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:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
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(Names of Registrant as Specified in Its Charters)
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:
(2) Aggregate number of securities to which transaction applies:
(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 the
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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(4) Date Filed:
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MORGAN STANLEY ASIA-PACIFIC FUND, INC.
c/o Morgan Stanley Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
Morgan Stanley Asia-Pacific Fund, Inc. (the "Fund") will be held on Thursday,
June 6, 2002 at [__]:00 a.m. (New York time), in Conference Room 3 at 1221
Avenue of the Americas, 5th Floor, New York, New York 10020, for the following
purposes:
1. To elect four Class I Directors for a term expiring in 2005.
2. To consider and act upon a stockholder proposal.
3. To consider and act upon any other business as may properly
come before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 8, 2002
are entitled to notice of, and to vote at, this Meeting or any adjournment
thereof.
MARY E. MULLIN
Secretary
Dated: April [__], 2002
If you do not expect to attend the Meeting, please sign and promptly
return the enclosed Proxy Card 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 Card promptly.
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
c/o Morgan Stanley Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
--------------------
PROXY STATEMENT
--------------------
This statement is furnished by the Board of Directors of Morgan Stanley
Asia-Pacific Fund, Inc. (the "Fund") in connection with the solicitation of
Proxy Cards by the Board of Directors for use at the Annual Meeting of
Stockholders (the "Meeting") to be held on June 6, 2002 at [_]:00 a.m. (New York
time), in Conference Room 3 at the principal executive office of Morgan Stanley
Investment Management Inc. (hereinafter "Morgan Stanley Investment Management"
or the "Manager"), 1221 Avenue of the Americas, 5th Floor, New York, New York
10020. It is expected that the Notice of Annual Meeting, Proxy Statement and
Proxy Card will first be mailed to stockholders on or about April __, 2002. The
purpose of the Meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Stockholders.
If the accompanying Proxy Card is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy Card. A Proxy Card 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 and voting at the Meeting. If no instructions are specified, shares
will be voted FOR the election of the nominees for Directors and shares will be
voted AGAINST the stockholder proposal set forth in Proposal 2.
The close of business on April 8, 2002 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Meeting and at any adjournment thereof. On that date, the Fund had
[_______] shares of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting.
The expense of solicitation will be borne by the Fund and will include
reimbursement to brokerage firms and others for reasonable expenses in
forwarding proxy solicitation materials to beneficial owners. The solicitation
of Proxy Cards will be largely by mail, but may include, without cost to the
Fund, telephonic, telegraphic or oral communications by regular employees of the
Manager. The solicitation of Proxy Cards is also expected to include
communications by employees of ________________, a proxy solicitation firm
expected to be engaged by the Fund to solicit Proxy Cards by mail or by
telephonic, telegraphic or oral communications at a cost not expected to exceed
$_____, plus out-of-pocket expenses.
The Fund will furnish, without charge, a copy of its annual report for
its fiscal year ended December 31, 2001, to any stockholder requesting such
report. Requests for the annual report should be made in writing to Morgan
Stanley Asia-Pacific Fund, Inc., c/o J.P. Morgan Investor Services Co., P.O. Box
2798, Boston, Massachusetts 02108-2798, or by calling 1-800-221-6726.
J.P. Morgan Investor Services Co. is an affiliate of the Fund's
administrator, JPMorgan Chase Bank ("JPMorgan Chase"), and provides
administrative services to the Fund. The business address of JPMorgan Chase and
J.P. Morgan Investor Services Co. is 73 Tremont Street, Boston, Massachusetts
02108-2798.
The Board recommends that you vote "FOR" the election of the nominees
as directors as set forth in matter No. 1 of the Notice of Annual Meeting of
Stockholders.
The Board unanimously recommends that Stockholders vote "AGAINST"
Proposal No. 2. The Board believes that this proposal is not in the best
interests of Stockholders and would substantially impair the ability of the Fund
to operate effectively.
ELECTION OF DIRECTORS
(Proposal No. 1)
It is necessary at this time that stockholders elect four Class I
Directors to hold office for a term stated below and until their successors are
duly elected and qualified. It is the intention of the persons named in the
accompanying Proxy Card to vote, on behalf of the stockholders, for the election
of Ronald E. Robison, Michael Nugent, Joseph J. Kearns and Fergus Reid as Class
I Directors for a term expiring in 2005.
Pursuant to the Fund's By-Laws, the terms of office of the Directors
are staggered. The Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with each class having a term of three years.
Each year the term of one class expires. Class I currently consists of Ronald E.
Robison, Michael Nugent, Joseph J. Kearns and Fergus Reid. Class II currently
consists of John D. Barrett II, Vincent R. McLean and C. Oscar Morong, Jr. Class
III currently consists of Barton M. Biggs, Gerard E. Jones, Thomas P. Gerrity
and William G. Morton, Jr. Only the Directors in Class I are being considered
for election at this Meeting.
Pursuant to the Fund's By-Laws, each Director holds office until (i)
the expiration of his term and until his successor has been elected and
qualified, (ii) his death, (iii) his resignation, (iv) December 31 of the year
in which he reaches seventy-two years of age, or (v) his removal as provided by
statute or the Fund's Articles of Incorporation. Each officer of the Fund will
hold such office until his or her death or resignation or a successor has been
duly elected and qualified.
The Board of Directors has an Audit Committee. The Audit Committee
makes recommendations to the full Board of Directors with respect to the
engagement of independent accountants and reviews with the independent
accountants the plan and results of the audit engagement and matters having a
material effect on the Fund's financial operations. The Fund has adopted a
formal, written Audit Committee Charter. The members of the Audit Committee are
currently Gerard E. Jones, John D. Barrett II, Joseph J. Kearns, Vincent R.
