THE EMERGING MARKETS INCOME FUND II INC
7 WORLD TRADE CENTER NEW YORK, NEW YORK 10048
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 13, 2001
To the Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of The Emerging Markets
Income Fund II Inc (the "Fund") will be held at 7 World Trade Center, 37th
Floor, Conference Room A, New York, New York, on Thursday, September 13, 2001,
at 3:30 p.m., New York time, for the purposes of considering and voting upon:
1. The election of directors (Proposal 1);
2. Any other business that may properly come before the meeting.
The close of business on July 24, 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors,
Christina T. Sydor
Secretary
TO AVOID UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE AND SIGN IT AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW LARGE OR HOW
SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
REGISTRATION VALID SIGNATURE
------------ ---------------
CORPORATE ACCOUNTS
------------------
(1) ABC Corp. .................................................. ABC Corp. (by John Doe, Treasurer)
(2) ABC Corp. .................................................. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer .......................... John Doe
(4) ABC Corp. Profit Sharing Plan .............................. John Doe, Trustee
TRUST ACCOUNTS
--------------
(1) ABC Trust .................................................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee, u/t/d 12/28/78 ....................... Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
----------------------------
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr. UGMA ......... John B. Smith
(2) John B. Smith .............................................. John B. Smith, Jr., Executor
THE EMERGING MARKETS INCOME FUND II INC
7 WORLD TRADE CENTER NEW YORK, NEW YORK 10048
---------------
PROXY STATEMENT
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of The Emerging Markets Income Fund II Inc (the "Fund") of
proxies to be used at the Annual Meeting of Stockholders of the Fund (the
"Meeting") to be held at 7 World Trade Center, 37th Floor, Conference Room A,
New York, New York, on Thursday, September 13, 2001 at 3:30 p.m., New York time
(and at any adjournment or adjournments thereof) for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. This proxy statement
and the accompanying form of proxy are first being mailed to stockholders on or
about August 13, 2001. Stockholders who execute proxies retain the right to
revoke them in person at the Meeting or by written notice received by the
Secretary of the Fund at any time before they are voted. Unrevoked proxies will
be voted in accordance with the specifications thereon and, unless specified to
the contrary, will be voted FOR the Election of Directors. The close of
business on July 24, 2001 has been fixed as the record date for the
determination of stockholders entitled to notice of and to vote at the Meeting.
Each stockholder is entitled to one vote for each full share and an appropriate
fraction of a vote for each fractional share held. On July 24, 2001, there were
23,647,760 shares of the Fund's Common Stock outstanding.
In accordance with the Fund's By-Laws, a quorum is constituted by the
presence in person or by proxy of the holders of record of a majority of the
outstanding shares of the Fund's Common Stock entitled to vote at the Meeting.
In the event that a quorum is not present at the Meeting, or in the event that
a quorum is present but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting to a date not more than 120 days after the original record date
to permit further solicitation of proxies. Any such adjournment will require
the affirmative vote of a majority of those shares represented at the Meeting
in person or by proxy. The persons named as proxies will vote those proxies
which they are entitled to vote FOR or AGAINST any such proposal in their
discretion. A stockholder vote may be taken on one or more of the proposals in
this proxy statement prior to any such adjournment if sufficient votes have
been received for approval.
PIMCO Advisors L.P. ("PIMCO Advisors"), whose principal business address
is 800 Newport Center Drive, Newport Beach, California 92660, is the Fund's
investment manager.
Salomon Brothers Asset Management Inc ("SBAM"), whose principal business
address is 7 World Trade Center, New York, New York 10048, is the Fund's
investment adviser. SBAM is an indirect wholly-owned subsidiary of Citigroup
Inc.
PROPOSAL 1: ELECTION OF DIRECTORS
In accordance with the Fund's Charter, the Fund's Board of Directors is
divided into three classes: Class I, Class II and Class III. At the Meeting,
stockholders will be asked to elect one Class III Director to hold office until
the year 2003 Annual Meeting of Stockholders and two Class I Directors to hold
office until the year 2004 Annual Meeting of Stockholders, or thereafter when
the Director's respective successor is duly elected and qualified. The terms of
office of the Class II Directors expire at the year 2002 Annual Meeting of
Stockholders, or thereafter in each case when the Directors' respective
successors are duly elected and qualified. The effect of these staggered terms
is to limit the ability of other entities or persons to acquire control of the
Fund by delaying the replacement of a majority of the Board of Directors.
