatives may involve the use benchmark index generally consider to be less economically of highly specialized instruments that require investment mature than developed nations, such as the United States or most

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document nations in Western Europe. Emerging market or developing techniques and risk analyses different from those associated with countries may be more likely to experience political turmoil or other portfolio investments. rapid changes in economic conditions than more developed Certain derivative transactions may give rise to a form of countries, and the financial condition of issuers in emerging leverage. Leverage magnifies the potential for gain and market 11

the risk of loss. Leverage associated with derivative transactions events. The prices of options can be highly volatile and the use of may cause the Portfolio to liquidate portfolio positions when it options can lower total returns. may not be advantageous to do so to satisfy its obligations or to Swaps. The Portfolio may enter into OTC swap contracts or meet earmarking or segregation requirements, pursuant to cleared swap transactions. An OTC swap contract is an applicable SEC rules and regulations, or may cause the Portfolio agreement between two parties pursuant to which the parties to be more volatile than if the Portfolio had not been leveraged. exchange payments at specified dates on the basis of a specified Although the Adviser seeks to use derivatives to further the notional amount, with the payments calculated by reference to Portfolio's investment objective, there is no assurance that the specified securities, indices, reference rates, currencies or other use of derivatives will achieve this result. instruments. Typically swap agreements provide that when the The derivative instruments and techniques that the Portfolio may period payment dates for both parties are the same, the payments use include: are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Futures. A futures contract is a standardized, exchange-traded Portfolio's obligations or rights under a swap contract entered agreement to buy or sell a specific quantity of an underlying into on a net basis will generally be equal only to the net amount asset, reference rate or index at a specific price at a specific to be paid or received under the agreement, based on the relative future time. The value of a futures contract tends to increase and values of the positions held by each party. Cleared swap decrease in tandem with the value of the underlying instrument. transactions may help reduce counterparty credit risk. In a Depending on the terms of the particular contract, futures cleared swap, the Portfolio's ultimate counterparty is a contracts are settled through either physical delivery of the clearinghouse rather than a swap dealer, bank or financial underlying instrument on the settlement date or by payment of a institution. OTC swap agreements are not entered into or traded cash settlement amount on the settlement date. A decision as to on exchanges and often there is no central clearing or guaranty whether, when and how to use futures contracts involves the function for swaps. These OTC swaps are often subject to credit exercise of skill and judgment and even a well-conceived futures risk or the risk of default or non-performance by the transaction may be unsuccessful because of market behavior or counterparty. Both OTC and cleared swaps could result in losses unexpected events. In addition to the derivatives risks discussed if interest rates, foreign currency exchange rates or other factors above, the prices of futures contracts can be highly volatile, are not correctly anticipated by the Portfolio or if the reference using futures contracts can lower total return, and the potential index, security or investments do not perform as expected. loss from futures contracts can exceed the Portfolio's initial Where the Portfolio is the buyer of a credit default swap contract, investment in such contracts. No assurance can be given that a it would typically be entitled to receive the par (or other agreed- liquid market will exist for any particular futures contract at any upon) value of a referenced debt obligation from the counterparty particular time. There is also the risk of loss by the Portfolio of to the contract only in the event of a default or similar event by a margin deposits in the event of bankruptcy of a broker with third-party on the debt obligation. If no default occurs, the which the Portfolio has open positions in the futures contract. Portfolio would have paid to the counterparty a periodic stream Options. If the Portfolio buys an option, it buys a legal contract of payments over the term of the contract and received no benefit giving it the right to buy or sell a specific amount of the from the contract. When the Portfolio is the seller of a credit underlying instrument or futures contract on the underlying default swap contract, it typically receives the stream of instrument at an agreed-upon price typically in exchange for a payments but is obligated to pay an amount equal to the par (or premium paid by the Portfolio. If the Portfolio sells an option, it other agreed-upon) value of a referenced debt obligation upon sells to another person the right to buy from or sell to the the default or similar event of the issuer of the referenced debt

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Portfolio a specific amount of the underlying instrument or obligation. The Dodd-Frank Wall Street Reform and Consumer futures contract on the underlying instrument at an agreed-upon Protection Act and related regulatory developments require the price typically in exchange for a premium received by the clearing and exchange-trading of certain standardized swap Portfolio. When options are purchased OTC, the Portfolio bears transactions. Mandatory exchange-trading and clearing is the risk that the counterparty that wrote the option will be unable occurring on a phased-in basis. or unwilling to perform its obligations under the option contract. CFDs. A CFD is a privately negotiated contract between two Options may also be illiquid and the Portfolio may have parties, buyer and seller, stipulating that the seller will pay to or difficulty closing out its position. A decision as to whether, when receive from the buyer the difference between the nominal value and how to use options involves the exercise of skill and of the underlying instrument at the opening of the contract and judgment and even a well-conceived option transaction may be that instrument's value at the end of the contract. The underlying unsuccessful because of market behavior or unexpected instrument may be a single security, stock basket or index. A CFD

Morgan Stanley Institutional Fund, Inc. Prospectus Additional Information About the Portfolio's Investment Strategies and Related Risks can be set up to take either a short or long position on the leveraged. While leveraged ETFs may offer the potential for underlying instrument. The buyer and seller are typically both greater return, the potential for loss and the speed at which losses required to post margin, which is adjusted daily. The buyer will can be realized also are greater. Leveraged ETFs can deviate also pay to the seller a financing rate on the notional amount of substantially from the performance of their underlying the capital employed by the seller less the margin deposit. In benchmark over longer periods of time, particularly in volatile addition to the general risks of derivatives, CFDs may be subject periods. Lack of liquidity in an ETF could result in it being more to liquidity risk and counterparty risk. volatile than the underlying portfolio of securities. Furthermore, disruptions in the markets for the securities underlying ETFs Structured Investments. The Portfolio also may invest a portion purchased or sold by the Portfolio could result in losses on the of its assets in structured investments. A structured investment is Portfolio's investment in ETFs. a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Initial Public Offerings Structured investments may come in various forms including The Portfolio may purchase shares issued as part of, or a short notes (such as exchange-traded notes), warrants and options to period after, a company's initial public offering ("IPOs"), and purchase securities. The Portfolio will typically use structured may at times dispose of those shares shortly after their investments to gain exposure to a permitted underlying security, acquisition. The Portfolio's purchase of shares issued in IPOs currency, commodity or market when direct access to a market is exposes it to the risks associated with companies that have little limited or inefficient from a tax or cost standpoint. There can be operating history as public companies, including unseasoned no assurance that structured investments will trade at the same trading, small number of shares available for trading and limited price or have the same value as the underlying security, currency, information about the issuer, as well as to the risks inherent in commodity or market. Investments in structured investments those sectors of the market where these new issuers operate. The involve risks including issuer risk, counterparty risk and market market for IPO issuers may be volatile, and share prices of risk. Holders of structured investments bear risks of the newly-public companies have fluctuated significantly over short underlying investment and are subject to issuer or counterparty periods of time. IPOs may produce high, double-digit returns. risk because the Portfolio is relying on the creditworthiness of Such returns are highly unusual and may not be sustainable. such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be Private Placements and Restricted Securities thinly traded or have a limited trading market and may have the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document effect of increasing the Portfolio's illiquidity to the extent that the The Portfolio's investments may include privately placed Portfolio, at a particular point in time, may be unable to find securities, which are subject to resale restrictions. These qualified buyers for these securities. securities could have the effect of increasing the level of Portfolio illiquidity to the extent the Portfolio may be unable to Exchange-Traded Funds sell or transfer these securities due to restrictions on transfers or The Portfolio may invest in ETFs. ETFs seek to track the on the ability to find buyers interested in purchasing the performance of various portions or segments of the equity and securities. Additionally, the market for certain investments fixed income markets. Shares of ETFs have many of the same deemed liquid at the time of purchase may become illiquid under risks as direct investments in common stocks or bonds. In adverse market or economic conditions. The illiquidity of the addition, the market value of ETF shares may differ from their market, as well as the lack of publicly available information NAV because the supply and demand in the market for ETF regarding these securities, may also adversely affect the ability to shares at any point in time is not always identical to the supply arrive at a fair value for certain securities at certain times and and demand in the market for the underlying securities. Also, could make it difficult for the Portfolio to sell certain securities. ETFs that track particular indices typically will be unable to If the Portfolio is forced to sell an illiquid security to fund match the performance of the index exactly due to, among other redemptions or for other cash needs, it may be forced to sell the things, the ETF's operating expenses and transaction costs. ETFs security at a loss. typically incur fees that are separate from those fees incurred directly by the Portfolio. Therefore, as a shareholder in an ETF, Investment Discretion the Portfolio would bear its ratable share of that entity's In pursuing the Portfolio's investment objective, the Adviser has expenses. At the same time, the Portfolio would continue to pay considerable leeway in deciding which investments it buys, holds its own investment management fees and other expenses. As a or sells on a day-to-day basis, and which trading strategies it result, the Portfolio and its shareholders, in effect, will be uses. For example, the Adviser, in its discretion, may determine absorbing duplicate levels of fees with respect to investments in to use some permitted trading strategies while not using others. ETFs. Further, certain of the ETFs in which the Portfolio may The success or failure of such decisions will affect the Portfolio's invest are performance.

Temporary Defensive Investments When the Adviser believes that changes in market, economic, political or other conditions warrant, the Portfolio may invest without limit in cash, cash equivalents or other fixed income securities for temporary defensive purposes that may be inconsistent with the Portfolio's principal investment strategies. If the Adviser incorrectly predicts the effects of these changes, such defensive investments may adversely affect the Portfolio's performance and the Portfolio may not achieve its investment objective.

Fund Management Morgan Stanley Institutional Fund, Inc. Prospectus Adviser

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Morgan Stanley Investment Management Inc., with principal banking, research and analysis, financing and financial advisory offices at 522 Fifth Avenue, New York, NY 10036, conducts a services. As of September 30, 2016, the Adviser, together with worldwide portfolio management business and provides a broad its affiliated asset management companies, had approximately range of portfolio management services to customers in the $417.1 billion in assets under management or supervision. United States and abroad. Morgan Stanley (NYSE: "MS") is the A discussion regarding the Board of Directors' approval of the direct parent of the Adviser and the indirect parent of the Investment Advisory Agreements will be available in the Distributor. Morgan Stanley is a preeminent global financial Portfolio's Annual Report to Shareholders for the period ended services firm engaged in securities trading and brokerage December 31, 2016. activities, as well as providing investment

Advisory Fees actual amount of fee waiver and/or expense reimbursement for the Portfolio, if any, the Adviser excludes from total annual The Adviser receives a fee for advisory services equal to 0.90% operating expenses certain investment related expenses, taxes, of the portion of the daily net assets not exceeding $1 billion and interest and other extraordinary expenses (including litigation). 0.85% of the portion of the daily net assets exceeding $1 billion. The fee waivers and/or expense reimbursements for the Portfolio will continue for at least one year or until such time as the Fund's The Adviser has agreed to reduce its advisory fee and/or Board of Directors acts to discontinue all or a portion of such reimburse the Portfolio, if necessary, if such fees would cause the waivers and/or reimbursements when it deems such action is total annual operating expenses of the Portfolio to exceed 1.20% appropriate. for Class I, 1.55% for Class A, 2.30% for Class C and 1.10% for Class IS. In determining the

Portfolio Management securities for investors. Mr. Sharma is the lead portfolio manager and is responsible for the overall portfolio performance and Emerging Markets Breakout Nations Portfolio construction. Mr. Sharma focuses on country allocation, relying The Portfolio is managed by members of the Emerging Markets heavily on input from the regional co-portfolio manager teams Equity team. The team consists of portfolio managers and who are responsible for stock selection for their respective analysts. The team works collaboratively when making portfolio regions. Portfolio managers generally specialize by region, with decisions. Current members of the team jointly and primarily the exception of a few specialized groups focusing on specific responsible for the day-to-day management of the Portfolio are sectors. Ruchir Sharma, Tim Drinkall and Jitania Kandhari. Additional Information Mr. Sharma has been associated with the Adviser in an The Portfolio's SAI provides additional information about the investment management capacity since 1996. Mr. Drinkall has portfolio managers' compensation structure, other accounts been associated with the Adviser in an investment management managed by the portfolio managers and the portfolio managers' capacity since 2007. Ms. Kandhari has been associated with the ownership of securities in the Portfolio. Adviser in an investment management capacity since 2006. The composition of the team may change from time to time. The Emerging Markets Equity team is comprised of dedicated portfolio managers/analysts that have extensive experience in analyzing emerging markets equity

Shareholder Information

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share Class Arrangements tutional investors based on assets under management or other The Fund currently offers investors Class I, Class A, Class C and considerations at the discretion of the Adviser. Class IS shares of the Portfolio. Class I and Class IS shares are Certain waivers may not be available depending on the policies not subject to a sales charge and are not subject to a distribution at certain Financial Intermediaries. Please consult your Financial and/or shareholder service (12b-1) fee. In addition, no sub- Intermediary for more information. accounting or other similar fees, or any finder's fee payments are charged or paid on Class IS shares. Class C shares are sold at Class IS shares are offered only to eligible investors meeting NAV with no initial sales charge, but are subject to a CDSC of certain minimum investment requirements. To purchase Class IS 1.00% on sales made within one year after the last day of the shares, an investor must meet a minimum initial investment of month of purchase. Class I and Class IS shares generally require $10,000,000 or be a defined contribution, defined benefit or investments in minimum amounts that are substantially higher other employer sponsored employee benefit plan with minimum than Class A and Class C shares. plan assets of $250,000,000, whether or not qualified under the Code, in each case subject to the discretion of the Adviser. Initial Minimum Investment Amounts omnibus trades of $10,000,000 or more shall be accepted from The minimum initial investment generally is $5,000,000 for certain platforms, including (i) banks and trust companies; (ii) Class I shares and $1,000 for Class A and Class C shares of the insurance companies; and (iii) registered investment advisory Portfolio. The minimum initial investment amount may be firms. The $10,000,000 minimum initial investment amount may waived by the Adviser for the following categories: (1) sales be waived for Portfolio shares purchased by or through: (1) through banks, broker-dealers and other financial institutions certain registered open-end investment companies whose shares (including registered investment advisers and financial planners) are distributed by the Distributor; or (2) investments made in purchasing shares on behalf of their clients in (i) discretionary connection with certain mergers and/or reorganizations as and non-discretionary advisory programs, (ii) asset allocation approved by the Adviser. programs, (iii) other programs in which the client pays an asset- based fee for advice or for executing transactions in Portfolio If the value of your account falls below the applicable minimum shares or for otherwise participating in the program or (iv) initial investment amount for a Class of shares of the Portfolio as certain other investment programs that do not charge an asset- a result of share redemptions or you no longer meet one of the based fee, as outlined in an agreement between the Distributor waiver criteria set forth above, your account may be subject to and such financial institution; (2) sales through a Financial involuntary conversion or involuntary redemption, as applicable. Intermediary that has entered into an agreement with the You will be notified prior to any such conversions or Distributor to offer Portfolio shares to self-directed investment redemptions. No CDSC will be imposed on any involuntary brokerage accounts, which may or may not charge a transaction conversion or involuntary redemption. fee; (3) qualified state tuition plans described in Section 529 of the Code (subject to all applicable terms and conditions); (4) Distribution of Portfolio Shares defined contribution, defined benefit and other employer- Morgan Stanley Distribution, Inc. is the exclusive Distributor of sponsored employee benefit plans, whether or not qualified under the shares of the Portfolio. The Distributor receives no the Code, where such plans purchase Class A, Class C and/or compensation from the Fund for distributing Class I and Class IS Class I shares through a plan-level or omnibus account sponsored shares of the Portfolio. The Fund has adopted a Shareholder or serviced by a Financial Intermediary that has entered into an Services Plan with respect to the Class A shares of the Portfolio agreement with the Fund, the Distributor and/or the Adviser and separate Distribution and Shareholder Services Plans with pursuant to which such Class A, Class C and/or Class I shares are respect to the Class C shares of the Portfolio (the "Plans") available to such plans; (5) certain retirement and deferred pursuant to Rule 12b-1 under the 1940 Act. Under the Plans, the compensation programs established by Morgan Stanley Portfolio pays the Distributor (i) a shareholder services fee of up Investment Management or its affiliates for their employees or to 0.25% of the average daily net assets of each of the Class A the Fund's Directors; (6) current or retired directors, officers and shares and Class C shares on an annualized basis and (ii) a employees of Morgan Stanley and any of its subsidiaries, such distribution fee of up to 0.75% of the average daily net assets of persons' spouses, and children under the age of 21, and trust the Class C shares on an annualized basis. The Distributor may accounts for which any of such persons is a beneficiary; (7) compensate other parties for providing distribution-related and/or current or retired Directors or Trustees of the Morgan Stanley shareholder support services to investors who purchase Class A

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Funds (as defined below), such persons' spouses, and children and Class C shares. Such fees relate solely to the Class A and under the age of 21, and trust accounts for which any of such Class C shares and will reduce the net investment income and persons is a beneficiary; (8) certain other registered open-end total return of the Class A and Class C shares, respectively. investment companies whose shares are distributed by the Because the fees are paid out of the Portfolio's assets on an Distributor; (9) investments made in connection with certain ongoing basis, over time these fees will increase the cost of your mergers and/or reorganizations as approved by the Adviser; (10) investment and may cost you more than paying other types of the reinvestment of dividends from Class A, Class C or Class I sales charges. shares of the Portfolio in additional shares of the same class of 16 the Portfolio; or (11) certain other insti-

Morgan Stanley Institutional Fund, Inc. Prospectus Shareholder Information

Shareholder Information (Cont'd)

The Adviser and/or Distributor may pay compensation to inclement weather, technology problems or any other reason on a Financial Intermediaries in connection with the sale, distribution, day it would normally be open for business, or the NYSE has an marketing and retention of the Portfolio's shares and/or unscheduled early closing on a day it has opened for business, shareholder servicing. Such compensation may be significant in the Portfolio reserves the right to treat such day as a business day amount and the prospect of receiving any such additional and accept purchase and redemption orders until, and calculate compensation may provide affiliated or unaffiliated Financial its NAV as of, the normally scheduled close of regular trading on Intermediaries with an incentive to favor sales of shares of the the NYSE for that day, so long as the Adviser believes there Portfolio over other investment options. Any such payments will generally remains an adequate market to obtain reliable and not change the NAV or the price of the Portfolio's shares. For accurate market quotations. The Portfolio may elect to remain more information, please see the Portfolio's SAI. open and price its shares on days when the NYSE is closed but the primary securities markets on which the Portfolio's securities About Net Asset Value trade remain open. Trading of securities that are primarily listed The NAV per share of a Class of shares of the Portfolio is on foreign exchanges may take place on weekends and other determined by dividing the total of the value of the Portfolio's days when the Portfolio does not price its shares. Therefore, to investments and other assets attributable to the Class, less any the extent, if any, that the Portfolio invests in securities primarily liabilities attributable to the Class, by the total number of listed on foreign exchanges, the value of the Portfolio's portfolio outstanding shares of that Class of the Portfolio. In making this securities may change on days when you will not be able to calculation, the Portfolio generally values securities at market purchase or sell your shares. price. If market prices are unavailable or may be unreliable, including circumstances under which the Adviser determines that Portfolio Holdings a security's market price is not accurate, fair value prices may be A description of the Fund's policies and procedures with respect determined in good faith using methods approved by the Board to the disclosure of the Portfolio's securities is available in the of Directors. Portfolio's SAI.

In addition, with respect to securities that primarily are listed on How To Purchase Portfolio Shares foreign exchanges, when an event occurs after the close of such You may purchase shares of the Portfolio on each day that the exchanges that is likely to have changed the value of the Portfolio is open for business by contacting your Financial securities (e.g., a percentage change in value of one or more U.S. Intermediary or directly from the Fund. securities indices in excess of specified thresholds), such Purchasing Shares Through a Financial Intermediary securities will be valued at their fair value, as determined under You may open a new account and purchase shares of the procedures established by the Fund's Board of Directors. Portfolio through a Financial Intermediary. The Financial Securities also may be fair valued in the event of a significant Intermediary will assist you with the procedures to invest in development affecting a country or region or an issuer-specific

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document development which is likely to have changed the value of the shares of the Portfolio. Investors purchasing or selling shares of security. In these cases, the Portfolio's NAV will reflect certain the Portfolio through a Financial Intermediary, including Morgan portfolio securities' fair value rather than their market price. To Stanley Wealth Management, may be charged transaction-based the extent the Portfolio invests in open-end management or other fees by the Financial Intermediary for its services. If you companies (other than ETFs) that are registered under the 1940 are purchasing shares of the Portfolio through a Financial Act, the Portfolio's NAV is calculated based upon the NAV of Intermediary, please consult your Financial Intermediary for such funds. The prospectuses for such funds explain the more information regarding any such fees and for purchase circumstances under which they will use fair value pricing and instructions. its effects. Financial Intermediaries may impose a limit on the dollar value Fair value pricing involves subjective judgments and it is of a Class C share purchase order that they will accept. You possible that the fair value determined for a security is materially should discuss with your Financial Intermediary which share different than the value that could be realized upon the sale of Class is most appropriate for you based on the size of your that security. investment, your expected time horizon for holding the shares and other factors, bearing in mind the availability of reduced Pricing of Portfolio Shares sales loads on Class A share purchases that qualify for such You may buy or sell (redeem) shares of the Portfolio at the NAV reduction under the combined purchase privilege or right of next determined for the Class after receipt of your order in good accumulation privilege available on Class A share purchases. order, plus any applicable sales charge. The Fund determines the NAV per share for the Portfolio as of the close of the NYSE Purchasing Shares Directly From the Fund (normally 4:00 p.m. Eastern time) on each day that the NYSE is Initial Purchase by Mail open for business (the "Pricing Time"). Shares generally will not You may open a new account, subject to acceptance by the Fund, be priced on days that the NYSE is closed. If the NYSE is closed and purchase shares of the Portfolio by completing and signing a due to New Account Application provided by Boston Financial Data Services, Inc. ("BFDS"), the Fund's transfer agent, which you can obtain by calling

Shareholder Information (Cont'd)

BFDS at 1-800-548-7786 and mailing it to Morgan Stanley Additional Investments Institutional Fund, Inc., c/o Boston Financial Data Services, Inc., You may purchase additional shares of the Portfolio for your P.O. Box 219804, Kansas City, MO 64121-9804 together with a account at any time by contacting your Financial Intermediary or check payable to Morgan Stanley Institutional Fund, Inc. by contacting the Fund directly. For additional purchases directly from the Fund, you should write a "letter of instruction" that Please note that payments to investors who redeem shares of the includes your account name, account number, the Portfolio name Portfolio purchased by check will not be made until payment of and the Class selected, signed by the account owner(s), to assure the purchase has been collected, which may take up to 15 proper crediting to your account. The letter must be mailed along calendar days after purchase. You can avoid this delay by with a check in accordance with the instructions under "Initial purchasing shares of the Portfolio by wire. Purchase by Mail." You may also purchase additional shares of

Initial Purchase by Wire the Portfolio by wire by following the instructions under "Initial You may purchase shares of the Portfolio by wiring Federal Purchase by Wire." Funds (monies credited by a Federal Reserve Bank) to State Sales Charges Applicable to Purchases of Class A Shares Street Bank and Trust Company (the "Custodian"). You must Class A shares are subject to a sales charge equal to a maximum forward a completed New Account Application to BFDS in of 5.25% calculated as a percentage of the offering price on a advance of the wire by following the instructions under "Initial

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Purchase by Mail." You should instruct your bank to send a single transaction as shown in the table below. As shown below, Federal Funds wire in a specified amount to the Custodian using the sales charge is reduced for purchases of $25,000 and over. the following wire instructions:

State Street Bank and Trust Company One Lincoln Street Boston, MA 02111-2101 ABA #011000028 DDA #00575373 Attn: Morgan Stanley Institutional Fund, Inc. Subscription Account Ref: (Portfolio Name, Account Number, Account Name)

Front End Sales Charge

Dealer Commission Amount of Single Percentage of Approximate Percentage as a Percentage Transaction Public Offering Price of Net Amount Invested of Offering Price

Less than $25,000 5.25 % 5.54 % 5.00 % $25,000 but less than $50,000 4.75 % 4.99 % 4.50 % $50,000 but less than $100,000 4.00 % 4.17 % 3.75 % $100,000 but less than $250,000 3.00 % 3.09 % 2.75 % $250,000 but less than $500,000 2.50 % 2.56 % 2.25 % $500,000 but less than $1 million 2.00 % 2.04 % 1.80 % $1 million and over* 0.00 % 0.00 % 0.00 %

* The Distributor may pay a commission of up to 1.00% to a Financial Intermediary for purchase amounts of $1 million or more.

You may benefit from a reduced sales charge schedule (i.e., • An UGMA/UTMA account. breakpoint discount) for purchases of Class A shares of the • An individual retirement account. Portfolio, by combining, in a single transaction, your purchase Investments made through employer-sponsored retirement plan with purchases of Class A shares of the Portfolio by the accounts will not be aggregated with individual accounts. following related accounts ("Related Accounts"): Investments of $1 million or more are not subject to an initial • A single account (including an individual, a joint account, a sales charge, but are generally subject to a CDSC of 1.00% on trust or fiduciary account). sales made within 18 months after the last day of the month of • A family member account (limited to spouse, and children purchase. See "How to Redeem Portfolio Shares" below for under the age of 21, but including trust accounts established more information about how the CDSC is assessed. solely for the benefit of a spouse, or children under the age of 21).

Shareholder Information (Cont'd)

In addition to investments of $1 million or more, purchases of Combined Purchase Privilege Class A shares are not subject to a front-end sales charge if your You will have the benefit of a reduced sales charge by combining account qualifies under one of the following categories: your purchase of Class A shares of the Portfolio in a single transaction with your purchase of Class A shares of any other • Sales through banks, broker-dealers and other financial Morgan Stanley Multi-Class Fund (as defined herein) for any institutions (including registered investment advisers and Related Account. financial planners) purchasing shares on behalf of their clients in

(i) discretionary and non-discretionary advisory programs, (ii) Right of Accumulation asset allocation programs, (iii) other programs in which the client You may benefit from a reduced sales charge if the cumulative pays an asset-based fee for advice or for executing transactions NAV of Class A shares of the Portfolio being purchased in a in Portfolio shares or for otherwise participating in the program single transaction, together with the NAV of any Class A, Class or (iv) certain other investment programs that do not charge an C and Class L shares of the Portfolio already held in Related asset-based fee, as outlined in an agreement between the Accounts as of the date of the transaction as well as Class A, Distributor and such financial institution. Class C and Class L shares of any other Morgan Stanley Multi- • Sales through Financial Intermediaries who have entered into Class Fund (including shares of Morgan Stanley Money Market an agreement with the Distributor to offer Portfolio shares to Funds (as defined herein) which you acquired in an exchange self-directed investment brokerage accounts, which may or may from Class A shares of the Portfolio or Class A shares of another not charge a transaction fee. Morgan Stanley Multi-Class Fund) already held in Related Accounts as of the date of the transaction, amounts to $25,000 or • Qualified state tuition plans described in Section 529 of the more. Code (subject to all applicable terms and conditions). Notification • Defined contribution, defined benefit and other employer- You must notify your Financial Intermediary (or the Transfer sponsored employee benefit plans, whether or not qualified under Agent, if you purchase shares of the Portfolio directly through the Code, where such plans purchase Class A shares through a the Fund) at the time a purchase order is placed, that the purchase plan-level or omnibus account sponsored or serviced by a qualifies for a reduced sales charge under any of the privileges Financial Intermediary that has an agreement with the Fund, the discussed above. The reduced sales charge will not be granted if: Distributor and/or the Adviser pursuant to which Class A shares (i) notification is not furnished at the time of the order; or (ii) a are available to such plans without an initial sales charge. review of the records of your Financial Intermediary or the • Certain retirement and deferred compensation programs Fund's transfer agent, BFDS, does not confirm your represented established by Morgan Stanley Investment Management or its holdings. Certain waivers may not be available depending on the affiliates for their employees or the Fund's Directors. policies at certain Financial Intermediaries. Please consult your • Current or retired Directors or Trustees of the Morgan Stanley Financial Intermediary for more information. Funds (as defined below), such persons' spouses, and children In order to obtain a reduced sales charge for Class A shares of under the age of 21, and trust accounts for which any of such the Portfolio under any of the privileges discussed above, it may persons is a beneficiary. be necessary at the time of purchase for you to inform your • Current or retired directors, officers and employees of Morgan Financial Intermediary (or the Transfer Agent, if you purchase Stanley and any of its subsidiaries, such persons' spouses, and shares of the Portfolio directly through the Fund) of the existence children under the age of 21, and trust accounts for which any of of any Related Accounts in which there are holdings eligible to such persons is a beneficiary. be aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verify your eligibility, you • Certain other registered open-end investment companies whose may be required to provide account statements and/or shares are distributed by the Distributor. confirmations regarding your purchases and/or holdings of any

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • Investments made in connection with certain mergers and/or Class A shares of the Portfolio or any other Morgan Stanley reorganizations as approved by the Adviser. Multi-Class Fund (including shares of Morgan Stanley Money Market Funds which you acquired in an exchange from Class A • The reinvestment of dividends from Class A shares of the shares of the Portfolio or any other Morgan Stanley Multi-Class Portfolio in additional Class A shares of the same Portfolio. Fund) held in all Related Accounts at your Financial Certain waivers may not be available depending on the policies Intermediary, in order to determine whether you have met the at certain Financial Intermediaries. Please consult your Financial sales load breakpoint and/or right of accumulation threshold. Intermediary for more information. Letter of Intent The above schedule of reduced sales charges for larger purchases also will be available to you if you enter into a written "Letter of Intent." A Letter of Intent provides for the

Shareholder Information (Cont'd) purchase of Class A shares of the Portfolio and Class A shares of To help the U.S. Government fight the funding of terrorism and other Morgan Stanley Multi-Class Funds within a 13-month money laundering activities, federal law requires all financial period. The initial purchase of Class A shares of the Portfolio institutions to obtain, verify and record information that under a Letter of Intent must be at least 5% of the stated identifies each person who opens an account. What this means to investment goal. The Letter of Intent does not preclude the you: when you open an account, we will ask your name, address, Portfolio (or any other Morgan Stanley Multi-Class Fund) from date of birth and other information that will allow us to identify discontinuing sales of its shares. To determine the applicable you. If we are unable to verify your identity, we reserve the right sales charge reduction, you may also include (1) the cost of Class to restrict additional transactions and/or liquidate your account at A shares of the Portfolio or any other Morgan Stanley Multi- the next calculated NAV after your account is closed (less any Class Fund which were previously purchased at a price including applicable sales/account charges and/or tax penalties) or take any a front-end sales charge during the 90-day period prior to the other action required by law. In accordance with federal law Distributor receiving the Letter of Intent and (2) the historical requirements, the Fund has implemented an anti-money cost of shares of any Morgan Stanley Money Market Fund which laundering compliance program, which includes the designation you acquired in an exchange from Class A shares of the Portfolio of an anti-money laundering compliance officer. or any other Morgan Stanley Multi-Class Fund purchased during When you buy Portfolio shares, the shares (plus any applicable that period at a price including a front-end sales charge. You may sales charge) will be purchased at the next share price calculated also combine purchases and exchanges by any Related Accounts after we receive your purchase order in good order. Purchase during such 90-day period. You should retain any records orders not received in good order prior to Pricing Time will be necessary to substantiate historical costs because the Fund, executed at the NAV next determined after the purchase order is BFDS and your Financial Intermediary may not maintain this received in good order. Certain institutional investors and information. You can obtain a Letter of Intent by contacting your financial institutions have entered into arrangements with the Financial Intermediary. If you do not achieve the stated Fund, the Adviser and/or the Distributor pursuant to which they investment goal within the 13-month period, you are required to may place orders prior to the Pricing Time, but make payment in pay the difference between the sales charges otherwise applicable Federal Funds for those shares up to three days after the purchase and sales charges actually paid, which may be deducted from order is placed, depending on the arrangement. We reserve the your investment. Shares acquired through reinvestment of right to reject any order for the purchase of Portfolio shares for distributions are not aggregated to achieve the stated investment any reason. goal.

Class A and Class C Conversion Features

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A shareholder currently holding Class A shares of the Portfolio The Fund may suspend the offering of shares, or any Class of in a fee-based advisory program ("Advisory Program") account shares, of the Portfolio or reject any purchase orders when we or currently holding Class A shares in a brokerage account but think it is in the best interest of the Portfolio. wishing to transfer into an Advisory Program account may Certain patterns of past exchanges and/or purchase or sale convert such shares to Class I shares of the Portfolio within the transactions involving the Portfolio may result in the Fund Advisory Program at any time. In addition, a shareholder holding rejecting, limiting or prohibiting, at its sole discretion, and Class C shares of the Portfolio through a brokerage account may without prior notice, additional purchases and/or exchanges and convert such shares to either Class A or Class I shares of the may result in a shareholder's account being closed. Portfolio within an Advisory Program at any time. Such Determinations in this regard may be made based on the conversions will be on the basis of the relative net asset values frequency or dollar amount of previous exchanges or purchase or per share, without requiring any investment minimum to be met sale transactions. See "Frequent Purchases and Redemptions of and without the imposition of any redemption fee or other Shares." charge. If a CDSC is applicable to such Class A or Class C shares, then the conversion may not occur until after the How To Redeem Portfolio Shares shareholder has held the shares for an 18 month or 12 month You may process a redemption request by contacting your period, respectively. Please ask your financial advisor if you are Financial Intermediary. Otherwise, you may redeem shares of the eligible for converting your Class A and/or Class C shares to Portfolio by mail or, if authorized, by telephone, at no charge Class I shares pursuant to these conversion features. other than as described below. The value of shares redeemed may be more or less than the purchase price, depending on the NAV at General the time of redemption. Shares of the Portfolio will be redeemed Shares of the Portfolio may, in the Fund's discretion, be at the NAV next determined after we receive your redemption purchased with investment securities (in lieu of or, in conjunction request in good order and will be reduced by the amount of any with, cash) acceptable to the Fund. The securities would be applicable CDSC. accepted by the Fund at their market value in return for Portfolio shares of equal value, taking into account any applicable sales With respect to Class A and Class C shares, the CDSC is charge. assessed on an amount equal to the lesser of the then market value of the shares or the historical cost of the shares (which is the amount actually paid for the shares

Morgan Stanley Institutional Fund, Inc. Prospectus Shareholder Information

Shareholder Information (Cont'd) at the time of original purchase) being redeemed. Accordingly, instructions which it reasonably believes to be genuine. no sales charge is imposed on increases in NAV above the initial Telephone redemptions and exchanges may not be available if purchase price. In determining whether a CDSC applies to a you cannot reach BFDS by telephone, whether because all redemption, it is assumed that the shares being redeemed first are telephone lines are busy or for any other reason; in such case, a any shares in the shareholder's account that are not subject to a shareholder would have to use the Fund's other redemption and CDSC, followed by shares held the longest in the shareholder's exchange procedures described in this section. Telephone account. A CDSC may be waived under certain circumstances. instructions will be accepted if received by BFDS between 9:00 See the Class A and Class C CDSC waiver categories below. a.m. and 4:00 p.m. Eastern time on any day the NYSE is open for business. During periods of drastic economic or market changes, Redemptions by Letter it is possible that the telephone privileges may be difficult to implement, although this has not been the case with the Fund in

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Requests should be addressed to Morgan Stanley Institutional the past. To opt out of telephone privileges, please contact BFDS Fund, Inc., c/o Boston Financial Data Services, Inc., P.O. Box at 1-800-548-7786. 219804, Kansas City, MO 64121-9804. Systematic Withdrawal Plan To be in good order, redemption requests must include the If your investment in all of the Morgan Stanley Funds (as defined following documentation: below) has a total market value of at least $10,000, you may elect to withdraw amounts of $25 or more, or in any whole (a) A letter of instruction, if required, or a stock assignment percentage of a fund's balance (provided the amount is at least specifying the account name, the account number, the name of $25), on a monthly, quarterly, semi-annual or annual basis, from the Portfolio and the number of shares or dollar amount to be any fund with a balance of at least $1,000. Each time you add a redeemed, signed by all registered owners of the shares in the fund to the plan, you must meet the plan requirements. exact names in which the shares are registered, and whether you wish to receive the redemption proceeds by check or by wire to Amounts withdrawn are subject to any applicable CDSC. A the bank account we have on file for you; CDSC may be waived under certain circumstances. See the Class A and Class C CDSC waiver categories listed below. (b) Any required signature guarantees if you are requesting payment to anyone other than the registered owner(s) or that To sign up for the systematic withdrawal plan, contact your payment be sent to any address other than the address of the Morgan Stanley Financial Advisor or call toll-free (800) registered owner(s) or pre-designated bank account; and 548-7786. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of (c) Other supporting legal documents, if required, in the case of shares, not Portfolio "distributions," and ultimately may exhaust estates, trusts, guardianships, custodianship, corporations, your account balance. The Fund may terminate or revise the plan pension and profit sharing plans and other organizations. at any time.

Redemptions by Telephone CDSC Waivers on Class A and Class C Shares You automatically have telephone redemption and exchange The CDSC on Class A and Class C shares will be waived in privileges unless you indicate otherwise by checking the connection with sales of Class A and Class C shares for which no applicable box on the New Account Application or calling BFDS commission or transaction fee was paid by the Distributor or to opt out of such privileges. You may request a redemption of Financial Intermediary at the time of purchase of such shares. In shares of the Portfolio by calling the Fund at 1-800-548-7786 addition, a CDSC, if otherwise applicable, will be waived in the and requesting that the redemption proceeds be mailed or wired case of: to you. You cannot redeem shares of the Portfolio by telephone if you hold share certificates for those shares. For your protection • Sales of shares held at the time you die or become disabled when calling the Fund, we will employ reasonable procedures to (within the definition in Section 72(m)(7) of the Code, which confirm that instructions communicated over the telephone are relates to the ability to engage in gainful employment), if the genuine. These procedures may include requiring various forms shares are: (i) registered either in your individual name or in the of personal identification (such as name, mailing address, social names of you and your spouse as joint tenants with right of security number or other tax identification number), tape- survivorship; (ii) registered in the name of a trust of which (a) recording telephone communications and providing written you are the settlor and that is revocable by you (i.e., a "living confirmation of instructions communicated by telephone. If trust") or (b) you and your spouse are the settlors and that is reasonable procedures are employed, none of Morgan Stanley, revocable by you or your spouse (i.e., a "joint living trust"); or BFDS or the Fund will be liable for following telephone (iii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account; provided in either case that

Shareholder Information (Cont'd)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the sale is requested within one year after your death or initial costs and a further gain or loss for income tax purposes when determination of disability. you ultimately sell the securities.

• Sales in connection with the following retirement plan Redemption Fees "distributions": (i) lump-sum or other distributions from a Shares of the Portfolio redeemed within 30 days of purchase may qualified corporate or self-employed retirement plan following be subject to a 2% redemption fee, payable to the Portfolio. The retirement (or, in the case of a "key employee" of a "top heavy" redemption fee is designed to protect the Portfolio and its plan, following attainment of age 59 1/2); (ii) required minimum remaining shareholders from the effects of short-term trading. distributions and certain other distributions (such as those The redemption fee is not imposed on redemptions made: (i) following attainment of age 59 1/2) from an IRA or 403(b) through systematic withdrawal/exchange plans, (ii) through asset Custodial Account; or (iii) a tax-free return of an excess IRA allocation programs, such as model programs, including contribution (a "distribution" does not include a direct transfer of redemptions or exchanges that are part of a periodic rebalancing, IRA, 403(b) Custodial Account or retirement plan assets to a (iii) of shares received by reinvesting income dividends or capital successor custodian or trustee). gain distributions, (iv) through certain collective trust funds or other pooled vehicles, including funds of funds, (v) on behalf of • Sales of shares in connection with the systematic withdrawal advisory accounts where client allocations are solely at the plan of up to 12% annually of the value of each fund from which discretion of the Morgan Stanley Investment Management plan sales are made. The percentage is determined on the date investment team, and (vi) through certain types of retirement you establish the systematic withdrawal plan and based on the plan account transactions, including: redemptions pursuant to next calculated share price. You may have this CDSC waiver systematic withdrawal programs, minimum required applied in amounts up to 1% per month, 3% per quarter, 6% distributions, loans or hardship withdrawals, return of excess semi-annually or 12% annually. Shares with no CDSC will be contribution amounts, redemptions related to payment of plan or sold first, followed by those with the lowest CDSC. As such, the custodian fees, forfeiture of assets, and redemptions related to waiver benefit will be reduced by the amount of your shares that death, disability, or qualified domestic relations order. The are not subject to a CDSC. If you suspend your participation in redemption fee is based on, and deducted from, the redemption the plan, you may later resume plan payments without requiring proceeds. Each time you redeem or exchange shares of the a new determination of the account value for the 12% CDSC Portfolio, the shares held the longest will be redeemed or waiver. exchanged first. The Distributor may require confirmation of your entitlement The redemption fee may not be imposed on transactions that before granting a CDSC waiver. If you believe you are eligible occur through certain omnibus accounts at Financial for a CDSC waiver, please contact your Financial Intermediary Intermediaries. Certain Financial Intermediaries may not have or call toll-free 1-800-548-7786. the ability to assess a redemption fee. Certain Financial

Redemption Proceeds Intermediaries may apply different methodologies than those The Fund will ordinarily distribute redemption proceeds in cash described above in assessing redemption fees, may impose their within one business day of your redemption request, but it may own redemption fee that may differ from the Portfolio's take up to seven days. However, if you purchased shares of the redemption fee or may impose certain trading restrictions to deter Portfolio by check, the Fund will not distribute redemption market-timing and frequent trading. If you invest in the Portfolio proceeds until it has collected your purchase payment, which through a Financial Intermediary, please read that Financial may take up to 15 calendar days. Intermediary's materials carefully to learn about any other restrictions or fees that may apply. If we determine that it is in the best interest of the Fund or Portfolio not to pay redemption proceeds in cash, we may Exchange Privilege distribute to you securities held by the Portfolio. If requested, we You may exchange shares of any Class of the Portfolio for the will pay a portion of your redemption(s) in cash (during any 90 same Class of shares of any mutual fund (excluding money day period) up to the lesser of $250,000 or 1% of the net assets market funds) sponsored and advised by the Adviser (each, a of the Portfolio at the beginning of such period. If the Fund "Morgan Stanley Multi-Class Fund"), if available, without the redeems your shares in-kind, you will bear any market risks imposition of an exchange fee. Front-end sales charges (loads) associated with the securities paid as redemption proceeds. Such are not imposed on exchanges of Class A shares. In addition, you

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document in-kind securities may be illiquid and difficult or impossible for a may exchange shares of any Class of the Portfolio for shares of shareholder to sell at a time and at a price that a shareholder Morgan Stanley California Tax-Free Daily Income Trust, Morgan would like. Redemptions paid in such securities generally will Stanley Liquid Asset Fund Inc., Morgan Stanley New York give rise to income, gain or loss for income tax purposes in the Municipal Money Market Trust, Morgan Stanley Tax-Free Daily same manner as redemptions paid in cash. In addition, you may Income Trust and Morgan Stanley U.S. Government Money incur brokerage Market Trust (each, "Morgan Stanley Money Market Fund" and, together with the Morgan Stanley Multi-Class Funds, the "Morgan Stanley Funds"), if available, without the imposition of an

Morgan Stanley Institutional Fund, Inc. Prospectus Shareholder Information

Shareholder Information (Cont'd) exchange fee. Because purchases of Class A shares of Morgan at the next Pricing Time after the Morgan Stanley Fund receives Stanley Institutional Fund Trust Short Duration Income and your exchange order. The Morgan Stanley Fund, in its sole Ultra-Short Income Portfolios are not subject to a sales charge, discretion, may waive the minimum initial investment amount in you will be subject to the payment of a sales charge, at time of certain cases. An exchange of shares of the Portfolio held for less exchange into Class A shares of a Morgan Stanley Fund, based than 30 days from the date of purchase will be subject to the 2% on the amount that you would have owed if you directly redemption fee described above. The Fund may terminate or purchased Class A shares of that Morgan Stanley Fund (less any revise the exchange privilege upon required notice or in certain sales charge previously paid in connection with shares exchanged cases without notice. The Fund reserves the right to reject an for such shares of Morgan Stanley Institutional Fund Trust Short exchange order for any reason. Duration Income or Ultra-Short Income Portfolios, as If you exchange shares of the Portfolio for shares of another applicable). Exchanges are effected based on the respective Morgan Stanley Fund, there are important tax considerations. For NAVs of the applicable Morgan Stanley Fund (subject to any tax purposes, the exchange out of the Portfolio is considered a applicable redemption fee) and in accordance with the eligibility sale of Portfolio shares and the exchange into the other fund is requirements of such Fund. To obtain a prospectus for another considered a purchase. As a result, you may realize a capital gain Morgan Stanley Fund, contact your Financial Intermediary or or loss. You should review the "Taxes" section and consult your call the Fund at 1-800-548-7786. If you purchased Portfolio own tax professional about the tax consequences of an exchange. shares through a Financial Intermediary, certain Morgan Stanley

Funds may be unavailable for exchange. Contact your Financial Frequent Purchases and Redemptions of Shares Intermediary to determine which Morgan Stanley Funds are Frequent purchases and redemptions of shares by Portfolio available for exchange. shareholders are referred to as "market-timing" or "short-term trading" and may present risks for other shareholders of the The current prospectus for each Morgan Stanley Fund describes Portfolio, which may include, among other things, diluting the its investment objective(s), policies and investment minimums, value of the Portfolio's shares held by long-term shareholders, and should be read before investment. Since exchanges are interfering with the efficient management of the Portfolio, available only into continuously offered Morgan Stanley Funds, increasing brokerage and administrative costs, incurring exchanges are not available into Morgan Stanley Funds or unwanted taxable gains and forcing the Portfolio to hold excess classes of Morgan Stanley Funds that are not currently being levels of cash. offered for purchase. In addition, the Portfolio is subject to the risk that market-timers You can process your exchange by contacting your Financial and/or short-term traders may take advantage of time zone Intermediary. You may also send exchange requests to the Fund's

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document transfer agent, BFDS, by mail to Morgan Stanley Institutional differences between the foreign markets on which the Portfolio's Fund, Inc., c/o Boston Financial Data Services, Inc., P.O. Box securities trade and the time the Portfolio's NAV is calculated 219804, Kansas City, MO 64121-9804 or by calling ("time-zone arbitrage"). For example, a market-timer may 1-800-548-7786. purchase shares of the Portfolio based on events occurring after foreign market closing prices are established, but before the There are special considerations when you exchange Class A and Portfolio's NAV calculation, that are likely to result in higher Class C shares of the Portfolio that are subject to a CDSC. When prices in foreign markets the following day. The market-timer determining the length of time you held the Class A or Class C would redeem the Portfolio's shares the next day when the shares, any period (starting at the end of the month) during which Portfolio's share price would reflect the increased prices in you held such shares will be counted. In addition, any period foreign markets for a quick profit at the expense of long-term (starting at the end of the month) during which you held (i) Class Portfolio shareholders. A or Class C shares of other portfolios of the Fund; (ii) Class A or Class C shares of a Morgan Stanley Multi-Class Fund; or (iii) Investments in other types of securities also may be susceptible shares of a Morgan Stanley Money Market Fund, any of which to short-term trading strategies. These investments include you acquired in an exchange from such Class A or Class C securities that are, among other things, thinly traded, traded shares of the Portfolio, will also be counted; however, if you sell infrequently or relatively illiquid, which have the risk that the shares of (a) such other portfolio of the Fund; (b) the Morgan current market price for the securities may not accurately reflect Stanley Multi-Class Fund; or (c) the Morgan Stanley Money current market values. A shareholder may seek to engage in Market Fund, before the expiration of the CDSC "holding short-term trading to take advantage of these pricing differences period," you will be charged the CDSC applicable to such shares. (referred to as "price arbitrage"). Investments in certain fixed income securities may be adversely affected by price arbitrage When you exchange for shares of another Morgan Stanley Fund, trading strategies. your transaction will be treated the same as an initial purchase. You will be subject to the same minimum initial investment and The Fund discourages and does not accommodate frequent account size as an initial purchase. Your exchange price will be purchases and redemptions of Portfolio shares by Portfolio the price calculated shareholders and the Fund's Board of Directors

Shareholder Information (Cont'd) has adopted policies and procedures with respect to such frequent Taxes purchases and redemptions. The dividends and distributions you receive from the Portfolio may be subject to federal, state and local taxation, depending on The Fund's policies with respect to purchases, redemptions and your tax situation. The tax treatment of dividends and exchanges of Portfolio shares are described in the "Shareholder distributions is the same whether or not you reinvest them. InformationHow To Purchase Portfolio Shares," "Shareholder Dividends paid by the Portfolio that are attributable to "qualified InformationSales Charge Applicable to Purchases of Class A dividends" received by the Portfolio may be taxed at reduced Shares," "Shareholder InformationGeneral," "Shareholder rates to individual shareholders (either 15% or 20%, depending InformationHow To Redeem Portfolio Shares" and on whether the individual's income exceeds certain threshold "Shareholder InformationExchange Privilege" sections of this amounts), if certain requirements are met by the Portfolio and the Prospectus. Except as described in each of these sections, and shareholders. "Qualified dividends" include dividends distributed with respect to trades that occur through omnibus accounts at by certain foreign corporations (generally, corporations Financial Intermediaries, as described below, the Fund's policies incorporated in a possession of the United States, some regarding frequent trading of Portfolio shares are applied corporations eligible for treaty benefits under a treaty with the uniformly to all shareholders. With respect to trades that occur United States and corporations whose stock with respect to through omnibus accounts at Financial Intermediaries, such as which such dividend is paid is readily tradable on an established investment advisers, broker-dealers, transfer agents and third- securities market in the United States). Dividends paid by the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document party administrators, the Fund (i) has requested assurance that Portfolio not attributable to "qualified dividends" received by the such Financial Intermediaries currently selling Portfolio shares Portfolio, including distributions of short-term capital gains, will have in place internal policies and procedures reasonably generally be taxed at normal tax rates applicable to ordinary designed to address market-timing concerns and has instructed income. The maximum individual rate applicable to long-term such Financial Intermediaries to notify the Fund immediately if capital gains (including capital gain dividends received from the they are unable to comply with such policies and procedures and Portfolio) is generally either 15% or 20%, depending on whether (ii) requires all prospective Financial Intermediaries to agree to the individual's income exceeds certain threshold amounts. The cooperate in enforcing the Fund's policies (or, upon prior written Portfolio may be able to pass through to you a credit for foreign approval only, a Financial Intermediary's own policies) with income taxes it pays. The Fund will tell you annually how to respect to frequent purchases, redemptions and exchanges of treat dividends and distributions. Portfolio shares. If you redeem shares of the Portfolio, you may be subject to tax With respect to trades that occur through omnibus accounts at on any gains you earn based on your holding period for the Financial Intermediaries, to some extent, the Fund relies on the shares and your marginal tax rate. An exchange of shares of the Financial Intermediary to monitor frequent short-term trading Portfolio for shares of another portfolio is treated for tax within the Portfolio by the Financial Intermediary's customers purposes as a sale of the original shares in the Portfolio, followed and to collect the Portfolio's redemption fee, as applicable, from by the purchase of shares in the other portfolio. Conversions of its customers. However, the Fund has entered into agreements shares between classes will not result in taxation. with Financial Intermediaries whereby Financial Intermediaries If you buy shares of the Portfolio before a distribution, you will are required to provide certain customer identification and be subject to tax on the entire amount of the taxable distribution transaction information upon the Fund's request. The Fund may you receive. Distributions are taxable to you even if they are paid use this information to help identify and prevent market-timing from income or gain earned by the Portfolio before your activity in the Fund. There can be no assurance that the Fund will investment (and thus were included in the price you paid for your be able to identify or prevent all market-timing activities. Portfolio shares). Dividends and Distributions An additional 3.8% Medicare tax is imposed on certain net The Portfolio's policy is to distribute to shareholders investment income (including ordinary dividends and capital substantially all of its net investment income, if any, in the form gain distributions received from the Portfolio and net gains from of an annual dividend and to distribute net realized capital gains, redemptions or other taxable dispositions of Portfolio shares) of if any, at least annually. U.S. individuals, estates and trusts to the extent that such The Fund automatically reinvests all dividends and distributions person's "modified adjusted gross income" (in the case of an in additional shares. However, you may elect to receive individual) or "adjusted gross income" (in the case of an estate or distributions in cash by giving written notice to the Fund or your trust) exceeds certain threshold amounts. Financial Intermediary or by checking the appropriate box in the Shareholders who are not citizens or residents of the United Distribution Option section on the New Account Application. States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by the Portfolio of investment income and short-term capital gains.

Morgan Stanley Institutional Fund, Inc. Prospectus Shareholder Information

Shareholder Information (Cont'd)

The Portfolio is required to withhold U.S. tax (at a 30% rate) on used for the first sale of Portfolio shares covered by these new payments of taxable dividends and (effective January 1, 2019) rules, the shareholder may only use an alternative cost basis

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document redemption proceeds and certain capital gain dividends made to method for shares purchased prospectively. Portfolio certain non-U.S. entities that fail to comply (or be deemed shareholders should consult with their tax advisors to determine compliant) with extensive new reporting and withholding the best cost basis method for their tax situation. requirements designed to inform the U.S. Department of the The Portfolio may be required to withhold U.S. federal income Treasury of U.S.-owned foreign investment accounts. tax (currently, at a rate of 28%) ("backup withholding") from all Shareholders may be requested to provide additional information taxable distributions payable to (1) any shareholder who fails to to the Portfolio to enable the Portfolio to determine whether furnish the Portfolio with its correct taxpayer identification withholding is required. number or a certificate that the shareholder is exempt from The Portfolio (or its administrative agent) is required to report to backup withholding, and (2) any shareholder with respect to the U.S. Internal Revenue Service ("IRS") and furnish to whom the IRS notifies the Portfolio that the shareholder has Portfolio shareholders the cost basis information for sale failed to properly report certain interest and dividend income to transactions of shares purchased on or after January 1, 2012. the IRS and to respond to notices to that effect. An individual's Shareholders may elect to have one of several cost basis methods taxpayer identification number is his or her social security applied to their account when calculating the cost basis of shares number. The 28% backup withholding tax is not an additional tax sold, including average cost, FIFO ("first-in, first-out") or some and may be credited against a taxpayer's regular federal income other specific identification method. Unless you instruct tax liability. otherwise, the Portfolio will use average cost as its default cost Because each investor's tax circumstances are unique and the tax basis method, and will treat sales as first coming from shares laws may change, you should consult your tax advisor about your purchased prior to January 1, 2012. If average cost is investment.

The Fund currently consists of the following portfolios: Global Insight Portfolio Global Opportunity Portfolio U.S. Equity Global Quality Portfolio Advantage Portfolio Global Real Estate Portfolio Fundamental Multi-Cap Core Portfolio* International Advantage Portfolio Growth Portfolio International Equity Portfolio Insight Portfolio International Opportunity Portfolio Small Company Growth Portfolio* International Real Estate Portfolio US Core Portfolio* Fixed Income U.S. Real Estate Portfolio Emerging Markets Fixed Income Opportunities Portfolio Global and International Equity Asset Allocation Active International Allocation Portfolio Multi-Asset Portfolio Asia Opportunity Portfolio* Emerging Markets Breakout Nations Portfolio* The Fund has suspended offering Class L shares of each Portfolio to Emerging Markets Leaders Portfolio* all investors. Emerging Markets Portfolio * Class A shares of the Small Company Growth Portfolio are currently closed to Emerging Markets Small Cap Portfolio* new investors. Class I shares and Class IS shares of the Small Company Growth Frontier Emerging Markets Portfolio Portfolio are closed to new investors, with certain exceptions. Class C shares of the Global Advantage Portfolio Small Company Growth Portfolio are not being offered at this time. The Asia Global Concentrated Portfolio* Opportunity, Emerging Markets Breakout Nations, Emerging Markets Leaders, Global Core Portfolio* Emerging Markets Small Cap, Fundamental Multi-Cap Core, Global Concentrated, Global Discovery Portfolio Global Core and US Core Portfolios do not offer Class L shares. The Fundamental Global Franchise Portfolio Multi-Cap Core Portfolio is not yet in operation; accordingly, it is not currently offered Global Infrastructure Portfolio to investors.

No financial information is provided for the Portfolio because it had not commenced operations as of the date of this Prospectus. Financial information will be provided in the first report to shareholders after commencement of operations.

Morgan Stanley Institutional Fund, Inc. Prospectus Additional Information Where to Find Additional Information

In addition to this Prospectus, the Portfolio has a Statement of Information about the Fund (including the Statement of Additional Information, dated December 13, 2016 (as may be Additional Information and Shareholder Reports) can be supplemented from time to time), which contains additional, reviewed and copied at the SEC's Public Reference Room in more detailed information about the Fund and the Portfolio. The Washington, D.C. Information on the operation of the Public Statement of Additional Information is incorporated by reference Reference Room may be obtained by calling the SEC at (202) into this Prospectus and, therefore, legally forms a part of this 551-8090. Shareholder Reports and other information about the Prospectus. Fund are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information Shareholder Reports may be obtained, after paying a duplicating fee, by electronic The Portfolio publishes Annual and Semi-Annual Reports to request at the following e-mail address: [email protected], or Shareholders ("Shareholder Reports") that contain additional by writing to the SEC's Public Reference Section, Washington, information about the Portfolio's investments. In the Portfolio's D.C. 20549-1520. Annual Report to Shareholders, when available, you will find a discussion of the market conditions and the investment strategies Morgan Stanley Institutional Fund, Inc. that significantly affected the Portfolio's performance during the c/o Boston Financial Data Services, Inc. last fiscal year. For additional Fund information, including P.O. Box 219804 information regarding the investments comprising the Portfolio, Kansas City, MO 64121-9804 please call the toll-free number below. For Shareholder Inquiries, You may obtain the Statement of Additional Information and call toll-free 1-800-548-7786. Shareholder Reports without charge by contacting the Fund at the toll-free number below or on our internet site at: Prices and Investment Results are available at www.morganstanley.com/im. If you purchased shares through a www.morganstanley.com/im. Financial Intermediary, you may also obtain these documents, without charge, by contacting your Financial Intermediary. The Fund's 1940 Act registration number is 811-05624.

MSIFEMBONAPRO

STATEMENT OF ADDITIONAL INFORMATION December 13, 2016

Morgan Stanley Institutional Fund, Inc. (the "Fund") is an open-end management investment company consisting of 30 portfolios offering a variety of investment alternatives. This Statement of Additional Information ("SAI") sets forth information about the Fund applicable to the Class I, Class A, Class C and Class IS shares of the Emerging Markets Breakout Nations Portfolio (the "Portfolio"). Share Class and Ticker Symbol Class I Class A Class C Class IS Emerging Markets Breakout Nations Portfolio EMIPX EMAPX EMCPX EMSPX

This SAI is not a prospectus, but should be read in conjunction with the Portfolio's prospectus, dated December 13, 2016, as may be supplemented from time to time. To obtain the Portfolio's prospectus, please call the Fund toll-free at 1-800-548-7786.

The Portfolio is "diversified" and, as such, the Portfolio's investments are required to meet certain diversification requirements under federal securities law.

Table of Contents Page Investment Policies and Strategies 2 Investment Limitations 31 Disclosure of Portfolio Holdings 33 Purchase and Redemption of Shares 35 Account Policies and Features 36 Management of the Fund 37 Investment Advisory and Other Services 50 Distribution and Shareholder Services Plans 54 Brokerage Practices 55 General Information 57 Taxes 58 Control Persons and Principal Holders of Securities 64 Performance Information 64 Financial Statements 64 Appendix A Morgan Stanley Investment Management Proxy Voting Policy and Procedures A-1

INVESTMENT POLICIES AND STRATEGIES

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document This SAI provides additional information about the investment policies and operations of the Fund and the Portfolio. Morgan Stanley Investment Management Inc. (the "Adviser") acts as investment adviser to the Portfolio.

The following tables summarize the permissible strategies and investments for the Portfolio. These tables should be used in conjunction with the investment summaries for the Portfolio contained in the Prospectus in order to provide a more complete description of the Portfolio's investment policies. More details about each investment and related risks are provided in the discussion following the tables.

Emerging Markets Breakout Nations

Equity Securities:

Common Stocks a

Depositary Receipts a

Preferred Stocks a

Rights a

Warrants a

IPOs a

Convertible Securities a

Limited Partnership and Limited Liability Company Interests a

Investment Company Securities a

Exchange-Traded Funds a

Real Estate Investing a

REITs a

Foreign Real Estate Companies a

Specialized Ownership Vehicles a

Fixed Income Securities:

Investment Grade Securities a

High Yield Securities a

U.S. Government Securities a

Corporates a

Money Market Instruments a

Cash Equivalents a

Repurchase Agreements a

Loan Participations and Assignments a

Temporary Investments a

Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities a

Eurodollar and Yankee Dollar Obligations a

Foreign Investment:

Foreign Equity Securities a

Foreign Government Fixed Income Securities a

Foreign Corporate Fixed Income Securities a

Emerging Market Securities a

Foreign Currency Transactions a

Emerging Markets Breakout Nations

Brady Bonds a

Investment Funds a

Exchange-Listed Equities via Stock Connect Program a

Other Securities and Investment Strategies:

Loans of Portfolio Securities a

Non-Publicly Traded Securities, Private Placements and Restricted Securities a

Temporary Borrowing a

Reverse Repurchase Agreements a

Derivatives:

Forwards a

Futures Contracts a

Options a

Swaps a

Contracts for Difference a

Structured Investments a

Combined Transactions a

EQUITY SECURITIES

Equity securities generally represent an ownership interest in an issuer, or may be convertible into or represent a right to acquire an ownership interest in an issuer. While there are many types of equity securities, prices of all equity securities will fluctuate. Economic, political and other events may affect the prices of broad equity markets. For example, changes in inflation or consumer demand may affect the prices of equity securities generally in the United States. Similar events also may affect the prices of particular equity securities. For example, news about the success or failure of a new product may affect the price of a particular issuer's equity securities.

Common Stocks. Common stocks are equity securities representing an ownership interest in a corporation, entitling the stockholder to voting rights and receipt of dividends paid based on proportionate ownership.

Depositary Receipts. Depositary Receipts represent an ownership interest in securities of foreign companies (an "underlying issuer") that are deposited with a depositary. Depositary Receipts are not necessarily denominated in the same currency as the underlying securities. Depositary Receipts include American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other types of depositary receipts (which, together with ADRs and GDRs, are hereinafter collectively referred to as "Depositary Receipts"). ADRs are dollar-denominated Depositary Receipts typically issued by a U.S. financial institution which evidence an ownership interest in a security or pool of securities issued by a foreign issuer. ADRs are listed and traded in the United States. ADRs also include American depositary shares. GDRs and other types of Depositary Receipts are typically issued by foreign banks or trust companies, although they also may be issued by U.S. financial institutions, and evidence ownership interests in a security or pool of securities issued by either a foreign or a U.S. corporation. Generally, depositary receipts in registered form are designed for use in the U.S. securities market and depositary receipts in bearer form are designed for use in securities markets outside the United States.

Depositary Receipts may be "sponsored" or "unsponsored." Sponsored Depositary Receipts are established jointly by a depositary and the underlying issuer, whereas unsponsored Depositary Receipts may be established by a depositary without participation by the underlying issuer. Holders of unsponsored Depositary Receipts generally bear all the costs associated with establishing unsponsored Depositary Receipts. In addition, the issuers of the securities underlying unsponsored Depositary Receipts are not obligated to disclose

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document material information in the United States and, therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the Depositary Receipts. For purposes of the Portfolio's investment policies, the Portfolio's investments in Depositary Receipts will be deemed to be an investment in the underlying securities, except that ADRs may be deemed to be issued by a U.S. issuer.

Preferred Stocks. Preferred stocks are securities that evidence ownership in a corporation which pay a fixed or variable stream of dividends. Preferred stocks have a preference over common stocks in the event of the liquidation of an issuer and usually do not carry voting rights. Preferred stocks have many of the characteristics of both equity securities and fixed income securities.

Rights. Rights represent the right, but not the obligation, for a fixed period of time to purchase additional shares of an issuer's common stock at the time of a new issuance, usually at a price below the initial offering price of the common stock and before the common stock is offered to the general public. Rights are usually freely transferable. The risk of investing in a right is that the right may expire prior to the market value of the common stock exceeding the price fixed by the right.

Sector Risk. The Portfolio may, from time to time, invest more heavily in companies in a particular economic sector or sectors. Economic or regulatory changes adversely affecting such sectors may have more of an impact on the Portfolio's performance than if the Portfolio held a broader range of investments.

Warrants. Warrants give holders the right, but not the obligation, to buy common stock of an issuer at a given price, usually higher than the market price at the time of issuance, during a specified period. Warrants are usually freely transferable. The risk of investing in a warrant is that the warrant may expire prior to the market value of the common stock exceeding the price fixed by the warrant.

IPOs. The Portfolio may purchase equity securities issued as part of, or a short period after, a company's initial public offering ("IPOs"), and may at times dispose of those securities shortly after their acquisition. The Portfolio's purchase of securities issued in IPOs exposes it to the risks associated with companies that have little operating history as public companies, as well as to the risks inherent in those sectors of the market where these issuers operate. The market for IPO issuers has been volatile, and share prices of newly-public companies have fluctuated significantly over short periods of time.

Convertible Securities. A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any dividend changes or other changes in the underlying securities. Certain of the convertible securities in which the Portfolio may invest are rated below investment grade or are unrated. The prices of such securities are likely to be more sensitive to adverse economic changes than higher-rated securities, resulting in increased volatility of market prices of these securities during periods of economic uncertainty, or adverse individual corporate developments. In addition, during an economic downturn or substantial period of rising interest rates, lower rated issuers may experience financial stress.

Limited Partnership and Limited Liability Company Interests. A limited partnership interest entitles the Portfolio to participate in the investment return of the partnership's assets as defined by the agreement among the partners. As a limited partner, the Portfolio generally is not permitted to participate in the management of the partnership. However, unlike a general partner whose liability is not limited, a limited partner's liability generally is limited to the amount of its commitment to the partnership. The Portfolio may invest in

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document limited liability company interests to the same extent it invests in limited partnership interests. Limited liability company interests have similar characteristics as limited partnership interests.

The Portfolio may invest in master limited partnerships ("MLPs"), which are generally organized under state law as limited partnerships or limited liability companies and generally treated as partnerships for U.S. federal income tax purposes. The securities issued by many MLPs are listed and traded on a securities exchange. If publicly traded, to be treated as a partnership for U.S. federal income tax purposes, the entity must receive at least 90% of its income from qualifying sources as set forth in the Internal Revenue Code of 1986, as amended (the "Code"). These qualifying sources include interest, dividends, real estate rents, gain from the sale or disposition of real property, income and gain from mineral or natural resources activities, income and gain from the transportation or storage of certain fuels, gain from the sale or disposition of a capital asset held for the production of income described in the foregoing, and, in certain circumstances, income and gain from commodities or futures, forwards and options with respect to commodities.

Investment Company Securities. Investment company securities are equity securities and include securities of other open-end, closed- end and unregistered investment companies, including foreign investment companies, hedge funds and exchange-traded funds. The Portfolio may invest in investment company securities as may be permitted by (i) the Investment Company Act of 1940, as amended from time to time (the "1940 Act"); (ii) the rules and regulations promulgated by the United States Securities and Exchange Commission (the "SEC") under the 1940 Act, as amended from time to time; or (iii) an exemption or other relief applicable to the Portfolio from provisions of the 1940 Act, as amended from time to time. The 1940 Act generally prohibits an investment company from acquiring more than 3% of the outstanding voting shares of an investment company and limits such investments to no more than 5% of the Portfolio's total assets in any one investment company, and no more than 10% in any combination of investment companies. The 1940 Act also prohibits the Portfolio from acquiring in the aggregate more than 10% of the outstanding voting shares of any registered closed-end investment company. The Portfolio may invest in investment company securities of investment companies managed by the Adviser or its affiliates to the extent permitted under the 1940 Act or as otherwise authorized by the SEC. To the extent the Portfolio invests a portion of its assets in investment company securities, those assets will be subject to the risks of the purchased investment company's portfolio securities, and a shareholder in the Portfolio will bear not only his proportionate share of the expenses of the Portfolio, but also, indirectly the expenses of the purchased investment company.

To the extent permitted by applicable law, the Portfolio may invest all or some of its short term cash investments in any money market fund advised or managed by the Adviser or its affiliates. In connection with any such investments, the Portfolio, to the extent permitted by the 1940 Act, will pay its share of all expenses (other than advisory and administrative fees) of a money market fund in which it invests which may result in the Portfolio

6 bearing some additional expenses. The SEC has adopted changes to the rules that govern money market funds. These changes: (1) permit (and, under certain circumstances, require) money market funds to impose a "liquidity fee" (up to 2%) or "redemption gate" that temporarily restricts redemptions from the money market fund, if weekly liquidity levels fall below the required regulatory threshold, and (2) require "institutional money market funds" to operate with a floating net asset value ("NAV") rounded to the fourth decimal place. "Government money market funds" are exempt from these requirements. These changes may affect the investment strategies, performance and operating expenses of money market funds.

Exchange-Traded Funds ("ETFs"). The Portfolio may invest in ETFs. Investments in ETFs are subject to a variety of risks, including risks of a direct investment in the underlying securities that the ETF holds. For example, the general level of stock prices may decline, thereby adversely affecting the value of the underlying investments of the ETF and, consequently, the value of the ETF. In addition, the market value of the ETF shares may differ from their NAV because the supply and demand in the market for ETF shares at any point is not always identical to the supply and demand in the market for the underlying securities. Also, ETFs that track particular indices typically will be unable to match the performance of the index exactly due to, among other things, the ETF's operating expenses and transaction costs. ETFs typically incur fees that are separate from those fees incurred directly by the Portfolio. Therefore, as a shareholder in an ETF, the Portfolio would bear its ratable share of that entity's expenses. At the same time, the Portfolio would continue to pay its own investment management fees and other expenses. As a result, the Portfolio and its shareholders, in effect, will be

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document absorbing duplicate levels of fees with respect to investments in ETFs. Further, certain of the ETFs in which the Portfolio may invest are leveraged. The more the Portfolio invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. Lack of liquidity in an ETF could result in it being more volatile than the underlying portfolio of securities. Furthermore, disruptions in the markets for the securities underlying ETFs purchased or sold by the Fund could result in losses on the Fund's investment in ETFs.

Real Estate Investing. Investments in securities of issuers engaged in the real estate industry entail special risks and considerations. In particular, securities of such issuers may be subject to risks associated with the direct ownership of real estate. These risks include the cyclical nature of real estate values, risks related to general and local economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, demographic trends and variations in rental income, changes in zoning laws, casualty or condemnation losses, environmental risks, regulatory limitations on rents, changes in neighborhood values, changes in the appeal of properties to tenants, increases in interest rates and other real estate capital market influences. Generally, increases in interest rates will increase the costs of obtaining financing, which could directly and indirectly decrease the value of the Portfolio's investments.

Real Estate Investment Trusts ("REITs") and Foreign Real Estate Companies. The Portfolio may invest in REITs and/or foreign real estate companies, which are similar to entities organized and operated as REITs in the United States. REITs and foreign real estate companies pool investors' funds for investment primarily in real estate properties or real estate-related loans. REITs and foreign real estate companies generally derive their income from rents on the underlying properties or interest on the underlying loans, and their value is impacted by changes in the value of the underlying property or changes in interest rates affecting the underlying loans owned by the REITs and/or foreign real estate companies. REITs and foreign real estate companies are more susceptible to risks associated with the ownership of real estate and the real estate industry in general. These risks can include fluctuations in the value of underlying properties; defaults by borrowers or tenants; market saturation; changes in general and local economic conditions; decreases in market rates for rents; increases in competition, property taxes, capital expenditures or operating expenses; and other economic, political or regulatory occurrences affecting the real estate industry. In addition, REITs and foreign real estate companies depend upon specialized management skills, may not be diversified (which may increase the volatility of a REIT's and/or foreign real estate company's value), may have less trading volume and may be subject to more abrupt or erratic price movements than the overall securities market. Foreign real estate companies may be subject to laws, rules and regulations governing those entities and their failure to comply with those laws, rules and regulations could negatively impact the performance of those entities. Operating REITs and foreign real estate companies requires specialized management skills and the Portfolio indirectly bears REIT and foreign real estate company management expenses along with the direct expenses of the Portfolio. REITs are generally not taxed on income distributed to shareholders provided they comply with several requirements of the Code. REITs are subject to the risk of failing to qualify for tax-free pass-through income under the Code.

Specialized Ownership Vehicles. Specialized ownership vehicles pool investors' funds for investment primarily in income-producing real estate or real estate-related loans or interests. Such specialized ownership vehicles in which the Portfolio may invest include property unit trusts, foreign real estate companies, REITs and other similar specialized investment vehicles. Investments in such specialized ownership vehicles may have favorable or unfavorable legal, regulatory or tax implications for the Portfolio and, to the extent such vehicles are structured similarly to investment funds, a shareholder in the Portfolio will bear not only his proportionate share of the expenses of the Portfolio, but also, indirectly the expenses of the specialized ownership vehicle.