McLean and C. Oscar Morong, Jr., none of whom is an "interested person," as
defined under the Investment Company Act of 1940, as amended (the "1940 Act"),
of the Fund (with such disinterested Directors being "Independent Directors").
The Chairman of the Audit Committee is Mr. Kearns. The Audit Committee met three
times during the fiscal year ended December 31, 2001.
The Board of Directors also has a Nominating and Compensation
Committee. The Nominating and Compensation Committee evaluates and recommends
nominees for election to the Fund's Board of Directors and establishes
compensation for Independent Directors. The Fund has adopted a formal written
Nominating and Compensation Committee Charter. The members of the Nominating and
Compensation Committee are Thomas P. Gerrity, William G. Morton, Jr., Michael
Nugent and Fergus Reid, none of whom is an "interested person," as defined under
the 1940 Act, of the Fund. The Chairman of the Nominating and Compensation
Committee is Mr. Reid. The Nominating and Compensation Committee met one time
during the fiscal year ending December 31, 2001.
At a meeting on June 14, 2001, the Board of Directors, including a
majority of the Independent Directors, approved the continuation of the
Investment Advisory and Management Agreement between the Fund and the Manager
for a one-year period.
There were five meetings of the Board of Directors held during the
fiscal year ended December 31, 2001. For the fiscal year ended December 31,
2001, each current Director attended at least seventy-five percent of the
aggregate number of meetings of the Board and of any committee on which he
served except for Barton M. Biggs.
Each of the nominees for Director has consented to be named in this
Proxy Statement and to serve as a director of the Fund if elected. 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, Proxy Cards will be voted for such persons as the Board of
Directors may recommend.
2
Certain information regarding the Directors of the Fund is set forth
below:
Aggregate
Dollar Range
of Equity
Securities Number
in All Funds of
Dollar Overseen or Share Portfolio
Range of to be Equivalents in Fund
Equity Overseen in Owned Under Complex
Position Principal Occupations Securities Family of Deferred Overseen
Name, Address and Date of with the During Past Five Years in the Investment Fee by
Birth Fund and Other Directorships Fund** Companies** Arrangements+ Director
- ---------------------------- ------------ ------------------------ ------------ ------------- ------------- ---------
Interested Directors
- ---------------------------- Class III Chairman, Director and $1-10,000 Over $100,000 -- 79
Barton M. Biggs* Director Managing Director of
1221 Avenue of the Americas and Morgan Stanley
New York, New York 10020 Chairman Investment Management
11/26/32 of the and Chairman and
Board Director of Morgan
since 1994 Stanley Investment
Management Limited;
Managing Director of
Morgan Stanley & Co.
Incorporated; Member of
the Yale Development
Board; Director or
Trustee and Chairman of
the Board of various
U.S. registered
investment companies
managed by Morgan
Stanley Investment
Management.
Ronald E. Robison* Class I Chief Global Operations None None -- 79
1221 Avenue of the Americas Director Officer and Managing
New York, New York 10020 since 2001 Director of Morgan
1/13/39 Stanley Investment
Management; Managing
Director of
Morgan Stanley & Co.
Incorporated;
President and Chief
Executive Officer
of Morgan Stanley Trust;
Director or
Trustee and President
of various U.S.
registered investment
companies
managed by Morgan Stanley
Investment
Management; Formerly,
Managing
Director and Chief
Operating Officer
of TCW Investment
Management Company
and Managing Director
of Trust Company
of the West.
Independent Directors
- ----------------------
3
Aggregate
Dollar Range
of Equity
Securities Number
in All Funds of
Dollar Overseen or Share Portfolio
Range of to be Equivalents in Fund
Equity Overseen in Owned Under Complex
Position Principal Occupations Securities Family of Deferred Overseen
Name, Address and Date of with the During Past Five Years in the Investment Fee by
Birth Fund and Other Directorships Fund** Companies** Arrangements+ Director
- ---------------------------- ------------ ------------------------ ------------ ------------- ------------- ---------
Class II Chairman and Director $1-10,000 Over $100,000 -- 78
John D. Barrett II Director of Barrett Associates,
Barrett Associates, Inc. since 2000 Inc. (investment
565 Fifth Avenue counseling); Director
New York, New York 10017 of the Ashforth Company
8/21/35 (real estate);
Chairman, and formerly
Director, of
the Barrett Growth
Fund; Limited
Partner, Barrett
Growth Partners, LP;
Limited Partner, Long
Meadow Holdings,
LP; Director or
Trustee of various
U.S. registered
investment companies
managed by Morgan
Stanley Investment
Management.
Thomas P. Gerrity Class III Professor of -- $10,001- -- 78
219 Grays Lane Director Management, and 50,000
Haverford, PA 19041 since 2001 formerly Dean, of
7/13/41 Wharton School of
Business, University of
Pennsylvania; Director
of Sunoco (oil
refining), Fannie Mae
(mortgage finance),
Reliance Group Holdings
(insurance), CVS
Corporation (retail
pharmacy), Internet
Capital Group and
Knight-Ridder, Inc.
(newspapers); Formerly,
Director of IKON Office
Solutions, Inc. (office
equipment), Fiserv
(financial services),
Investor Force
Holdings, Inc.
(institutional
investment information
services), Digital
Equipment Corporation
(computer equipment),
ICG Commerce, Inc.
(internet commerce),
and Union Carbide
Corporation
(chemicals); Director
or Trustee of various
U.S. registered
investment companies
managed by Morgan
Stanley Investment
Management.
