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 Rule 14a-11(c) or Rule 14a-12
THE FIRST AUSTRALIA FUND, INC.
(Name of Registrant as Specified in Its Charter/Declaration of Trust)
(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)(4) 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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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 identity 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
<PAGE>
[LOGO] Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
(800) 451-6788
April 1, 1998
Dear Shareholder:
The Annual Meeting of Shareholders is to be held at 2:00 p.m. (Eastern
Time), on Thursday, May 7, 1998, at the offices of Prudential Securities
Incorporated, One Seaport Plaza, 35th Floor, New York, New York. A Proxy
Statement regarding the meeting, proxy card for your vote at the meeting and an
envelope -- postage prepaid -- in which to return your proxy are enclosed.
At the Annual Meeting, the shareholders will elect the Fund's Class I
Directors, consider the ratification of the selection of Price Waterhouse LLP as
independent public accountants and consider a proposal to amend the Fund's
Articles of Incorporation. In addition, the shareholders present will hear a
report on the Fund. There will be an opportunity to discuss matters of interest
to you as a shareholder.
Your Directors recommend that the shareholders vote in favor of each of
the foregoing matters.
LAURENCE S. FREEDMAN BRIAN M. SHERMAN
Chairman President
SHAREHOLDERS ARE URGED TO SIGN AND MAIL THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE SO AS TO ASSURE A QUORUM AT THE MEETING. THIS
IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR SHAREHOLDING.
<PAGE>
THE FIRST AUSTRALIA FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 7, 1998
-----------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The
First Australia Fund, Inc. (the "Fund") will be held at the offices of
Prudential Securities Incorporated, One Seaport Plaza, 35th Floor, New York, New
York, on Thursday, May 7, 1998, at 2:00 p.m. (Eastern Time) for the following
purposes:
(1) To elect four Directors to serve as Class I Directors for a
three-year term;
(2) To ratify the selection of Price Waterhouse LLP as independent
public accountants of the Fund for the fiscal year ending October
31, 1998; and
(3) To amend the Articles of Incorporation to add supermajority 75% vote
requirements to approve open-ending, shareholder investment
proposals and certain business combinations.
The Board of Directors has fixed the close of business on March 20, 1998
as the record date for the determination of shareholders entitled to vote at the
meeting or any adjournment thereof.
The appointed proxies will vote in their discretion on any other business
as may properly come before the meeting or any adjournments or postponements
thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the meeting, the
persons named as proxies may propose one or more adjournments of the meeting, in
accordance with applicable law, to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of the holders of a majority
of the Fund's shares present in person or by proxy at the meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor and will vote against any such adjournment those
proxies to be voted against that proposal.
By Order of the Board of Directors,
Roy M. Randall, Secretary
Newark, New Jersey
April 1, 1998
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IMPORTANT: You are cordially invited to attend the meeting. Shareholders who do
not expect to attend the meeting in person are requested to complete, date and
sign the enclosed form of proxy and return it promptly in the addressed envelope
which requires no postage and is intended for your convenience. Your prompt
return of the enclosed proxy may save the Fund the necessity and expense of
further solicitations to assure a quorum at the meeting. The enclosed proxy is
being solicited on behalf of the Board of Directors of the Fund.
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<PAGE>
PROXY STATEMENT
THE FIRST AUSTRALIA FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
---------------------------------
Annual Meeting of Shareholders
May 7, 1998
---------------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The First Australia Fund, Inc.
(the "Fund"), a Maryland corporation, to be voted at the Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at the offices of Prudential
Securities Incorporated, One Seaport Plaza, 35th Floor, New York, New York, on
Thursday, May 7, 1998, at 2:00 p.m. (Eastern Time). The approximate mailing date
for this Proxy Statement is April 3, 1998.
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted in favor of Proposals 1, 2 and 3. Any proxy may be revoked at any
time prior to the exercise thereof by giving written notice to the Secretary of
the Fund (addressed to the Secretary at the principal executive office of the
Fund, Gateway Center 3, 100 Mulberry Street, Newark, New Jersey 07102).