The persons named in the accompanying form of proxy intend to vote at the
Meeting (unless directed not to vote) FOR the election of the nominees named
below. Each of the nominees for election is currently a member of the Fund's
Board of Directors and has previously been elected as a director by the Fund's
stockholders with the exception of Mr. Treadway. The nominees have indicated
that they will serve if elected, but if they should be unable to serve, the
proxy will be voted for any other person determined by the persons named in the
proxy in accordance with their judgment. As of April 20, 2001, Charles F.
Barber became a director emeritus of the Fund. Mr. William D. Cvengros resigned
as Director of the Fund. The Fund represents that Mr. Cvengros did not resign
due to any disagreement with management in connection with the management of
the Fund's affairs.
The following table provides information concerning the nominees for
election as directors of the Fund:
COMMON STOCK
BENEFICIALLY OWNED,
DIRECTLY OR
INDIRECTLY, ON
MAY 31, 2001
DIRECTOR -------------------
NOMINEE AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS SINCE AGE SHARES(*)
----------------------------------------------------------- -------- --- -------------------
NOMINEE TO SERVE UNTIL THE YEAR 2003 ANNUAL MEETING OF
STOCKHOLDERS
CLASS III DIRECTOR
Stephen J. Treadway**, Co-Chairman; Chairman and 2000 54 0
President of PIMCO Funds Distributors LLC ("PFD")
since May 1996. Formerly employed by Salomon
Smith Barney Inc.
NOMINEES TO SERVE UNTIL THE YEAR 2004 ANNUAL MEETING OF
STOCKHOLDERS
CLASS I DIRECTORS
Leslie H. Gelb, Member of the Audit Committee; President, 1994 64 100
The Council on Foreign Relations; formerly, Columnist,
Deputy Editorial Page Editor and Editor, Op-Ed Page, The
New York Times.
Riordan Roett, Member of Audit Committee; Professor and 1995 62 0
Director, Latin American Studies Program, Paul H. Nitze
School of Advanced International Studies, John Hopkins
University.
----------
* The holdings of no nominee represented more than 1% of the outstanding
shares of the Fund. Each nominee has sole voting and investment power with
respect to listed shares.
** "Interested person" as defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
2
The following table provides information concerning the remaining
directors of the Fund:
COMMON STOCK
BENEFICIALLY OWNED,
DIRECTLY OR
INDIRECTLY, ON
MAY 31, 2001
DIRECTOR --------------------
DIRECTORS AND PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS SINCE AGE SHARES(*)
-------------------------------------------------------------- -------- --- --------------------
DIRECTORS SERVING UNTIL THE YEAR 2002 ANNUAL MEETING OF
STOCKHOLDERS
CLASS II DIRECTORS
Heath B. McLendon**, Co-Chairman; Managing Director, 1998 68 395
Salomon Smith Barney Inc. ("SSB"), President and Director,
Smith Barney Fund Management LLC ("SBFM") and
Travelers Investment Adviser, Inc. ("TIA")
Jeswald W. Salacuse, Member of Audit Committee; Henry J. 1994 63 200
Braker Professor of Commercial Law and formerly Dean,
The Fletcher School of Law & Diplomacy, Tufts University.
----------
(*) The holdings of no nominee represented more than 1% of the outstanding
shares of the Fund. Each nominee has sole voting and investment power with
respect to the listed shares.
(**) "Interested person" as defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
Each of the nominees and directors also serve as a director of certain
other registered investment companies, as described below. Mr. McLendon also
serves as director of eleven investment companies advised by SBAM, five other
investment companies advised by both PIMCO Advisors and SBAM, forty-three
investment companies managed and/or administered by SBFM, six investment
companies advised by Travelers Investment Management Company and seven
investment companies managed by Travelers Asset Management International
Corporation. Mr. Treadway also serves as a director for five other investment
companies co-advised by PIMCO Advisors and SBAM and three other investment
companies advised by PIMCO Advisors and one of its affiliates. Messrs. Gelb and
Salacuse and Dr. Roett are directors of five other investment companies advised
by both PIMCO Advisors and SBAM. Mr. Salacuse and Dr. Roett are also directors
of four other investment companies advised by SBAM. Messrs. Salacuse and Gelb
also serve as directors of two other investment companies advised by Advantage
Advisers, Inc. Mr. Salacuse serves as a director of one other investment
company advised by CIBC Oppenheimer Advisers L.L.C. ("CIBC Advisers"). Mr. Gelb
serves as a director of one other registered investment company advised by CIBC
Advisers and TDA Capital Partners.
At May 31, 2001, directors and officers of the Fund as a group owned
beneficially less than 1% of the outstanding shares of the Fund's Common Stock.