4
Aggregate
Dollar Range
of Equity
Securities Number
in All Funds of
Dollar Overseen or Share Portfolio
Range of to be Equivalents in Fund
Equity Overseen in Owned Under Complex
Position Principal Occupations Securities Family of Deferred Overseen
Name, Address and Date of with the During Past Five Years in the Investment Fee by
Birth Fund and Other Directorships Fund** Companies** Arrangements+ Director
- ---------------------------- ------------ ------------------------ ------------ ------------- ------------- ---------
Class III Of Counsel, Shipman & None Over $100,000 -- 79
Gerard E. Jones Director Goodwin LLP (law firm);
Shipman & Goodwin LLP since 2000 Director of Tractor
43 Arch Street Supply Company, Tiffany
Greenwich, Connecticut Foundation, Fairfield
06830 County Foundation;
1/23/37 Director or Trustee of
various U.S. registered
investment companies
managed by Morgan
Stanley Investment
Management.
Joseph J. Kearns Class I Investment consultant; None $10,001- -- 78
PMB 754 Director Director of Electro 50,000
23852 Pacific Coast Highway since 2001 Rent Corporation
Malibu, California 90625 (equipment leasing) and
8/2/42 The Ford Family
Foundation; Director or
Trustee of various U.S.
registered investment
companies managed by
Morgan Stanley
Investment Management;
Formerly, Chief
Financial Officer of
the J. Paul Getty Trust.
Vincent R. McLean Class II Director of Legal and None $1-10,000 -- 78
702 Shackamaxon Dr. Director General America, Inc.
Westfield, NJ 07090 since 2001 (insurance), Banner
6/1/31 Life Insurance Co. and
William Penn Life
Insurance Company of
New York; Director
or Trustee of
various U.S. registered
investment
companies managed
by Morgan Stanley
Investment Management;
Formerly,
Executive Vice
President, Chief
Financial Officer,
Director and Member
of the Executive
Committee of Sperry
Corporation (now
part of UNISYS
Corporation) (computers).
5
Aggregate
Dollar Range
of Equity
Securities Number
in All Funds of
Dollar Overseen or Share Portfolio
Range of to be Equivalents in Fund
Equity Overseen in Owned Under Complex
Position Principal Occupations Securities Family of Deferred Overseen
Name, Address and Date of with the During Past Five Years in the Investment Fee by
Birth Fund and Other Directorships Fund** Companies** Arrangements+ Director
- ---------------------------- ------------ ------------------------ ------------ ------------- ------------- ---------
C. Oscar Morong, Jr. Class II Managing Director of None None -- 78
1385 Outlook Drive West Director Morong Capital
Mountianside, NJ 07092 since 2001 Management; Trustee and
4/22/35 Chairman of the mutual
funds in the
Smith Barney CitiFunds
fund complex;
Director or Trustee
of various U.S.
registered investment
companies
managed by Morgan
Stanley Investment
Management; Formerly,
Senior Vice
President and Investment
Manager for
CREF, TIAA-CREF
Investment Management,
Inc.; Director of the
Indonesia Fund,
the Landmark Funds
and Ministers and
Missionaries Benefit
Board of American
Baptist Churches.
William G. Morton, Jr. Class III Chairman Emeritus and $10,001- $ 50,001- -- 78
100 Franklin Street Director former Chief Executive 50,000 100,000
Boston, Massachusetts 02110 since 1995 Officer of Boston Stock
3/13/37 Exchange; Director of
RadioShack Corporation
(electronics);
Director or Trustee
of various U.S.
registered investment
companies managed by
Morgan Stanley Investment
Management.
Michael Nugent Class I General Partner of None $10,001- -- 207
c/o Triumph Capital, L.P. Director Triumph Capital, L.P., 50,000
237 Park Avenue since 2001 a private investment
New York, NY 10017 partnership; Chairman
5/25/36 of the Insurance
Committee and Director
or Trustee of various
U.S. registered
investment companies
managed by Morgan
Stanley Investment
Advisors Inc.; Director
of various business
organizations; Director
or Trustee of various
U.S. registered
investment companies
managed by Morgan
Stanley Investment
Management; Formerly,
Vice President of
Bankers Trust Company
and BT Capital
Corporation.
6
Aggregate
Dollar Range
of Equity
Securities Number
in All Funds of
Dollar Overseen or Share Portfolio
Range of to be Equivalents in Fund
Equity Overseen in Owned Under Complex
Position Principal Occupations Securities Family of Deferred Overseen
Name, Address and Date of with the During Past Five Years in the Investment Fee by
Birth Fund and Other Directorships Fund** Companies** Arrangements+ Director
- ---------------------------- ------------ ------------------------ ------------ ------------- ------------- ---------
Fergus Reid Class I Chairman and Chief $1-$10,000 Over $100,000 -- 79
85 Charles Colman Boulevard Director Executive Officer of
Pawling, New York 12564 since 2000 Lumelite Plastics
8/12/32 Corporation; Trustee
and Director of
approximately 30
investment companies in
the JPMorgan Funds
complex managed by J.P.
Morgan Investment
Management Inc.;
Director or Trustee of
various U.S. registered
investment companies
managed by Morgan
Stanley Investment
Management.
- ---------------
* "Interested person" of the Fund within the meaning of the 1940 Act. Mr.
Biggs is chairman, director and managing director of the Manager and Mr.
Robison is an officer of the Manager.
** This information has been furnished by each nominee and Director. The
dollar value of the shares is based upon the market price as of April __,
2002.
+ Indicates share equivalents owned by the Directors and held in accounts
by the Fund on behalf of the Directors in connection with the deferred
fee arrangements described below as of April __, 2002.