The Board of Directors has fixed the close of business on March 20, 1998
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment thereof. Shareholders on the
record date will be entitled to one vote for each share held. As of March 20,
1998, the Fund had ___________ shares of common stock outstanding, par value
$.01 per share. To the knowledge of management of the Fund, as of the record
date, no persons or group beneficially own more than five percent of the
outstanding shares of common stock of the Fund.
The Board of Directors of the Fund knows of no business other than that
mentioned in the Notice of the Meeting which will be presented for consideration
at the Meeting. If any other matter is properly presented, it is the intention
of the persons named in the enclosed proxy to vote in accordance with their best
judgment.
The Fund will furnish, without charge, a copy of the Fund's annual report
for its fiscal year ended October 31, 1997, and any more recent reports, to any
Fund shareholder upon request. To request a copy, please call or write to the
Fund's Administrator, Prudential Mutual Fund Management, Inc., Gateway Center 3,
100 Mulberry Street, Newark, New Jersey 07102, Telephone: 1-800-451-6788.
1
<PAGE>
PROPOSAL 1: ELECTION OF CLASS I DIRECTORS
The Fund's By-laws provide that the Board of Directors will be divided
into three classes of Directors, as nearly equal in number as possible, each of
which, after a transition period, will serve for three years with one class
being elected each year. Each year the term of office of one class will expire.
Anthony E. Aaronson, Roger C. Maddock, Neville Miles and John T. Sheehy,
Directors who were elected to serve until the Meeting, have been nominated for a
three-year term to expire at the Annual Meeting of Shareholders to be held in
2001 and until their successors are duly elected and qualified. The nominees
have indicated an intention to serve if elected and have consented to be named
in this Proxy Statement.
It is the intention of the persons named in the enclosed proxy to vote in
favor of the election of persons listed below under Class I. The Board of
Directors of the Fund knows of no reason why any of these nominees will be
unable to serve, but in the event of any such inability, the proxies will be
voted for such substituted nominees as the Board of Directors may recommend.
The following table sets forth certain information concerning each of the
nominees for election as a Director of the Fund and each Director of the Fund.
Each of the nominees is currently a Director of the Fund.
<TABLE>
<CAPTION>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
Class I (Current Directors and Nominees for a Term Expiring
at the Annual Meeting to be held in 2001)
<S> <C> <C> <C> <C> <C>
Anthony E. Aaronson (++) Director, The First Australia Prime Income 61 1985 _
116 South Anita Avenue Fund, Inc. (since 1986); Tony Aaronson (textile
Los Angeles, CA 90049 agency) (since 1993); Vice President, Fortune
Fashions (1992-1993); President, Fashion
Fabric Division, Forrest Fabrics (textiles)
(August 1991-1992); Director, PKE Incorporated
(consulting company) (1988-1990); Director,
Textile Association of Los Angeles
(1990-1993); Vice President, Textile
Association of Los Angeles (1996-1997);
Director, O.T.C. Sales, Emday Fabrics Co.
(textiles) (1986-1991); Executive
Vice-President and Secretary-Treasurer, J&J
Textiles Inc. (1982-1986).
Roger C. Maddock (*) Director, The First Australia Prime Income 47 1992 _
Union House, Union Street Fund, Inc. and The First Commonwealth Fund, Inc.
St. Helier, Jersey (since 1992); Chairman and Managing Director,
Channel Islands JE4 8TQ EquitiLink International Management Limited
United Kingdom (since 1985); Partner, Jackson Fox, Chartered
Accountants (since
2
<PAGE>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
1981); Director, Worthy Trust Company Limited
(since 1993); Director, Professional
Consultancy Services Limited (since 1983);
Director, Hollywell Spring Limited (since
1987); Director, The EquitiLink Private Gold
Investment Fund Limited (since 1992);
Director, CentraLink-EquitiLink Investment
Company Limited (since 1994).