To the knowledge of the Fund's management, no person owned of record or owned
beneficially, more than 5% of the Fund's outstanding shares of Common Stock at
that date, except that Cede & Co., a nominee for participants in Depository
Trust Company, held of record 22,224,518 shares, equal to approximately 94% of
the outstanding shares of the Fund's Common Stock.
3
The Fund's executive officers are chosen each year at the first meeting of
the Fund's Board of Directors following the Annual Meeting of Stockholders, to
hold office until the meeting of the Board following the next Annual Meeting of
Stockholders and until their successors are chosen and qualified. In addition
to Messrs. McLendon and Treadway, the current executive officers of the Fund
are:
OFFICER
NAME OFFICE AGE SINCE
---- ------ --- -------
Peter J. Wilby Executive Vice President 42 1994
Thomas K. Flanagan Executive Vice President 48 1994
James E. Craige Executive Vice President 33 1999
Newton B. Schott, Jr. Executive Vice President 58 1997
Lewis E. Daidone Executive Vice President and Treasurer 44 1998
Christina T. Sydor Secretary 50 1998
Mr. Wilby has also been a Managing Director of SBAM and SSB since January
1996. Prior to January 1996, he was a Director of SBAM and SSB. Mr. Flanagan
has also been a Managing Director of SBAM and SSB since December 1998. Prior to
December 1998, Mr. Flanagan was a Director of SBAM and SSB since July 1991. Mr.
Craige has also been a Managing Director of SBAM and SSB since December 1998.
He was a Director of SBAM and SSB since January 1998 and a Vice President of
SBAM and SSB since May 1992. Mr. Schott has also served as Senior Vice
President of PIMCO Advisors since January 1997. He also serves as the Executive
Vice President, Chief Administrative Officer, Secretary and General Counsel to
PFD and has held such positions or other senior officer positions in PFD since
May 1990. From November 1994 to December 1996, Mr. Schott served as Senior Vice
President-Legal and Secretary to PIMCO Advisors, PFD's parent company. Mr.
Daidone has also been a Managing Director of SSB since 1990. He is a Director
and Senior Vice President of SBFM and TIA, and is the Senior Vice President,
Treasurer and Chief Financial Officer of its mutual fund complex. Ms. Sydor is
also a Managing Director of SSB. She is General Counsel of SBFM and TIA, and is
also Secretary of numerous investment companies sponsored by SSB.
The Fund's Audit Committee is composed entirely of Directors who are not
"interested persons" of either the Fund, PIMCO Advisors, SBAM or their
affiliates within the meaning of the 1940 Act, and who are "independent" as
defined in the New York Stock Exchange listing standards. The principal
functions of the Audit Committee are: (i) to recommend to the Board the
appointment of the Fund's independent auditors; (ii) to review with the
independent auditors the scope and anticipated cost of their audit; (iii) to
receive and consider a report from the independent auditors concerning their
conduct of the audit, including any comments or recommendations they might want
to make in that connection. This Committee met once during the fiscal year
ended May 31, 2001. The Fund has no nominating or compensation committees. The
Fund adopted an Audit Committee Charter at a meeting held on May 23, 2000, a
copy of which is attached to this Proxy Statement as Exhibit A.
4
REPORT OF THE AUDIT COMMITTEE
Pursuant to a meeting of the Audit Committee on July 27, 2001, the Audit
Committee reports that it has (i) reviewed and discussed the Fund's audited
financial statements with management; (ii) discussed with PricewaterhouseCoopers
LLP ("PwC"), the independent auditors to the Fund, the matters (such as the
quality of the Fund's accounting principles and internal controls) required to
be discussed by Statement on Auditing Standards No. 61; and (iii) received
written confirmation from PwC that it is independent and written disclosures
regarding such independence as required by Independence Standards Board Standard
No. 1, and discussed with PwC the auditors' independence. Based on the review
and discussions referred to in items (i) through (iii) above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Fund's annual report
for the Fund's fiscal year ended May 31, 2001. The Fund's Audit Committee is
currently composed of Messrs. Gelb and Salacuse and Dr. Roett.
During the fiscal year ended May 31, 2001, the Board of Directors met four
times. Each director attended at least 75% of the aggregate number of meetings
of the Board and the committee for which he/she was eligible.