Certain information regarding the officers of the Fund is set forth
below:
Position with
Name, Address and Date of Birth the Fund Principal Occupations During Past Five Years
- ------------------------------- -------------- -----------------------------------------------------
Ronald E. Robison* President Chief Global Operations Officer and Managing Director
1221 Avenue of the Americas since 2001 of Morgan Stanley Investment Management; Managing
New York, New York 10020 Director of Morgan Stanley & Co. Incorporated;
1/13/39 President and Chief Executive Officer of Morgan Stanley
Trust; Director or Trustee and President of various
U.S. registered investment companies managed by Morgan
Stanley Investment Management; Previously, Managing
Director and Chief Operating Officer of TCW Investment
Management Company and Managing Director of Trust
Company of the West.
Stefanie V. Chang* Vice Executive Director of Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas President and Morgan Stanley Investment Management; Officer of
New York, New York 10020 since 1997 various U.S. registered investment companies managed by
11/30/66 Morgan Stanley Investment Management; Previously
practiced law with the New York law firm of Rogers &
Wells.
Lorraine Truten* Vice Executive Director of Morgan Stanley Investment
1221 Avenue of the Americas President Management; Officer of various U.S. registered
New York, New York 10020 since 2001 investment companies managed by Morgan Stanley
5/11/61 Investment Management.
Mary E. Mullin* Secretary Vice President of Morgan Stanley & Co. Incorporated and
1221 Avenue of the Americas since 1999 Morgan Stanley Investment Management; Officer of
New York, New York 10020 various U.S. registered investment companies managed by
3/22/67 Morgan Stanley Investment Management; Previously
practiced law with the New York law firms of McDermott,
Will & Emery and Skadden, Arps, Slate, Meagher & Flom
LLP.
7
Position with
Name, Address and Date of Birth the Fund Principal Occupations During Past Five Years
- ------------------------------- -------------- -----------------------------------------------------
James W. Garrett* Treasurer Vice President of Morgan Stanley & Co. Incorporated and
1221 Avenue of the Americas since 2002 Morgan Stanley Investment Management; Officer of
New York, NY 10020 various U.S. registered investment companies managed by
12/29/68 Morgan Stanley Investment Management; Previously with
Price Waterhouse LLP.
Belinda Brady Assistant Senior Manager, Fund Administration, J.P. Morgan
73 Tremont Street Treasurer Investor Services Co.; Officer of various U.S.
Boston, Massachusetts 02108 since 2002 registered investment companies managed by Morgan
1/23/68 Stanley Investment Management; Previously with Price
Waterhouse LLP.
- ---------------
* "Interested person" of the Fund within the meaning of the 1940 Act. Mr.
Robison and Mr. Garrett and Ms. Chang, Ms. Truten and Ms. Mullin are
officers of the Manager.
Based on information furnished by each Independent Director as of April
__, 2002, neither any Independent Director nor any immediate family member of
any Independent Director owned any securities of the Manager or its affiliates
as of such date.
Effective as of October 11, 2001, the Fund Complex (as defined below)
pays each of the Directors who is not an "interested person," as defined under
the 1940 Act, of any fund within the Fund Complex an annual retainer fee of
$75,000, for service on all Boards of Directors of the Fund Complex and pays the
following additional amounts to these Directors for performing certain services
for all of the funds in the Fund Group: $5,000 annually for performing the
duties of Chairman of the Audit Committee, $5,000 annually for performing the
duties of Chairman of the Nominating and Compensation Committee, $2,500 for each
in-person Board meeting attended and $1,000 for each telephonic Board meeting
attended. The retainer fee to be paid to each Director each year is allocated
among the funds in the Fund Complex in proportion to each fund's respective
average net assets during the year.
Each of the Directors who is not an "affiliated person" of Morgan
Stanley Investment Management within the meaning of the 1940 Act may enter into
a deferred fee arrangement (the "Fee Arrangement") with the Fund, pursuant to
which such Director may defer to a later date the receipt of his Director's
fees. The deferred fees owed by the Fund are credited to a bookkeeping account
maintained by the Fund on behalf of such Director and accrue income from and
after the date of credit in an amount equal to the amount that would have been
earned had such fees (and all income earned thereon) been invested and
reinvested either (i) in shares of the Fund or (ii) at a rate equal to the
prevailing rate applicable to 90-day United States Treasury Bills at the
beginning of each calendar quarter for which this rate is in effect, whichever
method is elected by the Director.
Under the Fee Arrangement, deferred Director's fees (including the
return accrued thereon) will become payable by the Fund in cash upon such
Director's resignation from the Board of Directors of the Fund in a lump sum or
in generally equal annual installments over a period of five years (unless the
Fund has agreed to a longer or shorter payment period) beginning on the first
day of the year following the year in which such Director's resignation
occurred. In the event of a Director's death, remaining amounts payable to him
under the Fee Arrangement will thereafter be payable to his designated
beneficiary; in all other events, a Director's right to receive payments is
non-transferable. Under the Fee Arrangement, the Board of Directors of the Fund,
in its sole discretion, has reserved the right, at the request of a Director or
otherwise, to accelerate or extend the payment of amounts in the deferred fee
account at any time after the termination of such Director's service as a
director. In addition, in the event of liquidation, dissolution or winding up of
the Fund or the distribution of all or substantially all of the Fund's assets
and property to its stockholders (other than in connection with a reorganization
or merger into another fund advised by Morgan Stanley Investment Management),
all unpaid amounts in the deferred fee account maintained by the Fund will be
paid in a lump sum to the Directors participating in the Fee Arrangement on the
effective date thereof.
Set forth below is a table showing the aggregate compensation paid by
the Fund to each of its Directors, as well as the total compensation paid to
each Director of the Fund by the Fund and by other U.S. registered investment
companies advised by Morgan Stanley Investment Management or its affiliates
(collectively, the "Fund Complex")
8
for their services as Directors of such investment companies for the fiscal year
ended December 31, 2001. In all cases, there were no pension or retirement
benefits accrued as part of the Fund's expenses.