Neville Miles Director, The First Australia Prime Income 51 1996 _
23 Regent Street Fund, Inc. (since 1996); Director, MaxiLink
Paddington N.S.W. 2021 Limited (investment company); Director, Walker
Australia Corp. Limited (property development); Director,
First Resources Development Fund Limited
(investment company); Executive Director, EL&C
Baillieu Limited (stock broker) (1994-1996);
Executive Director, Old Minnett Securities
Limited (stockbroker) (1988-1994).
John T. Sheehy (++)(*) Director, The First Australia Prime Income 55 1985 _
2700 Garden Road Fund, Inc. (since 1986), First Australia Prime
Suite G Income Investment Company Limited (since 1986)
Monterey, CA 93940 and The First Commonwealth Fund, Inc. (since
1992); Managing Director, The Value Group LLC
(merchant banking) (since 1997); Director,
Greater Pacific Food Holdings, Inc. (food
industry investment company) (since 1993);
Director, Video City, Inc. (video retail
merchandising); Partner, Sphere Capital
Partners (corporate consulting) (since 1987);
Director, Sphere Capital Advisors (investment
adviser); Director, Sandy Corporation
(corporate consulting, communication and
training) (since 1986); Managing Director,
Black & Company (broker-dealer and investment
bankers); Associate Director, Bear, Stearns &
Co. Inc. (1985-1987); previously, Limited
Partner, Bear, Stearns & Co. Inc.
Class II (Term Expiring at the Annual Meeting to be held in 1999)
Harry A. Jacobs, Jr. (*) Director, The First Australia Prime Income 76 1985 3,979
One New York Plaza Fund, Inc. (since 1986); Senior Director,
New York, NY 10292 Prudential Securities Incorporated (since 1986);
Chairman and Chief Executive
3
<PAGE>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
Officer, Prudential Mutual Fund Management,
Inc. (June - September 1993); previously,
Chairman of the Board, Prudential Securities
Incorporated (1982-1985); Chairman of the
Board and Chief Executive Officer, Bache
Group, Inc. (1977-1982); Trustee, The Trudeau
Institute (eleemosynary); Director of [11]
investment companies affiliated with
Prudential Securities Incorporated.
Rt. Hon. Malcolm Fraser, Director, The First Australia Prime Income 67 1985 _
A.C., C.H. (+) Fund, Inc. (since 1986), First Australia Prime
55 Collins Street Income Investment Company Limited (since 1986)
Melbourne, Victoria 3000 and The First Commonwealth Fund, Inc. (since
Australia 1992); International Consultant on Political,
Economic and Strategic Affairs (since 1983);
Partner, Nareen Pastoral Company
(agriculture); Fellow, Center for
International Affairs, Harvard University;
International Council of Associates, Claremont
University; Member, ANZ International Board of
Advice (1987-1990); InterAction Council for
Former Headsof Government (since 1987,
Chairman since 1997); Co-Chairman,
Commonwealth Eminent Persons Group on Southern
Africa (1985-1986); Chairman, United Nations
Committee on African Commodity Problems
(1989-1990); Consultant, The Prudential
Insurance Company of America; Parliamentarian
Prime Minister of Australia (1975-1983).
Howard A. Knight Director, The First Australia Prime Income 55 1993 _
36 Ives Street Fund, Inc. (since 1993); Director and Vice
London SW3 2ND Chairman, Scandinavian Broadcasting System SA
United Kingdom (television and radio broadcasting) (since
1996); Private Investor and Consultant
(1994-1996); President of Investment Banking,
Equity Transactions and Corporate Strategy,
Prudential Securities Incorporated
(1991-1994); formerly Chairman and Chief
Executive Officer, Avalon Corporation
(1984-1990); Managing Director, President and
Chief Executive
4
<PAGE>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
Officer, Weeks Petroleum Limited (1982-1984);
General Counsel, member of the Executive
Committee and Director, Farrell Lines
Incorporated (1976-1982); Partner, Cummings &
Lockwood (1963-1976).
