SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential. For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE ASIA PACIFIC FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6()i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement no.:
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3) Filing Party:
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4) Date Filed:
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THE ASIA PACIFIC FUND, INC.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102-4077
Dear Stockholders:
At this year's Annual Meeting of Stockholders, there are two proposals put
forth by stockholders that your Board of Directors believes clearly are not in
the best interests of the Fund. I strongly urge all stockholders to vote against
both of these proposals (Proposals 2 and 3), but want to address one which I
believe could cause severe damage to the Fund and your investment if approved.
This proposal (Proposal No. 2) if approved would result in the termination
of the Fund's investment management agreement with Baring Asset Management
(Asia) Limited. This would deprive the Fund of one of the most able investment
managers in the Asia Pacific region, whose annual return for the Fund has
regularly outperformed its benchmark index. It also would disrupt the management
of the Fund's investments and cause market uncertainties that could have an
adverse impact on your investment in the Fund.
The impetus for both stockholder proposals is legitimate stockholder
concern, which your Board of Directors shares, about the persistent and
significant discounts from net asset value at which shares of the Fund have been
trading. As a result of this concern and as previously announced, the Board has
authorized a share repurchase program, pursuant to which 874,500 shares of the
Fund have been repurchased to date. In addition, the Board has approved a tender
offer program under which the Fund has already purchased 15% of the Fund's
outstanding shares in December 2000, at a price representing a 10% discount from
net asset value. The Fund is obligated to make similar tender offers each for
10% of its outstanding shares both this year and next, if the Fund's shares
trade at average discounts greater than 15% over 13-week measurement periods
ending the last Friday in August.
The Board of Directors and not the Investment Manager has authority to take
actions in response to stockholders' concerns about the discount. The Investment
Manager has no responsibility or power in this regard. Terminating the
investment management agreement with an able and experienced investment manager
and the resulting disruption and uncertainties are not in the Fund's interests
or your interests as investors.
YOUR BOARD OF DIRECTORS STRONGLY URGES YOU TO VOTE AGAINST PROPOSAL NO. 2,
AS WELL AS PROPOSAL NO. 3.
Sincerely,
Michael J. Downey
Chairman
Dated: June 29, 2001
THE ASIA PACIFIC FUND, INC.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102-4077
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of The Asia
Pacific Fund, Inc. (the Fund) will be held on August 8, 2001 (the Meeting), at
9:00 a.m., at the offices of Sullivan & Cromwell, 125 Broad Street-33rd Floor,
New York, New York 10004, for the following purposes:
1. To elect three Directors.
2. To consider a stockholder proposal to terminate the investment
management agreement with Baring Asset Management (Asia) Limited (the
"Investment Manager").
3. To consider a stockholder proposal recommending that the Board
of Directors amend the Fund's Bylaws to require the continuance of the
Fund's investment management agreement to be submitted to an annual vote
of stockholders.
4. To consider and act upon any other business as may properly
come before the Meeting or any postponement or adjournment thereof.
The Board of Directors has fixed the close of business on June 1, 2001 as
the record date for the determination of stockholders entitled to notice of, and
to vote at the Meeting or any postponement or adjournment thereof.
Deborah A. Docs
Secretary
Dated: June 29, 2001
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER
SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
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THE ASIA PACIFIC FUND, INC.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102-4077
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PROXY STATEMENT
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This Proxy Statement is furnished by the Board of Directors of The Asia
Pacific Fund, Inc. (the Fund) in connection with its solicitation of proxies for
use at the Annual Meeting of Stockholders to be held on August 8, 2001 (the
Meeting) at 9:00 a.m., at the offices of Sullivan & Cromwell, 125 Broad
Street-33rd Floor, New York, New York 10004. The purpose of the Meeting and the
matters to be acted upon are set forth in the accompanying Notice of Annual
Meeting.
It is expected that the Notice of Annual Meeting, Proxy Statement and form
of proxy will first be mailed to stockholders of record on or about July 2,
2001. The Fund will furnish its most recent annual report without charge to a
stockholder upon request to Deborah A. Docs at the Fund's address stated above
or by calling (toll-free) Citigate Dewe Rogerson, the Fund's shareholder
servicing agent, at 1-(888) 4-ASIA-PAC.
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. If you return your signed proxy without instruction,
your shares will be voted (i) for the election of three Directors, (ii) against
proposals (2) and (3) and (iii) at the discretion of the persons named as
Proxies on any other matter that may properly come before the Meeting or any
postponement or adjournment thereof. A proxy may be revoked at any time prior to
the time it is voted by written notice to the Secretary of the Fund or by
attendance at the Meeting.
If sufficient votes to approve the Board of Directors' recommendations with
respect to one or more of the proposed items are not received, the persons named
as Proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares present at the Meeting or represented by Proxy and
voting on the item. When voting on a proposed adjournment, the persons named as
Proxies will vote for the proposed adjournment all shares that they are entitled
to vote with respect to each item, unless directed to vote against the Board of
Directors' recommendation with respect to the item, in which case such shares
will be voted against the proposed adjournment.
Approval of each of Proposal 1 (election of three directors) and Proposal 3
(stockholder proposal for annual vote of stockholders on continuance of the
investment management agreement) requires the affirmative vote of a majority of
the votes cast on the matter. Approval of Proposal 2 (stockholder proposal for
termination of the investment management agreement) requires the affirmative
vote of a "majority of the outstanding voting securities," of the Fund. The term
"majority of the outstanding voting securities" as defined in the Investment
Company Act of 1940 (Investment Company Act) and as used in this proxy
statement, means the affirmative vote of the lesser of (1) 67% of the shares of
the Fund present at the Meeting if more than 50% of the outstanding shares of
the Fund are present in person or by proxy or (2) more than 50% of the
outstanding shares of the Fund.
The Fund intends to treat properly executed proxies that are marked
"abstain" and broker non-votes (defined below) as present for purposes of
determining the existence of a quorum for the transaction of business. Under
Maryland law, abstentions do not constitute a vote "for" or "against" a matter
and will be disregarded in determining the "votes cast" on an issue. If a proxy
is properly executed and returned accompanied by instructions to withhold
authority to vote, it represents a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does not have discretionary
power). Because of the affirmative vote required for Proposal 2, abstentions and
broker non-votes will have the same effect as votes "against" such Proposal.
The close of business on June 1, 2001 has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 15,324,551 shares of common stock
outstanding and entitled to vote. As of June 1, 2001, there were no beneficial
holders of more than 5% of the outstanding shares of the Fund. Each share will
be entitled to one vote at the Meeting. The presence in person or by proxy of
the holders of one-third of the shares of common stock issued and outstanding
will constitute a quorum.