Total
Compensation
From Fund and
Aggregate Fund Complex
Compensation Paid to
Name of Directors From Fund(2)(3) Directors(2)(4)
------------------------- --------------- ---------------
Barton M. Biggs(1) $ 0 $ 0
Ronald E. Robison(1) 0 0
Thomas P. Gerrity 233 69,712
John D. Barrett II 2,095 78,786
Gerard E. Jones 2,092 78,786
Joseph J. Kearns 245 70,835
Michael Nugent 233 228,362
William G. Morton, Jr. 2,095 78,786
Vincent R. McLean 233 69,712
Fergus Reid 2,105 81,115
C. Oscar Morong, Jr. 233 69,712
---------------
(1) "Interested person" of the Fund within the meaning of the 1940 Act.
(2) The amounts reflected in this table include amounts payable by the
Fund Complex for services rendered during the fiscal year ended
December 31, 2001, regardless of whether such amounts were actually
received by the Directors during such fiscal year.
(3) Of the amounts shown in this column, Messrs. Gerrity, Kearns, Morong
and McLean deferred all of their aggregate compensation pursuant to
the Fee Arrangement described above. Payments under the Fee
Arrangement to a Director will be based on the number of share
equivalents a Director holds. For the number of share equivalents held
by each Director, please refer to the table on pgs. [3-6] of this
Proxy Statement.
(4) Of the amounts shown in this column, Messrs. Gerrity, Morong and
McLean deferred all of their total compensation pursuant to the Fee
Arrangement, and Messrs. Reid and Kearns deferred $75,098 and $66,035,
respectively, of their total compensation pursuant to the Fee
Arrangement.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Fund's officers and directors, and persons who own
more than ten percent of a registered class of the Fund's equity securities, to
file reports of ownership and changes in ownership with the Commission and the
NYSE. The Manager assumes responsibility for filing such reports for the Fund's
officers and directors and believes that all required reports under Section
16(a) have been filed on a timely basis for the Fund's officers and directors.
The election of Messrs. Robison, Nugent, Kearns and Reid requires the
affirmative vote of a majority of the votes cast at a meeting at which a quorum
is present. Under the Fund's By-Laws, the presence in person or by proxy of
stockholders entitled to cast a majority of the votes entitled to be cast
thereat will constitute a quorum. For this purpose, abstentions and broker
non-votes will be counted in determining whether a quorum is present at the
Meeting, but will not be counted as votes cast at the Meeting.
The Board of Directors of the Fund recommends that you vote "FOR" the
election of the nominees as Directors.
9
STOCKHOLDER PROPOSAL
(Proposal No. 2)
A stockholder of the Fund, Advantage Partners, L.P. (the "Proponent")
has submitted the following proposal set forth below on pages [12-13] for
inclusion in this Joint Proxy Statement for consideration by stockholders of the
Fund. The Proponent claims beneficial ownership of 79,973 shares of common stock
of the Fund. The Fund will provide the name and address of the Proponent to any
person who so requests such information by written or oral request to the Fund,
c/o Morgan Stanley Investment Management Inc., 1221 Avenue of the Americas, New
York, New York 10020 or by calling (212) 762-8406.
The Proponent's proposal calls for the stockholders of the Fund to
recommend that the Board of Directors convert the Fund to an open-end Fund. Your
Board of Directors Urges You to Vote AGAINST the Stockholder's Proposal, for the
Reasons Discussed Below.
The Board of Directors has consistently considered alternatives for
reducing the Fund's discount, and has taken numerous actions towards that end
over the years. In an attempt to address the discount and enhance stockholder
value, on July 2, 1998, the Fund commenced an open market repurchase program
(the "Program") of outstanding shares of the Fund's common stock. Since the
inception of the Program, _________ shares, representing ____% of the Fund's
outstanding shares when the Program commenced, have been repurchased through
March 31, 2002. In a further attempt to address the discount and enhance
stockholder value, the Fund conducted a tender offer during the first quarter of
2001 for 25% of the Fund's outstanding shares at 95% of net asset value. In
addition, as of the date of this Proxy Statement, the Fund is currently
conducting an additional tender offer for 15% of its outstanding shares at 95%
of net asset value. It is anticipated that upon the conclusion of the second
tender offer, a total of ______ shares, representing ___% of the Fund's
outstanding shares as of the date the first tender offer commenced, will have
been accepted for payment pursuant to the Fund's tender offers. Accordingly,
upon the conclusion of the second tender offer, it is expected that the Fund
will have purchased a total of _______ shares pursuant to the Program and the
tender offers, representing __% of the Fund's outstanding shares as of the
commencement of the Program. The Board of Directors continues to consider all
available options for reducing the Fund's discount.
The Board of Directors certainly understands, as described in the
Description of Proposal 2 on page __, that if the Fund were open-ended certain
stockholders would benefit as a result of the ability of stockholders to redeem
their shares at net asset value less the applicable redemption fee, if any, and
the fact that the Fund's shares would not trade at a discount or a premium.
Nevertheless, your Board of Directors does not believe that open-ending the Fund
would benefit stockholders generally, particularly longer-term stockholders, and
is strongly opposed to Proposal Two for the following reasons:
Performance Impairment. As a closed-end fund, the Fund does not have to
have cash available to meet redemption requests on a daily basis and therefore,
its assets can be more fully invested. Moreover, the Fund is never forced to
sell securities at an inopportune time to meet redemption requests. Both
features would change if the Fund were to convert to an open-end fund. The Fund
would thereafter be required to alter its investments so as to maintain cash
reserves and portfolio liquidity to meet redemptions, and might be forced to
sell portfolio securities at inopportune times to obtain cash to meet redemption
requests. Both changes would be likely to have an adverse effect on the Fund's
performance. In addition, as the Investment Manager has advised the Board, the
Investment Manager would be constrained in its ability to add value through
appropriate diversification, sector allocation and investment in medium and
smaller capitalization companies as well as less liquid companies in a manner
consistent with the Fund's past practice or investor expectations. The
closed-end structure of the Fund allows it to invest in securities which the
Investment Manager deems appropriate to hold over the long term, with the
potential for higher returns than investments which are meant to be held for
short time periods. Open-ending the Fund may render the Fund unable to make such
long-term investments, which may adversely affect the Fund's performance.