Brian M. Sherman (*) President of the Fund; President and Director, 54 1985 _
Level 3 The First Australia Prime Income Fund, Inc.
190 George Street (since 1986); Joint Managing Director (since
Sydney, N.S.W. 2000 1986) and Chairman (since 1995), First Australia
Australia Prime Income Investment Company Limited;
Director and Vice President (since 1992) and
Chairman (since 1995), The First Commonwealth
Fund, Inc.; Chairman and Joint Managing
Director, EquitiLink Limited (since 1986);
Chairman and Joint Managing Director,
EquitiLink Australia Limited (since 1981);
Director, EquitiLink International Management
Limited (since 1985); Joint Managing Director,
MaxiLink Limited (since 1987); Executive
Director, MaxiLink Securities Limited (since
1987); Joint Managing Director, First
Resources Development Fund Limited (since
1994); Director, Ten Group Limited (since
1994); Director, telecasters North Queensland
Limited (since 1993); Director, Sydney
Organizing Committee for the Olympic Games.
Richard H. McCoy (++)(*) Director, the First Australia Prime Income 55 1993 _
55 King Street West Investment Company Limited (since 1993); Vice
Toronto, Ontario M5K 1A2 Chairman, TD Securities, Inc. (since May 1997);
Canada Deputy Chairman, CIBC Wood Gundy Securities Inc.
(investment dealer) (1978-February 1997).
5
<PAGE>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
Class III (Term Expiring at the Annual Meeting to be held in 2000)
Sir Roden Cutler, V.C., Chairman (1986-1995) and Director (since 1986), 81 1985 _
A.K., K.C.M.G., K.C.V.O., The First Australia Prime Income Fund, Inc.;
C.B.E., K.St.J. (+) Chairman (1986-1995) and Director (since 1986),
22 Ginahgulla Road First Australia Prime Income Investment Company
Bellevue Hill, N.S.W. 2023 Limited; Chairman (1992-1995) and Director
Australia (since 1992), The First Commonwealth Fund, Inc.;
Australia Director, Rothmans Holding Ltd.
(formerly Rothmans Pall Mall) (tobacco)
(1981-1994); Chairman, State Bank of New South
Wales (1981-1986); Governor of New South
Wales, Australia (1966-1981).
David Lindsay Elsum, Director, The First Australia Prime Income 60 1985 _
A.M. (+) Fund, Inc. (since 1986), First Australia Prime
9 Maygrove Income Investment Company Limited (since 1986)
South Yarra, Victoria 3141 and The First Commonwealth Fund, Inc. (since
Australia 1992); Director, MaxiLink Ltd.; Chairman,
Stodart Investment Pty. Ltd.; Chairman, Queen
Victoria Market; Chairman, Melbourne Wholesale
Fish Market Ltd.; Director Stateguard Friendly
Society; Director, First Resources Development
Fund; Member, Corporations and Securities
Panel of the Australian Securities Commission;
Member, Federal Administrative Appeals
Tribunal; Adviser, TASA International
Executive Search; Chairman, Health Computing
Services Limited; President, State
Superannuation Fund of Victoria (1986-1993);
Director, IlTec Limited (1993-1996); Managing
Director, The MLC Limited (insurance)
(1984-1985); Managing Director, Renison
Goldfields Consolidated Limited (mining)
(1983-1984).