The Investment Manager of the Fund is Baring Asset Management (Asia)
Limited, 1901 Edinburgh Tower, 15 Queens Road Central, Hong Kong, and the
Administrator of the Fund is Prudential Investments Fund Management LLC (PIFM),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077.
The expense of solicitation will be borne by the Fund and will include
reimbursement of brokerage firms and others for expenses in forwarding proxy
solicitation material to beneficial owners. The solicitation of proxies will be
largely by mail but may include, without cost to the Fund, telephonic,
telegraphic or oral communications by regular employees of PIFM. In addition,
the Fund's Board of Directors has authorized management to retain a proxy
solicitation firm to assist in the solicitation of proxies for the Meeting.
Management has selected Georgeson Shareholder Communications Inc. as the proxy
solicitation firm (the Proxy Solicitation Firm). The cost of solicitation by the
Proxy Solicitation Firm is not expected to exceed $50,000 in fees, plus
out-of-pocket expenses, and will be borne by the Fund.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Fund's Charter and Bylaws provide that the Board of Directors is
divided into three classes of Directors, as nearly equal in number as possible.
Each Director serves for a term of three years, with one class being elected
each year. Each year the term of office of one class will expire.
At the Meeting, three Class III Directors will be elected to serve for the
ensuing three years, ending in 2004, and until their successors have been duly
elected and qualified. It is the intention of the persons named in the enclosed
proxy to vote in favor of the election of Messrs. Brennan, Gunia and Sibley (the
nominees). Each of the nominees has consented to be named in this Proxy
Statement and to serve as a Director if elected. Each of the Class III nominees
other than Mr. Sibley is currently a Class III Director of the Fund and has
previously been elected by stockholders. The Board of Directors has no reason to
believe that any of the nominees named above will become unavailable for
election as a Director, but if that should occur before the Meeting, proxies
will be voted for such persons as the Directors may recommend. All of the Fund's
Directors other than Mr. Sibley were previously elected by stockholders.
2
The following table sets forth certain information concerning each of the
nominees and each Director of the Fund.
INFORMATION REGARDING DIRECTORS
NAME, AGE, BUSINESS EXPERIENCE SHARES BENEFICIALLY
DURING THE PAST FIVE YEARS AND OTHER CURRENT DIRECTORSHIPS POSITION(S) WITH FUND OWNED AT JUNE 1, 2001*
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CLASS III DIRECTORS
(NOMINATED TO BE ELECTED FOR TERM EXPIRING 2004)
**David J. Brennan (43), Deputy Chairman and Director, Baring Asset Director since 1990 -0-
Management Holdings Limited; Chief Executive and Director, Baring
Asset Management Limited; Chairman, Baring Asset Management
Holdings, Inc.; Chairman, Baring Asset Management, Inc.;
Chairman, Baring Fund Managers Limited; Chief Executive and
Director, Baring International Investment Ltd.; Director, Baring
Global Fund Managers Ltd.
**Robert F. Gunia (54), Executive Vice President and Chief Admin- Vice President 1,200
istrative Officer (since June 1999) of Prudential Investments; since 1988,
Executive Vice President and Treasurer (since December 1996) of Director since
PIFM; President (since April 1999), Prudential Investment Man- 1989 and
agement Services LLC; Corporate Vice President (September 1997) Treasurer since
of the Prudential Insurance Company of America; formerly Senior 1999
Vice President (March 1987-May 1999) of Prudential Securities
Incorporated (PSI); formerly Chief Administrative Officer (July
1989-September 1996), Director (January 1989- September 1996) and
Executive Vice President, Treasurer and Chief Financial Officer
(June 1987-December 1996) of Prudential Mutual Fund Management,
Inc. (PMF), Director of 48 investment companies in the Prudential
Fund Complex (the Prudential Funds) and The High Yield Income
Fund (since October, 1996).
Nicholas T. Sibley (63), Fellow of the Institute of Chartered Nominee -0-
Accountants in England and Wales; Managing Director, Wheelock
Pacific Ltd. (June 1996-February 1997); Chairman, Instinet
Pacific Ltd., JF Japan OTC Fund Inc., Baring Peacock Fund Ltd.,
Taiwan Index Fund Ltd.; Director, Corney and Barrow Group Ltd.,
Aquarius Platinum Ltd.; Director, Fleming Japan Smaller Companies
Investment Trust plc (since 2001).
3
NAME, AGE, BUSINESS EXPERIENCE SHARES BENEFICIALLY
DURING THE PAST FIVE YEARS AND OTHER CURRENT DIRECTORSHIPS POSITION(S) WITH FUND OWNED AT JUNE 1, 2001*
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CLASS II DIRECTORS
(TERM EXPIRING 2003)
Robert H. Burns (71), Chairman, Robert H. Burns Holdings Limited Director -0-
(an investment business), Hong Kong; previously, Chairman and since 1986
Chief Executive Officer, Regent International Hotels, Limited,
Hong Kong.
Douglas Tong Hsu (59), Chairman and Chief Executive Officer, Far Director -0-
Eastern Textile Ltd., Taiwan. since 1986
David G. P. Scholfield (57), Since 1998, Managing Director, The Director 12,605
Bank of Bermuda Limited Hong Kong Branch; Director, Bermuda since 1988
Trust (International) Limited, Bermuda Trust (Far East) Limited,
Bermuda Trust (Hong Kong) Limited, MIL (Far East) Limited,
Bermuda Far East Properties Limited, Bermuda Trust (Mauritius)
Limited and since 2000, Director, The Furinkazan Fund Limited.
Formerly, President of the Fund; President, The Greater China
Fund, Inc; Managing Director, Baring Asset Management (Asia)
Limited and Baring International Investment (Far East) Limited.
4
NAME, AGE, BUSINESS EXPERIENCE SHARES BENEFICIALLY
DURING THE PAST FIVE YEARS AND OTHER CURRENT DIRECTORSHIPS POSITION(S) WITH FUND OWNED AT JUNE 1, 2001*
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CLASS I DIRECTORS
(TERM EXPIRING 2002)
Olarn Chaipravat (56), Formerly, President and Chief Executive Director -0-
Officer (October 1992 to January 1999), Director and Senior since 1986
Executive Vice President (July 1990-September 1992) and Senior
Executive Vice President (September 1987-June 1990), The Siam
Commercial Bank, Public Company Limited, Thailand.