Accordingly, if the Fund is open-ended, it would be less likely that the Fund
could continue its consistently strong relative performance of the past several
years in comparison with its benchmark market index, which is comprised of the
Morgan Stanley Capital International ("MSCI") Japan Net and MSCI All-Country
Asia-Pacific Free ex-Japan indices, with each index weighted equally (assuming
dividends to be gross of withholding tax and net of any domestic tax credits).
For the year ended December 31, 2001, the Fund outperformed its benchmark with
the Fund
10
having a total return (based on net asset value per share) of -14.60%, compared
to -16.53% for its benchmark. For the five years ended December 31, 2001, the
Fund outperformed its benchmark with the Fund having an average annual return
(based on net asset value per share) of -4.40%, compared to an average of -8.25%
for the Fund's benchmark. In addition, a number of studies have indicated that
open-end funds tend to perform less well than closed-end funds with comparable
investment objectives and policies.
Based on the experience of other closed-end funds that have open-ended
in recent years, open-ending would most likely result in the redemption within a
relatively short period thereafter of a large percentage of the Fund's
outstanding shares and the resulting need to liquidate a corresponding portion
of the Fund's portfolio. Because of the limited liquidity of the Asian-Pacific
equity markets, particularly for medium and smaller capitalization companies in
which the Fund invests, this could be accomplished only at a loss in the value
of the Fund's shares held by remaining stockholders as the result of the market
impact of the necessary portfolio liquidations. Moreover, the increased
redemption requests that the Fund would be required to meet if it were
open-ended would incur additional transaction costs, increasing the Fund's
expenses.
Continuing Viability. The redemption of a large percentage of the
Fund's outstanding shares upon its open-ending could reduce the Fund's assets to
the point that the Fund would be too small to be economically viable, in which
case the Investment Manager might recommend to the Board of Directors that the
Fund be liquidated. Moreover, while the Fund would attempt to sell new shares
with a view to offset reduction in the Fund's assets resulting from redemptions
over time, at present the Board of Directors is not confident that the Fund will
be successful in selling a sufficient number of shares to offset redemptions.
Therefore, over time it is likely that ongoing redemption of Fund shares will
reduce the size of the Fund, possibly to the point where it is no longer viable.
The Board of Directors has a significant concern that, if the Fund
becomes no longer viable, it will be necessary to liquidate the Fund. The
remaining stockholders in the Fund will have the burden of bearing the costs of
liquidation, including possibly tax liabilities, that stockholders who redeem
shortly after the Fund open-ends will not bear. For these reasons, the Board of
Directors may conclude that liquidation of the Fund would be fairer to the
Fund's Stockholders than open-ending.
Higher Expenses. Apart from its deleterious short-term and long-term
effects upon the Fund's ability to achieve its investment objective, open-ending
would, in the judgment of the Board of Directors, injure the Fund and its
stockholders in other ways. Importantly, as indicated below, the Fund's
per-share expense ratio would be likely to substantially increase, for several
reasons. First, those categories of Fund expenses that are more or less fixed
notwithstanding fluctuations in the Fund's asset size would be spread over a
substantially smaller asset base, proportionally increasing their per-share
effect. These include custody, audit and legal expenses. In order to protect
against this possibility, the Fund would be required to engage in a continuous
public offering of its shares intended at a minimum to offset redemptions. This,
in turn, would subject the Fund to further expenses and a corresponding
reduction in the Fund's return to stockholders. For example, if the Fund were to
be converted to an open-end fund, in order to market the Fund's shares
effectively, the Directors would likely recommend that the stockholders approve
a distribution plan for the Fund under Rule 12b-1 under the 1940 Act.
Additional legal, accounting and registration costs would be incurred
by the Fund to convert to an open-end fund. The Investment Manager estimates
that these conversion costs would be approximately $_______. Further, if the
Fund were to convert to an open-end fund, it would engage in a continuous public
offering of its shares with the objection of selling new shares to help offset
the reduction in the Fund's assets that would result from redemptions. Engaging
in a continuous public offering would require the Fund to maintain, on an annual
basis, a current registration under federal securities laws, which involves
additional costs. The Fund would also incur printing costs and other expenses in
connection with maintaining a current prospectus. If the continuous offering
were not successful in raising substantial new assets for the Fund, and
redemptions were significantly more than new sales, the Fund's expense ratio
would likely increase from its current level, since, as set forth above, fixed
costs would be paid out of a smaller asset base. Finally, if the Fund were
open-ended, the increased transaction costs caused by increased redemptions
would cause a persistent rise in the Fund's expenses.
Conclusion. For all the foregoing reasons, the Board of Directors
strongly believes that, notwithstanding the benefit which those stockholders who
would wish to redeem their shares over the short term would derive from
open-ending the Fund, on balance the best interests of the Fund and its
stockholders would be substantially
11
disadvantaged by such action. The Board of Directors does not believe that
open-ending the Fund would be in the best interests of its stockholders.
Accordingly, your Board of Directors unanimously agrees that this
proposal is not in the best interests of all stockholders of the Fund and would
substantially impair the ability of the Fund to operate effectively. Your Board
of Directors recommends that the stockholders vote AGAINST the stockholder's
proposal, Proposal No. 2.