Laurence S. Freedman (*) Vice President (since 1985) and Chairman (since 54 1985 _
Level 3 1995) of the Fund; Vice President and Director
190 George Street (since 1986) and Chairman (since 1995), The
Sydney, N.S.W. 2000 First Australia Prime Income Fund, Inc.; Joint
Australia Managing Director, First Australia Prime Income
Investment Company Limited (since 1986);
President
6
<PAGE>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
and Director, The First Commonwealth Fund,
Inc. (since 1992); Founder and Director,
EquitiLink Limited (since 1986); Joint
Managing Director, EquitiLink Australia
Limited (since 1982); Director, EquitiLink
International Management Limited (since 1985);
Chairman and Joint Managing Director, MaxiLink
Limited (since 1987); Executive Director,
MaxiLink Securities Limited (since 1987);
Chairman and Joint Managing Director, First
Resources Development Fund Limited (since
1994); Director, Ten Group Limited (since
1994); Director, Telecasters North Queensland
Limited (since 1993); Managing Director, Link
Enterprises (International) Pty. Limited
(investment management company) (since 1980);
Manager of Investments, Bankers Trust
Australia Limited (1978-1980); Investment
Manager, Consolidated Goldfields (Australia)
Limited (natural resources investments)
(1975-1978).
Michael R. Horsburgh Director, The First Australia Prime Income 52 1985 _
21,22/FI Ssang Yong Tower Fund, Inc. (since 1986); Director, The First
23-2 Yuido-dong Commonwealth Fund, Inc. (since 1994); Executive
Youngdungpo-gu, Vice President, Hannuri Securities & Investment,
Seoul 150-010, Korea Ltd. (since October 1997); Managing Director,
Carlson Investment Management, Inc. (1996-
October 1997); Director and Chief Executive
Officer, Horsburgh Carlson Investment
Management, Inc. (1991-1996); Director, The
First Hungary Fund; Managing Director,
Barclays de Zoete Wedd Investment Management
(U.S.A.) (1990-1991); Special Associate
Director, Bear, Stearns & Co. Inc.
(1989-1990); Senior Managing Director, Bear,
Stearns & Co. Inc. (1985-1989); General
Partner, Bear, Stearns & Co. Inc. (1981-1985);
previously, Limited Partner, Bear, Stearns &
Co. Inc.
7
<PAGE>
Shares
Beneficially
Owned and %
Present Office with the Fund, of Total
Name and Address Principal Occupation or Director Outstanding
of each Director or Nominee Employment and Directorships Age Since on 10/31/97 (1)
--------------------------- ---------------------------- --- ----- ---------------
William J. Potter (+) Director, The First Australia Prime Income 49 1985 1,000
380 Lexington Avenue Fund, Inc. (since 1986), First Australia Prime
Suite 1511 Income Investment Company Limited (since 1986)
New York, NY 10168 and The First Commonwealth Fund, Inc. (since
1992); President, Ridgewood Group
International Ltd. (investment banking) (since
1989); Director and Chairman of Finance,
National Foreign Trade Association (USA);
Director, Ridgewood Capital Funding,
Inc.(NASD); Director, Impulsora del Fondo
Mexico; Director, International Panorama
Resources Ltd.; Director, Voicenet, Inc.;
Director, Alexandria Bancorp (banking group in
Cayman Islands); Director, Battery
Technologies, Inc.; Consultant, Trieste
Futures Exchange, Inc.; Advisor, Guardian
Capital Group; Partner, Sphere Capital
Partners (corporate consulting) [(1989-1997)];
Director, Alexandria Bancorp Limited;
Director, Canadian Health Foundation; Managing
Director, Prudential-Bache Securities Inc.
(1984-1989); First Vice President, Barclays
Bank, plc (1982-1984); previously, various
positions with Toronto Dominion Bank.
-----------
* Directors considered by the Fund and its counsel to be persons who are
interested persons (which as used in this Proxy Statement is as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund or of the Fund's investment manager or investment adviser. Mr. Jacobs
is deemed to be an interested person because of his affiliation with
Prudential Securities Incorporated, a broker-dealer registered under the
Securities Exchange Act of 1934. Messrs. Freedman, Sherman and Maddock are
deemed to be interested persons because of their affiliation with the
Fund's investment manager and investment adviser, or because they are
officers of the Fund or both. Mr. McCoy may be deemed to be an interested
person because of his affiliation with TD Securities Inc.