Under the federal securities laws, the Fund is required to provide to
stockholders in connection with the Meeting information regarding compensation
paid to the directors by the Fund, as well as by the various other investment
companies advised by SBAM. The following table provides information concerning
the compensation paid to each director during the fiscal year ended May 31,
2001. Certain of the directors listed below are members of the Audit Committee
of the Fund and other committees of certain other investment companies advised
by SBAM, and, accordingly, the amounts provided in the table include
compensation for service on such committees. The Fund does not provide any
pension or retirement benefits to directors. In addition, the Fund paid no
remuneration during the fiscal year ended May 31, 2001 to Messrs. McLendon and
Treadway who are "interested persons" as defined in the 1940 Act.
TOTAL COMPENSATION FROM FUND AND OTHER FUNDS
AGGREGATE COMPENSATION FROM THE FUND FOR ADVISED BY SBAM AND ITS AFFILIATES FOR
NAME OF DIRECTOR THE FISCAL YEAR ENDED MAY 31, 2001 THE CALENDAR YEAR ENDED 12/31/00
---------------- ----------------------------------------- --------------------------------------------
DIRECTORSHIPS(A)
Leslie H. Gelb ........... $8,500 $44,600(6)
Jeswald W. Salacuse ...... $8,500 $77,900(10)
Dr. Riordan Roett ........ $8,500 $82,900(10)
----------
(A) The numbers in parentheses indicate the applicable number of
investment company directorships held by that director.
Upon attainment of age 80, Fund Directors are required to change to
emeritus Status. Directors emeritus are entitled to serve in emeritus
status for a maximum of 10 years during which time they are paid 50% of the
annual retainer fee and meeting fees otherwise applicable to Fund
Directors, together with reasonable out-of-pocket expenses for each meeting
attended. During the Fund's last fiscal year, total compensation paid by
the Fund to Directors emeritus totalled $8,150.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and Section 30(h) of
the 1940 Act in combination require the Fund's directors and officers, persons
who own more than 10% of the Fund's Common Stock, PIMCO Advisors and SBAM and
their respective directors and officers to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange, Inc. The Fund believes that all relevant persons have
complied with applicable filing requirements during the fiscal period ended May
31, 2001.
5
REQUIRED VOTE
Directors are elected by a plurality of the votes cast by the holders of
shares of the Fund's Common Stock present in person or represented by proxy at
a meeting at which a quorum is present. For purposes of the election of
directors, abstentions and broker non-votes will not be considered votes cast,
and do not affect the plurality vote required for directors
THE DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT "INTERESTED PERSONS,"
UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS VOTE "FOR" THE NOMINEES FOR
DIRECTORS.
FEES PAID TO INDEPENDENT ACCOUNTANTS
AUDIT FEES. Fees for the annual audit of the Fund's financial statements
by PricewaterhouseCoopers LLP ("PwC") for the fiscal year ended May 31, 2001
were $50,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
aggregate fees billed for financial information systems design and
implementation services rendered by PwC to the Fund, SBAM, PIMCO and entities
controlled by or affiliated with SBAM and PIMCO that provide services to the
Fund for the fiscal year ended May 31, 2001 were $0. The Audit Committee of the
Fund has determined that provision of these services is compatible with
maintaining the independence of PwC.
ALL OTHERS FEES. The aggregate fees billed for all other non-audit
services, including fees for tax related services, rendered by PwC to the Fund,
SBAM, PIMCO and entities controlled by or affiliated with SBAM and PIMCO that
provide services to the Fund for the fiscal year ended May 31, 2001 were
$1,506,000. The Audit Committee of the Fund has determined that provision of
these non-audit services is compatible with maintaining the independence of
PwC.
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Fund which are intended to be
presented at the Fund's next Annual Meeting of Stockholders to be held in 2002
must be received by the Fund for inclusion in the Fund's proxy statement and
proxy relating to that meeting no later than April 9, 2002. Any stockholder who
desires to bring a proposal at the Fund's 2002 Annual Meeting of Stockholders
without including such proposal in the Fund's Proxy Statement must deliver
written notice thereof to the Secretary of the Fund (addressed to The Emerging
Markets Income Fund II Inc, 7 World Trade Center, New York, New York 10048)
during the period from June 14, 2002 to July 15, 2002.
OTHER INFORMATION
The Fund's Annual Report containing financial statements for the fiscal
year ended May 31, 2001 is available free of charge by writing to the Fund c/o
Salomon Brothers Asset Management Inc at the address listed on the front cover,
or by calling toll-free 1-888-777-0102.
EXPENSES OF PROXY SOLICITATION
The costs of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Fund. Proxies may also be
solicited personally by officers of the Fund and by regular employees of SBAM,
PIMCO Advisors or their affiliates, or other representatives of the Fund or by
telephone or telegraph,
6
in addition to the use of mails. Brokerage houses, banks and other fiduciaries
may be requested to forward proxy solicitation material to their principals to
obtain authorization for the execution of proxies, and will be reimbursed by
the Fund for such out-of-pocket expenses.