Proposal No. 2, along with a supporting statement provided by the
Proponent, is set forth below:
Proposal
RESOLVED, that shareholders of Morgan Stanley Asia-Pacific Fund (the "Fund"),
recommend the Board of Directors expedite the process to ensure Fund shares can
trade at net asset value (NAV) daily by converting to an open-end investment
company or merging with an existing open-end fund.
Supporting Statement
It has been bad enough that shareholders have suffered fairly significant losses
since the Fund's inception in 1994. It adds insult to injury that the
persistent, wide discount to NAV over the years has caused shareholder losses to
vastly exceed NAV losses over time. The discount exceeded 30% during June 2000,
and has averaged greater than a 20% discount over the past five years. Clearly
modest actions taken by our Board of Directors to date have not been successful
in remedying the chronic discount, nor in reversing the losses to the aggregate
shareholder base. Advantage Partners, L.P., wouldn't waste your time if the
facts in favor of open-ending this Fund weren't overwhelming.
With the Fund still languishing at a discount to NAV in the range of 20%, the
economic cost of the discount to shareholders approximates 580 million. It is
certainly no consolation prize that the value of the discount has narrowed from
its widest levels while the stock price has dropped from 11 to 7 (even below 6
briefly) in the past two years! Fund management, however, keeps collecting its
fees no matter how poorly shareholders perform - and that is a major impediment
to fixing the problem...
The benefits of open-ending far outweigh the detrimental cost caused by the
Fund's gaping discount in the closed-end structure: a 25.0% benefit vs. less
than a 0.2% on-going annual cost. One-time conversion costs (approximately 0.15%
of NAV), and on-going incremental expenses (likely 0.1%-0.2% annually) are
inconsequential in relation to the price improvement that shareholders would
receive if the share price converges with NAV. The Fund may claim this is a one
time benefit if they determine to oppose this sensible proposal, but reality is
that NAV is the trading price every day from that point forward, allowing
shareholders to obtain full value for their holdings, and the liquidity to do
so, at the time of their choosing. That is anything but a one-time benefit, it
is an every day benefit. It has been an unreachable benefit so far for
shareholders. Vote FOR this proposal to express your view that this should
change!
Perpetuating the closed-end structure when cumulative shareholder returns are
consistently impaired by the discount makes little sense. A closed-end fund must
deliver NAV returns that compensate for any drag from the discount over the long
run, or shareholders have not benefited from the structure - instead they have
been captive to the structure. The Fund's dismal performance since inception
indicates shareholders have been prisoners for too long. If the Fund open-ends,
shareholders would be much better off economically than by perpetuating a
chronic discount any longer. Vote FOR this proposal to send that message to the
Board.
Voting Information
[As the Proponent's proposal is presented as a recommendation to the Board of
Directors of the Fund, there is no law or regulation that specifies the vote
required to pass the proposal. Rather, in considering whether or not to take any
action to open-end or merge the Fund, the Board of Directors will give the
recommendation set forth in the proposal such weight as it believes appropriate
based on the voting of stockholders for the proposal. In general, it is unlikely
that the Board of Directors will accord the proposal any significant weight
unless it is approved by the holders of a substantial majority of the Fund's
outstanding shares.
12
Under the rules of the New York Stock Exchange, while brokers are permitted to
submit on behalf of their customers proxies with respect to the election of the
Fund's directors whether or not the brokers receive instructions from their
customers regarding how to vote, brokers are not permitted to submit proxies
with respect to the Proponent's proposal unless the brokers have received
instructions from the customers holding shares of the Fund as to how vote on
that proposal. As a result, while there may be a quorum for the meeting as a
result of votes submitted by brokers on behalf of their customers for the
election of directors, it is likely, based on past experience, that the holders
of less than a majority of the outstanding shares of the Fund will vote on the
Proponent's proposal because many shareholders will have failed to instruct
their brokers on how to vote on that proposal.]
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Fund's management, the following persons owned
beneficially more than 5% of the Fund's outstanding shares at April [__], 2002:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ------------------------------------------ --------------------------------- ---------------
Yale University 3,992,123 shares with sole voting 9.3%
Investments Office power and sole dispositive
230 Prospect Street power(1)
New Haven, CT 06511-2107
Wachovia Corporation 4,369,626 shares with sole voting 10.14%
One Wachovia Center power and sole dispositive
Charlotte, North Carolina 28288-0137 power(2)
- ---------------
(1) Based on a Schedule 13G/A filed with the Commission on January 3, 2002.
(2) Based on a Schedule 13G filed with the Commission on February 13, 2002.
AUDIT COMMITTEE REPORT AND AUDITOR FEES
Report of the Audit Committee
At a meeting held on February 14, 2002, the Board of Directors of the
Fund, including a majority of the Directors who are not "interested persons," as
defined under the 1940 Act, of the Fund acting on the recommendation of the
Audit Committee of the Fund, selected Ernst & Young LLP to act as independent
accountants for the Fund for the fiscal year ending December 31, 2002. The Audit
Committee has received the written disclosures and the letter from Ernst & Young
LLP required by Independence Standards Board No. 1 and has discussed with Ernst
& Young LLP their independence with respect to the Fund. The Fund knows of no
direct financial or material indirect financial interest of Ernst & Young LLP in
the Fund.
The Fund's financial statements for the fiscal year ended December 31,
2001 were audited by Ernst & Young LLP. The Audit Committee has reviewed and
discussed the audited financial statements of the Fund with management of the
Fund. The Audit Committee has further discussed with Ernst & Young LLP the
matters required to be discussed by Statement on Auditing Standards No. 61.
Based on the foregoing review and discussions, the Audit Committee recommended
to the Board of Directors that the audited financial statements for the fiscal
year ended December 31, 2001 be included in the Fund's most recent annual
report.