Michael J. Downey (57), Managing Partner, Lexington Capital LLC and Chairman 10,000
Director, The Merger Fund and Value Asset Management, Inc. since 1999,
Director
since 1986
John A. Morrell (73), Chairman, John Morrell Advisory Services Ltd. Director -0-
(provides investment consultancy services and investment advice since 1986
to a range of international financial institutions), and Invesco
Japan Discovery Trust; Director, Govett High Income Investment
Trust, Johnson Fry Utilities Investment Trust plc and Prumerica
Worldwide Investors Portfolio. Previously, Executive Chairman,
Baring International Investment Ltd.
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* As of June 1, 2001, the Directors and officers of the Fund as a group
beneficially owned less than 1% of the outstanding shares of common stock of
the Fund.
**Indicates "interested" Directors of the Fund, as defined in the Investment
Company Act. Mr. Brennan is deemed to be an "interested" Director of the Fund
by reason of his affiliation with Baring Asset Management Limited. Mr. Gunia
is deemed to be an "interested" Director of the Fund, by reason of his
affiliation with PIFM.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Mr. Robert H.
Burns, a Director of the Fund, as a result of clerical error by his filing
agents, filed one late report and failed to file five reports required to be
filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, relating
to eleven transactions in shares of the Fund in 1997 and 1998.
5
The Fund pays each of its Directors who is not an affiliated person (as
defined in the Investment Company Act) of the Investment Manager or PIFM an
annual fee of US$10,000, plus US$1,000 for each Board meeting attended. In
addition, members of the Audit Committee receive US$1,250 for each Audit
Committee meeting attended, and members of the Nominating Committee receive
US$750 for each meeting of the Nominating Committee attended. The Chairman of
the Fund is paid an additional amount of US$2,500 annually. The Fund reimburses
all Directors and officers attending board meetings for their out-of-pocket
travel expenses. The Board of Directors does not have a compensation committee.
The following table sets forth the aggregate compensation paid by the Fund
to the Directors who are not affiliated with the Investment Manager or PIFM and
the aggregate compensation paid to such Directors for service on the Fund's
board and that of all other registered investment companies managed by the
Investment Manager (Fund Complex) during the Fund's fiscal year ended March 31,
2001.
COMPENSATION TABLE
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM FUND
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND
COMPENSATION AS PART OF FUND BENEFITS UPON COMPLEX PAID
NAME AND POSITION FROM FUND EXPENSES RETIREMENT TO DIRECTORS
- ------------------------------- ------------ ---------------- ---------------- -------------
David J. Brennan** 0 None N/A 0
Robert Burns-Director $18,000 None N/A $ 18,000(1)*
Olarn Chaipravat-Director $13,750 None N/A $ 13,750(1)*
Michael J. Downey-Director $20,500 None N/A $ 20,500(1)*
and Chairman
Robert F. Gunia** 0 None N/A 0
Douglas Tong Hsu-Director $11,575 None N/A $ 11,575(1)*
John A. Morrell-Director $14,250 None N/A $ 14,250(1)*
David G. P. Scholfield-Director $17,250 None N/A $ 17,250(1)*
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* Indicates number of funds in Fund Complex (including the Fund) to which
aggregate compensation relates.
**David J. Brennan and Robert F. Gunia, who are each interested Directors, do
not receive compensation from the Fund.
The Board of Directors has an Audit Committee, which makes recommendations
to the full Board of Directors with respect to the engagement of the independent
public accountants and reviews with the independent public accountants the plan
and results of the audit engagement and matters having a material effect upon
the Fund's financial operations. In accordance with Independence Standards Board
Standard No. 1, Deloitte & Touche LLP, the Fund's independent accountants for
the fiscal year ended March 31, 2001, has confirmed to the Audit Committee that
they are independent accountants with respect to the Fund. For the fiscal year
ended March 31, 2001, Deloitte & Touche LLP audited the annual financial
statements of the Fund but did not provide any financial information systems
design and implementation services, nor any other non-audit services, to the
Fund, its investment adviser, administrator, custodian or other service
provider, or any entity controlling, controlled by, or under common control with
any of the foregoing service providers. For the fiscal year ended March 31,
2001, the fee for professional services rendered for the audit of the annual
financial statements was $46,000.
The Audit Committee charter, as amended and restated on May 31, 2001, is
attached to this proxy statement as Appendix A, and the report of the Audit
Committee, dated May 31, 2001, is attached to this proxy statement as Appendix
B.
6
The Audit Committee consists of the following non-interested Directors:
Messrs. Burns, Chaipravat, Downey, Hsu, Morrell and Scholfield. Such members are
also "independent" as such term is defined in the New York Stock Exchange
Listing Standards. The Audit Committee met twice during the fiscal year ended
March 31, 2001.
The Board of Directors also has a Nominating Committee. The Nominating
Committee consists of certain of the Fund's non-interested Directors, namely,
Messrs. Burns, Downey and Scholfield. This Committee recommends to the Board
persons to be nominated for election as Directors by the stockholders and
selects and proposes nominees for election by the Board between Annual Meetings.
This Committee does not normally consider candidates proposed by stockholders
for election as directors. The Nominating Committee met three times during the
fiscal year ended March 31, 2001.
There were four regularly scheduled meetings of the Fund's Board of
Directors for the fiscal year ended March 31, 2001. For the fiscal year ended
March 31, 2001, all Directors other than Mr. Chaipravat, Mr. Hsu and Mr. Morrell
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors, the Audit Committee and the Nominating Committee, as
applicable.
Certain of the Directors of the Fund, including the nominees, reside
outside the United States, and substantially all the assets of such persons are
located outside the United States. It may not be possible, therefore, for
investors to effect service of process within the United States upon such
persons or to enforce against them, in United States courts or foreign courts,
judgments obtained in United States courts predicated upon the civil liability
provisions of the federal securities laws of the United States or the laws of
the State of Maryland. In addition, it is not certain that a foreign court would
enforce, in original actions or in actions to enforce judgments obtained in the
United States, liabilities against such persons predicated solely upon the
federal securities laws.
The executive officers of the Fund, other than as shown above, are Ronald
G. M. Watt, President, having held such office since May 1998; Deborah A. Docs,
Secretary, having held such office since September 1998 and Assistant Secretary
from November 1989 to September 1998; Vasso-Athene Spanos, Assistant Secretary,
having held such office since October 1997; Christine Gerrity-Yacuk, Assistant
Treasurer, having held such office since September 2000; and Linda McMullin,
Assistant Treasurer, having held such office since September 2000. Mr. Watt is
54 years old and is a Director of the Institutional Group of Baring Asset
Management Limited; prior thereto, he was Managing Director (1993-1997) of QESST
Pty Ltd Management Consultants. Ms. Docs is 43 years old and is a Vice President
and Associate General Counsel of PIFM (since December 1996); prior thereto she
was Vice President and Associate General Counsel of PMF (June 1991-September
1996) and a Vice President and Associate General Counsel of PSI. Miss Spanos is
42 years old and is Assistant Director-Investment Companies (since April 2000)
and, during the last seven years has been an account manager responsible for
several investment companies, including the Fund, at Baring Asset Management
Limited. Ms. Gerrity-Yacuk is 35 years old and is a director within Prudential
Mutual Fund Administration (since June 2000); prior thereto, she was a Manager
within Prudential Mutual Fund Administration (from December 1996) and Associate
Vice President of PSI (prior to December 1996). Ms. McMullin is 39 years old and
is a director within Prudential Mutual Fund Administration (since December
1996); prior thereto, she was Vice President of PSI.