+ Messrs. Cutler, Elsum, Fraser and Potter are members of the Contract
Review Committee.
++ Messrs. Aaronson, McCoy and Sheehy are members of the Audit Committee.
(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the Directors and nominees. All shares listed in
this table are owned with sole voting and investment power and in the
aggregate represent less than 1/4 of 1% of the total shares outstanding as
of October 31, 1997.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Section 30(h) of
the 1940 Act, as
8
<PAGE>
applied to the Fund, require the Fund's officers, Directors, investment manager
or adviser, affiliates of the investment manager or adviser, and persons who
beneficially own more than 10% of a registered class of the Fund's outstanding
securities ("Reporting Persons"), to file reports of ownership of the Fund's
securities and changes in such ownership with the Securities and Exchange
Commission and the American Stock Exchange. Such persons are required by
Securities and Exchange Commission regulations to furnish the Fund with copies
of all such filings.
Based solely upon its review of the copies of such forms received by it
and written representations from certain Reporting Persons that no year-end
reports were required for those persons, the Fund believes that during the
fiscal year ended October 31, 1997, all filing requirements applicable to its
Reporting Persons were complied with.
Committees and Board of Director Meetings. The Board of Directors has a
standing Audit Committee, which consists of certain Directors who are not
interested persons of the Fund as defined in the 1940 Act. The principal purpose
of the Audit Committee is to review the scope and results of the annual audit
conducted by the Fund's independent public accountants and the evaluation by
such accountants of the accounting procedures followed by the Fund. The Board of
Directors also has a standing Contract Review Committee that reviews and makes
recommendations to the Board with respect to entering into, renewal or amendment
of the Management Agreement, the Advisory Agreement, the Consultant Agreement
and the Administration Agreement. The Board of Directors does not have a
standing nominating committee.
During the Fund's fiscal year ended October 31, 1997, the Board of
Directors held four meetings, the Audit Committee held two meetings and the
Contract Review Committee held one meeting. Each of the Directors then in office
attended at least 75% of the aggregate number of meetings of the Board of
Directors and all meetings of the Committees of the Board on which he served,
except Mr. Jacobs, who attended two of the four meetings of the Board of
Directors.
Officers of the Fund. The officers of the Fund, all of whom serve at the
pleasure of the Board of Directors, and, with the exception of Messrs. Manor,
Sechos, Stark and Kozlowski, and Mesdames Bancroft and Sananikome-Fletcher, all
of whom have served since the Fund was organized in 1985, are as follows: Brian
M. Sherman, President; Laurence S. Freedman, Vice President; David Manor (age
57), Treasurer; Ouma Sananikome-Fletcher (age 39), Assistant Vice
President-Chief Investment Officer; Barry G. Sechos (age 36), Assistant
Treasurer; Eugene S. Stark (age 40), Chief Financial Officer & Assistant
Treasurer; Kenneth T. Kozlowski (age 36), Assistant Treasurer; Roy M. Randall
(age 61), Secretary; Allan S. Mostoff (age 65), Assistant Secretary; and
Margaret A. Bancroft (age 59), Assistant Secretary.
The respective principal occupations during the past five years of the
Fund's officers are as follows: Messrs. Sherman and Freedman, shown above in the
table of nominees and Directors under "Proposal 1: Election of Class I
Directors"; David Manor, Executive Director, EquitiLink Limited, Executive
Director, EquitiLink Australia Limited, Director, EquitiLink International
Management Limited, Director, EquitiLink U.S.A., Inc. and Director, President
and Chairman of the Board of First Australia Mutual Funds, Inc. (1989-1991);
Ouma Sananikome-Fletcher, Investment Director, EquitiLink Australia Limited
(since 1994) and Executive Director, Banque
9
<PAGE>
Nationale de Paris (1986-1994); Barry G. Sechos, General Counsel to the
EquitiLink Group (since 1993), Director, EquitiLink Australia Limited (since
1994) and Soliciter, Allen, Allen, & Hemsley (1986-1993); Eugene S. Stark, First
Vice President (since February 1990), Prudential Mutual Fund Management, Inc.;
Kenneth T. Kozlowski, Vice President, Prudential Mutual Fund Management, Inc.