OTHER BUSINESS
The Board of Directors of the Fund does not know of any other matter which
may come before the Meeting. If any other matter properly comes before the
Meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter.
August 13, 2001
7
EXHIBIT A
AUDIT COMMITTEE CHARTER
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
Fund that may interfere with the exercise of their independence from
management and the Fund and 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.
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 Fund's accounting and financial reporting
principles and policies and audit controls and procedures;
2. in its oversight of the Fund's financial statements and the independent
audit thereof;
3. in selecting (or nominating the outside auditors to be proposed for
shareholder approval in any proxy statement), evaluating and, where
deemed appropriate, replacing the outside auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The management of the
Fund is responsible for the preparation, presentation and integrity of the
Fund's financial statements. Management and the internal auditing
department are responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The outside auditors are responsible for
planning and carrying out a proper audit in accordance with Generally
Accepted Auditing Standards. In fulfilling their responsibilities
hereunder, it is recognized that members of the Audit Committee are not
full-time employees of the Fund and are not, and do not represent
themselves to be, accountants or auditors by profession or experts in the
fields of accounting or auditing. As such, it is not the duty or
responsibility of the Audit Committee or its members to conduct "field
work" or other types of auditing or accounting reviews or procedures, 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 Fund
that it receives information from and (ii) the accuracy of the financial
and other information provided to the Audit Committee by such persons and
organizations absent actual knowledge to the contrary (which shall be
promptly reported to the Board of Directors).
The outside auditors for the Fund 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
outside auditors (or to nominate the outside auditors to be proposed for
shareholder approval in the proxy statement).
The outside auditors shall submit to the Audit Committee annually a formal
written statement delineating all relationships between the outside
auditors and the Fund ("Statement as to Independence") which, in the
auditor's professional judgment may be reasonably thought to bear on
independence, addressing at least the matters set forth in Independence
Standards Board No. 1.
III. Meetings of the Audit Committee: The Audit Committee shall meet at least
annually with the outside auditors to discuss the annual audited financial
statements and results of their audit. The Audit Committee may request any
officer or employee of the Fund or the Fund's outside counsel or outside
auditors to attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee.
A-1
IV. Duties and Powers of the Audit Committee: To carry out its purposes, the
Audit Committee shall have the following duties and powers:
1. to provide advice to the Board of Directors in selecting, evaluating or
replacing outside auditors;
2. to review the fees charged by the outside auditors for audit and
non-audit services;
3. to ensure that the outside auditors prepare and deliver annually a
Statement as to Independence (it being understood that the outside
auditors are responsible for the accuracy and completeness of this
Statement), to discuss with the outside auditors any relationships or
services disclosed in this Statement that may impact the objectivity and
independence of the Fund's outside auditors and to recommend that the
Board of Directors take appropriate action in response to this Statement
to satisfy itself of the outside auditors' independence;
4. to instruct the auditors that the outside auditors are ultimately
accountable to the Board of Directors and Audit Committee;
5. to advise management and the outside auditors that they are expected to
provide to the Audit Committee a timely analysis of significant
financial reporting issues and practices;
6. to consider any reports or communications (and management's responses
thereto) submitted to the Audit Committee by the outside auditors
required by or referred to in SAS 61 (as codified by AU Section 380), as
may be modified or supplemented, including reports and communications
related to:
o deficiencies noted in the audit in the design or operation of internal
controls;
o consideration of fraud in a financial statement audit;
o detection of illegal acts;
o the outside auditors' responsibility under generally accepted auditing
standards;
o significant accounting policies;
o management judgments and accounting estimates;
o adjustments arising from the audit;
o the responsibility of the outside auditors 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
outside auditors;
o difficulties encountered with management in performing the audit;
o the outside auditors' judgments about the quality of the entity's
accounting principles; and
o reviews of interim financial information conducted by the outside
auditors; and
7. with respect to reporting and recommendations, to discuss with the
Fund's General Counsel any significant legal matters may have a material
effect on the financial statements, the Fund's compliance policies,
including material notices to or inquiries received from governmental
agencies;
A-2
8. to prepare any report, including any recommendation of the Audit
Committee, required by the rules of the Securities and Exchange
Commission to be included in the Fund's annual proxy statement;
9. to review this Charter at least annually and recommend any changes to
the full Board of Directors; and
10. 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 outside auditors for
special audits, reviews and other procedures and to retain special counsel
and other experts or consultants.
A-3