The Audit Committee of the Board of Directors has recommended, and the
Board of Directors, including a majority of those members who are not
"interested persons" of the Fund (as defined in the Investment Company Act), has
selected Ernst & Young LLP as the independent accountants of the Fund for the
fiscal year ending March 31, 2002. The firm of Ernst & Young LLP has extensive
experience in investment company accounting and auditing. It is not expected
that a representative of Ernst & Young LLP will be present at the Meeting to
make a statement or respond to questions.
7
Ernst & Young LLP was hired on May 31, 2001 to replace Deloitte & Touche
LLP, the Fund's independent accountants for the fiscal year ended March 31,
2001, who resigned on May 18, 2001. It is not expected that a representative of
Deloitte & Touche will be present at the Meeting to make a statement or respond
to questions.
Deloitte & Touche resigned because of possible perceived independence
issues arising out of new rules issued by the Securities and Exchange
Commission. Deloitte & Touche's reports on the financial statements for each of
the past two years did not contain an adverse opinion or a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. Moreover, in the past two fiscal years and the subsequent
interim period preceding Deloitte & Touche's resignation, the Fund had no
disagreements with Deloitte & Touche on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedure. There
were also no "reportable events" (as such term is defined in Regulation S-K of
the Securities and Exchange Commission).
FOR THE REASONS DISCUSSED BELOW, THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT
YOU VOTE AGAINST THE FOLLOWING STOCKHOLDER PROPOSAL:
STOCKHOLDER PROPOSAL
(PROPOSAL NO. 2)
A beneficial owner (the proponent) of common stock of the Fund has informed the
Fund that the proponent intends to present a proposal for action at the Meeting.
The proponent's name and address will be furnished by the Secretary of the Fund
upon request.
The proponent's formal proposal (the proposal) is as follows:
"RESOLVED: THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE FUND AND
BARING ASSET MANAGEMENT (ASIA) LIMITED SHALL BE TERMINATED. THE
SHAREHOLDERS STRONGLY RECOMMEND THAT THE DIRECTORS ONLY PROPOSE AS A
REPLACEMENT ADVISOR AN INVESTMENT MANAGER HAVING A FIRM COMMITMENT TO
PROMPTLY REALISE NET ASSET VALUE FOR THE SHAREHOLDERS OF THE FUND."
The proponent has furnished the following statement (the supporting
statement) in support of this proposal:
"We stockholders have witnessed the indifference of Baring Asset Management
(Asia) Ltd. (the "Management") and the Board of Directors toward the value of
our equity for many years. The clear result of this indifference is the dismal
performance of our fund. At the annual meeting of 2000, stockholders present or
represented at the meeting voted for liquidation by nearly two to one. The
Management did not implement the stockholders' recommendation. During the year
2000, the discount averaged 26.40%. The simple arithmetic fact is that a
discount of 26.40%, which is computed by dividing the dollar discount by the Net
Asset Value (NAV), actually means that each investor would obtain 35.87% more if
the NAV could be realized. In other words, each $100 of shares at the market
price would be worth $135.87 if the NAV were realized. For 17,934,000 shares
this amounts to $59,182,200.
"The Management and Board of Directors have taken actions that were
detrimental to our interests. These include: (1) Recommending the removal of a
provision in the Fund's charter that would potentially offer stockholders the
opportunity to receive the NAV of their shares at regular intervals; this action
was approved at the 1991 annual meeting by a majority of the voting
stockholders. (2) On May 13, 1995, the Fund's Board authorized an increase in
the number of shares through a rights offering that was completed on September
15, 1995. A PREMIUM of 19% on May 12, 1995 devolved into a DISCOUNT of 7% by
September 15, 1995. Stockholders thereby lost 26% of the market value due to
this decline, and the Fund has traded at a discount ever since, except for brief
periods in 1996
8
and 1998 during which the shares traded at a premium. The May 13 decision came
just nine weeks after Management's financially distressed parent company,
Barings PLC, was purchased by ING Group for one pound on March 5, 1995, and the
Fund dipped temporarily into a discount for the first time in years. The Fund's
share price dropped immediately following this uncertainty. Nevertheless, the
Board authorized the rights offering for new shares; the offering had the
predictable consequences of increasing Management's fees while decreasing the
price per share. If you feel that the Fund's shareholders deserve a management
company with better judgment and a more sincere concern for stockholders'
interests, then vote FOR the proposal.
"The Board and Management have had little interest in eliminating the
discount. The steady stream of fees to Management is based upon the NAV, and the
discount does not cost them anything. Furthermore, most of the Directors own no
shares at all and have no direct interest in the trading price of the shares.
Their interest in preserving and enhancing shareholder value will be very
limited so long as the fund is closed-end, and without any mechanism to reduce
the discount (such as open-ending or the possibility of unlimited redemptions at
NAV).
"However, they have a strong interest in maintaining high fees for
Management. So long as we have this Management and Board of Directors who, we
believe, are beholden to Management, there is no reason for anything but the
status quo to persist.
"If we shareholders vote to terminate the contract of Management, another
management company must be ratified by our majority vote. Only then we can end
the conflict between maximizing fees and maximizing shareholder value. This is
one of the few direct rights guaranteed to shareholders by federal securities
laws to ensure some accountability by management of the fund.
"We urge you to vote FOR the Shareholder Proposal. This will initiate the
process to explore the possibilities of open ending, interval redemptions or,
liquidation, if other measures to realize NAV are not possible."
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
Termination of the investment advisory agreement would deprive the Fund of
a strong and experienced investment manager, require extraordinary expenditures
by the Fund to find and have stockholders approve a successor, and create a
period of operating uncertainty that could substantially harm your investment
and the performance of the Fund. These consequences are unwarranted and not in
the best interests of the Fund or its stockholders.