FIXED INCOME SECURITIES

Fixed income securities generally represent an issuer's obligation to repay to the investor (or lender) the amount borrowed plus interest over a specified time period. A typical fixed income security specifies a fixed date when the amount borrowed (principal) is due in full, known as the maturity date, and specifies dates when periodic interest (coupon) payments will be made over the life of the security.

Fixed income securities come in many varieties and may differ in the way that interest is calculated, the amount and frequency of payments, the type of collateral, if any, and the presence of special features (e.g., conversion rights). Prices of fixed income securities fluctuate and, in particular, are subject to several key risks including, but not limited to, interest rate risk, credit risk, prepayment risk and spread risk.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Interest rate risk arises due to general changes in the level of market rates after the purchase of a fixed income security. Generally, the values of fixed income securities vary inversely with changes in interest rates. During periods of falling interest rates, the values of most outstanding fixed income securities generally rise and during periods of rising interest rates, the values of most fixed income securities generally decline. The historically low interest rate environment increases the risk associated with rising interest rates. The Portfolio may face a heightened level of risk, especially since the Federal Reserve Board has ended its quantitative easing program and has begun to raise rates. While fixed income securities with longer final maturities often have higher yields than those with shorter maturities, they usually possess greater price sensitivity to changes in interest rates and other factors. Traditionally, the remaining term to maturity has been used as a barometer of a fixed income security's sensitivity to interest rate changes. This measure, however, considers only the time until the final principal payment and takes no account of the pattern or amount of principal or interest payments prior to maturity. Duration combines consideration of yield, coupon, interest and principal payments, final maturity and call (prepayment) features. Duration measures the likely percentage change in a fixed income security's price for a small parallel shift in the general level of interest rates; it is also an estimate of the weighted average life of the remaining cash flows of a fixed income security. In almost all cases, the duration of a fixed income security is shorter than its term to maturity.

Credit risk represents the possibility that an issuer may be unable to meet scheduled interest and principal payment obligations. It is most often associated with corporate bonds, although it can be present in other fixed income securities as well (note that the market generally assumes that obligations of the U.S. Treasury are free from credit risk). Credit ratings and quantitative models attempt to measure the degree of credit risk in fixed income securities, and provide insight as to whether prevailing yield spreads afford sufficient compensation for such risk. Other things being equal, fixed income securities with high degrees of credit risk should trade in the market at lower prices (and higher yields) than fixed income securities with low degrees of credit risk.

Prepayment risk, also known as call risk, arises due to the issuer's ability to prepay all or most of the fixed income security prior to the stated final maturity date. Prepayments generally rise in response to a decline in interest rates as debtors take advantage of the opportunity to refinance their obligations. This risk is often associated with mortgage securities where the underlying mortgage loans can be refinanced, although it can also be present in corporate or other types of bonds with call provisions. When a prepayment occurs, the Portfolio may be forced to reinvest in lower yielding fixed income securities. Quantitative models are designed to help assess the degree of prepayment risk, and provide insight as to whether prevailing yield spreads afford sufficient compensation for such risk.

Spread risk is the potential for the value of the Portfolio's assets to fall due to the widening of spreads. Fixed income securities generally compensate for greater credit risk by paying interest at a higher rate. The difference (or "spread") between the yield of a security and the yield of a benchmark, such as a U.S. Treasury security with a comparable maturity, measures the additional interest paid for credit risk. As the spread on a security widens (or increases), the price (or value) of the security falls. Spread widening may occur, among other reasons, as a result of market concerns over the stability of the market, excess supply, general credit concerns in other markets, security- or market-specific credit concerns or general reductions in risk tolerance.

While assets in fixed income markets have grown rapidly in recent years, the capacity for traditional dealer counterparties to engage in fixed income trading has not kept pace and in some cases has decreased. For example, primary dealer inventories of corporate bonds, which provide a core indication of the ability of financial intermediaries to "make markets," are at or near historic lows in relation to market size. This reduction in market-making capacity may be a persistent change, to the extent it is resulting from broader structural changes, such as fewer proprietary trading desks at broker-dealers and increased regulatory capital requirements. Because market makers provide stability to a market through their intermediary services, the significant reduction in dealer inventories could potentially lead to decreased liquidity and increased volatility in the fixed income markets. Such issues may be exacerbated during periods of economic uncertainty.

Economic, political and other events also may affect the prices of broad fixed income markets, although the risks associated with such events are transmitted to the market via changes in the prevailing levels of interest rates, credit risk, prepayment risk or spread risk.

Investment Grade Securities. Investment grade securities are fixed income securities rated by one or more of the rating agencies in one of the four highest rating categories at the time of purchase (e.g., AAA, AA, A or BBB by Standard & Poor's Rating Group, a

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document division of The McGraw-Hill Companies, Inc. ("S&P"), or Fitch Ratings ("Fitch"), or Aaa, Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's")) or determined to be of equivalent quality by the Adviser. Securities rated BBB or Baa represent the lowest of four levels of investment grade securities and are regarded as borderline between definitely sound obligations and those in which the speculative element begins to predominate. Ratings assigned to fixed income securities represent only the opinion of the rating agency assigning the rating and are not dispositive of the credit risk associated with the purchase of a particular fixed income security. Moreover, market risk also will affect the prices of even the highest rated fixed income securities so that their prices may rise or fall even if the issuer's capacity to repay its obligations remains unchanged.

High Yield Securities. High yield securities are generally considered to include fixed income securities rated below the four highest rating categories at the time of purchase (e.g., Ba through C by Moody's, or BB through D by S&P or Fitch) and unrated fixed income securities considered by the Adviser to be of equivalent quality. High yield securities are not considered investment grade and are commonly referred to as "junk bonds" or high yield, high risk securities. Investment grade securities that the Portfolio holds may be downgraded to below investment grade by the rating agencies. If the Portfolio holds a security that is downgraded, the Portfolio may choose to retain the security.

While high yield securities offer higher yields, they also normally carry a high degree of credit risk and are considered speculative by the major credit rating agencies. High yield securities may be issued as a consequence of corporate restructuring or similar events. High yield securities are often issued by smaller, less creditworthy issuers, or by highly leveraged (indebted) issuers, that are generally less able than more established or less leveraged issuers to make scheduled payments of interest and principal. In comparison to investment grade securities, the price movement of these securities is influenced less by changes in interest rates and more by the financial and business position of the issuer. The values of high yield securities are more volatile and may react with greater sensitivity to market changes.

High yield securities are frequently ranked junior to claims by other creditors. If the issuer cannot meet its obligations, the senior obligations are generally paid off before the junior obligations, which will potentially limit the Portfolio's ability to fully recover principal or to receive interest payments when senior securities are in default. Thus, investors in high yield securities have a lower degree of protection with respect to principal and interest payments then do investors in higher rated securities. In addition, lower-rated securities frequently have call or redemption features that would permit an issuer to repurchase the security from the Portfolio. If a call were exercised by the issuer during a period of declining interest rates, the Portfolio likely would have to replace such called security with a lower yielding security, thus decreasing the net investment income to the Portfolio and any dividends to investors.

The secondary market for high yield securities is concentrated in relatively few market makers and is dominated by institutional investors, including mutual funds, insurance companies and other financial institutions. Accordingly, the secondary market for such securities is not as liquid as, and is more volatile than, the secondary market for higher-rated securities. Because high yield securities are less liquid, judgment may play a greater role in valuing certain of the Portfolio's securities than is the case with securities trading in a more liquid market. Also, future legislation may have a possible negative impact on the market for high yield, high risk securities.

The credit rating of a high yield security does not necessarily address its market value risk. Ratings and market value may change from time to time, positively or negatively, to reflect new developments regarding the issuer.

The high yield securities markets may react strongly to adverse news about an issuer or the economy, or to the perception or expectation of adverse news, whether or not it is based on fundamental analysis. Additionally, prices for high yield securities may be affected by legislative and regulatory developments. These developments could adversely affect the Portfolio's NAV and investment practices, the secondary market for high yield securities, the financial condition of issuers of these securities and the value and liquidity of outstanding high yield securities, especially in a thinly traded market.

U.S. Government Securities. U.S. government securities refer to a variety of fixed income securities issued or guaranteed by the U.S. Government and various instrumentalities and agencies. The U.S. government securities that the Portfolio may purchase include U.S. Treasury bills, notes and bonds, all of which are direct obligations of the U.S. Government. In addition, the Portfolio may purchase

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document securities issued by agencies and instrumentalities of the U.S. Government which are backed by the full faith and credit of the United States. Among the agencies and instrumentalities issuing these obligations are the Government National Mortgage Association ("Ginnie Mae") and the Federal Housing Administration ("FHA"). The Portfolio may also purchase securities issued by agencies and instrumentalities which are not backed by the full faith and credit of the United States, but whose issuing agency or instrumentality has the right to borrow, to meet its obligations, from the U.S. Treasury. Among these agencies and instrumentalities are the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal Home Loan Banks. Further, the Portfolio may purchase securities issued by agencies and instrumentalities which are backed solely by the credit of the issuing agency or instrumentality. Among these agencies and instrumentalities is the Federal Farm Credit System.

Agencies. Agencies refer to fixed income securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities. They may or may not be backed by the full faith and credit of the United States. If they are not backed by the full faith and credit of the United States, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment. Agencies which are backed by the full faith and credit of the United States include the Export-Import Bank, Farmers Home Administration, Federal Financing Bank and others. Certain debt issued by Resolution Funding Corporation has both its principal and interest backed by the full faith and credit of the U.S. Treasury in that its principal is backed by U.S. Treasury zero coupon issues, while the U.S. Treasury is explicitly required to advance funds sufficient to pay interest on it, if needed. Certain agencies and instrumentalities, such as Ginnie Mae, are, in effect, backed by the full faith and credit of the United States through provisions in their charters that they may make "indefinite and unlimited" drawings on the Treasury, if needed to service its debt. Debt from certain other agencies and instrumentalities, including the Federal Home Loan Banks, Fannie Mae and Freddie Mac are not guaranteed by the United States, but those institutions are protected by the discretionary authority of the U.S. Treasury to purchase certain amounts of their securities to assist them in meeting their debt obligations. Finally, other agencies and instrumentalities, such as the Farm Credit System, are federally chartered institutions under U.S. Government supervision, but their debt securities are backed only by the credit worthiness of those institutions, not the U.S. Government. Some of the U.S. government agencies that issue or guarantee securities include the Export-Import Bank of the United States, Farmers Home Administration, FHA, Maritime Administration, Small Business Administration and The Tennessee Valley Authority ("TVA").

In September 2008, the U.S. Treasury Department announced that the U.S. Government would be taking over Fannie Mae and Freddie Mac and placing the companies into a conservatorship. In addition, the U.S. Treasury announced additional steps that it intended to take with respect to the debt and mortgage-backed securities ("MBS") issued by Fannie Mae and Freddie Mac in order to support the conservatorship. Fannie Mae and Freddie Mac are continuing to operate as going concerns while in conservatorship and each remains liable for all of its respective obligations, including its guaranty obligations, associated with its MBS. No assurance can be given that these initiatives will be successful. The maximum potential liability of the issuers of some U.S. government securities held by the Portfolio may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

An instrumentality of the U.S. Government is a government agency organized under federal charter with government supervision. Instrumentalities issuing or guaranteeing securities include, among others, Federal Home

Loan Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal Intermediate Credit Banks and Fannie Mae.

Corporates. Corporates are fixed income securities issued by private businesses. Holders, as creditors, have a prior legal claim over holders of equity securities of the issuer as to both income and assets for the principal and interest due the holder.

Money Market Instruments. Money market instruments are high quality short-term fixed income securities. Money market instruments may include obligations of governments, government agencies, banks, corporations and special purpose entities and repurchase agreements relating to these obligations. Certain money market instruments may be denominated in a foreign currency.

Cash Equivalents. Cash equivalents are short-term fixed income securities comprising:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) Time deposits, certificates of deposit (including marketable variable rate certificates of deposit) and bankers' acceptances issued by a commercial bank or savings and loan association. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Certificates of deposit are negotiable short-term obligations issued by commercial banks or savings and loan associations against funds deposited in the issuing institution. Variable rate certificates of deposit are certificates of deposit on which the interest rate is periodically adjusted prior to their stated maturity based upon a specified market rate. A bankers' acceptance is a time draft drawn on a commercial bank by a borrower, usually in connection with an international commercial transaction (to finance the import, export, transfer or storage of goods);

(2) Obligations of U.S. banks, foreign branches of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars). Eurodollar and Yankee dollar investments will involve some of the same risks of investing in international securities that are discussed in various foreign investing sections of this SAI;

(3) Any security issued by a commercial bank if (i) the bank has total assets of at least $1 billion, or the equivalent in other currencies or, in the case of domestic banks which do not have total assets of at least $1 billion, the aggregate investment made in any one such bank is limited to $250,000 principal amount per certificate and the principal amount of such investment is insured in full by the Federal Deposit Insurance Corporation ("FDIC"), (ii) in the case of U.S. banks, it is a member of the FDIC and (iii) in the case of foreign branches of U.S. banks, the security is deemed by the Adviser to be of an investment quality comparable with other debt securities which the Portfolio may purchase;

(4) Commercial paper (see below) rated at time of purchase by one or more nationally recognized statistical rating organizations ("NRSROs") in one of their two highest categories (e.g., A-l or A-2 by S&P, Prime 1 or Prime 2 by Moody's or F1 or F2 by Fitch) or, if not rated, issued by a corporation having an outstanding unsecured debt issue rated high-grade by an NRSRO (e.g., A or better by Moody's, S&P or Fitch);

(5) Short-term corporate obligations rated high-grade at the time of purchase by a NRSRO (e.g., A or better by Moody's, S&P or Fitch);

(6) U.S. government obligations, including bills, notes, bonds and other debt securities issued by the U.S. Treasury. These are direct obligations of the U.S. Government and differ mainly in interest rates, maturities and dates of issue;

(7) Government agency securities issued or guaranteed by U.S. government sponsored instrumentalities and Federal agencies. These include securities issued by the Federal Home Loan Banks, Federal Land Bank, Farmers Home Administration, Farm Credit Banks, Federal Intermediate Credit Bank, Fannie Mae, Federal Financing Bank, TVA and others; and

(8) Repurchase agreements collateralized by the securities listed above.

Commercial Paper. Commercial paper refers to short-term fixed income securities with maturities ranging from 1 to 270 days. They are primarily issued by corporations needing to finance large amounts of receivables, but may be issued by banks and other borrowers. Commercial paper is issued either directly or through broker-dealers, and may be discounted or interest bearing. Commercial paper is unsecured, but is almost always backed by bank lines of credit. Virtually all commercial paper is rated by Moody's, Fitch or S&P.

Commercial paper rated A-1 by S&P has the following characteristics: (1) liquidity ratios are adequate to meet cash requirements; (2) long-term senior debt is rated "A" or better; (3) the issuer has access to at least two additional channels of borrowing; (4) basic earnings and cash flow have an upward trend with allowance made for unusual circumstances; (5) typically, the issuer's industry is well established and the issuer has a strong position

11 within the industry; and (6) the reliability and quality of management are unquestioned. Relative strength or weakness of the above factors determine whether the issuer's commercial paper is A-1, A-2 or A-3.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's. Among the factors considered by Moody's in assigning ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer's industry or industries and the appraisal of speculative-type risks which may be inherent in certain areas; (3) evaluation of the issuer's products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document years; (7) financial strength of a parent company and the relationships that exist with the issuer; and (8) recognition by management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations.

Repurchase Agreements. Repurchase agreements are transactions in which the Portfolio purchases a security or basket of securities and simultaneously commits to resell that security or basket to the seller (a bank, broker or dealer) at a mutually agreed-upon date and price. The resale price reflects the purchase price plus an agreed-upon market rate of interest which is unrelated to the coupon rate or date of maturity of the purchased security. The term of these agreements is usually from overnight to one week, and never exceeds one year. Repurchase agreements with a term of over seven days are considered illiquid.

In these transactions, the Portfolio receives securities that have a market value at least equal to the purchase price (including accrued interest) of the repurchase agreement, and this value is maintained during the term of the agreement. These securities are held by the Fund's custodian or an approved third-party for the benefit of the Portfolio until repurchased. Repurchase agreements permit the Portfolio to remain fully invested while retaining overnight flexibility to pursue investments of a longer-term nature. If the seller defaults and the value of the repurchased securities declines, the Portfolio might incur a loss. If bankruptcy proceedings are commenced with respect to the seller, the Portfolio's realization upon the collateral may be delayed.

While repurchase agreements involve certain risks not associated with direct investments in debt securities, the Portfolio follows procedures approved by the Directors that are designed to minimize such risks. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose financial condition will be continually monitored by the Adviser. In addition, as described above, the value of the collateral underlying the repurchase agreement will be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Portfolio will seek to liquidate such collateral. However, the exercising of the Portfolio's right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Portfolio could suffer a loss.

Pursuant to an order issued by the SEC, the Portfolio may pool its daily uninvested cash balances in order to invest in repurchase agreements on a joint basis with other investment companies advised by the Adviser. By entering into repurchase agreements on a joint basis, the Portfolio expects to incur lower transaction costs and potentially obtain higher rates of interest on such repurchase agreements. The Portfolio's participation in the income from jointly purchased repurchase agreements will be based on the Portfolio's percentage share in the total repurchase agreement.

Loan Participations and Assignments. Loan participations are interests in loans or other direct debt instruments ("Loans") relating to amounts owed by a corporate, governmental or other borrower to another party. Loans may represent amounts owed to lenders or lending syndicates, to suppliers of goods or services (trade claims or other receivables), or to other parties ("Lenders") and may be fixed rate or floating rate. Loans also may be arranged through private negotiations between an issuer of sovereign debt obligations and Lenders.

The Portfolio's investments in Loans may be in the form of a participation in Loans ("Participations") and assignments of all or a portion of Loans ("Assignments") from third-parties. In the case of a Participation, the Portfolio will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In the event of an insolvency of the Lender selling a Participation, the Portfolio may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. Certain Participations may be structured in a manner designed to avoid purchasers of Participations being subject to the credit risk of the Lender with respect to the Participation. Even under such a structure, in the event of a Lender's insolvency, the Lender's servicing of the Participation may be delayed and the assignability of the Participation may be impaired. The Portfolio will acquire Participations only if the Lender interpositioned between the Portfolio and the borrower is determined by the Adviser to be creditworthy.

When the Portfolio purchases Assignments from Lenders it will acquire direct rights against the borrower on the Loan. However, because Assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document obligations acquired by the Portfolio as the purchaser of an Assignment may differ from, and be more limited than, those held by the assigning Lender. Because there is no liquid market for Loan Participations and Assignments, it is likely that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary market may have an adverse impact on the value of such securities and the Portfolio's ability to dispose of particular Assignments or Participations when necessary to meet the Portfolio's liquidity needs or in response to a specific economic event, such as a deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for Loan Participations and Assignments also may make it more difficult for the Portfolio to assign a value to these securities for purposes of valuing the Portfolio's securities and calculating its NAV.

Loan Participations and Assignments involve a risk of loss in case of default or insolvency of the borrower. In addition, they may offer less legal protection to the Portfolio in the event of fraud or misrepresentation and may involve a risk of insolvency of the Lender. Certain Loan Participations and Assignments may also include standby financing commitments that obligate the Portfolio to supply additional cash to the borrower on demand. Participations involving emerging market country issuers may relate to Loans as to which there has been or currently exists an event of default or other failure to make payment when due, and may represent amounts owed to Lenders that are themselves subject to political and economic risks, including the risk of currency devaluation, expropriation, or failure. Such Loan Participations and Assignments present additional risk of default or loss.

Temporary Investments. When the Adviser believes that changes in market, economic, political or other conditions make it advisable, the Portfolio may invest up to 100% of its assets in cash, cash equivalents and other fixed income securities for temporary defensive purposes. These temporary investments may consist of obligations of the U.S. or foreign governments, their agencies and instrumentalities; money market instruments; and instruments issued by international development agencies.

Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities. Zero coupon, pay-in-kind and deferred payment securities are all types of fixed income securities on which the holder does not receive periodic cash payments of interest or principal. Generally, these securities are subject to greater price volatility and lesser liquidity in the event of adverse market conditions than comparably rated securities paying cash interest at regular intervals. Although the Portfolio will not receive cash periodic coupon payments on these securities, the Portfolio may be deemed to have received interest income, or "phantom income" during the life of the obligation. The Portfolio may have to distribute such phantom income to avoid taxes at the Portfolio level, although it has not received any cash payment.

Zero Coupons. Zero coupons are fixed income securities that do not make regular interest payments. Instead, zero coupons are sold at a discount from their face value. The difference between a zero coupon's issue or purchase price and its face value represents the imputed interest an investor will earn if the obligation is held until maturity. For tax purposes, a portion of this imputed interest is deemed as income received by zero coupon bondholders each year. The Portfolio intends to pass along such interest as a component of the Portfolio's distributions of net investment income.

Zero coupons may offer investors the opportunity to earn a higher yield than that available on ordinary interest-paying obligations of similar credit quality and maturity. However, zero coupon prices may also exhibit greater price volatility than ordinary fixed income securities because of the manner in which their principal and interest are returned to the investor.

Pay-In-Kind Securities. Pay-in-kind securities are securities that have interest payable by delivery of additional securities. Upon maturity, the holder is entitled to receive the aggregate par value of the securities.

Deferred Payment Securities. Deferred payment securities are securities that remain zero coupons until a predetermined date, at which time the stated coupon rate becomes effective and interest becomes payable at regular intervals.

Eurodollar and Yankee Dollar Obligations. Eurodollar and Yankee dollar obligations are fixed income securities that include time deposits, which are non-negotiable deposits maintained in a bank for a specified period of time at a stated interest rate. The Eurodollar obligations may include bonds issued and denominated in euros. Eurodollar obligations may be issued by government and corporate issuers in Europe. Yankee bank obligations, which include time deposits and certificates of deposit, are U.S. dollar-denominated obligations issued in the U.S. capital markets by foreign banks. Eurodollar bank obligations, which include time deposits and certificates of deposit, are U.S.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 13 dollar-denominated obligations issued outside the U.S. capital markets by foreign branches of U.S. banks and by foreign banks. The Portfolio may consider Yankee dollar obligations to be domestic securities for purposes of its investment policies.

Eurodollar and Yankee dollar obligations are subject to the same risks as domestic issues, notably credit risk, market risk and liquidity risk. However, Eurodollar (and to a limited extent, Yankee dollar) obligations are also subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital from flowing across its borders. Other risks include adverse political and economic developments; the extent and quality of government regulations of financial markets and institutions; the imposition of foreign withholding taxes; and the expropriation or nationalization of foreign issuers.

FOREIGN INVESTMENT

Investing in foreign securities involves certain special considerations which are not typically associated with investments in the securities of U.S. issuers. Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards and may have policies that are not comparable to those of domestic issuers. As a result, there may be less information available about foreign issuers than about domestic issuers. Securities of some foreign issuers may be less liquid and more volatile than securities of comparable domestic issuers. There is generally less government supervision and regulation of stock exchanges, brokers and listed issuers than in the United States. In addition, with respect to certain foreign countries, there is a possibility of expropriation or confiscatory taxation, political and social instability, or diplomatic developments which could affect U.S. investments in those countries. The costs of investing in foreign countries frequently are higher than the costs of investing in the United States. Although the Adviser endeavors to achieve the most favorable execution costs in portfolio transactions, fixed commissions on many foreign stock exchanges are generally higher than negotiated commissions on U.S. exchanges. In addition, investments in certain foreign markets which have historically been considered stable may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. For instance, if one or more countries leave the European Union or the European Union dissolves, the world's securities markets likely will be significantly disrupted.

Investments in securities of foreign issuers may be denominated in foreign currencies. Accordingly, the value of the Portfolio's assets, as measured in U.S. dollars, may be affected favorably or unfavorably by changes in currency exchange rates and in exchange control regulations. The Portfolio may incur costs in connection with conversions between various currencies.

Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, entities and/or individuals, changes in international trading patterns, trade barriers, and other protectionist or retaliatory measures. Economic sanctions could, among other things, effectively restrict or eliminate the Portfolio's ability to purchase or sell securities or groups of securities for a substantial period of time, and may make the Portfolio's investments in such securities harder to value. International trade barriers or economic sanctions against foreign countries, organizations, entities and/or individuals, may adversely affect the Portfolio's foreign holdings or exposures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets, or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of the Portfolio's investments. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Any of these actions could severely affect security prices, impair the Portfolio's ability to purchase or sell foreign securities or transfer the Portfolio's assets back into the U.S., or otherwise adversely affect the Portfolio's operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Portfolio, particularly during periods of market turmoil. Certain foreign investments may become illiquid when,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Portfolio holds illiquid investments, its portfolio may be harder to value.

Certain foreign governments may levy withholding or other taxes on dividend and interest income. Although in some countries a portion of these taxes may be recoverable, the non-recovered portion of foreign withholding taxes will reduce the income received from investments in such countries. The Portfolio may be able to pass through to its shareholders a credit for U.S. tax purposes with respect to any such foreign taxes.

The Adviser may consider an issuer to be from a particular country (including the United States) or geographic region if (i) its principal securities trading market is in that country or geographic region; (ii) alone or on a consolidated basis it derives 50% or more of its annual revenue from goods produced, sales made or services performed in that country or geographic region; or (iii) it is organized under the laws of, or has a principal office in, that country or geographic region. By applying these tests, it is possible that a particular issuer could be deemed to be from more than one country or geographic region.

Foreign Equity Securities. Foreign equity securities are equity securities of a non-U.S. issuer.

Foreign Government Fixed Income Securities. Foreign government fixed income securities are fixed income securities issued by a government other than the U.S. Government or government-related issuer in a country other than the United States.

Foreign Corporate Fixed Income Securities. Foreign corporate fixed income securities are fixed income securities issued by a private issuer in a country other than the United States.

Emerging Market Securities. The Portfolio may invest in emerging market securities. An emerging market security is one issued by a foreign government or private issuer that has one or more of the following characteristics: (i) its principal securities trading market is in an emerging market or developing country, (ii) alone or on a consolidated basis it derives 50% or more of its annual revenue from goods produced, sales made or services performed in emerging markets or (iii) it is organized under the laws of, or has a principal office in, an emerging market or developing country. Based on these criteria it is possible for a security to be considered issued by an issuer in more than one country. Therefore, it is possible for the securities of any issuer that has one or more of these characteristics in connection with any emerging market or developing country to be considered an emerging market security when held in one Portfolio, but not considered an emerging market security when held in another Portfolio if it has one or more of these characteristics in connection with a developed country.

Emerging market describes any country which is generally considered to be an emerging or developing country by major organizations in the international financial community, such as the International Bank for Reconstruction and Development (more commonly known as the World Bank) and the International Finance Corporation, or by the Portfolio's benchmark index.

The economies of individual emerging market or developing countries may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation or deflation, currency depreciation, capital reinvestment, resource self-sufficiency and balance of payments position. Further, the economies of developing countries generally are heavily dependent upon international trade and, accordingly, have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures. These economies also have been, and may continue to be, adversely affected by economic conditions in the countries with which they trade.

Prior governmental approval for foreign investments may be required under certain circumstances in some emerging market or developing countries, and the extent of foreign investment in certain fixed income securities and domestic companies may be subject to limitation in other emerging market or developing countries. Foreign ownership limitations also may be imposed by the charters of individual companies in emerging market or developing countries to prevent, among other concerns, violation of foreign investment limitations. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some emerging countries. The Portfolio could be adversely affected by delays in, or a refusal to grant,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any required governmental registration or approval for such repatriation. Any investment subject to such repatriation controls will be considered illiquid if it appears reasonably likely that this process will take more than seven days.

Investment in emerging market or developing countries may entail purchasing securities issued by or on behalf of entities that are insolvent, bankrupt, in default or otherwise engaged in an attempt to reorganize or reschedule their obligations and in entities that have little or no proven credit rating or credit history. In any such case, the issuer's poor or deteriorating financial condition may increase the likelihood that the Portfolio will

15 experience losses or diminution in available gains due to bankruptcy, insolvency or fraud. Emerging market or developing countries also pose the risk of nationalization, expropriation or confiscatory taxation, political changes, government regulation, social instability or diplomatic developments (including war) that could adversely affect the economies of such countries or the value of the Portfolio's investments in those countries. In addition, it may be difficult to obtain and enforce a judgment in a court outside the United States.

The Portfolio may also be exposed to an extra degree of custodial and/or market risk, especially where the securities purchased are not traded on an official exchange or where ownership records regarding the securities are maintained by an unregulated entity (or even the issuer itself).

Foreign Currency Transactions. The U.S. dollar value of the assets of the Portfolio, to the extent it invests in securities denominated in foreign currencies, may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and the Portfolio may incur costs in connection with conversions between various currencies. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the overall economic health of the issuer. Devaluation of a currency by a country's government or banking authority also will have a significant impact on the value of any investments denominated in that currency. The Portfolio may conduct its foreign currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market. The Portfolio also may manage its foreign currency transactions by entering into foreign currency forward exchange contracts to purchase or sell foreign currencies or by using other instruments and techniques described under "Derivatives" below.

Under normal circumstances, consideration of the prospect for changes in the values of currency will be incorporated into the long-term investment decisions made with regard to overall diversification strategies. However, the Adviser believes that it is important to have the flexibility to use such derivative products when it determines that it is in the best interests of the Portfolio. It may not be practicable to hedge foreign currency risk in all markets, particularly emerging markets.

Foreign Currency Warrants. The Portfolio may invest in foreign currency warrants, which entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time.

Foreign currency warrants have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers of the securities, is inherent in the international fixed income marketplace. Foreign currency warrants may attempt to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event that the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges.

Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. In the case of any exercise of warrants, there may be a delay between the time a

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined, during which time the exchange rate could change significantly, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining "time value" of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case where the warrants were "out-of-the-money," in a total loss of the purchase price of the warrants.

Foreign currency warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation ("OCC"). Unlike foreign currency options issued by the OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants

16 is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants are subject to complex political or economic factors.

Principal Exchange Rate Linked Securities. Principal exchange rate linked securities are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency at or about that time. The return on "standard" principal exchange rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar; "reverse" principal exchange rate linked securities are like the "standard" securities, except that their return is enhanced by increases in the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some foreign currency risk).

Brady Bonds. Brady Bonds are fixed income securities that are created through the exchange of existing commercial bank loans to foreign entities for new obligations in connection with debt restructuring under a plan introduced by Nicholas F. Brady when he was the U.S. Secretary of the Treasury. They may be collateralized or uncollateralized and issued in various currencies (although most are U.S. dollar-denominated) and they are actively traded in the over-the-counter ("OTC") secondary market. The Portfolio will invest in Brady Bonds only if they are consistent with the Portfolio's quality specifications. Dollar-denominated, collateralized Brady Bonds may be fixed rate par bonds or floating rate discount bonds. Interest payments on Brady Bonds generally are collateralized by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of rolling interest payments or, in the case of floating rate bonds, initially is equal to at least one year's rolling interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to "value recovery payments" in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized.

Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the "residual risk"). In the event of a default with respect to collateralized Brady Bonds as a result of which the payment obligations of the issuer are accelerated, the U.S. Treasury zero coupon obligations held as collateral for the payment of principal will not be distributed to investors, nor will such obligations be sold and the proceeds distributed. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds, which will continue to be outstanding, at which time the face amount of the collateral will equal the principal payments due on the Brady Bonds in the normal course. However, Brady Bonds should be viewed as speculative in light of the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds.

Investment Funds. Some emerging market countries have laws and regulations that currently preclude direct investment or make it undesirable to invest directly in the securities of their companies. However, indirect investment in the securities of companies listed and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document traded on the stock exchanges in these countries is permitted by certain emerging market countries through investment funds that have been specifically authorized. The Portfolio may invest in these investment funds subject to the provisions of the 1940 Act, as applicable, and other applicable laws. The Portfolio will invest in such investment funds only where appropriate given that the Portfolio's shareholders will bear indirectly the layer of expenses of the underlying investment funds in addition to their proportionate share of the expenses of the Portfolio.

Exchange-Listed Equities via Stock Connect Program. The Shanghai-Hong Kong Stock Connect program and the recently launched Shenzhen-Hong Kong Stock Connect programs ("Stock Connect") allows non-Chinese investors (such as the Portfolio) to purchase certain listed equities via brokers in Hong Kong. Although Stock Connect allows non-Chinese investors to trade Chinese equities without a license, purchases of securities through Stock Connect are subject to daily market-wide quota limitations, which may prevent the Portfolio from purchasing Stock Connect securities when it is otherwise advantageous to do so. An investor cannot purchase and sell the same security on the same trading day, which may restrict the Portfolio's ability to invest in China A-shares through Stock Connect and to enter into or exit trades where it is advantageous to do so on the same trading day. Because Stock Connect trades are routed through Hong Kong brokers and the Hong Kong Stock Exchange, Stock Connect is affected by trading holidays in either China or Hong Kong, and there are trading days in China when Stock Connect investors will not be able to trade. As a result, prices of securities purchased through Stock Connect may fluctuate

17 at times when the Portfolio is unable to add to or exit its position. Only certain China A-shares are eligible to be accessed through Stock Connect. Such securities may lose their eligibility at any time, in which case they could be sold but could no longer be purchased through Stock Connect. Because Stock Connect is relatively new, its effects on the market for trading China A-shares are uncertain. In addition, the trading, settlement and IT systems required to operate Stock Connect are relatively new and continuing to evolve. In the event that the relevant systems do not function properly, trading through Stock Connect could be disrupted.

Stock Connect is subject to regulation by both Hong Kong and China. There can be no assurance that further regulations will not affect the availability of securities in the program, the frequency of redemptions or other limitations. Stock Connect transactions are not covered by investor protection programs of either the Hong Kong or Shanghai and Shenzhen Stock Exchanges, although any default by a Hong Kong broker should be subject to established Hong Kong law. In China, Stock Connect securities are held on behalf of ultimate investors (such as the Portfolio) by the Hong Kong Securities Clearing Company Limited ("HKSCC") as nominee. While Chinese regulators have affirmed that the ultimate investors hold a beneficial interest in Stock Connect securities, the law surrounding such rights is in its early stages and the mechanisms that beneficial owners may use to enforce their rights are untested and therefore pose uncertain risks. Further, courts in China have limited experience in applying the concept of beneficial ownership and the law surrounding beneficial ownership will continue to evolve as they do so. There is accordingly a risk that as the law is tested and developed, the Portfolio's ability to enforce its ownership rights may be negatively impacted. The Portfolio may not be able to participate in corporate actions affecting Stock Connect securities due to time constraints or for other operational reasons. Similarly, the Portfolio will not be able to vote in shareholders' meetings except through HKSCC and will not be able to attend shareholders' meetings. Stock Connect trades are settled in Renminbi (RMB), the Chinese currency, and investors must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed.

Stock Connect trades are either subject to certain pre-trade requirements or must be placed in special segregated accounts that allow brokers to comply with these pre-trade requirements by confirming that the selling shareholder has sufficient Stock Connect securities to complete the sale. If the Portfolio does not utilize a special segregated account, the Portfolio will not be able to sell the shares on any trading day where it fails to comply with the pre-trade checks. In addition, these pre-trade requirements may, as a practical matter, limit the number of brokers that the Portfolio may use to execute trades. While the Portfolio may use special segregated accounts in lieu of the pre-trade check, some market participants have yet to fully implement IT systems necessary to complete trades involving securities in such accounts in a timely manner. Market practice with respect to special segregated accounts is continuing to evolve. Investments via Stock Connect are subject to regulation by Chinese authorities. Chinese law may require aggregation of a Portfolio's holdings of Stock Connect securities with securities of other clients of the Adviser for purposes of disclosing positions held to the market,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document acquiescing to trading halts that may be imposed until regulatory filings are completed or complying with China's short-term trading rules.

OTHER SECURITIES AND INVESTMENT STRATEGIES

Loans of Portfolio Securities. The Portfolio may lend its portfolio securities to brokers, dealers, banks and other institutional investors. By lending its portfolio securities, the Portfolio attempts to increase its net investment income through the receipt of interest on the cash collateral with respect to the loan or fees received from the borrower in connection with the loan. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Portfolio. The Portfolio employs an agent to implement the securities lending program and the agent receives a fee from the Portfolio for its services. The Portfolio will not

1 lend more than 33 /3% of the value of its total assets.

The Portfolio may lend its portfolio securities so long as the terms, structure and the aggregate amount of such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretations of the SEC thereunder, which currently require that (i) the borrower pledge and maintain with the Portfolio collateral consisting of liquid, unencumbered assets having a value not less than 100% of the value of the securities loaned; (ii) the borrower add to such collateral whenever the price of the securities loaned rises (i.e., the borrower "marks-to-market" on a daily basis); (iii) the loan be made subject to termination by the Portfolio at any time; and (iv) the Portfolio receives a reasonable return on the loan (which may include the Portfolio investing any cash collateral in interest bearing short-term investments), any distributions on the loaned securities and any increase in their market value. In addition, voting rights may pass with the loaned securities, but the Portfolio will retain the right to call any security in anticipation of a vote that the Adviser deems material to the security on loan.

Loans of securities involve a risk that the borrower may fail to return the securities or may fail to maintain the proper amount of collateral, which may result in a loss of money by the Portfolio. There may be risks of delay and costs involved in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. These delays and costs could be greater for foreign securities. However, loans will be made only to borrowers deemed by the Adviser to be creditworthy and when, in the judgment of the Adviser, the income which can be earned from such securities loans justifies the attendant risk. All relevant facts and circumstances, including the creditworthiness of the broker, dealer, bank or institution, will be considered in making decisions with respect to the lending of securities, subject to review by the Fund's Board of Directors. The Portfolio also bears the risk that the reinvestment of collateral will result in a principal loss. Finally, there is the risk that the price of the securities will increase while they are on loan and the collateral will not be adequate to cover their value.

Non-Publicly Traded Securities, Private Placements and Restricted Securities. The Portfolio may invest in securities that are neither listed on a stock exchange nor traded OTC, including privately placed and restricted securities. Such unlisted securities may involve a higher degree of business and financial risk that can result in substantial losses. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Portfolio or less than what may be considered the fair value of such securities. Furthermore, companies whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements which might be applicable if their securities were publicly traded. The illiquidity of the market, as well as the lack of publicly available information regarding these securities, may also adversely affect the ability of the Portfolio to arrive at a fair value for certain securities at certain times and could make it difficult for the Portfolio to sell certain securities. If such securities are required to be registered under the securities laws of one or more jurisdictions before being sold, the Portfolio may be required to bear the expenses of registration.

As a general matter, the Portfolio may not invest more than 15% of its net assets, determined at the time of investment, in illiquid securities, such as securities for which there is not a readily available secondary market or securities that are restricted from sale to the public without registration, including commercial paper issued in reliance on the so-called "private placement" exemption afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"). However, certain Restricted Securities can be offered and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document sold to qualified institutional buyers under Rule 144A under the 1933 Act ("Rule 144A Securities"), and may be deemed to be liquid under guidelines adopted by the Fund's Board of Directors. The Portfolio may invest without limit in liquid Rule 144A Securities. Rule 144A Securities may become illiquid if qualified institutional buyers are not interested in acquiring the securities.

The Portfolio may purchase equity securities in a private placement that are issued by issuers who have outstanding, publicly-traded equity securities of the same class ("private investments in public equity" or "PIPES"). Shares in PIPES generally are not registered with the SEC until after a certain time period from the date the private sale is completed. This restricted period can last many months. Until the public registration process is completed, PIPES are restricted as to resale and the Portfolio cannot freely trade the securities. Generally, such restrictions cause the PIPES to be illiquid during this time. PIPES may contain provisions that the issuer will pay specified financial penalties to the holder if the issuer does not publicly register the restricted equity securities within a specified period of time, but there is no assurance that the restricted equity securities will be publicly registered, or that the registration will remain in effect.

When-Issued and Delayed Delivery Securities. From time to time, the Portfolio may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. When these transactions are negotiated, the price is fixed at the time of the commitment, but delivery and payment can take place a month or more after the date of commitment. The Portfolio may sell the securities before the settlement date, if it is deemed advisable. The securities so purchased or sold are subject to market fluctuation and no interest or dividends accrue to the purchaser prior to the settlement date.

At the time the Portfolio makes the commitment to purchase or sell securities on a when-issued, delayed delivery or forward commitment basis, it will record the transaction and thereafter reflect the value, each day, of such security purchased, or if a sale, the proceeds to be received, in determining its NAV. At the time of delivery of the securities, their value may be more or less than the purchase or sale price. An increase in the percentage of the Portfolio's assets committed to the purchase of securities on a when-issued, delayed delivery or forward commitment basis may increase the volatility of its NAV. The Portfolio will also earmark or segregate cash or liquid assets or establish a

19 segregated account on the Portfolio's books in which it will continually maintain cash or cash equivalents or other liquid portfolio securities equal in value to commitments to purchase securities on a when-issued, delayed delivery or forward commitment basis.

Temporary Borrowing. The Portfolio is permitted to borrow from banks in an amount up to 10% of its total assets for extraordinary or emergency purposes. For example, the Portfolio may borrow for temporary defensive purposes or to meet shareholder redemptions when the Adviser believes that it would not be in the best interests of the Portfolio to liquidate portfolio holdings. The Portfolio will not purchase additional securities while temporary borrowings exceed 5% of its total assets.

The Board of Directors of the Fund has approved procedures whereby the Portfolio together with other investment companies advised by the Adviser or its affiliates may enter into a joint line of credit arrangement with a bank. The Portfolio would be liable only for its own temporary borrowings under the joint line of credit arrangements.

Reverse Repurchase Agreements. Under a reverse repurchase agreement, the Portfolio sells a security and promises to repurchase that security at an agreed-upon future date and price. The price paid to repurchase the security reflects interest accrued during the term of the agreement. The Portfolio will earmark or segregate cash or liquid assets or establish a segregated account holding cash and other liquid assets in an amount not less than the purchase obligations of the agreement. Reverse repurchase agreements may be viewed as a speculative form of borrowing called leveraging. The Portfolio may invest in reverse repurchase agreements if (i) interest earned from leveraging exceeds the interest expense of the original reverse repurchase transaction and (ii) proceeds from the transaction are not invested for longer than the term of the reverse repurchase agreement.

The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Portfolio's portfolio securities. All forms of borrowing (including reverse repurchase agreements) are limited in the aggregate and may

1 not exceed 33 /3% of the Portfolio's total assets, except as permitted by law.

DERIVATIVES The Portfolio may, but is not required to, use various derivatives and related investment strategies as described below. Derivatives may be used for a variety of purposes including hedging, risk management, portfolio management or to earn income. Any or all of the investment techniques described herein may be used at any time and there is no particular strategy that dictates the use of one technique rather than another, as the use of any derivative by the Portfolio is a function of numerous variables, including market conditions. The Portfolio complies with applicable regulatory requirements when using derivatives, including the earmarking or segregating of cash or of liquid assets when mandated by the SEC rules or SEC staff positions. Although the Adviser seeks to use derivatives to further the Portfolio's investment objective, no assurance can be given that the use of derivatives will achieve this result.

General Risks of Derivatives. Derivatives utilized by the Portfolio may involve the purchase and sale of derivative instruments. A derivative is a financial instrument the value of which depends upon (or derives from) the value of another asset, security, interest rate or index. Derivatives may relate to a wide variety of underlying instruments, including equity and debt securities, indices, interest rates, currencies and other assets. Certain derivative instruments which the Portfolio may use and the risks of those instruments are described in further detail below. The Portfolio may in the future also utilize derivatives techniques, instruments and strategies that may be newly developed or permitted as a result of regulatory changes, consistent with the Portfolio's investment objective and policies. Such newly developed techniques, instruments and strategies may involve risks different than or in addition to those described herein. No assurance can be given that any derivatives strategy employed by the Portfolio will be successful.

The risks associated with the use of derivatives are different from, and possibly greater than, the risks associated with investing directly in the instruments underlying such derivatives. Derivatives are highly specialized instruments that require investment techniques and risk analyses different from other portfolio investments. The use of derivative instruments requires an understanding not only of the underlying instrument but also of the derivative itself. Certain risk factors generally applicable to derivative transactions are described below.

• Derivatives are subject to the risk that the market value of the derivative itself or the market value of underlying instruments will change in a way adverse to the Portfolio's interests. The Portfolio bears the risk

20 that the Adviser may incorrectly forecast future market trends and other financial or economic factors or the value of the underlying security, index, interest rate or currency when establishing a derivatives position for the Portfolio.

• Derivatives may be subject to pricing risk, which exists when a derivative becomes extraordinarily expensive (or inexpensive) relative to historical prices or corresponding instruments. Under such market conditions, it may not be economically feasible to initiate a transaction or liquidate a position at an advantageous time or price.

• Many derivatives are complex and often valued subjectively. Improper valuations can result in increased payment requirements to counterparties or a loss of value to the Portfolio.

• Using derivatives as a hedge against a portfolio investment subjects the Portfolio to the risk that the derivative will have imperfect correlation with the portfolio investment, which could result in the Portfolio incurring substantial losses. This correlation risk may be greater in the case of derivatives based on an index or other basket of securities, as the portfolio securities being hedged may not duplicate the components of the underlying index or the basket may not be of exactly the same type of obligation as those underlying the derivative. The use of derivatives for "cross hedging" purposes (using a derivative based on one instrument as a hedge on a different instrument) may also involve greater correlation risks.

• While using derivatives for hedging purposes can reduce the Portfolio's risk of loss, it may also limit the Portfolio's opportunity for gains or result in losses by offsetting or limiting the Portfolio's ability to participate in favorable price movements in portfolio investments.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • Derivatives transactions for non-hedging purposes involve greater risks and may result in losses which would not be offset by increases in the value of portfolio securities or declines in the cost of securities to be acquired. In the event that the Portfolio enters into a derivatives transaction as an alternative to purchasing or selling the underlying instrument or in order to obtain desired exposure to an index or market, the Portfolio will be exposed to the same risks as are incurred in purchasing or selling the underlying instruments directly as well as the additional risks associated with derivatives transactions.

• The use of certain derivatives transactions, including OTC derivatives, involves the risk of loss resulting from the insolvency or bankruptcy of the counterparty to the contract or the failure by the counterparty to make required payments or otherwise comply with the terms of the contract. In the event of default by a counterparty, the Portfolio may have contractual remedies pursuant to the agreements related to the transaction.

• Liquidity risk exists when a particular derivative is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is illiquid, the Portfolio may be unable to initiate a transaction or liquidate a position at an advantageous time or price.

• While some derivatives are cleared through a regulated, central clearinghouse, many derivatives transactions are not entered into or traded on exchanges or in markets regulated by the U.S. Commodity Futures Trading Commission ("CFTC") or the SEC. Instead, in some cases, certain types of bilateral OTC derivatives are entered into directly by the Portfolio and a counterparty and may be traded only through financial institutions acting as market makers. OTC derivatives transactions can only be entered into with a willing counterparty that is approved by the Adviser in accordance with guidelines established by the Board. Where no such counterparty is available, the Portfolio will be unable to enter into a desired OTC transaction. There also may be greater risk that no liquid secondary market in the trading of OTC derivatives will exist, in which case the Portfolio may be required to hold such instruments until exercise, expiration or maturity. Many of the protections afforded to participants in the cleared derivatives markets are not available to participants in bilateral OTC derivatives transactions. Bilateral OTC derivatives transactions are not subject to the guarantee of a clearinghouse and, as a result, the Portfolio would bear greater risk of default by the counterparties to such transactions.

• The Portfolio may be required to make physical delivery of portfolio securities underlying a derivative in order to close out a derivatives position or to sell portfolio securities at a time or price at which it may be disadvantageous to do so in order to obtain cash to close out or to maintain a derivatives position.

• As a result of the structure of certain derivatives, adverse changes in, among other things, interest rates, volatility or the value of the underlying instrument can result in losses substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.

• Certain derivatives may be considered illiquid and therefore subject to the Portfolio's limitation on investments in illiquid securities.

• Derivatives transactions conducted outside the United States may not be conducted in the same manner as those entered into on U.S. exchanges, and may be subject to different margin, exercise, settlement or expiration procedures. Brokerage commissions, clearing costs and other transaction costs may be higher on foreign exchanges. Many of the risks of OTC derivatives transactions are also applicable to derivatives transactions conducted outside the United States. Derivatives transactions conducted outside the United States are subject to the risk of governmental action affecting the trading in, or the prices of, foreign securities, currencies and other instruments. The value of such positions could be adversely affected by foreign political and economic factors; lesser availability of data on which to make trading decisions; delays on the Portfolio's ability to act upon economic events occurring in foreign markets; and less liquidity than U.S. markets.

• Currency derivatives are subject to additional risks. Currency derivatives transactions may be negatively affected by government exchange controls, blockages and manipulation. Currency exchange rates may be influenced by factors extrinsic to a country's economy. There is no systematic reporting of last sale information with respect to foreign currencies. As a result, the available information on which trading in currency derivatives will be based may not be as complete as comparable data for other transactions. Events could occur in the foreign currency market which will not be reflected in currency derivatives until the following day, making it more difficult for the Portfolio to respond to such events in a timely manner.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Regulatory Matters. As described herein, the Portfolio may be required to cover its potential economic exposure to certain derivatives transactions by holding an offsetting financial position and/or earmarking or segregating cash or liquid assets equal in value to the Portfolio's potential economic exposure under the transaction. The Portfolio will cover such transactions as described herein or in such other manner in accordance with applicable laws and regulations. Assets used to cover derivatives transactions cannot be sold while the derivatives position is open, unless they are replaced by other appropriate assets. Earmarked or segregated cash or liquid assets and assets held in margin accounts are not otherwise available to the Portfolio for investment purposes. If a large portion of the Portfolio's assets are used to cover derivatives transactions or are otherwise earmarked or segregated, it could affect portfolio management or the Portfolio's ability to meet redemption requests or other current obligations. With respect to derivatives which are cash-settled (i.e., have no physical delivery requirement), the Portfolio is permitted to earmark or segregate cash or liquid assets in an amount equal to the Portfolio's daily marked-to-market net obligations (i.e., the Portfolio's daily net liability) under the derivative, if any, rather than the derivative's full notional amount or the market value of the instrument underlying the derivative, as applicable. By segregating assets equal to only its net obligations under cash-settled derivatives, the Portfolio will have the ability to employ leverage to a greater extent than if the Portfolio were required to segregate assets equal to the full notional amount of the derivative or the market value of the underlying instrument, as applicable.

Regulatory developments affecting the exchange-traded and OTC derivatives markets may impair the Portfolio's ability to manage or hedge its investment portfolio through the use of derivatives. In particular, proposed regulatory changes by the SEC relating to a mutual fund's use of derivatives could potentially limit or impact the Portfolio's ability to invest in derivatives and adversely affect the value or performance of the Portfolio or its derivative investments. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the rules promulgated thereunder may limit the ability of the Portfolio to enter into one or more exchange-traded or OTC derivatives transactions.

The Portfolio's use of derivatives may also be limited by the requirements of the Code for qualification as a regulated investment company for U.S. federal income tax purposes.

The Fund, on behalf of the Portfolio, has filed a notice of eligibility with the National Futures Association ("NFA") claiming an exclusion from the definition of the term "commodity pool operator" ("CPO") pursuant to CFTC Regulation 4.5, as promulgated under the Commodity Exchange Act, as amended ("CEA"), with respect to the Portfolio's operations. Therefore, neither the Portfolio nor the Adviser (with respect to the Portfolio), is subject to registration or regulation as a commodity pool or CPO under the CEA. If the Portfolio becomes subject to these requirements, as well as related NFA rules, the Portfolio may incur additional compliance and other expenses.

With respect to investments in swap transactions, commodity futures, commodity options or certain other commodity interests used for purposes other than bona fide hedging purposes, an investment company must meet one of the following tests under the amended regulations in order for its investment adviser to claim an exemption from being considered a CPO. First, the aggregate initial margin and premiums required to establish an investment company's positions in such investments may not exceed five percent (5%) of the liquidation value of the

22 investment company's portfolio (after accounting for unrealized profits and unrealized losses on any such investments). Alternatively, the aggregate net notional value of such instruments, determined at the time of the most recent position established, may not exceed one hundred percent (100%) of the liquidation value of the investment company's portfolio (after accounting for unrealized profits and unrealized losses on any such positions). In addition to meeting one of the foregoing trading limitations, the investment company may not market itself as a commodity pool or otherwise as a vehicle for trading in the commodity futures, commodity options or swaps and derivatives markets.

Forwards. A foreign currency forward exchange contract is a negotiated agreement between two parties to exchange specified amounts of two or more currencies at a specified future time at a specified rate. The rate specified by the foreign currency forward exchange contract can be higher or lower than the spot rate between the currencies that are the subject of the contract. The Portfolio may also invest in non-deliverable foreign currency forward exchange contracts ("NDFs"). NDFs are similar to other foreign currency forward

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document exchange contracts, but do not require or permit physical delivery of currency upon settlement. Instead, settlement is made in cash based on the difference between the contracted exchange rate and the spot foreign exchange rate at settlement. Currency futures are similar to foreign currency forward exchange contracts, except that they are traded on an exchange and standardized as to contract size and delivery date. Most currency futures call for payment or delivery in U.S. dollars. Unanticipated changes in currency prices may result in losses to the Portfolio and poorer overall performance for the Portfolio than if it had not entered into foreign currency forward exchange contracts. The Portfolio may enter into foreign currency forward exchange contracts under various circumstances. The typical use of a foreign currency forward exchange contract is to "lock in" the price of a security in U.S. dollars or some other foreign currency, which the Portfolio is holding in its portfolio. By entering into a foreign currency forward exchange contract for the purchase or sale, for a fixed amount of dollars or other currency, of the amount of foreign currency involved in the underlying security transactions, the Portfolio may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the security is denominated during the period between the date on which the security is purchased or sold and the date on which payment is made or received. The Adviser also may from time to time utilize foreign currency forward exchange contracts for other purposes. For example, they may be used to hedge a foreign security held in the portfolio against a decline in value of the applicable foreign currency. They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased are denominated. At times, the Portfolio may enter into "cross-currency" hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated.

The Portfolio will not enter into foreign currency forward exchange contracts or maintain a net exposure to these contracts where the consummation of the contracts would obligate the Portfolio to deliver an amount of foreign currency in excess of the value of the Portfolio's portfolio securities.

When required by law, the Portfolio will earmark or segregate cash or U.S. government securities or other appropriate liquid portfolio securities in an amount equal to the value of the Portfolio's total assets committed to the consummation of foreign currency forward exchange contracts entered into under the circumstances set forth above. If the value of the securities so earmarked declines, additional cash or securities will be segregated or earmarked on a daily basis so that the value of such securities will equal the amount of the Portfolio's commitments with respect to such contracts.

The Portfolio may be limited in its ability to enter into hedging transactions involving foreign currency forward exchange contracts by the Code requirements relating to qualification as a regulated investment company.

Foreign currency forward exchange contracts may limit gains on portfolio securities that could otherwise be realized had they not been utilized and could result in losses. The contracts also may increase the Portfolio's volatility and may involve a significant amount of risk relative to the investment of cash.

Futures Contracts. A futures contract is a standardized agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time (the "settlement date"). Futures contracts may be based on, among other things, a specified equity security (securities futures), a specified debt security or reference rate (interest rate futures), the value of a specified securities index (index futures) or the value of a foreign currency (currency futures). The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. The buyer of a futures contract agrees to purchase the underlying instrument on the settlement date and is said to be "long" the contract. The seller of a futures contract agrees to sell the underlying instrument on the settlement date and is said to be "short" the contract. Futures contracts call for settlement only on the expiration date and cannot be "exercised" at any other time during their term.

Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date (such as in the case of securities futures based on a specified debt security) or by payment of a cash settlement amount on the settlement date (such as in the case of futures contracts relating to broad-based securities indices). In the case of cash settled futures contracts, the settlement amount is equal to the difference between the reference instrument's price on the last trading day of the contract and the reference instrument's price at the time the contract was entered into. Most futures contracts,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document particularly futures contracts requiring physical delivery, are not held until the settlement date, but instead are offset before the settlement date through the establishment of an opposite and equal futures position (buying a contract that had been sold, or selling a contract that had been purchased). All futures transactions are effected through a clearinghouse associated with the exchange on which the futures are traded.

The buyer and seller of a futures contract are not required to deliver or pay for the underlying commodity unless the contract is held until the settlement date. However, both the buyer and seller are required to deposit "initial margin" with a futures commission merchant when the futures contract is entered into. Initial margin deposits are typically calculated as a percentage of the contract's market value. If the value of either party's position declines, the party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The process is known as "marking-to-market." Upon the closing of a futures position through the establishment of an offsetting position, a final determination of variation margin will be made and additional cash will be paid by or released to the Portfolio.

In addition, the Portfolio may be required to earmark or segregate cash or liquid assets or maintain earmarked or segregated cash or liquid assets in order to cover futures transactions. The Portfolio will earmark or segregate cash or liquid assets in an amount equal to the difference between the market value of a futures contract entered into by the Portfolio and the aggregate value of the initial and variation margin payments made by the Portfolio with respect to such contract or as otherwise permitted by SEC rules or SEC staff positions. See "Regulatory Matters" above.

Additional Risks of Futures Transactions. The risks associated with futures contract transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Futures are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of futures requires an understanding not only of the underlying instrument but also of the futures contract itself. Futures may be subject to the risk factors generally applicable to derivatives transactions described herein, and may also be subject to certain additional risk factors, including:

• The risk of loss in buying and selling futures contracts can be substantial. Small price movements in the commodity underlying a futures position may result in immediate and substantial loss (or gain) to the Portfolio.

• Buying and selling futures contracts may result in losses in excess of the amount invested in the position in the form of initial margin. In the event of adverse price movements in the underlying commodity, security, index, currency or instrument, the Portfolio would be required to make daily cash payments to maintain its required margin. The Portfolio may be required to sell portfolio securities, or make or take delivery of the underlying securities in order to meet daily margin requirements at a time when it may be disadvantageous to do so. The Portfolio could lose margin payments deposited with a futures commission merchant if the futures commission merchant breaches its agreement with the Portfolio, becomes insolvent or declares bankruptcy.

• Most exchanges limit the amount of fluctuation permitted in futures contract prices during any single trading day. Once the daily limit has been reached in a particular futures contract, no trades may be made on that day at prices beyond that limit. If futures contract prices were to move to the daily limit for several trading days with little or no trading, the Portfolio could be prevented from prompt liquidation of a futures position and subject to substantial losses. The daily limit governs only price movements during a single trading day and therefore does not limit the Portfolio's potential losses.

• Index futures based upon a narrower index of securities may present greater risks than futures based on broad market indices, as narrower indices are more susceptible to rapid and extreme fluctuations as a result of changes in value of a small number of securities.

Options. An option is a contract that gives the holder of the option the right, but not the obligation, to buy from (in the case of a call option) or sell to (in the case of a put option) the seller of the option (the "option writer") the underlying security at a specified fixed price (the "exercise price") on or prior to a specified date for American

24 options or only at expiration for European options (the "expiration date"). The buyer of the option pays to the option writer the option premium, which is the purchase price of the option.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exchange-traded options are issued by a regulated intermediary such as the OCC, which guarantees the performance of the obligations of the parties to such options. OTC options are purchased from or sold to counterparties through direct bilateral agreement between the Portfolio and its counterparty. Certain options, such as options on individual securities, are settled through physical delivery of the underlying security, whereas other options, such as index options, may be settled in cash in an amount based on the difference between the value of the underlying instrument and the strike price, which is then multiplied by a specified multiplier.

Writing Options. The Portfolio may write call and put options. As the writer of a call option, the Portfolio receives the premium from the purchaser of the option and has the obligation, upon exercise of the option, to deliver the underlying security upon payment of the exercise price. If the option expires without being exercised the Portfolio is not required to deliver the underlying security and retains the premium received.

The Portfolio may only write call options that are "covered." A call option on a security is covered if (a) the Portfolio owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, such amount is maintained by the Portfolio in earmarked or segregated cash or liquid assets) upon conversion or exchange of other securities held by the Portfolio; or (b) the Portfolio has purchased a call on the underlying security, the exercise price of which is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by the Portfolio in earmarked or segregated cash or liquid assets.

Selling call options involves the risk that the Portfolio may be required to sell the underlying security at a disadvantageous price, below the market price of such security, at the time the option is exercised. As the writer of a covered call option, the Portfolio forgoes, during the option's life, the opportunity to profit from increases in the market value of the underlying security covering the option above the sum of the premium and the exercise price but retains the risk of loss should the price of the underlying security decline.

The Portfolio may write put options. As the writer of a put option, the Portfolio receives the premium from the purchaser of the option and has the obligation, upon exercise of the option, to pay the exercise price and receive delivery of the underlying security. If the option expires without being exercised, the Portfolio is not required to receive the underlying security in exchange for the exercise price and retains the option premium.

The Portfolio may only write put options that are "covered." A put option on a security is covered if (a) the Portfolio earmarks or segregates cash or liquid assets equal to the exercise price; or (b) the Portfolio has purchased a put on the same security as the put written, the exercise price of which is (i) equal to or greater than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the difference is maintained by the Portfolio in earmarked or segregated cash or liquid assets.

Selling put options involves the risk that the Portfolio may be required to buy the underlying security at a disadvantageous price, above the market price of such security, at the time the option is exercised. While the Portfolio's potential gain in writing a covered put option is limited to the premium received plus the interest earned on the liquid assets covering the put option, the Portfolio's risk of loss is equal to the entire value of the underlying security, offset only by the amount of the premium received.

The Portfolio may close out an options position which it has written through a closing purchase transaction. The Portfolio could execute a closing purchase transaction with respect to a written call option by purchasing a call option on the same underlying security which has the same exercise price and expiration date as the call option written by the Portfolio. The Portfolio could execute a closing purchase transaction with respect to a put option written by purchasing a put option on the same underlying security and having the same exercise price and expiration date as the put option written by the Portfolio. A closing purchase transaction may or may not result in a profit to the Portfolio. The Portfolio can close out its position as an option writer only if a liquid market exists for options on the same underlying security which have the same exercise price and expiration date as the option written by the Portfolio. There is no assurance that such a market will exist with respect to any particular option.

The writer of an American option generally has no control over the time when the option is exercised and the option writer is required to deliver or acquire the underlying security. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option. Thus, the use of options may require the Portfolio to buy or sell portfolio securities at inopportune times or for prices other than the current market values of such securities, which may limit the amount of appreciation the Portfolio can realize on an investment, or may cause the Portfolio to hold a security that it might otherwise sell.

Purchasing Options. The Portfolio may purchase call and put options. As the buyer of a call option, the Portfolio pays the premium to the option writer and has the right to purchase the underlying security from the option writer at the exercise price. If the market price of the underlying security rises above the exercise price, the Portfolio could exercise the option and acquire the underlying security at a below market price, which could result in a gain to the Portfolio, minus the premium paid. As the buyer of a put option, the Portfolio pays the premium to the option writer and has the right to sell the underlying security to the option writer at the exercise price. If the market price of the underlying security declines below the exercise price, the Portfolio could exercise the option and sell the underlying security at an above market price, which could result in a gain to the Portfolio, minus the premium paid. The Portfolio may buy call and put options whether or not it holds the underlying securities.

As a buyer of a call or put option, the Portfolio may sell put or call options that it has purchased at any time prior to such option's expiration date through a closing sale transaction. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security in relation to the exercise price of the option, the volatility of the underlying security, the underlying security's dividend policy, and the time remaining until the expiration date. A closing sale transaction may or may not result in a profit to the Portfolio. The Portfolio's ability to initiate a closing sale transaction is dependent upon the liquidity of the options market and there is no assurance that such a market will exist with respect to any particular option. If the Portfolio does not exercise or sell an option prior to its expiration date, the option expires and becomes worthless.

OTC Options. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of OTC options generally are established through negotiation between the parties to the options contract. This type of arrangement allows the purchaser and writer greater flexibility to tailor the option to their needs. OTC options are available for a greater variety of securities or baskets of securities, and in a wider range of expiration dates and exercise prices, than exchange-traded options. However, unlike exchange-traded options, which are issued and guaranteed by a regulated intermediary, such as the OCC, OTC options are entered into directly with the counterparty. Unless the counterparties provide for it, there is no central clearing or guaranty function for an OTC option. Therefore, OTC options are subject to the risk of default or non-performance by the counterparty. Accordingly, the Adviser must assess the creditworthiness of the counterparty to determine the likelihood that the terms of the option will be satisfied. There can be no assurance that a continuous liquid secondary market will exist for any particular OTC option at any specific time. As a result, the Portfolio may be unable to enter into closing sale transactions with respect to OTC options.

Index Options. Call and put options on indices operate similarly to options on securities. Rather than the right to buy or sell a single security at a specified price, options on an index give the holder the right to receive, upon exercise of the option, an amount of cash determined by reference to the difference between the value of the underlying index and the strike price. The underlying index may be a broad-based index or a narrower market index. Unlike many options on securities, all settlements are in cash. The settlement amount, which the writer of an index option must pay to the holder of the option upon exercise, is generally equal to the difference between the strike price of the option and the value of the underlying index, multiplied by a specified multiplier. The multiplier determines the size of the investment position the option represents. Gain or loss to the Portfolio on index options transactions will depend, in part, on price movements of the underlying index generally or in a particular segment of the index rather than price movements of individual components of the index. As with other options, the Portfolio may close out its position in index options through closing purchase transactions and closing sale transactions provided that a liquid secondary market exists for such options.

Index options written by the Portfolio will generally be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position and/or segregating or earmarking cash or liquid assets. The Portfolio may cover call options written on an index by owning securities or other assets whose price changes, in the opinion of the Adviser, are expected to correlate to those of the underlying index.

Foreign Currency Options. Options on foreign currencies operate similarly to options on securities. Rather than the right to buy or sell a single security at a specified price, options on foreign currencies give the holder the right to buy or sell foreign currency for a fixed amount in U.S. dollars or other base currencies. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on U.S. and foreign exchanges. The value of a foreign currency option is dependent upon the value of the underlying foreign

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document currency relative to the U.S. dollar or other base currency. The price of the option may vary with changes, among other things, in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors which influence foreign exchange rates and foreign investment generally. As with

26 other options, the Portfolio may close out its position in foreign currency options through closing purchase transactions and closing sale transactions provided that a liquid market exists for such options.

Foreign currency options written by the Portfolio will generally be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position and/or segregating or earmarking cash or liquid assets.

Options on Futures Contracts. Options on futures contracts are similar to options on securities except that options on futures contracts give the purchasers the right, in return for the premium paid, to assume a position in a futures contract (a long position in the case of a call option and a short position in the case of a put option) at a specified exercise price at any time prior to the expiration of the option. Upon exercise of the option, the parties will be subject to all of the risks associated with futures transactions and subject to margin requirements. As the writer of options on futures contracts, the Portfolio would also be subject to initial and variation margin requirements on the option position.

Options on futures contracts written by the Portfolio will generally be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position and/or earmarking or segregating cash or liquid assets. The Portfolio may cover an option on a futures contract by purchasing or selling the underlying futures contract. In such instances the exercise of the option will serve to close out the Portfolio's futures position.

Additional Risks of Options Transactions. The risks associated with options transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Options are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of options requires an understanding not only of the underlying instrument but also of the option itself. Options may be subject to the risk factors generally applicable to derivatives transactions described herein, and may also be subject to certain additional risk factors, including:

• The exercise of options written or purchased by the Portfolio could cause the Portfolio to sell portfolio securities, thus increasing the Portfolio's portfolio turnover.

• The Portfolio pays brokerage commissions each time it writes or purchases an option or buys or sells an underlying security in connection with the exercise of an option. Such brokerage commissions could be higher relative to the commissions for direct purchases or sales of the underlying securities.

• The Portfolio's options transactions may be limited by limitations on options positions established by the SEC, the CFTC or the exchanges on which such options are traded.

• The hours of trading for exchange-listed options may not coincide with the hours during which the underlying securities are traded. To the extent that the options markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying securities that cannot be reflected in the options markets.

• Index options based upon a narrow index of securities or other assets may present greater risks than options based on broad market indices, as narrower indices are more susceptible to rapid and extreme fluctuations as a result of changes in the values of a smaller number of securities or other assets.

• The Portfolio is subject to the risk of market movements between the time that an option is exercised and the time of performance thereunder, which could increase the extent of any losses suffered by the Portfolio in connection with options transactions.

Swaps. An OTC swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Portfolio's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Many swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for swaps. These OTC swaps are often subject to the risk of default or non-performance by the counterparty. Accordingly, the Adviser must assess the creditworthiness of the counterparty to determine the likelihood that the terms of the swap will be satisfied.

Swap agreements allow for a wide variety of transactions. For example, fixed rate payments may be exchanged for floating rate payments, U.S. dollar-denominated payments may be exchanged for payments

27 denominated in foreign currencies, and payments tied to the price of one security, index, reference rate, currency or other instrument may be exchanged for payments tied to the price of a different security, index, reference rate, currency or other instrument. Swap contracts are typically individually negotiated and structured to provide exposure to a variety of particular types of investments or market factors. Swap contracts can take many different forms and are known by a variety of names. To the extent consistent with the Portfolio's investment objective and policies, the Portfolio is not limited to any particular form or variety of swap contract. The Portfolio may utilize swaps to increase or decrease its exposure to the underlying instrument, reference rate, foreign currency, market index or other asset. The Portfolio may also enter into related derivative instruments including caps, floors and collars.

The Portfolio may be required to cover swap transactions. Obligations under swap agreements entered into on a net basis are generally accrued daily and any accrued but unpaid amounts owed by the Portfolio to the swap counterparty will be covered by earmarking or segregating cash or liquid assets. If the Portfolio enters into a swap agreement on other than a net basis, the Portfolio will earmark or segregate cash or liquid assets with a value equal to the full notional amount of the Portfolio's accrued obligations under the agreement.

The Dodd-Frank Act and related regulatory developments require the eventual clearing and exchange-trading of many standardized OTC derivative instruments that the CFTC and SEC recently defined as "swaps" and "security based swaps," respectively. Mandatory exchange-trading and clearing is occurring on a phased-in basis based on the type of market participant and CFTC approval of contracts for central clearing and exchange trading. In a cleared swap, the Portfolio's ultimate counterparty is a central clearinghouse rather than a brokerage firm, bank or other financial institution. The Portfolio initially will enter into cleared swaps through an executing broker. Such transactions will then be submitted for clearing and, if cleared, will be held at regulated futures commission merchants ("FCMs") that are members of the clearinghouse that serves as the central counterparty. When the Portfolio enters into a cleared swap, it must deliver to the central counterparty (via an FCM) an amount referred to as "initial margin." Initial margin requirements are determined by the central counterparty, but an FCM may require additional initial margin above the amount required by the central counterparty. During the term of the swap agreement, a "variation margin" amount may also be required to be paid by the Portfolio or may be received by the Portfolio in accordance with margin controls set for such accounts, depending upon changes in the price of the underlying reference asset subject to the swap agreement. At the conclusion of the term of the swap agreement, if the Portfolio has a loss equal to or greater than the margin amount, the margin amount is paid to the FCM along with any loss that is greater than such margin amount. If the Portfolio has a loss of less than the margin amount, the excess margin is returned to the Portfolio. If the Portfolio has a gain, the full margin amount and the amount of the gain is paid to the Portfolio.

Central clearing is designed to reduce counterparty credit risk compared to uncleared swaps because central clearing interposes the central clearinghouse as the counterparty to each participant's swap, but it does not eliminate those risks completely. There is also a risk of loss by the Portfolio of the initial and variation margin deposits in the event of bankruptcy of the FCM with which the Portfolio has an open position in a swap contract. The assets of the Portfolio may not be fully protected in the event of the bankruptcy of the FCM or central counterparty because the Portfolio might be limited to recovering only a pro rata share of all available funds and margin segregated on behalf of an FCM's or central counterparty's customers or clearing members. If the FCM does not provide accurate reporting, the Portfolio is also subject to the risk that the FCM could use the Portfolio's assets, which are held in an omnibus account with assets belonging to the FCM's other customers, to satisfy its own financial obligations or the payment obligations of another

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document customer to the central counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange-trading is expected to increase liquidity of swaps trading.

In addition, with respect to cleared swaps, the Portfolio may not be able to obtain as favorable terms as it would be able to negotiate for an uncleared swap. In addition, an FCM may unilaterally impose position limits or additional margin requirements for certain types of swaps in which the Portfolio may invest. Central counterparties and FCMs generally can require termination of existing cleared swap transactions at any time, and can also require increases in margin above the margin that is required at the initiation of the swap agreement. Margin requirements for cleared swaps vary on a number of factors, and the margin required under the rules of the clearinghouse and FCM may be in excess of the collateral required to be posted by the Portfolio to support its obligations under a similar uncleared swap. However, regulators are expected to adopt rules imposing certain margin requirements, including minimums, on uncleared swaps in the near future, which could change this comparison.