Joseph J. Kearns, Chairman of the Audit Committee
Gerard E. Jones, Member of the Audit Committee
John D. Barrett II, Member of the Audit Committee
C. Oscar Morong, Jr., Member of the Audit Committee
Vincent R. McLean, Member of the Audit Committee
Audit Fees
The aggregate fees paid to Ernst & Young LLP in connection with the
annual audit of the Fund's financial statements for the fiscal year ended
December 31, 2001 was $55,000.
Financial Information Systems Design and Implementation Fees
There were no professional services rendered by Ernst & Young LLP to
the Fund, the Manager or affiliated entities that provide services to the Fund
for the fiscal year ended December 31, 2001 relating to financial design and
implementation.
14
All Other Fees
The aggregate fees billed for professional services rendered by Ernst &
Young LLP for all other services provided to the Fund, the Manager and to
affiliated entities that provide services to the Fund for the fiscal year ended
December 31, 2001 amounted to $3.8 million, which figure includes (i)
audit-related fees of $100,000 for the issuance of a report under Statement on
Accounting Standards No. 70 titled "Reports on the Processing of Transactions by
Service Organizations" and (ii) all other fees of $3.7 million related to
services such as performance attestation, operational control reviews, business
interruption insurance recovery assistance, process improvement and
reengineering, tax consulting and educational seminars. The Audit Committee also
reviewed information regarding other services provided to affiliates of the
Manager by Ernst & Young LLP and the fees received by Ernst & Young LLP for
those services. In addition, all other fees for services provided to the Fund
were $2,600, relating to the review of the Fund's tax returns. The Audit
Committee has considered whether the provision of non-audit services and the
provision of services to affiliates of the Manager is compatible with
maintaining the independence of Ernst & Young LLP.
Certain Other Matters Concerning the Fund's Independent Auditors
On July 5, 2000, PricewaterhouseCoopers LLP resigned as the independent
accountants for the Fund. At a meeting held on June 15, 2000, the Board of
Directors of the Fund, including a majority of the Directors who are not
"interested persons," as defined under the 1940 Act, of the Fund acting on the
recommendation of the Audit Committee of the Fund, appointed Ernst & Young LLP
as independent accountants for the Fund, effective with the resignation of
PricewaterhouseCoopers LLP. The appointment of Ernst & Young as independent
accountants for the Fund was ratified by the stockholders of the Fund on August
1, 2000 at the Fund's reconvened annual meeting of stockholders. In connection
with its audits for 1998 and 1999 and through July 5, 2000, the date of
PricewaterhouseCoopers LLP's resignation as the independent accountant for the
Fund, there were no disagreements with PricewaterhouseCoopers LLP on any matters
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused it to make
reference thereto in its report on the financial statements of the Fund for such
years. Each report of PricewaterhouseCoopers LLP on the financial statements of
the Fund for such years contained no adverse opinion or disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope or accounting
principles.
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 arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed Proxy Card will vote thereon according to their best judgment in
the interests of the Fund.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
A stockholder's proposal intended to be presented at the Fund's Annual
Meeting of Stockholders in 2003, if one is held, must be received by the Fund on
or before December 19, 2002, in order to be included in the Fund's proxy
statement and proxy card relating to that meeting. Any stockholder who desires
to bring a proposal at the Fund's Annual Meeting of Stockholders in 2003,
without including such proposal in the Fund's proxy statement, must deliver
written notice thereof to the Secretary of the Fund not before March 6, 2003 and
not later than April 5, 2003, in the manner and form required by the Fund's
Amended and Restated By-Laws.
MARY E. MULLIN
Secretary
Dated: April [__], 2002
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 card and return it in the enclosed envelope. No postage is required if
mailed in the United States.
15
PROXY CARD
MORGAN STANLEY ASIA-PACIFIC FUND, INC.
C/O MORGAN STANLEY INVESTMENT MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints RONALD E. ROBISON,
STEFANIE V. CHANG and MARY E. MULLIN, and each of them, as proxies for the
undersigned, with full power of substitution and resubstitution, and hereby
authorizes said proxies, and each of them, to represent and vote, as designated
on the reverse side, all stock of the above Fund held of record by the
undersigned on April 8, 2002 at the Annual Meeting of Stockholders to be held on
June 6, 2002, and at any adjournment thereof. The undersigned hereby revokes any
and all proxies with respect to such stock heretofore given by the undersigned.
The undersigned acknowledges receipt of the Proxy Statement dated May [__],
2002.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE SIDE
[X] Please mark your votes as in this sample.
1. Election of the following nominees as Directors:
FOR WITHHELD
[ ] [ ] Class I Nominee:
Ronald E. Robison, Joseph J. Kearns, Michael Nugent
` and Fergus Reid
--------------------------------------
For all nominees except as noted above
2. Approval of a recommendation that the Board of Directors convert the
Fund to an open-end fund or merge the Fund with an
open-end fund, as set forth in Proposal No. 2.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This Proxy Card when properly executed will be voted in the manner
directed herein by the undersigned stockholder, and in the discretion of such
proxies, upon any and all other business as may properly come before the Meeting
or any adjournment thereof. If no direction is made, this Proxy Card will be
voted for the election of the nominees as Directors for the Fund and will be
voted against Proposal No. 2 as set forth above.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT
TENANTS, EACH JOINT TENANT MUST SIGN.
SIGNATURES(S) ___________________________________
DATE _______________, 2002
When signing as attorney, executor, administrator, trustee, guardian or
custodian, please sign full title as such. If a corporation, please sign full
corporate name by authorized officer and indicate the signer's office.
If a partnership, please sign in partnership name. PLEASE MARK, SIGN,
DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]