The Investment Manager has delivered consistently superior investment
results under frequently difficult market conditions. The Fund's per annum net
asset value (NAV) performance, assuming reinvestment of all dividends, has been
significantly stronger than its benchmark, the MSCI All Countries Combined Far
East Free ex Japan Index (Index). Comparative performance for the one, three,
five and ten year periods ended May 31, 2001 and the year 2001 to date is shown
below.
% OF CHANGE PER ANNUM
(THROUGH MAY 31, 2001)
----------------------------------------------
PERIOD FUND INDEX
---------------- -------------- ----------
year to date -1.9% -3.7%
1 year -17.8 -25.7
3 years +12.0 +4.1
5 years -5.2 -12.2
10 years +4.9 +3.1
9
NAV returns for the Fund do not reflect the substantial discounts from NAV
at which shares of the Fund have been trading. Market prices of the Fund's
shares are beyond the control of the Investment Manager and not part of the
Investment Manager's responsibilities or mandate under the investment advisory
agreement.
The discounts from NAV at which shares of the Fund have been trading have
been and continue to be of concern to the Board of Directors. The Board has
previously announced a share repurchase program, pursuant to which it has
repurchased to date 874,500 shares of the Fund. It has also authorized a tender
offer program pursuant to which a tender offer for 15% of the Fund's outstanding
shares at a price representing a 10% discount from NAV was completed in December
2000. The announced program also requires the Fund to conduct additional tender
offers this year and in 2002, each for at least 10% of the Fund's outstanding
shares at a price representing a 10% discount from their NAV, if the Fund's
shares trade at an average weekly discount from NAV greater than 15% for 13-week
measurement periods ending on the last Friday in August of each year.
The Board of Directors of the Fund has taken steps that it deems
appropriate and in the best interests of the Fund in view of its and the
stockholders' legitimate concerns about the discount. These significant actions
by the Board of Directors have been taken with full support of the Investment
Manager despite the resulting reduction in its fees. However, only the Board of
Directors, and not the Investment Manager, has authority to take these actions.
Termination and replacement of the Investment Manger will not change this fact.
The Board of Directors is highly satisfied with the consistently superior
investment performance provided by the Investment Manager. Termination of the
investment advisory agreement will not only deprive the Fund of a very competent
investment manager, but will also cause market uncertainty, which could
adversely affect your investment and the performance of the Fund.
THE BOARD OF DIRECTORS BELIEVES THAT THIS STOCKHOLDER PROPOSAL IS NOT IN
THE BEST INTERESTS OF THE FUND; ACCORDINGLY, THE BOARD OF DIRECTORS STRONGLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
FOR THE REASONS DISCUSSED BELOW, THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT
YOU VOTE AGAINST FOLLOWING STOCKHOLDER PROPOSAL:
STOCKHOLDER PROPOSAL
(PROPOSAL NO. 3)
A beneficial owner (the proponent) of common stock of the Fund has informed
the Fund that he intends to present a proposal for action at the Meeting. The
proponent's name and address will be furnished by the Secretary of the Fund upon
request.
The proponent's formal proposal (the proposal) is as follows:
"RESOLVED: It is recommended that the following by-law shall be
adopted: "THE INVESTMENT MANAGEMENT AGREEMENT SHALL BE SUBMITTED TO
SHAREHOLDERS FOR A VOTE IN 2002 AND EVERY YEAR THEREAFTER. IF THE
SHAREHOLDERS DO NOT APPROVE CONTINUANCE OF THE AGREEMENT, THE BOARD OF
DIRECTORS MAY SUBSEQUENTLY APPROVE ITS CONTINUANCE IF NOT INCONSISTENT
WITH STATE OR FEDERAL LAW. THE PROVISIONS OF THIS BY-LAW MAY BE
AMENDED OR REPEALED ONLY BY THE SHAREHOLDERS.'"
The proponent has furnished the following statement (the supporting
statement) in support of this proposal: "This shareholder proposal is about
accountability and the failure of the Asia Pacific Fund's Investment Manager -
Baring Asset Management ("Baring") to maximize our investment.
10
"The Investment Company Act of 1940 requires the investment advisory agreement
for every mutual fund to be `approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities.' Our
Board of Directors has acted as if it alone had the power to approve the renewal
of the investment advisory agreement because it has never once permitted the
shareholders to vote on it.
"Last year, the Asia Pacific Fund ("Fund") paid Baring $1,913,177 to manage the
Fund. It is only fair that shareholders be able to vote `yea or nay' on the
management contract each year. Such a vote will make the Investment Manager
accountable - not just to a friendly Board of Directors - but also to the
shareholders who actually pay the Manager's fees. The proponent believes the
Board members are beholden to Baring for their board seats - and the Board has
not diligently considered other investment managers.
"In July 2000, the shareholders of the Fund voted by a 63.9% margin to liquidate
and return all of the cash proceeds to the shareholders. The undersigned
believes this vote was a `nay' vote on the performance of Baring. Unfortunately,
a shareholder proposal to liquidate (although passed by a nearly 2:1 margin) is
not binding on the Board of Directors. I believe the Board did not implement it
because they are too highly influenced by the Investment Manager and underscores
the need for shareholder approval of Baring's Management Contract.
"The shareholder making this proposal owns 24,943 shares (held in his own
accounts or via immediate family members) in the Fund and has been an investor
in the Fund for more than 8 years.
"This proposal is designed to allow shareholders to annually review the Fund's
lucrative Management Agreement and to have a future voice about which manager is
qualified to manage our money. Please vote FOR this proposal."
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
The proposal recommends that continuance of the Fund's investment
management agreement be put to a vote of stockholders every year, but if the
stockholders do not approve continuance, continuance may be approved by the
Board of Directors. The proposal therefore would increase the annual printing,
mailing, solicitation and legal costs to the Fund relating to the preparation
and distribution of proxy statements and the solicitation of proxies while
effectively treating the vote of stockholders as advisory only. This clearly is
not in the best interests of the Fund or the stockholders.
The supporting statement accurately reflects the requirements of the
Investment Company Act, which permit annual approval of investment advisory
agreements to be given by EITHER the board of directors OR stockholders of a
fund. The Fund, like virtually all registered investment companies, opts to have
the annual consideration and approval of the investment management agreement
carried out by the Board of Directors. This is because the Board of Directors,
which meets with representatives of the Investment Manager at each regular
meeting of the Board, has on-going knowledge and the ability to review and
assess the Investment Manager's performance and other relevant matters that
simply cannot be duplicated in one proxy statement for a stockholders' meeting.
It is important to note also that the Investment Company Act requires the
continuance of investment advisory agreements to be approved by a majority of
the directors who are not "interested persons", as defined, of the Fund or of
the investment adviser. This means among other things that this approval must be
given by a majority of the Board of Directors of the Fund who have no
affiliation with the Investment Manager.