The Portfolio is also subject to the risk that, after entering into a cleared swap with an executing broker, no FCM or central counterparty is willing or able to clear the transaction. In such an event, the central counterparty

28 would void the trade. Before the Portfolio can enter into a new trade, market conditions may become less favorable to the Portfolio.

The Adviser will continue to monitor developments regarding trading and execution of cleared swaps on exchanges, particularly to the extent regulatory changes affect the Portfolio's ability to enter into swap agreements and the costs and risks associated with such investments.

Interest Rate Swaps, Caps, Floors and Collars. Interest rate swaps consist of an agreement between two parties to exchange their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). Interest rate swaps are generally entered into on a net basis. Interest rate swaps do not involve the delivery of securities, other underlying assets, or principal. Accordingly, the risk of market loss with respect to interest rate and total rate of return swaps is typically limited to the net amount of interest payments that the Portfolio is contractually obligated to make.

The Portfolio may also buy or sell interest rate caps, floors and collars. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified interest rate index exceeds a predetermined level, to receive payments of interest on a specified notional amount from the party selling the interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified interest rate falls below a predetermined level, to receive payments of interest on a specified notional amount from the party selling the interest rate floor. A collar is a combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates. Caps, floors and collars may be less liquid than other types of derivatives. If the Portfolio sells caps, floors and collars, it will earmark or segregate cash or liquid assets with a value equal to the full amount, accrued daily, of the Portfolio's net obligations with respect to the caps, floors or collars.

Index Swaps. An index swap consists of an agreement between two parties in which a party typically exchanges a cash flow based on a notional amount of a reference index for a cash flow based on a different index or on another specified instrument or reference rate. Index swaps are generally entered into on a net basis.

Inflation Swaps. Inflation swap agreements are contracts in which one party typically agrees to pay the cumulative percentage increase in a price index, such as the Consumer Price Index, over the term of the swap (with some lag on the referenced inflation index), and the other party pays a compounded fixed rate. Inflation swap agreements may be used to protect the NAV of the Portfolio against an unexpected change in the rate of inflation measured by an inflation index. The value of inflation swap agreements is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship between nominal interest rates and the rate of inflation.

Currency Swaps. A currency swap consists of an agreement between two parties to exchange cash flows on a notional amount of two or more currencies based on the relative value differential among them, such as exchanging a right to receive a payment in foreign currency for the right to receive U.S. dollars. Currency swap agreements may be entered into on a net basis or may involve the delivery

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of the entire principal value of one designated currency in exchange for the entire principal value of another designated currency. In such cases, the entire principal value of a currency swap is subject to the risk that the counterparty will default on its contractual delivery obligations.

Credit Default Swaps. A credit default swap consists of an agreement between two parties in which the "buyer" typically agrees to pay to the "seller" a periodic stream of payments over the term of the contract and the seller agrees to pay the buyer the par (or other agreed- upon) value of a referenced debt obligation upon the occurrence of a credit event with respect to the issuer of that referenced debt obligation. Generally, a credit event means bankruptcy, failure to pay, obligation acceleration or modified restructuring. The Portfolio may be either the buyer or seller in a credit default swap. Where the Portfolio is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by the issuer of the debt obligation. If no default occurs, the Portfolio would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. The Portfolio will generally earmark or segregate cash or liquid assets to cover any potential obligation under a credit default swap sold by the Portfolio. The use of credit default swaps could result in losses to the Portfolio if the Adviser fails to correctly evaluate the creditworthiness of the issuer of the referenced debt obligation.

Swaptions. An option on a swap agreement, also called a "swaption," is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for a premium. A receiver swaption gives the owner the right to receive the return of a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay the return of a specified asset, reference rate, or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.

General Risks of Swaps. The risks associated with swap transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Swaps are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of swaps requires an understanding not only of the underlying instrument but also of the swap contract itself. Swap transactions may be subject to the risk factors generally applicable to derivatives transactions described above, and may also be subject to certain additional risk factors, including:

• OTC swap agreements are not traded on exchanges and may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell.

• In addition to the risk of default by the counterparty, if the creditworthiness of a counterparty to a swap agreement declines, the value of the swap agreement would be likely to decline, potentially resulting in losses.

• The swaps market is subject to extensive regulation under the Dodd-Frank Act and certain CFTC and SEC rules promulgated thereunder. It is possible that further developments in the swaps market, including new and additional governmental regulation, could result in higher Portfolio costs and expenses and could adversely affect the Portfolio's ability to utilize swaps, terminate existing swap agreements or realize amounts to be received under such agreements.

Contracts for Difference ("CFDs"). The Portfolio may purchase CFDs. A CFD is a privately negotiated contract between two parties, buyer and seller, stipulating that the seller will pay to or receive from the buyer the difference between the nominal value of the underlying instrument at the opening of the contract and that instrument's value at the end of the contract. The underlying instrument may be a single security, stock basket or index. A CFD can be set up to take either a short or long position on the underlying instrument. The buyer and seller are typically both required to post margin, which is adjusted daily. The buyer will also pay to the seller a financing rate on the notional amount of the capital employed by the seller less the margin deposit. A CFD is usually terminated at the buyer's initiative. The seller of the CFD will simply match the exposure of the underlying instrument in the open market and the parties will exchange whatever payment is due.

As is the case with owning any financial instrument, there is the risk of loss associated with buying a CFD. For example, if the Portfolio buys a long CFD and the underlying security is worth less at the end of the contract, the Portfolio would be required to make a payment to the seller and would suffer a loss. Also, there may be liquidity risk if the underlying instrument is illiquid because the liquidity of a

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document CFD is based on the liquidity of the underlying instrument. A further risk is that adverse movements in the underlying security will require the buyer to post additional margin. CFDs also carry counterparty risk, i.e., the risk that the counterparty to the CFD transaction may be unable or unwilling to make payments or to otherwise honor its financial obligations under the terms of the contract. If the counterparty were to do so, the value of the contract, and of the Portfolio's shares, may be reduced. The Portfolio will not enter into a CFD transaction that is inconsistent with its investment objective, policies and strategies.

Structured Investments. The Portfolio also may invest a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market, for which the amount of principal repayment and/or interest payments is based on the change in value of such underlying security, currency, commodity or market, including, among others, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices or other financial references. Structured investments may come in various forms, including notes, warrants and options to purchase securities, and may be listed and traded on an exchange or otherwise traded in the OTC market.

The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to such security, currency, commodity or market is limited or inefficient from a tax, cost or regulatory standpoint. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the holders are relying on the creditworthiness of such issuer or counterparty and have no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular point in time, may be unable to find qualified buyers for these investments.

A structured investment may be linked either positively or negatively to an underlying security, currency, commodity, index or market and a change in interest rates, principal amount, volatility, currency values or other factors, depending on the structured investment's design, may result in a gain or loss that is a multiple of the

30 movement of such interest rates, principal amount, volatility, currency values or other factors. Application of a multiplier is comparable to the use of financial leverage, a speculative technique. Leverage magnifies the potential for gain and the risk of loss. As a result, a relatively small decline in the value of the referenced factor could result in a relatively large loss in the value of a structured investment.

Other types of structured investments include interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. This type of securitization or restructuring usually involves the deposit or purchase of an underlying security by a U.S. or foreign entity, such as a corporation or trust of specified instruments, and the issuance by that entity of one or more classes of securities backed by, or representing an interest in, the underlying instruments. The cash flow or rate of return on the underlying investments may be apportioned among the newly issued securities to create different investment characteristics, such as varying maturities, credit quality, payment priorities and interest rate provisions. Structured investments which are subordinated, for example, in payment priority often offer higher returns, but may result in increased risks compared to other investments.

Combined Transactions. Combined transactions involve entering into multiple derivatives transactions (such as multiple options transactions, including purchasing and writing options in combination with each other; multiple futures transactions; and combinations of options, futures, forward and swap transactions) instead of a single derivatives transaction in order to customize the risk and return characteristics of the overall position. Combined transactions typically contain elements of risk that are present in each of the component transactions. The Portfolio may enter into a combined transaction instead of a single derivatives transaction when, in the opinion of the Adviser, it is in the best interest of the Portfolio to do so. Because combined transactions involve multiple transactions, they may result in higher transaction costs and may be more difficult to close out.

SPECIAL RISKS RELATED TO CYBER SECURITY

The Fund and its service providers are susceptible to cyber security risks that include, among other things, theft, unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document unauthorized access to relevant systems; compromises to networks or devices that the Fund and its service providers use to service the Fund's operations; or operational disruption or failures in the physical infrastructure or operating systems that support the Fund and its service providers. Cyber attacks against or security breakdowns of the Fund or its service providers may adversely impact the Fund and its shareholders, potentially resulting in, among other things, financial losses; the inability of Fund shareholders to transact business and the Fund to process transactions; inability to calculate the Portfolio's NAV; violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs; and/or additional compliance costs. The Fund may incur additional costs for cyber security risk management and remediation purposes. In addition, cyber security risks may also impact issuers of securities in which the Portfolio invests, which may cause the Portfolio's investment in such issuers to lose value. There can be no assurance that the Fund or its service providers will not suffer losses relating to cyber attacks or other information security breaches in the future.

INVESTMENT LIMITATIONS

Fundamental Limitations

The Portfolio has adopted the following restrictions, which are fundamental policies and may not be changed without the approval of the lesser of: (i) at least 67% of the voting securities of the Portfolio present at a meeting if the holders of more than 50% of the outstanding voting securities of the Portfolio are present or represented by proxy; or (ii) more than 50% of the outstanding voting securities of the Portfolio. The Portfolio will not: (1) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments; provided that this restriction shall not prohibit the Portfolio from purchasing or selling options, futures contracts and related options thereon, forward contracts, swaps, caps, floors, collars and any other financial instruments or from investing in securities or other instruments backed by physical commodities or as otherwise permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Portfolio from the provisions of the 1940 Act, as amended from time to time; (2) purchase or sell real estate, although it may purchase and sell securities of companies that deal in real estate and may purchase and sell securities that are secured by interests in real estate;

(3) make loans of money or property to any person, except (a) to the extent that securities or interests in which the Portfolio may invest are considered to be loans, (b) through the loan of portfolio securities, (c) by engaging in repurchase agreements or (d) as may otherwise be permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time; (4) invest in a manner inconsistent with its classification as a "diversified company" as provided by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Portfolio from the provisions of the 1940 Act, as amended from time to time; (5) borrow money, except the Portfolio may borrow money to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Portfolio from the provisions of the 1940 Act, as amended from time to time;

(6) issue senior securities, except the Portfolio may issue senior securities to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Portfolio from the provisions of the 1940 Act, as amended from time to time;

(7) underwrite securities issued by others, except to the extent that the Portfolio may be considered an underwriter within the meaning of the 1933 Act in the disposition of restricted securities;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (8) acquire any securities of companies within one industry if, as a result of such acquisition, more than 25% of the value of the Portfolio's total assets would be invested in securities of companies within such industry; provided, however, that there shall be no limitation on the purchase of obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities; and

(9) write or acquire options or interests in oil, gas or other mineral exploration or development programs.

Non-Fundamental Limitations

In addition, the Portfolio has adopted the following non-fundamental investment limitations, which may be changed by the Board without shareholder approval. The Portfolio will not:

(1) purchase on margin or sell short except (i) that the Portfolio may enter into option transactions and futures contracts as described in its Prospectus; and (ii) as specified above in fundamental investment limitation number (1) above;

(2) make loans except (i) by purchasing bonds, debentures or similar obligations (including repurchase agreements, subject to the limitations as described in its Prospectus) that are publicly distributed; and (ii) by lending its portfolio securities to banks, brokers, dealers and other financial institutions so long as such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretations of the SEC thereunder;

(3) borrow money, except from banks for extraordinary or emergency purposes, and then only in amounts up to 10% of the value of the Portfolio's total assets (including, in each case, the amount borrowed less liabilities (other than borrowings)), or purchase securities while borrowings exceed 5% of its total assets; and (4) invest in other investment companies in reliance on Sections 12(d)(1)(F), 12(d)(1)(G) or 12(d)(1)(J) of the 1940 Act. Whether diversified or non-diversified, the Portfolio will satisfy the diversification requirements for tax treatment as a regulated investment company ("RIC"). As a result, the Portfolio will diversify its holdings so that, at the close of each quarter of its taxable year or within 30 days thereafter, (i) at least 50% of the market value of the Portfolio's total assets is represented by cash (including cash items and receivables), U.S. government securities, securities of other RICs and other securities, with such other securities limited, in respect of any one issuer, for purposes of this calculation to an amount not greater than 5% of the value of the Portfolio's total assets and 10% of the outstanding voting securities of such issuer; and (ii) not more than 25% of the value of its total assets is invested in the securities of any one issuer (other than U.S. government securities or securities of other RICs) or of one or more "qualified" publicly traded partnerships.

The percentage limitations contained in these fundamental and non-fundamental limitations apply at the time of purchase of securities. A later change in percentage resulting from changes in the value of the Portfolio's assets

32 or in total or net assets of the Portfolio will not be considered a violation of the restriction and the sale of securities will not be required. The foregoing does not apply to borrowings. Future portfolios of the Fund may adopt different limitations.

The investment policies, limitations or practices of the Portfolio may not apply during periods of unusual or adverse market, economic, political or other conditions. Such market, economic, political or other conditions may include periods of abnormal or heightened market volatility, strained credit and/or liquidity conditions or increased governmental intervention in the markets or industries. During such periods, the Portfolio may not invest according to its principal investment strategies or in the manner in which its name may suggest, and may be subject to different and/or heightened risks. It is possible that such unusual or adverse conditions may continue for extended periods of time.

DISCLOSURE OF PORTFOLIO HOLDINGS

The Fund's Board of Directors and the Adviser have adopted policies and procedures regarding disclosure of portfolio holdings (the "Policy"). Pursuant to the Policy, the Adviser may disclose information concerning Fund portfolio holdings only if such disclosure is consistent with the antifraud provisions of the federal securities laws and the Fund's and the Adviser's fiduciary duties to Fund shareholders. In no instance may the Adviser or the Fund receive compensation or any other consideration in connection with the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document disclosure of information about the portfolio securities of the Fund. Consideration includes any agreement to maintain assets in the Fund or in other investment companies or accounts managed by the Adviser or by any affiliated person of the Adviser. Non-public information concerning portfolio holdings may be divulged to third-parties only when the Fund has a legitimate business purpose for doing so and the recipients of the information are subject to a duty of confidentiality. Under no circumstances shall current or prospective Fund shareholders receive non-public portfolio holdings information, except as described below.

The Fund makes available on its public website the following portfolio holdings information:

• complete portfolio holdings information monthly, at least 15 calendar days after the end of each month; and

• top 10 holdings monthly, at least 15 calendar days after the end of each month.

The Fund provides a complete schedule of portfolio holdings for the second and fourth fiscal quarters in its semiannual and annual reports, and for the first and third fiscal quarters in its filings with the SEC on Form N-Q.

All other portfolio holdings information that has not been disseminated in a manner making it available to investors generally as described above is non-public information for purposes of the Policy.

The Fund may make selective disclosure of non-public portfolio holdings information pursuant to certain exemptions set forth in the Policy. Third-parties eligible for exemptions under the Policy and therefore eligible to receive such disclosures currently include clients/ shareholders (such as redeeming shareholders in kind), fund rating agencies, information exchange subscribers, proxy voting or advisory services, pricing services, consultants and analysts, portfolio analytics providers, transition managers and service providers, provided that the third-party expressly agrees to maintain the disclosed information in confidence and not to trade portfolio securities or related derivative securities based on the non-public information. Non-public portfolio holdings information may not be disclosed to a third-party pursuant to an exemption unless and until the third-party recipient has entered into a non-disclosure agreement with the Fund and the arrangement has been reviewed and approved as set forth in the Policy and discussed below. In addition, persons who owe a duty of trust or confidence to the Fund or the Adviser may receive non-public portfolio holdings information without entering into a non-disclosure agreement. Currently, these persons include (i) the Fund's independent registered public accounting firm (as of the Fund's fiscal year end and on an as-needed basis), (ii) counsel to the Fund (on an as needed basis), (iii) counsel to the independent Directors (on an as-needed basis) and (iv) members of the Board of Directors (on an as-needed basis). Subject to the terms and conditions of any agreement between the Adviser or the Fund and the third-party recipient, if these conditions for disclosure are satisfied, there shall be no restriction on the frequency with which Fund non-public portfolio holdings information is released, and no lag period shall apply (unless otherwise indicated below).

The Adviser may provide interest lists to broker-dealers who execute securities transactions for the Fund without entering into a non- disclosure agreement with the broker-dealers, provided that the interest list satisfies all of the following criteria: (1) the interest list must contain only the CUSIP numbers and/or ticker symbols of securities held in all registered management investment companies advised by the Adviser or any affiliate of the Adviser (the "MSIM Funds") on an aggregate, rather than a fund-by-fund basis; (2) the interest list will not disclose portfolio holdings on a fund-by-fund basis; (3) the interest list must not contain information about the

33 number or value of shares owned by a specified MSIM Fund; (4) the interest list may identify the investment strategy, but not the particular MSIM Funds, to which the list relates; and (5) the interest list may not identify the portfolio manager or team members responsible for managing the MSIM Funds. The Fund may discuss or otherwise disclose performance attribution analyses (i.e., mention the effects of having a particular security in the portfolio(s)) where such discussion is not contemporaneously made public, provided that the particular holding has been disclosed publicly or the information that includes such holding(s) has been made available to shareholders requesting such information. Additionally, any discussion of the analyses may not be more current than the date the holding was disclosed publicly or the information that includes such holding(s) has been made available to shareholders requesting such information.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Portfolio holdings information may be provided to broker-dealers, prime brokers, futures commission merchants, or similar providers in connection with the Fund's portfolio trading or operational processing activities; such entities generally need access to such information in the performance of their duties and responsibilities to fund service providers and are subject to a duty of confidentiality, including a duty not to trade on material nonpublic information, imposed by law or contract. Portfolio holdings information may also be provided to affiliates of Morgan Stanley Investment Management ("MSIM") pursuant to regulatory requirements or may be reported by the Fund's counterparties to certain global trade repositories pursuant to regulatory requirements. The Adviser, the Fund and/or the Portfolio currently have entered into ongoing arrangements with the following parties:

Name Information Disclosed Frequency(1) Lag Time Service Providers Institutional Complete portfolio Shareholder holdings Daily basis End of Day Services(*) State Street Bank Complete portfolio (2 ) and holdings Daily basis Trust Company(*) Complete portfolio State Street Global holdings Monthly basis Approximately 10 business Markets LLC days Complete portfolio Eze Software Group holdings Monthly basis Approximately 10 business holdings days FX Transparency Complete portfolio LLC holdings Quarterly basis Approximately three-four weeks after quarter end Complete portfolio Monthly basis (2 ) KellyCo Marketing holdings and Quarterly basis Complete portfolio Monthly basis (2 ) RR Donnelley Inc. holdings and Quarterly basis Fund Rating Agencies Lipper(*) Complete portfolio Approximately six business holdings Monthly basis days after month end Portfolio Analytics Providers Complete portfolio FactSet Research holdings Daily basis End of Day Systems, Inc.(*) Complete portfolio ITG Analytics Inc. holdings Daily basis One Day

(*) This entity has agreed to maintain Fund non-public portfolio holdings information in confidence and not to trade portfolio securities based on the non-public portfolio holdings information. (1) Dissemination of portfolio holdings information to entities listed above may occur less frequently than indicated (or not at all). (2) Information will typically be provided on a real time basis or as soon thereafter as possible. All disclosures of non-public portfolio holdings information made to third-parties pursuant to the exemptions set forth in the Policy must be reviewed and approved by the Adviser, which will also determine from time-to-time whether such third-parties should continue to receive portfolio holdings information.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Adviser shall report quarterly to the Board of Directors (or a designated committee thereof) at the next regularly scheduled meeting: (i) any material information concerning all parties receiving non-public portfolio holdings information pursuant to an exemption; and (ii) any new non-disclosure agreements entered into during the reporting period. Procedures to monitor the use of such non-public portfolio holdings information may include requiring annual certifications that the recipients have utilized such information only pursuant to the terms of the agreement between the recipient and the Adviser and, for those recipients receiving information electronically, acceptance of the information will constitute reaffirmation that the third-party expressly agrees to maintain the disclosed information in confidence and not to trade portfolio securities based on the non-public information.

PURCHASE AND REDEMPTION OF SHARES Information concerning how Portfolio shares are offered to the public (and how they are redeemed or exchanged) is provided in the Portfolio's Prospectus. The Portfolio reserves the right in its sole discretion (i) to suspend the offering of its shares; (ii) to reject purchase orders when in the judgment of management such rejection is in the best interest of the Fund; and (iii) to reduce or waive the minimum for initial investments for certain categories of investments. The NAV per share of the Portfolio is calculated on days that the New York Stock Exchange ("NYSE") is open for business. NAV per share is determined as of the close of trading of the NYSE (normally 4:00 p.m. Eastern time) (for the Portfolio, the "Pricing Time"). If the NYSE is closed due to inclement weather, technology problems or any other reason on a day it would normally be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the Portfolio reserves the right to treat such day as a business day and accept purchase and redemption orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE for that day, so long as the Adviser believes there generally remains an adequate market to obtain reliable and accurate market quotations. The Portfolio may elect to remain open and price its shares on days when the NYSE is closed but the primary securities markets on which the Portfolio's securities trade remain open. Additional Purchase Information You may purchase Class I, Class A, Class C and Class IS shares directly from the Fund by Federal Funds wire or by check; however, on days that the NYSE is open but the custodian bank is closed, you may only purchase shares by check. Investors may also invest in the Portfolio by purchasing Class I, Class A, Class C and/or Class IS shares through certain third-parties, such as brokers, dealers or other financial intermediaries that have entered into a selling agreement with the Distributor (each a "Financial Intermediary"). Some Financial Intermediaries may charge an additional service or transaction fee (see also "Investment Through Financial Intermediaries"). If a purchase is canceled due to nonpayment or because your check does not clear, you will be responsible for any loss the Fund or its agents incur. If you are already a shareholder, the Fund may redeem shares from your account(s) to reimburse the Fund or its agents for any loss. In addition, you may be prohibited or restricted from making future investments in the Fund. Check. An account may be opened and you may purchase Class I, Class A, Class C and Class IS shares by completing and signing a New Account Application and mailing it, together with a check payable to "Morgan Stanley Institutional Fund, Inc. Emerging Markets Breakout Nations Portfolio" to:

Morgan Stanley Institutional Fund, Inc. c/o Boston Financial Data Services, Inc. P.O. Box 219804 Kansas City, MO 64121-9804

A purchase of shares by check ordinarily will be credited to your account at the NAV per share of the Portfolio determined on the day of receipt.

Investment Through Financial Intermediaries. Certain Financial Intermediaries have made arrangements with the Fund so that an investor may purchase Class I, Class A, Class C and Class IS shares or redeem Class I, Class A, Class C and Class IS at the NAV per share (after any applicable sales load or contingent deferred sales charge ("CDSC")) next determined after the Financial Intermediary receives the share order. In other instances, the Fund has also authorized such Financial Intermediaries to designate other intermediaries

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to receive purchase and redemption orders on the Fund's behalf at the share price next determined after such designees receive the share order. Under these arrangements, the Fund will be deemed to have received a purchase or redemption order when the Financial Intermediary or, if applicable, a Financial Intermediary's authorized designee, receives the share order from an investor.

Conversion to a New Share Class If the value of an account containing shares of the Portfolio falls below the investment minimum for the class of shares held by the account because of shareholder redemption(s) or the failure to meet one of the waiver criteria set forth in the Portfolio's Prospectus and, if the account value remains below such investment minimum, the shares in such account may, at the Adviser's discretion, convert to another class of shares offered by the Portfolio, if an account meets the minimum investment amount for such class, and will be subject to the shareholder services fee and other features applicable to such shares. Conversion to another class of shares will result in holding a share class with higher fees. The Fund will not convert to another class of shares based solely upon changes in the market that reduce the NAV of shares. Under current tax law, conversion between share classes is generally not a taxable event to the shareholder. Shareholders will be notified prior to any such conversion.

Involuntary Redemption of Shares If your account has been converted to a new share class and the value of an account falls below the investment minimum for that class because of shareholder redemption(s) or you no longer meet one of the waiver criteria set forth in the Portfolio's Prospectus, and if the account value remains below such investment minimum, the shares in such account may be subject to redemption by the Fund. The Fund will not redeem shares based solely upon changes in the market that reduce the NAV of shares. If shares are redeemed, redemption proceeds will be promptly paid to the shareholder. Shareholders will be notified prior to any such redemption.

Suspension of Redemptions The Fund may suspend the right of redemption or postpone the date of payment (i) during any period that the NYSE is closed, or trading on the NYSE is restricted as determined by the SEC; (ii) during any period when an emergency exists as determined by the SEC as a result of which it is not practicable for the Portfolio to dispose of securities it owns, or fairly to determine the value of its assets; and (iii) for such other periods as the SEC may permit.

Further Redemption Information

To protect your account and the Fund from fraud, signature guarantees are required for certain redemptions. Signature guarantees enable the Fund to verify the identity of the person who has authorized a redemption from your account. Signature guarantees are required in connection with: (i) all redemptions, regardless of the amount involved, when the proceeds are to be paid to someone other than the registered owner(s) and/or registered address; and (ii) share transfer requests. An "eligible guarantor institution" may include a bank, a trust company, a credit union or savings and loan association, a member firm of a domestic stock exchange, or a foreign branch of any of the foregoing. Notaries public are not acceptable guarantors. The signature guarantees must appear either: (i) on the written request for redemption; (ii) on a separate instrument for assignment ("stock power") which should specify the total number of shares to be redeemed; or (iii) on all stock certificates tendered for redemption and, if shares held by the Fund are also being redeemed, on the letter or stock power.

ACCOUNT POLICIES AND FEATURES

Transfer of Shares Shareholders may transfer shares of the Portfolio to another person by making a written request to the Fund. The request should clearly identify the account and number of shares to be transferred, and include the signature of all registered owners and all stock certificates, if any, which are subject to the transfer. It may not be possible to transfer shares purchased through a Financial Intermediary. The signature on the letter of request, the stock certificate or any stock power must be guaranteed in the same manner as described in the Portfolio's Prospectus. As in the case of redemptions, the written request must be received in good order before any transfer can be made. Transferring shares may affect the eligibility of an account for a given class of the Portfolio's shares and may result in involuntary

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document conversion or redemption of such shares. Under certain circumstances, the person who receives the transfer may be required to complete a New Account Application.

Valuation of Shares NAV per share is determined by dividing the total market value of the Portfolio's investments and other assets, less the total market value of all liabilities, by the total number of outstanding shares of the Portfolio. The NAV for each class of shares offered by the Fund may differ due to class-specific expenses paid by each class, including the shareholder servicing fees charged to Class A shares and Class C shares.

In the calculation of the Portfolio's NAV: (1) an equity portfolio security listed or traded on an exchange is valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; and (2) all other equity portfolio securities for which OTC market quotations are readily available are valued at the latest reported sale price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from the relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained

36 from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market. When market quotations are not readily available, including circumstances under which it is determined by the Adviser that the closing price, the last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Board. For valuation purposes, quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE.

Certain of the Portfolio's securities may be valued by an outside pricing service approved by the Board. The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolio securities valued by such pricing service.

Listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sale price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. If an exchange closing price or bid and asked prices are not available from the exchange, then the quotes from one or more brokers or dealers may be used. Unlisted options and swaps are valued by an outside pricing service approved by the Board or quotes from a broker or dealer. Unlisted options and swaps cleared on a clearinghouse or exchange may be valued using the closing price provided by the clearinghouse or exchange. Futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, then at the last sale price on the exchange.

If the Adviser determines that the valuation received from the outside pricing service or broker or dealer is not reflective of the security's market value, such security is valued at its fair value as determined in good faith under procedures established by and under the general supervision of the Board.

Generally, trading in foreign securities, as well as corporate bonds, U.S. government securities and money market instruments, is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the NAV of the Portfolio's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the close of the NYSE. Occasionally, events which may affect the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE. If events that may affect the value of such securities occur during such period, then these securities may be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Board.

Although the legal rights of Class I, Class A, Class C and Class IS shares will be identical, the different expenses borne by each class will result in different NAVs and dividends for the class. Dividends will differ by approximately the amount of the class specific expenses (distribution, transfer agency and sub transfer agency fees). The NAV of Class A and Class C shares will generally be lower than the NAV of Class I and Class IS shares as a result of the shareholder services fees charged to Class A and the distribution and shareholder services fees charged to Class C shares and certain other class-specific expenses of Class A and Class C shares.

MANAGEMENT OF THE FUND

Directors and Officers

The Board of the Fund consists of 10 Directors. These same individuals also serve as directors or trustees for certain of the funds advised by the Adviser and Morgan Stanley AIP GP LP. None of the Directors have an affiliation or business connection with the Adviser or any of its affiliated persons and do not own any stock or other securities issued by the Adviser's parent company, Morgan Stanley. They are "non-interested" or "Independent" Directors as defined under the 1940 Act.

Board Structure and Oversight Function

The Board's leadership structure features an Independent Director serving as Chairperson and the Board Committees described below. The Chairperson participates in the preparation of the agenda for meetings of the Board and the preparation of information to be presented to the Board with respect to matters to be acted upon by the Board. The Chairperson also presides at all meetings of the Board and is involved in discussions regarding matters pertaining to the oversight of the management of the Fund between meetings.

The Board of Directors operates using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Directors, the Fund and Fund stockholders, and to facilitate compliance with legal and regulatory requirements and oversight of the Fund's activities and associated risks. The Board of Directors has established five standing committees: (1) Audit Committee, (2) Governance Committee, (3) Compliance and Insurance Committee, (4) Investment Committee and (5) Closed-End Fund Committee. The Audit Committee, the Governance Committee and the Closed-End Fund Committee are comprised exclusively of Independent Directors. Each committee charter governs the scope of the committee's responsibilities with respect to the oversight of the Fund. The responsibilities of each committee, including their oversight responsibilities, are described further under the caption "Independent Directors and the Committees."

The Portfolio is subject to a number of risks, including investment, compliance, operational and valuation risk, among others. The Board of Directors oversees these risks as part of its broader oversight of the Fund's affairs through various Board and committee activities. The Board has adopted, and periodically reviews, policies and procedures designed to address various risks to the Portfolio. In addition, appropriate personnel, including but not limited to the Fund's Chief Compliance Officer, members of the Fund's administration and accounting teams, representatives from the Fund's independent registered public accounting firm, the Fund's Treasurer, portfolio management personnel, risk management personnel and independent valuation and brokerage evaluation service providers, make regular reports regarding the Fund's activities and related risks to the Board of Directors and the committees, as appropriate. These reports include, among others, quarterly performance reports, quarterly risk reports and discussions with members of the risk teams relating to each asset class. The Board's committee structure allows separate committees to focus on different aspects of risk and the potential impact of these risks on some or all of the funds in the complex and then report back to the full Board. In between regular meetings, Fund officers also communicate with the Directors regarding material exceptions and items relevant to the Board's risk oversight function. The Board recognizes that it is not possible to identify all of the risks that may affect the Portfolio, and that it is not possible to develop processes and controls to eliminate all of the risks that may affect the Portfolio. Moreover, the Board recognizes that it may be necessary for the Portfolio to bear certain risks (such as investment risk) to achieve its investment objectives.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As needed between meetings of the Board, the Board or a specific committee receives and reviews reports relating to the Fund and engages in discussions with appropriate parties relating to the Fund's operations and related risks.

Directors

The Fund seeks as Directors individuals of distinction and experience in business and finance, government service or academia. In determining that a particular Director was and continues to be qualified to serve as Director, the Board has considered a variety of criteria, none of which, in isolation, was controlling. Based on a review of the experience, qualifications, attributes or skills of each Director, including those enumerated in the table below, the Board has determined that each of the Directors is qualified to serve as a Director of the Fund. In addition, the Board believes that, collectively, the Directors have balanced and diverse experience, qualifications, attributes and skills that allow the Board to operate effectively in governing the Fund and protecting the interests of shareholders. Information about the Fund's Governance Committee and Board of Directors nomination process is provided below under the caption "Independent Directors and the Committees."

The Directors of the Fund, their ages, addresses, positions held, length of time served, their principal business occupations during the past five years and other relevant professional experience, the number of portfolios in the Fund Complex (defined below) overseen by each Independent Director (as of December 31, 2015 unless otherwise indicated) and other directorships, if any, held by the Directors, are shown below. The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Adviser and any registered funds that have an adviser that is an affiliate of the Adviser (including, but not limited to, Morgan Stanley AIP GP LP) (the "Morgan Stanley AIP Funds") (collectively, the "Morgan Stanley Funds").

Independent Directors:

Number of Portfolios in Name, Age Fund Other and Address Length Complex Directorships of Position(s) of Principal Occupation(s) Overseen by Held by Independent Held with Time During Past 5 Years and Other Independent Independent Director Registrant Served* Relevant Professional Experience Director Director** Frank L. Director Since President, Strategic Decisions, LLC (consulting) (since February 98 Director of BP p.l.c.; Director of Bowman August 2009); Director or Trustee of various Morgan Stanley Funds Naval and Nuclear Technologies LLP; (71) 2006 (since August 2006); Chairperson of the Compliance and Director Emeritus of the Armed c/o Perkins Insurance Committee (since October 2015); formerly, Services YMCA of the USA; Director Coie LLP Chairperson of the Insurance Sub-Committee of the Compliance of the U.S. Naval Submarine League; Counsel to and Insurance Committee (2007-2015); served as President and Member of the National Security the Chief Executive Officer of the Nuclear Energy Institute (policy Advisory Council of the Center for U. Independent organization) (February 2005-November 2008); retired as S. Global Engagement and a member Directors Admiral, U.S. Navy after serving over 38 years on active duty of the CNA Military Advisory Board; 30 including 8 years as Director of the Naval Nuclear Propulsion Chairman of the charity J Street Cup Rockefeller Program in the Department of the Navy and the U.S. Golf; Trustee of Fairhaven United Plaza Department of Energy (1996-2004); served as Chief of Naval Methodist Church; and Director of New York, Personnel (July 1994-September 1996) and on the Joint Staff as other various non-profit organizations. NY 10112 Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document National du Mérite by the French Government; elected to the National Academy of Engineering (2009).

* This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

Nancy C. Director Since Chief Executive Officer, Virginia Commonwealth University 98 Member of Virginia Commonwealth Everett (61) January Investment Company (since November 2015); Owner, OBIR, University School of Business c/o Perkins 2015 LLC (institutional investment management consulting) (since Foundation; formerly, Member of Coie LLP June 2014); formerly, Managing Director, BlackRock, Inc. Virginia Commonwealth University Counsel to (February 2011-December 2013); and Chief Executive Officer, Board of Visitors (2013-2015); the General Motors Asset Management (a/k/a Promark Global Member of Committee on Directors Independent Advisors, Inc.) (June 2005-May 2010). for Emerging Markets Growth Fund, Directors Inc. (2007-2010); Chairperson of 30 Performance Equity Management, Rockefeller LLC (2006-2010); and Chairperson, Plaza GMAM Absolute Return Strategies New York, Fund, LLC (2006-2010). NY 10112

* This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

Number of Portfolios in Name, Age Fund Other and Address Length Complex Directorships of Position(s) of Principal Occupation(s) Overseen by Held by Independent Held with Time During Past 5 Years and Other Independent Independent Director Registrant Served* Relevant Professional Experience Director Director** Jakki L. Director Since Chairman and Chief Executive Officer, Opus Capital Group 98 Director of Cincinnati Bell Inc. and Haussler January (since January 1996); formerly, Director, Capvest Venture Fund, Member, Audit Committee and (59) 2015 LP (May 2000-December 2011); Partner, Adena Ventures, LP Compensation Committee; Director of c/o Perkins (July 1999-December 2010); Director, The Victory Funds Northern Kentucky University Coie LLP (February 2005-July 2008). Foundation and Member, Investment Counsel to Committee; Member of Chase College the of Law Transactional Law Practice Independent Center Board of Advisors; Director of Directors Best Transport; Director of Chase 30 College of Law Board of Visitors; Rockefeller formerly, Member, University of Plaza Cincinnati Foundation Investment New York, Committee; Member, Miami NY 10112 University Board of Visitors (2008-2011); Trustee of Victory Funds (2005-2008) and Chairman, Investment Committee (2007-2008) and Member, Service Provider Committee (2005-2008).

* This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document c/o Johnson (since July 1991); Co-Chairman and a founder of the Group of Smick Seven Council (G7C) (international economic commission); International, formerly, Chairperson of the Audit Committee (July Inc. 1991-September 2006), Vice Chairman of the Board of 220 I Street, Governors of the Federal Reserve System and Assistant NE Secretary of the U.S. Treasury. Suite 200 Washington, D.C. 20002

Joseph J. Director Since President, Kearns & Associates LLC (investment consulting); 101 Director of Electro Rent Corporation Kearns (74) August Chairperson of the Audit Committee (since October 2006) and (equipment leasing). Prior to c/o Kearns & 1994 Director or Trustee of various Morgan Stanley Funds (since December 31, 2013, Director of The Associates August 1994); formerly, Deputy Chairperson of the Audit Ford Family Foundation. LLC Committee (July 2003-September 2006) and Chairperson of the 23823 Audit Committee of various Morgan Stanley Funds (since Malibu Road August 1994); CFO of the J. Paul Getty Trust. S-50-440 Malibu, CA 90265

Michael F. Director Since Managing Director, Aetos Capital, LLC (since March 2000); 97 Director of certain investment funds Klein (58) August Co-President, Aetos Alternatives Management, LLC (since managed or sponsored by Aetos c/o Perkins 2006 January 2004) and Co-Chief Executive Officer of Aetos Capital Capital, LLC; Director of Sanitized Coie LLP LLC (since August 2013); Chairperson of the Fixed Income AG and Sanitized Marketing AG Counsel to Sub-Committee of the Investment Committee (since October (specialty chemicals). the 2006) and Director or Trustee of various Morgan Stanley Funds Independent (since August 2006); formerly, Managing Director, Morgan Directors Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment 30 Management, President, various Morgan Stanley Funds (June Rockefeller 1998-March 2000) and Principal, Morgan Stanley & Co. Inc. Plaza and Morgan Stanley Dean Witter Investment Management New York, (August 1997-December 1999). NY 10112

* This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Michael E. Chair of Chair of Chair of the Boards of various Morgan Stanley Funds (since 100 None. Nugent (80) the Board the July 2006); Chairperson of the Closed-End Fund Committee 522 Fifth and Boards (since June 2012) and Director or Trustee of various Morgan Avenue Director since Stanley Funds (since July 1991); formerly, Chairperson of the New York, July Insurance Committee (until July 2006); General Partner, NY 10036 2006 Triumph Capital, L.P. (private investment partnership) and (1988-2013). Director since July 1991

W. Allen Director Since Chairperson of the Equity Sub-Committee of the Investment 98 Director of Legg Mason, Inc.; Reed (69) August Committee (since October 2006) and Director or Trustee of formerly, Director of the Auburn c/o Perkins 2006 various Morgan Stanley Funds (since August 2006); formerly, University Foundation (2010-2015). Coie LLP President and CEO of General Motors Asset Management; Counsel to Chairman and Chief Executive Officer of the GM Trust Bank the and Corporate Vice President of General Motors Corporation Independent (August 1994-December 2005). Directors 30 Rockefeller Plaza New York, NY 10112

Fergus Reid Director Since Chairman, Joe Pietryka, Inc.; Chairperson of the Governance 100 Formerly, Trustee and Director of (84) June Committee and Director or Trustee of various Morgan Stanley certain investment companies in the c/o Joe 1992 Funds (since June 1992). JP Morgan Fund complex managed Pietryka, by JP Morgan Investment Inc. Management Inc. (1987-2012). 85 Charles Colman Blvd. Pawling, NY 12564

* This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

The executive officers of the Fund, their ages, addresses, positions held, length of time served and their principal business occupations during the past five years are shown below.

Executive Officers:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name, Age and Address of Position(s) Executive Held with Length of Principal Occupation(s) Officer Registrant Time Served* During Past 5 Years John H. President Since September President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley Gernon and 2013 AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May (53) Principal 2014) in the Fund Complex; Managing Director of the Adviser; Head of Product (since 2006). 522 Fifth Executive Avenue Officer New York, NY 10036

Timothy Chief Since December Managing Director of the Adviser and various entities affiliated with the Adviser; Chief Compliance J. Compliance 2016 Officer of various Morgan Stanley Funds and the Adviser (since December 2016). Formerly, Managing Knierim Officer Director and Deputy Chief Compliance Officer of the Adviser (2014-2016) and Chief Compliance Officer (57) of Morgan Stanley AIP GP LP (2014-2016); and formerly, Chief Compliance Officer of Prudential 522 Fifth Investment Management, Inc. (2007-2014). Avenue New York, NY 10036

Francis Treasurer Treasurer since Executive Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July J. Smith and July 2003 and 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002). (51) Principal Principal Financial 522 Fifth Financial Officer since Avenue Officer September 2002 New York, NY 10036

Mary E. Secretary Since Executive Director of the Adviser; Secretary of various Morgan Stanley Funds (since June 1999). Mullin and Chief June 1999 (49) Legal 522 Fifth Officer Avenue New York, NY 10036

* This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves a one-year term, until his or her successor is chosen and qualifies.

In addition, the following individuals who are officers of the Adviser or its affiliates serve as assistant secretaries of the Fund: Daniel E. Burton and Francesca Mead.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document It is a policy of the Fund's Board that each Director shall invest at least $250,000 ($100,000 prior to January 1, 2015) in any combination of the Morgan Stanley Funds that the Director determines meets his or her own specific investment objectives, without requiring any specific investment in any particular Fund. Newly elected or appointed Directors have three years to comply with this policy. For each Director, the dollar range of equity securities beneficially owned by the Director in the Fund and in the Family of Investment Companies (Family of Investment Companies includes all of the registered investment companies advised by the Adviser and Morgan Stanley AIP GP LP) for the calendar year ended December 31, 2015 is set forth in the table below.

Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Director in Dollar Range of Equity Securities Family of Investment in the Fund Companies Name of Director (As of December 31, 2015) (As of December 31, 2015) Independent: Frank L. Bowman (2 ) over $100,000 Kathleen A. Dennis (3 ) over $100,000 Nancy C. Everett None None Jakki L. Haussler (4 ) over $100,000 Manuel H. Johnson None over $100,000

Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Director in Dollar Range of Equity Securities Family of Investment in the Fund Companies Name of Director (As of December 31, 2015) (As of December 31, 2015) Joseph J. Kearns(1) (5) over $100,000 Michael F. Klein(1) (6) over $100,000 Michael E. Nugent (7) over $100,000 W. Allen Reed(1) (8) over $100,000 Fergus Reid(1) (9) over $100,000

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1 Includes the total amount of compensation deferred by the Director at his election pursuant to a deferred compensation plan. Such deferred compensation is placed in a deferral account and deemed to be invested in one or more of the Morgan Stanley Funds (or portfolio thereof) that are offered as investment options under the plan. 2 Growth Portfolio ($50,001-$100,000) and Small Company Growth Portfolio ($50,001-$100,000). 3 Small Company Growth Portfolio (over $100,000). 4 International Equity Portfolio (over $100,000). 5 Emerging Markets Portfolio (over $100,000) and U.S. Real Estate Portfolio (over $100,000). 6 Emerging Markets Portfolio ($10,001-$50,000); Global Real Estate Portfolio ($50,001-$100,000); International Equity Portfolio ($50,001-$100,000); and Small Company Growth Portfolio ($50,001-$100,000). 7 Growth Portfolio (over $100,000); Global Franchise Portfolio (over $100,000); and Global Infrastructure Portfolio ($50,001-$100,000). 8 Emerging Markets Portfolio (over $100,000); Growth Portfolio (over $100,000); International Equity Portfolio ($10,001-$50,000); Small Company Growth Portfolio (over $100,000); and U.S. Real Estate Portfolio (over $100,000). 9 Growth Portfolio (over $100,000); International Equity Portfolio (over $100,000); and U.S. Real Estate Portfolio (over $100,000).

As to each Independent Director and his or her immediate family members, no person owned beneficially or of record securities of an investment adviser or principal underwriter of the Fund, or a person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with an investment adviser or principal underwriter of the Fund. As of December 1, 2016, the Directors and officers of the Fund, as a group, owned less than 1% of any Class of the outstanding common stock of the Portfolio. Independent Directors and the Committees

Law and regulation establish both general guidelines and specific duties for the Independent Directors. The Board has five committees: (1) Audit Committee, (2) Governance Committee, (3) Compliance and Insurance Committee, (4) Investment Committee and (5) Closed- End Fund Committee. The Independent Directors are charged with recommending to the full Board approval of management, advisory and administration contracts, Rule 12b-1 plans and distribution and underwriting agreements; continually reviewing fund performance; checking on the pricing of portfolio securities, brokerage commissions, transfer agent costs and performance and trading among funds in the same complex; and approving fidelity bond and related insurance coverage and allocations, as well as other matters that arise from time to time. The Independent Directors are required to select and nominate individuals to fill any Independent Director vacancy on the board of any fund that has a Rule 12b-1 plan of distribution. The Board of Directors has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "1934 Act"). The Audit Committee is charged with recommending to the full Board the engagement or discharge of the Fund's independent registered public accounting firm; directing investigations into matters within the scope of the independent registered public accounting firm's duties, including the power to retain outside specialists; reviewing with the independent registered public accounting firm the audit plan and results of the auditing engagement; approving professional services provided by the independent registered public accounting firm and other accounting firms prior to the performance of the services; reviewing the independence of the independent registered public accounting firm; considering the range of audit and non-audit fees; reviewing the adequacy of the Fund's system of internal controls; and reviewing the valuation process. The Fund has adopted a formal, written Audit Committee Charter.

The members of the Audit Committee of the Fund are Jakki L. Haussler, Joseph J. Kearns, Michael F. Klein and W. Allen Reed. None of the members of the Fund's Audit Committee is an "interested person," as defined under the 1940 Act, of the Fund (with such disinterested Directors being "Independent Directors" or individually, an "Independent Director"). Each Independent Director is also

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document "independent" from the Fund under the listing standards of the NYSE. The Chairperson of the Audit Committee of the Fund is Joseph J. Kearns. The Board of Directors of the Fund also has a Governance Committee. The Governance Committee identifies individuals qualified to serve as Independent Directors on the Fund's Board and on committees of the Board and recommends such qualified individuals for nomination by the Fund's Independent Directors as candidates for election as Independent Directors, advises the Fund's Board with respect to Board composition, procedures and committees, develops and recommends to the Fund's Board a set of corporate governance principles applicable to the Fund, monitors and makes recommendations on corporate governance matters and policies and procedures of the Fund's Board of Directors and any Board committees and oversees periodic evaluations of the Fund's Board and its committees. The members of the Governance Committee of the Fund are Kathleen A. Dennis, Michael E. Nugent and Fergus Reid, each of whom is an Independent Director. In addition, Michael E. Nugent (as Chair of the Morgan Stanley Funds) periodically may attend other operating committee meetings. The Chairperson of the Governance Committee is Fergus Reid. The Fund does not have a separate nominating committee. While the Fund's Governance Committee recommends qualified candidates for nominations as Independent Directors, the Board of Directors of the Fund believes that the task of nominating prospective Independent Directors is important enough to require the participation of all current Independent Directors, rather than a separate committee consisting of only certain Independent Directors. Accordingly, all the Independent Directors participate in the selection and nomination of candidates for election as Independent Directors for the Fund. Persons recommended by the Fund's Governance Committee as candidates for nomination as Independent Directors shall possess such experience, qualifications, attributes, skills and diversity so as to enhance the Board's ability to manage and direct the affairs and business of the Fund, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation or any listing requirements of the NYSE. While the Independent Directors of the Fund expect to be able to continue to identify from their own resources an ample number of qualified candidates for the Fund's Board as they deem appropriate, they will consider nominations from shareholders to the Board. Nominations from shareholders should be in writing and sent to the Independent Directors as described below under the caption "Shareholder Communications." The Board formed the Compliance and Insurance Committee to address insurance coverage and oversee the compliance function for the Fund and the Board. The Compliance and Insurance Committee consists of Frank L. Bowman, Nancy C. Everett and Manuel H. Johnson, each of whom is an Independent Director. The Chairperson of the Compliance and Insurance Committee is Frank L. Bowman. The Investment Committee oversees the portfolio investment process for and reviews the performance of the Fund. The Investment Committee also recommends to the Board to approve or renew the Fund's Investment Advisory, Sub-Advisory and Administration Agreements. The members of the Investment Committee are Frank L. Bowman, Kathleen A. Dennis, Nancy C. Everett, Jakki L. Haussler, Manuel H. Johnson, Joseph J. Kearns, Michael F. Klein, Michael E. Nugent, W. Allen Reed and Fergus Reid. The Chairperson of the Investment Committee is Manuel H. Johnson. The Investment Committee has three Sub-Committees, each with its own Chairperson. Each Sub-Committee focuses on the funds' primary areas of investment, namely equities, fixed income and alternatives. Within the Fund Complex, the Sub-Committees and their members are as follows: (1) EquityW. Allen Reed (Chairperson), Frank L. Bowman, Nancy C. Everett and Michael E. Nugent. (2) Fixed IncomeMichael F. Klein (Chairperson) and Fergus Reid. (3) Liquidity and AlternativesKathleen A. Dennis (Chairperson), Jakki L. Haussler and Joseph J. Kearns. In addition, Manuel H. Johnson (as Chairperson of the Investment Committee) periodically attends Sub-Committee meetings, filling in where necessary.

The Board formed the Closed-End Fund Committee to consider a range of issues unique to closed-end funds. The Closed-End Fund Committee consists of Michael E. Nugent, W. Allen Reed and Fergus Reid, each of whom is an Independent Director. The Chairperson of the Closed-End Fund Committee is Michael E. Nugent.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the Fund's fiscal year ended December 31, 2015, the Board of Directors held the following meetings:

Board of Directors 6

Committee/Sub-Committee: Number of meetings: Audit Committee 4 Governance Committee 4 Compliance and Insurance Committee 4 Investment Committee 5 Equity Sub-Committee 5 Fixed Income Sub-Committee 5 Liquidity and Alternatives Sub- Committee 5 Closed-End Fund Committee 4

Experience, Qualifications and Attributes. The Board has concluded, based on each Director's experience, qualifications and attributes that each Board member should serve as a Director. Following is a brief summary of the information that led to and/or supports this conclusion.

Mr. Bowman has experience in a variety of business and financial matters through his prior service as a Director or Trustee for various other funds in the Fund Complex, where he serves as Chairperson of the Compliance and Insurance Committee (and formerly served as Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee) and as a Director of BP p.l.c. and Naval and Nuclear Technologies LLP. Mr. Bowman also serves as a Director Emeritus for the Armed Services YMCA of the USA, Director of the U.S. Naval Submarine League and as Chairman of the charity J Street Cup Golf. Mr. Bowman serves as a Trustee of the Fairhaven United Methodist Church. Mr. Bowman is also a member of the National Security Advisory Council of the Center for U.S. Global Engagement and a member of the CNA Military Advisory Board. Mr. Bowman retired as an Admiral in the U.S. Navy after serving over 38 years on active duty including eight years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004). Additionally, Mr. Bowman served as the U.S. Navy's Chief of Naval Personnel (1994-1996) where he was responsible for the planning and programming of all manpower, personnel, training and education resources for the U.S. Navy and on the Joint Staff as Director of Political Military Affairs (1992-1994). In addition, Mr. Bowman served as President and Chief Executive Officer of the Nuclear Energy Institute. Mr. Bowman has received such distinctions as a knighthood as Honorary Knight Commander of the Most Excellent Order of the British Empire and the Officier de l'Orde National du Mérite from the French Government and was elected to the National Academy of Engineering (2009). He is President of the consulting firm Strategic Decisions, LLC.

Ms. Dennis has over 25 years of business experience in the financial services industry and related fields including serving as a Director or Trustee of various other funds in the Fund Complex, where she serves as Chairperson of the Liquidity and Alternatives Sub- Committee of the Investment Committee. Ms. Dennis possesses a strong understanding of the regulatory framework under which investment companies must operate based on her years of service to this Board and her position as Senior Managing Director of Victory Capital Management.

Ms. Everett has over 35 years of experience in the financial services industry, including roles with both registered investment companies and registered investment advisers. By serving on the boards of other registered funds, such as GMAM Absolute Return Strategies Fund, LLC and Emerging Markets Growth Fund, Inc., Ms. Everett has acquired significant experience with financial, accounting, investment and regulatory matters. Ms. Everett is also a Chartered Financial Analyst.

With more than 30 years of experience in the financial services industry, including her years of entrepreneurial and managerial experience in the development and growth of Opus Capital Group, Ms. Haussler brings a valuable perspective to the Fund's Board. Through her role at Opus Capital and her service as a director of several venture capital funds and other boards, Ms. Haussler has gained valuable experience dealing with accounting principles and evaluating financial results of large corporations. She is a certified public accountant (inactive) and a licensed attorney in the State of Ohio (inactive).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In addition to his tenure as a Director or Trustee of various other funds in the Fund Complex, where he formerly served as Chairperson of the Audit Committee, Dr. Johnson has also served as an officer or a board member of numerous companies for over 20 years. These positions included Co-Chairman and a founder of the Group of Seven Council, Director of NVR, Inc., Director of Evergreen Energy and Director of Greenwich Capital

Holdings. He also has served as Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. In addition, Dr. Johnson also served as Chairman of the Financial Accounting Foundation, which oversees the Financial Accounting Standards Board, for seven years.

Mr. Kearns gained extensive experience regarding accounting through his experience on the Audit Committees of the boards of other funds in the Funds Complex, including serving as either Chairperson or Deputy Chairperson of the Audit Committee for nearly 20 years, and through his position as Chief Financial Officer of the J. Paul Getty Trust. He also has experience in financial, accounting, investment and regulatory matters through his position as President and founder of Kearns & Associates LLC, a financial consulting company. Mr. Kearns also serves as a Director of Electro Rent Corporation and previously served as Director of The Ford Family Foundation. The Board has determined that Mr. Kearns is an "audit committee financial expert" as defined by the SEC.

Through his prior positions as a Managing Director of Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and as President and a Trustee of the Morgan Stanley Institutional Funds, Mr. Klein has experience in the management and operation of registered investment companies, enabling him to provide management input and investment guidance to the Board. Mr. Klein also has extensive experience in the investment management industry based on his current positions as Managing Director and Co-Chief Executive Officer of Aetos Capital, LLC, Co-President of Aetos Alternatives Management, LLC and as a Director of certain investment funds managed or sponsored by Aetos Capital, LLC. In addition, he also has experience as a member of the board of other funds in the Fund Complex.

Mr. Nugent has extensive experience with financial, accounting, investment and regulatory matters through his over 20 years of service on the boards of various funds in the Fund Complex, including time as the Chairperson of the Insurance Committee, Chairperson of the Closed-End Fund Committee and Chair of the Morgan Stanley Funds. Mr. Nugent also has experience as a former General Partner in Triumph Capital, L.P.

Mr. Reed has experience on investment company boards and is experienced with financial, accounting, investment and regulatory matters through his prior service as a Director of iShares, Inc. and his service as Trustee or Director of other funds in the Fund Complex. Mr. Reed also gained substantial experience in the financial services industry through his position as a Director of Legg Mason, Inc. and prior position as President and CEO of General Motors Asset Management.

Mr. Reid has served on a number of mutual fund boards, including as a Trustee or Director of certain investment companies in the JP Morgan Funds complex and as a Trustee or Director of other funds in the Fund Complex. Therefore, Mr. Reid is experienced with financial, accounting, investment and regulatory matters, enabling him to provide management input and investment guidance to the Board.

The Directors' principal occupations and other relevant professional experience during the past five years or more are shown in the above tables.

Advantages of Having the Same Individuals as Directors for the Morgan Stanley Funds

The Independent Directors and the Fund's management believe that having the same Independent Directors for each of the Morgan Stanley Funds avoids the duplication of effort that would arise from having different groups of individuals serving as Independent Directors for each of the funds or even of sub-groups of funds. They believe that having the same individuals serve as Independent Directors of all the Morgan Stanley Funds tends to increase their knowledge and expertise regarding matters which affect the Fund Complex generally and enhances their ability to negotiate on behalf of each fund with the fund's service providers. This arrangement also precludes the possibility of separate groups of Independent Directors arriving at conflicting decisions regarding operations and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document management of the funds and avoids the cost and confusion that would likely ensue. Finally, having the same Independent Directors serve on all fund boards enhances the ability of each fund to obtain, at modest cost to each separate fund, the services of Independent Directors of the caliber, experience and business acumen of the individuals who serve as Independent Directors of the Morgan Stanley Funds.

Shareholder Communications

Shareholders may send communications to the Fund's Board of Directors. Shareholders should send communications intended for the Fund's Board by addressing the communications directly to the Board (or individual Board members) and/or otherwise clearly indicating in the salutation that the communication is for the Board (or individual Board members) and by sending the communication to either the Fund's office or directly to such Board member(s) at the address specified for each Director previously noted. Other shareholder communications received by the Fund not directly addressed and sent to the Board will be reviewed and generally responded to by management, and will be forwarded to the Board only at management's discretion based on the matters contained therein.

Compensation

Effective January 1, 2016, each Director (except for the Chairperson of the Boards) receives an annual retainer fee of $250,000 ($240,000 prior to January 1, 2016) for serving as a Director of the Morgan Stanley Funds.

The Chairperson of the Audit Committee receives an additional annual retainer fee of $80,000, the Investment Committee Chairperson receives an additional annual retainer fee of $65,000 and the Chairperson of the Compliance and Insurance Committee receives an additional annual retainer fee of $50,000. Other Committee and Sub-Committee Chairpersons (except for the Chairperson of the Closed- End Fund Committee) receive an additional annual retainer fee of $35,000. The aggregate compensation paid to each Director is paid by the Morgan Stanley Funds, and is allocated on a pro rata basis among each of the operational funds/portfolios of the Morgan Stanley Funds based on the relative net assets of each of the funds/portfolios. Michael E. Nugent receives a total annual retainer fee of $500,000 ($480,000 prior to January 1, 2016) for his services as Chair of the Boards of the Morgan Stanley Funds and for administrative services provided to each Board.

The Fund also reimburses such Directors for travel and other out-of-pocket expenses incurred by them in connection with attending such meetings. Directors of the Fund who are employed by the Adviser receive no compensation or expense reimbursement from the Fund for their services as a 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 of Directors throughout the year. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley Funds (or portfolios thereof) that are offered as investment options under the DC Plan. At the Director's election, distributions are either in one lump sum payment, or in the form of equal annual installments 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.

Prior to April 1, 2004, the Fund maintained a similar Deferred Compensation Plan (the "Prior DC Plan"), which also allowed each Independent Director to defer payment of all, or a portion, of the fees he or she received for serving on the Board of Directors throughout the year. Generally, the DC Plan amends and supersedes the Prior DC Plan and all amounts payable under the Prior DC Plan are now subject to the terms of the DC Plan (except for amounts paid during the calendar year 2004, which remain subject to the terms of the Prior DC Plan).

The following table shows aggregate compensation payable to each of the Fund's Directors from the Fund for the fiscal year ended December 31, 2015 and the aggregate compensation payable to each of the Fund's Directors by the Fund Complex (which includes all of the Morgan Stanley Funds) for the calendar year ended December 31, 2015.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Compensation(1) Total Compensation From Name of Independent Aggregate Compensation Fund and Fund Complex Director: From the Fund(2) Paid to Directors(3) Frank L. Bowman $ 33,045 $ 271,500 Kathleen A. Dennis 33,045 271,500 Nancy C. Everett 28,949 240,000 Jakki L. Haussler 28,949 240,000 Manuel H. Johnson 36,333 303,000 Joseph J. Kearns(3) 38,177 354,500 Michael F. Klein(2)(3) 33,068 271,500 Michael E. Nugent 57,572 480,000 W. Allen Reed(2)(3) 33,065 271,500 Fergus Reid(3) 32,546 303,500

(1) Includes all amounts paid for serving as director/trustee of the funds, as well as serving as Chairperson of the Boards or a Chairperson of a Committee or Sub-Committee.

(2) The amounts shown in this column represent the aggregate compensation before deferral with respect to the Fund's fiscal year. The following Directors deferred compensation from the Fund during the fiscal year ended December 31, 2015: Mr. Klein, $33,068 and Mr. Reed, $33,065.

(3) The amounts shown in this column represent the aggregate compensation paid by all of the funds in the Fund Complex as of December 31, 2015 before deferral by the Directors under the DC Plan. As of December 31, 2015, the value (including interest) of the deferral accounts across the Fund Complex for Messrs. Kearns, Klein, Reed and Reid pursuant to the deferred compensation plan was $645,006, $537,397, $1,890,315 and $868,250, respectively. Because the funds in the Fund Complex have different fiscal year ends, the amounts shown in this column are presented on a calendar year basis.

Prior to December 31, 2003, 49 of the Morgan Stanley Funds (the "Adopting Funds") had adopted a retirement program under which an Independent Director who retired after serving for at least five years as an Independent Director of any such fund (an "Eligible Director") would have been entitled to retirement payments, based on factors such as length of service, upon reaching the eligible retirement age. On December 31, 2003, the amount of accrued retirement benefits for each Eligible Director was frozen, and will be payable, together with a return of 8% per annum, at or following each such Eligible Director's retirement as shown in the table below.

The following table illustrates the retirement benefits accrued to the Fund's Independent Directors by the Adopting Funds for the fiscal year ended December 31, 2015, and the estimated retirement benefits for the Independent Directors from the Adopting Funds for each calendar year following retirement. Only the Directors noted below participated in the retirement program.

Retirement Benefits Accrued as Estimated Annual Benefits Fund Expenses Upon Retirement(1) Name of Independent By By All From From All Director: the Fund* Adopting Funds the Fund* Adopting Funds Manuel H. Johnson $ 995 $ 44,686 $ 1,420 $ 64,338 Michael E. Nugent 996 45,156 1,269 57,539

* Growth Portfolio

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) Total compensation accrued under the retirement plan, together with a return of 8% per annum, will be paid annually commencing upon retirement and continuing for the remainder of the Director's life.

Code of Ethics

Pursuant to Rule 17j-1 under the 1940 Act, the Board of Directors has adopted a Code of Ethics for the Fund and approved a Code of Ethics adopted by the Adviser and the Distributor (collectively the "Codes"). The Codes are intended to ensure that the interests of shareholders and other clients are placed ahead of any personal interest, that no undue personal benefit is obtained from the person's employment activities and that actual and potential conflicts of interest are avoided.

The Codes are designed to detect and prevent improper personal trading. The Codes permit personnel subject to the Codes to invest in securities, including securities that may be purchased, sold or held by the Fund, subject to a number of restrictions and controls, including prohibitions against purchases of securities in an initial public offering and a pre-clearance requirement with respect to personal securities transactions.

INVESTMENT ADVISORY AND OTHER SERVICES

Adviser

The Adviser is a wholly-owned subsidiary of Morgan Stanley (NYSE: "MS"), a preeminent global financial services firm engaged in securities trading and brokerage activities, as well as providing investment banking, research and analysis, financing and financial advisory services. The principal offices of Morgan Stanley are located at 1585 Broadway, New York, NY 10036, and the principal offices of the Adviser are located at 522 Fifth Avenue, New York, NY 10036. As of September 30, 2016, the Adviser, together with its affiliated asset management companies, had approximately $417.1 billion in assets under management or supervision. The Adviser provides investment advice and portfolio management services pursuant to an Investment Advisory Agreement and, subject to the supervision of the Fund's Board of Directors, makes the Portfolio's day-to-day investment decisions, arranges for the execution of portfolio transactions and generally manages the Portfolio's investments. Pursuant to the Investment Advisory Agreement, the Adviser is entitled to receive from each class of shares of the Portfolio an annual management fee, payable quarterly, equal to the percentage of average daily net assets set forth in the below table reflecting the contractual advisory fee and the maximum expense ratios for the Portfolio. The Adviser has agreed to a reduction in the fees payable to it and to reimburse the Portfolio, if necessary, if such fees would cause the total annual operating expenses of the Portfolio to exceed the percentage of average daily

50 net assets set forth in the below table reflecting the contractual advisory fee and the maximum expense ratios for the Portfolio. In determining the actual amount of fee waiver and/or expense reimbursement for the Portfolio, if any, the Adviser excludes from total annual operating expenses acquired fund fees and expenses (as applicable), certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation). The fee waivers and/or expense reimbursements for the Portfolio will continue for at least one year or until such time as the Fund's Board of Directors acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate.

The following table reflects the contractual advisory fee and the maximum expense ratios for the Portfolio.

Expense Expense Expense Expense Cap Cap Cap Cap Contractual Rate of Advisory Fees Class I Class A Class C Class IS 0.90% of the portion of the daily net assets not exceeding $1 billion; 0.85% of the 1.20 % 1.55 % 2.30 % 1.10 % portion of the daily net assets exceeding $1 billion.

Proxy Voting Policy and Proxy Voting Record The Board of Directors believes that the voting of proxies on securities held by the Fund is an important element of the overall investment process. As such, the Directors have delegated the responsibility to vote such proxies to MSIM.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A copy of MSIM's Proxy Voting Policy ("Proxy Policy") is attached hereto as Appendix A. In addition, a copy of the Proxy Policy, as well as the Fund's most recent proxy voting record for the 12-month period ended June 30, as filed with the SEC, are available without charge on our web site at www.morganstanley.com/im. The Fund's proxy voting record is also available without charge on the SEC's web site at http://www.sec.gov.

Principal Underwriter Morgan Stanley Distribution, Inc. (the "Distributor"), an indirect wholly-owned subsidiary of Morgan Stanley with principal offices at 522 Fifth Avenue, New York, NY 10036, acts as the exclusive principal underwriter with respect to the continuous offering of the Fund's shares pursuant to the Distribution Agreement. The Distribution Agreement continues in effect so long as such continuance is specifically approved at least annually in conformity with the requirements of the 1940 Act. The Distribution Agreement provides that the Fund will bear the costs of the registration of its shares with the SEC and various states and the printing of its prospectuses, statements of additional information and reports to shareholders.

Fund Administration The Adviser also provides administrative services to the Fund pursuant to an Administration Agreement. The services provided under the Administration Agreement are subject to the supervision of the officers and the Board of Directors of the Fund and include day-to- day administration of matters related to the corporate existence of the Fund, maintenance of records, preparation of reports, supervision of the Fund's arrangements with its custodian, and assistance in the preparation of the Fund's registration statement under federal laws. For its services under the Administration Agreement, the Fund pays the Adviser a monthly fee which on an annual basis equals 0.08% of the average daily net assets of the Portfolio. The Adviser may compensate other service providers for performing shareholder servicing and administrative services.

Sub-Administrator. Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the administrative fee the Administrator receives from the Fund. The Administrator supervises and monitors the administrative and accounting services provided by State Street. Their services are also subject to the supervision of the officers and Board of Directors of the Fund.

Custodian

State Street, located at One Lincoln Street, Boston, MA 02111-2101, acts as the Fund's custodian. State Street is not an affiliate of the Adviser or the Distributor. In maintaining custody of foreign assets held outside the United States, State Street has contracted with various foreign banks and depositaries in accordance with regulations of the SEC for the purpose of providing custodial services for such assets.

In the selection of foreign sub-custodians, the Directors or their delegates consider a number of factors, including, but not limited to, the reliability and financial stability of the institution, the ability of the institution to provide efficiently the custodial services required for the Fund, and the reputation of the institution in the particular country or region.

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc., 2000 Crown Colony Drive, Quincy, MA 02169-0953, provides dividend disbursing and transfer agency services for the Fund.

Portfolio Managers

Other Accounts Managed by the Portfolio Managers

Because the portfolio managers may manage assets for other investment companies, pooled investment vehicles and/or other accounts (including institutional clients, pension plans and certain high net worth individuals), there may be an incentive to favor one client over another resulting in conflicts of interest. For instance, the Adviser may receive fees from certain accounts that are higher than the fee it

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document receives from the Fund, or it may receive a performance-based fee on certain accounts. In those instances, the portfolio managers may have an incentive to favor the higher and/or performance-based fee accounts over the Fund. In addition, a conflict of interest could exist to the extent the Adviser has proprietary investments in certain accounts, where portfolio managers have personal investments in certain accounts or when certain accounts are investment options in the Adviser's employee benefits and/or deferred compensation plans. The portfolio manager may have an incentive to favor these accounts over others. If the Adviser manages accounts that engage in short sales of securities of the type in which the Fund invests, the Adviser could be seen as harming the performance of the Fund for the benefit of the accounts engaging in short sales if the short sales cause the market value of the securities to fall. The Adviser has adopted trade allocation and other policies and procedures that it believes are reasonably designed to address these and other conflicts of interest.

Portfolio Manager Compensation Structure

Morgan Stanley's compensation structure is based on a total reward system of base salary and incentive compensation, which is paid either in the form of cash bonus, or for employees meeting the specified deferred compensation eligibility threshold, partially as a cash bonus and partially as mandatory deferred compensation. Deferred compensation may be granted as a deferred cash award under the Investment Management Alignment Plan ("IMAP"), as an equity-based award or as a deferred incentive compensation award under another Firm compensation plan. The portion of incentive compensation granted in the form of a deferred compensation award and the terms of such awards are determined annually by the Compensation, Management Development and Succession Committee ("CMDS") of the Morgan Stanley Board of Directors.

Base salary compensation. Generally, portfolio managers receive base salary compensation based on the level of their position with the Adviser.

Incentive compensation. In addition to base compensation, portfolio managers may receive discretionary year-end compensation.

Incentive compensation may include:

• Cash Bonus.

• Deferred Compensation:

• A mandatory program that defers a portion of incentive compensation into restricted stock units or other awards based on Morgan Stanley common stock or other plans that are subject to vesting and other conditions.

• IMAP is a cash-based deferred compensation plan designed to increase the alignment of participants' interests with the interests of the Adviser's clients. For eligible employees, a portion of their deferred compensation is mandatorily deferred into IMAP on an annual basis. Deferred incentive awards granted under IMAP are notionally invested in referenced funds advised by the Adviser or its affiliates. Portfolio managers must notionally invest at least 25% of their IMAP award in a combination of the designated funds managed by the PM that are included in the IMAP notional investment menu.

• Deferred compensation awards are typically subject to vesting over a multi-year period and are cancellable in the event the employee terminates employment prior to the vesting date (other than for reasons of death, disability, retirement and involuntary termination not involving a cancellation event). Prior to distribution, deferred compensation awards are also subject to cancellation and clawback in the event the employee engages in certain proscribed behavior, including, without limitation, if the employee engages in "cause" (i.e., any act or omission that constitutes a breach of obligation to the Firm, including failure to comply with internal compliance, ethics or risk

52 management standards and failure or refusal to perform duties satisfactorily, including supervisory and management duties) and if the employee takes any action, or fails to take any action (including with respect to direct supervisory responsibilities) where such action or omission: causes a restatement of the Firm's consolidated financial results; constitutes a violation of the Firm's Global Risk Management Principles, Policies and Standards; or causes a loss of revenue associated with a position on which the employee was paid and the employee operated outside of internal control policies.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Eligibility for, and the amount of any, incentive compensation is subject to a multi-dimensional process. Specifically, consideration is given to one or more of the following factors, which can vary by portfolio management team and circumstances:

• Revenue and profitability of the business and/or each fund/accounts managed by the portfolio manager

• Revenue and profitability of the Firm

• Return on equity and risk factors of both the business units and Morgan Stanley

• Assets managed by the portfolio manager

• External market conditions

• New business development and business sustainability

• Contribution to client objectives

• Team, product and/or Investment Management performance

• The pre-tax investment performance of the funds/accounts managed by the portfolio manager (which may, in certain cases, be measured against the applicable benchmark(s) and/or peer group(s) over one-, three- and five-year periods)

• Individual contribution and performance

The Firm has a Global Incentive Compensation Discretion Policy, approved by the CMDS. This policy sets forth standards for the appropriate exercise of managerial discretion in determining the level of incentive compensation to be awarded to an employee. This policy specifically provides that all managers must consider whether an employee managed risk appropriately and effectively managed and supervised the risk control practices of his or her employee reports during the performance year. For the Firm's material risk takers, managers are required to document their decision making process for discretionary compensation. Managers are trained on these requirements annually and are required to certify compliance with the applicable requirements. The Policy is reviewed at least annually, and updated as needed.

Other Accounts Managed by Portfolio Managers as of September 30, 2016 (unless otherwise indicated)

Other Registered Investment Other Pooled Companies Investment Vehicles Other Accounts Portfolio and Portfolio Number of Total Assets Number of Total Assets Number of Total Assets Managers Accounts in the Accounts Accounts in the Accounts Accounts in the Accounts Emerging Markets Breakout Nations Ruchir Sharma 6 $2.5 billion 7 $5.1 billion 18 (1) $6.2 billion(1) $724.8 $567.5 Tim Drinkall 2 $683.3 million 3 million 2 (2) million(2) $567.5 Jitania Kandhari 0 $0 1 $5.0 million 2 (2) million(2)

(1) Of these other accounts, six accounts with a total of approximately $3.1 billion in assets had performance-based fees.