We are greatly troubled by the proponent's suggestion that your Board of
Directors is not carrying out its duties in the interests of the Fund. In fact,
its annual approval of the continuance of the Investment Management Agreement
reflects in major part the satisfaction of the Board of Directors with the
strong performance of the Investment Manager. The Investment Manager has
delivered consistently superior investment results by regularly outperforming
its benchmark index, as set forth in detail under Proposal 2.
11
We also believe that the proponent's suggestion that your Board of
Directors has ignored the vote of stockholders, who approved by a "63.9% margin"
or a "nearly 2:1 margin" a recommendation to liquidate the Fund, is misleading.
Your Board has not ignored the vote, and the vote does not represent the
"margin" of approval but rather the percentage of shares voted at the meeting in
favor of the recommendation. Due to the small attendance at last year's annual
meeting of stockholders, the vote in favor of liquidation represented only 23.5%
of the Fund's outstanding shares. As a percentage of outstanding shares, 12.1%
voted against the recommendation to liquidate, while 1.2% abstained and 63.2%
did not vote at all. In other words, 76.5% of the Fund's outstanding shares were
NOT voted in favor of this recommendation.
Nevertheless, and not mentioned by the proponent, your Board of Directors
has authorized significant actions by the Fund in response to the vote at last
year's stockholder meeting. The Board did not and does not believe that
liquidation is in the best interests of the Fund. However, pursuant to Board
authorization, the Fund has repurchased 874,500 shares in a share repurchase
program and has announced a tender offer program pursuant to which it has
already purchased 15% of the Fund's outstanding shares and may be required to
conduct tender offers, each for 10% of the Fund's outstanding shares, this year
and next. See Proposal 2 for more details.
The practice of the Fund and the industry generally to have annual
continuance of advisory contracts approved by the board of directors is, in the
view of your Board of Directors, the most efficient and effective procedure for
accomplishing this statutory duty. The Board of Directors, including a majority
of the Directors who have no affiliation with the Investment Manager, considers
the renewal of the Investment Management Agreement each year in accordance with
all applicable standards. Nothing is to be gained by having the Fund undertake
the annual expense of presenting the Investment Management Agreement for an
advisory vote by stockholders.
THE BOARD OF DIRECTORS BELIEVES THAT THIS STOCKHOLDER PROPOSAL IS NOT IN
THE BEST INTERESTS OF THE FUND; ACCORDINGLY, THE BOARD OF DIRECTORS STRONGLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders properly
come before the Meeting, including any question as to an adjournment of the
Meeting, the persons named in the enclosed proxy will vote thereon according to
their discretion in the interests of the Fund.
12
STOCKHOLDER PROPOSALS
The deadline for submitting stockholder proposals for inclusion in the
Fund's proxy statement and form of proxy for the Fund's Annual Meeting of
Stockholders in 2002 is March 1, 2002. Any stockholder proposal that is intended
to be presented at such Annual Meeting but not submitted for inclusion in the
Fund's proxy statement and form of proxy in accordance with the foregoing
sentence must be received by the Fund's Secretary at the address indicated on
the first page of this Proxy Statement no earlier than March 4, 2002 and no
later than April 3, 2002. Any such proposal received after such date will be
considered untimely and will be excluded from consideration at the next Annual
Meeting in accordance with the Fund's Advance Notice Bylaw. The mere submission
of a proposal or notice of proposal by a stockholder does not guarantee that
such proposal will be included in the proxy statement or otherwise considered at
such Annual Meeting because certain federal rules and the Fund's Advance Notice
Bylaw, respectively, must be complied with before consideration of the proposal
is required.
Dated: June 29, 2001 Deborah A. Docs
Secretary
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
13
APPENDIX A
THE ASIA PACIFIC FUND, INC.
AUDIT COMMITTEE CHARTER
(As amended and restated on May 31, 2001)
I. COMPOSITION OF THE AUDIT COMMITTEE: The Audit Committee shall be comprised
of at least three directors, each of whom shall have no relationship to the
Company or its investment adviser, administrator, or custodian that may
interfere with the exercise of his or her independence from management and
the Company and, as to his or her relationship to the Company, shall
otherwise satisfy the applicable membership requirements under the rules of
the New York Stock Exchange, Inc., as such requirements are interpreted by
the Board of Directors in its business judgment. Copies of the relevant
requirements are attached hereto.
II. PURPOSES OF THE AUDIT COMMITTEE: The purposes of the Audit Committee are to
assist the Board of Directors:
1. in its oversight of the Company's accounting and financial reporting
principles and policies and related controls and procedures maintained
by or on behalf of the Company;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in selecting, evaluating and, where deemed appropriate, replacing the
independent accountants; and
4. in evaluating the independence of the independent accountants.
The function of the Audit Committee is oversight. The management of the
Company, including contractually obligated service providers, are
responsible for the preparation, presentation and integrity of the
Company's financial statements. Management and applicable service providers
are responsible for maintaining appropriate accounting and financial
reporting principles and policies and related controls and procedures
designed to assure compliance with accounting standards and applicable laws
and regulations. The independent accountants are responsible for planning
and carrying out a proper audit of the Company's annual financial
statements. In fulfilling their responsibilities hereunder, it is
recognized that the members of the Audit Committee are not full-time
employees of the Company and are not, nor do they represent themselves to
be, accountants or auditors by profession or experts in the fields of
accounting or auditing, including the issue of auditor independence. As
such, in fulfilling their oversight duties under this Charter it is neither
the duty nor the responsibility of the Audit Committee or its members to
conduct "field work" or other types of auditing or accounting reviews or
procedures or to set auditor independence standards, and each member of the
Audit Committee shall be entitled to rely on (i) the integrity of those
persons and organizations within and outside the Company from which it
receives information, (ii) the accuracy of the financial and other
information provided to the Audit Committee by such persons or
organizations absent actual knowledge to the contrary (which shall be
promptly reported to the Board of Directors) and (iii) representations made
by management of the Company, the investment adviser, or the administrator
as to any information technology, internal audit and other non-audit
services provided by the independent accountants to the Company, its
investment adviser and any entity controlling, controlled by or under
common control with the investment adviser that provides services to the
Company ("Advisory Affiliates").
The independent accountants for the Company are ultimately accountable to
the Board of Directors (as assisted by the Audit Committee). The Board of
Directors, with the assistance of the Audit Committee, has the ultimate
authority and responsibility to select, evaluate and, where appropriate,
replace the independent accountants.
The independent accountants shall submit to the Audit Committee annually a
formal written statement delineating all relationships between the independent
accountants and the Company ("Statement as to Independence"), which, in the
independent accountants' professional judgment, may be reasonably thought to
bear on independence, addressing each non-audit service provided to the Company,
the investment adviser and each of the Advisory Affiliates and at least the
matters set forth in Independence Standards Board Standard No. 1. The Statement
as to Independence shall also identify any audit, tax or consulting services to
the Company's investment adviser, administrator, custodian, or other service
providers to the Company, and to other investment companies advised by the
Company's investment adviser or administered by the Company's administrator, as
the Audit Committee and the independent accountants may agree. These
professional services may include those relating to the services provided by
such service providers to the Company or any other services that the independent
accountants or the Committee believe may bear on the independence of the
independent accountants with respect to the Company. The Audit Committee
acknowledges that the disclosure of such services provided by the independent
accountants may be limited by the Code of Professional Conduct of the American
Institute of Certified Public Accountants.
The independent accountants shall submit to the Company annually a formal
written statement of the fees billed for each of the following categories of
services rendered by the independent accountants: (i) the audit of the Company's
financial statements; (ii) information technology consulting services provided
to the Company, the investment adviser, and the Advisory Affiliates for the most
recent fiscal year, in the aggregate, and (iii) all other services provided to
the Company, the investment adviser and the Advisory Affiliates by the
independent accountants for the most recent fiscal year, in the aggregate.
III. MEETINGS OF THE AUDIT COMMITTEE: The Audit Committee shall meet as often as
may be required to discuss the matters set forth in Article IV. In
addition, the Audit Committee should meet separately at least annually with
management and the independent accountants to discuss any matters that the
Audit Committee or any of these persons or firms believe should be
discussed privately. The Audit Committee may request any officer or
employee of the Company or any service provider, outside counsel to the
Company or to the independent directors or the Company's independent
accountants to attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee. Members of the Audit
Committee may participate in a meeting of the Audit Committee by means of
conference call or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
IV. DUTIES AND POWERS OF THE AUDIT COMMITTEE: To carry out its purposes, the
Audit Committee shall have the following duties and powers:
1. with respect to the independent accountants,
(i) to provide advice to the Board of Directors in selecting,
evaluating or replacing independent accountants;
(ii) to review the fees charged the Company by the independent
accountants for performance of audit and non-audit services;
(iii) to ensure that the independent accountants prepare and deliver
annually a Statement as to Independence (it being understood
that the independent accountants are responsible for the
accuracy and completeness of this Statement), to discuss with
the independent accountants any relationships or services
disclosed in this Statement that may impact the objectivity and
independence of the Company's independent accountants and to
recommend that the Board of Directors take appropriate action in
response to this Statement to satisfy itself of the independent
accountants' independence;
2
(iv) if applicable, to consider whether the independent accountants'
provision to the Company, the investment adviser and Advisory
Affiliates of (a) information technology consulting services
relating to financial information systems design and
implementation and (b) other non-audit services is compatible
with maintaining the independence of the independent
accountants; and
(v) to instruct the independent accountants that the independent
accountants are ultimately accountable to the Board of Directors
and Audit Committee;
2. with respect to financial reporting principles and policies and
related controls and procedures,
(i) to advise management and the independent accountants that they
are expected to provide or cause to be provided to the Audit
Committee a timely analysis of significant financial reporting
issues and practices;
(ii) to consider any reports or communications (and management's
responses thereto) submitted to the Audit Committee by the
independent accountants required by or referred to in Statement
of Auditing Standards No. 61 (as codified by AU Section 380), as
it may be modified or supplemented, including reports and
communications related to:
o deficiencies noted in the audit in the design or operation of
related controls;
o consideration of fraud in a financial statement audit;
o detection of illegal acts;
o the independent accountants' responsibility under generally
accepted auditing standards;
o significant accounting policies;
o management judgments and accounting estimates;
o adjustments recorded and unadjusted differences arising from
the audit;
o the responsibility of the independent accountants for other
information in documents containing audited financial
statements;
o disagreements with management;
o consultation by management with other accountants;
o major issues discussed with management prior to retention of
the independent accountants;
o difficulties encountered with management in performing the
audit; and
o the independent accountants' judgments about the quality of
the Company's accounting principles;
(iii) to meet with management and/or the independent accountants:
o to discuss the scope of the annual audit or any audit or
review of interim financial statements;
o to discuss the audited financial statements;
o to discuss any significant matters arising from any audit or
report or communication referred to in item 2(ii) above,
whether raised by management or the independent accountants,
relating to the Company's financial statements;
o to review the opinion rendered, or the form of opinion the
independent accountants propose to render, to the Board of
Directors and shareholders;
3
o to discuss allocations of expenses between the Company and
other entities;
o to discuss the Company's compliance with Subchapter M of the
Internal Revenue Code of 1986, as amended;
o to discuss with management and the independent accountants
their respective procedures to assess the representativeness
of securities prices provided by external pricing services;
o to discuss with the independent accountants their conclusions
as to the reasonableness of procedures employed to determine
the fair value of securities for which market quotations are
not readily available, management's adherence to such
procedures and the adequacy of supporting documentation;
o to discuss the report of the independent accountants on the
Company's system of internal accounting controls required to
be filed with the Company's Form N-SAR;
o to discuss significant changes to the Company's accounting
principles, policies, controls, procedures and practices
proposed or contemplated by management;
o to discuss significant changes to auditing principles and to
auditing policies, controls, procedures and practices
contemplated by the independent accountants; and
o to inquire about significant risks and exposures, if any, and
the steps taken to monitor and minimize such risks; and
(iv) to discuss with the Company's legal advisors any significant
legal matters that may have a material effect on the financial
statements; and
3. with respect to reporting, recommendations and other matters,
(i) to provide advice to the Board of Directors in selecting the
principal accounting officer of the Company;
(ii) to prepare any report or other disclosures, including any
recommendation of the Audit Committee, required by the rules of
the Securities and Exchange Commission to be included in the
Company's annual proxy statement;
(iii) to review this Charter at least annually and recommend any
changes to the full Board of Directors; and
(iv) to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to
the above and other matters as the Audit Committee may deem
necessary or appropriate.
V. RESOURCES AND AUTHORITY OF THE AUDIT COMMITTEE: The Audit Committee shall
have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage independent accountants
for special audits, reviews and other procedures and to retain special
counsel and other experts or consultants.
4
NEW YORK STOCK EXCHANGE, INC.
REQUIREMENTS FOR A QUALIFIED AUDIT COMMITTEE
303.01(B)(2) COMPOSITION/EXPERTISE REQUIREMENT OF AUDIT COMMITTE MEMBERS.