(2) Of these other accounts, two accounts with a total of approximately $567.5 million in assets had performance-based fees.

Securities Ownership of Portfolio Managers

As of the date of this SAI, the portfolio managers do not own any securities of the Portfolio.

Independent Registered Public Accounting Firm

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Ernst & Young LLP, located at 200 Clarendon Street, Boston, MA 02116-5021, serves as the Fund's independent registered public accounting firm and audits the annual financial statements of the Portfolio.

Fund Counsel Dechert LLP, located at 1095 Avenue of the Americas, New York, NY 10036-6797, acts as the Fund's legal counsel.

DISTRIBUTION AND SHAREHOLDER SERVICES PLANS

Morgan Stanley Distribution, Inc., an indirect wholly owned subsidiary of Morgan Stanley, serves as the Fund's exclusive distributor of Portfolio shares pursuant to a Distribution Agreement. In addition, to promote the sale of Fund shares, the Fund has adopted a Shareholder Services Plan with respect to the Class A shares of the Portfolio and Distribution and Shareholder Services Plans with respect to Class C shares of the Portfolio under Rule 12b-1 of the 1940 Act (each, a "Plan"). Under the Plans, the Portfolio pays the Distributor a shareholder services fee of up to 0.25% of the Class A shares' average daily net assets on an annualized basis. The Portfolio pays the Distributor a shareholder services fee of up to 0.25% of the Class C shares' average daily net assets on an annualized basis and a distribution fee of up to 0.75% of the Class C shares' average daily net assets on an annualized basis. Morgan Stanley Distribution, Inc. may retain any portion of the fees it does not expend in meeting its obligations to the Fund. The Distributor may compensate Financial Intermediaries, plan fiduciaries and administrators, which may or may not be affiliated with Morgan Stanley, for providing distribution-related and/or shareholder support services, including account maintenance services, to shareholders (including, where applicable, underlying beneficial owners) of the Fund. The Distributor and the Adviser also may compensate third-parties out of their own assets. The Plans for the Class A and Class C shares were approved by the Fund's Board of Directors, including the Independent Directors, none of whom has a direct or indirect financial interest in the operation of a Plan or in any agreements related thereto. With respect to sales of Class C shares of the Fund, a commission or transaction fee generally will be compensated by the Distributor at the time of purchase directly out of the Distributor's assets (and not out of the Fund's assets) to Financial Intermediaries who initiate and are responsible for such purchases computed based on a percentage of the dollar value of such shares sold of up to 1.00% on Class C shares. Proceeds from any CDSC and any distribution fees on Class C shares are paid to the Distributor and are used by the Distributor to defray its distribution related expenses in connection with the sale of the Fund's shares, such as the payment to Financial Intermediaries for selling such shares. With respect to Class C shares, the Financial Intermediaries generally receive from the Distributor ongoing distribution fees of up to 1.00% of the average daily net assets of the Fund's Class C shares annually commencing in the second year after purchase.

Revenue Sharing

This section does not apply to Class IS shares. The Adviser and/or the Distributor may pay compensation, out of their own funds and not as an expense of the Portfolio, to certain Financial Intermediaries, including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Portfolio and/or shareholder servicing. For example, the Adviser or the Distributor may pay additional compensation to a Financial Intermediary for, among other things, promoting the sale and distribution of Portfolio shares, providing access to various programs, mutual fund platforms or preferred or recommended mutual fund lists that may be offered by a Financial Intermediary, granting the Distributor access to a Financial Intermediary's financial advisors and consultants, providing assistance in the ongoing education and training of a Financial Intermediary's financial personnel, furnishing marketing support, maintaining share balances and/or for sub-accounting, recordkeeping, administrative, shareholder, or transaction processing services. Such payments are in addition to any shareholder servicing fees and/or transfer agency fees that may be payable by the Portfolio. The additional payments may be based on various factors, including level of sales (based on gross or net sales or some specified minimum sales or some other similar criteria related to sales of the Portfolio and/or some or all other Morgan Stanley Funds), amount of assets invested by the Financial Intermediary's customers (which could include current or aged assets of the Portfolio and/or some or all other Morgan Stanley Funds), the Portfolio's advisory fees, some other agreed upon amount or other measures as determined from time to time by the Adviser and/or the Distributor. The amount of these payments may be different for different Financial Intermediaries.

With respect to Morgan Stanley Smith Barney LLC, these payments currently include the following amounts, which are paid in accordance with the applicable compensation structure:

(1) an ongoing annual fee in an amount up to $550,000 in consideration of the Adviser's participation at various Morgan Stanley Smith Barney LLC events, including seminars, conferences and meetings as determined by Morgan Stanley Smith Barney LLC;

(2) an ongoing annual fee in an amount up to $300,000 in consideration of Morgan Stanley Smith Barney LLC providing Adviser with access to distribution analytical data in relation to sales of the Portfolio by Morgan Stanley Smith Barney LLC financial advisors;

(3) on Class A and Class C shares of the Portfolio held in Morgan Stanley Smith Barney LLC brokerage accounts, an ongoing annual fee in an amount equal to 0.16% of the total average daily NAV of such shares for the applicable quarterly period; and

(4) on new referrals after June 30, 2014 of $5 million or more in Class I shares of the Portfolio, Morgan Stanley Smith Barney LLC, under extraordinary circumstances, may receive an agreed upon one-time payment in an amount not to exceed 0.68% of the actual amount invested.

With respect to other Financial Intermediaries, these payments currently include the following amounts, which are paid in accordance with the applicable compensation structure for each Financial Intermediary:

(1) on Class I, Class A and Class C shares of the Portfolio held in brokerage accounts only, a ticket charge of up to $10.00;

(2) on Class I, Class A and Class C shares of the Portfolio held in brokerage and/or advisory program accounts, an ongoing annual fee in an amount up to 0.15% of the total average daily NAV of such shares for the applicable quarterly period; and

(3) an ongoing annual fee in an amount up to 0.25% on sales of Class I, Class A and Class C shares of the Portfolio through brokerage accounts.

The prospect of receiving, or the receipt of, additional compensation as described above by Morgan Stanley Smith Barney LLC or other Financial Intermediaries may provide Morgan Stanley Smith Barney LLC or other Financial Intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Portfolio over other investment options with respect to which Morgan Stanley Smith Barney LLC or other Financial Intermediaries do not receive additional compensation (or receives lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Portfolio or the amount that the Portfolio receives to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Portfolio shares and should review carefully any disclosure provided by Morgan Stanley Smith Barney LLC and other Financial Intermediaries as to their compensation.

Dealer Reallowances

Upon notice to selected broker-dealers, the Distributor may reallow up to the full applicable front-end sales charge during periods specified in such notice. During periods when 90% or more of the sales charge is reallowed, such selected broker-dealers may be deemed to be underwriters as that term is defined in the securities act.

BROKERAGE PRACTICES

Portfolio Transactions The Adviser is responsible for decisions to buy and sell securities for the Portfolio, for broker-dealer selection and for negotiation of commission rates. The Adviser is prohibited from directing brokerage transactions on the basis of the referral of clients or the sale of shares of advised investment companies. Purchases and sales of securities on a stock exchange are effected through brokers who charge a commission for their services. In the OTC market, securities may be traded as agency transactions through broker dealers or traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes profit to the dealer. In underwritten offerings, securities are purchased at a fixed price which includes an amount of

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document compensation to the underwriter, generally referred to as the underwriter's concession or discount. When securities are purchased or sold directly from or to an issuer, no commissions or discounts are paid.

On occasion, the Portfolio may purchase certain money market instruments directly from an issuer without payment of a commission or concession. Money market instruments are generally traded on a "net" basis with

55 dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes a profit to the dealer.

The Fund anticipates that certain of its transactions involving foreign securities will be effected on foreign securities exchanges. There is also generally less government supervision and regulation of foreign securities exchanges and brokers than in the United States.

The Adviser serves as investment adviser to a number of clients, including other investment companies. The Adviser attempts to equitably allocate purchase and sale transactions among the Portfolio and other client accounts. To that end, the Adviser considers various factors, including respective investment objectives, relative size of portfolio holdings of the same or comparable securities, availability of cash for investment, size of investment commitments generally held and the opinions of the persons responsible for managing the Portfolio and other client accounts.

The Adviser selects the brokers or dealers that will execute the purchases and sales of investment securities for the Portfolio. Selection of approved brokers for execution is based on three main criteria: access to liquidity, provision of capital and quality of execution. The Adviser effects transactions with those broker-dealers under the obligation to seek best execution. The Adviser may place portfolio transactions with those brokers and dealers who also furnish research and other services to the Fund and the Adviser. Services provided may include certain research services (as described below), as well as effecting securities transactions and performing functions incidental thereto (such as clearance, settlement and custody).

The Adviser and its affiliated investment advisers have established commission sharing arrangements under a commission management program (the "Commission Management Program" or "CMP"), pursuant to which execution and research costs or a portion of those costs are decoupled in accordance with applicable laws, rules and regulations.

"Approved Equity CMP Partner Brokers" are those executing brokers with which the Adviser or its affiliated investment advisers have agreement(s) to accrue research commission credits for the benefit of clients. Over a certain time period, the research credits are pooled at the Approved Equity CMP Partner Brokers and a third-party vendor (also known as the "CMP Aggregator") who will, under the Adviser's supervision, act as the administrator of certain CMP related activities which may include reconciliation of research credits with brokers, as well as holding research credits in an account for purposes of distribution to applicable research providers at a later time. These research credits are subsequently used to pay for eligible research services.

Under the CMP, the Adviser and its affiliated investment advisers select approved equity brokers (which include the Adviser's affiliates) for execution services and after accumulation of commissions at such brokers, the Adviser and/or its affiliated investment advisers instruct these approved equity brokers to transfer a predetermined percentage of commissions to an aggregator. The Adviser and/or its affiliated investment advisers then instruct the aggregator to utilize these balances to pay for eligible research provided by executing brokers or third-party research providers on the Adviser's and its affiliated investment advisers' Approved Research Provider List. Generally, the Adviser and its affiliated investment advisers will direct the aggregator and/or approved equity broker to record research credits based upon a previously agreed-upon allocation and will periodically instruct the aggregator and/or approved equity broker to direct specified dollar amounts from that pool to pay for eligible research services provided by third-party research providers and/or executing brokers. The research credits are pooled among the Adviser and its affiliated investment advisers and allocated on behalf of both the Adviser and its affiliated investment advisers. Likewise, the research services obtained under the CMP are shared among the Adviser and its affiliated investment advisers.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For those costs not decoupled, but retained by broker-dealers, the Adviser also effects transactions with brokers which directly pay for proprietary research services provided in accordance with Section 28(e) of the 1934 Act. Such transactions include equity transactions effected on an agency basis.

Transactions involving client accounts managed by two or more affiliated investment advisers may be aggregated and executed using the services of broker-dealers that provide third-party benefits/research so long as all client accounts involved in the transaction benefit from one or more of the services offered by such broker-dealer.

The research services received include those of the nature described above and other services which aid the Adviser in fulfilling its investment decision-making responsibilities, including (a) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; and (b) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts. Where a particular item has both research and non-research related uses, the Adviser will make a reasonable allocation of the cost of the item between research and non-research uses and will only pay for the portion of the cost allocated to research uses with client brokerage transactions.

Certain investment professionals and other employees of the Adviser are also officers of affiliated investment advisers and may provide investment advisory services to clients of such affiliated investment advisers. Research services furnished or paid for by brokers through whom the Adviser effects transactions for a particular account may be used by the Adviser or its affiliated investment advisers in servicing their other accounts, and not all such services may be used for the benefit of the client which pays the brokerage commission that results in the receipt of such research services. Commissions paid to brokers providing research services may be higher than those charged by brokers not providing such services.

The Adviser's personnel also provide research and trading support to personnel of certain affiliated investment advisers. Research related costs may be shared by affiliated investment advisers and may benefit the clients of such affiliated investment advisers. Research services that benefit the Adviser may be received in connection with commissions generated by clients of its affiliated investment advisers.

The Adviser and its affiliated investment advisers make a good faith determination of the value of research services in accordance with Section 28(e) of the 1934 Act, UK Financial Conduct Authority and Prudential Regulation Authority Rules and other relevant regulatory requirements.

The Adviser and certain of its affiliates currently serve as an investment adviser to a number of clients, including other investment companies, and may in the future act as investment adviser to others. It is the practice of the Adviser, and its affiliates, to cause purchase and sale transactions (including transactions in certain initial and secondary public offerings) to be allocated among clients whose assets they manage (including the Fund) in such manner they deem equitable. In making such allocations among the Fund and other client accounts, various factors may be considered, including the respective investment objectives, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held and the opinions of the persons responsible for managing the portfolios of the Fund and other client accounts. The Adviser and its affiliates may operate one or more order placement facilities and each facility will implement order allocation in accordance with the procedures described above. From time to time, each facility may transact in a security at the same time as other facilities are trading in that security.

Affiliated Brokers Subject to the overriding objective of obtaining the best execution of orders, the Fund may use broker-dealer affiliates of the Adviser to effect Portfolio brokerage transactions, including transactions in futures contracts and options on futures contracts, under procedures adopted by the Fund's Board of Directors. In order to use such affiliates, the commission rates and other remuneration paid to the affiliates must be fair and reasonable in comparison to those of other broker-dealers for comparable transactions involving similar

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document securities being purchased or sold during a comparable time period. This standard would allow the affiliated broker or dealer to receive no more than the remuneration which would be expected to be received by an unaffiliated broker.

Pursuant to an order issued by the SEC, the Fund is permitted to engage in principal transactions in money market instruments, subject to certain conditions, with Morgan Stanley & Co. LLC, a broker-dealer affiliated with the Fund's Adviser.

Portfolio Turnover

The Portfolio generally does not invest for short-term trading purposes; however, when circumstances warrant, the Portfolio may sell investment securities without regard to the length of time they have been held. Market conditions in a given year could result in a higher or lower portfolio turnover rate than expected and the Portfolio will not consider portfolio turnover rate a limiting factor in making investment decisions consistent with its investment objectives and policies. Higher portfolio turnover (e.g., over 100%) necessarily will cause the Portfolio to pay correspondingly increased brokerage and trading costs. In addition to transaction costs, higher portfolio turnover may result in the realization of capital gains. As discussed under "Taxes," to the extent net short-term capital gains are realized, any distributions resulting from such gains are considered ordinary income for federal income tax purposes.

GENERAL INFORMATION

Fund History

The Fund was incorporated pursuant to the laws of the State of Maryland on June 16, 1988 under the name Morgan Stanley Institutional Fund, Inc. The Fund filed a registration statement with the SEC registering itself as an open-end management investment company offering diversified and non-diversified series under the 1940 Act and its shares under the 1933 Act, as amended, and commenced operations on November 15, 1988. On December 1, 1998, the Fund changed its name to Morgan Stanley Dean Witter Institutional Fund, Inc. Effective May 1, 2001, the Fund changed its name to Morgan Stanley Institutional Fund, Inc.

Description of Shares and Voting Rights

The Fund's Amended and Restated Articles of Incorporation permit the Directors to issue 78 billion shares of common stock, par value $.001 per share, from an unlimited number of classes or series of shares. The shares of the Portfolio, when issued, are fully paid and nonassessable, and have no preference as to conversion, exchange, dividends, retirement or other features. Portfolio shares have no preemptive rights. The shares of the Fund have non-cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of Directors can elect 100% of the Directors if they choose to do so. Shareholders are entitled to one vote for each full share held (and a fractional vote for each fractional share held), then standing in their name on the books of the Fund. No portfolio of the Fund is subject to the liabilities of any other portfolio of the Fund.

Dividends and Capital Gains Distributions

The Fund's policy is to distribute substantially all of the Portfolio's net investment income, if any. The Fund may also distribute any net realized capital gains in the amount and at the times that will avoid both income (including taxable gains) taxes on it and the imposition of the federal excise tax on income and capital gains (see "Taxes"). However, the Fund may also choose to retain net realized capital gains and pay taxes on such gains. The amounts of any income dividends or capital gains distributions cannot be predicted.

Any dividend or distribution paid shortly after the purchase of shares of the Portfolio by an investor may have the effect of reducing the per share NAV of the Portfolio by the per share amount of the dividend or distribution. Furthermore, such dividends or distributions, although in effect a return of capital, are subject to income taxes for shareholders subject to tax as set forth herein and in the applicable Prospectus.

As set forth in the Prospectus, unless the shareholder elects otherwise in writing, all dividends and capital gains distributions for a class of shares are automatically reinvested in additional shares of the same class of the Portfolio at NAV (as of the business day following the record date). This automatic reinvestment of dividends and distributions will remain in effect until the shareholder notifies the Fund by telephone or in writing that either the Income Option (income dividends in cash and capital gain distributions reinvested in shares at

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document NAV) or the Cash Option (both income dividends and capital gains distributions in cash) has been elected. It may take up to three business days to effect this change. An account statement is sent to shareholders whenever a dividend or distribution is paid.

TAXES

The following is only a summary of certain additional federal income tax considerations generally affecting the Fund, Portfolio and its shareholders. No attempt is made to present a detailed explanation of the federal, state or local tax treatment of the Fund, Portfolio or shareholders, and the discussion here and in the Prospectus is not intended to be a substitute for careful tax planning.

The following general discussion of certain federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this SAI. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.

The Portfolio is generally treated as a separate corporation for federal income tax purposes. Thus, the provisions of the Code generally will be applied to the Portfolio separately, rather than to the Fund as a whole.

Regulated Investment Company Qualification

The Portfolio intends to qualify and elect to be treated for each taxable year as a RIC under Subchapter M of the Code. In order to so qualify, the Portfolio must, among other things, (i) derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and other income derived with respect to its business of investing in such stock, securities or currencies, including, generally, certain gains from options, futures and forward contracts; and (ii) diversify its holdings so that, at the end of each fiscal quarter of the Portfolio's taxable year, (a) at least 50% of the market value of the Portfolio's total assets is represented by cash and cash items, U.S. government securities, securities of other RICs, and other securities, with such other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of the Portfolio's total assets or 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of its total assets are invested in the securities (other than U.S. government securities or securities of other RICs) of any one issuer or two or more issuers which the Portfolio controls and which are engaged in the same, similar, or related trades or businesses. For

58 purposes of the 90% gross income requirement described above, foreign currency gains will generally be treated as qualifying income under current federal income tax law. However, the Code expressly provides the U.S. Treasury with authority to issue regulations that would exclude foreign currency gains from qualifying income if such gains are not directly related to a RIC's business of investing in stock or securities (or options or futures with respect to stocks or securities). While to date the U.S. Treasury has not exercised this regulatory authority, there can be no assurance that it will not issue regulations in the future (possibly with retroactive application) that would treat some or all of the Portfolio's foreign currency gains as non-qualifying income.

For purposes of the 90% test described above, dividends received by the Portfolio will be treated as qualifying income to the extent they are attributable to the issuer's current and accumulated earnings and profits. Distributions in excess of the distributing issuer's current and accumulated earnings and profits will first reduce the Portfolio's basis in the stock as a return of capital and will not qualify as gross income. Distributions in excess of the Portfolio's basis in the stock will qualify for the 90% test discussed above as the distribution will be treated as gain from the sale of stock. This gain will be long-term capital gain if the Portfolio held the stock for more than a year.

For purposes of the diversification requirement described above, the Portfolio will not be treated as in violation of such requirement as a result of a discrepancy between the value of its various investments and the diversification percentages described above, unless such discrepancy exists immediately following the acquisition of any security or other property and is wholly or partly the result of such acquisition. Moreover, even in the event of noncompliance with the diversification requirement as of the end of any given quarter, the Portfolio is permitted to cure the violation by eliminating the discrepancy causing such noncompliance within a period of 30 days from the close of the relevant quarter other than its first quarter following its election to be taxed as a RIC.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net income derived from an interest in a "qualified publicly traded partnership," as defined in the Code, will be treated as qualifying income for purposes of the income requirement in clause (i) above. In addition, for the purposes of the diversification requirements in clause (ii) above, the outstanding voting securities of any issuer includes the equity securities of a qualified publicly traded partnership, and no more than 25% of the value of a RIC's total assets may be invested in the securities of one or more qualified publicly traded partnerships. The separate treatment for publicly traded partnerships under the passive loss rules of the Code applies to a RIC holding an interest in a qualified publicly traded partnership, with respect to items attributable to such interest.

The Portfolio may make certain investments indirectly through one or more entities treated as corporations for U.S. federal income tax purposes. Such entities will generally be required to pay U.S. corporate income tax, and possibly other taxes, on their earnings, which ultimately will reduce the Portfolio's return on income derived from such investments.

In addition to the requirements described above, in order to qualify as a RIC, the Portfolio must distribute at least 90% of its investment company taxable income (which generally includes dividends, taxable interest, and the excess of net short-term capital gains over net long-term capital losses less operating expenses) and at least 90% of its net tax-exempt interest income, for each tax year, if any, to its shareholders. If the Portfolio meets all of the RIC requirements, it will not be subject to federal income tax on any of its investment company taxable income or capital gains that it distributes to shareholders.

If the Portfolio fails to qualify as a RIC for any taxable year, all of its net income will be subject to tax at regular corporate rates (whether or not distributed to shareholders), and its distributions (including capital gains distributions) will be taxable as income dividends to its shareholders to the extent of the Portfolio's current and accumulated earnings and profits, and will be eligible for the dividends-received deduction for corporate shareholders and for treatment as qualified dividend income, in the case of individual shareholders.

If the Portfolio fails to satisfy either the income test or asset diversification test described above, in certain cases, however, the Portfolio may be able to avoid losing its status as a RIC by timely providing notice of such failure to the Internal Revenue Service, curing such failure and possibly paying an additional tax or penalty.

General Tax Treatment of Qualifying RICs and Shareholders

The Portfolio intends to distribute substantially all of its net investment income (including, for this purpose, net short-term capital gains) to shareholders. Dividends from the Portfolio's net investment income generally are taxable to shareholders as ordinary income, whether received in cash or in additional shares. Certain income distributions paid by the Portfolio to individual shareholders are taxed at rates equal to those applicable to net long-term capital gains (currently either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts). This tax treatment applies only if certain holding period requirements are satisfied by the shareholder and the dividends are attributable to qualified dividends received by the Portfolio itself. For this

59 purpose, "qualified dividends" means dividends received by the Portfolio from certain U.S. corporations and qualifying foreign corporations, provided that the Portfolio satisfies certain holding period and other requirements in respect of the stock of such corporations. Distributions received from REITs are generally comprised of ordinary income dividends and capital gains dividends, which are generally passed along to shareholders retaining the same character and are subject to tax accordingly, as described above. In the case of securities lending transactions, payments in lieu of dividends are not qualified dividends. Dividends received by the Portfolio from REITs are qualified dividends eligible for this lower tax rate only in limited circumstances. Dividends received by the Portfolio from a passive foreign investment company (discussed below) are generally not eligible to be treated as qualified dividends.

A dividend paid by the Portfolio to a shareholder will not be treated as qualified dividend income of the shareholder if (1) the dividend is received with respect to any share held for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend, (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property or (3) if the recipient elects to have the dividend treated as investment income for purposes of the limitation on deductibility of investment interest.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document You should also be aware that the benefits of the reduced tax rate applicable to long-term capital gains and qualified dividend income may be impacted by the application of the alternative minimum tax to individual shareholders.

Dividends paid to you out of the Portfolio's investment company taxable income that are not attributable to qualified dividends generally will be taxable to you as ordinary income (currently at a maximum federal income tax rate of 39.6% in the case of an individual shareholder and 35% in the case of a corporate shareholder) to the extent of the Portfolio's earnings and profits. Distributions to you of net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, will be taxable to you as long-term capital gain, regardless of how long you have held your Fund shares.

Distributions of net long-term capital gains, if any, are taxable to shareholders as long-term capital gains regardless of how long a shareholder has held the Portfolio's shares and regardless of whether the distribution is received in additional shares or in cash. The maximum individual rate applicable to long-term capital gains is generally either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts.

The Portfolio will decide whether to distribute or to retain all or part of any net capital gains (the excess of net long-term capital gains over net short-term capital losses) in any year for reinvestment. Distributions of net capital gains are taxable to shareholders as a long- term capital gain regardless of how long shareholders have held their shares. The Portfolio will send reports annually to shareholders regarding the federal income tax status of all distributions made for the preceding year. To the extent such amounts include distributions received from a REIT, they may be based on estimates and be subject to change as REITs do not always have the information available by the time these reports are due and can recharacterize certain amounts after the end of the tax year. As a result, the final character and amount of distributions may differ from that initially reported. If any capital gains are retained, the Portfolio will pay federal income tax thereon, and, if the Portfolio makes an election, the shareholders will include such undistributed gains in their income, and will increase their tax basis in Portfolio shares by the difference between the amount of the includable gains and the tax deemed paid by the shareholder in respect of such shares. The shareholder will be able to claim their share of the tax paid by the Portfolio as a refundable credit.

Shareholders generally are taxed on any ordinary dividend or capital gain distributions from the Portfolio in the year they are actually distributed. However, if any such dividends or distributions are declared in October, November or December, to shareholders of record of such month and paid in January, then such amounts will be treated for tax purposes as received by the shareholders on December 31.

After the end of each calendar year, shareholders will be sent information on their dividends and capital gain distributions for tax purposes, including the portion taxable as ordinary income, the portion taxable as long-term capital gains, and the amount of any dividends eligible for the federal dividends received deduction for corporations.

Gains or losses on the sale of securities by the Portfolio held as a capital asset will generally be long-term capital gains or losses if the securities have a tax holding period of more than one year at the time of such sale. Gains or losses on the sale of securities with a tax holding period of one year or less will be short-term capital gains or losses. Special tax rules described below may change the normal treatment of gains and losses recognized by

60 the Portfolio when it makes certain types of investments. Those special tax rules can, among other things, affect the treatment of capital gain or loss as long-term or short-term and may result in ordinary income or loss rather than capital gain or loss. The application of these special rules would therefore also affect the character of distributions made by the Portfolio.

A gain or loss realized by a shareholder on the sale, exchange or redemption of shares of the Portfolio held as a capital asset will be capital gain or loss, and such gain or loss will be long-term if the holding period for the shares exceeds one year and otherwise will be short-term. Any loss realized on a sale, exchange or redemption of shares of the Portfolio will be disallowed to the extent the shares disposed of are replaced with substantially identical shares within the 61-day period beginning 30 days before and ending 30 days after the shares are disposed of. Any loss realized by a shareholder on the disposition of shares held six months or less is treated as a long- term capital loss to the extent of any distributions of net long-term capital gains received by the shareholder with respect to such shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document or any inclusion of undistributed capital gain with respect to such shares. The ability to deduct capital losses may otherwise be limited under the Code.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Portfolio and net gains from redemptions or other taxable dispositions of Portfolio shares) of U.S. individuals, estates and trusts to the extent that such person's "modified adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds certain threshold amounts.

The Portfolio (or its administrative agent) is required to report to the Internal Revenue Service ("IRS") and furnish to Portfolio shareholders the cost basis information for sale transactions of shares purchased on or after January 1, 2012. Shareholders may elect to have one of several cost basis methods applied to their account when calculating the cost basis of shares sold, including average cost, FIFO ("first-in, first-out") or some other specific identification method. Unless you instruct otherwise, the Portfolio will use average cost as its default cost basis method, and will treat sales as first coming from shares purchased prior to January 1, 2012. If average cost is used for the first sale of Portfolio shares covered by these new rules, the shareholder may only use an alternative cost basis method for shares purchased prospectively. Portfolio shareholders should consult with their tax advisors to determine the best cost basis method for their tax situation.

The Portfolio will generally be subject to a nondeductible 4% federal excise tax to the extent it fails to distribute by the end of any calendar year an amount at least equal to the sum of 98% of its ordinary income (taking into account certain deferrals and elections) for that year and 98.2% of its capital gain net income (the excess of short- and long-term capital gains over short- and long-term capital losses, including any available capital loss carryforwards) for the one-year period ending on October 31 of that year, plus certain other amounts. The Portfolio intends to make sufficient distributions or deemed distributions of its ordinary income and capital gain net income, prior to the end of each calendar year to avoid liability for federal excise tax, but can give no assurances that all such liability will be eliminated.

The Fund may be required to withhold and remit to the U.S. Treasury an amount equal to 28% of any dividends, capital gains distributions and redemption proceeds paid to any individual or certain other non-corporate shareholder (i) who has failed to provide a correct taxpayer identification number (generally an individual's social security number or non-individual's employer identification number) on the New Account Application; (ii) who is subject to backup withholding as notified by the IRS; or (iii) who has not certified to the Fund that such shareholder is not subject to backup withholding. This backup withholding is not an additional tax, and any amounts withheld would be sent to the IRS as an advance payment of taxes due on a shareholder's income for such year.

The Fund may make investments in which it recognizes income or gain prior to receiving cash with respect to such investment. For example, under certain tax rules, the Fund may be required to accrue a portion of any discount at which certain securities are purchased as income each year even though the Fund receives no payments in cash on the security during the year. To the extent that the Fund makes such investments, it generally would be required to pay out such income or gain as a distribution in each year to avoid taxation at the Fund level. Such distributions will be made from the available cash of the Fund or by liquidation of portfolio securities if necessary. If a distribution of cash necessitates the liquidation of portfolio securities, the Adviser will select which securities to sell. The Fund may realize a gain or loss from such sales. In the event the Fund realizes net capital gains from such transactions, the Fund and consequently its shareholders may receive a larger capital gain distribution, if any, than they would in the absence of such transactions.

Special Rules for Certain Foreign Currency and Derivatives Transactions

In general, gains from foreign currencies and from foreign currency options, foreign currency futures and forward foreign exchange contracts relating to investments in stock, securities or foreign currencies are currently considered to be qualifying income for purposes of determining whether the Portfolio qualifies as a RIC.

Under Section 988 of the Code, special rules are provided for certain transactions in a foreign currency other than the taxpayer's functional currency (i.e., unless certain special rules apply, currencies other than the U.S. dollar). In general, foreign currency gains or losses from forward contracts, from futures contracts that are not "regulated futures contracts," and from unlisted options will be treated

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document as ordinary income or loss under Section 988 of the Code. Also, certain foreign exchange gains or losses derived with respect to foreign fixed income securities are also subject to Section 988 treatment. In general, therefore, Section 988 gains or losses will increase or decrease the amount of the Portfolio's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Portfolio's net capital gain.

The Portfolio's investment in options, swaps and related transactions, futures contracts and forward contracts, options on futures contracts and stock indices and certain other securities, including transactions involving actual or deemed short sales or foreign exchange gains or losses are subject to many complex and special tax rules. For example, OTC options on debt securities and equity options, including options on stock and on narrow-based stock indices, will be subject to tax under Section 1234 of the Code, generally producing a long-term or short-term capital gain or loss upon exercise, lapse or closing out of the option or sale of the underlying stock or security. By contrast, the Portfolio's treatment of certain other options, futures and forward contracts entered into by the Portfolio is generally governed by Section 1256 of the Code. These "Section 1256" positions generally include listed options on debt securities, options on broad-based stock indices, options on securities indices, options on futures contracts, regulated futures contracts and certain foreign currency contracts and options thereon.

When the Portfolio holds options or futures contracts which substantially diminish its risk of loss with respect to other positions (as might occur in some hedging transactions), this combination of positions could be treated as a "straddle" for tax purposes, resulting in possible deferral of losses, adjustments in the holding periods of Portfolio securities and conversion of short-term capital losses into long-term capital losses. Certain tax elections exist for mixed straddles (i.e., straddles comprised of at least one Section 1256 position and at least one non-Section 1256 position) which may reduce or eliminate the operation of these straddle rules.

A Section 1256 position held by the Portfolio will generally be marked-to-market (i.e., treated as if it were sold for fair market value) on the last business day of the Fund's fiscal year, and all gain or loss associated with fiscal year transactions and mark-to-market positions at fiscal year end (except certain currency gain or loss covered by Section 988 of the Code) will generally be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. The effect of Section 1256 mark-to-market rules may be to accelerate income or to convert what otherwise would have been long-term capital gains into short-term capital gains or short-term capital losses into long-term capital losses within the Portfolio. The acceleration of income on Section 1256 positions may require the Portfolio to accrue taxable income without the corresponding receipt of cash. In order to generate cash to satisfy the distribution requirements of the Code, the Portfolio may be required to dispose of portfolio securities that it otherwise would have continued to hold or to use cash flows from other sources. Any or all of these rules may, therefore, affect the amount, character and timing of income earned and, in turn, distributed to shareholders by the Portfolio.

Special Tax Considerations Relating to Foreign Investments

Gains or losses attributable to foreign currency contracts, or to fluctuations in exchange rates that occur between the time the Portfolio accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Portfolio actually collects such receivables or pays such liabilities are treated as ordinary income or ordinary loss to the Portfolio. Similarly, gains or losses on disposition of debt securities denominated in a foreign currency attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of disposition also are treated as ordinary gain or loss to the Portfolio. These gains or losses increase or decrease the amount of the Portfolio's net investment income available to be distributed to its shareholders as ordinary income.

It is expected that the Portfolio will be subject to foreign withholding taxes with respect to its dividend and interest income from foreign countries, and the Portfolio may be subject to foreign income taxes with respect to other income. So long as more than 50% in value of the Portfolio's total assets at the close of the taxable year consists of stock or securities of foreign corporations, the Portfolio may elect to treat certain foreign income taxes

62 imposed on it for federal income tax purposes as paid directly by its shareholders. The Portfolio will make such an election only if it deems it to be in the best interest of its shareholders and will notify shareholders in writing each year if it makes an election and of the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document amount of foreign income taxes, if any, to be treated as paid by the shareholders. If the Portfolio makes the election, shareholders will be required to include in income their proportionate share of the amount of foreign income taxes treated as imposed on the Portfolio and will be entitled to claim either a credit (subject to the limitations discussed below) or, if they itemize deductions, a deduction, for their shares of the foreign income taxes in computing their federal income tax liability.

Shareholders who choose to utilize a credit (rather than a deduction) for foreign taxes will be subject to a number of complex limitations regarding the availability and utilization of the credit. Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income taxes paid by the Portfolio. Shareholders are urged to consult their tax advisors regarding the application of these rules to their particular circumstances.

The Portfolio may invest in stocks of foreign companies that may be classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. When investing in PFIC securities, the Portfolio intends to mark-to-market these securities under certain provisions of the Code and recognize any unrealized gains as ordinary income at the end of the Portfolio's fiscal and excise tax years. Deductions for losses are allowable only to the extent of any current or previously recognized gains. These gains (reduced by allowable losses) are treated as ordinary income that the Portfolio is required to distribute, even though it has not sold or received dividends from these securities. In addition, if the Portfolio is unable to identify an investment as a PFIC and thus does not make a mark-to-market election, the Portfolio may be subject to U.S. federal income tax and interest on a portion of any "excess distribution" or gain from the disposition of such shares even if such income is distributed as a taxable dividend by the Portfolio to its shareholders.

Taxes and Foreign Shareholders

Taxation of a shareholder who, as to the United States, is a nonresident alien individual, a foreign trust or estate, a foreign corporation or a foreign partnership ("Foreign Shareholder") depends on whether the income from the Portfolio is "effectively connected" with a U.S. trade or business carried on by such shareholder.

Shareholders who are not citizens or residents of the United States and certain foreign entities will generally be subject to withholding of U.S. tax of 30% on distributions made by the Portfolio of investment income and short-term capital gains. Prospective investors are urged to consult their tax advisors regarding the specific tax consequences discussed above and the potential applicability of the U.S. estate tax.

If the income from the Portfolio is effectively connected with a U.S. trade or business carried on by a Foreign Shareholder, then distributions from the Portfolio and any gains realized upon the sale of shares of the Portfolio will be subject to U.S. federal income tax at the rates applicable to U.S. citizens and residents or domestic corporations. In addition, Foreign Shareholders that are corporations may be subject to a branch profit tax.

The Portfolio may be required to withhold federal income tax on distributions that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless the Foreign Shareholder complies with IRS certification requirements.

The Portfolio is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends and (effective January 1, 2019) redemption proceeds and certain capital gain dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive new reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the Portfolio to enable the Portfolio to determine whether withholding is required.

The tax consequences to a Foreign Shareholder entitled to claim the benefits of an applicable tax treaty may differ from those described here. Furthermore, Foreign Shareholders are strongly urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in the Portfolio, including the possible applicability of the U.S. estate tax.

State and Local Tax Considerations

Rules of state and local taxation of dividend and capital gains from regulated investment companies often differ from the rules for federal income taxation described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other state and local tax rules regarding an investment in the Fund.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES As of December 1, 2016, no person was known by the Portfolio to own beneficially or of record 5% or more of the outstanding Class I, Class A, Class C or Class IS shares of the Portfolio.

PERFORMANCE INFORMATION The Portfolio is newly organized. As a result, the Portfolio has no operating history or performance information to include.

FINANCIAL STATEMENTS

No financial information is presented for the Portfolio because it has not commenced operations as of the date of this SAI. Financial information will be provided in the first report to shareholders for the Portfolio after commencement of operations.

APPENDIX A

MORGAN STANLEY INVESTMENT MANAGEMENT PROXY VOTING POLICY AND PROCEDURES I. POLICY STATEMENT

Morgan Stanley Investment Management's ("MSIM") policy and procedures for voting proxies ("Policy") with respect to securities held in the accounts of clients applies to those MSIM entities that provide discretionary investment management services and for which an MSIM entity has authority to vote proxies. This Policy is reviewed and updated as necessary to address new and evolving proxy voting issues and standards.

The MSIM entities covered by this Policy currently include the following: Morgan Stanley AIP GP LP, Morgan Stanley Investment Management Inc., Morgan Stanley Investment Management Limited, Morgan Stanley Investment Management Company, Morgan Stanley Investment Management (Japan) Co. Limited and Morgan Stanley Investment Management Private Limited (each a "MSIM Affiliate" and collectively referred to as the "MSIM Affiliates" or as "we" below).

Each MSIM Affiliate will use its best efforts to vote proxies as part of its authority to manage, acquire and dispose of account assets. With respect to the registered management investment companies sponsored, managed or advised by any MSIM affiliate (the "MSIM Funds"), each MSIM Affiliate will vote proxies under this Policy pursuant to authority granted under its applicable investment advisory agreement or, in the absence of such authority, as authorized by the Board of Directors/Trustees of the MSIM Funds. A MSIM Affiliate will not vote proxies unless the investment management or investment advisory agreement explicitly authorizes the MSIM Affiliate to vote proxies.

MSIM Affiliates will vote proxies in a prudent and diligent manner and in the best interests of clients, including beneficiaries of and participants in a client's benefit plan(s) for which the MSIM Affiliates manage assets, consistent with the objective of maximizing long- term investment returns ("Client Proxy Standard"). In addition to voting proxies at portfolio companies, MSIM routinely engages with the management or board of companies in which we invest on a range of governance issues. Governance is a window into or proxy for management and board quality. MSIM engages with companies where we have larger positions, voting issues are material or where we believe we can make a positive impact on the governance structure. MSIM's engagement process, through private communication with companies, allows us to understand the governance structures at investee companies and better inform our voting decisions. In certain situations, a client or its fiduciary may provide an MSIM Affiliate with a proxy voting policy. In these situations, the MSIM Affiliate will comply with the client's policy.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Retention and Oversight of Proxy Advisory FirmsISS and Glass Lewis (together with other proxy research providers as we may retain from time to time, the "Research Providers") are independent advisers that specialize in providing a variety of fiduciary-level proxy-related services to institutional investment managers, plan sponsors, custodians, consultants, and other institutional investors. The services provided include in-depth research, global issuer analysis, and voting recommendations.

MSIM has retained Research Providers to analyze proxy issues and to make vote recommendations on those issues. While we may review and utilize the recommendations of one or more Research Providers in making proxy voting decisions, we are in no way obligated to follow such recommendations. MSIM votes all proxies based on its own proxy voting policies in the best interests of each client. In addition to research, ISS provides vote execution, reporting, and recordkeeping services to MSIM.

As part of MSIM's ongoing oversight of the Research Providers, MSIM performs periodic due diligence on the Research Providers. Topics of the reviews include, but are not limited to, conflicts of interest, methodologies for developing their policies and vote recommendations, and resources.

Voting Proxies for Certain Non-U.S. CompaniesVoting proxies of companies located in some jurisdictions may involve several problems that can restrict or prevent the ability to vote such proxies or entail significant costs. These problems include, but are not limited to: (i) proxy statements and ballots being written in a language other than English; (ii) untimely and/or inadequate notice of shareholder meetings; (iii) restrictions on the ability of holders outside the issuer's jurisdiction of organization to exercise votes; (iv) requirements to vote proxies in person; (v) the imposition of restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting; and (vi) requirements to provide local agents with power of attorney to facilitate our voting instructions. As a result, we vote clients' non-U.S. proxies on a best efforts basis only, after weighing the costs and benefits of

A-1 voting such proxies, consistent with the Client Proxy Standard. ISS has been retained to provide assistance in connection with voting non-U.S. proxies.

Securities LendingMSIM Funds or any other investment vehicle sponsored, managed or advised by a MSIM affiliate may participate in a securities lending program through a third party provider. The voting rights for shares that are out on loan are transferred to the borrower and therefore, the lender (i.e., a MSIM Fund or another investment vehicle sponsored, managed or advised by a MSIM affiliate) is not entitled to vote the lent shares at the company meeting. In general, MSIM believes the revenue received from the lending program outweighs the ability to vote and we will not recall shares for the purpose of voting. However, in cases in which MSIM believes the right to vote outweighs the revenue received, we reserve the right to recall the shares on loan on a best efforts basis.

II. GENERAL PROXY VOTING GUIDELINES To promote consistency in voting proxies on behalf of our clients, we follow this Policy (subject to any exception set forth herein). The Policy addresses a broad range of issues, and provides general voting parameters on proposals that arise most frequently. However, details of specific proposals vary, and those details affect particular voting decisions, as do factors specific to a given company. Pursuant to the procedures set forth herein, we may vote in a manner that is not in accordance with the following general guidelines, provided the vote is approved by the Proxy Review Committee (see Section III for description) and is consistent with the Client Proxy Standard. Morgan Stanley AIP GP LP will follow the procedures as described in Appendix A.

We endeavor to integrate governance and proxy voting policy with investment goals, using the vote to encourage portfolio companies to enhance long-term shareholder value and to provide a high standard of transparency such that equity markets can value corporate assets appropriately.

We seek to follow the Client Proxy Standard for each client. At times, this may result in split votes, for example when different clients have varying economic interests in the outcome of a particular voting matter (such as a case in which varied ownership interests in two companies involved in a merger result in different stakes in the outcome). We also may split votes at times based on differing views of portfolio managers.

We may abstain on matters for which disclosure is inadequate.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A. Routine Matters. We generally support routine management proposals. The following are examples of routine management proposals:

• Approval of financial statements and auditor reports if delivered with an unqualified auditor's opinion.

• General updating/corrective amendments to the charter, articles of association or bylaws, unless we believe that such amendments would diminish shareholder rights.

• Most proposals related to the conduct of the annual meeting, with the following exceptions. We generally oppose proposals that relate to "the transaction of such other business which may come before the meeting," and open-ended requests for adjournment. However, where management specifically states the reason for requesting an adjournment and the requested adjournment would facilitate passage of a proposal that would otherwise be supported under this Policy (i.e., an uncontested corporate transaction), the adjournment request will be supported. We do not support proposals that allow companies to call a special meeting with a short (generally two weeks or less) time frame for review.

We generally support shareholder proposals advocating confidential voting procedures and independent tabulation of voting results.

B. Board of Directors. 1. Election of directors: Votes on board nominees can involve balancing a variety of considerations. In vote decisions, we may take into consideration whether the company has a majority voting policy in place that we believe makes the director vote more meaningful. In the absence of a proxy contest, we generally support the board's nominees for director except as follows: a. We consider withholding support from or voting against a nominee if we believe a direct conflict exists between the interests of the nominee and the public shareholders, including failure to meet fiduciary standards of care and/or loyalty. We may oppose directors where we conclude that actions of directors are unlawful, unethical or negligent. We consider opposing individual board members or an entire slate if we believe the board is entrenched and/or dealing inadequately with performance problems; if we

A-2 believe the board is acting with insufficient independence between the board and management; or if we believe the board has not been sufficiently forthcoming with information on key governance or other material matters. b. We consider withholding support from or voting against interested directors if the company's board does not meet market standards for director independence, or if otherwise we believe board independence is insufficient. We refer to prevalent market standards as promulgated by a stock exchange or other authority within a given market (e.g., New York Stock Exchange or Nasdaq rules for most U.S. companies, and The Combined Code on Corporate Governance in the United Kingdom). Thus, for an NYSE company with no controlling shareholder, we would expect that at a minimum a majority of directors should be independent as defined by NYSE. Where we view market standards as inadequate, we may withhold votes based on stronger independence standards. Market standards notwithstanding, we generally do not view long board tenure alone as a basis to classify a director as non-independent. i. At a company with a shareholder or group that controls the company by virtue of a majority economic interest in the company, we have a reduced expectation for board independence, although we believe the presence of independent directors can be helpful, particularly in staffing the audit committee, and at times we may withhold support from or vote against a nominee on the view the board or its committees are not sufficiently independent. In markets where board independence is not the norm (e.g. Japan), however, we consider factors including whether a board of a controlled company includes independent members who can be expected to look out for interests of minority holders. ii. We consider withholding support from or voting against a nominee if he or she is affiliated with a major shareholder that has representation on a board disproportionate to its economic interest. c. Depending on market standards, we consider withholding support from or voting against a nominee who is interested and who is standing for election as a member of the company's compensation/remuneration, nominating/governance or audit committee.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document d. We consider withholding support from or voting against nominees if the term for which they are nominated is excessive. We consider this issue on a market-specific basis. e. We consider withholding support from or voting against nominees if in our view there has been insufficient board renewal (turnover), particularly in the context of extended poor company performance. f. We consider withholding support from or voting against a nominee standing for election if the board has not taken action to implement generally accepted governance practices for which there is a "bright line" test. For example, in the context of the U.S. market, failure to eliminate a dead hand or slow hand poison pill would be seen as a basis for opposing one or more incumbent nominees. g. In markets that encourage designated audit committee financial experts, we consider voting against members of an audit committee if no members are designated as such. We also consider voting against the audit committee members if the company has faced financial reporting issues and/or does not put the auditor up for ratification by shareholders. h. We believe investors should have the ability to vote on individual nominees, and may abstain or vote against a slate of nominees where we are not given the opportunity to vote on individual nominees. i. We consider withholding support from or voting against a nominee who has failed to attend at least 75% of the nominee's board and board committee meetings within a given year without a reasonable excuse. We also consider opposing nominees if the company does not meet market standards for disclosure on attendance. j. We consider withholding support from or voting against a nominee who appears overcommitted, particularly through service on an excessive number of boards. Market expectations are incorporated into this analysis; for U.S. boards, we generally oppose election of a nominee who serves on more than six public company boards (excluding investment companies), although we may also reference National Association of Corporate Directors guidance suggesting that public company CEOs, for example, should serve on no more than two outside boards given the level of time commitment required in their primary job.

A-3 k. We consider withholding support from or voting against a nominee where we believe executive remuneration practices are poor, particularly if the company does not offer shareholders a separate "say-on-pay" advisory vote on pay.

2. Discharge of directors' duties: In markets where an annual discharge of directors' responsibility is a routine agenda item, we generally support such discharge. However, we may vote against discharge or abstain from voting where there are serious findings of fraud or other unethical behavior for which the individual bears responsibility. The annual discharge of responsibility represents shareholder approval of disclosed actions taken by the board during the year and may make future shareholder action against the board difficult to pursue.

3. Board independence: We generally support U.S. shareholder proposals requiring that a certain percentage (up to 66 2/3%) of the company's board members be independent directors, and promoting all-independent audit, compensation and nominating/governance committees.

4. Board diversity: We consider on a case-by-case basis shareholder proposals urging diversity of board membership with respect to gender, race or other factors.

5. Majority voting: We generally support proposals requesting or requiring majority voting policies in election of directors, so long as there is a carve-out for plurality voting in the case of contested elections.

6. Proxy access: We consider proposals on procedures for inclusion of shareholder nominees and to have those nominees included in the company's proxy statement and on the company's proxy ballot on a case-by-case basis. Considerations include ownership thresholds, holding periods, the number of directors that shareholders may nominate and any restrictions on forming a group.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7. Reimbursement for dissident nominees: We generally support well-crafted U.S. shareholder proposals that would provide for reimbursement of dissident nominees elected to a board, as the cost to shareholders in electing such nominees can be factored into the voting decision on those nominees.

8. Proposals to elect directors more frequently: In the U.S. public company context, we usually support shareholder and management proposals to elect all directors annually (to "declassify" the board), although we make an exception to this policy where we believe that long-term shareholder value may be harmed by this change given particular circumstances at the company at the time of the vote on such proposal. As indicated above, outside the United States, we generally support greater accountability to shareholders that comes through more frequent director elections, but recognize that many markets embrace longer term lengths, sometimes for valid reasons given other aspects of the legal context in electing boards.

9. Cumulative voting: We generally support proposals to eliminate cumulative voting in the U.S. market context. (Cumulative voting provides that shareholders may concentrate their votes for one or a handful of candidates, a system that can enable a minority bloc to place representation on a board.) U.S. proposals to establish cumulative voting in the election of directors generally will not be supported.

10. Separation of Chairman and CEO positions: We vote on shareholder proposals to separate the Chairman and CEO positions and/or to appoint an independent Chairman based in part on prevailing practice in particular markets, since the context for such a practice varies. In many non-U.S. markets, we view separation of the roles as a market standard practice, and support division of the roles in that context. In the United States, we consider such proposals on a case-by-case basis, considering, among other things, the existing board leadership structure, company performance, and any evidence of entrenchment or perceived risk that power is overly concentrated in a single individual.

11. Director retirement age and term limits: Proposals setting or recommending director retirement ages or director term limits are voted on a case-by-case basis that includes consideration of company performance, the rate of board renewal, evidence of effective individual director evaluation processes, and any indications of entrenchment.

12. Proposals to limit directors' liability and/or broaden indemnification of officers and directors: Generally, we will support such proposals provided that an individual is eligible only if he or she has not acted in bad faith, with gross negligence or with reckless disregard of their duties.

A-4

C. Statutory Auditor Boards The statutory auditor board, which is separate from the main board of directors, plays a role in corporate governance in several markets. These boards are elected by shareholders to provide assurance on compliance with legal and accounting standards and the company's articles of association. We generally vote for statutory auditor nominees if they meet independence standards. In markets that require disclosure on attendance by internal statutory auditors, however, we consider voting against nominees for these positions who failed to attend at least 75% of meetings in the previous year. We also consider opposing nominees if the company does not meet market standards for disclosure on attendance.

D. Corporate Transactions and Proxy Fights. We examine proposals relating to mergers, acquisitions and other special corporate transactions (i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings and recapitalizations) on a case-by-case basis in the interests of each fund or other account. Proposals for mergers or other significant transactions that are friendly and approved by the Research Providers usually are supported if there is no portfolio manager objection. We also analyze proxy contests on a case-by-case basis.

E. Changes in Capital Structure. 1. We generally support the following:

• Management and shareholder proposals aimed at eliminating unequal voting rights, assuming fair economic treatment of classes of shares we hold.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • U.S. management proposals to increase the authorization of existing classes of common stock (or securities convertible into common stock) if: (i) a clear business purpose is stated that we can support and the number of shares requested is reasonable in relation to the purpose for which authorization is requested; and/or (ii) the authorization does not exceed 100% of shares currently authorized and at least 30% of the total new authorization will be outstanding. (We consider proposals that do not meet these criteria on a case-by-case basis.)

• U.S. management proposals to create a new class of preferred stock or for issuances of preferred stock up to 50% of issued capital, unless we have concerns about use of the authority for anti-takeover purposes.

• Proposals in non-U.S. markets that in our view appropriately limit potential dilution of existing shareholders. A major consideration is whether existing shareholders would have preemptive rights for any issuance under a proposal for standing share issuance authority. We generally consider market-specific guidance in making these decisions; for example, in the U.K. market we usually follow Association of British Insurers' ("ABI") guidance, although company-specific factors may be considered and for example, may sometimes lead us to voting against share authorization proposals even if they meet ABI guidance.

• Management proposals to authorize share repurchase plans, except in some cases in which we believe there are insufficient protections against use of an authorization for anti-takeover purposes.

• Management proposals to reduce the number of authorized shares of common or preferred stock, or to eliminate classes of preferred stock.

• Management proposals to effect stock splits.

• Management proposals to effect reverse stock splits if management proportionately reduces the authorized share amount set forth in the corporate charter. Reverse stock splits that do not adjust proportionately to the authorized share amount generally will be approved if the resulting increase in authorized shares coincides with the proxy guidelines set forth above for common stock increases.

• Management dividend payout proposals, except where we perceive company payouts to shareholders as inadequate.

2. We generally oppose the following (notwithstanding management support):

• Proposals to add classes of stock that would substantially dilute the voting interests of existing shareholders.

• Proposals to increase the authorized or issued number of shares of existing classes of stock that are unreasonably dilutive, particularly if there are no preemptive rights for existing shareholders. However,

A-5 depending on market practices, we consider voting for proposals giving general authorization for issuance of shares not subject to preemptive rights if the authority is limited.

• Proposals that authorize share issuance at a discount to market rates, except where authority for such issuance is de minimis, or if there is a special situation that we believe justifies such authorization (as may be the case, for example, at a company under severe stress and risk of bankruptcy).

• Proposals relating to changes in capitalization by 100% or more.

We consider on a case-by-case basis shareholder proposals to increase dividend payout ratios, in light of market practice and perceived market weaknesses, as well as individual company payout history and current circumstances. For example, currently we perceive low payouts to shareholders as a concern at some Japanese companies, but may deem a low payout ratio as appropriate for a growth company making good use of its cash, notwithstanding the broader market concern.

F. Takeover Defenses and Shareholder Rights. 1. Shareholder rights plans: We generally support proposals to require shareholder approval or ratification of shareholder rights plans (poison pills). In voting on rights plans or similar takeover defenses, we consider on a case-by-case basis whether the company has demonstrated a need for the defense in the context of promoting long-term share value; whether provisions of the defense are in line

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document with generally accepted governance principles in the market (and specifically the presence of an adequate qualified offer provision that would exempt offers meeting certain conditions from the pill); and the specific context if the proposal is made in the midst of a takeover bid or contest for control.

2. Supermajority voting requirements: We generally oppose requirements for supermajority votes to amend the charter or bylaws, unless the provisions protect minority shareholders where there is a large shareholder. In line with this view, in the absence of a large shareholder we support reasonable shareholder proposals to limit such supermajority voting requirements.

3. Shareholders right to call a special meeting: We consider proposals to enhance a shareholder's rights to call meetings on a case-by- case basis. At large-cap U.S. companies, we generally support efforts to establish the right of holders of 10% or more of shares to call special meetings, unless the board or state law has set a policy or law establishing such rights at a threshold that we believe to be acceptable.

4. Written consent rights: In the U.S. context, we examine proposals for shareholder written consent rights on a case-by-case basis.

5. Reincorporation: We consider management and shareholder proposals to reincorporate to a different jurisdiction on a case-by-case basis. We oppose such proposals if we believe the main purpose is to take advantage of laws or judicial precedents that reduce shareholder rights.

6. Anti-greenmail provisions: Proposals relating to the adoption of anti-greenmail provisions will be supported, provided that the proposal: (i) defines greenmail; (ii) prohibits buyback offers to large block holders (holders of at least 1% of the outstanding shares and in certain cases, a greater amount) not made to all shareholders or not approved by disinterested shareholders; and (iii) contains no anti- takeover measures or other provisions restricting the rights of shareholders.

7. Bundled proposals: We may consider opposing or abstaining on proposals if disparate issues are "bundled" and presented for a single vote.

G. Auditors. We generally support management proposals for selection or ratification of independent auditors. However, we may consider opposing such proposals with reference to incumbent audit firms if the company has suffered from serious accounting irregularities and we believe rotation of the audit firm is appropriate, or if fees paid to the auditor for non-audit-related services are excessive. Generally, to determine if non-audit fees are excessive, a 50% test will be applied (i.e., non-audit-related fees should be less than 50% of the total fees paid to the auditor). We generally vote against proposals to indemnify auditors.

H. Executive and Director Remuneration. 1. We generally support the following:

• Proposals for employee equity compensation plans and other employee ownership plans, provided that our research does not indicate that approval of the plan would be against shareholder interest. Such

A-6 approval may be against shareholder interest if it authorizes excessive dilution and shareholder cost, particularly in the context of high usage ("run rate") of equity compensation in the recent past; or if there are objectionable plan design and provisions.

• Proposals relating to fees to outside directors, provided the amounts are not excessive relative to other companies in the country or industry, and provided that the structure is appropriate within the market context. While stock-based compensation to outside directors is positive if moderate and appropriately structured, we are wary of significant stock option awards or other performance-based awards for outside directors, as well as provisions that could result in significant forfeiture of value on a director's decision to resign from a board (such forfeiture can undercut director independence).

• Proposals for employee stock purchase plans that permit discounts, but only for grants that are part of a broad-based employee plan, including all non-executive employees, and only if the discounts are limited to a reasonable market standard or less.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • Proposals for the establishment of employee retirement and severance plans, provided that our research does not indicate that approval of the plan would be against shareholder interest.

2. We generally oppose retirement plans and bonuses for non-executive directors and independent statutory auditors.

3. In the U.S. context, we generally vote against shareholder proposals requiring shareholder approval of all severance agreements, but we generally support proposals that require shareholder approval for agreements in excess of three times the annual compensation (salary and bonus) or proposals that require companies to adopt a provision requiring an executive to receive accelerated vesting of equity awards if there is a change of control and the executive is terminated. We generally oppose shareholder proposals that would establish arbitrary caps on pay. We consider on a case-by-case basis shareholder proposals that seek to limit Supplemental Executive Retirement Plans (SERPs), but support such shareholder proposals where we consider SERPs excessive.

4. Shareholder proposals advocating stronger and/or particular pay-for-performance models will be evaluated on a case-by-case basis, with consideration of the merits of the individual proposal within the context of the particular company and its labor markets, and the company's current and past practices. While we generally support emphasis on long-term components of senior executive pay and strong linkage of pay to performance, we consider factors including whether a proposal may be overly prescriptive, and the impact of the proposal, if implemented as written, on recruitment and retention.

5. We generally support proposals advocating reasonable senior executive and director stock ownership guidelines and holding requirements for shares gained in executive equity compensation programs.

6. We generally support shareholder proposals for reasonable "claw-back" provisions that provide for company recovery of senior executive bonuses to the extent they were based on achieving financial benchmarks that were not actually met in light of subsequent restatements.

7. Management proposals effectively to re-price stock options are considered on a case-by-case basis. Considerations include the company's reasons and justifications for a re-pricing, the company's competitive position, whether senior executives and outside directors are excluded, potential cost to shareholders, whether the re-pricing or share exchange is on a value-for-value basis, and whether vesting requirements are extended.

8. Say-on-Pay: We consider proposals relating to an advisory vote on remuneration on a case-by-case basis. Considerations include a review of the relationship between executive remuneration and performance based on operating trends and total shareholder return over multiple performance periods. In addition, we review remuneration structures and potential poor pay practices, including relative magnitude of pay, discretionary bonus awards, tax gross ups, change-in-control features, internal pay equity and peer group construction. As long-term investors, we support remuneration policies that align with long-term shareholder returns.

I. Social, Political and Environmental Issues. Shareholders in the United States and certain other markets submit proposals encouraging changes in company disclosure and practices related to particular corporate, social, political and environmental matters. We consider how to vote on the proposals on a case-by-case basis to determine likely impacts on shareholder value. We seek to balance concerns on reputational and other risks that lie behind a proposal against costs of implementation, while considering appropriate shareholder and management prerogatives. We may abstain from voting on proposals that do not have a readily determinable financial impact on shareholder value. We

A-7 support proposals that, if implemented, would enhance useful disclosure, but we generally vote against proposals requesting reports that we believe are duplicative, related to matters not material to the business, or that would impose unnecessary or excessive costs. We believe that certain social and environmental shareholder proposals may intrude excessively on management prerogatives, which can lead us to oppose them. J. Funds of Funds. Certain MSIM Funds advised by an MSIM Affiliate invest only in other MSIM Funds. If an underlying fund has a shareholder meeting, in order to avoid any potential conflict of interest, such proposals will be voted in the same proportion as the votes of the other shareholders of the underlying fund, unless otherwise determined by the Proxy Review Committee. Other MSIM Funds

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document invest in unaffiliated funds. If an unaffiliated underlying fund has a shareholder meeting and the MSIM Fund owns more than 25% of the voting shares of the underlying fund, the MSIM Fund will vote its shares in the unaffiliated underlying fund in the same proportion as the votes of the other shareholders of the underlying fund to the extent possible. III. ADMINISTRATION OF POLICY The MSIM Proxy Review Committee (the "Committee") has overall responsibility for the Policy. The Committee consists of investment professionals who represent the different investment disciplines and geographic locations of the firm, and is chaired by the director of the Corporate Governance Team ("CGT"). Because proxy voting is an investment responsibility and impacts shareholder value, and because of their knowledge of companies and markets, portfolio managers and other members of investment staff play a key role in proxy voting, although the Committee has final authority over proxy votes.

The CGT Director is responsible for identifying issues that require Committee deliberation or ratification. The CGT, working with advice of investment teams and the Committee, is responsible for voting on routine items and on matters that can be addressed in line with these Policy guidelines. The CGT has responsibility for voting case-by-case where guidelines and precedent provide adequate guidance.

The Committee will periodically review and have the authority to amend, as necessary, the Policy and establish and direct voting positions consistent with the Client Proxy Standard.

CGT and members of the Committee may take into account Research Providers' recommendations and research as well as any other relevant information they may request or receive, including portfolio manager and/or analyst comments and research, as applicable. Generally, proxies related to securities held in accounts that are managed pursuant to quantitative, index or index-like strategies ("Index Strategies") will be voted in the same manner as those held in actively managed accounts, unless economic interests of the accounts differ. Because accounts managed using Index Strategies are passively managed accounts, research from portfolio managers and/or analysts related to securities held in these accounts may not be available. If the affected securities are held only in accounts that are managed pursuant to Index Strategies, and the proxy relates to a matter that is not described in this Policy, the CGT will consider all available information from the Research Providers, and to the extent that the holdings are significant, from the portfolio managers and/ or analysts.

A. Committee Procedures The Committee meets at least quarterly, and reviews and considers changes to the Policy at least annually. Through meetings and/or written communications, the Committee is responsible for monitoring and ratifying "split votes" (i.e., allowing certain shares of the same issuer that are the subject of the same proxy solicitation and held by one or more MSIM portfolios to be voted differently than other shares) and/or "override voting" (i.e., voting all MSIM portfolio shares in a manner contrary to the Policy). The Committee will review developing issues and approve upcoming votes, as appropriate, for matters as requested by CGT.

The Committee reserves the right to review voting decisions at any time and to make voting decisions as necessary to ensure the independence and integrity of the votes.

B. Material Conflicts of Interest In addition to the procedures discussed above, if the CGT Director determines that an issue raises a material conflict of interest, the CGT Director may request a special committee to review, and recommend a course of action with respect to, the conflict(s) in question ("Special Committee").

A potential material conflict of interest could exist in the following situations, among others:

1. The issuer soliciting the vote is a client of MSIM or an affiliate of MSIM and the vote is on a matter that materially affects the issuer.

A-8

2. The proxy relates to Morgan Stanley common stock or any other security issued by Morgan Stanley or its affiliates except if echo voting is used, as with MSIM Funds, as described herein.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3. Morgan Stanley has a material pecuniary interest in the matter submitted for a vote (e.g., acting as a financial advisor to a party to a merger or acquisition for which Morgan Stanley will be paid a success fee if completed).

If the CGT Director determines that an issue raises a potential material conflict of interest, depending on the facts and circumstances, the issue will be addressed as follows:

1. If the matter relates to a topic that is discussed in this Policy, the proposal will be voted as per the Policy.

2. If the matter is not discussed in this Policy or the Policy indicates that the issue is to be decided case-by-case, the proposal will be voted in a manner consistent with the Research Providers, provided that all the Research Providers consulted have the same recommendation, no portfolio manager objects to that vote, and the vote is consistent with MSIM's Client Proxy Standard.

3. If the Research Providers' recommendations differ, the CGT Director will refer the matter to a Special Committee to vote on the proposal, as appropriate.

Any Special Committee shall be comprised of the CGT Director, and at least two portfolio managers (preferably members of the Committee), as approved by the Committee. The CGT Director may request non-voting participation by MSIM's General Counsel or his/her designee and the Chief Compliance Officer or his/her designee. In addition to the research provided by Research Providers, the Special Committee may request analysis from MSIM Affiliate investment professionals and outside sources to the extent it deems appropriate.

C. Proxy Voting Reporting The CGT will document in writing all Committee and Special Committee decisions and actions, which documentation will be maintained by the CGT for a period of at least six years. To the extent these decisions relate to a security held by an MSIM Fund, the CGT will report the decisions to each applicable Board of Trustees/Directors of those Funds at each Board's next regularly scheduled Board meeting. The report will contain information concerning decisions made during the most recently ended calendar quarter immediately preceding the Board meeting.

MSIM will promptly provide a copy of this Policy to any client requesting it. MSIM will also, upon client request, promptly provide a report indicating how each proxy was voted with respect to securities held in that client's account.

MSIM's Legal Department is responsible for filing an annual Form N-PX on behalf of each MSIM Fund for which such filing is required, indicating how all proxies were voted with respect to such Fund's holdings.

A-9

APPENDIX A

Appendix A applies to the following accounts managed by Morgan Stanley AIP GP LP: (i) closed-end funds registered under the Investment Company Act of 1940, as amended; (ii) discretionary separate accounts; (iii) unregistered funds; and (iv) non-discretionary accounts offered in connection with AIP's Custom Advisory Portfolio Solutions service.

Generally, AIP will follow the guidelines set forth in Section II of MSIM's Proxy Voting Policy and Procedures. To the extent that such guidelines do not provide specific direction, or AIP determines that consistent with the Client Proxy Standard, the guidelines should not be followed, the Proxy Review Committee has delegated the voting authority to vote securities held by accounts managed by AIP to the Fund of Hedge Funds investment team, the Private Equity Fund of Funds investment team, the Private Equity Real Estate Fund of Funds investment team or the Portfolio Solutions team of AIP. A summary of decisions made by the applicable investment teams will be made available to the Proxy Review Committee for its information at the next scheduled meeting of the Proxy Review Committee.

In certain cases, AIP may determine to abstain from determining (or recommending) how a proxy should be voted (and therefore abstain from voting such proxy or recommending how such proxy should be voted), such as where the expected cost of giving due consideration to the proxy does not justify the potential benefits to the affected account(s) that might result from adopting or rejecting (as the case may be) the measure in question.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Waiver of Voting Rights For regulatory reasons, AIP may either 1) invest in a class of securities of an underlying fund (the "Fund") that does not provide for voting rights; or 2) waive 100% of its voting rights with respect to the following:

1. Any rights with respect to the removal or replacement of a director, general partner, managing member or other person acting in a similar capacity for or on behalf of the Fund (each individually a "Designated Person," and collectively, the "Designated Persons"), which may include, but are not limited to, voting on the election or removal of a Designated Person in the event of such Designated Person's death, disability, insolvency, bankruptcy, incapacity, or other event requiring a vote of interest holders of the Fund to remove or replace a Designated Person; and

2. Any rights in connection with a determination to renew, dissolve, liquidate, or otherwise terminate or continue the Fund, which may include, but are not limited to, voting on the renewal, dissolution, liquidation, termination or continuance of the Fund upon the occurrence of an event described in the Fund's organizational documents; provided, however, that, if the Fund's organizational documents require the consent of the Fund's general partner or manager, as the case may be, for any such termination or continuation of the Fund to be effective, then AIP may exercise its voting rights with respect to such matter.

Approved by the Morgan Stanley Funds Board on September 27-28, 2016.

A-10

MORGAN STANLEY INSTITUTIONAL FUND, INC. PART C. OTHER INFORMATION

ITEM 28. EXHIBITS

(a) (1) Articles of Amendment and Restatement, dated September 20, 1995, are incorporated herein by reference to Exhibit 1(a) to Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A filed on October 13, 1995.

(2) Articles Supplementary to Registrants Articles of Amendment and Restatement (reclassifying shares), dated December 18, 1995, are incorporated herein by reference to Exhibit 1(b) to Post-Effective Amendment No. 30 to the Registration Statement on Form N-1A filed on May 24, 1996.

(3) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding new Technology Portfolio), dated May 2, 1996, are incorporated herein by reference to Exhibit 1(c) to Post-Effective Amendment No. 30 to the Registration Statement on Form N-1A filed on May 24, 1996.

(4) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding U.S. Equity Plus Portfolio), dated May 21, 1997, are incorporated herein by reference to Exhibit 1(d) to Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A filed on February 27, 1998.

(5) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding European Real Estate and Asian Real Estate Portfolios), dated June 10, 1997, are incorporated herein by reference to Exhibit 1(e) to Post- Effective Amendment No. 38 to the Registration Statement on Form N-1A filed on February 27, 1998.

(6) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class B shares to the Money Market Portfolio), dated December 16, 1997, are incorporated herein by reference to Exhibit 1(f) to Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A filed on February 27, 1998.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (7) Articles of Amendment to Registrants Articles of Amendment and Restatement (Active Country Allocation Portfolio name changed to Active International Portfolio), dated July 17, 1998, are incorporated herein by reference to Exhibit (a)(7) to Post-Effective Amendment No. 40 to the Registration Statement on Form N-1A filed on January 27, 1999.

(8) Articles of Amendment to Registrants Articles of Amendment and Restatement (Active International Portfolio name changed to Active International Allocation Portfolio), dated August 6, 1998, are incorporated herein by reference to Exhibit (a)(8) to Post-Effective Amendment No. 40 to the Registration Statement on Form N-1A filed on January 27, 1999.

(9) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing corporate name to Morgan Stanley Dean Witter Institutional Fund, Inc.), dated November 20, 1998, are incorporated herein by reference to Exhibit (a)(9) to Post-Effective Amendment No. 40 to the Registration Statement on Form N-1A filed on January 27, 1999.

(10) Articles of Amendment to Registrants Articles of Amendment and Restatement (Aggressive Equity Portfolio name changed to Focus Equity Portfolio and Emerging Growth Portfolio name changed to Small Company Growth Portfolio), dated September 24, 1999, are incorporated herein by reference to Exhibit (a)(10) to Post-Effective Amendment No. 43 to the Registration Statement on Form N-1A filed on May 1, 2000.

(11) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing corporate name to Morgan Stanley Institutional Fund, Inc., Global Equity Portfolio name changed to Global Value Equity Portfolio, European Equity Portfolio named changed to European Value Equity Portfolio and Japanese Equity Portfolio name changed to Japanese Value Equity Portfolio), dated April 23, 2001, are incorporated herein by reference to Exhibit (a)(11) to Post- Effective Amendment No. 45 to the Registration Statement on Form N-1A filed on April 30, 2001.

(12) Articles of Amendment to the Amended and Restated Articles of Incorporation (Fixed Income Portfolio name changed to Fixed Income III Portfolio, High Yield Portfolio name changed to High Yield II Portfolio and Global Fixed Income Portfolio name changed to Global Fixed Income II Portfolio), dated July 23, 2001, are incorporated herein by reference to Exhibit (a) (12) of Post-Effective Amendment No. 59 to the Registration Statement on Form N-1A filed on April 28, 2006.

(13) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding new Global Franchise Portfolio), dated October 18, 2001, are incorporated herein by reference to Exhibit (a)(7) to Post-Effective Amendment No. 48 to the Registration Statement on Form N-1A filed on November 26, 2001.

(14) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating Small Cap Value Equity Portfolio, Balanced Portfolio, Fixed Income Portfolio, High Yield Portfolio and Global Fixed Income Portfolio and adding Large Cap Relative Value Portfolio), dated June 6, 2003, are incorporated herein by reference to Exhibit (a)(13) to Post-Effective Amendment No. 50 to the Registration Statement on Form N-1A filed on June 6, 2003.

(15) Certificate of Correction to the Articles Supplementary, dated March 21, 2005, is incorporated herein by reference to Exhibit (a)(15) of Post-Effective Amendment No. 70 to the Registration Statement on Form N-1A filed on July 18, 2007.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (16) Certificate of Correction to the Articles Supplementary, dated April 26, 2005, is incorporated herein by reference to Exhibit (a)(14) to Post-Effective Amendment No. 53 to the Registration Statement on Form N-1A filed on April 29, 2005.

(17) Certificate of Correction to the Articles Supplementary, dated April 26, 2005, is incorporated herein by reference to Exhibit (a)(15) to Post-Effective Amendment No. 53 to the Registration Statement on Form N-1A filed on April 29, 2005.

(18) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the Asian Equity, Asian Real Estate, European Value Equity, Japanese Value Equity, Latin American and Technology Portfolios), dated April 26, 2005, are incorporated herein by reference to Exhibit (a)(16) to Post-Effective Amendment No. 53 to the Registration Statement on Form N-1A filed on April 29, 2005.

(19) Articles of Amendment to the Articles of Amendment and Restatement (Large Cap Relative Value Portfolio name changed to Large Cap Value Portfolio and Value Equity Portfolio name changed to Large Cap Relative Value Portfolio), dated August 25, 2005, are incorporated by reference to Exhibit (a)(17) to Post-Effective Amendment No. 55 to the Registration Statement on Form N-1A filed on October 7, 2005.

(20) Articles of Amendment to the Articles of Amendment and Restatement (European Real Estate Portfolio name changed to International Real Estate Portfolio), dated August 25, 2005, are incorporated herein by reference to Exhibit (a)(18) to Post-Effective Amendment No. 55 to the Registration Statement on Form N-1A filed on October 7, 2005.

(21) Certificate of Correction to the Articles Supplementary, dated September 20, 2005, is incorporated herein by reference to Exhibit (a)(19) to Post-Effective Amendment No. 55 to the Registration Statement on Form N-1A filed on October 7, 2005.

(22) Certificate of Correction to the Articles Supplementary, dated September 20, 2005, is incorporated herein by reference to Exhibit (a)(20) to Post-Effective Amendment No. 55 to the Registration Statement on Form N-1A filed on October 7, 2005.

(23) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing the name of the Value Equity Portfolio to the Large Cap Relative Value Portfolio and the Equity Growth Portfolio to the U.S. Large Cap Growth Portfolio), dated September 20, 2005, are incorporated herein by reference to Exhibit (a)(21) to Post-Effective Amendment No. 55 to the Registration Statement on Form N-1A filed on October 7, 2005.

(24) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding International Growth Equity Portfolio), dated November 15, 2005, are incorporated herein by reference to Exhibit (a)(22) to Post-Effective Amendment No. 56 to the Registration Statement on Form N-1A filed on December 20, 2005.

(25) Articles of Amendment to Registrants Articles of Amendment and Restatement (effecting a reverse stock split of the Emerging Markets Debt Portfolio), dated February 24, 2006, are incorporated herein by reference to Exhibit (a) (24) of Post-Effective Amendment No. 59 to the Registration Statement on Form N-1A filed on April 28, 2006.

(26) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Systematic Active Large Cap Core Portfolio, Systematic Active Small Cap Core Portfolio, Systematic Active Small Cap Value Portfolio and Systematic Active Small Cap Growth Portfolio), dated February 6, 2006, are incorporated herein by reference to

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit (a) (25) of Post-Effective Amendment No. 59 to the Registration Statement on Form N-1A filed on April 28, 2006.

(27) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Global Real Estate Portfolio), dated April 25, 2006, are incorporated herein by reference to Exhibit (a) (26) of Post-Effective Amendment No. 60 to the Registration Statement on Form N-1A filed on May 3, 2006.

(28) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of Municipal Money Market Portfolio and Money Market Portfolio), dated August 24, 2006, are incorporated herein by reference to Exhibit (a)(28) of Post-Effective Amendment No. 70 to the Registration Statement on Form N-1A filed on July 18, 2007.

(29) Certificate of Correction to the Registrants Articles of Amendment, dated February 6, 2007, is incorporated herein by reference to Exhibit (a)(27) of Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A filed on April 27, 2007.

(30) Certificate of Correction to the Registrants Articles of Amendment, dated February 6, 2007, is incorporated herein by reference to Exhibit (a)(28) of Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A filed on April 27, 2007.

(31) Articles of Restatement, dated February 20, 2007, are incorporated herein by reference to Exhibit (a)(29) of Post- Effective Amendment No. 65 to the Registration Statement on Form N-1A filed on April 27, 2007.

(32) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Disciplined Large Cap Value Active Extension Portfolio and Systematic Large Cap Core Active Extension Portfolio), dated February 21, 2007, are incorporated herein by reference to Exhibit (a)(30) of Post-Effective Amendment No. 68 to the Registration Statement on Form N-1A filed on May 29, 2007.

(33) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding International Growth Active Extension Portfolio), dated April 25, 2007, are incorporated herein by reference to Exhibit (a)(31) of Post-Effective Amendment No. 69 to the Registration Statement on Form N-1A filed on July 10, 2007.

(34) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding U.S. Small/Mid Cap Value Portfolio), dated September 26, 2007, are incorporated herein by reference to Exhibit (a)(34) to Post-Effective Amendment No. 71 to the Registration Statement on Form N-1A filed on September 26, 2007.

(35) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class H shares to certain Portfolios), dated December 18, 2007, are incorporated herein by reference to Exhibit (a)(35) to Post-Effective Amendment No. 73 to the Registration Statement on Form N-1A filed on December 20, 2007.

(36) Articles of Amendment to Registrants Articles of Amendment and Restatement, (redesignating all Portfolios Class A and Class B shares as Class I and Class P shares, respectively), dated December 18, 2007, are incorporated herein by reference to Exhibit (a)(36) to Post-Effective Amendment No. 73 to the Registration Statement on Form N-1A filed on December 20, 2007.

(37) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing the name of the Focus Equity Portfolio to the Focus Growth Portfolio and the U.S. Large Cap Growth Portfolio to the Capital Growth Portfolio), dated April 22, 2008, are incorporated herein by reference to Exhibit (a)(37) to Post-Effective Amendment No. 75 to the Registration Statement on Form N-1A filed on April 28, 2008.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (38) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class L shares to certain Portfolios), dated June 3, 2008, are incorporated herein by reference to Exhibit (a)(37) to Post-Effective Amendment No. 76 to the Registration Statement on Form N-1A filed on June 3, 2008.

(39) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of Systematic Active Large Cap Core, Systematic Active Small Cap Core, Systematic Active Small Cap Growth and Systematic Active Small Cap Value Portfolios), dated June 27, 2008, are incorporated herein by reference to Exhibit (a)(38) to Post-Effective Amendment No. 78 to the Registration Statement on Form N-1A filed on October 17, 2008.

(40) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of Disciplined Large Cap Value Active Extension and Systematic Large Cap Core Active Extension Portfolios), dated October 13, 2008, are incorporated herein by reference to Exhibit (a)(39) to Post-Effective Amendment No. 78 to the Registration Statement on Form N-1A filed on October 17, 2008.

(41) Articles Supplementary to Registrants Articles of Amendment and Restatement (with respect to Class P shares of International Small Cap Portfolio), dated October 14, 2008, are incorporated herein by reference to Exhibit (a)(40) to Post-Effective Amendment No. 78 to the Registration Statement on Form N-1A filed on October 17, 2008.

(42) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of International Magnum Portfolio), dated April 16, 2009, are incorporated herein by reference to Exhibit (a)(42) to Post-Effective Amendment No. 79 to the Registration Statement on Form N-1A filed on April 28, 2009.

(43) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of International Growth Active Extension Portfolio), dated January 20, 2010, are incorporated herein by reference to Exhibit (a)(43) to Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A filed on February 23, 2010.

(44) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of Global Value Equity Portfolio), dated January 20, 2010, are incorporated herein by reference to Exhibit (a)(44) to Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A filed on February 23, 2010.

(45) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Advantage, Equity Growth, Global Growth and International Opportunity Portfolios), dated January 20, 2010, are incorporated herein by reference to Exhibit (a)(45) to Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A filed on February 23, 2010.

(46) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of International Growth Equity, Large Cap Relative Value and U.S. Small/Mid Cap Value Portfolios), dated July 28, 2010, are incorporated herein by reference to Exhibit (a)(46) to Post-Effective Amendment No. 87 to the Registration Statement on Form N-1A filed on August 31, 2010.

(47) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Select Global Infrastructure Portfolio), dated July 28, 2010, are incorporated herein by reference to Exhibit (a)(47) to Post-Effective Amendment No. 87 to the Registration Statement on Form N-1A filed on August 31, 2010.

(48) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing the name of the Equity Growth Portfolio to the Opportunity Portfolio and changing the name of the Global Growth Portfolio to the Global

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Opportunity Portfolio), dated October 4, 2010, are incorporated herein by reference to Exhibit (a)(48) to Post-Effective Amendment No. 90 to the Registration Statement on Form N-1A filed on October 28, 2010.

(49) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Asian Equity, Global Advantage, Global Discovery and International Advantage Portfolios), dated December 8, 2010, are incorporated herein by reference to Exhibit (a)(49) to Post-Effective Amendment No. 91 to the Registration Statement on Form N-1A filed on December 14, 2010.

(50) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing the name of the Capital Growth Portfolio to the Growth Portfolio), dated April 5, 2011, are incorporated herein by reference to Exhibit (a)(50) to Post-Effective No. 93 to the Registration Statement on Form N-1A filed on April 27, 2011.

(51) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class H and Class L shares to Small Company Growth and U.S. Real Estate Portfolios), dated August 11, 2011, are incorporated herein by reference to Exhibit (a)(51) to Post-Effective Amendment No. 96 to the Registration Statement on Form N-1A filed on August 22, 2011.

(52) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Global Insight and Insight Portfolios), dated October 7, 2011, are incorporated by reference to Exhibit (a)(52) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on December 9, 2011.

(53) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing the name of the Emerging Markets Debt Portfolio to the Emerging Markets Domestic Debt Portfolio), dated April 23, 2012, are incorporated by reference to Exhibit (a)(54) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on April 27, 2012.

(54) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class H and Class L shares to Active International Allocation, Emerging Markets, Focus Growth, Global Franchise, Growth, International Equity, International Real Estate and International Small Cap Portfolios), dated April 23, 2012, are incorporated by reference to Exhibit (a)(53) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on April 27, 2012.

(55) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Emerging Markets External Debt, Multi-Asset and Total Emerging Markets Portfolios), dated May 17, 2012, are incorporated by reference to Exhibit (a)(55) to Post-Effective Amendment No. 107 to the Registration Statement on Form N-1A filed on May 23, 2012.

(56) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Frontier Emerging Markets Portfolio), dated June 22, 2012, are incorporated by reference to Exhibit (a)(56) to Post-Effective Amendment No. 109 to the Registration Statement on Form N-1A filed on June 26, 2012.

(57) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of Focus Growth Portfolio), dated April 8, 2013, are incorporated herein by reference to Exhibit (a)(57) to Post-Effective Amendment No. 114 to the Registration Statement on Form N-1A filed on April 25, 2013.

(58) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class IS shares to Advantage, Emerging Markets, Emerging Markets Domestic Debt, Emerging Markets External Debt, Global Opportunity, Global Real Estate, Growth, International Equity, International Opportunity, International Real Estate, Opportunity, Select Global Infrastructure, Small Company Growth and U.S. Real Estate Portfolios), dated May 16, 2013, are incorporated

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document herein by reference to Exhibit (a)(58) to Post-Effective Amendment No. 118 to the Registration Statement on Form N-1A filed on June 3, 2013.

(59) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Global Quality Portfolio), dated August 2, 2013, are incorporated herein by reference to Exhibit (a)(59) to Post-Effective Amendment No. 123 to the Registration Statement on Form N-1A filed on August 16, 2013.

(60) Articles of Amendment to Registrants Articles of Amendment and Restatement (reclassifying Class H shares of each Portfolio (other than Global Insight, Insight and International Real Estate Portfolios) as Class P shares), dated August 13, 2013, are incorporated herein by reference to Exhibit (a)(60) to Post-Effective Amendment No. 123 to the Registration Statement on Form N-1A filed on August 16, 2013.

(61) Articles of Amendment to Registrants Articles of Amendment and Restatement ((i) changing the designation of Class H shares of each of the Global Insight and Insight Portfolios to Class A shares and (ii) changing the designation of Class P shares of each Portfolio (other than Global Insight, Global Quality and Insight Portfolios)) to Class A shares, dated August 13, 2013, are incorporated herein by reference to Exhibit (a)(61) to Post-Effective Amendment No. 123 to the Registration Statement on Form N-1A filed on August 16, 2013.

(62) Certificate of Correction to the Registrants Articles of Amendment, dated September 5, 2013, is incorporated herein by reference to Exhibit (a)(62) to Post-Effective Amendment No. 125 to the Registration Statement on Form N-1A filed on April 29, 2014.

(63) Certificate of Correction to the Registrants Articles of Amendment, dated September 5, 2013, is incorporated herein by reference to Exhibit (a)(63) to Post-Effective Amendment No. 125 to the Registration Statement on Form N-1A filed on April 29, 2014.

(64) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Emerging Markets Leaders Portfolio), dated November 14, 2014, are incorporated herein by reference to Exhibit (a)(64) to Post-Effective Amendment No. 128 to the Registration Statement on Form N-1A filed on November 25, 2014.

(65) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class IS shares to Frontier Emerging Markets Portfolio), are incorporated herein by reference to Exhibit (a)(65) to Post-Effective Amendment No. 133 to the Registration Statement on Form N-1A filed on February 13, 2015.

(66) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating the assets of Total Emerging Markets Portfolio), dated March 26, 2015, are incorporated herein by reference to Exhibit (a)(66) to Post- Effective Amendment No. 137 to the Registration Statement on Form N-1A filed on April 27, 2015.

(67) Articles Supplementary to Registrants Articles of Amendment and Restatement (changing the name of the Select Global Infrastructure Portfolio to Global Infrastructure Portfolio), dated March 27, 2015, are incorporated herein by reference to Exhibit (a)(67) to Post-Effective Amendment No. 137 to the Registration Statement on Form N-1A filed on April 27, 2015.

(68) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class C shares to all Portfolios), dated April 23, 2015, are incorporated herein by reference to Exhibit (a)(68) to Post-Effective Amendment No. 137 to the Registration Statement on Form N-1A filed on April 27, 2015.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (69) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Class IS shares to Global Franchise and Multi-Asset Portfolios), dated May 11, 2015, are incorporated herein by reference to Exhibit (a)(69) to Post-Effective Amendment No. 138 to the Registration Statement on Form N-1A filed on May 12, 2015.

(70) Articles of Amendment to Registrants Articles of Amendment and Restatement (changing the name of the Emerging Markets External Debt Portfolio to the Emerging Markets Fixed Income Opportunities Portfolio), dated November 25, 2015, are incorporated herein by reference to Exhibit (a)(70) to Post-Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(71) Articles Supplementary to Registrants Articles of Amendment and Restatement (eliminating Emerging Markets Domestic Debt Portfolio), dated November 25, 2015, are incorporated herein by reference to Exhibit (a)(71) to Post- Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(72) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating International Small Cap Portfolio), dated November 25, 2015, are incorporated herein by reference to Exhibit (a)(72) to Post-Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(73) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Emerging Markets Small Cap Portfolio), dated November 25, 2015, are incorporated herein by reference to Exhibit (a)(73) to Post-Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(74) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Asia Opportunity Portfolio), dated November 25, 2015, are incorporated herein by reference to Exhibit (a)(74) to Post-Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(75) Articles Supplementary to Registrants Articles of Amendment and Restatement (eliminating Opportunity Portfolio), dated March 1, 2016, are incorporated herein by reference to Exhibit (a)(75) to Post-Effective Amendment No. 148 to the Registration Statement on Form N-1A filed on April 26, 2016.

(76) Articles Supplementary to Registrants Articles of Amendment and Restatement (eliminating Class H shares of International Real Estate Portfolio), dated March 1, 2016, are incorporated herein by reference to Exhibit (a)(76) to Post-Effective Amendment No. 148 to the Registration Statement on Form N-1A filed on April 26, 2016.

(77) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Fundamental Multi-Cap Core, Global Concentrated, Global Core and US Core Portfolios), are incorporated herein by reference to Exhibit (a)(77) to Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A filed on May 11, 2016.

(78) Articles Supplementary to Registrants Articles of Amendment and Restatement (liquidating Asian Equity Portfolio), dated September 1, 2016, are incorporated herein by reference to Exhibit (a)(78) to Post-Effective Amendment No. 155 to the Registration Statement on Form N-1A filed on September 29, 2016.

(79) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Emerging Markets Breakout Nations Portfolio), dated October 20, 2016, filed herein.

(b) Amended and Restated By-Laws, dated December 8, 2015, are incorporated herein by reference to Exhibit (b) to Post- Effective Amendment No. 148 to the Registration Statement on Form N-1A filed on April 26, 2016.

(c) (1) Specimen Security with respect to Morgan Stanley Institutional Fund, Inc. Class A shares is incorporated herein by reference to Exhibit 1(a) (Amended and Restated Articles of Incorporation), as amended to date to Post-Effective

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Amendment No. 26 to the Registration Statement filed on October 13, 1995 and is incorporated by reference to Exhibit 2 (Amended and Restated By-Laws), as amended to date to Post-Effective Amendment No. 33 to the Registration Statement filed on February 28, 1997.

(2) Specimen Security with respect to Morgan Stanley Institutional Fund, Inc. Class B shares is incorporated herein by reference to Exhibit 1(a) (Amended and Restated Articles of Incorporation), as amended to date to Post-Effective Amendment No. 26 to the Registration Statement filed on October 13, 1995 and is incorporated by reference to Exhibit 2 (Amended and Restated By-Laws), as amended to date to Post-Effective Amendment No. 33 to the Registration Statement filed on February 28, 1997.

(d) (1) Amended and Restated Investment Advisory Agreement between the Registrant and Morgan Stanley Investment Management Inc., dated June 30, 2009, filed herein.

(2) Amended and Restated Sub-Advisory Agreement, dated May 30, 2013, between Morgan Stanley Investment Management Inc. and Morgan Stanley Investment Management Limited (relating to the Global Franchise Portfolio, Global Infrastructure Portfolio, Global Quality Portfolio, Global Real Estate Portfolio, International Equity Portfolio and International Real Estate Portfolio), filed herein.

(3) Amended and Restated Sub-Advisory Agreement, dated June 30, 2009, between Morgan Stanley Investment Management Inc. and Morgan Stanley Investment Management Company (relating to the Emerging Markets Leaders Portfolio, Emerging Markets Portfolio, Global Franchise Portfolio, Global Infrastructure Portfolio, Global Quality Portfolio, Global Real Estate Portfolio, International Equity Portfolio and International Real Estate Portfolio), filed herein.

(e) Distribution Agreement, between Registrant and Morgan Stanley Distribution, Inc. is incorporated herein by reference to Exhibit (e)(2) to Post-Effective Amendment No. 53 to the Registration Statement on Form N-1A filed on April 29, 2005.

(f) Not applicable.

(g) Custodian Contract between the Registrant and State Street Bank and Trust Company, dated March 7, 2008, filed herein.

(h) (1) Form of Amended and Restated Administration Agreement between the Registrant and Morgan Stanley Investment Management Inc., is incorporated herein by reference to Exhibit (h)(1) to Post-Effective Amendment No. 153 to the Registration Statement on Form N-1A filed on August 26, 2016.

(2) Transfer Agency and Service Agreement with Boston Financial Data Services, Inc., dated April 1, 2013, filed herein.

(3) Amendment to the Transfer Agency and Service Agreement with Boston Financial Data Services, Inc., dated July 1, 2013, is incorporated herein by reference to Exhibit (h)(2) of Post-Effective Amendment No. 34 to the Registration Statement on Form N-1A of Morgan Stanley Limited Duration U.S. Government Trust, filed on September 26, 2014.

(4) Fee Waiver Agreement between the Registrant (relating to Multi-Asset Portfolio) and Morgan Stanley Investment Management Inc., dated August 2, 2016, is incorporated by reference to Exhibit (h)(4) to Post-Effective Amendment No. 153 to the Registration Statement on Form N-1A filed on August 26, 2016.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (5) Form of Appointment of Agent for Service of Process relating to Multi-Asset Cayman Portfolio, Ltd., is incorporated by reference to Exhibit (h)(5) to Post-Effective Amendment No. 153 to the Registration Statement on Form N-1A filed on August 26, 2016.

(i) (1) Opinion of Ballard Spahr Andrews & Ingersoll, LLP is incorporated herein by reference to Exhibit (i)(1) to Post- Effective Amendment No. 53 to the Registration Statement on Form N-1A filed on April 29, 2005.

(2) Opinion and Consent of Clifford Chance US LLP is incorporated herein by reference to Exhibit (i)(2) to Post-Effective Amendment No. 53 to the Registration Statement on Form N-1A filed on April 29, 2005.

(3) Opinion and Consent of Clifford Chance US LLP (with respect to the International Growth Equity Portfolio), is incorporated herein by reference to Exhibit (i)(3) to Post-Effective Amendment No. 56 to the Registration Statement on Form N-1A filed on December 20, 2005.

(4) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to the International Growth Equity Portfolio), is incorporated herein by reference to Exhibit (i)(4) to Post-Effective Amendment No. 56 to the Registration Statement on Form N-1A filed on December 20, 2005.

(5) Opinion and Consent of Clifford Chance US LLP (with respect to the Systematic Active Large Cap Core Portfolio, Systematic Active Small Cap Core Portfolio, Systematic Active Small Cap Value Portfolio and Systematic Active Small Cap Growth Portfolio), is incorporated herein by reference to Exhibit (i) (5) of Post-Effective Amendment No. 59 to the Registration Statement on Form N-1A filed on April 28, 2006.

(6) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to the Systematic Active Large Cap Core Portfolio, Systematic Active Small Cap Core Portfolio, Systematic Active Small Cap Value Portfolio and Systematic Active Small Cap Growth Portfolio), is incorporated herein by reference to Exhibit (i) (6) of Post-Effective Amendment No. 59 to the Registration Statement on Form N-1A filed on April 28, 2006.

(7) Opinion and Consent of Clifford Chance US LLP (with respect to the Global Real Estate Portfolio), is incorporated herein by reference to Exhibit (i)(7) of Post-Effective Amendment No. 62 to the Registration Statement on Form N-1A filed on August 1, 2006.

(8) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to the Global Real Estate Portfolio), is incorporated herein by reference to Exhibit (i)(8) of Post-Effective Amendment No. 62 to the Registration Statement on Form N-1A filed on August 1, 2006.

(9) Opinion and Consent of Clifford Chance, LLP (with respect to the Disciplined Large Cap Value Active Extension Portfolio and Systematic Large Cap Core Active Extension Portfolio), is incorporated herein by reference to Exhibit (i)(9) of Post-Effective Amendment No. 68 to the Registration Statement on Form N-1A filed on May 29, 2007.

(10) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to the Disciplined Large Cap Value Active Extension and Systematic Large Cap Core Active Extension Portfolio), is incorporated herein by reference to Exhibit (i)(10) of Post-Effective Amendment No. 68 to the Registration Statement on Form N-1A filed on May 29, 2007.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (11) Opinion and Consent of Clifford Chance US LLP (with respect to the International Growth Active Extension Portfolio), is incorporated herein by reference to Exhibit (i)(11) of Post-Effective Amendment No. 70 to the Registration Statement on Form N-1A, filed on July 18, 2007.

(12) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to the International Growth Active Extension Portfolio), is incorporated herein by reference to Exhibit (i)(12) of Post-Effective Amendment No. 70 to the Registration Statement on Form N-1A, filed on July 18, 2007.

(13) Opinion and Consent of Clifford Chance US LLP (with respect to U.S. Small/Mid Cap Value Portfolio), is incorporated herein by reference to Exhibit (i)(13) to Post-Effective Amendment No. 71 to the Registration Statement on Form N-1A filed on September 26, 2007.

(14) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to U.S. Small/Mid Cap Value Portfolio), is incorporated herein by reference to Exhibit (i)(14) to Post-Effective Amendment No. 71 to the Registration Statement on Form N-1A filed on September 26, 2007.

(15) Opinion and Consent of Clifford Chance US LLP (with respect to Class H Shares), is incorporated herein by reference to Exhibit (i)(15) to Post-Effective Amendment No. 73 to the Registration Statement on Form N-1A filed on December 20, 2007.

(16) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to Class H Shares), is incorporated herein by reference to Exhibit (i)(16) to Post-Effective Amendment No. 73 to the Registration Statement on Form N-1A filed on December 20, 2007.

(17) Opinion and Consent of Clifford Chance US LLP (with respect to Class L Shares), is incorporated herein by reference to Exhibit (i)(17) to Post-Effective Amendment No. 76 to the Registration Statement on Form N-1A filed on June 3, 2008.

(18) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to Class L Shares), is incorporated herein by reference to Exhibit (i)(18) to Post-Effective Amendment No. 76 to the Registration Statement on Form N-1A filed on June 3, 2008.

(19) Opinion and Consent of Clifford Chance US LLP (with respect to Class P shares of International Small Cap Portfolio), is incorporated herein by reference to Exhibit (i)(19) to Post-Effective Amendment No. 78 to the Registration Statement on Form N-1A filed October 17, 2008.

(20) Opinion of Ballard Spahr Andrews & Ingersoll, LLP (with respect to Class P shares of International Small Cap Portfolio), is incorporated herein by reference to Exhibit (i)(20) to Post-Effective Amendment No. 78 to the Registration Statement on Form N-1A filed October 17, 2008.

(21) Opinion and Consent of Dechert LLP (with respect to Advantage, Equity Growth, Global Growth and International Opportunity Portfolios), is incorporated herein by reference to Exhibit (i)(22) to Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A filed on February 23, 2010.

(22) Opinion of Ballard Spahr LLP (with respect to Advantage, Equity Growth, Global Growth and International Opportunity Portfolios), is incorporated herein by reference to Exhibit (i)(23) to Post-Effective Amendment No. 82 to the Registration Statement on Form N-1A filed on February 23, 2010.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (23) Opinion and Consent of Dechert LLP (with respect to Select Global Infrastructure Portfolio), is incorporated herein by reference to Exhibit (i)(23) to Post-Effective Amendment No. 87 to the Registration Statement on Form N-1A filed on August 31, 2010.

(24) Opinion of Ballard Spahr LLP (with respect to Select Global Infrastructure Portfolio), is incorporated herein by reference to Exhibit (i)(24) to Post-Effective Amendment No. 87 to the Registration Statement on Form N-1A filed on August 31, 2010.

(25) Opinion and Consent of Dechert LLP (with respect to Global Advantage, Global Discovery and International Advantage Portfolios), is incorporated herein by reference to Exhibit (i)(25) to Post-Effective Amendment No. 91 to the Registration Statement on Form N-1A filed on December 14, 2010.

(26) Opinion of Ballard Spahr LLP (with respect to Global Advantage, Global Discovery and International Advantage Portfolios), is incorporated herein by reference to Exhibit (i)(26) to Post-Effective Amendment No. 91 to the Registration Statement on Form N-1A filed on December 14, 2010.

(27) Opinion and Consent of Dechert LLP (with respect to Asian Equity Portfolio), is incorporated herein by reference to Exhibit (i)(27) to Post-Effective Amendment No. 92 to the Registration Statement on Form N-1A filed on December 22, 2010.

(28) Opinion of Ballard Spahr LLP (with respect to Asian Equity Portfolio), is incorporated herein by reference to Exhibit (i)(28) to Post-Effective Amendment No. 92 to the Registration Statement on Form N-1A filed on December 22, 2010.

(29) Opinion and Consent of Dechert LLP (with respect to Class H and Class L shares of Small Company Growth and U.S. Real Estate Portfolios), is incorporated herein by reference to Exhibit (i)(29) to Post-Effective Amendment No. 96 to the Registration Statement on Form N-1A filed on August 22, 2011.

(30) Opinion of Ballard Spahr LLP (with respect to Class H and Class L shares of Small Company Growth and U.S. Real Estate Portfolios), is incorporated herein by reference to Exhibit (i)(30) to Post-Effective Amendment No. 96 to the Registration Statement on Form N-1A filed on August 22, 2011.

(31) Opinion and Consent of Dechert LLP (with respect to Global Insight and Insight Portfolios), is incorporated herein by reference to Exhibit (i)(31) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on December 9, 2011.

(32) Opinion of Ballard Spahr LLP (with respect to Global Insight and Insight Portfolios), is incorporated herein by reference to Exhibit (i)(32) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on December 9, 2011.

(33) Opinion of Dechert LLP (with respect to Class H and Class L shares of Active International Allocation, Emerging Markets Equity, Focus Growth, Global Franchise, Growth, International Equity, International Real Estate and International Small Cap Portfolios), is incorporated by reference to Exhibit (i)(33) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on April 27, 2012.

(34) Opinion of Ballard Spahr LLP (with respect to Class H and Class L shares of Active International Allocation, Emerging Markets Equity, Focus Growth, Global Franchise, Growth, International Equity, International Real Estate and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document International Small Cap Portfolios), is incorporated by reference to Exhibit (i)(33) to Post-Effective Amendment No. 99 to the Registration Statement on Form N-1A filed on April 27, 2012.

(35) Opinion and Consent of Dechert LLP (with respect to Emerging Markets External Debt, Multi-Asset and Total Emerging Markets Portfolios), is incorporated by reference to Exhibit (i)(35) to Post-Effective Amendment No. 107 to the Registration Statement on Form N-1A filed on May 23, 2012.

(36) Opinion of Ballard Spahr LLP (with respect to Emerging Markets External Debt, Multi-Asset and Total Emerging Markets Portfolios), is incorporated by reference to Exhibit (i)(36) to Post-Effective Amendment No. 107 to the Registration Statement on Form N-1A filed on May 23, 2012.

(37) Opinion and Consent of Dechert LLP (with respect to Frontier Emerging Markets Portfolio), are incorporated by reference to Exhibit (i)(37) to Post-Effective Amendment No. 109 to the Registration Statement on Form N-1A filed on June 26, 2012.

(38) Opinion of Ballard Spahr LLP (with respect to Frontier Emerging Markets Portfolio), is incorporated by reference to Exhibit (i)(38) to Post-Effective Amendment No. 109 to the Registration Statement on Form N-1A filed on June 26, 2012.

(39) Opinion and Consent of Dechert LLP (with respect to Class IS shares of Advantage, Emerging Markets, Emerging Markets Domestic Debt, Emerging Markets External Debt, Global Opportunity, Global Real Estate, Growth, International Equity, International Opportunity, International Real Estate, Opportunity, Select Global Infrastructure and U.S. Real Estate Portfolios), is incorporated herein by reference to Exhibit (i)(39) to Post-Effective Amendment No. 119 to the Registration Statement on Form N-1A filed on June 13, 2013.

(40) Opinion of Ballard Spahr LLP (with respect to Class IS shares of Advantage, Emerging Markets, Emerging Markets Domestic Debt, Emerging Markets External Debt, Global Opportunity, Global Real Estate, Growth, International Equity, International Opportunity, International Real Estate, Opportunity, Select Global Infrastructure and U.S. Real Estate Portfolios), is incorporated herein by reference to Exhibit (i)(40) to Post-Effective Amendment No. 119 to the Registration Statement on Form N-1A filed on June 13, 2013.

(41) Opinion and Consent of Dechert LLP (with respect to Class IS shares of Small Company Growth Portfolio), is incorporated herein by reference to Exhibit (i)(41) to Post-Effective Amendment No. 121 to the Registration Statement on Form N-1A filed on July 12, 2013.

(42) Opinion of Ballard Spahr LLP (with respect to Class IS shares of Small Company Growth Portfolio), is incorporated herein by reference to Exhibit (i)(42) to Post-Effective Amendment No. 121 to the Registration Statement on Form N-1A filed on July 12, 2013.

(43) Opinion and Consent of Dechert LLP (with respect to the Global Quality Portfolio), is incorporated herein by reference to Exhibit (i)(43) to Post-Effective Amendment No. 123 to the Registration Statement on Form N-1A filed on August 16, 2013.

(44) Opinion of Ballard Spahr LLP (with respect to the Global Quality Portfolio), is incorporated herein by reference to Exhibit (i)(44) to Post-Effective Amendment No. 123 to the Registration Statement on Form N-1A filed on August 16, 2013.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (45) Opinion and Consent of Dechert LLP (with respect to Emerging Markets Leaders Portfolio), is incorporated herein by reference to Exhibit (i)(45) to Post-Effective Amendment No. 128 to the Registration Statement on Form N-1A filed on November 25, 2014.

(46) Opinion of Ballard Spahr LLP (with respect to Emerging Markets Leaders Portfolio), is incorporated herein by reference to Exhibit (i)(46) to Post-Effective Amendment No. 128 to the Registration Statement on Form N-1A filed on November 25, 2014.

(47) Opinion and Consent of Dechert LLP (with respect to Class IS shares of Frontier Emerging Markets Portfolio), is incorporated herein by reference to Exhibit (i)(47) to Post-Effective Amendment No. 133 to the Registration Statement on Form N-1A filed on February 13, 2015.

(48) Opinion of Ballard Spahr LLP (with respect to Class IS shares of Frontier Emerging Markets Portfolio), is incorporated herein by reference to Exhibit (i)(48) to Post-Effective Amendment No. 133 to the Registration Statement on Form N-1A filed on February 13, 2015.

(49) Opinion and Consent of Dechert LLP (with respect to Class C shares of all Portfolios), is incorporated herein by reference to Exhibit (i)(49) to Post-Effective Amendment No. 137 to the Registration Statement on Form N-1A filed on April 27, 2015.

(50) Opinion of Ballard Spahr LLP (with respect to Class C shares of all Portfolios), is incorporated herein by reference to Exhibit (i)(50) to Post-Effective Amendment No. 137 to the Registration Statement on Form N-1A filed on April 27, 2015.

(51) Opinion and Consent of Dechert LLP (with respect to Class IS shares of Global Franchise and Multi-Asset Portfolios), is incorporated herein by reference to Exhibit (i)(51) to Post-Effective Amendment No. 138 to the Registration Statement on Form N-1A filed on May 12, 2015.

(52) Opinion of Ballard Spahr LLP (with respect to Class IS shares of Global Franchise and Multi-Asset Portfolios), is incorporated herein by reference to Exhibit (i)(52) to Post-Effective Amendment No. 138 to the Registration Statement on Form N-1A filed on May 12, 2015.

(53) Opinion and Consent of Dechert LLP (with respect to Asia Opportunity Portfolio), is incorporated herein by reference to Exhibit (i)(53) to Post-Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(54) Opinion of Ballard Spahr LLP (with respect to Asia Opportunity Portfolio), is incorporated herein by reference to Exhibit (i)(54) to Post-Effective Amendment No. 143 to the Registration Statement on Form N-1A filed on December 1, 2015.

(55) Opinion and Consent of Dechert LLP (with respect to Emerging Markets Small Cap Portfolio), is incorporated herein by reference to Exhibit (i)(55) to Post-Effective Amendment No. 144 to the Registration Statement on Form N-1A filed on December 2, 2015.

(56) Opinion of Ballard Spahr LLP (with respect to Emerging Markets Small Cap Portfolio), is incorporated herein by reference to Exhibit (i)(56) to Post-Effective Amendment No. 144 to the Registration Statement on Form N-1A filed on December 2, 2015.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (57) Opinion and Consent of Dechert LLP (with respect to Fundamental Multi-Cap Core, Global Concentrated, Global Core and US Core Portfolios), is incorporated by reference to Exhibit (i)(57) to Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A filed on May 11, 2016.

(58) Opinion of Ballard Spahr LLP (with respect to Fundamental Multi-Cap Core, Global Concentrated, Global Core and US Core Portfolios), is incorporated by reference to Exhibit (i)(58) to Post-Effective Amendment No. 150 to the Registration Statement on Form N-1A filed on May 11, 2016.

(59) Opinion and Consent of Dechert LLP (with respect to Emerging Markets Breakout Nations Portfolio), filed herein.

(60) Opinion of Ballard Spahr LLP (with respect to Emerging Markets Breakout Nations Portfolio), filed herein.

(j) Not applicable.

(k) Not applicable.

(l) Purchase Agreement, is incorporated herein by reference to Exhibit 13 to Post-Effective Amendment No. 25 to the Registration Statement on Form N-1A filed on August 1, 1995.

(m) (1) Amended and Restated Shareholder Services Plan under Rule 12b-1 for Class A Shares, filed herein.

(2) Amended and Restated Distribution and Shareholder Services Plan under Rule 12b-1 for Class L Shares, is incorporated herein by reference to Exhibit (m)(2) to Post-Effective Amendment No. 148 to the Registration Statement on Form N-1A filed on April 26, 2016.

(3) Distribution and Shareholder Services Plan under Rule 12b-1 for Class C Shares, filed herein.

(n) Amended and Restated Multiple Class 18f-3 Plan, filed herein.

(o) Reserved.

(p) (1) Code of Ethics of the Morgan Stanley Funds is incorporated herein by reference to Exhibit (p)(2) of Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A of Morgan Stanley Limited Duration U.S. Government Trust, filed on September 30, 2010.

(2) Code of Ethics for Morgan Stanley Investment Management, dated March 22, 2016, is incorporated herein by reference to Exhibit (p)(1) of Post-Effective Amendment No. 41 to the Registration Statement on Form N-1A of Morgan Stanley Multi Cap Growth Trust, filed on March 29, 2016.

(q) Powers of Attorney of Directors, dated December 9, 2015, are incorporated herein by reference to Exhibit (q) to Post- Effective Amendment No. 146 to the Registration Statement on Form N-1A of Morgan Stanley Institutional Fund Trust, filed on January 19, 2016.

ITEM 29. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND

Provide a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant. For any person controlled by another person, disclose the percentage of voting securities owned by

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the immediately controlling person or other basis of that persons control. For each company, also provide the state or other sovereign power under the laws of which the company is organized.

None.

ITEM 30. INDEMNIFICATION

State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified against any liability incurred in their official capacity, other than insurance provided by any director, officer, affiliated person, or underwriter for their own protection.

Reference is made to Article Seven of the Registrants Articles of Incorporation which is incorporated by reference herein:

Insofar as indemnification for liability may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Pursuant to paragraph 7 of the Registrants Investment Advisory Agreement, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Adviser in performance of its obligations and duties hereunder, reckless disregard by the Adviser of its obligations and duties hereunder or a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the Investment Company Act), the Adviser shall not be subject to any liability whatsoever to the Registrant, or to any shareholder of the Registrant, for any error or judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including, without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of any Portfolio of the Registrant.

Pursuant to paragraph 6 of the Registrants Administration Agreement, the Administrator has no liability for any loss or damage resulting from the performance or nonperformance of its duties unless solely caused by or resulting from the gross negligence or willful misconduct. The Registrant agrees to indemnify and hold the Administrator, and third parties providing services for the benefit of the Registrant through arrangements with the Administrator, harmless from all loss, cost, damage and expense, including reasonable expenses for counsel, incurred by such person resulting from any claim, demand, action or omission by it in the performance of its duties under the Agreement or such arrangements with the Administrator, or as a result of acting upon any instructions reasonably believed by any such person to have been executed by a duly authorized officer of the Registrant or of its investment advisers, provided that this indemnification shall not apply to actions or omissions of the Administrator, its officers, employees or agents in cases of its or their own gross negligence or willful misconduct. Further, the Agreement does not protect the Administrator, its directors, officers and/ or employees against liability to the Registrant or its shareholders to which it might otherwise be subject by reason of any fraud, willful misfeasance or gross negligence in the performance of its duties or the reckless disregard of its obligations under the Agreement.

Pursuant to section 5 of the Registrants Distribution Agreement, the Registrant has agreed to indemnify, defend and hold the Distributor, its officers and directors and any person who controls the Distributor, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which the Distributor, its officers, directors or any such controlling person, arising out of or based upon any untrue statement of a material fact contained in the Registration Statement or Prospectus or arising out of or based upon

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any alleged omission to state a material fact required to be stated in either thereof or necessary to make the statements in either thereof not misleading, except insofar as such claims, demands, liabilities or expenses arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished in writing by the Distributor to the Registrant for use in the Registration Statement or Prospectus, but only in the event that a court of competent jurisdiction shall determine, or it shall have

been determined by controlling precedent, that such result would not be against public policy as expressed in the 1933 Act; and except in the case of the Distributors willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of its reckless disregard of its obligations under this Agreement.

ITEM 31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

(a) Describe any other business, profession, vocation or employment of a substantial nature in which the investment adviser and each director, officer or partner of the investment adviser, is or has been, engaged within the last two fiscal years for his or her own account or in the capacity of director, officer, employee, partner or trustee. (Disclose the name and principal business address of any company for which a person listed below serves in the capacity of director, officer, employee, partner or trustee, and the nature of the relationship.)

See Fund Management in the Prospectus regarding the business of the investment adviser. The following information is given regarding directors and officers of Morgan Stanley Investment Management Inc. Morgan Stanley Investment Management Inc. is a wholly-owned subsidiary of Morgan Stanley.

Set forth below is the name and principal business address of each company for which directors or officers of Morgan Stanley Investment Management Inc. serve as directors, officers or employees:

Morgan Stanley Investment Management Inc. Morgan Stanley Distribution, Inc. Morgan Stanley Services Company Inc. 522 Fifth Avenue, New York, New York 10036

Listed below are the officers and Directors of Morgan Stanley Investment Management Inc.:

NAME AND POSITION WITH MORGAN STANLEY INVESTMENT OTHER SUBSTANTIAL BUSINESS, MANAGEMENT INC. PROFESSION OR VOCATION

Dan Simkowitz Managing Director of Morgan Stanley. Managing Director and President

Christopher ODell Managing Director and Secretary of Morgan Stanley Managing Director and Secretary Distribution, Inc. and Morgan Stanley Services Company, Inc.; Secretary of other entities affiliated with the Adviser.

Timothy J. Knierim Chief Compliance Officer of the Morgan Stanley Funds. Managing Director and Chief Compliance Officer

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document David Heaton Treasurer of other entities affiliated with the Adviser. Managing Director, Director and Chief Financial Officer

Mary Alice Dunne Managing Director and Director

Anita Rios Executive Director and Treasurer

Feta Zabeli Managing Director and Director

Philip Varela Executive Director and Anti-Money Laundering Officer of Morgan Executive Director and Chief Anti-Money Laundering Stanley Distribution, Inc. and Morgan Stanley Services Officer Company, Inc.

For information as to the business, profession, vocation or employment of a substantial nature of additional officers of the Adviser, reference is made to the Advisers current Form ADV (File No. 801-15757) filed under the Investment Advisers Act of 1940, incorporated herein by reference.

In addition, the Adviser and the Sub-Advisers act as investment adviser or sub-adviser to several other registered investment companies.

ITEM 32. PRINCIPAL UNDERWRITERS

(a) State the name of each investment company (other than the Registrant) for which each principal underwriter currently distributing securities of the Registrant also acts as a principal underwriter, depositor or investment adviser.

Morgan Stanley Distribution, Inc. acts as distributor for the following investment companies:

(1) Active Assets Government Trust (2) Active Assets Prime Trust (3) Morgan Stanley California Tax-Free Daily Income Trust (4) Morgan Stanley European Equity Fund Inc. (5) Morgan Stanley Global Fixed Income Opportunities Fund (6) Morgan Stanley Institutional Fund Trust (7) Morgan Stanley Institutional Liquidity Funds (8) Morgan Stanley Liquid Asset Fund Inc. (9) Morgan Stanley Mortgage Securities Trust (10) Morgan Stanley Multi Cap Growth Trust (11) Morgan Stanley New York Municipal Money Market Trust (12) Morgan Stanley Select Dimensions Investment Series (13) Morgan Stanley Tax-Free Daily Income Trust (14) Morgan Stanley U.S. Government Money Market Trust (15) Morgan Stanley U.S. Government Securities Trust (16) Morgan Stanley Variable Investment Series (17) The Universal Institutional Funds, Inc.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Provide the information required by the following table with respect to each director, officer or partner of each principal underwriter named in answer to Item 32.

The principal address for Morgan Stanley Distribution, Inc. and each director, officer or partner listed below is 522 Fifth Avenue, New York, NY 10036.

NAME AND PRINCIPAL POSITION AND OFFICES WITH POSITIONS AND BUSINESS ADDRESS UNDERWRITER OFFICES WITH REGISTRANT Henry Kaplan President and Director None Frederick McMullen Director None Maureen OToole Director None John Keleghan Chief Financial Officer and Treasurer None Christopher ODell Secretary and Managing Director None

Ilene Shore Chief Compliance Officer and Executive None Director Philip Varela Chief Anti-Money Laundering Officer and AML Officer Executive Director Sergio Lupetin Financial and Operations Principal and None Managing Director

(c) Provide the information required by the following table for all commissions and other compensation received, directly or indirectly, from the Fund during the last fiscal year by each principal underwriter who is NOT an affiliated person of the Fund or any affiliated person of an affiliated person:

Not Applicable.

ITEM 33. LOCATION OF ACCOUNTS AND RECORDS

State the name and address of each person maintaining principal possession of each account, book on other document required to be maintained by Section 31(a) of the 1940 Act [15 U.S.C. 80a-30(a)] and the rules under that section.

State Street Bank and Trust Company One Lincoln Street Boston, MA 02111 (records relating to its function as custodian and sub-administrator)

Boston Financial Data Services, Inc. 2000 Crown Colony Drive Quincy, MA 02169-0953 (records relating to its function as transfer agent and dividend disbursing agent)

Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036 (records relating to its function as investment adviser and administrator)

Provide a summary of the substantive provisions of any management-related service contract not discussed in part A or part B, disclosing the parties to the contract and the total amount paid and by whom, for the funds last three fiscal years.

Not applicable.

ITEM 35. UNDERTAKINGS

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 13th day of December, 2016.

MORGAN STANLEY INSTITUTIONAL FUND, INC.

By: /s/ John H. Gernon John H. Gernon President and Principal Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 157 has been signed below by the following persons in the capacities and on the dates indicated.

Signatures Title Date

(1) Principal Executive Officer President and Principal Executive Officer

By: /s/ John H. Gernon December 13, 2016 John H. Gernon

(2) Principal Financial Officer Principal Financial Officer

By: /s/ Francis J. Smith December 13, 2016 Francis J. Smith

(3) Majority of the Directors

INDEPENDENT DIRECTORS Frank L. Bowman Joseph J. Kearns Kathleen A. Dennis Michael F. Klein Nancy C. Everett Michael E. Nugent (Chairman) Jakki L. Haussler W. Allen Reed

By: /s/ Carl Frischling December 13, 2016 Carl Frischling Attorney-in-Fact for the Independent Directors

EXHIBIT INDEX

(a)(79) Articles Supplementary to Registrants Articles of Amendment and Restatement (adding Emerging Markets Breakout Nations Portfolio).

(d)(1) Amended and Restated Investment Advisory Agreement between the Registrant and Morgan Stanley Investment Management Inc.

(d)(2) Amended and Restated Investment Sub-Advisory Agreement between Morgan Stanley Investment Management Inc. and Morgan Stanley Investment Management Limited.

(d)(3) Amended and Restated Investment Sub-Advisory Agreement between Morgan Stanley Investment Management Inc. and Morgan Stanley Investment Management Company.

(g) Custodian Contract between the Registrant and State Street Bank and Trust Company.

(h)(2) Transfer Agency Service Agreement with Boston Financial Data Services, Inc.

(i)(59) Opinion and Consent of Dechert LLP (with respect to Emerging Markets Breakout Nations Portfolio).

(i)(60) Opinion of Ballard Spahr LLP (with respect to Emerging Markets Breakout Nations Portfolio).

(m)(1) Amended and Restated Shareholder Services Plan under Rule 12b-1 for Class A Shares.

(m)(3) Distribution and Shareholder Services Plan under Rule 12b-1 for Class C Shares.

(n) Amended and Restated Multiple Class 18f-3 Plan.

MORGAN STANLEY INSTITUTIONAL FUND, INC.

ARTICLES SUPPLEMENTARY

MORGAN STANLEY INSTITUTIONAL FUND, INC., a Maryland corporation (the Corporation), does hereby certify to the State Department of Assessments and Taxation of Maryland (the Department) that:

FIRST: The Corporation is registered as an open-end investment company under the Investment Company Act of 1940.

SECOND: The Board of Directors of the Corporation (the Board of Directors), at a meeting duly convened and held on September 27-28, 2016, adopted resolutions which: (i) increased the total number of shares of stock which the Corporation has authority to issue to seventy-eight billion (78,000,000,000) shares of common stock; (ii) established one (1) additional portfolio of common stock consisting of four classes, designated as Emerging Markets Breakout Nations PortfolioClass I, Emerging Markets Breakout Nations PortfolioClass A, Emerging Markets Breakout Nations PortfolioClass C and Emerging Markets Breakout Nations PortfolioClass IS; and (iii) classified 500,000,000 shares of common stock as shares of Emerging Markets Breakout Nations PortfolioClass I, 500,000,000 shares of common stock as shares of Emerging Markets Breakout Nations PortfolioClass A, 500,000,000 shares of common stock as shares of Emerging Markets Breakout Nations PortfolioClass C and 500,000,000 shares of common stock as shares of Emerging Markets Breakout Nations PortfolioClass IS.

THIRD: The terms applicable to the classes of common stock designated and classified as set forth above, including any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption, as set by the Board of Directors, are the same as the terms of the existing classes of common stock which are set forth in the Articles of Restatement of the Corporation, as amended and supplemented (the Charter).

FOURTH: As of immediately before the increase in the number of authorized shares as set forth above, the total number of shares of stock of all classes that the Corporation had authority to issue was seventy-six billion (76,000,000,000) shares of common stock, having an aggregate par value of seventy-six million dollars ($76,000,000) and designated and classified in the following portfolios and classes:

NUMBER OF SHARES OF COMMON STOCK CLASSIFIED AND NAME OF CLASS ALLOCATED

Active International Allocation Portfolio Class I 500,000,000 shares Active International Allocation Portfolio Class A 1,000,000,000 shares Active International Allocation Portfolio Class L 500,000,000 shares Active International Allocation Portfolio Class C 500,000,000 shares

Advantage Portfolio Class I 500,000,000 shares Advantage Portfolio Class A 1,000,000,000 shares Advantage Portfolio Class L 500,000,000 shares Advantage Portfolio Class IS 500,000,000 shares Advantage Portfolio Class C 500,000,000 shares Asia Opportunity Portfolio Class I 500,000,000 shares Asia Opportunity Portfolio Class A 1,000,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Asia Opportunity Portfolio Class IS 500,000,000 shares Asia Opportunity Portfolio Class C 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class I 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class A 1,000,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class L 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class IS 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class C 500,000,000 shares Emerging Markets Leaders Portfolio Class I 500,000,000 shares Emerging Markets Leaders Portfolio Class A 1,000,000,000 shares Emerging Markets Leaders Portfolio Class L 500,000,000 shares Emerging Markets Leaders Portfolio Class IS 500,000,000 shares Emerging Markets Leaders Portfolio Class C 500,000,000 shares Emerging Markets Portfolio Class I 500,000,000 shares Emerging Markets Portfolio Class A 1,000,000,000 shares Emerging Markets Portfolio Class L 500,000,000 shares Emerging Markets Portfolio Class IS 500,000,000 shares Emerging Markets Portfolio Class C 500,000,000 shares Emerging Markets Small Cap Portfolio Class I 500,000,000 shares Emerging Markets Small Cap Portfolio Class A 500,000,000 shares Emerging Markets Small Cap Portfolio Class IS 500,000,000 shares Emerging Markets Small Cap Portfolio Class C 500,000,000 shares Frontier Emerging Markets Portfolio Class I 500,000,000 shares Frontier Emerging Markets Portfolio Class A 1,000,000,000 shares Frontier Emerging Markets Portfolio Class L 500,000,000 shares Frontier Emerging Markets Portfolio Class IS 500,000,000 shares Frontier Emerging Markets Portfolio Class C 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class I 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class A 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class C 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class IS 500,000,000 shares Global Advantage Portfolio Class I 500,000,000 shares Global Advantage Portfolio Class A 1,000,000,000 shares Global Advantage Portfolio Class L 500,000,000 shares Global Advantage Portfolio Class C 500,000,000 shares

Global Concentrated Portfolio Class I 500,000,000 shares Global Concentrated Portfolio Class A 500,000,000 shares Global Concentrated Portfolio Class C 500,000,000 shares Global Concentrated Portfolio Class IS 500,000,000 shares Global Core Portfolio Class I 500,000,000 shares Global Core Portfolio Class A 500,000,000 shares Global Core Portfolio Class C 500,000,000 shares Global Core Portfolio Class IS 500,000,000 shares Global Discovery Portfolio Class I 500,000,000 shares Global Discovery Portfolio Class A 1,000,000,000 shares Global Discovery Portfolio Class L 500,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Global Discovery Portfolio Class C 500,000,000 shares Global Franchise Portfolio Class I 500,000,000 shares Global Franchise Portfolio Class A 1,000,000,000 shares Global Franchise Portfolio Class L 500,000,000 shares Global Franchise Portfolio Class IS 500,000,000 shares Global Franchise Portfolio Class C 500,000,000 shares Global Infrastructure Portfolio Class I 500,000,000 shares Global Infrastructure Portfolio Class A 1,000,000,000 shares Global Infrastructure Portfolio Class L 500,000,000 shares Global Infrastructure Portfolio Class IS 500,000,000 shares Global Infrastructure Portfolio Class C 500,000,000 shares Global Insight Portfolio Class I 500,000,000 shares Global Insight Portfolio Class A 500,000,000 shares Global Insight Portfolio Class L 500,000,000 shares Global Insight Portfolio Class C 500,000,000 shares Global Opportunity Portfolio Class I 500,000,000 shares Global Opportunity Portfolio Class A 1,000,000,000 shares Global Opportunity Portfolio Class L 500,000,000 shares Global Opportunity Portfolio Class IS 500,000,000 shares Global Opportunity Portfolio Class C 500,000,000 shares Global Quality Portfolio Class I 500,000,000 shares Global Quality Portfolio Class A 500,000,000 shares Global Quality Portfolio Class L 500,000,000 shares Global Quality Portfolio Class IS 500,000,000 shares Global Quality Portfolio Class C 500,000,000 shares Global Real Estate Portfolio Class I 500,000,000 shares Global Real Estate Portfolio Class A 1,000,000,000 shares Global Real Estate Portfolio Class L 500,000,000 shares Global Real Estate Portfolio Class IS 500,000,000 shares Global Real Estate Portfolio Class C 500,000,000 shares Growth Portfolio Class I 500,000,000 shares Growth Portfolio Class A 1,000,000,000 shares Growth Portfolio Class L 500,000,000 shares Growth Portfolio Class IS 500,000,000 shares Growth Portfolio Class C 500,000,000 shares

Insight Portfolio Class I 500,000,000 shares Insight Portfolio Class A 500,000,000 shares Insight Portfolio Class L 500,000,000 shares Insight Portfolio Class C 500,000,000 shares International Advantage Portfolio Class I 500,000,000 shares International Advantage Portfolio Class A 1,000,000,000 shares International Advantage Portfolio Class L 500,000,000 shares International Advantage Portfolio Class C 500,000,000 shares International Equity Portfolio Class I 500,000,000 shares International Equity Portfolio Class A 1,000,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document International Equity Portfolio Class L 500,000,000 shares International Equity Portfolio Class IS 500,000,000 shares International Equity Portfolio Class C 500,000,000 shares International Opportunity Portfolio Class I 500,000,000 shares International Opportunity Portfolio Class A 1,000,000,000 shares International Opportunity Portfolio Class L 500,000,000 shares International Opportunity Portfolio Class IS 500,000,000 shares International Opportunity Portfolio Class C 500,000,000 shares International Real Estate Portfolio Class I 500,000,000 shares International Real Estate Portfolio Class A 500,000,000 shares International Real Estate Portfolio Class L 500,000,000 shares International Real Estate Portfolio Class IS 500,000,000 shares International Real Estate Portfolio Class C 500,000,000 shares Multi-Asset Portfolio Class I 500,000,000 shares Multi-Asset Portfolio Class A 1,000,000,000 shares Multi-Asset Portfolio Class L 500,000,000 shares Multi-Asset Portfolio Class IS 500,000,000 shares Multi-Asset Portfolio Class C 500,000,000 shares Small Company Growth Portfolio Class I 500,000,000 shares Small Company Growth Portfolio Class A 1,000,000,000 shares Small Company Growth Portfolio Class L 500,000,000 shares Small Company Growth Portfolio Class IS 500,000,000 shares Small Company Growth Portfolio Class C 500,000,000 shares US Core Portfolio Class I 500,000,000 shares US Core Portfolio Class A 500,000,000 shares US Core Portfolio Class C 500,000,000 shares US Core Portfolio Class IS 500,000,000 shares U.S. Real Estate Portfolio Class I 500,000,000 shares U.S. Real Estate Portfolio Class A 1,000,000,000 shares U.S. Real Estate Portfolio Class L 500,000,000 shares U.S. Real Estate Portfolio Class IS 500,000,000 shares U.S. Real Estate Portfolio Class C 500,000,000 shares Total 76,000,000,000 shares

The par value of all shares of common stock of all portfolios and classes that the Corporation has authority to issue is $0.001 per share.

FIFTH: As increased, the total number of shares of stock of all classes that the Corporation has authority to issue is seventy-eight billion (78,000,000,000) shares of common stock, having an aggregate par value of seventy-eight million dollars ($78,000,000) and designated and classified in the following portfolios and classes:

NUMBER OF SHARES OF COMMON STOCK CLASSIFIED AND NAME OF CLASS ALLOCATED

Active International Allocation Portfolio Class I 500,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Active International Allocation Portfolio Class A 1,000,000,000 shares Active International Allocation Portfolio Class L 500,000,000 shares Active International Allocation Portfolio Class C 500,000,000 shares Advantage Portfolio Class I 500,000,000 shares Advantage Portfolio Class A 1,000,000,000 shares Advantage Portfolio Class L 500,000,000 shares Advantage Portfolio Class IS 500,000,000 shares Advantage Portfolio Class C 500,000,000 shares Asia Opportunity Portfolio Class I 500,000,000 shares Asia Opportunity Portfolio Class A 1,000,000,000 shares Asia Opportunity Portfolio Class IS 500,000,000 shares Asia Opportunity Portfolio Class C 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class I 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class A 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class C 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class IS 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class I 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class A 1,000,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class L 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class IS 500,000,000 shares Emerging Markets Fixed Income Opportunities Portfolio Class C 500,000,000 shares Emerging Markets Leaders Portfolio Class I 500,000,000 shares Emerging Markets Leaders Portfolio Class A 1,000,000,000 shares Emerging Markets Leaders Portfolio Class L 500,000,000 shares Emerging Markets Leaders Portfolio Class IS 500,000,000 shares Emerging Markets Leaders Portfolio Class C 500,000,000 shares Emerging Markets Portfolio Class I 500,000,000 shares Emerging Markets Portfolio Class A 1,000,000,000 shares Emerging Markets Portfolio Class L 500,000,000 shares Emerging Markets Portfolio Class IS 500,000,000 shares Emerging Markets Portfolio Class C 500,000,000 shares

Emerging Markets Small Cap Portfolio Class I 500,000,000 shares Emerging Markets Small Cap Portfolio Class A 500,000,000 shares Emerging Markets Small Cap Portfolio Class IS 500,000,000 shares Emerging Markets Small Cap Portfolio Class C 500,000,000 shares Frontier Emerging Markets Portfolio Class I 500,000,000 shares Frontier Emerging Markets Portfolio Class A 1,000,000,000 shares Frontier Emerging Markets Portfolio Class L 500,000,000 shares Frontier Emerging Markets Portfolio Class IS 500,000,000 shares Frontier Emerging Markets Portfolio Class C 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class I 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class A 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class C 500,000,000 shares Fundamental Multi-Cap Core Portfolio Class IS 500,000,000 shares Global Advantage Portfolio Class I 500,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Global Advantage Portfolio Class A 1,000,000,000 shares Global Advantage Portfolio Class L 500,000,000 shares Global Advantage Portfolio Class C 500,000,000 shares Global Concentrated Portfolio Class I 500,000,000 shares Global Concentrated Portfolio Class A 500,000,000 shares Global Concentrated Portfolio Class C 500,000,000 shares Global Concentrated Portfolio Class IS 500,000,000 shares Global Core Portfolio Class I 500,000,000 shares Global Core Portfolio Class A 500,000,000 shares Global Core Portfolio Class C 500,000,000 shares Global Core Portfolio Class IS 500,000,000 shares Global Discovery Portfolio Class I 500,000,000 shares Global Discovery Portfolio Class A 1,000,000,000 shares Global Discovery Portfolio Class L 500,000,000 shares Global Discovery Portfolio Class C 500,000,000 shares Global Franchise Portfolio Class I 500,000,000 shares Global Franchise Portfolio Class A 1,000,000,000 shares Global Franchise Portfolio Class L 500,000,000 shares Global Franchise Portfolio Class IS 500,000,000 shares Global Franchise Portfolio Class C 500,000,000 shares Global Infrastructure Portfolio Class I 500,000,000 shares Global Infrastructure Portfolio Class A 1,000,000,000 shares Global Infrastructure Portfolio Class L 500,000,000 shares Global Infrastructure Portfolio Class IS 500,000,000 shares Global Infrastructure Portfolio Class C 500,000,000 shares Global Insight Portfolio Class I 500,000,000 shares Global Insight Portfolio Class A 500,000,000 shares Global Insight Portfolio Class L 500,000,000 shares Global Insight Portfolio Class C 500,000,000 shares Global Opportunity Portfolio Class I 500,000,000 shares Global Opportunity Portfolio Class A 1,000,000,000 shares Global Opportunity Portfolio Class L 500,000,000 shares

Global Opportunity Portfolio Class IS 500,000,000 shares Global Opportunity Portfolio Class C 500,000,000 shares Global Quality Portfolio Class I 500,000,000 shares Global Quality Portfolio Class A 500,000,000 shares Global Quality Portfolio Class L 500,000,000 shares Global Quality Portfolio Class IS 500,000,000 shares Global Quality Portfolio Class C 500,000,000 shares Global Real Estate Portfolio Class I 500,000,000 shares Global Real Estate Portfolio Class A 1,000,000,000 shares Global Real Estate Portfolio Class L 500,000,000 shares Global Real Estate Portfolio Class IS 500,000,000 shares Global Real Estate Portfolio Class C 500,000,000 shares Growth Portfolio Class I 500,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Growth Portfolio Class A 1,000,000,000 shares Growth Portfolio Class L 500,000,000 shares Growth Portfolio Class IS 500,000,000 shares Growth Portfolio Class C 500,000,000 shares Insight Portfolio Class I 500,000,000 shares Insight Portfolio Class A 500,000,000 shares Insight Portfolio Class L 500,000,000 shares Insight Portfolio Class C 500,000,000 shares International Advantage Portfolio Class I 500,000,000 shares International Advantage Portfolio Class A 1,000,000,000 shares International Advantage Portfolio Class L 500,000,000 shares International Advantage Portfolio Class C 500,000,000 shares International Equity Portfolio Class I 500,000,000 shares International Equity Portfolio Class A 1,000,000,000 shares International Equity Portfolio Class L 500,000,000 shares International Equity Portfolio Class IS 500,000,000 shares International Equity Portfolio Class C 500,000,000 shares International Opportunity Portfolio Class I 500,000,000 shares International Opportunity Portfolio Class A 1,000,000,000 shares International Opportunity Portfolio Class L 500,000,000 shares International Opportunity Portfolio Class IS 500,000,000 shares International Opportunity Portfolio Class C 500,000,000 shares International Real Estate Portfolio Class I 500,000,000 shares International Real Estate Portfolio Class A 500,000,000 shares International Real Estate Portfolio Class L 500,000,000 shares International Real Estate Portfolio Class IS 500,000,000 shares International Real Estate Portfolio Class C 500,000,000 shares Multi-Asset Portfolio Class I 500,000,000 shares Multi-Asset Portfolio Class A 1,000,000,000 shares Multi-Asset Portfolio Class L 500,000,000 shares Multi-Asset Portfolio Class IS 500,000,000 shares Multi-Asset Portfolio Class C 500,000,000 shares Small Company Growth Portfolio Class I 500,000,000 shares

Small Company Growth Portfolio Class A 1,000,000,000 shares Small Company Growth Portfolio Class L 500,000,000 shares Small Company Growth Portfolio Class IS 500,000,000 shares Small Company Growth Portfolio Class C 500,000,000 shares US Core Portfolio Class I 500,000,000 shares US Core Portfolio Class A 500,000,000 shares US Core Portfolio Class C 500,000,000 shares US Core Portfolio Class IS 500,000,000 shares U.S. Real Estate Portfolio Class I 500,000,000 shares U.S. Real Estate Portfolio Class A 1,000,000,000 shares U.S. Real Estate Portfolio Class L 500,000,000 shares U.S. Real Estate Portfolio Class IS 500,000,000 shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document U.S. Real Estate Portfolio Class C 500,000,000 shares Total 78,000,000,000 shares

The par value of all shares of common stock of all portfolios and classes that the Corporation has authority to issue is $0.001 per share.

SIXTH: The aggregate number of shares of stock of all classes that the Corporation has authority to issue has been increased by the Board of Directors in accordance with Section 2-105(c) of the Maryland General Corporation Law, and the shares of Emerging Markets Breakout Nations PortfolioClass I, Emerging Markets Breakout Nations PortfolioClass A, Emerging Markets Breakout Nations PortfolioClass C and Emerging Markets Breakout Nations PortfolioClass IS have been classified and designated by the Board of Directors under the authority contained in Article FIFTH, Section 3 of the Charter.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its President and attested to on its behalf by its Secretary on this 20th day of October, 2016.

MORGAN STANLEY INSTITUTIONAL FUND, INC.

By: /s/ John H. Gernon John H. Gernon President

ATTEST:

/s/ Mary E. Mullin Mary E. Mullin Secretary

THE UNDERSIGNED, President of MORGAN STANLEY INSTITUTIONAL FUND, INC., who executed on behalf of the Corporation the foregoing Articles Supplementary of which this certificate is made a part, hereby acknowledges, in the name and on behalf of the Corporation, the foregoing Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

/s/ John H. Gernon John H. Gernon President

AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT

AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT made this 30th day of June, 2009 by and between Morgan Stanley Institutional Fund, Inc., a Maryland corporation (the Fund), and Morgan Stanley Investment Management Inc. (formerly, Morgan Stanley Asset Management Inc.), a Delaware corporation (the Adviser).

RECITALS

WHEREAS, the Fund entered into an Investment Advisory Agreement to provide investment advisory services with the Adviser, effective as of May 1, 1997, as amended (the Current Investment Advisory Agreement); and

WHEREAS, as of November 1, 2004, the Current Investment Advisory Agreement was amended and restated (the Amended Investment Advisory Agreement) to reduce the fee payable with respect to certain series of the Fund; and

WHEREAS, this Agreement amends and restates, in its entirety, the Amended Investment Advisory Agreement to incorporate amendments thereto and to make other ministerial changes designed to facilitate the administration of this Agreement.

AGREEMENTS

Now, Therefore, the Fund and the Adviser agree as follows:

1. Duties of Adviser. The Fund hereby appoints the Adviser to act as investment adviser to the series of the Fund set forth on Schedule A hereto, as such Schedule A may be amended from time to time (each a Portfolio and, collectively, the Portfolios), for the period and on such terms as set forth in this Agreement. The Fund employs the Adviser to manage the investment and reinvestment of the assets of the Funds Portfolios, to continuously review, supervise and administer the investment program of each of the Portfolios, to determine in its discretion the securities to be purchased or sold and the portion of each such Portfolios assets to be held uninvested, to provide the Fund with records concerning the Advisers activities which the Fund is required to maintain, and to render regular reports to the Funds officers and Board of Directors concerning the Advisers discharge of the foregoing responsibilities. The Adviser shall discharge the foregoing responsibilities subject to the control of the officers and the Board of Directors of the Fund, and in compliance with the objectives, policies and limitations set forth in the Funds prospectus and applicable laws and regulations. The Adviser accepts such employment and agrees to render the services and to provide, at its own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation provided herein.

2. Portfolio Transactions. The Adviser is authorized to select the brokers or dealers that will execute the purchases and sales of securities for each of the Funds Portfolios and is directed to use its best efforts to obtain the best available price and most favorable execution, except as prescribed herein. Unless and until otherwise directed by the Board of Directors of the Fund, the Adviser may also be authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage or research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisers overall responsibilities with respect to the Fund. The execution of such transactions shall not be deemed to represent an unlawful act or

breach of any duty created by this Agreement or otherwise. The Adviser will promptly communicate to the officers and Directors of the Fund such information relating to portfolio transactions as they may reasonably request.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3. Compensation of the Adviser. For the services to be rendered by the Adviser as provided in Section 1 of this Agreement, the Fund shall pay to the Adviser at the end of each of the Funds fiscal quarters, an advisory fee calculated by applying a quarterly rate, based on the annual percentage rates set forth on Schedule A to this Agreement attached hereto, to the average daily net assets of each of the Portfolios for the quarter.

In the event of termination of this Agreement, the fee set forth in Schedule A to this Agreement shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current fiscal quarter as a percentage of the total number of days in such quarter.

4. Other Services. At the request of the Fund, the Adviser in its discretion may make available to the Fund office facilities, equipment, personnel and other services. Such office facilities, equipment, personnel and services shall be provided for or rendered by the Adviser and billed to the Fund at the Advisers cost.

5. Reports. The Fund and the Adviser agree to furnish to each other current prospectuses, proxy statements, reports to shareholders, certified copies of their financial statements, and such other information with regard to their affairs as each may reasonably request.

6. Status of Adviser. The services of the Adviser to the Fund are not to be deemed exclusive, and the Adviser shall be free to render similar services to others.

7. Liability of Adviser. In the absence of (i) willful misfeasance, bad faith or gross negligence on the part of the Adviser in performance of its obligations and duties hereunder, (ii) reckless disregard by the Adviser of its obligations and duties hereunder, or (iii) a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the Investment Company Act of 1940 (1940 Act), the Adviser shall not be subject to any liability whatsoever to the Fund, or to any shareholder of the Fund, for any error or judgment, mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder including, without limitation, for any losses that may be sustained in connection with the purchase, holding, redemption or sale of any security on behalf of any Portfolio of the Fund.

8. Permissible Interests. Subject to and in accordance with the Articles of Incorporation of the Fund and the Certificate of Incorporation of the Adviser, Directors, officers, agents and shareholders of the Fund are or may be interested in the Adviser (or any successor thereof) as Directors, officers, agents, shareholders or otherwise; Directors, officers, agents and shareholders of the Adviser are or may be interested in the Fund as Directors, officers, shareholders or otherwise; and the Adviser (or any successor) is or may be interested in the Fund as a shareholder or otherwise; and that the effect of any such interrelationships shall be governed by said Articles of Incorporation, Certificate of Incorporation and the provisions of the 1940 Act.

9. Duration and Termination. This Agreement, unless sooner terminated as provided herein, shall continue in effect with respect to each Portfolio for a period of up to one year from the effective date hereof (except with respect to any Portfolio added to Schedule A of this Agreement after the date hereof, for an initial period of two years from the date that such Portfolio is added) and thereafter

provided such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Fund 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, and (b) by the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of each Portfolio of the Fund; provided however, that if the holders of any Portfolio fail to approve the Agreement as provided

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document herein, the Adviser may continue to serve in such capacity in the manner and to the extent permitted by the 1940 Act and Rules thereunder. This Agreement may be terminated by any Portfolio of the Fund at any time, without the payment of any penalty, by vote of a majority of the entire Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio on 60 days written notice to the Adviser. This Agreement may be terminated by the Adviser at any time, without the payment of any penalty, upon 90 days written notice to the Fund. This agreement will automatically and immediately terminate in the event of its assignment, provided that an assignment to a corporate successor to all or substantially all of the Advisers business or to a wholly-owned subsidiary of such corporate successor which does not result in a change of actual control of the Advisers business shall not be deemed to be an assignment for the purposes of this Agreement. Any notice under this Agreement shall be given in writing, addressed and delivered or mailed postpaid, to the other party at any office of such party and shall be deemed given when received by the addressee.

As used in this Section 9, the terms assignment, interested persons, and a vote of a majority of the outstanding voting securities shall have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42) of the 1940 Act.

10. Amendment of Agreement. This Agreement may be amended by mutual consent, but the consent of the Fund must be approved (a) by vote of a majority of those members of the Board of Directors of the Fund 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 amendment, and (b) by vote of a majority of the outstanding voting securities of each Portfolio of the Fund.

11. Use of Name. The Fund agrees that if this Agreement is terminated and the Adviser shall no longer be the adviser to the Fund, the Fund will, within a reasonable period of time, change its name to delete reference to Morgan Stanley.

12. Severability. If any provisions of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.

13. Applicable Law. This Agreement shall be construed in accordance with the laws of the State of New York, provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.

14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the day and year first written above.

MORGAN STANLEY INVESTMENT MORGAN STANLEY MANAGEMENT INC. INSTITUTIONAL FUND, INC.

By: /s/ Randy Takian By: /s Randy Takian Name: Randy Takian Name: Randy Takian Title: President Title: President and Principal Executive Officer

EFFECTIVE DATE OF AGREEMENT AND ANY AMENDMENTS ENTERED CONTRACTUAL RATE OF ADVISORY PORTFOLIO INTO PRIOR TO JUNE 30, 2009 FEES

Active International Allocation Portfolio Effective Date: 05/01/97 0.65% of the portion of the daily net assets Amendments: 11/01/04, 06/ not exceeding $1 billion; 0.60% of the 01/05 portion of the daily net assets exceeding $1 billion.