(a) Each audit committee shall consist of at least three directors,
all of whom have no relationship to the company that may
interfere with the exercise of their independence from management
and the company ("Independent");
(b) Each member of the audit committee shall be financially literate,
as such qualification is interpreted by the company's Board of
Directors in its business judgment, or must become financially
literate within a reasonable period of time after his or her
appointment to the audit committee; and
(c) At least one member of the audit committee must have accounting
or related financial management expertise, as the Board of
Directors interprets such qualification in its business judgment.
(3) INDEPENDENCE REQUIREMENT OF AUDIT COMMITTEE MEMBERS. In addition to
the definition of Independent provided above in (2)(a), the following
restrictions shall apply to every audit committee member:
(a) EMPLOYEES. A director who is an employee (including non-employee
executive officers) of the company or any of its affiliates may
not serve on the audit committee until three years following the
termination of his or her employment. In the event the employment
relationship is with a former parent or predecessor of the
company, the director could serve on the audit committee after
three years following the termination of the relationship between
the company and the former parent or predecessor.
(b) BUSINESS RELATIONSHIP. A director
(i) who is a partner, controlling shareholder, or executive
officer of an organization that has a business relationship
with the company, or
(ii) who has a direct business relationship with the company
(e.g., a consultant) may serve on the audit committee only
if the company's Board of Directors determines in its
business judgment that the relationship does not interfere
with the director's exercise of independent judgment.
In making a determination regarding the independence of a director pursuant to
this paragraph, the Board of Directors should consider, among other things, the
materiality of the relationship to the company, to the director, and, if
applicable, to the organization with which the director is affiliated.
"Business relationships" can include commercial, industrial, banking,
consulting, legal, accounting and other relationships. A director can have this
relationship directly with the company, or the director can be a partner,
officer or employee of an organization that has such a relationship. The
director may serve on the audit committee without the above-referenced Board of
Directors' determination after three years following the termination of, as
applicable, either
(1) the relationship between the organization with which the director is
affiliated and the company,
(2) the relationship between the director and his or her partnerhsip
status, shareholder interest or executive officer position, or
5
(3) the direct business relationship between the director and the company.
(c) CROSS COMPENSATION COMMITTEE LINK. A director who is employed as
an executive of another corporation where any of the company's
executives serves on that corporation's compensation committee
may not serve on the audit committee.
(d) IMMEDIATE FAMILY. A director who is an Immediate Family member of
an individual who is an executive officer of the company or any
of its affiliates cannot serve on the audit committee until three
years following the termination of such employment relationship.
"Immediate Family" includes a person's spouse, parents, children,
siblings, mothers-in-law and fathers-in-law, sons and
daughters-in-law, brothers and sisters-in-law, and anyone (other
than employees) who shares such person's home.
* * *
(Since 1956 the New York Stock Exchange has required all domestic companies
listing on the Exchange to have at least two outside directors on their boards.)
6
APPENDIX B
THE ASIA PACIFIC FUND, INC.
(THE "FUND")
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the Fund's accounting and financial reporting process and the
selection of the Fund's independent accountants. The Committee operates pursuant
to a charter that was last amended and restated by the Board on May 31, 2001, a
copy of which is attached to this proxy statement as Appendix A. As set forth in
the charter, management of the Fund is responsible for the preparation,
presentation and integrity of the Fund's financial statements, and for the
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent accountants are responsible for
auditing the Fund's financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles.
In performing its oversight function, the Committee has considered and
discussed with management and the independent accountants the Fund's audited
financial statements for its fiscal year ended March 31, 2001. The Committee has
discussed with the independent accountants the matters required to be discussed
by Statement on Auditing Standards No. 61, COMMUNICATION WITH AUDIT COMMITTEES,
as modified or supplemented. The Committee has also received the written
disclosures from the independent accountants required by Independence Standards
Board Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, as
currently in effect, delineating relationships between the independent
accountants and the Fund, and discussed the impact that any such relationships
may have on the objectivity and independence of the independent accountants.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including the issue of auditor independence. Members of
the Committee rely without independent verification on the information provided
to them and on the representations made by management and the independent
accountants. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Fund's financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
the Fund's independent accountants are in fact "independent."
The Audit Committee met on May 14, 2001 to consider and discuss the
financial statements as of and for the fiscal year ended March 31, 2001 with
management and the independent accountants.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Committee
referred to above and in the charter, the Committee recommended to the Board
that the audited financial statements be included in the Fund's Annual Report
for its fiscal year ended March 31, 2001.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE FUND'S BOARD OF DIRECTORS
Robert H. Burns
Olarn Chaipravat
Michael J. Downey
Douglas Tong Hsu
John A. Morrell
David G.P. Scholfield
Dated: May 31, 2001
THE ASIA PACIFIC FUND, INC.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102-4077
Proxy for the Annual Meeting of Stockholders, August 8, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of The Asia Pacific Fund, Inc. hereby appoints
Deborah A. Docs, Robert F. Gunia and Ronald G. M. Watt as Proxies, each with the
power of substitution, and hereby authorizes each of them to represent and to
vote, as designated on the reverse side hereof, all the shares of Common Stock
of The Asia Pacific Fund, Inc. held of record by the undersigned on June 1, 2001
at the Annual Meeting of Stockholders to be held on August 8, 2001, or any
postponement or adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF DIRECTORS AND AGAINST PROPOSALS 2 AND 3, AND IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, IN THE DISCRETION OF THE PERSONS
NAMED AS PROXIES HEREIN.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
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Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
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HAS YOUR ADDRESS CHANGED?
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X PLEASE MARK VOTES
- ----- AS IN THIS EXAMPLE
- -------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE
THE ASIA PACIFIC FUND, INC. ELECTION OF DIRECTORS.
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For All
For All With- Nominees
1. Election of Directors. Nominees hold Except
Class III (Term Expiring in 2004) / / / / / /
(01) DAVID J. BRENNAN
(02) ROBERT F. GUNIA
(03) NICHOLAS T. SIBLEY
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CONTROL NUMBER: MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S
NAME IN THE LIST ABOVE.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST PROPOSALS 2 AND 3,
For Against Abstain
2. Stockholder proposal to terminate the
Investment Management Agreement. / / / / / /
3. Stockholder proposal to recommend that
the Board of Directors amend the Bylaws / / / / / /
regarding the Annual Approval of the
Investment Management Agreement.
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Please be sure to sign and date this Proxy. Date Mark box at right if an address change has been noted on the / /
- -------------------------------------------------- reverse side of this card.
Stockholder sign here _____ Co-owner sign here___ RECORD DATE SHARES:
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