Advantage Portfolio Effective Date: 12/10/09 0.65% of the portion of the daily net assets not exceeding $750 million; 0.60% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.55% of the portion of the daily net assets exceeding $1.5 billion.

Asia Opportunity Portfolio Effective Date: 09/17/15 0.80% of the portion of the daily net assets not exceeding $750 million; 0.75% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.70% of the portion of the daily net assets exceeding $1.5 billion.

Emerging Markets Breakout Nations Portfolio Effective Date: 12/13/16 0.90% of the portion of the daily net assets not exceeding $1 billion; 0.85% of the portion of the daily net assets exceeding $1 billion.

Emerging Markets Fixed Income Opportunities Portfolio Effective Date: 03/01/12 0.75% of the portion of the daily net assets not exceeding $500 million; 0.70% of the portion of the daily net assets exceeding $500 million but not exceeding $1 billion; and 0.65% of the portion of the daily net assets exceeding $1 billion.

Emerging Markets Leaders Portfolio Effective Date: 09/17/14 0.90% of the portion of the daily net assets not exceeding $1 billion; and 0.85% of the portion of the daily net assets exceeding $1 billion.

Emerging Markets Portfolio Effective Date: 05/01/97 0.85% of the portion of the daily net assets Amendments: 11/01/04, 06/ not exceeding $500 million; 0.75% of the 01/05 portion of the daily net assets exceeding $500 million but not exceeding $1 billion; 0.70% of the

EFFECTIVE DATE OF AGREEMENT AND ANY AMENDMENTS ENTERED CONTRACTUAL RATE OF ADVISORY PORTFOLIO INTO PRIOR TO JUNE 30, 2009 FEES

portion of the daily net assets exceeding $1 billion but not exceeding $2.5 billion; and 0.65% of the daily net assets exceeding $2.5 billion.

Emerging Markets Small Cap Portfolio Effective Date: 09/17/15 1.25% of daily net assets.

Fundamental Multi-Cap Core Portfolio Effective Date: 05/11/16 0.65% of the portion of the daily net assets not exceeding $750 million; 0.60% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.55% of the portion of the daily net assets exceeding $1.5 billion.

Frontier Emerging Markets Portfolio Effective Date: 04/25/12 1.25% of daily net assets.

Global Advantage Portfolio Effective Date: 12/08/10 0.80% of the portion of the daily net assets not exceeding $1 billion; and 0.75% of the portion of the daily net assets exceeding $1 billion.

Global Concentrated Portfolio Effective Date: 05/11/16 0.75% of the portion of the daily net assets not exceeding $750 million; 0.70% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.65% of the portion of the daily assets exceeding $1.5 billion.

Global Core Portfolio Effective Date: 05/11/16 0.75% of the portion of the daily net assets not exceeding $750 million; 0.70% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.65% of the portion of the daily assets exceeding $1.5 billion.

Global Discovery Portfolio Effective Date: 12/08/10 0.90% of the portion of the daily net assets not exceeding $1 billion; and 0.85% of the portion of the daily net assets exceeding $1 billion.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Global Franchise Portfolio Effective Date: 05/01/97 0.80% of the portion of the daily net assets Amendments: 11/01/04, 06/ not exceeding $500 million; 0.75% of the 01/05 portion of the daily net assets exceeding $500 million but not exceeding $1 billion; 0.70% of the portion of the daily net assets

EFFECTIVE DATE OF AGREEMENT AND ANY AMENDMENTS ENTERED CONTRACTUAL RATE OF ADVISORY PORTFOLIO INTO PRIOR TO JUNE 30, 2009 FEES

exceeding $1 billion.

Global Infrastructure Portfolio Effective Date: 06/18/10 0.85% of daily net assets.

Global Insight Portfolio Effective Date: 09/28/11 1.00% of the portion of the daily net assets not exceeding $1 billion; and 0.95% of the portion of the daily net assets exceeding $1 billion.

Global Opportunity Portfolio Effective Date: 12/10/09 0.80% of the portion of the daily net assets not exceeding $750 million; 0.75% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.70% of the portion of the daily net assets exceeding $1.5 billion.

Global Quality Portfolio Effective Date: 05/30/13 0.80% of the portion of the daily net assets not exceeding $500 million; 0.75% of the portion of the daily net assets exceeding $500 million but not exceeding $1 billion; and 0.70% of the portion of the daily net assets exceeding $1 billion.

Global Real Estate Portfolio Effective Date: 04/25/06 0.85% of the portion of the daily net assets not exceeding $2.5 billion; and 0.80% of the portion of the daily net assets exceeding $2.5 billion.

Growth Portfolio Effective Date: 05/01/97 0.50% of the portion of the daily net assets Amendments: 11/01/04, 06/ not exceeding $1 billion; 0.45% of the 01/05 portion of the daily net assets exceeding $1 billion but not exceeding $2 billion; 0.40% of the portion of the daily net assets exceeding $2 billion but not exceeding $3

Insight Portfolio Effective Date: 09/28/11 0.80% of the portion of the daily net assets not exceeding $750 million; 0.75% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.70% of the portion of the daily net assets exceeding $1.5 billion.

EFFECTIVE DATE OF AGREEMENT AND ANY AMENDMENTS ENTERED CONTRACTUAL RATE OF ADVISORY PORTFOLIO INTO PRIOR TO JUNE 30, 2009 FEES

International Advantage Portfolio Effective Date: 12/08/10 0.80% of the portion of the daily net assets not exceeding $1 billion; and 0.75% of the portion of the daily net assets exceeding $1 billion.

International Equity Portfolio Effective Date: 05/01/97 0.80% of the portion of the daily net assets Amendments: 11/01/04, 06/ not exceeding $10 billion; 0.75% of the 01/05 portion of the daily net assets exceeding $10 billion.

International Opportunity Portfolio Effective Date: 12/10/09 0.80% of the portion of the daily net assets not exceeding $1 billion; 0.75% of the portion of the daily net assets exceeding $1 billion.

International Real Estate Portfolio Effective Date: 05/01/97 0.80% of daily net assets. Amendments: 11/01/04, 06/ 01/05

Multi-Asset Portfolio Effective Date: 03/01/12 0.85% of the portion of the daily net assets not exceeding $750 million; 0.80% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.75% of the portion of the daily net assets exceeding $1.5 billion.

Small Company Growth Portfolio Effective Date: 05/01/97 0.92% of the portion of the daily net assets Amendments: 11/01/04, 06/ not exceeding $1 billion; 0.85% of the 01/05 portion of the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.80% of the portion of the daily net assets

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document exceeding $1.5 billion but not exceeding $2 billion; and 0.75% of the portion of the daily net assets exceeding $2 billion.

US Core Portfolio Effective Date: 05/11/16 0.60% of the portion of the daily net assets not exceeding $750 million; 0.55% of the portion of the daily net assets exceeding $750 million but not exceeding $1.5 billion; and 0.50% of the portion of the daily assets exceeding $1.5 billion.

U.S. Real Estate Portfolio Effective Date: 05/01/97 0.80% of the portion of the daily net assets Amendments: 11/01/04, not exceeding $500 million; 0.75% of the portion of the daily net

EFFECTIVE DATE OF AGREEMENT AND ANY AMENDMENTS ENTERED CONTRACTUAL RATE OF ADVISORY PORTFOLIO INTO PRIOR TO JUNE 30, 2009 FEES

06/01/05 assets exceeding $500 million but not exceeding $1 billion; 0.70% of the portion of the daily net assets exceeding $1 billion.

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 Institutional Fund, Inc. (the Fund) is a Maryland corporation engaged in business as an open- end management investment company with separate portfolios, certain of which are set forth on Schedule A, as may be amended from time to time to add or remove portfolios (with such portfolios set forth on Schedule A being the Portfolios), 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 May 1, 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 each Portfolio, effective as of the effective date set forth in Schedule A (the Original Sub-Advisory Agreement); and

WHEREAS, as of June 30, 2009, the Original Sub-Advisory Agreement was amended and restated (the Current Sub- Advisory Agreement) to incorporate amendments thereto and to make other ministerial changes designed to facilitate the administration of 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 Kingdoms 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 Funds 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

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 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 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 Funds 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 each Portfolio. 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 each Portfolio, 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 each Portfolio 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 each Portfolios investment objective(s), investment policies and investment restrictions as the same are set forth in the currently effective prospectus and statement of additional information relating to the shares of the Fund under the Securities Act of 1933, as amended (the Prospectus and Statement of Additional Information, respectively), 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 with respect to each Portfolio 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 in respect to each Portfolio 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 Funds investment objective(s) or investment restrictions (as the same are set forth in the Funds then-currently effective Prospectus and Statement of Additional Information) 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 Advisers 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 Managers 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 each Portfolio. The Local Manager shall not be liable to a Portfolio or to any shareholder of a Portfolio 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 each Portfolio or to any shareholder of a Portfolio except to the extent that such loss, liability or cost arises from the Local Managers fraud, willful misfeasance, bad faith or gross negligence in the performance of the Local Managers duties hereunder.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Each Portfolio shall be severally (and not jointly) liable for its own fees, costs, expenses and other liabilities attributable to such Portfolio, and no Portfolio shall be responsible for any liabilities in connection with any other Portfolio.

ARTICLE V

Activities of the Local Manager

The services of the Local Manager to the Investment Adviser in connection with the operations of each Portfolio 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 each Portfolio for an initial period of up to two years from the effective date set forth opposite such Portfolios 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 Portfolio 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 with respect to a Portfolio, 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 Portfolio, or by the Local Manager, on sixty days written notice to the other party. This Agreement shall automatically terminate with respect to a Portfolio in the event of its assignment or in the event of the termination of the Advisory Agreement of such Portfolio. Any termination shall be without prejudice to the completion of transactions already initiated.

ARTICLE VII

Amendments to this Agreement

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 July 1, 2016

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to May 30, 2013 Fee Global Infrastructure Portfolio Effective Date: 06/18/10 The Fund may have portfolio managers Amendments: 06/30/09 from one or more sub-advisers and from the Investment Adviser. 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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. Global Franchise Portfolio Effective Date: 08/11/03 The Fund may have portfolio managers Amendments: 04/25/06, 06/30/09 from one or more sub-advisers and from the Investment Adviser. Effective September 1, 2010, 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 relative percentage of the total amount of compensation of each of the Funds portfolio managers. The total amount of compensation is comprised of base salary, plus cash bonus, plus long-term

Sch. A-1

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to May 30, 2013 Fee incentive compensation. Global Quality Portfolio Effective Date: 05/30/13 The Fund may have portfolio managers Amendments: 06/30/09 from one or more sub-advisers and from the Investment Adviser. 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 relative percentage of the total amount of compensation of each of the Funds portfolio managers. The total amount of compensation is comprised of base salary, plus cash bonus, plus long-term incentive compensation. Global Real Estate Portfolio Effective Date: 04/25/06 The Fund may have portfolio managers Amendments: 06/30/09 from one or more sub-advisers and from the Investment Adviser. Effective January 1, 2009, the Investment Adviser

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

Sch. A-2

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to May 30, 2013 Fee International Equity Portfolio Effective Date: 08/11/03 The Fund may have portfolio managers Amendments: 04/25/06, 06/30/09 from one or more sub-advisers and from the Investment Adviser. Effective September 1, 2010, 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 relative percentage of the total amount of compensation of each of the Funds portfolio managers. The total amount of compensation is comprised of base salary, plus cash bonus, plus long-term incentive compensation. International Real Estate Portfolio Effective Date: 10/27/05 The Fund may have portfolio managers Amendments: 04/25/06, 06/30/09 from one or more sub-advisers and from the Investment Adviser. 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.

SUB-ADVISORY AGREEMENT

ANNEX

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 Advisers 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 Managers 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 a Portfolio which is not immediately executed under prevailing market conditions where the Local Manager believes it is in the Investment Advisers interests not to do so.

The Local Manager may aggregate transactions for a Portfolio with transactions of other clients of the Local Manager and of its employees and of clients of its affiliate and its

Annex-1

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 such Portfolio. However, on occasion the aggregation may operate to the disadvantage of a Portfolio 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 Managers 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 Managers 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 Managers fees, unless otherwise provided, be abated. For example, such potential conflicting interests or duties may arise because:

· any of the Local Managers or Affiliates 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

Annex-2

· 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.

5.1 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 a Portfolio.

5.2 All records held pursuant to this clause by the Local Manager shall be open to inspection by the Investment Adviser or each Portfolio and the Local Manager will provide the Investment Adviser and each Portfolio 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 a Portfolio.

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 each Portfolio 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 each Portfolio and any income arising on each Portfolios account during the relevant calendar month, and will also include a statement showing the measure of the performance of the assets of each Portfolio. 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 a Portfolio 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;

Annex-3

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 Advisers 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 a Portfolio 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.

Annex-4

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 Advisers attention is drawn to Schedule 3 which provides important information as to the nature and risks of certain investments which may comprise a Portfolio 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.

Annex-5

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Managers clients with a summary of the Local Managers 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 Managers 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 Managers 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

Sch. 1-1

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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Managers obligation to obtain the best possible result in relation to the relevant Transaction.

Sch. 1-2

Approval of brokers, monitoring and review

The Local Managers Order Execution Policy provides for a broker approval procedure. Apart from a brokers 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 brokers research capabilities may be considered relevant factors in connection with the selection and approval of a broker. This may include a brokers coverage of certain industries in which the Local Manager may seek to invest on behalf of its clients, the quality of the brokers research, as well as the reputation and standing of the brokers analysts, their investment strategies, timing, accuracy of statistical information and idea generation.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Local Manager monitors the quality of the execution services provided by approved brokers and reviews each brokers 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.

Sch. 1-3

Schedule 2

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

Morgan Stanley Investment Management Limiteds 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 Managers 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 Managers 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 Managers 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 Managers 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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

Sch. 2-1

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 Managers 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.

Sch. 2-2

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 each Portfolio. 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 each Portfolios 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 Advisers behalf and the extent of the Investment Advisers exposure to risk. The Investment Adviser should also be satisfied that such financial instruments are suitable for each Portfolio in light of the Investment Advisers 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Advisers 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 a Portfolio. 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 a Portfolio. 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 issuers profits made during the reference period.

Sch. 3-1

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 Advisers claims for recovery of the Investment Advisers 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 companys 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Advisers position with cash from a Portfolio 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 Advisers 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

Sch. 3-2

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 Advisers 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 Advisers behalf to sell as part of a Portfolio (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 a Portfolio (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 Advisers premium. If the Investment Adviser fails to do so as required, the Investment Advisers position may be closed or liquidated in the same way as a futures position.

3.3 Contracts for Differences:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

Sch. 3-3

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 a Portfolio 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 Advisers 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 Advisers 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 Advisers 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 Advisers 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 Advisers 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If the Investment Guidelines so permit, the Local Manager may effect transactions in warrants for a Portfolio.

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

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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 a Portfolio 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 Advisers 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 a Portfolio 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 a Portfolio, 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 Advisers 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 a Portfolios base currency will be affected by fluctuations in overseas exchange rates against the Funds 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 Advisers position. Contingent liability investments which are margined require a Portfolio (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 a Portfolio 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 Advisers 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 Advisers 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 Advisers 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 Advisers 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 Advisers property once dealings on the Investment Advisers behalf are undertaken. Even if the Investment Advisers dealings should ultimately prove profitable, the Investment Adviser may not get back the same assets which the Local Manager deposited on the Investment Advisers 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

Sch. 3-6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Advisers 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 Advisers 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 Advisers orders not being executed in accordance with the Local Managers 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 Advisers 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 brokers insolvency or default, or that of any other brokers involved with the Investment Advisers transaction, may lead to positions being liquidated or closed out without the Investment Advisers or the Local Managers 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.

Sch. 3-7

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 the Local Manager).

W I T N E S S T E T H:

WHEREAS, MSIM 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; 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 advisers 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 June 1, 2005, as amended from time to time, 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 each Portfolio, effective as of the effective date set forth in Schedule A (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 Funds 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 Portfolios; shall furnish continuously an investment program for the Portfolios 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 each of the Portfolios shall be held in the various securities in which the Portfolio 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 Portfolios investment objective(s), investment restrictions as the same are set forth in the currently effective prospectus and statement of additional information relating to the shares of the Fund under the Securities Act of 1933, as amended (the Prospectus and Statement of Additional Information, respectively). 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 necessary to provide the services 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 in respect of each Portfolio is set forth on Schedule A, as may be amended from time to time.

ARTICLE IV

LIMITATION OF LIABILITY OF THE LOCAL MANAGER

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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.

Each Portfolio shall be severally (and not jointly) liable for its own fees, costs, expenses and other liabilities attributable to such Portfolio, and no Portfolio shall be responsible for any liabilities in connection with any other Portfolio.

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 may be terminated at any time with respect to a Portfolio, 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 Portfolio, or by the Local Manager, on sixty days written notice to the other party. This Agreement shall automatically terminate with respect to a Portfolio in the event of its assignment or in the event of the termination of the Advisory Agreement of such Portfolio. Any termination shall be without prejudice to the completion of transactions already initiated.

AMENDMENTS TO THIS AGREEMENT

This Agreement may be amended with respect to a Portfolio 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 Portfolio 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

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 July 30, 2016

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to June 30, 2009 Fee

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Emerging Markets Leaders Portfolio Effective Date: 09/17/14 MSIM will pay the Local Manager on a monthly basis an aggregate amount equal to 50% of the net advisory fees MSIM receives from the Fund during such period, after taking into account any fee waivers. Emerging Markets Portfolio Effective Date: 04/25/06 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. MSIM 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 MSIM and the Local Manager, and paid out on a monthly basis, based on the relative percentage of assets under management of the funds and accounts in the strategy managed by each of the Local Manager and MSIM, respectively. Global Franchise Portfolio Effective Date: 04/23/09 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. Effective September 1, 2010, MSIM 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 MSIM, the Local Manager and any other sub-adviser, and paid out on a monthly basis, based on relative percentage of the total amount of compensation of each of the Funds portfolio managers. The total amount of compensation is

Sch. A-1

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to June 30, 2009 Fee comprised of base salary, plus cash bonus, plus long-term incentive compensation. Global Infrastructure Portfolio Effective Date: 06/18/10 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. MSIM 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 MSIM, 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

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document managed by the Local Manager, each other sub-adviser and, as may be determined periodically. Global Quality Portfolio Effective Date: 05/30/13 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. MSIM 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 MSIM, the Local Manager and any other sub-adviser, and paid out on a monthly basis, based on relative percentage of the total amount of compensation of each of the Funds portfolio managers. The total amount of compensation is comprised of base salary, plus cash bonus, plus long-term incentive compensation. Global Real Estate Portfolio Effective Date: 04/25/06 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. Effective January 1, 2009, MSIM will retain 50% of the

Sch. A-2

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to June 30, 2009 Fee net advisory fees it receives from the Fund, after taking into account any fee waivers. The remaining 50% will be split between MSIM, 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 MSIM, as may be determined periodically. International Equity Portfolio Effective Date: 04/01/09 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. Effective September 1, 2010, MSIM 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 MSIM, the Local Manager and any other sub-adviser, and paid out on a monthly basis, based on relative percentage of the total amount of compensation of

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document each of the Funds portfolio managers. The total amount of compensation is comprised of base salary, plus cash bonus, plus long-term incentive compensation. International Real Estate Portfolio Effective Date: 04/25/06 The Fund may have portfolio managers from one or more sub-advisers and from MSIM. Effective January 1, 2009, MSIM 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 MSIM, the Local Manager and any other

Sch. A-3

Effective Date of Agreement and any amendments entered into Name of Portfolio prior to June 30, 2009 Fee 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, as may be determined periodically.

Sch. A-4

CUSTODIAN CONTRACT

This Contract dated as of March 7, 2008, between each fund or series of a fund listed on Appendix A, severally and not jointly, which evidences its agreement to be bound hereby by executing a copy of this Contract (each such Fund is individually hereinafter referred to as the Fund), and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at One Lincoln Street, Boston, Massachusetts, 02111 (hereinafter called the Custodian), to be effective as of the dates on Appendix A,

WITNESSETH THAT, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It

Each Fund hereby employs the Custodian as the custodian of the assets of the Fund, including securities which the Fund desires to be held in places within the United States (domestic securities) and securities it desires to be held outside the United States (foreign securities) pursuant to the provisions of the Funds governing documents. Each Fund agrees to deliver to the Custodian all securities and cash of the Fund, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Fund from time to time, and the cash consideration received by it for such new or treasury shares of capital stock or beneficial interest, as applicable, of the Fund representing interests in the Fund (Shares) as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Fund held or received by the Fund and not delivered to the Custodian.

Upon receipt of Proper Instructions (within the meaning of Article 6 of this Contract), the Custodian shall on behalf of the applicable Fund from time to time employ one or more sub-custodians, located in the United States but only in accordance with an applicable vote by the Board of Trustees/Directors of the applicable Fund (the Board) and provided that the Custodian shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so employed than any such sub-custodian has to the Custodian and provided, further, that the foregoing shall not affect the responsibility of the Custodian as set forth in Section 14 hereof. The Custodian may employ as sub-custodian for the Funds foreign securities the foreign banking institutions and foreign securities depositories designated in Schedules A and B hereto but only in accordance with the provisions of Articles 3 and 4.

2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States

2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of each Fund all non-cash property, to be held by it in the United States including all domestic securities owned by such Fund, other than securities which are maintained pursuant to Section 2.10 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies (collectively referred to herein as a U.S. Securities System).

2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Fund held by the Custodian or in a U.S. Securities System account of the Custodian only upon receipt of Proper Instructions from the Fund, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:

1) Upon sale of such securities for the account of the Fund in accordance with customary or established market practices and procedures, including, without limitation, delivery to the purchaser thereof or to a dealer therefor (or an agent of such purchaser or dealer) against payment;

2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Fund;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.10 hereof;

4) To the depository agent in connection with tender or other similar offers for securities of the Fund;

5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;

6) To the issuer thereof, or its agent, for transfer into the name of the Fund or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian;

7) Upon the sale of such securities for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with street delivery custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodians own negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;

9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;

10) For delivery in connection with any loans of securities made by the Fund, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodians account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Fund prior to the receipt of such collateral;

11) For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed;

12) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the Exchange Act) and a member of the Financial Industry Regulatory Authority (FINRA), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund;

13) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Fund;

14) Upon receipt of instructions from the transfer agent (Transfer Agent) for the Fund, for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund (Prospectus), in satisfaction of requests by holders of Shares for repurchase or redemption;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 15) For delivery of initial or variation margin in connection with trading in futures and options on futures contracts entered into by the Fund;

16) For any other purpose, but only upon receipt of Proper Instructions from the Fund, specifying the securities of the Fund to be delivered and naming the person or persons to whom delivery of such securities shall be made; and;

17) Upon termination of the Contract.

2.3 Registration of Securities. Domestic securities held by the Custodian (other than bearer securities) shall be registered on the books and records of the Custodian in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Custodian which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser or investment manager as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of the Fund under the terms of this Contract shall be in street name or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in street name, the Custodian shall utilize its best efforts to promptly (i) collect income due the Fund on such securities and (ii) notify the Fund of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Fund, other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended (the 1940 Act). Funds held by the Custodian for a Fund may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Fund be approved by vote of a majority of the Board of the Fund. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity.

2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from the Fund, make federal funds available to such Fund as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Fund which are deposited into the Funds account.

2.6 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which the Fund shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. The Custodian shall credit income to the Fund as such income is received or in accordance with Custodians then current payable date income schedule. Any credit to the Fund in advance of receipt may be reversed when the Custodian determines that payment will not occur in due course and the Fund may be charged at the Custodians applicable rate for time credited. Income due each Fund on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Fund is properly entitled.

2.7 Payment of Fund Monies. The Custodian shall pay out monies of the Fund as provided in Section 24 and otherwise upon receipt of Proper Instructions from the Fund, which may be continuing instructions when deemed appropriate by the parties, in the following cases only:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Fund but only (a) in accordance with customary or established market practices and procedures, including, without limitation, against delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the Investment Company Act of 1940, as amended, to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Fund or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c) in the case of repurchase agreements entered into between the Fund and the Custodian, or another bank, or a broker-dealer which is a member of FINRA, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodians account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Fund of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Fund or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined in Article 6;

2) In connection with conversion, exchange or surrender of securities owned by the Fund as set forth in Section 2.2 hereof;

3) For the redemption or repurchase of Shares issued by the Fund as set forth in Article 5 hereof;

4) For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses;

5) For the payment of any dividends on Shares of the Fund declared pursuant to the governing documents of the Fund;

6) For payment of the amount of dividends received in respect of securities sold short;

7) For the payment of initial or variation margin in connection with trading in futures and options on futures contracts entered into by the Fund;

8) For any other purpose, but only upon receipt of Proper Instructions from the Fund, specifying the amount of such payment and naming the person or persons to whom such payment is to be made; and

9) Upon termination of this Contract.

2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of a Fund is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act, to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder.

2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may deposit and/or maintain securities owned by a Fund in a U.S. Securities System in compliance with the conditions of Rule 17f-4 under the 1940 Act, from time to time.

2.11 [Reserved.]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions from the Fund establish and maintain a segregated account or accounts for and on behalf of each such Fund, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Exchange Act and a member of FINRA (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Fund or commodity futures contracts or options thereon purchased or sold by the Fund, (iii) for the purposes of compliance by the Fund with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission (the SEC) or interpretative opinion of the staff of the SEC relating to the maintenance of segregated accounts by registered investment companies and (iv) for any other purpose, upon receipt of Proper Instructions from the Fund.

2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Fund held by it and in connection with transfers of securities.

2.14 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Fund or a nominee of the Fund, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to such securities.

2.15 Communications Relating to Fund Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund and the maturity of futures contracts purchased or sold by the Fund) received by the Custodian from issuers of the securities being held for the Fund. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or its agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Fund shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action.

3. Provisions Relating to Rules 17f-5 and 17f-7 of the 1940 Act

3.1. Definitions. Capitalized terms in this Contract shall have the following meanings:

Country Risk means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such countrys political environment, economic and financial infrastructure (including any Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country.

Eligible Foreign Custodian has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned direct or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.

Eligible Securities Depository has the meaning set forth in section (b)(1) of Rule 17f-7.

Foreign Assets means any of the Funds investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Funds transactions in such investments.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Foreign Custody Manager has the meaning set forth in section (a)(3) of Rule 17f-5.

3.2. The Custodian as Foreign Custody Manager.

3.2.1 Delegation to the Custodian as Foreign Custody Manager. The Fund, by resolution adopted by its Board, hereby delegates to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2 with respect to Foreign Assets of the Funds held outside the United States, and the Custodian hereby accepts such delegation as Foreign Custody Manager with respect to the Funds.

3.2.2 Countries Covered. The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to the countries and custody arrangements for each such country listed on Schedule A to this Contract, which list of countries may be amended from time to time by the Fund with the agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody Manager to maintain the assets of the Funds, which list of Eligible Foreign Custodians may be amended from time to time in the sole discretion of the Foreign Custody Manager. The Foreign Custody Manager will provide amended versions of Schedule A in accordance with Section 3.2.5 hereof.

Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account or to place or maintain Foreign Assets in a country listed on Schedule A, and the fulfillment by the Fund of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by the Board on behalf of the Funds responsibility as Foreign Custody Manager with respect to that country and to have accepted such delegation. Execution of this Contract by the Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each country listed on Schedule A in which the Custodian has previously placed or currently maintains Foreign Assets pursuant to the terms of the Contract. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Fund with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board on behalf of the Funds to the Custodian as Foreign Custody Manager for that country shall be deemed to have been withdrawn and the Custodian shall immediately cease to be the Foreign Custody Manager of the Funds with respect to that country.

The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon prior written notice to the Fund. Sixty (60) days (or such longer period to which the parties agree in writing) after receipt of any such notice by the Fund, the Custodian shall have no further responsibility in its capacity as Foreign Custody Manager to the Fund with respect to the country as to which the Custodians acceptance of delegation is withdrawn.

3.2.3 Scope of Delegated Responsibilities:

(a) Selection of Eligible Foreign Custodians. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager in each country listed on Schedule A, as amended from time to time. In performing its delegated responsibilities as Foreign Custody Manager to place or maintain Foreign Assets in the care of an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the relevant market in which the Foreign Assets will be maintained by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).

(b) Contracts With Eligible Foreign Custodians. The Foreign Custody Manager shall determine that the contract governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).

(c) Monitoring. In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian selected by the Foreign Custody Manager, the Foreign Custody Manager shall establish a system to monitor (i) the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) performance of the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian it has selected no longer meets the requirements of Rule 17f-5, the Foreign Custody Manager shall notify the Board in accordance with Section 3.2.5 hereunder.

3.2.4 Guidelines for the Exercise of Delegated Authority. For purposes of this Section 3.2, subject to Section 3.2.6 hereunder, the Board shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which the Custodian is serving as Foreign Custody Manager of the Funds.

3.2.5 Reporting Requirements. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to the Board an amended Schedule A at the end of the calendar quarter in which an amendment to such Schedule has occurred. The Foreign Custody Manager shall make written reports notifying the Board of any other material change in the foreign custody arrangements of the Funds described in this Section 3.2 with reasonable promptness after the occurrence of the material change.

3.2.6 Standard of Care as Foreign Custody Manager of a Fund. In performing the responsibilities delegated to it, the Foreign Custody Manager agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of the Funds Foreign Assets would exercise.

3.2.7 Representations with Respect to Rule 17f-5. The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as defined in section(a)(7) of Rule 17f-5. The Fund represents to the Custodian that the Board has determined that it is reasonable for the Board to rely on the Custodian to perform the responsibilities delegated pursuant to this Contract to the Custodian as the Foreign Custody Manager of the Funds.

3.2.8 Effective Date and Termination of the Custodian as Foreign Custody Manager. The Boards delegation to the Custodian as Foreign Custody Manager of the Funds shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the Funds with respect to designated countries.

3.3 Eligible Securities Depositories.

3.3.1 Analysis and Monitoring. The Custodian shall (a) provide the Fund (or its duly-authorized investment manager or investment adviser) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify the Fund (or its duly-authorized investment manager or investment adviser) of any material change in such risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7.

3.3.2 Standard of Care. The Custodian agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1.

4. Duties of the Custodian with Respect to Property of the Funds Held Outside the United States.

4.1 Definitions. Capitalized terms in this Article 4 shall have the following meanings:

Foreign Securities System means an Eligible Securities Depository listed on Schedule B hereto.

Foreign Sub-Custodian means a foreign banking institution serving as an Eligible Foreign Custodian.

4.2. Holding Securities. The Custodian shall identify on its books as belonging to the Funds the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Funds, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document provided however, that (i) the records of the Custodian with respect to foreign securities of the Funds which are maintained in such account shall identify those securities as belonging to the Funds and (ii) except where it is otherwise required by applicable law or market practice, the Custodian will require each Sub-Custodian to identify in its own records that securities held at such Sub-Custodian by the Custodian on behalf of the Funds belong to the Sub-Custodians customers, such that it is readily apparent that the securities do not belong to the Sub-Custodian, and the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.

4.3. Foreign Securities Systems. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by the Custodian or a Foreign Sub-Custodian, as applicable, in such country.

4.4. Transactions in Foreign Custody Account.

4.4.1. Delivery of Foreign Assets. The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of the Funds held by the Custodian or such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:

(i) upon the sale of such foreign securities for the Fund in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System;

(ii) in connection with any repurchase agreement related to foreign securities;

(iii) to the depository agent in connection with tender or other similar offers for foreign securities of the Funds;

(iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;

(v) to the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;

(vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Foreign Sub-Custodians own negligence or willful misconduct;

(vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;

(viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;

(ix) for delivery as security in connection with any borrowing by the Funds requiring a pledge of assets by the Funds;

(x) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;

(xi) in connection with the lending of foreign securities; and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (xii) for any other purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered and naming the person or persons to whom delivery of such securities shall be made.

4.4.2. Payment of Fund Monies. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Fund in the following cases only:

(i) upon the purchase of foreign securities for the Fund, unless otherwise directed by Proper Instructions, in accordance with customary or established market practices and procedures, including without limitation, delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;

(ii) in connection with the conversion, exchange or surrender of foreign securities of the Fund;

(iii) for the payment of any expense or liability of the Fund, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Contract, legal fees, accounting fees, and other operating expenses;

(iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the Fund, including transactions executed with or through the Custodian or its Foreign Sub-Custodians;

(v) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;

(vi) for payment of part or all of the dividends received in respect of securities sold short;

(vii) in connection with the borrowing or lending of foreign securities; and

(viii) for any other purpose, but only upon receipt of Proper Instructions specifying the amount of such payment and naming the person or persons to whom such payment is to be made.

4.4.3. Market Conditions. Notwithstanding any provision of this Contract to the contrary, settlement and payment for Foreign Assets received for the account of the Funds and delivery of Foreign Assets maintained for the account of the Funds may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer.

The Custodian shall provide to the Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian described on Schedule C hereto at the time or times set forth on such Schedule. The Custodian may revise Schedule C from time to time, provided that no such

revision shall result in the Board being provided with substantively less information than had been previously provided hereunder.

4.5. Registration of Foreign Securities. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered in the name of the applicable Fund or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the Fund agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Fund under the terms of this Contract unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 4.6. Bank Accounts. The Custodian shall identify on its books as belonging to the Fund cash (including cash denominated in foreign currencies) deposited with the Custodian. Where the Custodian is unable to maintain, or market practice does not facilitate the maintenance of, cash on the books of the Custodian, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of a Fund with a Foreign Sub-Custodian. All accounts referred to in this Section shall be subject only to draft or order by the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Contract to hold cash received by or from or for the account of the Fund. Cash maintained on the books of the Custodian (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts.

4.7. Collection of Income. The Custodian shall use reasonable commercial efforts to collect on a timely basis all income and other payments with respect to the Foreign Assets held hereunder to which the Funds shall be entitled. In the event that extraordinary measures are required to collect such income, the Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures. The Custodian shall credit income to the applicable Fund as such income is received or in accordance with Custodians then current payable date income schedule. Any credit to the Fund in advance of receipt may be reversed when the Custodian determines that payment will not occur in due course and the Fund may be charged at the Custodians applicable rate for time credited. Income on securities loaned other than from the Custodians securities lending program shall be credited as received.

4.8. Shareholder Rights. With respect to the foreign securities held pursuant to this Article 4, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights.

4.9. Communications Relating to Foreign Securities. The Custodian shall transmit promptly to the Fund written information with respect to materials received by the Custodian via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Funds (including, without limitation, pendency of calls and maturities of foreign securities and expirations of rights in connection therewith). With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund written information with respect to materials so received by the Custodian from issuers of the foreign securities whose tender or exchange is sought or from the party (or its agents) making the tender or exchange offer. Subject to the foregoing, the Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with foreign securities or other property of the Funds at any time held by it unless (i) the Custodian or the respective Foreign Sub-Custodian is in actual possession of such foreign securities or property and (ii) the Custodian receives Proper Instructions with regard to the exercise of any such right or power, and both (i) and (ii) occur at least three business days prior to the date on which the Custodian is to take action to exercise such right or power.

4.10. Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian shall require the Foreign Sub-Custodian to exercise reasonable care, based on the standards applicable to custodians in the relevant market, in the performance of its duties, and to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodians performance of such obligations. At the Funds election, the Funds shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Sub-

Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Funds have not been made whole for any such loss, damage, cost, expense, liability or claim.

4.11. Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund, the Funds or the Custodian as custodian of the Funds by the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund or the Custodian as custodian of the Fund by the tax law of countries other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of countries for which the Fund has provided such information.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 4.12. Liability of Custodian. Except as may arise from the Custodians own negligence or willful misconduct or the negligence or willful misconduct of a Foreign Sub-Custodian, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by anything which is part of Country Risk. The Custodian shall be liable for the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth with respect to sub-custodians generally in the Contract and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism, or any other loss where the Sub-Custodian has otherwise acted with reasonable care.

5. Payments for Sales or Repurchases or Redemptions of Shares of the Fund

The Custodian shall receive from the distributor for the Shares or from the Transfer Agent of the Fund and deposit into the account of the appropriate Fund such payments as are received for Shares of that Fund issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Fund on behalf of each such Fund and the Transfer Agent of any receipt by it of payments for Shares of such Fund.

From such funds as may be available for the purpose but subject to the limitations of the applicable Funds governing documents and any applicable votes of the Board of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares of a Fund, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between the Fund and the Custodian.

6. Proper Instructions

Proper Instructions, which may also be standing instructions, as used throughout this Contract shall mean instructions received by the Custodian from the Fund, the Funds investment adviser or investment manager or subadviser, as duly authorized by the Fund. Such instructions may be in writing signed by the authorized person or persons or may be in a tested communication or in a communication utilizing access codes effected between electro-mechanical or electronic devices or may be by such other means and utilizing such intermediary systems and utilities as may be agreed to from time to time by the Custodian and the person or entity giving such instructions, provided that the Fund has followed any security procedures agreed to from time to time by the Fund and the Custodian, including, but not limited to, the security procedures selected by the Fund in the Funds Transfer Addendum to this Contract. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed in writing. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any multi- party agreement, which requires a segregated asset account in accordance with Section 2.12 of this Contract. The Fund or the Funds investment adviser or investment manager shall cause its duly authorized officer to certify to the Custodian in writing the names and specimen signatures of persons authorized to give Proper Instructions. The Custodian shall

be entitled to rely upon the identity and authority of such persons until it receives notice from the Fund to the contrary.

7. Actions Permitted without Express Authority

The Custodian may in its discretion, without express authority from the Fund:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund;

2) surrender securities in temporary form for securities in definitive form;

3) endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and

4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Fund except as otherwise directed by the Board of the Fund.

8. Evidence of Authority

The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a certified copy of a resolution of the Board of the Fund as conclusive evidence (a) of the authority of any person to act in accordance with such resolution or (b) of any determination or of any action by the Board pursuant to the governing documents of the Fund as described in such resolution, and such resolution may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary.

9. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value

The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of the Fund to keep the books of account of each Fund and/or compute the net asset value per share of the outstanding shares of the Fund.

10. Records

The Custodian shall with respect to each Fund create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-I and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the SEC. The Custodian shall, at the Funds request, supply the Fund with a tabulation of securities owned by each Fund and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations.

11. Opinion of Funds Independent Registered Public Accounting Firm

The Custodian shall take all reasonable action, as the Fund may from time to time request, to obtain from year to year favorable opinions from the Funds independent registered public accounting firm with respect to its activities hereunder in connection with the preparation of the Funds Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any other requirements of the SEC.

12. Reports to Fund by Independent Registered Public Accounting Firm

The Custodian shall provide the Fund, at such times as the Fund may reasonably require, with reports by independent registered public accounting firms on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. or Foreign Securities System, relating to the services provided by the Custodian under this Contract; such reports, shall be of sufficient scope and in sufficient

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.

13. Compensation of Custodian

The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund and the Custodian.

14. Responsibility of Custodian

So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon written advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice.

Except as may arise from the Custodians own negligence or willful misconduct or the negligence or willful misconduct of a sub-custodian or agent, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by; (i) events or circumstances beyond the reasonable control of the Custodian or any sub-custodian or U.S. or Foreign Securities System or any agent or nominee of any of the foregoing, including, without limitation, nationalization or expropriation, imposition of currency controls or restrictions, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, acts of war or terrorism, riots, revolutions, work stoppages, natural disasters or other similar events or acts; (ii) errors by the Fund or the Investment Adviser in their instructions to the Custodian provided such instructions have been in accordance with this Contract; (iii) the insolvency of or acts or omissions by a U.S. or Foreign Securities System; (iv) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodians sub-custodian or agent securities purchased or in the remittance or payment made in connection with securities sold; (v) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of the Custodian, the Fund, the Custodians sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vi) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or U.S. or Foreign Securities System; and (vii) any provision of any present or future law or regulation or order of the United States, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction.

The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract.

If the Fund requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund being liable for the payment of money or incurring liability of some other form, the Fund, as a

prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominees own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Fund shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Funds assets to the extent necessary to obtain reimbursement.

In no event shall either party be liable to the other for indirect, special or consequential damages.

15. Effective Period, Termination and Amendment

This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Funds governing documents, and further provided, that the Fund may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.

Upon termination of the Contract with respect to a Fund, the applicable Fund shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements.

16. Successor Custodian

If a successor custodian for a Fund shall be appointed by the Board of such Fund, the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities, funds and other properties of the Fund then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Fund held in a U.S or Foreign Securities System.

If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a resolution of the Board of the Fund, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such resolution.

In the event that no written order designating a successor custodian or certified copy of a resolution of the Board shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a bank as defined in the 1940 Act, doing business in New York, New York, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Fund and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Fund and to transfer to an account of such successor custodian all of the securities of each such Fund held in any U.S. or Foreign Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract.

In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof with respect to a Fund owing to failure of the Fund to procure the certified copy of the

resolution referred to or of the Board to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect.

17. Interpretive and Additional Provisions

In connection with the operation of this Contract, the Custodian and the Fund may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the governing documents of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract.

18. Additional Funds

In the event that any Morgan Stanley fund registered under the 1940 Act in addition to the Funds listed on Appendix A desires to have the Custodian render services as custodian under the terms hereof, the Custodian shall be notified in writing, and if the Custodian agrees in writing to provide such services, such fund shall become a Fund hereunder, subject to the delivery by the new Fund of resolutions authorizing the appointment of the Custodian and such other supporting or related documentation as the Custodian may request. All references herein to the Fund are to each of the Funds listed on Appendix A individually, as if this Contract were between each such individual Fund and the Custodian. With respect to any Fund which issues shares in separate classes or series, each class or series of such Fund shall be treated as a separate Fund hereunder.

19. New York Law to Apply

This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of the State of New York, without regard to conflicts of laws principals thereof.

20. Prior Contracts

This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Funds and the Custodian relating to the custody of the Funds assets.

21. Reproduction of Documents

This Contract and all schedules, exhibits, addenda, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

22. Shareholder Communications

SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs the Fund to indicate whether the Fund authorizes the Custodian to provide the Funds name, address, and share position to requesting companies

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document whose stock the Fund owns. If the Fund tells the Custodian no, the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian yes or do not check either yes or no below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts

established by the Fund. For the Funds protection, the Rule prohibits the requesting company from using the Funds name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below.

YES o The Custodian is authorized to release the Funds name, address, and share positions.

NO x The Custodian is not authorized to release the Funds name, address, and share positions.

23. Limitation of Liability.

The execution of this Contract has been authorized by each Funds Board.

This Contract is executed on behalf of the Trustees/Directors of each Fund as Trustees/Directors and not individually. The obligations of the Funds under this Contract are not binding upon any of the Funds Trustees/Directors, officers or shareholders individually but are binding only upon the assets and property of the respective Fund. A copy of the Declaration of Trust of each Fund organized as a business trust (or a series thereof) is on file with the Secretary of State of the Commonwealth of Massachusetts.

24. Contractual Settlement Services (Purchases / Sales)

The Custodian shall, in accordance with the terms set out in this Section, debit or credit the appropriate cash account of the Fund in connection with (i) the purchase of securities for the Fund, and (ii) proceeds of the sale of securities held on behalf of the Fund, on a contractual settlement basis (the Contractual Settlement Services). The Contractual Settlement Services shall be provided for such instruments and in such markets as the Custodian may advise from time to time. The Custodian in good faith may terminate or suspend any part of the provision of the Contractual Settlement Services under this Contract upon reasonable notice under the circumstances to the Fund, including, without limitation, in the event of force majeure events affecting settlement, any disorder in markets, or other changed external business circumstances affecting the markets or the Fund.

The consideration payable in connection with a purchase transaction shall be debited from the appropriate cash account of the Fund as of the time and date that monies would ordinarily be required to settle such transaction in the applicable market. The Custodian shall promptly recredit such amount at the time that the Fund notifies the Custodian by Proper Instruction that such transaction has been cancelled.

With respect to the settlement of a sale of securities, a provisional credit of an amount equal to the net sale price for the transaction (the Settlement Amount) shall be made to the account of the Fund as if the Settlement Amount had been received as of the close of business on the date that monies would ordinarily be available in good funds in the applicable market. Such provisional credit will be made conditional upon the Custodian having received Proper Instructions with respect to, or reasonable notice of, the transaction, as applicable; and the Custodian or its agents having possession of the asset(s) (which shall exclude assets subject to any third party lending arrangement entered into by the Fund) associated with the transaction in good deliverable form and not being aware of any facts which would lead them to believe that the transaction will not settle in the time period ordinarily applicable to such transactions in the applicable market.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Custodian shall have the right to reverse any provisional credit or debit given in connection with the Contractual Settlement Services at any time when the Custodian believes, in its reasonable judgment, that such transaction will not settle in accordance with its terms or amounts due pursuant thereto will not be collectable or where the Custodian has not been provided Proper Instructions with respect thereto, as applicable, and the Fund shall be responsible for any costs or liabilities resulting from such reversal. Upon such reversal, a sum equal to the credited or debited amount shall become immediately payable by the Fund to the Custodian and may be debited from any cash account held for benefit of the Fund.

In the event that the Custodian is unable to debit an account of the Fund, and the Fund fails to pay any amount due to the Custodian at the time such amount becomes payable in accordance with this Contract, (i) the Custodian may charge the Fund for costs and expenses associated with providing the provisional credit, including without limitation the cost of funds associated therewith, (ii) the amount of any accrued dividends, interest and other distributions with respect to assets associated with such transaction may be set off against the credited amount, (iii) the provisional credit and any such costs and expenses shall be considered an advance of cash for purposes of this Contract and (iv) the Custodian shall have the right to setoff against any property and the discretion to sell, exchange, convey, transfer or otherwise dispose of any property at any time held for the account of the Fund to the full extent necessary for the Custodian to make itself whole.

25. Data Access Services Agreement.

The Custodian and each Fund agree to be bound by the terms of that certain Data Access Services Agreement dated March 7, 2008, with respect to the Custodians services hereunder. In the event of any conflict between this Agreement and the Data Access Services Agreement, this Agreement shall govern.

26. Notices.

Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time.

To the Funds: Morgan Stanley Investment Management 522 Fifth Avenue New York, NY 10036 Attention: General Counsel Telephone: 800-869-6397 Telecopy: 212-507-1989

To the Custodian: State Street Bank and Trust Company 1200 Crown Colony Drive Crown Colony Office Park Quincy, MA 02169 Attention: Matt Malkasian Telephone: 617-537-4685 Telecopy: 617-451-4786

Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of cable twenty four hours after dispatch and, in the case of telex, immediately on dispatch and if delivered outside normal business hours it shall be deemed to have been received at the next time after delivery when

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document normal business hours commence and in the case of cable, telex or telecopy on the business day after the receipt thereof. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting.

27. Confidentiality. Confidential Material of the Custodian and each Fund shall mean any proprietary computer software, programs, source or object codes, databases, specifications, techniques, technical information, know-how, strategic business information, marketing and business plans, product information, client information, financial data, or other information or materials which such party (collectively, Proprietor) discloses to the other party (Recipient), including, without limitation, all portfolio, investment and trading data and other information and materials disclosed by the Fund to the Custodian in connection with this Contract, and all accounts, records and other materials produced by the Custodian pursuant to this Contract; provided that the Fund shall be deemed Proprietor and the Custodian shall be deemed Recipient with respect to all accounts and records produced by the Custodian pursuant to this Contract. Confidential Material shall not include information which (i) is generally available and known to the public, or (ii) becomes generally available and known to the public other than as the result of a disclosure by Recipient in violation of this Contract, or (iii) becomes available to Recipient from a source

other than the Proprietor without obligation of confidentiality, provided such source did not, to Recipients knowledge, obtain such information or make such disclosure to Recipient in violation of an agreement with the Proprietor or through other improper action or inaction, or (iv) is independently developed by Recipient without use of or reference to the Confidential Material, and such independent development is evidenced or otherwise confirmed by written documentation. Confidential Material will be used by Recipient solely for the purpose of carrying out this Contract and will be kept in strict confidence by Recipient; provided, however any Confidential Material may be disclosed to employees and agents of Recipient who reasonably need to know such information for the purpose of carrying out this Contract (it being understood that all such employees and agents shall be informed of the confidential nature of such Confidential Material and shall be directed not to disclose such Confidential Material and to use such Confidential Material solely for the purpose of carrying out this Contract). The Recipient will use commercially reasonable efforts to prevent any breach of this Contract by its employees or any other person who obtains access to or possession of any of the Proprietors Confidential Information from or through the Recipient. In addition, the Custodian may aggregate the Funds nonpublic portfolio holdings information with similar data of other clients of the Custodian and may report and use such aggregated data without specific reference to the Fund so long as such aggregated data is sufficiently large a sample that no Confidential Material can be identified either directly or by inference or implication. Without limiting the foregoing, Recipient expressly agrees that it shall not use the Confidential Material as a basis for making any investment recommendations or decisions (a) regarding specific portfolio holdings, or any instruments derived from the value of such holdings, and (b) to purchase or sell the shares of a Fund for the purpose of taking advantage of any real or perceived discrepancy between the value of the portfolio holdings and the stated net asset value of a Funds shares. Nothing herein shall prevent the disclosure of Confidential Material that is required to be disclosed (i) by Recipient to its regulatory authorities, or (ii) by order of a court of competent jurisdiction, subpoena or other legal process; provided, that Recipient shall give Proprietor prompt notice of such requirement so Proprietor may seek an appropriate protective order. Recipient specifically agrees that money damages would not be a sufficient remedy for any breach of this Section 27 and Proprietor shall be entitled to specific performance as a remedy for any such breach. Specific performance shall not be deemed to be the exclusive remedy for any breach of this Section 27, but shall be in addition to all other remedies available at law or in equity. The obligations and agreements set forth in this Section 27 shall survive the termination of this Contract.

Subject to the terms of this Contract, the Custodian agrees that during the term of this Contract it will maintain policies reasonably designed to prohibit the dissemination or use of the Funds nonpublic portfolio holdings information by the Custodian or its employees, unless such dissemination or use is: (i) for the purposes set forth in or contemplated by this Contract, (ii) at the direction of the Fund, (iii) in the case of any Fund that is or becomes a securities lending client of the Custodian, disclosed to borrowers and borrowers affiliates in connection with loans made pursuant to that certain Securities Lending Agreement between such Fund and the Custodian, or (iv) requested or required in any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, or required by operation of law or regulation (provided that, with regard to disclosures pursuant to clause (iv), if permitted by applicable law the Custodian will give the Funds reasonable notice prior to any such dissemination or use).

IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the date mentioned above.

ATTEST EACH OF THE FUNDS LISTED ON APPENDIX A

/s/ Alice J. Stein By /s/ Ronald E. Robison Name: Alice J. Stein (Gerstel) Ronald E. Robison Title: Assistant Secretary President and Principal Executive Officer

ATTEST STATE STREET BANK AND TRUST COMPANY

/s/ Marvin Rau By /s/ Joseph L. Hooley Name: Marvin Rau Joseph L. Hooley Title: Vice President Vice Chairman

APPENDIX A, EFFECTIVE AS OF JUNE 18, 2010

List of Funds

OPEN-END RETAIL FUNDS

TAXABLE MONEY MARKET FUNDS

1. Active Assets Government Securities Trust 2. Active Assets Institutional Government Securities Trust 3. Active Assets Institutional Money Trust 4. Active Assets Money Trust 5. Morgan Stanley Liquid Asset Fund Inc. 6. Morgan Stanley U.S. Government Money Market Trust

TAX-EXEMPT MONEY MARKET FUNDS

7. Active Assets California Tax-Free Trust 8. Active Assets Tax-Free Trust 9. Morgan Stanley California Tax-Free Daily Income Trust 10. Morgan Stanley New York Municipal Money Market Trust 11. Morgan Stanley Tax-Free Daily Income Trust

EQUITY FUNDS

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12. Morgan Stanley Capital Opportunities Trust 13. Morgan Stanley European Equity Fund Inc. 14. Morgan Stanley Focus Growth Fund 15. Morgan Stanley Global Infrastructure Fund 16. Morgan Stanley International Fund 17. Morgan Stanley International Value Equity Fund 18. Morgan Stanley Mid Cap Growth Fund 19. Morgan Stanley Real Estate Fund 20. Morgan Stanley Special Growth Fund

ASSET ALLOCATION FUND

21. Morgan Stanley Global Strategist Fund

TAXABLE FIXED-INCOME FUNDS

22. Morgan Stanley Flexible Income Trust 23. Morgan Stanley Mortgage Securities Trust 24. Morgan Stanley Limited Duration U.S. Government Trust 25. Morgan Stanley U.S. Government Securities Trust

SPECIAL PURPOSE FUNDS

26. Morgan Stanley Select Dimensions Investment Series · Capital Growth Portfolio · Capital Opportunities Portfolio · Flexible Income Portfolio · Focus Growth Portfolio · Global Infrastructure Portfolio

· Mid Cap Growth Portfolio · Money Market Portfolio

27. Morgan Stanley Variable Investment Series · Aggressive Equity Portfolio · Capital Opportunities Portfolio · European Equity Portfolio · Global Infrastructure Portfolio · Income Plus Portfolio · Limited Duration Portfolio · Money Market Portfolio · Strategist Portfolio

CLOSED-END RETAIL FUNDS

TAXABLE FIXED-INCOME CLOSED-END FUNDS

28. Morgan Stanley Income Securities Inc.

STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS

COUNTRY SUBCUSTODIAN

Argentina Citibank, N.A.

Australia The Hongkong and Shanghai Banking Corporation Limited Citibank Pty. Limited

Austria Erste Bank der osterreichischen Sparkassen AG

Bahrain HSBC Bank Middle East Limited (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Bangladesh Standard Chartered Bank

Belgium Deutsche Bank AG, Netherlands (operating through its Amsterdam branch)

Benin via Societe Generale de Banques en Cote dIvoire, Abidjan, Ivory Coast

Bermuda Bank of Bermuda Limited

Botswana Barclays Bank of Botswana Limited

Brazil Citibank, N.A.

Bulgaria ING Bank N.V.

Burkina Faso via Societe Generale de Banques en Cote dIvoire, Abidjan, Ivory Coast

Canada State Street Trust Company Canada

Cayman Islands Scotiabank & Trust (Cayman) Limited

Chile Banco Itau Chile

Peoples Republic of China HSBC Bank (China) Company Limited (Shanghai and Shenzhen) (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Colombia Cititrust Colombia S.A. Sociedad Fiduciaria

Costa Rica Banco BCT S.A.

Croatia Privredna Banka Zagreb d.d

Czech Republic Ceskoslovenska Obchodni Banka, a.s.

Denmark Skandinaviska Enskilda Bankken AB, Sweden (operating through its Copenhagen branch)

COUNTRY SUBCUSTODIAN

Ecuador Banco de la Produccion S.A. PRODUBANCO

Egypt HSBC Bank Egypt S.A.E. (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Estonia AS Hansabank

Finland Skandinaviska Enskilda Bankken AB, Sweden (operating through its Helsinki branch)

France Deutsche Bank AG, Netherlands (operating through its Paris branch)

Germany Deutsche Bank AG

Ghana Barclays Bank of Ghana Limited

Greece National Bank of Greece S.A.

Guinea-Bissau via Societe Generale de Banques en Cote dIvoire, Abidjan, Ivory Coast

Hong Kong Standard Chartered Bank (Hong Kong) Limited

Hungary UniCredit Bank Hungary Zrt.

Iceland Kaupthing Bank hf.

India Deutsche Bank AG The Hongkong and Shanghai Banking Corporation Limited

Indonesia Deutsche Bank AG

Ireland Bank of Ireland

Israel Bank Hapoalim B.M.

Italy Deutsche Bank S.p.A.

Jamaica Bank of Nova Scotia Jamaica Limited

Japan Mizuho Corporate Bank Ltd. Sumitomo Mitsui Banking Corporation

Jordan HSBC Bank Middle East Limited (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Kazakhstan SB HSBC Bank Kazakhstan JSC (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Kenya Barclays Bank of Kenya Limited

COUNTRY SUBCUSTODIAN

Republic of Korea Deutsche Bank AG The Hongkong and Shanghai Banking Corporation Limited

Kuwait HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Latvia A/s Hansabanka

Lebanon HSBC Bank Middle East (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Lithuania SEB Vilniaus Bankas AB

Malaysia Standard Chartered Bank Malaysia Berhad

Mali via Societe Generale de Banques en Cote dIvoire, Abidjan, Ivory Coast

Malta The Hongkong and Shanghai Banking Corporation Limited

Mauritius The Hongkong and Shanghai Banking Corporation Limited

Mexico Banco Nacional de Mexico S.A.

Morocco Attijariwafa bank

Namibia Standard Bank Namibia Limited

Netherlands Deutsche Bank AG

New Zealand The Hongkong and Shanghai Banking Corporation Limited

Nigeria IBTC Chartered Bank Plc.

Norway Skandinaviska Enskilda Bankken AB, Sweden (operating through its Oslo branch)

Oman HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Pakistan Deutsche Bank AG

Palestine HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Panama HSBC Bank (Panama) S.A.

Peru Citibank del Peru, S.A.

Philippines Standard Chartered Bank

COUNTRY SUBCUSTODIAN

Poland Bank Handlowy w Warszawie S.A.

Portugal Banco Comercial Portugues S.A.

Puerto Rico Citibank N.A.

Qatar HSBC Bank Middle East Limited (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Romania ING Bank N.V.

Russia ING Bank (Eurasia) ZAO, Moscow

Saudi Arabia Saudi British Bank (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

Senegal via Societe Generale de Banques en Cote dIvoire, Abidjan, Ivory Coast

Serbia Unicredit Bank Serbia JSC

Singapore DBS Bank Limited United Overseas Bank Limited

Slovak Republic Ceskoslovenska Obchodni Banka, a.s., pobocka zahranicnej banky v SR

South Africa Nedbank Limited Standard Bank of South Africa Limited

Spain Deutsche Bank S.A.E.

Sri Lanka The Hongkong and Shanghai Banking Corporation Limited

Swaziland Standard Bank Swaziland Limited

Sweden Skandinaviska Enskilda Banken AB

Switzerland UBS AG

Taiwan - R.O.C. Bank of Taiwan

Thailand Standard Chartered Bank (Thai) Public Company Limited

Togo via Societe Generale de Banques en Cote dIvoire, Abidjan, Ivory Coast

Trinidad & Tobago Republic Bank Limited

Tunisia Banque Internationale Arabe de Tunisie

Turkey Citibank, A.S.

COUNTRY SUBCUSTODIAN

Uganda Barclays Bank of Uganda Limited

Ukraine ING Bank Ukraine

United Arab Emirates - Dubai HSBC Bank Middle East Limited Financial Market (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

United Arab Emirates - Dubai HSBC Bank Middle East Limited International Financial Center (as delegate of The Hongkong and Shanghai Banking Corporation Limited)

United Kingdom State Street Bank and Trust Company, United Kingdom branch

Uruguay Bank Itau Uruguay S.A.

Venezuela Citibank, N.A.

Vietnam The Hongkong and Shanghai Banking Corporation Limited

Zimbabwe Barclays Bank of Zimbabwe Limited

12/31/07

SCHEDULE B

STATE STREET GLOBAL CUSTODY NETWORK DEPOSITORIES OPERATING IN NETWORK MARKETS

COUNTRY SUBCUSTODIAN

Argentina Caja de Valores S.A.

Australia Austraclear Limited

Austria Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division)

Bahrain Clearing, Settlement, and Depository System of the Bahrain Stock Exchange

Bangladesh Central Depository Bangladesh Limited

Belgium Banque Nationale de Belgique Euroclear Belgium

Benin Depositaire Central - Banque de Reglement

Bermuda Bermuda Securities Depository

Brazil Central de Custodia e de Liquidacao Financeira de Titulos Privados (CETIP) Companhia Brasileira de Liquidacao e Custodia Sistema Especial de Liquidacao e de Custodia (SELIC)

Bulgaria Bulgarian National Bank Central Depository AD

Burkina Faso Depositaire Central - Banque de Reglement

Canada The Canadian Depository for Securities Limited

Chile Deposito Central de Valores S.A.

Peoples Republic of China China Securities Depository and Clearing Corporation Limited, Shanghai Branch China Securities Depository and Clearing Corporation Limited Shenzhen Branch

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Colombia Deposito Central de Valores Deposito Centralizado de Valores de Colombia S..A. (DECEVAL)

Costa Rica Central de Valores S.A.

Croatia Sredisnja depozitarna agencija d.d.

Cyprus Central Depository and Central Registry

Czech Republic Czech National Bank Stredisko cennych papiru - Ceska republika

Denmark Vaerdipapircentralen

Dubai International Financial Center Central Securities Depository department of the Dubai International Financial Exchange

Egypt Misr for Clearing, Settlement, and Depository S.A.E.

COUNTRY SUBCUSTODIAN

Central Bank of Egypt

Estonia AS Eesti Vaartpaberikeskus

Finland Suomen Arvopaperikeskus Oy

France Euroclear France

Germany Clearstream Banking AG, Frankfurt

Greece Apothetirion Titlon AE Bank of Greece, System for Monitoring Transactions in Securities in Book-Entry Form

Guinea-Bissau Depositaire Central - Banque de Reglement

Hong Kong Central Moneymarkets Unit Hong Kong Securities Clearing Company Limited

Hungary Kozponti Elszamolohaz es Ertektar (Budapest) Zrt. (KELER)

Iceland Icelandic Securities Depository Limited

India Central Depository Services (India) Limited National Securities Depository Limited Reserve Bank of India

Indonesia Bank Indonesia

Israel Tel Aviv Stock Exchange Clearing House Ltd. (TASE Clearing House)

Italy Monte Titoli S.p.A.

Ivory Coast Depositaire Central - Banque de Reglement

Jamaica Jamaica Central Securities Depository

Japan Bank of Japan - Net System Japan Securities Depository Center (JASDEC) Incorporated

Jordan Securities Depository Center

Kazakhstan Central Securities Depository

Kenya Central Depository and Settlement Corporation Limited Central Bank of Kenya

Republic of Korea Korea Securities Depository

Kuwait Kuwait Clearing Company

COUNTRY SUBCUSTODIAN

Latvia Latvian Central Depository

Lebanon Banque du Liban Custodian and Clearing Center of Financial Instruments for Lebanon and the Middle East (Midclear) S.A.L.

Lithuania Central Securities Depository of Lithuania

Malaysia Bank Negara Malaysia Bursa Malaysia Depository Sdn. Bhd.

Mali Depositaire Central - Banque de Reglement

Malta Central Securities Depository of the Malta Stock Exchange

Mauritius Bank of Mauritius Central Depository and Settlement Co. Ltd.

Mexico S.D. INDEVAL, S.A. de C.V.

Namibia Bank of Namibia

Netherlands Euroclear Nederland

New Zealand New Zealand Central Securities Depository Limited

Niger Depositaire Central - Banque de Reglement

Nigeria Central Securities Clearing System Limited

Norway Verdipapirsentralen

Oman Muscat Depository & Securities Registration Company, SAOC

Pakistan Central Depository Company of Pakistan Limited State Bank of Pakistan

Palestine Clearing, Depository and Settlement, a department of the Palestine Securities Exchange

Panama Central Latinoamericana de Valores, S.A. (LatinClear)

Peru Caja de Valores y Liquidaciones, Institucion de Compensacion y Liquidacion de Valores S.A

Philippines Philippine Depository & Trust Corporation Registry of Scripless Securities (ROSS) of the Bureau of Treasury

COUNTRY SUBCUSTODIAN

Poland Rejestr Papierow Wartosciowych Krajowy Depozyt Papierow Wartosciowych S.A.

Portugal INTERBOLSA - Sociedade Gestora de Sistemas de Liquidacao e de Sistemas Centralizados de Valores Mobiliarios, S.A.

Qatar Central Clearing and Registration (CCR), a department of the Doha Securities Market

Romania S.C. Depozitarul Central S.A. National Bank of Romania

Russia Vneshtorgbank, Bank for Foreign Trade of the Russian Federation National Depository Center

Saudi Arabia Tadawul Central Securities Depository

Senegal Depositaire Central - Banque de Reglement

Singapore The Central Depository (Pte) Limited Monetary Authority of Singapore

Slovak Republic Naodna banka slovenska Centralny depozitar cennych papierov SR, a.s.

Slovenia KDD - Centralna klirinsko depotna druzba d.d.

South Africa Strate Ltd.

Spain IBERCLEAR

Sri Lanka Central Depository System (Pvt) Limited

Sweden Vardepapperscentralen VPC AB

Switzerland SegaIntersettle AG (SIS)

Taiwan - R.O.C. Taiwan Depository and Clearing Corporation

Thailand Thailand Securities Depository Company Limited

Togo Depositaire Central - Banque de Reglement

Trinidad and Tobago Central Bank of Trinidad and Tobago

Tunisia Societe Tunisienne Interprofessionelle pour la Compensation et de Depots des Valeurs Mobilieres (STICODEVAM)

Turkey Central Bank of Turkey Central Registry Agency

COUNTRY SUBCUSTODIAN

Uganda Bank of Uganda

Ukraine Mizhregionalny Fondovy Souz National Bank of Ukraine

United Arab Emirates Clearing and Depository System, a department of the Dubai Financial Market Dubai International Financial Exchange Ltd. central securities depository

United Kingdom Euroclear UK & Ireland Limited

Uruguay Banco Central del Uruguay

Vietnam Vietnam Securities Depository

Zambia Bank of Zambia LuSE Central Shares Depository Limited

TRANSNATIONAL

Euroclear Bank S.A./N.V. Clearstream Banking, S.A.

12/31/07

FUNDS TRANSFER ADDENDUM

[STATE STREET LOGO] Serving Institutional Investors Worldwide (SM)

OPERATING GUIDELINES

1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit Clients account(s) upon the receipt of a payment order in compliance with the selected Security Procedure chosen for funds transfer and in the amount of money that State Street has been instructed to transfer. State Street shall execute payment orders in compliance with the Security Procedure and with the Clients instructions on the execution date provided that such payment order is received by the customary deadline for processing such a request, unless the payment order specifies a later time. All payment orders and communications received after this time will be deemed to have been received on the next business day.

2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure it has designated on the Selection Form was selected by the Client from Security Procedures offered by State Street. The Client agrees that the Security Procedures are reasonable and adequate for its wire transfer transactions and agrees to be bound by any payment orders, amendments and cancellations, whether or not authorized, issued in its name and accepted by State Street after being confirmed by any of the selected Security Procedures. The Client also agrees to be bound by any other valid and authorized payment order accepted by State Street. The Client shall restrict access to confidential information relating to the Security Procedure to authorized persons as communicated in writing to State Street. The Client must notify State Street immediately if it has reason to believe unauthorized persons may have obtained access to such information or of any change in the Clients authorized personnel. State Street shall verify the authenticity of all instructions according to the Security Procedure.

3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis of the account number contained in the payment order. In the event of a discrepancy between any name indicated on the payment order and the account number, the account number shall take precedence and govern. Financial institutions that receive payment orders initiated by State Street at the instruction of the Client may also process payment orders on the basis of account numbers, regardless of any name included in the payment order. State Street will also rely on any financial institution identification numbers included in any payment order, regardless of any financial institution name included in the payment order.

4. REJECTION: State Street reserves the right to decline to process or delay the processing of a payment order which (a) is in excess of the collected balance in the account to be charged at the time of State Streets receipt of such payment order; (b) if initiating such payment order would cause State Street, in State Streets sole judgment, to exceed any volume, aggregate dollar, network, time,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document credit or similar limits upon wire transfers which are applicable to State Street; or (c) if State Street, in good faith, is unable to satisfy itself that the transaction has been properly authorized.

5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act on all authorized requests to cancel or amend payment orders received in compliance with the Security Procedure provided that such requests are received in a timely manner affording State Street reasonable opportunity to act. However, State Street assumes no liability if the request for amendment or cancellation cannot be satisfied.

6. ERRORS: State Street shall assume no responsibility for failure to detect any erroneous payment order provided that State Street complies with the payment order instructions as received and State Street complies with the Security Procedure. The Security Procedure is established for the purpose of authenticating payment orders only and not for the detection of errors in payment orders.

7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility for lost interest with respect to the refundable amount of any unauthorized payment order, unless State Street is notified of the unauthorized payment order within thirty (30) days of notification by State Street of the acceptance of such payment order. In no event shall State Street be liable for special, indirect or consequential damages, even if advised of the possibility of such damages and even for failure to execute a payment order.

8. AUTOMATED CLEARING HOUSE (ACH) CREDIT ENTRIES/PROVISIONAL PAYMENTS: When a Client initiates or receives ACH credit and debit entries pursuant to these Guidelines and the rules of the National Automated Clearing House Association and the New England Clearing House Association, State Street will act as an Originating Depository Financial Institution and/or Receiving Depository Institution, as the case may be, with respect to such entries. Credits given by State Street with respect to an ACH credit entry are provisional until State Street receives final settlement for such entry from the Federal Reserve Bank. If State Street does not receive such final settlement, the Client agrees that State Street shall receive a refund of the amount credited to the Client in connection with such entry, and the party making payment to the Client via such entry shall not be deemed to have paid the amount of the entry.

9. CONFIRMATION STATEMENTS: Confirmation of State Streets execution of payment orders shall ordinarily be provided within 24 hours. Notice may be delivered through State Streets proprietary information systems, such as, but not limited to Horizon and GlobalQuest(R), account statements, advices, or by facsimile or callback. The Client must report any objections to the execution of a payment order within 30 days.

10. LIABILITY ON FOREIGN ACCOUNTS: State Street shall not be required to repay any deposit made at a non-U.S. branch of State Street, or any deposit made with State Street and denominated in a non-U.S. dollar currency, if repayment of such deposit or the use of assets denominated in the non-U.S. dollar currency is prevented, prohibited or otherwise blocked due to: (a) an act of war, insurrection or civil strife; (b) any action by a non-U.S. government or instrumentality or authority asserting governmental, military or police power of any kind, whether such authority be recognized as a defacto or a dejure government, or by any entity, political or revolutionary movement or otherwise that usurps, supervenes or otherwise materially impairs the normal operation of civil authority; or(c) the closure of a non-U.S. branch of State Street in order to prevent, in the reasonable judgment of State Street, harm to the employees or property of State Street. The obligation to repay any such deposit shall not be transferred to and may not be enforced against any other branch of State Street.

The foregoing provisions constitute the disclosure required by Massachusetts General Laws, Chapter 167D, Section 36.

While State Street is not obligated to repay any deposit made at a non-U.S. branch or any deposit denominated in a non-U.S. currency during the period in which its repayment has been prevented, prohibited or otherwise blocked, State Street will repay such deposit when and if all circumstances preventing, prohibiting or otherwise blocking repayment cease to exist.

11. MISCELLANEOUS: State Street and the Client agree to cooperate to attempt to recover any funds erroneously paid to the wrong party or parties, regardless of any fault of State Street or the Client, but the party responsible for the erroneous payment shall bear all costs and expenses incurred in trying to effect such recovery. These Guidelines may not be amended except by a written agreement signed by the parties.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Please select one or more of the funds transfer security procedures indicated below. o SWIFT

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative society owned and operated by member financial institutions that provides telecommunication services for its membership. Participation is limited to securities brokers and dealers, clearing and depository institutions, recognized exchanges for securities, and investment management institutions. SWIFT provides a number of security features through encryption and authentication to protect against unauthorized access, loss or wrong delivery of messages, transmission errors, loss of confidentiality and fraudulent changes to messages. SWIFT is considered to be one of the most secure and efficient networks for the delivery of funds transfer instructions.

Selection of this security procedure would be most appropriate for existing SWIFT members.

o STANDING INSTRUCTIONS

Standing Instructions may be used where funds are transferred to a broker on the Clients established list of brokers with which it engages in foreign exchange transactions. Only the date, the currency and the currency amount are variable. In order to establish this procedure, State Street will send to the Client a list of the brokers that State Street has determined are used by the Client. The Client will confirm the list in writing, and State Street will verify the written confirmation by telephone. Standing Instructions will be subject to a mutually agreed upon limit. If the payment order exceeds the established limit, the Standing Instruction will be confirmed by telephone prior to execution. o REMOTE BATCH TRANSMISSION

Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data communications between the Client and State Street. Security procedures include encryption and or the use of a test key by those individuals authorized as Automated Batch Verifiers.

Clients selecting this option should have an existing facility for completing CPU-CPU transmissions. This delivery mechanism is typically used for high-volume business. o GLOBAL HORIZON INTERCHANGE(SM) FUNDS TRANSFER SERVICE

Global Horizon Interchange Funds Transfer Service (FTS) is a State Street proprietary microcomputer-based wire initiation system. FTS enables Clients to electronically transmit authenticated Fedwire, CHIPS or internal book transfer instructions to State Street.

This delivery mechanism is most appropriate for Clients with a low-to-medium number of transactions (5-75 per day), allowing Clients to enter, batch, and review wire transfer instructions on their PC prior to release to State Street. o TELEPHONE CONFIRMATION (CALLBACK)

Telephone confirmation will be used to verify all non-repetitive funds transfer instructions received via untested facsimile or phone. This procedure requires Clients to designate individuals as authorized initiators and authorized verifiers. State Street will verify that the instruction contains the signature of an authorized person and prior to execution, will contact someone other than the originator at the Clients location to authenticate the instruction.

Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures.

For situations where funds are transferred periodically (minimum of one instruction per calendar quarter) from an existing authorized account to the same payee (destination bank and account number) and only the date and currency amount are variable, a repetitive wire may be implemented. Repetitive wires will be subject to a mutually agreed upon limit. If the payment order exceeds the established limit, the instruction will be confirmed by telephone prior to execution. Telephone confirmation is used to establish this process. Repetitive wire instructions must be reconfirmed annually.

This alternative is recommended whenever funds are frequently transferred between the same two accounts.

o TRANSFERS INITIATED BY FACSIMILE

The Client faxes wire transfer instructions directly to State Street Mutual Fund Services. Standard security procedure requires the use of a random number test key for all transfers. Every six months the Client receives test key logs from State Street. The test key contains alpha-numeric characters, which the Client puts on each document faxed to State Street. This procedure ensures all wire instructions received via fax are authorized by the Client.

We provide this option for Clients who wish to batch wire instructions and transmit these as a group to State Street Mutual Fund Services once or several times a day. o INSTRUCT

Instruct is a State Street web-based application designed to provide internet-enabled remote access that allows for the capturing, verification and processing of various instruction types, including securities, cash and foreign exchange transactions. Instruct is designed using industry standard formats to facilitate straight-through processing. Instruct provides a number of security features through user entitlements, industry standard encryption protocols, digital security certificates and multiple tiers of user authentication requirements. o SECURE TRANSPORT

Secure Transport is a file transfer application based upon the Secure File Transfer Protocol standard that is designed to enable State Street clients/ investment managers to send file based transfer and transaction instructions over the internet. Secure Transport features multi-factor authenticators such as SecurID and digital certificates, and incorporates industry-standard encryption protocols. o AUTOMATED CLEARING HOUSE (ACH)

State Street receives an automated transmission or a magnetic tape from a Client for the initiation of payment (credit) or collection (debit) transactions through the ACH network. The transactions contained on each transmission or tape must be authenticated by the Client. Clients using ACH must select one or more of the following delivery options: o GLOBAL HORIZON INTERCHANGE AUTOMATED CLEARING HOUSE SERVICE

Transactions are created on a microcomputer, assembled into batches and delivered to State Street via fully authenticated electronic transmissions in standard NACHA formats. o Transmission from Client PC to State Street Mainframe with Telephone Callback

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document o Transmission from Client Mainframe to State Street Mainframe with Telephone Callback o Transmission from DST Systems to State Street Mainframe with Encryption o Magnetic Tape Delivered to State Street with Telephone Callback

State Street is hereby instructed to accept funds transfer instructions only via the delivery methods and security procedures indicated. The selected delivery methods and security procedure(s) will be effective for payment orders initiated by our organization.

KEY CONTACT INFORMATION

Whom shall we contact to implement your selection(s)?

CLIENT OPERATIONS CONTACT ALTERNATE CONTACT

Name Name

Address Address

City/State/Zip Code City/State/Zip Code

Telephone Number Telephone Number

Facsimile Number Facsimile Number

SWIFT Number

Telex Number

[STATE STREET LOGO] Serving Institutional Investors Worldwide (SM)

FUNDS TRANSFER ADDENDUM

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FUND

INVESTMENT ADVISER

AUTHORIZED INITIATORS Please Type or Print

Please provide a listing of Fund officers or other individuals who are currently authorized to INITIATE wire transfer instructions to State Street:

TITLE (Specify whether position is with Fund or NAME Investment Adviser) SPECIMEN SIGNATURE

AUTHORIZED VERIFIERS Please Type or Print

Please provide a listing of Fund officers or other individuals who will be CALLED BACK to verify the initiation of repetitive wires of $10 million or more and all non-repetitive wire instructions:

CALL BACK DOLLAR LIMITATION NAME PHONE NUMBER (IF ANY)

SCHEDULE C

MARKET INFORMATION

PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION (SCHEDULED FREQUENCY)

The Guide to Custody in World Markets An overview of settlement and safekeeping procedures, custody (hardcopy annually and regular website updates) practices and foreign investor considerations for the markets in which State Street offers custodial services.

Global Custody Network Review Information relating to Foreign Sub-Custodians in State Streets (annually) Global Custody Network. The Review stands as an integral part of the materials that State Street provides to its U.S. mutual fund

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document clients to assist them in complying with SEC Rule 17f-5. The Review also gives insight into State Streets market expansion and Foreign Sub-Custodian selection processes, as well as the procedures and controls used to monitor the financial condition and performance of our Foreign Sub-Custodian banks.

Securities Depository Review Custody risk analyses of the Foreign Securities Depositories (annually) presently operating in Network markets. This publication is an integral part of the materials that State Street provides to its U.S. mutual fund clients to meet informational obligations created by SEC Rule 17f-7.

Global Legal Survey With respect to each market in which State Street offers custodial (annually) services, opinions relating to whether local law restricts (i) access of a funds independent public accountants to books and records of a Foreign Sub-Custodian or Foreign Securities System, (ii) a funds ability to recover in the event of bankruptcy or insolvency of a Foreign Sub-Custodian or Foreign Securities System, (iii) a funds ability to recover in the event of a loss by a Foreign Sub- Custodian or Foreign Securities System, and (iv) the ability of a foreign investor to convert cash and cash equivalents to U.S. dollars.

Subcustodian Agreements Copies of the contracts that State Street has entered into with each (annually) Foreign Sub-Custodian that maintains U.S. mutual fund assets in the markets in which State Street offers custodial services.

Global Market Bulletin Information on changing settlement and custody conditions in (daily or as necessary) markets where State Street offers custodial services. Includes changes in market and tax regulations, depository developments, dematerialization information, as well as other market changes that may impact State Streets clients.

Foreign Custody Advisories For those markets where State Street offers custodial services that (as necessary) exhibit special risks or infrastructures impacting custody, State Street issues market advisories to highlight those unique market factors which might impact our ability to offer recognized custody service levels.

Material Change Notices Informational letters and accompanying materials confirming (presently on a quarterly State Streets foreign custody arrangements,

PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION (SCHEDULED FREQUENCY) basis or as otherwise necessary) including a summary of material changes with Foreign Sub- Custodians that have occurred during the previous quarter. The

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document notices also identify any material changes in the custodial risks associated with maintaining assets with Foreign Securities Depositories.

ADDENDUM ONE TO

CUSTODIAN CONTRACT

This Addendum One (this Addendum One) is entered into and effective as of March 31, 2010 (the Addendum One Effective Date), by and between State Street Bank and Trust Company, a trust company chartered under the laws of The Commonwealth of Massachusetts (the Custodian), and each fund or series of a fund listed on the current Appendix A (as amended from time to time) to the Contract (as defined below), severally and not jointly, which evidences its agreement to be bound hereby by executing a copy of this Addendum One (each such fund is individually hereafter referred to as the Fund).

This Addendum One is made pursuant to that certain Custodian Contract dated March 7, 2008 between the Custodian and each Fund (as amended, the Contract), and supplements and, as expressly set forth herein, amends the terms of the Contract. Capitalized terms used but not defined herein shall have the meaning assigned to such terms in the Contract, provided that any capitalized term not otherwise defined herein or in the Contract shall have the meaning commonly ascribed to such term in the financial services industry.

WHEREAS:

A. The Custodian and the Fund are parties to the Contract, pursuant to which the Custodian performs certain custodial services to the Fund; and

B. The parties now each wish to enter into this Addendum One to amend and supplement the terms of the Contract as set forth herein.

THIS ADDENDUM ONE WITNESSES THAT:

I.Amendments

A.Reports to the Fund by Independent Registered Public Accounting Firm. Section 12 of the Contract is hereby deleted in its entirety and replaced with the following:

The Custodian shall provide the Fund, at such times as the Fund may reasonably require, with reports by independent registered public accounting firms on (a) the accounting system, (b) the internal accounting controls, (c) the procedures for safeguarding securities, futures contracts and options on future contracts, including securities deposited and/or maintained in a U.S. or Foreign Securities System, (d) information security procedures, and (e) the Custodians operations, relating to the services provided by the Custodian under this Contract. Such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. Without limiting the foregoing, upon request from the Fund from time to time (e.g., annually), the Custodian shall cause an independent registered public accounting firm to perform a SAS 70 Type II audit in connection with preparing such report, and the Custodian shall provide to the Fund the report resulting from each such SAS 70 Type II audit.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document B.Effective Period, Termination and Amendment. Section 15 of the Contract is deleted in its entirety and amended to read as follows:

15. Effective Period, Termination and Amendment.

Term. This Contract shall be effective as of the date first written above and shall continue until the date that is three (3) years from the Addendum One Effective Date, unless terminated earlier as set forth herein (the Initial Term). Thereafter, this Contract shall continue until terminated as set forth herein (the Initial Term and each Renewal Term (as defined below) shall be referred to herein as the Term). Upon the expiration of the Initial Term, the term of this Contract shall automatically renew for successive one-year periods (each, a Renewal Term), provided that: (a) the Custodian has provided to the Fund, no later than one hundred eighty (180) days prior to the expiration of then-current Initial Term or Renewal Term, as the case may be, a written notice of such automatic renewal; and (b) neither party has delivered a written notice of non-renewal to the other party (a Non-Renewal Notice). If the Fund is the non-renewing party, its Non-Renewal Notice must be delivered to the Custodian at least sixty (60) days prior to the expiration of the then-current Initial Term or any Renewal Term, as the case may be; if the Custodian is the non-renewing party, its Non-Renewal Notice must be delivered to the Fund at least one hundred eighty (180) days prior to the expiration of the then-current Initial Term or any Renewal Term, as the case may be. Any such Non-Renewal Notice delivered by a party shall be effective upon the expiration of the then-current Initial Term or Renewal Term, as the case may be.

This Contract may be amended at any time by mutual agreement of the parties hereto, provided, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Funds governing documents, and further provided, that the Fund may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by given notice as described herein to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.

Notwithstanding anything in this Contract to the contrary: (i) a breach of this Contract by one Fund shall not give rise to a right of termination of this Contract with respect to any other Fund unless there is an independent right to terminate this Contract with respect to any such other Fund; (ii) a Fund may terminate this Contract immediately upon the expiration or termination of the that certain Master Services Agreement between Morgan Stanley Investment Management Inc. and the Custodian effective as of March 31, 2010, with respect to such Fund (other than a termination for convenience by Morgan Stanley Investment Management Inc.); and (iii) a Fund may terminate this Contract immediately upon the expiration or termination of that certain Master Services Agreement between Morgan Stanley Services Company, Inc. and the Custodian effective as of March 31, 2010, with respect to such Fund (other than a termination for convenience by Morgan Stanley Services Company, Inc.).

Upon termination of this Contract with respect to a Fund, the applicable Fund shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its associated costs, expenses and disbursements.

C.Additional Funds. Section 18 of the Contract is hereby deleted and replaced with the following:

18. Additional Funds.

If any Morgan Stanley fund registered under the 1940 Act in addition to the Funds listed on Appendix A desires to have the Custodian render services as custodian under the terms hereof, the Custodian shall be notified in writing, and subject to satisfactory completion of the Custodians new-client screening, review and approval processes, and the delivery by the new fund of resolutions authorizing the appointment of the Custodian and such other supporting or related documentation as the Custodian may reasonably request, such fund shall become a Fund hereunder and shall be listed on Appendix A. All references herein to the Fund are to each of the Funds listed on Appendix A individually, as if this Contract were between each such individual Fund and the Custodian. With respect to any Fund which issues shares in separate classes or series, each class or series of such Fund shall be treated as a separate Fund hereunder. Notwithstanding anything to the contrary, this Contract shall not

prevent Morgan Stanley Investment Management Inc. or Morgan Stanley Services Company, Inc. from selling, merging, winding down, liquidating or closing any Fund, or result in any negative consequences to Morgan Stanley Investment Management Inc., Morgan Stanley Services Company, Inc. or any Fund, early termination fee, or termination-related fees or other obligations to Morgan Stanley Investment Management Inc., Morgan Stanley Services Company, Inc. or any Fund hereunder with respect thereto.

D.Data Access Services Agreement. Section 25 of the Contract is hereby deleted and replaced with the following:

25. Data Access Services Agreement. Effective with the execution and delivery of Addendum One, that certain Data Access Services Agreement dated March 7, 2008 is hereby terminated.

E.Appendix A. An amended and restated version of Appendix A to the Contract is attached hereto and supersedes all prior versions of Appendix A to the Contract. By execution and delivery of this Addendum One, each Fund agrees as of the date set forth in Appendix A to be bound by the terms and conditions of the Contract as amended hereby.

II.SUPPLEMENTAL TERMS

A.Criminal and Similar Offenses. With respect to each employee of the Custodian (the Custodian Staff) who has access to, and the ability to download, upload, modify or otherwise alter data and information (including, as applicable, personal information) relating to the business of the Fund or its clients which is systematically stored by or on behalf of the Custodian (the Fund Data), the Custodian shall, to the extent permitted by applicable law, promptly notify the Fund if and as soon as practicable after the Custodian (i) becomes aware that any such individual is charged with, convicted of or pleads guilty to or pleads no contest to, or (ii) has reasonably determined based on sufficient facts made known to it that any such individual has committed, any criminal offense involving dishonesty or a breach of trust or money laundering, which may include the taking of a false oath, the making of a false report, the making of a false statement to a governmental official or law enforcement officer or under oath, bribery, perjury, burglary, larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, possession or use of stolen property (including stolen credit cards or credit card numbers) or misappropriation of funds or securities or conspiracy to commit any of these offenses or felonies of a similar nature (a Criminal Act). The Custodian shall preclude any Custodian Staff from performing any services under the Contract if the Custodian (2) becomes aware that any such individual is convicted of, or pleads guilty to or pleads no contest to, or (3) has reasonably determined based on sufficient facts made known to it that any such individual has committed, a Criminal Act. The Custodian shall, to the extent permitted by applicable law, cooperate fully with all reasonable requests by the Fund for additional information, including all statements of individuals and court documentation necessary for the Fund to make all required regulatory filings, regarding any matter requiring notification under this Section II.A. Except with respect to information that is required to enable the Fund to satisfy all legal requirements, the Custodian may limit the disclosure of information otherwise required of it under this Section II.A to prevent any liability that may arise from such disclosure.

B.Data Access Services.

1.Generally. The Custodian has developed and/or uses proprietary or third-party accounting and other systems in conjunction with the services that the Custodian provides to the Fund. In this regard, the Custodian maintains certain information in databases under its ownership and/or control that it makes available to its customers in connection with the provision of services under the Contract (the Remote Access Services). The Custodian shall provide the Fund, and its designated investment advisors, consultants or other third parties who agree to abide by the terms of this Addendum (Authorized Designees) with access to the Custodian propriety and third-party systems as may be offered by the Custodian from time to time (each, a System) on a remote basis. The System and the Remote Access Services and the databases, computer programs, screen formats, report formats, interactive design techniques, formulae, processes, systems, software, know-how, algorithms, programs, files, documentation and other information made available to the Fund by the Custodian as part of the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Remote Access Services and through the use of the System and all trade secrets and other proprietary and intellectual property rights of the Custodian and third-party vendors related thereto shall be deemed to be Confidential Material (as

defined in Section 27 of the Contract) of the Custodian, subject to any applicable exceptions set forth in Section 27 of the Contract.

2.Security Procedures. The Fund shall comply in all material respects, and shall cause its Authorized Designees to comply in all material respects, with remote access operating standards and procedures and with user identification or other password control requirements and other security devices and procedures as may be reasonably issued or reasonably required from time to time by the Custodian or its permitted third-party vendors for use of a System and access to the Remote Access Services. The Fund is responsible for any use and/or misuse of each System and the Remote Access Services by its Authorized Designees. The Fund shall advise the Custodian promptly if it learns or has reason to believe that any person to whom it has given access to a System or the Remote Access Services has violated or intends to violate the terms of this Addendum and the Fund will cooperate with the Custodian in seeking injunctive or other equitable relief. The Fund shall discontinue use of a System and Remote Access Services, if requested, for any security reasons cited by the Custodian and the Custodian may restrict access of a System and Remote Access Services by the Fund or any Authorized Designee for security reasons or noncompliance with the terms of the Contract at any time.

3.Use.

a.The Fund shall use the Remote Access Services only in connection with the proper purposes of the Contract. The Fund will not, and will cause its employees and Authorized Designees not to, (1) permit any third party to use the System or the Remote Access Services, (2) sell, rent, license or otherwise use the System or the Remote Access Services in the operation of a service bureau or for any purpose other than as expressly authorized under the Contract, (3) use the System or the Remote Access Services for any fund, trust or other investment vehicle without the prior written consent of the Custodian, or (4) allow or cause any information transmitted from the Custodians databases, including data from third-party sources, available through use of the System or the Remote Access Services, to be published, redistributed or retransmitted for other than use for or on behalf of the Fund.

b.The Fund shall not modify or permit its Authorized Designees to: (1) modify any System in any way; (2) enhance, copy or otherwise create derivative works based upon a System; or (3) reverse engineer, decompile or otherwise attempt to secure the source code for all or any part of any System.

4.Limited Warranties.

a.The Custodian represents and warrants that it is the owner of and/or has the right to grant access to each System and to provide the Remote Access Services contemplated herein. Except as set forth in the Contract, the System and Remote Access Services are provided AS IS without warranty express or implied including as to availability of the System, and the Fund and its Authorized Designees shall be solely responsible for the use of the System and Remote Access Services and investment decisions, results obtained, regulatory reports and statements produced using the Remote Access Services.

b.EXCEPT AS EXPRESSLY SET FORTH IN THE CONTRACT, THE CUSTODIAN, FOR ITSELF AND ITS RELEVANT LICENSORS AND THIRD-PARTY VENDORS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE SYSTEM AND THE REMOTE ACCESS SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT

LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

III.GENERAL

A.Entire Agreement. The Contract, as supplemented and amended by this Addendum One, constitutes the complete agreement and understanding between the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof. Except as expressly amended and supplemented hereby, the Contract shall remain in full force and effect. In the event of any inconsistency between the provisions of this Addendum One and the provisions of the Contract, the terms of this Addendum One shall prevail.

B.Counterparts. This Addendum One may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

[signature page follows]

IN WITNESS WHEREOF, each of the parties has caused this Addendum One to be executed in its name and behalf by its duly authorized representative as of the Addendum One Effective Date.

ATTEST EACH OF THE FUNDS LISTED ON APPENDIX A

/s/ Norm Jones By: /s/ Francis Smith Name: Norm Jones Name: Francis Smith Title: Executive Director Title: Treasurer Date: March 26, 2010

ATTEST STATE STREET BANK AND TRUST COMPANY

/s/ A. Elizabeth Howard By: /s/ Joseph C. Antonellis Name: A. Elizabeth Howard Name: Joseph C. Antonellis Title: Vice President Title: Vice Chairman Date: March 31, 2010

Signature Page to Addendum One to Custodian Contract

Appendix A

MORGAN STANLEY

EFFECTIVE AS OF December 13, 2016

RETAIL FUNDS

Open-End Retail Funds

Taxable Money Market Funds

1. Active Assets Government Trust 2. Active Assets Prime Trust 3. Morgan Stanley Liquid Asset Fund Inc. 4. Morgan Stanley U.S. Government Money Market Trust

Tax-Exempt Money Market Funds

5. Morgan Stanley California Tax-Free Daily Income Trust 6. Morgan Stanley New York Municipal Money Market Trust 7. Morgan Stanley Tax-Free Daily Income Trust

Equity Funds

8. Morgan Stanley European Equity Fund Inc. 9. Morgan Stanley Multi Cap Growth Trust

Taxable Fixed-Income Funds

10. Morgan Stanley Global Fixed Income Opportunities Fund 11. Morgan Stanley Mortgage Securities Trust 12. Morgan Stanley U.S. Government Securities Trust

Special Purpose Funds

13. Morgan Stanley Select Dimensions Investment Series

· Mid Cap Growth Portfolio

14. Morgan Stanley Variable Investment Series

· European Equity Portfolio · Income Plus Portfolio · Limited Duration Portfolio · Multi Cap Growth Portfolio

Closed-End Retail Funds

Taxable Fixed-Income Closed-End Funds

20. Morgan Stanley Income Securities Inc.

Open-End Institutional Funds

1. Morgan Stanley Institutional Fund, Inc.

· Active International Allocation Portfolio · Advantage Portfolio · Asia Opportunity Portfolio · Emerging Markets Breakout Nations Portfolio · Emerging Markets Fixed Income Opportunities Portfolio · Emerging Markets Leaders Portfolio · Emerging Markets Portfolio · Emerging Markets Small Cap Portfolio · Frontier Emerging Markets Portfolio · Fundamental Multi-Cap Core Portfolio · Global Advantage Portfolio · Global Concentrated Portfolio · Global Core Portfolio · Global Discovery Portfolio · Global Franchise Portfolio · Global Infrastructure Portfolio · Global Insight Portfolio · Global Opportunity Portfolio · Global Quality Portfolio · Global Real Estate Portfolio · Growth Portfolio · Insight Portfolio · International Advantage Portfolio · International Equity Portfolio · International Opportunity Portfolio · International Real Estate Portfolio · Multi-Asset Portfolio · Small Company Growth Portfolio · US Core Portfolio · U.S. Real Estate Portfolio

2. Morgan Stanley Institutional Fund Trust

· Core Plus Fixed Income Portfolio · Corporate Bond Portfolio · Global Multi-Asset Income Portfolio · Global Strategist Portfolio · High Yield Portfolio · Short Duration Portfolio · Mid Cap Growth Portfolio · Strategic Income Portfolio · Ultra-Short Income Portfolio

3. The Universal Institutional Funds, Inc.

· Core Plus Fixed Income Portfolio · Emerging Markets Debt Portfolio

· Emerging Markets Equity Portfolio · Global Franchise Portfolio · Global Infrastructure Portfolio · Global Real Estate Portfolio · Global Strategist Portfolio · Growth Portfolio · Mid Cap Growth Portfolio · Small Company Growth Portfolio · U.S. Real Estate Portfolio

4. Morgan Stanley Institutional Liquidity Funds

· Government Portfolio · Government Securities Portfolio · Money Market Portfolio · Prime Portfolio · Tax-Exempt Portfolio · Treasury Portfolio · Treasury Securities Portfolio

Closed-End Institutional Funds

1. Morgan Stanley Asia-Pacific Fund, Inc. 2. Morgan Stanley China A Share Fund, Inc. 3. Morgan Stanley Emerging Markets Debt Fund, Inc. 4. Morgan Stanley Emerging Markets Domestic Debt Fund, Inc. 5. Morgan Stanley Emerging Markets Fund, Inc. 6. The India Investment Fund, Inc. 7. The Latin American Discovery Fund, Inc. 8. The Thai Fund, Inc. 9. The Turkish Investment Fund, Inc.

TRANSFER AGENCY AND SERVICE AGREEMENT

THIS AGREEMENT, made as of the 1st day of April 2013, and to have an effective date on or about July 1, 2013, (the Effective Date), is by and between each of the entities individually and not jointly, as listed on Schedule A, having their principal office and place of business at 522 Fifth Avenue, New York, New York 10036 (collectively, the Funds and individually, the Fund) and BOSTON FINANCIAL DATA SERVICES, INC., a Massachusetts corporation having its principal office and place of business at 2000 Crown Colony Drive, Quincy, Massachusetts 02169-0953 (the Transfer Agent).

WHEREAS, certain Funds may be authorized to issue shares in a separate series, such series shall be named under the respective Fund in the attached Schedule A, which may be amended by the parties from time to time, (each such series, together with all other series subsequently established by a Fund and made subject to this Agreement in accordance with Section 17, being herein referred to as a Portfolio, and collectively as the Portfolios);

WHEREAS, each Fund is either a statutory or business trust or a corporation organized under the laws of a state (as set forth on the Schedule A) and registered with the Securities and Exchange Commission as an investment company pursuant to the Investment Company Act of 1940, as amended (the 1940 Act);

WHEREAS, it is contemplated that additional Funds and Portfolios may become parties to this Agreement by written consent of the parties hereto and in accordance with Section 17; and

WHEREAS, each Fund, on behalf of itself and, where applicable, its Portfolios, desires to appoint the Transfer Agent as its transfer agent, dividend disbursing agent and agent in connection with certain other activities, and the Transfer Agent desires to accept such appointment.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

1. Terms of Appointment and Duties

1.1 Transfer Agency Services. Subject to the terms and conditions set forth in this Agreement, each Fund, on behalf of itself and, where applicable, its Portfolios, hereby employs and appoints the Transfer Agent to act as, and the Transfer Agent agrees to act as, its transfer agent for each class of each Funds now or hereafter authorized and issued shares (Shares), dividend disbursing agent and shareholder servicing agent in connection with any dividend reinvestment, accumulation, open-account or similar plan provided to the shareholders of each Fund and of any Portfolios of a Fund (Shareholders) as set out in the currently effective prospectus and Statement of Additional Information (the prospectus) of each Fund as provided to the Transfer Agent by each Fund, including without limitation any periodic investment plan or periodic withdrawal program. In accordance with

procedures established from time to time by agreement between the Transfer Agent and each of the Funds (the Procedures) and the Service Levels (defined below) to be established by the parties, in each case with such changes or deviations therefrom as have been (or may from time to time be) agreed upon in writing by the parties, the Transfer Agent agrees that it will perform the following services (all such services referred to herein as the Services):

(a) Establish each Shareholders account in the Fund on the Transfer Agents recordkeeping system and maintain such account for the benefit of such Shareholder in accordance with the Procedures;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Receive for acceptance and process orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the custodian of the assets of the Fund (the Custodian) and assist the Funds administrator with the calculation and payment of commissions and distribution and shareholder servicing fees to dealers related to such orders;

(c) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in book entry form in the appropriate Shareholder account;

(d) Receive for acceptance and process redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian;

(e) In respect to items (b) through (d) above, the Transfer Agent may execute transactions directly with broker-dealers authorized by the Fund;

(f) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders;

(g) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions;

(h) Prepare and transmit payments for dividends and distributions declared by the Fund or any Portfolio thereof, as the case may be;

(i) If applicable, issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Transfer Agent of indemnification satisfactory to the Transfer Agent and protecting the Transfer Agent and the Fund, and the Transfer Agent at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity;

(j) If applicable, issue replacement checks and place stop orders on original checks based on Shareholders representation that a check was not received or was lost. Such stop orders and replacements will be deemed to have been made at the request

of the Fund, and, as between the Fund and the Transfer Agent, the Fund shall be responsible for all losses or claims resulting from such replacement;

(k) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing;

(l) Record the issuance of Shares of the Fund and maintain pursuant to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as amended (the 1934 Act) a record of the total number of Shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. The Transfer Agent shall also provide the Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding but shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Fund;

(m) Accept any information, records, documents, data, certificates, transaction requests by machine readable input, facsimile, data entry and electronic instructions, including e-mail communications, which have been prepared, maintained or provided by the Fund or any other person or firm on behalf of the Fund or from broker-dealers of record or third-party administrators (TPAs) on behalf of individual Shareholders. With respect to transaction requests received in the foregoing manner, the Transfer Agent shall not be responsible for determining that the original source documentation is in good order, which includes compliance with Rule 22c-1 under the 1940 Act, and it will be the responsibility of the Fund to require its broker-dealers or TPAs to retain such documentation. E-mail exchanges on routine matters may be made directly with the Funds contact at the Transfer Agent. The Transfer Agent will not act on any e-mail communications coming to it directly from Shareholders requesting transactions, including, but not limited to, monetary transactions, change of ownership, or beneficiary changes;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (n) Open, maintain and manage, as agent for the Fund, such bank accounts as the Transfer Agent shall deem necessary for the performance of its duties under this Agreement, including but not limited to, the processing of Share purchases and redemptions and the payment of Fund dividends and distributions. The Transfer Agent may maintain such accounts at State Street Bank and Trust Company;

(o) Receive correspondence pertaining to any former, existing or new Shareholder account, process such correspondence for proper recordkeeping and respond to Shareholder correspondence;

(p) Process any request from a Shareholder to change account registration, beneficiary, beneficiary information, transfer and rollovers in accordance with the Procedures.

(q) Other Customary Services. Perform the customary services of a transfer agent, dividend disbursing agent and, as relevant, shareholder servicing agent in connection with dividend reinvestment, accumulation, open-account or similar plan (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to: maintaining all Shareholder accounts; arranging for mailing of Shareholder reports and prospectuses to current Shareholders; withholding taxes on U.S. resident and non-resident alien accounts; preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders; preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts; preparing and mailing activity statements for Shareholders; and providing Shareholder account information;

(r) Control Book (also known as Super Sheet). Maintain a daily record and produce a daily report for the Fund of all transactions and receipts and disbursements of money and securities and deliver a copy of such report for the Fund for each business day to the Fund no later than 9:00 a.m. Eastern Time, or such earlier time as the Fund may reasonably require, on the next business day;

(s) Blue Sky Reporting. The Fund or its administrator shall identify to the Transfer Agent in writing the states and countries where the Shares of the Fund are registered or exempt, and the number of Shares registered for sale with respect to each state or country, as applicable. The Transfer Agent shall establish the foregoing parameters on the system for the designated Blue Sky vendor. The Fund or its administrator shall verify that such parameters have been correctly established for each state or country on the system prior to activation and thereafter shall be responsible for monitoring the daily activity for each state or country. The responsibility of the Transfer Agent for the Funds blue sky registration status under the securities laws of any state is solely limited to the initial establishment of the parameters provided by the Fund or the administrator for the vendors system and the daily transmission of a file to such vendor in order that the vendor may provide reports to the Fund or the administrator for monitoring;

(t) National Securities Clearing Corporation (the NSCC). (i) Accept and effectuate the registration and maintenance of accounts through Networking and the purchase, redemption, transfer and exchange of shares in such accounts through Fund/ SERV (Networking and Fund/SERV being programs operated by the NSCC on behalf of NSCCs participants, including the Fund), in accordance with, instructions transmitted to and received by the Transfer Agent by transmission from NSCC on behalf of authorized broker-dealers on the Fund dealer file maintained by the Transfer Agent; (ii) issue instructions to the Funds banks for the settlement of transactions between the Fund and NSCC (acting on behalf of its broker-dealer and bank participants); (iii) provide account and transaction information from the affected Funds records on DST Systems, Inc.s computer system TA2000 (TA2000 System) in accordance with NSCCs Networking and Fund/SERV rules

for those broker-dealers; and (iv) maintain Shareholder accounts on TA2000 System through Networking;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (u) Performance of Certain Services by the Fund or Affiliates or Agents. New procedures as to who shall provide certain of these services may be established in writing from time to time by agreement between the Fund and the Transfer Agent.

(v) Anti-Money Laundering (AML) Delegation. In order to assist the Fund with the Funds AML responsibilities under applicable AML laws, the Transfer Agent offers certain risk-based shareholder activity monitoring tools and procedures that are reasonably designed to: (i) promote the detection and reporting of potential money laundering activities; and (ii) assist in the verification of persons opening accounts with the Fund (the AML Procedures). If the Fund elects to have the Transfer Agent implement the AML Procedures and delegate the day-to-day operation of such AML Procedures to the Transfer Agent, the parties will agree to such terms as stated in the attached schedule (Schedule 1.1(f) entitled AML Delegation) which may be changed from time to time subject to mutual written agreement between the parties.

(w) Call Center Services. Upon request of the Fund, answer telephone inquiries from 8:00 a.m. to 6:00 p.m., Eastern Time, each day on which the New York Stock Exchange is open for trading. These services do not apply to, nor will the Transfer Agent be responsible for, calls originating from the Morgan Stanley Institutional Liquidity Funds Call Center. The Transfer Agent shall answer and respond to inquiries from existing Shareholders, prospective Shareholders of the Fund and broker- dealers on behalf of such Shareholders in accordance with the telephone scripts provided by the Fund to the Transfer Agent, such inquiries may include, but are not limited to, requests for information on account set-up and maintenance, general questions regarding the operation of the Fund, general account information including dates of purchases, redemptions, exchanges and account balances, requests for account access instructions and literature requests.

(x) Short Term Trader. Upon request of the Fund, the Transfer Agent will provide the Fund with periodic reports on trading activity in the Fund based on parameters provided to the Transfer Agent by the Fund, as amended from time to time. The services to be performed by the Transfer Agent for the Fund hereunder will be ministerial only and the Transfer Agent shall have no responsibility for monitoring or reviewing market-timing activities except as otherwise set forth in Section 1.2(y) below.

(y) Omnibus Transparency Services. Upon request of the Fund, the Transfer Agent shall carry out certain information requests, analyses and reporting services in support of the Funds obligations under Rule 22c-2(a)(2). The parties will agree to such services and terms as stated in the attached schedule (Schedule 1.1(y) entitled Omnibus Transparency Services) that may be changed from time to time subject to mutual written agreement between the parties.

(z) Escheatment, Orders, Etc. If requested by the Fund (and as mutually agreed upon by the parties as to any reasonable reimbursable expenses), provide any additional related services (i.e., pertaining to escheatments, abandoned property, garnishment orders, bankruptcy and divorce proceedings, Internal Revenue Service or state tax authority tax levies and summonses and all matters relating to the foregoing).

(aa) Commencing on the execution of this Agreement, the Transfer Agent and the funds shall jointly undertake to document and define the tasks, methods, procedures, acceptance testing requirements, parallel running plans, and anticipated timing of the steps necessary to enable the Transfer Agent to commence the provision of the Services. All acceptance tests shall be completed to the Funds satisfaction prior to the commencement of the provision of the Services.

(bb) Service Levels/Monthly Reviews. The parties agree to work to together in good faith to develop written service level standards for certain services provided by the Transfer Agent under this Agreement (the Service Levels). Once mutually agreed upon, such Service Levels shall be added as a schedule to this Agreement by amendment. Unless otherwise agreed by the parties hereto or instructed by the Funds, the parties will conduct monthly service level reviews, which shall include a review of Transfer Agents performance of the Services against the Service Levels for the previous month, once such Services Levels have been established by the parties. The monthly service level reviews will be conducted by representatives of the Parties either in person or by phone.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1.2 Fiduciary Accounts. With respect to certain retirement plans or accounts (such as individual retirement accounts (IRAs), SIMPLE IRAs, SEP IRAs, Roth IRAs, Coverdell Education Savings Accounts, and 403(b) arrangements (such accounts, Fiduciary Accounts)), the Transfer Agent, at the request of the Fund, shall arrange for the provision of appropriate prototype plans as well as provide or arrange for the provision of various services to such plans and/or accounts, which services may include custodial services to be provided by State Street Bank and Trust Company (State Street), account set-up maintenance, and disbursements as well as such other services as the parties hereto shall mutually agree upon.

1.3 Site Visits and Inspections; Regulatory Examinations. During the term of this Agreement, authorized representatives of the Fund may conduct periodic site visits of the Transfer Agents facilities and inspect the Transfer Agents records and procedures solely as they pertain to the Transfer Agents Services for the Fund under or pursuant to this Agreement. Any non- routine expenses due to such inspections shall be the responsibility of the Fund (including, but not limited to, retrieving stored materials, and non-standard reporting) and shall occur during the Transfer Agents regular business hours and, except as otherwise agreed to by the parties, no more frequently than twice a year. In connection with such site visit and/or inspection, the Fund shall not attempt to access, nor will it review, the

records of any other clients of the Transfer Agent and the Fund shall conduct the visit/inspection in a manner that will not interfere with the Transfer Agents normal and customary conduct of its business activities, including the provision of services to the Fund and to other clients. The Transfer Agent shall have the right to immediately require the removal of any Fund representatives from its premises in the event that their actions, in the reasonable opinion of the Transfer Agent, jeopardize the information security of its systems and/or other client data or otherwise are disruptive to the business of the Transfer Agent. The Transfer Agent may require any persons seeking access to its facilities to provide reasonable evidence of their authority. The Transfer Agent may also reasonably require any of the Funds representatives to execute a confidentiality agreement before granting such individuals access to its facilities. The Transfer Agent will also provide reasonable access to the Funds governmental regulators, at the Funds expense following the Funds review and approval, solely to (i) the Funds records held by the Transfer Agent and (ii) the procedures of the Transfer Agent directly related to its provision of services to the Fund under the Agreement, (iii) the premises of the Transfer Agent and (iv) any other Fund information requested by such governmental regulator.

1.4 Tax-related support. The parties agree that to the extent that the Transfer Agent provides any services under this Agreement that relate to compliance by the Fund with the Internal Revenue Code of 1986, as amended (Code) or any other tax law, including without limitation, withholding, as required by federal law, taxes on Shareholder accounts, preparing, filing and mailing information tax reporting on U.S. Treasury Department Forms 1099, 1042, and 1042S, and performing and paying backup withholding as required for Shareholders, the Transfer Agent will not make any judgments or exercise any discretion. The Transfer Agents responsibilities hereunder shall not extend to or include duties and responsibilities of a tax return preparer as defined in the Code. The Fund will provide comprehensive instructions to the Transfer Agent in connection with the services and shall promptly respond to requests for direction from the Transfer Agent regarding Internal Revenue Service (IRS) notices and other requests.

2. Third Party Administrators for Defined Contribution Plans

2.1 The Fund may decide to make available to certain of its customers, a qualified plan program (the Program) pursuant to which the customers (Employers) may adopt certain plans of deferred compensation (Plan or Plans) for the benefit of the individual Plan participant (the Plan Participant), such Plan(s) being qualified under Section 401(a) of the Code and administered by TPAs which may be plan administrators as defined in the Employee Retirement Income Security Act of 1974, as amended.

2.2 In accordance with the procedures established in Schedule 2.1 entitled Third Party Administrator Procedures, as may be amended by the Transfer Agent and the Fund from time to time (Schedule 2.1), the Transfer Agent shall:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) Treat Shareholder accounts established by the Plans in the name of the Trustees, Plans or TPAs, as the case may be, as omnibus accounts;

(b) Maintain omnibus accounts on its records in the name of the TPA or its designee as the Trustee for the benefit of the Plan; and

2.3 Transactions identified under Sections 1 and 2 of this Agreement shall be deemed exception services (Exception Services) when such transactions:

(a) Require the Transfer Agent to use methods and procedures other than those usually employed by the Transfer Agent to perform transfer agency and recordkeeping services;

(b) Involve the provision of information to the Transfer Agent after the commencement of the nightly processing cycle of the TA2000 System; or

(c) Require more manual intervention by the Transfer Agent, either in the entry of data or in the modification or amendment of reports generated by the TA2000 System, than is normally required.

3. Fees and Expenses

3.1 Fee Schedule. For the performance by the Transfer Agent pursuant to this Agreement, the Fund agrees to pay the Transfer Agent the fees and expenses as set forth in the attached fee schedule (Schedule 3.1). Such fees and reimbursable expenses and advances identified under Section 3.2 below may be changed from time to time subject to mutual written agreement between the Fund and the Transfer Agent. The parties agree that the fees set forth on Schedule 3.1 shall apply with respect to the Funds set forth on Schedule A hereto as of the date hereof and to any newly created funds added to this Agreement under Section 17 that have requirements consistent with Services then being provided by the Transfer Agent under this Agreement. The fees set forth on Schedule 3.1, however, shall not automatically apply to any funds resulting from acquisition or merger subsequent to the execution of this Agreement. In the event that a fund is to become a party to this Agreement as the result of an acquisition or merger then the parties shall confer diligently and in good faith, and agree upon fees applicable to such fund.

3.2 Reimbursable Expenses. In addition to the fees paid under Section 3.1 above, the Fund agrees to reimburse the Transfer Agent for reimbursable expenses, including but not limited to special mailings, postage, and other expenses incurred at the direction of the Fund or with advance written approval of the Fund.

3.3 Increases. The fees and charges set forth on Schedule 3.1 will be increased in accordance with Section 3.5 below. The fees and charges set forth on Schedule 3.1 may be increased; (i) upon at least ninety (90) days prior written notice, if changes in laws applicable to its transfer agency business or laws applicable to the Fund, which the Transfer Agent has agreed to abide by and implement result in extraordinary increases to the Transfer Agents ongoing costs to provide the affected service or function; or (ii) in connection with new or additional services, or new or additional functions, features or modes of operation of the TA2000 system which the Fund chooses to implement. If the Transfer Agent notifies the Fund of an increase in fees or charges pursuant to this Section 3.3, the parties shall confer, diligently and in good faith, to agree upon a new fee to cover new fund feature.

3.4 Invoices. The Fund agrees to pay all fees and reimbursable expenses within sixty (60) days following the receipt of the respective invoice, except for any fees or expenses that are subject to good faith dispute. In the event of such a dispute, the Fund may only withhold that portion of the fee or expense subject to the good faith dispute. If no agreement is reached after good faith discussion between the parties within sixty (60) days of the due date of the relevant invoice, then such disputed amounts shall be settled as may be required by law or legal process.

3.5 Cost of Living Adjustment. After the first year of the Initial Term, the total fee for all services for each succeeding year shall equal the fee that would be charged for the same services based on the then current fee increased by the lesser of (i) the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document percentage increase for the twelve-month period of such previous calendar year of the CPI-W (defined below), or, in the event that publication of such Index is terminated, any successor or substitute index, appropriately adjusted, acceptable to both parties or (ii) 1%. As used herein, CPI-W shall mean the Consumer Price Index for Urban Wage Earners and Clerical Workers for Boston-Brockton-Nashua, MA-NH-ME-CT, (Base Period: 1982-84 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics.

4. Representations and Warranties of the Transfer Agent

The Transfer Agent represents and warrants to the Fund that:

4.1 It is a corporation duly organized and existing and in good standing under the laws of The Commonwealth of Massachusetts.

4.2 It is duly registered as a transfer agent under Section 17A(c)(2) of the 1934 Act, as amended (the 1934 Act), and it will remain so registered for the duration of this Agreement. It will as soon as reasonably possible notify the Fund in the event of any material change in its status as a registered transfer agent. Notwithstanding any other provision of this Agreement, the loss or expiration of the Transfer Agents registration as a transfer agent will constitute a material breach of this Agreement and any cure period and/or early termination fee shall be waived.

4.3 It is duly qualified to carry on its business in The Commonwealth of Massachusetts.

4.4 It is empowered under applicable laws and by its Articles of Organization and By-Laws to enter into and perform the Services contemplated in this Agreement.

4.5 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

4.6 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement.

4.7 It is entering into this Agreement and provision of the Services does not violate any other obligations it may have.

4.8 It shall at all times employ a current version of a leading commercially available virus detection software program that employs regular updates to test the hardware and software applications used by it to deliver the Services for the presence of any computer code designed to disrupt, disable, harm or otherwise impede the operation of such hardware or software.

4.9 The Transfer Agent will (a) comply with all applicable anti-corruption laws; and (b) not knowingly, accept from, or provide to the Fund, its directors, officers or employees, or any public official, any unlawful payment, unlawful compensation or other unlawful remuneration, be it monetary or other thing of value, in connection with the negotiation, execution, or performance of this Agreement. A breach of the foregoing provision shall be considered cause for termination of this Agreement under Section 12.7 and the Transfer Agent waives the cure period that would otherwise apply to such breach under that Section. The Transfer Agent shall maintain policies and procedures reasonably designed to promote and achieve compliance with this requirement.

The Transfer Agent will notify the Fund promptly if any of the representations and warranties above ceases to be true.

5. Representations and Warranties of the Fund

The Fund represents and warrants to the Transfer Agent that:

5.1 It is a trust or corporation duly organized and existing and in good standing under the laws of the state of its organization as set forth on Schedule A.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5.2 It is empowered under applicable laws and by its organizational documents to enter into and perform this Agreement.

5.3 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

5.4 It is an open-end management investment company registered with the U.S. Securities and Exchange Commission under the 1940 Act.

5.5 A registration statement under the Securities Act of 1933, as amended, is currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale by the Fund.

The Fund will notify the Transfer Agent promptly if any of the representations and warranties above ceases to be true.

6. Wire Transfer Operating Guidelines

6.1 Obligation of Sender. The Transfer Agent is authorized to promptly debit the appropriate Fund account(s) upon the receipt of a payment order in compliance with the authorized parties for funds transfer and in the amount of money that the Transfer Agent has been instructed to transfer. The Transfer Agent shall execute payment orders in compliance with the Fund instructions on the execution date provided that such payment order is received by the customary deadline for processing such a request, unless the payment order specifies a later time. All payment orders and communications received after the customary deadline will be deemed to have been received the next business day.

6.3 Account Numbers. The Transfer Agent shall process all payment orders on the basis of the account number contained in the payment order. In the event of a discrepancy between any name indicated on the payment order and the account number, the account number shall take precedence and govern.

6.4 Rejection. So long as it is in compliance with the Funds prospectus and Section 22 of the Investment Company Act of 1940, the Transfer Agent reserves the right to decline to process or delay the processing of a payment order which (a) is in excess of the collected balance in the account to be charged at the time of the Transfer Agents receipt of such payment order; (b) if initiating such payment order would cause the Transfer Agent, in the Transfer Agents sole judgment, to exceed any volume, aggregate dollar, network, time, credit or similar limits which are applicable to the Transfer Agent; or (c) if the Transfer Agent, in good faith, is unable to satisfy itself that the transaction has been properly authorized.

6.5 Cancellation Amendment. The Transfer Agent shall use reasonable efforts to act on all authorized requests to cancel or amend payment orders provided that such requests are received in a timely manner affording the Transfer Agent reasonable opportunity to act. However, the Transfer Agent assumes no liability if the request for amendment or cancellation cannot be satisfied other than due to its negligence, bad faith, or willful misconduct.

6.6 Errors. The Transfer Agent shall assume no responsibility for failure to detect any erroneous payment order provided that the Transfer Agent complies with the payment order instructions as received.

6.7 Interest. The Transfer Agent shall assume no responsibility for lost interest with respect to the refundable amount of any unauthorized payment order, unless the Transfer Agent is notified of the unauthorized payment order within thirty (30) days of notification by the Transfer Agent of the acceptance of such payment order.

6.8 ACH Credit Entries/Provisional Payments. When the Fund initiates or receives Automated Clearing House credit and debit entries pursuant to these guidelines and the rules of the National Automated Clearing House Association and the New England Clearing House Association, State Street will act as an Originating Depository Financial Institution and/or Receiving Depository Financial Institution, as the case may be, with respect to such entries. Credits given by the Transfer Agent with

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document respect to an ACH credit entry are provisional until the Transfer Agent receives final settlement for such entry from the Federal Reserve Bank. If the Transfer Agent does not receive such final settlement, the Fund agrees that the Transfer Agent shall receive a refund of the amount credited to the Fund in connection with such entry, and the party making payment to the Fund via such entry shall not be deemed to have paid the amount of the entry.

6.9 Confirmation. Confirmation of Transfer Agents execution of payment orders shall ordinarily be provided within twenty four (24) hours notice of which may be delivered through the Transfer Agents proprietary information systems, or by facsimile or call-back. The Fund must report any objections to the execution of an order within thirty (30) days.

7. Data Access and Proprietary Information

7.1 The Fund acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Fund by the Transfer Agent as part of the Fund s ability to access certain Fund - related data maintained by the Transfer Agent on databases under the control and ownership of the Transfer Agent or other third party (Data Access Services) constitute copyrighted, trade secret, or other proprietary information (collectively, Proprietary Information) of substantial value to the Transfer Agent or other third party. In no event shall Proprietary Information be deemed Customer Information (as defined in Section 10.2 below) or the confidential information of the Fund. The Fund agrees to treat all Proprietary Information as proprietary to the Transfer Agent and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Fund agrees for itself and its employees and agents to:

(a) Use such programs and databases (i) solely from equipment at locations agreed to between the Fund and the Transfer Agent and (ii) solely in accordance with the Transfer Agents applicable user documentation as provided to the Fund;

(b) Refrain from copying or duplicating in any way (other than in the normal course of performing processing on the Funds computer(s)), the Proprietary Information;

(c) Refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform the Transfer Agent in a timely manner of such fact and dispose of such information in accordance with the Transfer Agents instructions;

(d) Refrain from causing or allowing information transmitted from the Transfer Agents computer to the Funds computer to be retransmitted to any other computer or other device except as expressly permitted by the Transfer Agent (such permission not to be unreasonably withheld);

(e) Allow the Fund to have access only to those authorized transactions as agreed to between the Fund and the Transfer Agent; and

(f) Honor all reasonable written requests made by the Transfer Agent to protect at the Transfer Agents expense the rights of the Transfer Agent in Proprietary Information at common law, under federal copyright law and under other federal or state law.

7.2 Proprietary Information shall not include all or any portion of any of the foregoing items that: (i) are or become publicly available without breach of this Agreement; (ii) are released for general disclosure by a written release by the Transfer Agent; or (iii) are already in the possession of the receiving party at the time of receipt without obligation of confidentiality or breach of this Agreement.

7.3 The Fund acknowledges that its obligation to protect the Transfer Agents Proprietary Information is essential to the business interest of the Transfer Agent and that the disclosure of such Proprietary Information in breach of this Agreement may cause the Transfer Agent immediate, substantial and irreparable harm, the value of which may be extremely difficult to determine. Accordingly, the parties agree that, in addition to any other remedies that may be available in law, equity, or otherwise for the disclosure or use of the Proprietary Information in breach of this Agreement, the Transfer Agent shall be entitled to seek a temporary restraining order, injunctive relief, or other equitable relief against the continuance of such breach.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7.4 If the Fund notifies the Transfer Agent that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Transfer Agent shall use its best endeavors in a timely manner

to correct such failure. Organizations from which the Transfer Agent may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Fund agrees to make no claim against the Transfer Agent arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof.

7.5 If the transactions available to the Fund include the ability to originate electronic instructions to the Transfer Agent in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, then in such event the Transfer Agent shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Transfer Agent from time to time.

7.6 Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section 7. The obligations of this Section shall survive any earlier termination of this Agreement.

7.7 DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE USED IN CONNECTION WITH THE PERFORMANCE OF THE SERVICES UNDER THIS AGREEMENT ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES (OTHER THAN AS SET FORTH IN THIS AGREEMENT), WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

8. Indemnification

8.1 The Transfer Agent shall not be responsible for, and the Fund shall indemnify and hold the Transfer Agent, and with respect to Section 1.2 and Section 8.1(f) herein, also State Street, harmless, from and against, any and all losses, damages, costs, charges, documented counsel fees (including the defense of any lawsuit in which the Transfer Agent or affiliate is a named party), payments, expenses and liability arising out of or attributable to:

(a) All actions of the Transfer Agent or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct;

(b) The Funds lack of good faith, negligence or willful misconduct;

(c) The reliance upon, and any subsequent use of or action taken or omitted, by the Transfer Agent, or its agents or subcontractors on: (i) any information, records, documents, data, stock certificates or services, which are received by the Transfer Agent or its agents or subcontractors by machine readable input, facsimile, data

entry, electronic instructions, or other similar means authorized by the Fund, and which have been prepared, maintained or performed by the Fund or any other person or firm on behalf of the Fund including but not limited to any broker-dealer, TPA or previous transfer agent; (ii) any instructions or requests of the Fund or any of its officers; and (iii) any paper or document, reasonably believed to be genuine, authentic, or signed by the proper person or persons;

(d) The offer or sale of Shares in violation of federal or state securities laws or regulations requiring that such Shares be registered, or in violation of any stop order or other determination or ruling by any federal or any state agency with respect to the offer or sale of such Shares;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) The acceptance of facsimile transaction requests on behalf of individual Shareholders received from broker-dealers, TPAs or the Fund, and the reliance by the Transfer Agent on the broker-dealer, TPA or the Fund ensuring that the original source documentation is in good order and properly retained;

(f) The negotiation and processing of any checks, wires and ACH transmissions including without limitation for deposit into, or credit to, the Funds demand deposit accounts maintained by the Transfer Agent; or

(g) Upon the Funds request entering into any agreements required by the NSCC for the transmission of Fund or Shareholder data through the NSCC clearing systems.

8.2 To the extent that the Transfer Agent is not entitled to indemnification pursuant to Section 8.1 above and only to the extent of such right, the Fund shall not be responsible for, and the Transfer Agent shall indemnify and hold the Fund harmless from and against any losses, damages, costs, charges, documented counsel fees (including the defense of any lawsuit in which the Fund or affiliate is a named party), payments, expenses and liability asserted against or incurred by the Fund arising out of or attributable to claims by third parties arising directly out of or attributable to any action or failure of the Transfer Agent to act as a result of the Transfer Agents lack of good faith, negligence or willful misconduct in the performance of its services hereunder.

8.3 In order that the indemnification provisions contained in this Section 8 shall apply, upon the assertion of a claim for which one party may be required to indemnify the other party, the indemnified party shall promptly notify the indemnifying party of such assertion, and shall keep the indemnifying party advised with respect to all developments concerning such claim. The indemnifying party shall have the option to participate with the indemnified party in the defense of such claim or to defend against said claim in its own name or in the name of the indemnified party. The party controlling the defense of such claim shall in no case, without the prior written consent of the other party hereto, settle, confess any claim, make any compromise, or consent to the entry of any judgment in any commenced or threatened claim or

action, unless such settlement, compromise or consent: (i) includes an unconditional release of the indemnified party and indemnifying party from all liability arising out of such commenced or threatened claim or action; and (ii) is solely monetary in nature and does not include a statement as to, or an admission of fault, culpability or failure to act by or on behalf of, the indemnified party or the indemnifying party or otherwise adversely affect any indemnified party or indemnifying party.

8. 4 As-of Adjustments.

(a) The Transfer Agent and the Funds will discuss the Transfer Agent accepting liability for an as of loss on a case-by- case basis unless Transfer Agent assumes liability without the necessity of a discussion between the parties. Subject to such discussion, the Transfer Agent will accept financial responsibility for a particular situation resulting in a financial loss to a Fund where such loss is material, as hereinafter defined, and, under the particular facts at issue, the Transfer Agents conduct was culpable. A loss will be deemed material for purposes of this Section when (i) it results in a pricing error on a particular transaction which equals or exceeds one-half cent ($0.005) per share; or (ii) taken together with the accumulated, unreimbursed net loss of all as-of transactions caused solely by the Transfer Agent to the affected Portfolio during such year, results in an impact to a particular price that equals or exceeds one half cent ($.005) per share.

(b) With respect to a single transaction, if the net effect of an as of transaction that is determined to be caused solely by the Transfer Agent is negative and exceeds the materiality threshold set forth above, then the Transfer Agent shall promptly contact the Funds. The Transfer Agent will work with the Funds to determine what, if any, impact the threshold break has on the Funds Net Asset Value and what, if any, further action is required. These further actions may include but are not limited to, the Fund re-pricing the affected day(s), the Transfer Agent re-processing, at its expense, all affected transactions in the Fund that took place during the period or a payment to the Fund. The Funds agree to work in good faith with the Transfer Agent and wherever possible, absent a regulatory prohibition or other mutually agreed upon reason, the Fund agrees to re-price the affected day(s) and to allow the Transfer Agent to re- process the affected transactions. When such re-pricing and re-processing is not possible or the affect of re-pricing or re-processing still results in a loss that exceeds the materiality threshold, the Transfer Agent will make payment to the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document custodian or Funds at the Funds direction. The Funds agree that in connection with determining the loss with respect to an as of transaction, the Transfer Agent shall be permitted to net gains in one class of the Fund against losses in another class of the Fund when there are related transactions across such classes.

(c) At the end of each calendar year, if the net effect of accumulated, unreimbursed, as of transactions caused solely by the Transfer Agent across all classes of a Portfolio is negative and equals or exceeds $25,000, the Transfer Agent shall promptly make a payment to the Fund, in such amount as necessary to reduce the net effect of such Transfer Agent- caused as of losses below the $25,000 threshold. If a Portfolio has a net gain position at the end of the calendar year, the gain may be used to offset net losses of other classes of the same Portfolio, except as otherwise may be agreed by the parties.

(d) The Transfer Agents aggregate liability with respect to as of losses under the foregoing provisions shall not exceed twenty-four (24) months of service fees during any calendar year of this Agreement. The Transfer Agent shall make all payments that are deemed to be required under this Section 8.4 within thirty (30) days of the parties mutual agreement as to (i) the Transfer Agents responsibility hereunder and (ii) the amount of such payment.

(e) At the end of each calendar year, any gains not applied to off-set losses will be paid to the Funds.

8.5 The Funds shall not be responsible for, and the Transfer Agent shall indemnify and hold the Funds harmless from and against any and all losses, damages, costs, charges, documented counsel fees (including the defense of any lawsuit in which the Transfer Agent or affiliate is a named party), payments, expenses and liability arising directly out of or attributable to any action or failure of the Transfer Agent to act as a result of the Transfer Agents:

(a) Failure to abide by the Standard of Care;

(b) all Claims brought against the Funds to the extent such action is based upon, any claim that any part of the services or products provided by the Transfer Agent infringes upon any patent, copyright, trademark, service mark, or any trade secret or other proprietary right of a third party (an Infringement); provided that the Transfer Agent is promptly notified in writing of any such claim; and provided further that the Transfer Agent shall have the right to defend against said claim in its own name in accordance with the provisions of Section 8.3. Further, in the event of any such claim, litigation or threat thereof, the Transfer Agent may, in its sole and absolute discretion, either:

(i) Procure for the right to continue to use or receive such service or product at no additional cost to the Fund Indemnitees; or

(ii) Replace or modify such service or product to make it non-infringing without materially affecting the functionality and performance of such service or product; or

(iii) If option (i) or (ii), above, are not reasonably available, terminate this Agreement, or in the alternative, the Transfer Agent may only partially terminate this Agreement solely with respect to the allegedly infringing functionality if that infringing function (the Non-Critical Functionality) can be eliminated from the service or product without materially affecting the remaining functionality and performance of the service or product available to the Funds.

9. Standard of Care

The Transfer Agent shall at all times act in good faith and agrees to use all commercially reasonable efforts in performing the services under this Agreement. The Transfer Agent assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct. Notwithstanding the foregoing, the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Transfer Agents aggregate liability during the Term of this Agreement with respect to, arising from or arising in connection with this Agreement, or from all services provided or omitted to be provided by the Transfer Agent under this Agreement for all of the Funds subject to this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed the aggregate of the amounts actually received hereunder by the Transfer Agent as fees and charges, but not including reimbursable expenses, for all of the Funds covered by this Agreement during the twenty-four (24) calendar months immediately preceding the first event for which recovery from the Transfer Agent is being sought. The foregoing limitation on liability shall not apply to any loss or damage resulting from any intentional malicious acts or intentional malicious omissions by the Transfer Agents employees. For purposes of this Section 9, intentional malicious acts or intentional malicious omissions shall mean those acts undertaken or omitted purposefully under the circumstances in which the person knows that such acts or omissions violate this Agreement and are likely to cause damage or harm to the Fund. In the event that a claim giving rise to liability by the Transfer Agent occurs prior to the completion of the first twenty-four (24) months of the Agreement, the foregoing liability limitation shall be calculated by adding: (1) the amounts actually paid hereunder for such period by the Fund to the Transfer Agent as fees and charges, but not including reimbursable expenses; and (2) an amount equal to (x) an average monthly fee (determined based on the actual fees received and number of months that have passed as of the calculation date) multiplied by (y) the number of months remaining to reach twenty-four (24) months.

10. Confidentiality

10.1 The Transfer Agent and the Fund agree that they will not, at any time during the term of this Agreement or after its termination, reveal, divulge, or make known to any person, firm, corporation or other business organization, any Confidential Information (as defined below) of the other party used or gained by the Transfer Agent or the Fund during performance under this Agreement. The Fund and the

Transfer Agent further covenant and agree to retain all such Confidential Information in trust for the sole benefit of the Transfer Agent or the Fund and their successors and assigns. In the event of breach of the foregoing by either party, the parties agree that, in addition to any other remedies that may be available in law, equity, or otherwise for the disclosure of the Confidential Information in breach of this Agreement, the party whose Confidential Information is disclosed shall be entitled to seek and obtain a temporary restraining order, injunctive relief, or other equitable relief against the continuance of such breach. The above prohibition of disclosure shall not apply to the extent that the Transfer Agent must disclose such Confidential Information to its sub-contractor or Fund agent for purposes of providing services under this Agreement.

10.2 For purposes of this Agreement, Confidential Information shall mean: (a) with respect to Confidential Information of the Fund: (i) shareholder lists, cost figures and projections, profit figures and projections, all non-public information, including but not limited to trade secrets, proprietary information, and information about products, business methods and business plans) relating to the business of the Fund, or any other secret or confidential information whatsoever of the Fund; and (ii) Customer Information (as defined below) and all information that the Fund is obligated by law to treat as confidential for the benefit of third parties, including but not limited to Customer Information (defined below); and (b) with respect to the Transfer Agents Confidential Information: all non-public information, including but not limited to trade secrets, proprietary information, and information about products, business methods and business plans, customer names and other information related to customers, fee schedules, price lists, pricing policies, financial information, discoveries, ideas, concepts, software in various stages of development, designs, drawings, specifications, techniques, models, data, source code, object code, documentation, diagrams, flow charts, research, development, processes, procedures, know-how, organizational structure, user guides, marketing techniques and materials, marketing and development plans, and data processing software and systems relating to the Transfer Agents business, operations or systems (or to the business, systems or operations of the Transfer Agents affiliates.

10.3 For purposes of this Agreement, Customer Information means all the personally identifying data however collected or received, including without limitation, through cookies or non-electronic means pertaining to or identifiable to the Funds Shareholders, prospective shareholders and plan administrators (collectively, Fund Customers), including without limitation, (i) name, address, email address, passwords, account numbers, personal financial information, social security numbers, personal preferences, demographic data, marketing data, data about securities transactions, credit data or any other identification data; (ii) any information that reflects the use of or interactions with a Fund service, including the Funds web site; or (iii) any data otherwise submitted in the process of registering for a Fund service. For the avoidance of doubt, Customer Information shall include all nonpublic personal information, as defined under the Gramm-Leach-Bliley

Act of 1999 (Public Law 106-102, 113 Stat. 1138) (GLB Act) and all personal information as defined in the Massachusetts Standards for the Protection of Personal Information, 201 CMR 17.00, et seq., (Mass Privacy Act). This Agreement shall not be construed as granting the Transfer Agent any ownership rights in the Customer Information.

10.4 The Transfer Agent will use the Confidential Information, including Customer Information, only in compliance with (i) the provisions of this Agreement, (ii) the instructions of the Funds, (iii) its own Privacy and Information Sharing Policy, as amended and updated from time to time and (iv) federal and state privacy laws, including the GLB Act and the Mass Privacy Act, as such is applicable to its transfer agency business. The Transfer Agent will implement and maintain an appropriate written information security program, the terms of which shall meet or exceed the requirements for financial institutions under 17 CFR 248.30, and which shall include appropriate technical and organizational measures to (a) ensure the security and confidentiality of all information provided to it by the Funds, including Customer Information, (b) protect against any threats or hazards to the security or integrity of information, including unlawful destruction or accidental loss, alteration and any other form of unlawful processing and (c) prevent such unauthorized access to, use or disclosure of the information.

10.5 The Transfer Agent will, as soon as reasonably possible, notify the Funds in writing if it becomes aware of (a) any disclosure or use of any information by it or any of its representatives in breach of this Section 10, (b) any request for disclosure or inquiry regarding the information from a third party (other than for routine subpoenas or trustee writs for shareholder information) or (c) any change in applicable law that is likely to have a substantial adverse effect on Transfer Agents ability to comply with this Section 10.

10.6 In the event that any requests or demands are made for the inspection of the records of the Fund, the Transfer Agent will promptly notify the Fund (except where prohibited by law) and to secure instructions from an authorized officer of the Fund as to such inspection. The Transfer Agent expressly reserves the right, however, to exhibit the Funds records to any person whenever it is advised by counsel that it is legally compelled to exhibit the records to such person. In the event that the Transfer Agent is requested or authorized by the Fund, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Fund by state or federal regulatory agencies, to produce such records of the Fund or the Transfer Agents personnel as witnesses, the Fund agrees to pay any extraordinary fees and expenses the Transfer Agent incurs in responding to such request, order or requirement.

11. Covenants of the Fund and the Transfer Agent

11.1 The Fund shall promptly furnish to the Transfer Agent the following:

(a) A certified copy of the resolution of the Board of Trustees or the Board of Directors, as the case may be, of the Fund authorizing the appointment of the Transfer Agent and the execution and delivery of this Agreement; and

(b) A copy of the organizational documents of the Fund and all amendments thereto.

11.2 The Transfer Agent hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices.

11.3 Records. The Transfer Agent shall prepare and keep records relating to the services to be performed hereunder, in the form, manner and for such periods, as it may deem advisable and as may be required by (i) the laws and regulations applicable to its business as a Transfer Agent, including, but not limited to, those set forth in 17 CFR 240.17Ad-6 and 17 CFR 240.17Ad-7, and those set forth in IRS regulations with respect to any services as information reporting and withholding agent for the Funds, in each case as such regulations may be amended from time to time; and (ii) its record retention policies. The Transfer Agent

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shall also maintain customary records in connection with its agency for the Fund; particularly those records required to be maintained pursuant to subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under 1940 Act. Records maintained by the Transfer Agent on behalf of the Funds are the property of the Funds and shall be made available for reasonable examinations by the Funds governmental regulators upon reasonable request and shall be preserved and maintained by the Transfer Agent for such period as required by applicable law or until such earlier time as the Transfer Agent has delivered such records into the Funds possession or destroyed them at the Funds request.

11.4 Compliance Program. The Transfer Agent maintains and will continue to maintain a comprehensive compliance program reasonably designed to prevent violations of the federal securities laws pursuant to Rule 38a-1 under the 1940 Act. Pursuant to its compliance program, the Transfer Agent will provide periodic measurement reports to the Fund. Upon request of the Fund, the Transfer Agent will provide to the Fund in connection with any periodic annual or semi-annual shareholder report filed by the Fund or, in the absence of the filing of such reports, on a quarterly basis, a sub-certification pursuant to the Sarbanes-Oxley Act of 2002 with respect to the Transfer Agents performance of the services set forth in this Agreement and its internal controls related thereto. In addition, on a quarterly basis, the Transfer Agent will provide to the Fund a certification in connection with Rule 38a-1 under the 1940 Act. The Transfer Agent reserves the right to amend and update its compliance program and the measurement tools and certifications provided thereunder from time to time in order to address changing regulatory and industry developments.

11.5 SSAE16 Reports. The Transfer Agent will furnish to the Fund, on a semi-annual basis, a report in accordance with Statements on Standards for Attestation Engagements No. 16 (the SSAE Report) as well as such other reports and information relating to the Transfer Agents policies and procedures and its compliance with such policies and procedures and with the laws applicable to its business and its services, as the parties may mutually agree upon.

11.6 Information Security. The Transfer Agent has implemented and maintains at each service location physical and information security and data protection safeguards against the destruction, loss, theft, unauthorized access, unauthorized use, or alteration of the Funds Confidential Information, including Customer Information, in the possession of the Transfer Agent that will be no less rigorous than those in place at the Effective Date of this Agreement, and from time to time enhanced in accordance with changes in regulatory requirements. The Transfer Agent will, at a minimum, update its policies to remain compliant with applicable regulatory requirements, including those under the GLB Act and the Mass Privacy Act. The Transfer Agent will meet with the Fund, at its request, on an annual basis to discuss information security safeguards

11.7 In the event that Transfer Agent learns or has reason to believe that (i) Confidential Information has been disclosed or accessed by an unauthorized party, (ii) Transfer Agents facilities associated with such Confidential Information has been accessed by an unauthorized party or (iii) Confidential Information has otherwise been lost or misplaced, Transfer Agent will as soon as possible give notice of such event to the Fund.

11.8 In the event that Transfer Agent learns or has reason to believe that there (i) has been a breach of its security standards, or (ii) is a weakness in Transfer Agents security practices or systems, in each instance irrespective of cause, to the extent such breach or weakness could reasonably be expected to (y) allow unauthorized access to Confidential Information or Transfer Agents facilities associated with such Confidential Information or (z) adversely impact the facilities, software or Services, Transfer Agent will promptly give notice of such event to the Fund.

11.9 Furthermore, Transfer Agent acknowledges that upon unauthorized access to or acquisition of personal, nonpublic information within Transfer Agent custody or control (a Security Event), the law may require that Transfer Agent notify the individuals whose information was accessed or disclose that a Security Event has occurred. Transfer Agent must notify the Fund as soon as possible if Transfer Agent learns or has reason to believe a Security Event has occurred. Except to the extent prohibited by mandatory applicable law, Transfer Agent agrees that it will not notify any individual until Transfer Agent first consults with the Fund and the Fund has had an opportunity to review the notification Transfer Agent proposes to issue to individuals and given its express consent to the same. The reasonable cost, as mutually agreed upon by the Fund and the Transfer Agent, of providing required notifications to individuals impacted by such Security Event shall be borne by

11.10 The notices required under Sections 11.7, 11.8 and 11.9 above shall be given in accordance with Section 16.14 below (Notices). Such notice shall contain material details of the security issue that are known at the time of notification, subject to a request by law enforcement or other government agency to withhold such notice. Transfer Agent shall (i) promptly take appropriate steps to contain and control the security issue to prevent unauthorized access or further unauthorized access (as applicable) to or misuse of the Confidential Information, facilities, software or Services; and (ii) continue to provide information relating to the investigation and resolution of the security issue until it has been resolved. Transfer Agent will maintain appropriate processes for evidence collection, analysis and remediation of any security related incident as well as postmortems and resulting actions taken or proposed with timelines for completion and will make such information available to the Fund at its request. Transfer Agent will also cooperate fully with the Fund or its investigator in investigating and responding to each successful security breach including allowing reasonable access to Transfer Agents facility by the Fund or its investigator to investigate.

11.11 Business Continuity. The Transfer Agent will maintain a comprehensive business continuity plan and will provide an executive summary of such plan upon reasonable request of the Fund. The Transfer Agent will test the adequacy of its business continuity plan at least annually and upon request, the Fund may participate in such test. Upon request by the Fund, the Transfer Agent will provide the Fund with a letter assessing the most recent business continuity test results. In the event of a business disruption that materially impacts the Transfer Agents provision of services under this Agreement, the Transfer Agent will promptly notify the Fund of the disruption and the steps being implemented under the business continuity plan.

12. Termination of Agreement

12.1 Term. The initial term of this Agreement (the Initial Term) shall be five (5) years from the date first stated above (the Initial Term). This Agreement shall automatically extend for one additional, successive two (2) year term (the Renewal Term) unless terminated as of the end of the Initial Term by the Fund on not less than twelve months written notice to the Transfer Agent. Thereafter the Agreement shall continue for successive periods of one year (each an Extension Period) unless terminated by the Transfer Agent or the Fund upon one hundred twenty (120) days before the expiration of such Extension Period. As used hereinafter, Term shall refer to the then current duration during which this Agreement is in full force and effect, including the Initial Term, the Renewal Term and any Extension Period. In the event a Fund wishes to terminate this Agreement as to the Fund prior to the expiration of the Initial Term or the Renewal Term, the Fund shall give the Transfer Agent one hundred twenty (120) days prior written notice and shall be subject to the terms of this Section, including the payments applicable under Section 12.3. One hundred twenty (120) days before the expiration of the Initial Term, the Renewal Term or an Extension Period, the Transfer Agent and the Fund will agree upon a Fee Schedule for the Renewal Term or Extension Period. In the event the parties fail to agree upon a new Fee Schedule as of such date, the Fee Schedule set forth as Schedule 3.1 hereto shall remain in effect subject to increase under Section 3.6. Notwithstanding the termination or non- renewal of this Agreement, the terms and conditions of this Agreement shall continue to apply until the completion of Deconversion (defined below).

12.2 Deconversion. In the event that this Agreement is terminated or not renewed for any reason by the Fund, the Transfer Agent agrees that, in order to provide for uninterrupted service to the Fund, the Transfer Agent, at Funds request, shall offer reasonable assistance to the Fund in converting the Funds records from the Transfer Agents systems to whatever services or systems are designated by the Fund (the Deconversion). Such Deconversion is subject to the recompense of the Transfer Agent for such assistance at its standard rates and fees in effect at the time and to a reasonable time frame for performance as agreed to by the parties. As used herein reasonable assistance shall not include requiring the Transfer Agent (i) to assist any new service or system provider to modify, to alter, to enhance, or to improve such providers system, or to provide any new functionality to such providers system, (ii) to disclose any protected information of the Transfer Agent, including the Proprietary Information as defined in Section 7.1, or (iii) to develop Deconversion software, to modify any of the Transfer Agents software, or to otherwise alter the format of the data as maintained on any providers systems.

(a) Outstanding Fees and Charges. In the event of termination or non-renewal of this Agreement, the Fund will promptly pay the Transfer Agent all fees and charges for the services provided under this Agreement (i) which have been accrued and remain unpaid as of the date of such notice of termination or non-renewal and (ii) which thereafter accrue for the period through and including the date of the Funds Deconversion.

(b) Deconversion Costs and Post-Deconversion Support Fees. In the event of the termination or non-renewal of this Agreement, the Funds shall pay the Transfer Agent for the Deconversion costs as noted in Section 12.2 and all reasonable fees and expenses for providing any support services that the Funds request the Transfer Agent to provide post Deconversion, including but not limited to tax reporting and open issue resolution. In the event that a termination of the Agreement by the Funds is due to Sections 12.5, or 12.6, the Transfer Agent shall waive its standard Deconversion costs with respect to the Funds; provided, however, such waiver shall not include any special programming or a custom Deconversion requested by the Funds. The Deconversion shall be subject to a mutually agreed upon Statement of Work.

(c) Early Termination Fee. In the event that the Funds terminate this Agreement prior to the five (5) year anniversary of the Effective Date (the Anniversary Date), other than due to the Transfer Agents bankruptcy under Section 12.6, or for cause under Section 12.7, or under Section 4.2 in the event the Transfer Agent ceases to be a registered transfer agent under the 1934 Act, or under Section 4.9 in the event the Transfer Agent violates clauses (a) or (b) of that Section, the Funds shall pay to the Transfer Agent an early termination fee (the Early Termination Fee), the amount of which shall be determined as follows:

(i) if the Agreement is terminated in months one (1) through twenty-four (24) after the Effective Date, the Early Termination Fee shall be equal to thirty-six (36) months of compensation (based upon the average monthly compensation previously earned by the Transfer Agent under this Agreement during the twelve (12) months immediately preceding the Funds notice of termination, but not including reimbursable expenses);

(ii) if the Agreement is terminated in months twenty-five (25) through thirty-six (36) after the Effective Date, the Early Termination Fee shall be equal to twenty-four (24) months of compensation (based upon the average monthly compensation previously earned by the Transfer Agent under this Agreement during the twelve (12) months immediately preceding the Funds notice of termination, but not including reimbursable expenses);and

(iii) if the Agreement is terminated in months thirty-seven (37) through sixty (60) after the Effective Date, the Early Termination Fee shall be equal to twelve (12) months of compensation (based upon the average monthly

compensation previously earned by the Transfer Agent under this Agreement during the twelve (12) months immediately preceding the Funds notice of termination, but not including reimbursable expenses).

For the avoidance of doubt, the Early Termination Fee with respect to a Fund or Portfolio shall be calculated using the period from the Effective Date of the Agreement to the date of termination with respect to that Fund or Portfolio notwithstanding the fact that such Fund or Portfolio was not a party to the Agreement on the date of execution of the Agreement.

The Early Termination Fee and any amounts under Section 12.4(a) and (b) above will be due and payable on the business day immediately prior to the completion of the Deconversion or the termination of services under this Agreement.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For the avoidance of doubt, the parties agree that no Early Termination Fee shall be required under Section 12.3(c) of the Agreement in connection with the termination of the Agreement with respect to a particular Fund or Portfolio if such termination is due to:

(a) the merger of such Fund or Portfolio into, or the consolidation of such Fund or Portfolio with, another entity, so long as (i) this Agreement continues with respect to the remainder of the Funds, and either (ii) the Transfer Agent is retained to continue to provide services to such merged Fund, Portfolio or its successor on substantially the same terms as this Agreement, or (iii) such Fund or Portfolio is merged or consolidated with another Fund or Portfolio serviced under this Agreement;

(b) the sale by such Fund or Portfolio of all, or substantially all, of its assets to another entity, so long as (i) this Agreement continues with respect to the remainder of the Funds, and either (ii) the Transfer Agent is retained to provide services to such successor Fund or Portfolio on substantially the same terms as this Agreement or (iii) the assets of such Fund or Portfolio are sold to another Fund or Portfolio serviced under this Agreement; or

(c) the liquidation of such Fund or Portfolio and distribution of such Fund or Portfolios assets as a result of a determination by the Board of Directors of such Fund or Portfolio, in its reasonable business judgment, that such Fund or Portfolio is no longer viable, so long as this Agreement continues with respect to the remainder of the Funds.

The parties further agree that the termination of the Agreement with respect to any one particular Fund or Portfolio shall in no way affect the rights and duties under this Agreement with respect to any other Fund or Portfolio.

The amounts set forth in paragraphs (a) and (b) above, shall become due and payable and shall be paid by the Fund on the business day immediately prior to the Deconversion. The

amounts set forth in paragraphs (a) and (b) above shall be invoiced as incurred and paid promptly by the Fund in accordance with Section 3.4.

12.4 Confidential Information. Upon termination of this Agreement, each party shall return to the other party all copies of confidential or proprietary materials or information (including all Customer Information) received from such other party hereunder, other than materials or information required to be retained by such party under applicable laws or regulations.

12.5 Unpaid Invoices. The Transfer Agent may terminate this Agreement immediately upon an unpaid invoice payable by the Fund to the Transfer Agent being outstanding for more than ninety (90) days after its due date, except with respect to any amount subject to a good faith dispute within the meaning of Section 3.5 of this Agreement.

12.6 Bankruptcy. Either party hereto may terminate this Agreement by notice to the other party, effective at any time specified therein, in the event that (a) the other party ceases to carry on its business or (b) an action is commenced by or against the other party under Title 11 of the United States Code or a receiver, conservator or similar officer is appointed for the other party and such suit, conservatorship or receivership is not discharged within thirty (30) days and (where the Fund is the subject of such action), the Fund is unable to meet its payment obligations hereunder.

12.7 Cause. If one of the parties hereto shall be materially in default in the performance of any of its duties and obligations under this Agreement (the Defaulting Party) or in breach of any of its representations and warranties, the other party (the Non- Defaulting Party) may give written notice thereof to the Defaulting Party in sufficient detail to permit the Defaulting Party to identify and cure such default. The Non-Defaulting Party shall have a right to terminate this Agreement in the event: (i) the Defaulting Party has either (a) failed to cure such material default, or (b) failed to establish a remedial plan to cure such material default that is reasonably acceptable to the Non-Defaulting Party, within sixty (60) days of its receipt of the Non- Defaulting Partys written notice of such breach or such longer period of time as the parties may agree upon, or (ii) the Defaulting Party has committed repeated defaults over a twelve (12) month period, that taken together materially and adversely affect the Funds. The Non-Defaulting Party may exercise such right to terminate, within ninety (90) days of the date on which

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such right of termination first commenced, by providing the Defaulting Party with one hundred and twenty (120) days written notice of such termination.

12.8 The parties agree that the effective date of any Deconversion as a result of termination hereof shall not occur during the period from December 15th through March 1st of any year to avoid adversely impacting a year-end.

12.10 Within thirty (30) days after completion of a Deconversion, the Funds will give notice to the Transfer Agent containing reasonable instructions regarding the disposition of tapes, data files, records, original source documentation or other property belonging to the Fund and then in the Transfer Agents possession and shall make payment for the Transfer Agents reasonable costs to comply with such notice. If the Fund fails to give that notice within thirty (30) days after termination of this Agreement, then the Transfer Agent may dispose of such property as it sees fit, subject to the confidentiality obligations set out herein. The reasonable costs of any such disposition or of the continued storage of such tapes, data files, records, original source documentation or other properties shall be billed to, and within thirty (30) days of receipt of such invoice paid by, the Fund. The Transfer Agent may keep one copy of certain Fund related records to the extent, and for such period, as may be legally required in order to comply with regulatory requirements applicable to the Transfer Agent, as discussed under Section 11.3.

13. Assignment and Third Party Beneficiaries

13.1 Except as provided in Section 14.1 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party, such consent not to be unreasonably withheld, conditioned or delayed. Any attempt to do so in violation of this Section shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement.

13.2 Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Transfer Agent and the Fund, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Transfer Agent and the Fund. This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.

13.3 This Agreement does not constitute an agreement for a partnership or joint venture between the Transfer Agent and the Fund other than as provided in Section 14.1 below and Schedule 1.1(f). Neither party shall make any commitments with third parties that are binding on the other party without the other partys prior written consent.

14. Subcontractors

14.1 The Funds acknowledge and agree that the Transfer Agent intends to subcontract for the performance hereof with an affiliate of the Transfer Agent which is duly registered as a transfer agent pursuant to Section 17A(c)(2) of the 1934 Act or, with regard to print/mail services, to DST Output, Inc., an affiliate of the Transfer Agent; provided, however, that the Transfer Agent shall be fully responsible to the

Funds for the acts and omissions of its affiliate as it is for its own acts and omissions. The foregoing shall not be deemed to apply to any direct contracts between the Fund and any affiliate of the Transfer Agent as to which the Transfer Agent is not a party. The Transfer Agent shall not provide the services hereunder from service locations outside of the United States without the prior consent of the Funds.

14.2 Nothing herein shall impose any duty upon the Transfer Agent in connection with or make the Transfer Agent liable for actions or omissions to act of, unaffiliated third parties such as, by way of example and not limitation, Airborne Services, Federal Express, United Parcel Service, the U.S. Mails, the NSCC and telecommunication companies, provided that, if the Transfer Agent selected such unaffiliated third party it exercised due care in selecting the same.

15.1 During the term of this Agreement the Transfer Agent will use on behalf of the Fund, without additional cost, all modifications, enhancements, or changes which its affiliate DST Systems, Inc. may make to the TA2000 System in the normal course of its business and which are applicable to functions and features offered by the Fund; however, if there are substantial system improvements, revisions or modifications to the TA2000 System necessitated by changes in existing laws, rules or regulations, the parties shall confer, diligently and in good faith, to agree upon new fees to cover any such modifications.

15.2 The Transfer Agent shall have the right, at any time and from time to time, to alter and modify any systems, programs, procedures or facilities used or employed in performing its duties and obligations hereunder; provided that the Fund will be notified as promptly as possible prior to implementation of such alterations and modifications and that no such alteration or modification or deletion shall materially adversely change or affect the operations and procedures of the Fund in using or employing the TA2000 System or the Transfer Agents facilities hereunder or the reports to be generated by such system and facilities hereunder, unless the Fund is given thirty (30) days prior notice to allow the Fund to change its procedures and unless the Transfer Agent provides the Fund with revised operating procedures and controls.

15.3 All enhancements, improvements, changes, modifications or new features added to the TA2000 System however developed or paid for shall be, and shall remain, the confidential and exclusive property of, and proprietary to, DST Systems, Inc., an affiliate of the Transfer Agent.

16. Miscellaneous

16.1 Amendment. This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Trustees or the Board of Directors, as the case may be, of the Fund.

16.2 New York Law to Apply. This Agreement shall be will be governed by and the provisions thereof interpreted under and in accordance with the laws of the State of New York, without regard to its choice of laws principles.. The parties hereby irrevocably consent to the exclusive jurisdiction of, and venue in, any federal or state court of competent jurisdiction located in the Borough of Manhattan, New York City for the purposes of adjudicating any matter arising from or in connection with this Agreement and any Task Order. THE PARTIES UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL FOR ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR RELATING TO, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE RELATED DOCUMENTS, OR ANY DEALINGS BETWEEN THEM ARISING OUT OF OR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS.

16.3 Force Majeure. In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, acts of war or terrorism, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes to the extent that the party has (where relevant) complied with its own business continuity procedures.

16.4 Consequential Damages. Neither party to this Agreement shall be liable to the other party for special, indirect or consequential damages under any provision of this Agreement or for any special, indirect or consequential damages arising out of any act or failure to act hereunder.

16.5 Survival. All provisions regarding indemnification, warranty, liability, and limits thereon, and confidentiality and/or protections of proprietary rights and trade secrets shall survive the termination of this Agreement.

16.6 Severability. If any provision or provisions of this Agreement shall be held invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 16.7 Priorities Clause. In the event of any conflict, discrepancy or ambiguity between the terms and conditions contained in this Agreement and any Schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence.

16.8 Waiver. No waiver by either party or any breach or default of any of the covenants or conditions herein contained and performed by the other party shall be construed as a waiver of any succeeding breach of the same or of any other covenant or condition.

16.9 Merger of Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.

16.10 Counterparts. This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

16.11. Reproduction of Documents. This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction shall likewise be admissible in evidence.

16.12 No Publicity. Transfer Agent agrees not to disclose the identity of the Fund or its affiliates or any of their directors, officers, managers, employees, consultants or agents as a customer or prospective customer of Transfer Agent or the existence or nature of this Agreement. Without limiting the generality of the foregoing, Transfer Agent will not use, in advertising, publicity or otherwise, the name of the Fund or its affiliates or any of their directors, officers, managers, employees, consultants or agents or any trade name, trademark, service mark, logo or symbol of the Fund or its affiliates.

16.13 Insurance. Transfer Agent will obtain and maintain in full force and effect during the term of this Agreement, the insurance coverage in the minimum amounts and on the terms set forth in Schedule 16 attached hereto. All insurance required hereunder to be carried by Transfer Agent (as well as any approved subcontractors or agents) will be with sound and reputable insurers. Nothing in this Section 16.13 (Insurance) will be construed as limiting Transfer Agents liability to the Fund. The mere purchase and existence of insurance does not reduce or release Transfer Agent from any liability incurred or assumed within the scope of this agreement. Transfer Agents failure to maintain insurance will not relieve it of liability under this agreement.

16.14 Notices. All notices and other communications as required or permitted hereunder shall be in writing and sent by first class mail, postage prepaid, addressed as follows or to such other address or addresses of which the respective party shall have notified the other.

(a) If to the Transfer Agent, to: Boston Financial Data Services, Inc. 2000 Crown Colony Drive Quincy, Massachusetts 02169-0953 Attention: General Counsel, Legal Department Facsimile: 617-483-7091

(b) If to the Funds, to: Morgan Stanley Investment Management Inc. 522 Fifth Avenue

A copy (which will not constitute notice hereunder) of any notice given by Transfer Agent to the Fund will likewise be sent to:

Morgan Stanley & Co. LLC Attn: Technology, Intellectual Property & E-Commerce Law Group 1221 Avenue of the Americas New York, NY 10020

17. Additional Portfolios/Funds

17.1 Additional Portfolios. In the event that a Fund establishes one or more series of Shares, in addition to those listed on the attached Schedule A, with respect to which it desires to have the Transfer Agent render services as transfer agent under the terms hereof, it shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder by the parties amending the Schedule A to include the additional series.

17.2 Additional Funds. In the event that an entity affiliated with the Funds, in addition to those listed on the Schedule A, desires to have the Transfer Agent render services as transfer agent under the terms hereof and the Transfer Agent agrees to provide such services, upon completion of an amended Schedule A signed by all parties to the Agreement, such entity shall become a Fund hereunder and any series thereof shall become a Portfolio hereunder.

17.3 Conditions re: Additional Funds/Portfolios. In the event that the Transfer Agent is to become the transfer agent for new funds or portfolios, the Transfer Agent shall add them to the TA2000 System upon at least sixty (60) days prior written notice to the Transfer Agent provided that the requirements of such funds or portfolios are generally consistent with services then being provided by the Transfer Agent under this Agreement, in which case the fees and expenses for such additional funds or portfolios shall be determined in accordance with Section 3.1.

18. Limitations of Liability of the Trustees and Shareholders

In the case where the Fund is a trust, a copy of the trust instrument (if applicable) is on file with the Secretary of the State of the state of its organization, and notice is hereby given that this instrument is executed on behalf of the trustees of the trust as trustees and not individually and that the obligations of this instrument are not binding upon any of the trustees or Shareholders individually but are binding only upon the assets and property of the Fund.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

EACH OF THE ENTITIES, INDIVIDUALLY AND NOT JOINTLY, AS LISTED ON SCHEDULE A

By: /s/ Francis Smith

Title: Treasurer As an Authorized Officer on behalf of each of the Funds indicated on Schedule A

ATTEST:

/s/ Robert Serafin

BOSTON FINANCIAL DATA SERVICES, INC.

By: /s/ Richard J. Ahl

Name: Richard J. Ahl

Title: COO

ATTEST:

/s/ Kimberly Gross

SCHEDULE A (as of December 13, 2016)

Type of Entity: Jurisdiction Morgan Stanley Institutional Fund Trust 9 underlying funds: Trust PA 1 Morgan Stanley Institutional Fund Trust Global Strategist Portfolio Trust PA 2 Morgan Stanley Institutional Fund Trust Core Plus Fixed Income Portfolio Trust PA 3 Morgan Stanley Institutional Fund Trust Corporate Bond Portfolio Trust PA 4 Morgan Stanley Institutional Fund Trust Global Multi-Asset Income Portfolio Trust PA 5 Morgan Stanley Institutional Fund Trust High Yield Portfolio Trust PA 6 Morgan Stanley Institutional Fund Trust Short Duration Income Portfolio Trust PA 7 Morgan Stanley Institutional Fund Trust Mid Cap Growth Portfolio Trust PA 8 Morgan Stanley Institutional Fund Trust Strategic Income Portfolio Trust PA 9 Morgan Stanley Institutional Fund Trust Ultra-Short Income Portfolio Morgan Stanley Institutional Fund, Inc. 30 underlying funds: Fund MD 1 Morgan Stanley Institutional Fund, Inc. Active International Allocation Portfolio Fund MD 2 Morgan Stanley Institutional Fund, Inc. Advantage Portfolio Fund MD 3 Morgan Stanley Institutional Fund, Inc. Asia Opportunity Portfolio Fund MD 4 Morgan Stanley Institutional Fund, Inc. Emerging Markets Breakout Nations Portfolio Fund MD 5 Morgan Stanley Institutional Fund, Inc. Emerging Markets Fixed Income Opportunities Portfolio

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fund MD 6 Morgan Stanley Institutional Fund, Inc. Emerging Markets Leaders Portfolio Fund MD 7 Morgan Stanley Institutional Fund, Inc. Emerging Markets Portfolio Fund MD 8 Morgan Stanley Institutional Fund, Inc. Emerging Markets Small Cap Portfolio Fund MD 9 Morgan Stanley Institutional Fund, Inc. Frontier Emerging Markets Portfolio Fund MD 10 Morgan Stanley Institutional Fund, Inc. Fundamental Multi-Cap Core Portfolio Fund MD 11 Morgan Stanley Institutional Fund, Inc. Global Advantage Portfolio Fund MD 12 Morgan Stanley Institutional Fund, Inc. Global Concentrated Portfolio Fund MD 13 Morgan Stanley Institutional Fund, Inc. Global Core Portfolio Fund MD 14 Morgan Stanley Institutional Fund, Inc. Global Discovery Portfolio Fund MD 15 Morgan Stanley Institutional Fund, Inc. Global Franchise Portfolio Fund MD 16 Morgan Stanley Institutional Fund, Inc. Global Infrastructure Portfolio Fund MD 17 Morgan Stanley Institutional Fund, Inc. Global Insight Portfolio Fund MD 18 Morgan Stanley Institutional Fund, Inc. Global Opportunity Portfolio Fund MD 19 Morgan Stanley Institutional Fund, Inc. Global Quality Portfolio Fund MD 20 Morgan Stanley Institutional Fund, Inc. Global Real Estate Portfolio Fund MD 21 Morgan Stanley Institutional Fund, Inc. Growth Portfolio Fund MD 22 Morgan Stanley Institutional Fund, Inc. Insight Portfolio Fund MD 23 Morgan Stanley Institutional Fund, Inc. International Advantage Portfolio Fund MD 24 Morgan Stanley Institutional Fund, Inc. International Equity Portfolio Fund MD 25 Morgan Stanley Institutional Fund, Inc. International Opportunity Portfolio Fund MD 26 Morgan Stanley Institutional Fund, Inc. International Real Estate Portfolio Fund MD 27 Morgan Stanley Institutional Fund, Inc. Multi-Asset Portfolio Fund MD 28 Morgan Stanley Institutional Fund, Inc. Small Company Growth Portfolio Fund MD 29 Morgan Stanley Institutional Fund, Inc. US Core Portfolio Fund MD 30 Morgan Stanley Institutional Fund, Inc. U.S. Real Estate Portfolio Universal Institutional Funds, Inc. 11 underlying funds: Fund MD 1 Universal Institutional Funds, Inc. Core Plus Fixed Income Portfolio Fund MD 2 Universal Institutional Funds, Inc. Emerging Markets Debt Portfolio Fund MD 3 Universal Institutional Funds, Inc. Emerging Markets Equity Portfolio Fund MD 4 Universal Institutional Funds, Inc. Global Franchise Portfolio Fund MD 5 Universal Institutional Funds, Inc. Global Infrastructure Portfolio Fund MD 6 Universal Institutional Funds, Inc. Global Real Estate Portfolio Fund MD 7 Universal Institutional Funds, Inc. Global Strategist Portfolio Fund MD 8 Universal Institutional Funds, Inc. Growth Portfolio Fund MD 9 Universal Institutional Funds, Inc. Mid Cap Growth Portfolio Fund MD 10 Universal Institutional Funds, Inc. Small Company Growth Portfolio Fund MD 11 Universal Institutional Funds, Inc. U.S. Real Estate Portfolio Fund MD Morgan Stanley European Equity Fund Inc.

Type of Entity: Jurisdiction Fund MD Morgan Stanley Liquid Asset Fund Inc. Morgan Stanley Institutional Liquidity Funds 7 underlying funds: Trust MA 1 Morgan Stanley Institutional Liquidity Funds Government Portfolio Trust MA 2 Morgan Stanley Institutional Liquidity Funds Government Securities Portfolio Trust MA 3 Morgan Stanley Institutional Liquidity Funds Money Market Portfolio Trust MA 4 Morgan Stanley Institutional Liquidity Funds Prime Portfolio Trust MA 5 Morgan Stanley Institutional Liquidity Funds Tax-Exempt Portfolio

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Trust MA 6 Morgan Stanley Institutional Liquidity Funds Treasury Portfolio Trust MA 7 Morgan Stanley Institutional Liquidity Funds Treasury Securities Portfolio Trust MA Morgan Stanley Select Dimensions Investment Series Mid Cap Growth Portfolio Morgan Stanley Variable Investments Series 4 underlying funds: Trust MA 1 Morgan Stanley Variable Investment Series European Equity Portfolio Trust MA 2 Morgan Stanley Variable Investment Series Income Plus Portfolio Trust MA 3 Morgan Stanley Variable Investment Series Limited Duration Portfolio Trust MA 4 Morgan Stanley Variable Investment Series Multi Cap Growth Portfolio Trust MA Active Assets Government Trust Trust MA Active Assets Prime Trust Trust MA Morgan Stanley Mortgage Securities Trust Trust MA Morgan Stanley California Tax-Free Daily Income Trust Trust MA Morgan Stanley Global Fixed Income Opportunities Fund Trust MA Morgan Stanley Multi Cap Growth Trust Trust MA Morgan Stanley New York Municipal Money Market Trust Trust MA Morgan Stanley Tax-Free Daily Income Trust Trust MA Morgan Stanley US Government Money Market Trust Trust MA Morgan Stanley US Government Securities Trust

Schedule A-2

SCHEDULE 1.1(f) AML DELEGATION Dated: April 1, 2013

1. Delegation.

1.1 In order to assist the Fund with the Funds AML responsibilities under applicable AML laws, the Transfer Agent offers certain risk-based AML Procedures that are reasonably designed to: (i) promote the detection and reporting of potential money laundering activities and terrorist financing; and (ii) assist in the verification of persons opening accounts with the Fund. The Fund has had an opportunity to review the AML Procedures with the Transfer Agent and desires to implement the AML Procedures as part of the Funds overall AML program (the AML Program).

1.2 Accordingly, subject to the terms and conditions set forth in this Agreement, the Fund hereby instructs and directs the Transfer Agent to implement the AML Procedures as set forth in Section 4 below on the Funds behalf and delegates to the Transfer Agent the day-to-day operation of the AML Procedures. The AML Procedures set forth in Section 4 may be amended, from time to time, by mutual agreement of the Fund and the Transfer Agent upon the execution by such parties of a revised Schedule 1.1(f) bearing a later date than the date hereof.

1.3 The Transfer Agent agrees to perform such AML Procedures, with respect to the ownership of Shares in the Fund for which the Transfer Agent maintains the applicable shareholder information, subject to and in accordance with the terms and conditions of this Agreement.

2. Consent to Examination. In connection with the performance by the Transfer Agent of the AML Procedures, the Transfer Agent understands and acknowledges that the Fund remains responsible for assuring compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) and that the records the Transfer Agent maintains for the Fund relating to the AML Program may be subject, from time to time, to examination and/or inspection by federal regulators in order that the regulators may evaluate such compliance. The Transfer Agent hereby consents to such examination and/or inspection and agrees to cooperate with such federal examiners in connection with their review. For purposes of such examination and/or inspection, the Transfer Agent will use its best efforts to make available, during normal business hours and on reasonable notice all required records and information for review by such examiners.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3. Limitation on Delegation. The Fund acknowledges and agrees that in accepting the delegation hereunder, the Transfer Agent is agreeing to perform only the AML Procedures, as may be amended from time to time, and is not undertaking and shall not be responsible for any other aspect of the AML Program or for the overall compliance by the Fund with the USA PATRIOT Act or for any other matters that have not been delegated hereunder. Additionally, the parties acknowledge and agree that the Transfer Agent shall

only be responsible for performing the AML Procedures with respect to the ownership of, and transactions in, Shares in the Fund for which the Transfer Agent maintains the applicable Shareholder information, which includes the registration for accounts opened through NSCC/FundSERV.

4. AML Procedures(1)

4.1 Consistent with the services provided by the Transfer Agent and with respect to the ownership of Shares in the Fund for which the Transfer Agent maintains the applicable Shareholder information, which includes the registration for accounts opened through NSCC/FundSERV, the Transfer Agent shall:

(a) On a daily basis, submit all new customer account registrations and registration changes against the Office of Foreign Assets Control (OFAC) database, the Politically Exposed Persons (PEP) database, and such other lists or databases as may be required from time to time by applicable regulatory authorities;

(b) Submit all account registrations through OFAC database, the PEP database, and such other lists or databases as may be required from time to time by applicable regulatory authorities;

(c) On a daily basis, submit special payee information from checks, outgoing wires and systematic withdrawal files through the OFAC database;

(d) Review certain types of redemption transactions that occur within thirty (30) days of an account establishment, registration change, or banking information change (e.g. redemption by wire within 30 days of banking information change; rapid depletion of account balance after establishment; and redemption by check within 30 days of address change);

(e) Review wires sent pursuant to banking instructions other than those on file with the Transfer Agent;

(f) Review accounts with small balances followed by large purchases;

(g) Review accounts with frequent activity within a specified date range followed by a large redemption;

(1) The accounts, transactions, items and activity reviewed in each case are subject to certain standard exclusions as set forth in written procedures of the Transfer Agent, which have been made available to the Fund and which may be modified from time to time.

Schedule 1.1(f) - 2

(h) Review purchase and redemption activity by check that meets or exceeds $100,000 threshold on any given day;

(i) In consultation with the Funds AML Compliance Officer, determine when a suspicious activity report (SAR) should be filed as required by regulations applicable to mutual funds; prepare and file the SAR; provide the Fund with a copy of the SAR within a reasonable time after filing; and notify the Fund if any further communication is received from the U.S. Department of the Treasury or other law enforcement agencies regarding such filing;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (j) Compare account information to any FinCEN request received by the Fund and provided to the Transfer Agent pursuant to USA PATRIOT Act Sec. 314(a). Provide the Fund with the necessary information for it to respond to such request within required time frame;

(k) (i) Take reasonable steps to verify the identity of any person seeking to become a new customer of the Fund and notify the Fund in the event such person cannot be verified, (ii) Maintain records of the information used to verify the persons identity, as required, and (iii) Determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the Fund by any government agency. If Transfer Agent is unable to obtain or verify customer identification information, notify the Funds AML Compliance Officer;

(l) Conduct due diligence and if required, enhanced due diligence in accordance with 31 C.F.R. 103.176(b) for new and existing correspondent accounts for foreign financial institutions (as defined in 31 C.F.R. 103.175).

(m) On an on-going basis, conduct due diligence to determine if the Fund is involved with any foreign jurisdiction, institution, class of transactions and a type of account designated, from time to time, by the U.S. Department of Justice in order to identify and take certain special measures against such entities as required under Section 311 of the USA PATRIOT Act (31 C.F.R. 103.193).

(n) Commencing on or before the date as determined by FinCEN, create and retain records required under 31 CFR 103.33 in connection with the transmittals of funds in amounts equal to or in excess of $3,000, and transmit such information on the transactions to the receiving financial institutions.

(o) Conduct appropriate initial AML training for new Transfer Agent associates and ongoing annual AML training for existing associates.

Schedule 1.1(f) - 3

(p) Provide the Fund with a written audit report summary of the Transfer Agents annual AML external auditors compliance report (currently known as Building Compliance Confidence).

4.2 In the event that the Transfer Agent detects activity as a result of the foregoing procedures, which necessitates the filing by the Transfer Agent of a SAR or other similar report or notice to OFAC, then the Transfer Agent shall also immediately notify the Funds AML Compliance Officer prior to filing, unless prohibited by applicable law.

EACH OF THE ENTITIES, INDIVIDUALLY AND NOT BOSTON FINANCIAL DATA SERVICES, INC. JOINTLY, AS LISTED ON SCHEDULE A

By: /s/ Francis Smith By: /s/ Richard J. Ahl

Name: Francis Smith Name: Richard J. Ahl

Title: Treasurer Title: COO As an Authorized Officer on behalf of each of the Funds indicated on Schedule A

Schedule 1.1(f) - 4

SCHEDULE 1.1(y)

A. The Funds shall provide the following information to the Transfer Agent:

1. The name and contact information for the Financial Intermediary, with which the Funds have a shareholder information agreement (under which the Financial Intermediary agrees to provide, at the Funds request, identity and transaction information about shareholders who hold their shares through an account with the Financial Intermediary (an accountlet)), that is to receive an information request;

2. The Funds to be included, along with each Funds frequency trading policy, under surveillance for the Financial Intermediary;

3. The frequency of supplemental data requests from the Transfer Agent;

4. The duration of supplemental data requests (e.g. 60 days, 90 days); and

5. The expected turnaround time for a response from the Financial Intermediary to an information request (including requests for supplemental data)

B. Upon receipt of the foregoing information, the Funds hereby authorize and instruct the Transfer Agent to perform the following Services:

1. Financial Intermediary Surveillance Schedules.

(a) Create a system profile and infrastructure based upon parameters set by the Fund to establish and maintain Financial Intermediary surveillance schedules and communication protocol/links. (b) Initiate information requests to the Financial Intermediaries.

2. Data Management Monitoring

(a) Monitor status of information requests until all supplemental data is received. (b) If a Financial Intermediary does not respond to a second request from the Transfer Agent, the Transfer Agent shall notify the Fund for the Fund to follow-up with the Financial Intermediary.

3. Customized Reporting for Market Timing Analysis

(a) Run information received from the Financial Intermediaries through TA2000 System functionalities. (b) Generate exception reports using parameters provided by the Funds.

4. Daily Exception Analysis of Market Timing Policies for Supplemental Data Provided

(a) Review daily short-term trader exceptions, daily excessive trader exceptions, and daily supplemental data reconciliation exceptions. (b) Analyze Financial Intermediary supplemental data (items), which are identified as Potential Violations based on parameters established by the Funds.

5. Communication and Resolution of Market Timing Exceptions

(a) Communicate results of analysis to the Funds or upon request of the Funds directly to the Financial Intermediary.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Unless otherwise requested by the Funds and as applicable, instruct the Financial Intermediary to (i) restrict trading on the accountlet, (ii) cancel a trade, or (iii) prohibit future purchases or exchanges. (c) Update AWD Work Object with comments detailing resolution. (d) Keep a detailed record of all data exceptions and inquires with regards to potential violations.

6. Management Reporting

(a) Provide periodic reports, in accordance with agreed upon frequency and content parameters, to the Funds. As reasonably requested by the Funds, the Transfer Agent shall furnish ad hoc reports to the Funds.

7. Support Due Diligence Programs

(a) Update system watch list with pertinent information on trade violators. (b) Maintain a detailed audit trail of all accounts that are blocked and reason for doing so.

Schedule 1.1(i) - 2

SCHEDULE 2.1

THIRD PARTY ADMINISTRATOR(S) PROCEDURES

Dated: April 1, 2013

1. On each day on which both the New York Stock Exchange and the Fund are open for business (a Business Day), the TPA(s) shall receive, on behalf of and as agent of the Fund, Instructions (as hereinafter defined) from the Plan. Instructions shall mean as to each Fund (i) orders by the Plan for the purchases of Shares, and (ii) requests by the Plan for the redemption of Shares; in each case based on the Plans receipt of purchase orders and redemption requests by Participants in proper form by the time required by the term of the Plan, but not later than the time of day at which the net asset value of a Fund is calculated, as described from time to time in that Funds prospectus. Each Business Day on which the TPA receives Instructions shall be a Trade Date.

2. The TPA(s) shall communicate the TPA(s)s acceptance of such Instructions, to the applicable Plan.

3. On the next succeeding Business Day following the Trade Date on which it accepted Instructions for the purchase and redemption of Shares, (TD+1), the TPA(s) shall notify the Transfer Agent of the net amount of such purchases or redemptions, as the case may be, for each of the Plans. In the case of net purchases by any Plan, the TPA(s) shall instruct the Trustees of such Plan to transmit the aggregate purchase price for Shares by wire transfer to the Transfer Agent on (TD+1). In the case of net redemptions by any Plan, the TPA(s) shall instruct the Funds custodian to transmit the aggregate redemption proceeds for Shares by wire transfer to the Trustees of such Plan on (TD+1). The times at which such notification and transmission shall occur on (TD+1) shall be as mutually agreed upon by each Fund, the TPA(s), and the Transfer Agent.

4. The TPA(s) shall maintain separate records for each Plan, which record shall reflect Shares purchased and redeemed, including the date and price for all transactions, and Share balances. The TPA(s) shall maintain on behalf of each of the Plans a single master account with the Transfer Agent and such account shall be in the name of that Plan, the TPA(s), or the nominee of either thereof as the record owner of Shares owned by such Plan.

5. The TPA(s) shall maintain records of all proceeds of redemptions of Shares and all other distributions not reinvested in Shares.

6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic account statements showing the total number of Shares owned by that Plan as of the statement closing date, purchases and redemptions of Shares by the Plan during the period covered by the statement, and the dividends and other distributions paid to the Plan on Shares during the statement period (whether paid in cash or reinvested in Shares).

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7. The TPA(s) shall, at the request and expense of each Fund, transmit to the Plans prospectuses, proxy materials, reports, and other information provided by each Fund for delivery to its Shareholders.

8. The TPA(s) shall, at the request of each Fund, prepare and transmit to each Fund or any agent designated by it such periodic reports covering Shares of each Plan as each Fund shall reasonably conclude are necessary to enable the Fund to comply with state Blue Sky requirements.

9. The TPA(s) shall transmit to the Plans confirmation of purchase orders and redemption requests placed by the Plans; and

10. The TPA(s) shall, with respect to Shares, maintain account balance information for the Plan(s) and daily and monthly purchase summaries expressed in Shares and dollar amounts.

11. Plan sponsors may request, or the law may require, that prospectuses, proxy materials, periodic reports and other materials relating to each Fund be furnished to Participants in which event the Transfer Agent or each Fund shall mail or cause to be mailed such materials to Participants. With respect to any such mailing, the TPA(s) shall, at the request of the Transfer Agent or each Fund, provide at the TPA(s)s expense a complete and accurate set of mailing labels with the name and address of each Participant having an interest through the Plans in Shares.

Schedule 2.1 - 2

SCHEDULE 16 Insurance Coverage

For as long as Transfer Agent is performing its obligations hereunder, Transfer Agent will continue to maintain in effect the minimum insurance coverage described below, provided that such coverage is available at a reasonable cost. Transfer Agent shall provide the Funds with written notice of any modification which decreases coverage below these minimums or the termination of such coverage. Such notice will be given within seven (7) days of Transfer Agents receipt of notice of such modification or termination.

Transfer Agent shall secure and maintain at its own expense insurance of the following types and amounts:

A. Commercial General Liability Insurance in an amount of not less than $1,000,000 per occurrence, subject to a $2,000,000 aggregate covering, bodily injury (including death), personal injury, and property damage. This policy shall include products/ completed operations coverage.

B. Workers Compensation in accordance with all federal and state statutory requirements and Employers Liability Insurance in an amount of not less than $500,000 per accident for bodily injury and $500,000 per employee/aggregate for disease. .

C. Commercial Automobile Liability Insurance in an amount of not less than $1,000,000 combined single limit covering bodily injury (including death) and property damage for all owned, hired, and non-owned vehicles used by the Transfer Agent.

D. Umbrella Liability Insurance with respect to subsections A, B, and C in an amount of not less than $10,000,000 combined single limit.

E. Blanket Fidelity Bond of not less than $10,000,000 covering the dishonest acts of all Transfer Agent employees performing under this Agreement.

F. Claims Made Annual Aggregate Errors and Omissions in an amount of not less than $1,000,000.

1095 Avenue of the Americas New York, NY 10036-6797 +1 212 698 3500 Main +1 212 698 3599 Fax www.dechert.com

December 13, 2016

Morgan Stanley Institutional Fund, Inc. 522 Fifth Avenue New York, New York 10036

Re: Opinion of Counsel regarding Post-Effective Amendment No. 157 to the Registration Statement filed on Form N-1A under the Securities Act of 1933 (File Nos. 33-23166, 811-05624)

Dear Ladies and Gentlemen:

We have acted as counsel to Morgan Stanley Institutional Fund, Inc., a Maryland corporation (the Fund), in connection with the above-referenced Registration Statement (as amended, the Registration Statement), which relates to the shares of common stock of the Emerging Markets Breakout Nations Portfolio, $0.001 par value (collectively, the Shares). This opinion is being delivered to you in connection with the Funds filing of Post-Effective Amendment No. 157 to the Registration Statement (the Amendment) to be filed with the Securities and Exchange Commission pursuant to Rule 485(b) under the Securities Act of 1933, as amended (the 1933 Act), and Amendment No. 158 pursuant to the Investment Company Act of 1940, as amended. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. We have reviewed the Funds Articles of Incorporation, as amended, and such other documents and matters as we have deemed necessary to enable us to render this opinion.

Based upon, and subject to, the foregoing, we are of the opinion that the issuance of the Shares has been duly authorized by all necessary corporate action on the part of the Fund, and when such Shares are issued and delivered by the Fund as contemplated by the Registration Statement and certain resolutions duly adopted by the Board of Directors of the Fund against payment of the consideration therein described, such Shares will be validly issued, fully paid and non-assessable.

As to matters of Maryland law contained in the foregoing opinions, we have relied upon the opinion of Ballard Spahr LLP, dated December 13, 2016.

US Austin Boston Charlotte Hartford Los Angeles New York Orange County Philadelphia Princeton San Francisco Silicon Valley Washington DC EUROPE Brussels Dublin Frankfurt London Luxembourg Moscow Munich Paris ASIA Beijing Hong Kong

We have consented to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading Fund Counsel in the Statement of Additional Information forming a part of the Registration Statement. In giving this consent, we do not concede that we are in the category of persons whose consent is required under Section 7 of the 1933 Act.

/s/ Dechert LLP Dechert LLP

December 13, 2016

Morgan Stanley Institutional Fund, Inc. 522 Fifth Avenue New York, New York 10036

Re: Morgan Stanley Institutional Fund, Inc., a Maryland corporation (the Fund) Registration of shares of common stock of the portfolio, and classes of such portfolio, of the Fund listed on Schedule 1 attached hereto (the Shares) pursuant to the Registration Statement on Form N-1A (Securities Act File No. 033-23166 and Investment Company Act File No. 811-05624), as amended and supplemented

Ladies and Gentlemen:

We have acted as Maryland corporate counsel to the Fund in connection with the registration of the Shares under the Securities Act of 1933, as amended (the Securities Act), and the Investment Company Act of 1940, as amended (the Investment Company Act), by the Fund pursuant to the Registration Statement on Form N-1A originally filed with the Securities and Exchange Commission (the Commission) on or about July 25, 1988, as amended by Post-Effective Amendment No. 157 under the Securities Act and Amendment No. 158 under the Investment Company Act to be filed with the Commission on or about the date hereof. You have requested our opinion with respect to the matters set forth below.

In our capacity as Maryland corporate counsel to the Fund and for the purposes of this opinion, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the Documents):

(i) the corporate charter of the Fund, represented by Articles of Incorporation filed with the State Department of Assessments and Taxation of Maryland (the Department) on June 16, 1988, and the articles supplementary, articles of amendment and other charter documents filed with, and accepted for record by, the Department subsequent to June 16, 1988 through the date hereof (collectively, the Charter);

(ii) the Bylaws of the Fund, as amended and restated as of December 8, 2015 (the Bylaws);

(iii) certain resolutions duly adopted by the Board of Directors of the Fund (collectively, the Directors Resolutions);

(iv) a certificate of one or more officers of the Fund, dated as of a recent date (the Officers Certificate), to the effect that, among other things, the Charter, the Bylaws and the Directors Resolutions are true, correct and complete, and that the Charter and the Bylaws have not been rescinded or modified and are in full force and

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document effect as of the date of the Officers Certificate, and certifying as to the manner of adoption of the Directors Resolutions, and as to the authorization for issuance of the Shares;

(v) the Registration Statement on Form N-1A originally filed with the Commission on or about July 25, 1988, as amended by Post-Effective Amendment No. 157 under the Securities Act and Amendment No. 158 under the Investment Company Act, in substantially the form filed or to be filed with the Commission (the Registration Statement);

(vi) a status certificate of the Department, dated as of a recent date, to the effect that the Fund is duly incorporated and existing under the laws of the State of Maryland; and

(vii) such other laws, records, documents, certificates, opinions and instruments as we have deemed necessary to render this opinion, subject to the limitations, assumptions and qualifications noted below.

In reaching the opinion set forth below, we have assumed the following:

(a) each person executing any of the Documents on behalf of a party (other than the Fund) is duly authorized to do so;

(b) each natural person executing any of the Documents is legally competent to do so;

(c) the Officers Certificate and all other certificates submitted to us are true and correct when made and as of the date hereof and without regard to any knowledge qualifiers contained therein;

(d) any of the Documents submitted to us as originals are authentic; the form and content of any Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such documents as executed and delivered; any of the Documents submitted to us as certified or photostatic copies conform to the original documents; all signatures on all of the Documents are genuine; all public records reviewed or relied upon by us or on our behalf are true and complete; all representations, certifications, statements and information contained in the Documents are true and complete without regard to any knowledge qualifiers contained therein; there has been no modification of, or amendment to, any of the Documents, and there has been no waiver of any provision of any of the Documents by action or omission of the parties or otherwise; and

(e) upon each issuance of Shares of any class of the portfolio, the total number of shares of such class of the portfolio issued and outstanding, after giving effect to such issuance, will not exceed the total number of shares of such class of the portfolio that the Fund is authorized to issue under its Charter.

Based on the foregoing, and subject to the assumptions and qualifications set forth herein, it is our opinion that, as of the date of this letter:

1. The Fund is duly incorporated and validly existing as a corporation in good standing under the laws of the State of Maryland.

2. The issuance of the Shares has been duly authorized by all necessary corporate action on the part of the Fund, and when such Shares are issued and delivered by the Fund as contemplated by the Registration Statement and the Directors Resolutions against payment of the consideration therein described, such Shares will be validly issued, fully paid and non-assessable.

The foregoing opinion is limited to the corporation laws of the State of Maryland, and we do not express any opinion herein concerning any other law. We express no opinion as to the applicability or effect of the Investment Company Act, the Securities Act or any other

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document federal or state securities laws, including the securities laws of the State of Maryland. To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter.

This opinion letter is issued as of the date hereof and is necessarily limited to laws now in effect and facts and circumstances presently existing and brought to our attention. We assume no obligation to supplement this opinion letter if any applicable laws change after the date hereof, or if we become aware of any facts or circumstances that now exist or that occur or arise in the future and may change the opinions expressed herein after the date hereof.

Dechert LLP may rely upon this opinion, in its capacity as securities counsel to the Fund, in connection with the registration of the Shares and in rendering its opinion to the Fund in connection therewith.

We consent to your filing this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act.

Very truly yours,

/s/ Ballard Spahr LLP Ballard Spahr LLP

SCHEDULE 1

PORTFOLIO, AND CLASSES OF SUCH PORTFOLIO, OF COMMON STOCK OF MORGAN STANLEY INSTITUTIONAL FUND, INC.

NUMBER OF SHARES OF COMMON STOCK CLASSIFIED AND NAME OF PORTFOLIO AND CLASSES ALLOCATED

Emerging Markets Breakout Nations Portfolio Class I 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class A 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class IS 500,000,000 shares Emerging Markets Breakout Nations Portfolio Class C 500,000,000 shares

Total: 2,000,000,000 shares

AMENDED AND RESTATED SHAREHOLDER SERVICES PLAN UNDER RULE 12B-1

Class A Shares (formerly Class P shares)

WHEREAS, Morgan Stanley Institutional Fund, Inc. (the Fund) is engaged in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940 (the Act); and

WHEREAS, the Fund has separate series, each of which is a separate pool of assets with its own investment policies (each a Portfolio and collectively the Portfolios) and each Portfolio listed on Schedule A, as may be amended from time to time, may be divided into multiple separate classes including Class A (formerly Class P); and

WHEREAS, certain Portfolios of the Fund previously adopted a Plan (the Original Plan) pursuant to Rule 12b-1 with respect to the Class B shares (redesignated Class P) which provided for the payment of a fee to Morgan Stanley Distribution, Inc. (the Distributor) for shareholder services; and

WHEREAS, on September 26, 2007, the Fund amended the Original Plan to reflect that Class B had been redesignated as Class P with respect to each Portfolio of the Fund then listed on Schedule A and to make such other ministerial changes designed to facilitate the administration of the Original Plan (the Current Plan); and

WHEREAS, effective September 9, 2013, the Fund (i) reclassified the Class H shares of each Portfolio (except the Class H shares of the Global Insight, Insight and International Real Estate Portfolios) as Class P shares of the applicable Portfolio, (ii) redesignated the Class P shares of each applicable Portfolio as Class A shares and (iii) redesignated the Class H shares of the Global Insight and Insight Portfolios as Class A shares; and

WHEREAS, the Fund desires to amend the Current Plan to reflect that Class P shares of each Portfolio of the Fund listed on Schedule A (except Global Insight, Global Quality and Insight Portfolios) have been redesignated Class A shares and that Class H shares of the Global Insight and Insight Portfolios have been redesignated as Class A shares, and the Funds Board of Directors (Board), including those Board members who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of this Plan or any agreements related thereto (Independent Board Members) have determined that there is a reasonable likelihood that adoption of the amended Plan will benefit each Portfolio of the Fund and its Class A shareholders; and

WHEREAS, the Fund and the Distributor have entered into a Distribution Agreement (the Distribution Agreement) pursuant to which the Fund employs the Distributor in such capacity during the continuous offering of Class A shares of each Portfolio of the Fund.

NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan on the following terms and conditions with respect to Class A shares of each Portfolio of the Fund:

1. The Fund may pay to the Distributor and other affiliated broker-dealers, unaffiliated broker-dealers, financial institutions and/or intermediaries, as compensation for the provision of services to shareholders, a service fee up to 0.25% on an annualized basis of the average daily net assets of Class

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A shares of each Portfolio. Such fee shall be calculated and accrued daily and paid monthly or at such other intervals as the Fund and the Distributor shall mutually agree.

2. The service fee may be paid for the provision of personal service and/or the maintenance of shareholder accounts as provided for in Section 2830(b)(9) of the FINRA Conduct Rules, including (i) expenditures for overhead and other expenses of the Distributor and other affiliated and unaffiliated broker-dealers, (ii) telephone and other communications expenses relating to the provision of shareholder services and (iii) compensation to and expenses of financial advisors and other employees of the Distributor and other affiliated and unaffiliated broker-dealers for the provision of shareholder services (collectively, the Services). If FINRA amends the definition of service fee or adopts a related definition intended to define the same concept, the services provided under the Plan shall be automatically amended, without further action of the parties, to conform to such definition.

3. This Plan must be approved, together with any related agreements, by votes of a majority of both (a) the Funds Directors and (b) the Independent Board Members, cast in person at a meeting (or meetings) called for the purpose of voting on such approval.

4. This Plan shall continue in full force and effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Paragraph 3.

5. The Distributor shall provide to the Board and the Board shall review, at least quarterly, a written report of the amounts expended with respect to the Services. The Distributor shall submit to the Board only information regarding amounts expended for the Services in support of the service fee payable hereunder.

6. This Plan may be terminated at any time with respect to the Class A shares of any Portfolio by the vote of a majority of the Independent Board Members or by vote of a majority of the outstanding voting securities of Class A of the Portfolio.

7. This Plan may not be amended to increase materially the amount payable hereunder by a Portfolio unless such amendment is approved by a vote of at least a majority (as defined in the 1940 Act) of the outstanding voting securities of Class A of the Portfolio, and no material amendment to this Plan shall be made unless approved in the manner provided in paragraph 3 hereof.

8. While this Plan is in effect, the selection and nomination of those Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the Directors then in office who are not interested persons of the Fund.

9. The Distributor may direct that all or any part of the amounts receivable by it under this Plan be paid directly to its affiliates or other broker-dealers, financial institutions and/or intermediaries that provide shareholder services. All payments made hereunder pursuant to the Plan shall be in accordance with the terms and limitations of the Conduct Rules of FINRA.

10. The Fund shall preserve copies of this Plan (including any amendments thereto) and any related agreements and all reports made pursuant to Paragraph 5 hereof for a period of not less than six years from the date of this Plan, the first two years in an easily accessible place.

11. This Plan only relates to Class A shares of each Portfolio and the fees determined in accordance with paragraph 1 hereof shall be based upon the average daily net assets of the Portfolio attributable to Class A shares. No Portfolio of the Fund shall be responsible for the obligations of any other Portfolio of the Fund.

IN WITNESS WHEREOF, the Fund and the Distributor have executed this Plan as of the day and year set forth below in New York, New York.

Dated: September 16, 2013

Attest:

/s/ Mary E. Mullin By: /s/ John H. Gernon Mary E. Mullin John H. Gernon President and Principal Executive Officer

Attest: MORGAN STANLEY DISTRIBUTION, INC.

/s/ Joseph C. Benedetti By: /s/ James Janover Joseph C. Benedetti James Janover Acting President

SCHEDULE A

ADOPTING PORTFOLIOS

(updated as of December 13, 2016)

1. Active International Allocation Portfolio (formerly Active Country Allocation Portfolio) 2. Advantage Portfolio 3. Asia Opportunity Portfolio 4. Emerging Markets Breakout Nations Portfolio 5. Emerging Markets Fixed Income Opportunities Portfolio (formerly Emerging Markets External Debt Portfolio) 6. Emerging Markets Leaders Portfolio 7. Emerging Markets Small Cap Portfolio 8. Emerging Markets Portfolio 9. Fundamental Multi-Cap Core Portfolio 10. Frontier Emerging Markets Portfolio 11. Global Advantage Portfolio 12. Global Concentrated Portfolio 13. Global Core Portfolio 14. Global Discovery Portfolio 15. Global Franchise Portfolio 16. Global Infrastructure Portfolio (formerly Select Global Infrastructure Portfolio) 17. Global Insight Portfolio 18. Global Opportunity Portfolio (formerly Global Growth Portfolio) 19. Global Quality Portfolio 20. Global Real Estate Portfolio 21. Growth Portfolio (formerly U.S. Large Cap Growth Portfolio) 22. International Advantage Portfolio 23. International Equity Portfolio (formerly European Equity Portfolio) 24. International Opportunity Portfolio 25. International Real Estate Portfolio (formerly European Real Estate Portfolio) 26. Insight Portfolio 27. Multi-Asset Portfolio 28. Small Company Growth Portfolio (formerly Emerging Growth Portfolio) 29. US Core Portfolio 30. U.S. Real Estate Portfolio

DISTRIBUTION AND SHAREHOLDER SERVICES PLAN UNDER RULE 12B-1 Class C Shares

WHEREAS, the Fund has separate series listed on Schedule A hereto, each of which is a separate pool of assets with its own investment policies (each a Portfolio and collectively the Portfolios) and each Portfolio may be divided into multiple separate classes including Class C; and

WHEREAS, the Funds Board of Directors (Board), including those Board members who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of this Plan adopted pursuant to Rule 12b-1 (the Plan) or any agreements related thereto (Independent Board Members) have determined that there is a reasonable likelihood that adoption of this Plan will benefit each Portfolio of the Fund and its Class C shareholders; and

WHEREAS, the Fund and Morgan Stanley Distribution, Inc. (the Distributor) have entered into a Distribution Agreement (the Distribution Agreement) pursuant to which the Fund employs the Distributor in such capacity during the continuous offering of Class C shares of each Portfolio of the Fund;

NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan on the following terms and conditions with respect to Class C of each Portfolio of the Fund:

1. The Fund may pay to the Distributor and other affiliated broker-dealers, unaffiliated broker-dealers, financial institutions and/ or intermediaries as compensation for the provision of services provided and expenses incurred relating to the offering of Class C shares, a fee up to 1.00% on an annualized basis of the average daily net assets of Class C shares of each Portfolio (as designated on Schedule A hereto), 0.25% of which shall be a service fee and 0.75% of which shall be a distribution fee. Such fees shall be calculated and accrued daily and paid monthly or at such other intervals as the Fund and the Distributor shall mutually agree.

2. The service fee may be paid for the provision of personal service and/or the maintenance of shareholder accounts as provided for in Section 2830(b)(9) of the Financial Industry Regulatory Authority (FINRA) Conduct Rules, including (i) expenditures for overhead and other expenses of the Distributor and other affiliated and unaffiliated broker-dealers, (ii) telephone and other communications expenses relating to the provision of shareholder services and (iii) compensation to and expenses of financial advisors and other employees of the Distributor and other affiliated and unaffiliated broker-dealers for the provision of shareholder services (collectively, the Services). If FINRA amends the definition of service fee or adopts a related definition intended to define the same concept, the services provided under the Plan shall be automatically amended, without further action of the parties, to conform to such definition.

4. This Plan shall continue in full force and effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Paragraph 3 hereof.

5. The Distributor shall provide to the Board and the Board shall review, at least quarterly, a written report of the amounts expended under the Plan.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6. This Plan may be terminated at any time with respect to the Class C shares of any Portfolio by the vote of a majority of the Independent Board Members or by vote of a majority of the outstanding voting securities of Class C of the Portfolio.

7. This Plan may not be amended to increase materially the amount payable hereunder by a Portfolio unless such amendment is approved by a vote of at least a majority (as defined in the 1940 Act) of the outstanding voting securities of Class C of the Portfolio, and no material amendment to this Plan shall be made unless approved in the manner provided in Paragraph 3 hereof.

11. This Plan only relates to Class C shares of each Portfolio and the fees determined in accordance with Paragraph 1 hereof shall be based upon the average daily net assets of the Portfolio attributable to Class C shares. No Portfolio of the Fund shall be responsible for the obligations of any other Portfolio of the Fund.

IN WITNESS WHEREOF, the Fund and the Distributor have executed this Plan as of the day and year set forth below in New York, New York.

Dated: November 17, 2015

MORGAN STANLEY INSTITUTIONAL FUND, INC.

Attest: /s/ Mary E. Mullin By: /s/ John Gernon Mary E. Mullin John Gernon President and Principal Executive Officer

MORGAN STANLEY DISTRIBUTION, INC.

Attest: /s/ Joseph C. Benedetti By: /s/ Henry Kaplan Joseph C. Benedetti Henry Kaplan President

SCHEDULE A

ADOPTING PORTFOLIOS

(updated as of December 13, 2016)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EQUITY PORTFOLIOS: 1. Active International Allocation Portfolio 2. Advantage Portfolio 3. Asia Opportunity Portfolio 4. Emerging Markets Breakout Nations Portfolio 5. Emerging Markets Leaders Portfolio 6. Emerging Markets Small Cap Portfolio 7. Emerging Markets Portfolio 8. Frontier Emerging Markets Portfolio 9. Fundamental Multi-Cap Core Portfolio 10. Global Advantage Portfolio 11. Global Concentrated Portfolio 12. Global Core Portfolio 13. Global Discovery Portfolio 14. Global Franchise Portfolio 15. Global Infrastructure Portfolio 16. Global Insight Portfolio 17. Global Opportunity Portfolio 18. Global Quality Portfolio 19. Global Real Estate Portfolio 20. Growth Portfolio 21. Insight Portfolio 22. International Advantage Portfolio 23. International Equity Portfolio 24. International Opportunity Portfolio 25. International Real Estate Portfolio 26. Small Company Growth Portfolio 27. US Core Portfolio 28. U.S. Real Estate Portfolio FIXED INCOME PORTFOLIOS: 29. Emerging Markets Fixed Income Opportunities Portfolio ASSET ALLOCATION PORTFOLIOS: 30. Multi-Asset Portfolio

MORGAN STANLEY INSTITUTIONAL FUND, INC. Rule 18f-3 Amended and Restated Multiple Class Plan

Morgan Stanley Institutional Fund, Inc. (the Fund), a registered investment company that currently consists of a number of separately managed portfolios, has elected to rely on Rule 18f-3 under the Investment Company Act of 1940, as amended (the 1940 Act), in offering multiple classes of shares in each portfolio listed on Schedule A hereto (each a Portfolio). This plan (the Plan) is adopted pursuant to Rule 18f-3, effective as of September 30, 1995, as hereby amended and restated as of September 28, 2016.

Effective January 2, 2008, the Funds Class A shares were redesignated as Class I shares and the Funds Class B shares were redesignated as Class P shares.

Effective September 9, 2013, the Fund (i) reclassified the Class H shares of each Portfolio (except the Class H shares of the Global Insight, Insight and International Real Estate Portfolios) as Class P shares of the applicable Portfolio, (ii) redesignated the Class P shares of each applicable Portfolio as Class A shares and (iii) redesignated the Class H shares of the Global Insight and Insight Portfolios as Class A shares.

A. Attributes of Share Classes

1. The rights of each class of shares of the Portfolios shall be as set forth in the respective Certificate of Class Designation for each class (each a Certificate) as each such Certificate is approved by the Funds Board of Directors and as attached hereto as Exhibits.

2. With respect to each class of shares created hereunder, each share of a Portfolio will represent an equal pro rata interest in the Portfolio and will have identical terms and conditions, except that: (i) each new class will have a different class name (or other designation) that identifies the class as separate from any other class; (ii) each class will be offered and sold only to investors meeting the qualifications set forth in the Certificate and disclosed in each Portfolios Prospectus; (iii) each class will separately bear any distribution or shareholder service fees that are payable in connection with a distribution and/or shareholder services plan adopted pursuant to Rule 12b-1 under the 1940 Act (a 12b-1 Plan), and separately bear any service fees (service fees) that may be paid for the provision of personal service and/or the maintenance of shareholder accounts as provided for in Section 2341(b)(9) of the Financial Industry Regulatory Authority (FINRA) Conduct Rules, which are not contemplated by or within the scope of the 12b-1 Plan; (iv) each class may bear, the expenses of the Portfolios operations which are directly attributable to such class, to the extent consistent with Rule 18f-3, guidance by the Securities and Exchange Commission, and, to the extent relevant, guidance issued by the Internal Revenue Service (Class Expenses); and (v) shareholders of each class will have exclusive voting rights regarding any matter submitted to shareholders that relates solely to such class (such as a 12b-1 Plan or service agreement relating to such class), and will have separate voting rights on any matter submitted to shareholders in which the interests of that class differ from the interests of any other class.

B. Expense Allocations

Expenses incurred by a Portfolio are allocated among the various classes of shares pro rata based on the net assets of the Portfolio attributable to each class, except that 12b-1 fees, service fees, sub-accounting fees or Class Expenses relating to a particular class are allocated directly to that class.

C. Amendment of Plan

This Plan must be amended to properly describe (through additional exhibits hereto) each new class of shares upon its approval by the Board.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Board of Directors of the Fund, including a majority of the Directors who are not interested persons of the Fund as defined in the 1940 Act, must approve any material amendment of the Plan as it relates to any class of any Portfolio covered by the Plan. In approving any material amendment to the Plan, the Directors, including a

majority of the Directors who are not interested persons of the Fund, must find that the amendment is in the best interests of each class individually and the Fund as a whole.

EXHIBIT A

MORGAN STANLEY INSTITUTIONAL FUND, INC. CERTIFICATE OF CLASS DESIGNATION

Class I Shares

1. Class-Specific Distribution Arrangements; Other Expenses

Class I shares are sold without a sales charge and are not subject to any Rule 12b-1 fees or service fees.

2. Eligibility of Purchasers

Class I shares generally require a minimum initial investment of $5,000,000. The minimum initial investment may be waived for certain limited categories of investors, as disclosed in each Portfolios Prospectus.

3. Exchange Privileges

You may exchange Class I shares of a Portfolio for the same Class of shares of any Morgan Stanley Multi-Class Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. In addition, you may exchange Class I shares of a Portfolio for shares of a Morgan Stanley Money Market Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. Exchanges are effected in accordance with the procedures disclosed in each Portfolios Prospectus.

4. Conversion Features

Morgan Stanley Investment Management may convert Class I shares into Class IS shares (if available), provided that following the conversion the shareholder meets the then applicable eligibility requirements for Class IS shares. Any such conversion will occur at the respective net asset values of the share classes next calculated after such conversion without the imposition of any charge.

5. Voting Rights

Each Class I shareholder will have one vote for each full Class I share held and a fractional vote for each fractional Class I share held. Class I shareholders will have exclusive voting rights regarding any matter submitted to shareholders that relates solely to Class I (such as a 12b-1 plan or service agreement relating to Class I), and will have separate voting rights on any other matter submitted to shareholders in which the interests of Class I shareholders differ from the interests of holders of any other class.

MORGAN STANLEY INSTITUTIONAL FUND, INC. CERTIFICATE OF CLASS DESIGNATION

Class A Shares

1. Class-Specific Distribution Arrangements; Other Expenses

(a) Class A shares are offered with a front-end sales load (FESL). The schedule of sales charges applicable to a Portfolio and the circumstances under which the sales charges are subject to reduction or waiver are set forth in each Portfolios Prospectus. As stated in each Portfolios Prospectus, Class A shares may be purchased at net asset value (without a FESL) in the case of certain large purchases of such shares. Class A shares purchased at net asset value may be subject to a contingent deferred sales charge (CDSC) on redemptions made within eighteen months after purchase. Further information relating to the CDSC, including the manner in which it is calculated, is set forth in paragraph 5 below.

(b) Class A shares are also subject to a 12b-1 shareholder service fee. The Fund, on behalf of the applicable Portfolio, will make monthly payments to the Distributor under the Amended and Restated Shareholder Services Plan approved by the Board of Directors at an annual rate of up to 0.25% of each Portfolios average daily net assets attributable to Class A Shares. The shareholder service fee may be paid for the provision of personal service and/or the maintenance of shareholder accounts as provided for in Section 2341(b)(9) of the FINRA Conduct Rules, including (i) expenditures for overhead and other expenses of the Distributor and other affiliated and unaffiliated broker-dealers, (ii) telephone and other communications expenses relating to the provision of shareholder services and (iii) compensation to and expenses of financial advisors and other employees of the Distributor and other affiliated and unaffiliated broker-dealers for the provision of shareholder services.

2. Eligibility of Purchases

Class A shares generally require a minimum initial investment of $1,000. The minimum initial investment may be waived for certain limited categories of investors, as disclosed in each Portfolios Prospectus.

3. Exchange Privileges

You may exchange Class A shares of a Portfolio for the same Class of shares of any Morgan Stanley Multi-Class Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. In addition, you may exchange Class A shares of a Portfolio for shares of a Morgan Stanley Money Market Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. Exchanges are effected in accordance with the procedures disclosed in each Portfolios Prospectus. FESLs are not imposed on exchanges of Class A shares.

4. Conversion Features

A shareholder currently holding Class A shares of a Portfolio in a fee-based advisory program (Advisory Program) account or currently holding Class A shares in a brokerage account but desiring to transfer into an account within an Advisory Program may convert such shares to Class I shares of the same Portfolio within the Advisory Program at any time. Such conversions will be on the basis of the relative net asset values per share, without requiring any investment minimum to be met and without the imposition of any redemption fee or other charge, and will be treated as a non-taxable event. If a CDSC is applicable to such Class A shares, then the conversion may not occur until after the shareholder has held the shares for an 18 month period.

5. Voting Rights

Each Class A shareholder will have one vote for each full Class A share held and a fractional vote for each fractional Class A share held. Class A shareholders will have exclusive voting rights regarding any matter submitted

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to shareholders that relates solely to Class A (such as a 12b-1 plan or service agreement relating to Class A), and will have separate voting rights on any other matter submitted to shareholders in which the interests of Class A shareholders differ from the interests of holders of any other class.

6. Calculation of the CDSC

Any applicable CDSC is calculated based upon the lesser of net asset value of the shares at the time of purchase or at the time of redemption. The CDSC does not apply to amounts representing an increase in share value due to capital appreciation and shares acquired through the reinvestment of dividends or capital gains distributions. The CDSC schedule applicable to a Portfolio and the circumstances in which the CDSC is subject to waiver are set forth in each Portfolios Prospectus.

EXHIBIT C

MORGAN STANLEY INSTITUTIONAL FUND, INC. CERTIFICATE OF CLASS DESIGNATION

Class L Shares

1. Class-Specific Distribution Arrangements; Other Expenses

Class L shares are sold without a sales charge, but are subject to a 12b-1 fee, including a shareholder service fee. The Fund, on behalf of the applicable Portfolio, will make monthly payments to the Distributor under the Amended and Restated Distribution and Shareholder Services Plan approved by the Board of Directors at an annual rate of up to 0.75% of each Equity and Asset Allocation Portfolios (as designated on Schedule A hereto) average daily net assets and up to 0.50% with respect to each Fixed Income Portfolios (as designated on Schedule A hereto) attributable to Class L shares, of which 0.25% shall be a shareholder services fee. The shareholder services fee may be paid for the provision of personal service and/or the maintenance of shareholder accounts as provided for in Section 2341(b)(9) of the FINRA Conduct Rules, including (i) expenditures for overhead and other expenses of the Distributor and other affiliated and unaffiliated broker-dealers, (ii) telephone and other communications expenses relating to the provision of shareholder services and (iii) compensation to and expenses of financial advisors and other employees of the Distributor and other affiliated and unaffiliated broker-dealers for the provision of shareholder services.

2. Eligibility of Purchases

Class L shares generally require a minimum initial investment of $1,000. The minimum initial investment may be waived for certain limited categories of investors, as disclosed in each Portfolios Prospectus.

3. Exchange Privileges

You may exchange Class L shares of a Portfolio for the same Class of shares of any Morgan Stanley Multi-Class Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. In addition, you may exchange Class L shares of a Portfolio for shares of a Morgan Stanley Money Market Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. Exchanges are effected in accordance with the procedures disclosed in each Portfolios Prospectus.

Each Class L shareholder will have one vote for each full Class L share held and a fractional vote for each fractional Class L share held. Class L shareholders will have exclusive voting rights regarding any matter submitted to shareholders that relates solely to Class L (such as a 12b-1 plan or service agreement relating to Class L), and will have separate voting rights on any other matter submitted to shareholders in which the interests of Class L shareholders differ from the interests of holders of any other class.

EXHIBIT D

MORGAN STANLEY INSTITUTIONAL FUND, INC. CERTIFICATE OF CLASS DESIGNATION

Class IS Shares

1. Class-Specific Distribution Arrangements; Other Expenses

Class IS shares are sold without a sales charge and are not subject to any Rule 12b-1 fees or service fees. In addition, no sub- accounting or other similar fees, or any finders fee payments are charged or paid, on Class IS shares.

2. Eligibility of Purchasers

Class IS shares are offered only to eligible investors meeting certain minimum investment requirements. To purchase Class IS shares, an investor must meet a minimum initial investment of $10,000,000 or be a defined contribution, defined benefit or other employer sponsored employee benefit plan with minimum plan assets of $250,000,000, whether or not qualified under the Internal Revenue Code, in each case subject to the discretion of the Adviser. Class IS shares are also offered to certain other limited categories of investors, as disclosed in each Portfolios Prospectus.

3. Exchange Privileges

You may exchange Class IS shares of a Portfolio for the same Class of shares of any Morgan Stanley Multi-Class Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. In addition, you may exchange Class IS shares of a Portfolio for shares of a Morgan Stanley Money Market Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. Exchanges are effected in accordance with the procedures disclosed in each Portfolios Prospectus.

4. Voting Rights

Each Class IS shareholder will have one vote for each full Class IS share held and a fractional vote for each fractional Class IS share held. Class IS shareholders will have exclusive voting rights regarding any matter submitted to shareholders that relates solely to Class IS (such as a 12b-1 plan or service agreement relating to Class IS), and will have separate voting rights on any other matter submitted to shareholders in which the interests of Class IS shareholders differ from the interests of holders of any other class.

EXHIBIT E

MORGAN STANLEY INSTITUTIONAL FUND, INC. CERTIFICATE OF CLASS DESIGNATION

1. Class-Specific Distribution Arrangements; Other Expenses

Class C shares are sold without a front-end sales charge, but are subject to a 12b-1 fee, including a shareholder service fee. The Fund, on behalf of the applicable Portfolio, will make monthly payments to the Distributor under the Amended and Restated Distribution and Shareholder Services Plan approved by the Board of Directors at an annual rate of up to 1.00% of each Portfolios (as designated on Schedule A hereto) average daily net assets, of which 0.25% shall be a shareholder services fee. The shareholder services fee may be paid for the provision of personal service and/or the maintenance of shareholder accounts as provided for in Section 2341(b)(9) of the FINRA Conduct Rules, including (i) expenditures for overhead and other expenses of the Distributor and other affiliated and unaffiliated broker-dealers, (ii) telephone and other communications expenses relating to the provision of shareholder services and (iii) compensation to and expenses of financial advisors and other employees of the Distributor and other affiliated and unaffiliated broker-dealers for the provision of shareholder services.

Class C shares of a Portfolio generally shall be subject to a contingent deferred sales charge (CDSC) of 1.00% on redemptions made within one year after purchase. Further information relating to the CDSC, including the manner in which it is calculated is set forth in paragraph 5 below.

2. Eligibility of Purchases

Class C shares generally require a minimum initial investment of $1,000. The minimum initial investment may be waived for certain limited categories of investors, as disclosed in each Portfolios Prospectus.

3. Exchange Privileges

You may exchange Class C shares of a Portfolio for the same Class of shares of any Morgan Stanley Multi-Class Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. In addition, you may exchange Class C shares of a Portfolio for shares of a Morgan Stanley Money Market Fund (as such term is defined in each Portfolios Prospectus), if available, without the imposition of an exchange fee. Exchanges are effected in accordance with the procedures disclosed in each Portfolios Prospectus.

4. Conversion Features

A shareholder holding Class C shares of a Portfolio through a brokerage account may convert such shares to Class I shares of the same Portfolio in a fee-based advisory program (Advisory Program) that offers only Class I shares, or may convert such shares to either Class A or Class I shares if such shareholder transfers its Class C shares to an account within an Advisory Program that offers both Class I and Class A shares. Such conversions will be on the basis of the relative net asset values per share, without requiring any investment minimum to be met and without the imposition of any redemption fee or other charge, and will be treated as a non-taxable event. If a CDSC is applicable to such Class C shares, then the conversion may not occur until after the shareholder has held the shares for a 12 month period.

5. Voting Rights

Each Class C shareholder will have one vote for each full Class C share held and a fractional vote for each fractional Class C share held. Class C shareholders will have exclusive voting rights regarding any matter submitted to shareholders that relates solely to Class C (such as a 12b-1 plan or service agreement relating to Class C), and will have separate voting rights on any other matter submitted to shareholders in which the interests of Class C shareholders differ from the interests of holders of any other class.

MORGAN STANLEY INSTITUTIONAL FUND, INC.

SCHEDULE A

(updated as of December 13, 2016)

Portfolio Class I Class A Class L Class IS Class C EQUITY PORTFOLIOS: 1. Active International Allocation Portfolio X X X X 2. Advantage Portfolio X X X X X 3. Asia Opportunity Portfolio X X X X 4. Emerging Markets Breakout Nations Portfolio X X X X 5. Emerging Markets Leaders Portfolio X X X X X 6. Emerging Markets Portfolio X X X X X 7. Emerging Markets Small Cap Portfolio X X X X 8. Frontier Emerging Markets Portfolio X X X X X 9. Fundamental Multi-Cap Core Portfolio X X X X 10. Global Advantage Portfolio X X X X 11. Global Concentrated Portfolio X X X X 12. Global Core Portfolio X X X X 13. Global Discovery Portfolio X X X X 14. Global Franchise Portfolio X X X X X 15. Global Infrastructure Portfolio X X X X X 16. Global Insight Portfolio X X X X 17. Global Opportunity Portfolio X X X X X 18. Global Quality Portfolio X X X X X 19. Global Real Estate Portfolio X X X X X 20. Growth Portfolio X X X X X 21. Insight Portfolio X X X X 22. International Advantage Portfolio X X X X 23. International Equity Portfolio X X X X X 24. International Opportunity Portfolio X X X X X 25. International Real Estate Portfolio X X X X X 26. Small Company Growth Portfolio X X X X X 27. US Core Portfolio X X X X 28. U.S. Real Estate Portfolio X X X X X FIXED INCOME PORTFOLIOS: 29. Emerging Markets Fixed Income Opportunities X X X X X Portfolio