(since 1992) and Fund Accounting Manager, Pruco-Life Insurance Company
(1990-1992); Roy M. Randall, Partner of Stikeman, Elliott (Australian law firm);
Allan S. Mostoff and Margaret A. Bancroft, Partners of Dechert Price & Rhoads
(U.S. law firm).
Relationship of Directors or Nominees with the Investment Adviser and the
Investment Manager. EquitiLink International Management Limited (the "Investment
Manager") serves as investment manager to the Fund and EquitiLink Australia
Limited (the "Investment Adviser") serves as investment adviser to the Fund
pursuant to a management agreement dated February 1, 1990 and an advisory
agreement dated February 1, 1990.
The Investment Manager is a Jersey, Channel Islands corporation organized
in October 1985 with its registered office located at Union House, Union Street,
St. Helier, Jersey, Channel Islands. The Investment Adviser is a wholly owned
subsidiary of EquitiLink Limited, an Australian corporation. The registered
offices of both the Investment Adviser and EquitiLink Limited are located at
Level 3, 190 George Street, Sydney, N.S.W., Australia. EquitiLink Limited is a
public company whose ordinary shares are listed on the Australian Stock Exchange
Limited.
Messrs. Freedman and Sherman, both Directors of the Fund, serve as
directors of the Investment Manager. Mr. Maddock, a Director of the Fund, is
also chairman and managing director of the Investment Manager. In addition,
Messrs. Freedman and Sherman are the principal shareholders of the Investment
Manager. Messrs. Freedman and Sherman also serve as, respectively, joint
managing director, and joint managing director and chairman, of the Investment
Adviser, and are the principal shareholders of EquitiLink Limited. Mr. Maddock
is also a shareholder of EquitiLink Limited.
During the fiscal year ended October 31, 1997, Professional Consultancy
Services Limited, a limited company organized under the laws of Jersey, Channel
Islands, provided administrative services to the Investment Manager in
connection with its activities on behalf of the Fund and other U.S. and foreign
investment companies and entities in return for a fee in the amount of $930,000.
Mr. Maddock is a director and a principal shareholder of Professional
Consultancy Services Limited.
Compensation of Directors and Certain Officers. The following table sets
forth information regarding compensation of Directors by the Fund and by the
fund complex of which the Fund is a part for the fiscal year ended October 31,
1997. Officers of the Fund and Directors who are interested persons of the Fund
do not receive any compensation from the Fund or any other fund in the fund
complex. In the column headed "Total Compensation From Registrant and Fund
Complex Paid to Directors," the number in parentheses indicates the total number
of boards of funds in the fund complex on which the Director serves.
10
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
Fiscal Year Ended 10/31/97
Total
Pension or Compensation
Aggregate Retirement Estimated From Registrant
Compensation Benefits Accrued Annual and Fund
From As Part of Benefits Upon Complex Paid
Name of Person, Position Registrant Fund Expenses Retirement to Directors
- ------------------------ ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Anthony E. Aaronson...................... $7,500 N/A N/A $21,250(2)
Sir Roden Cutler......................... 7,500 N/A N/A 29,250(3)
David Lindsay Elsum...................... 7,500 N/A N/A 29,250(3)
Rt. Hon. Malcolm Fraser.................. 7,500 N/A N/A 29,250(3)
Laurence S. Freedman..................... 0 N/A N/A 0(3)
Michael R. Horsburgh..................... 7,500 N/A N/A 29,250(3)
Harry A. Jacobs, Jr...................... 0 N/A N/A 0(2)
Howard A. Knight......................... 7,500 N/A N/A 21,250(2)
Richard H. McCoy......................... 7,500 N/A N/A 7,500(1)
Roger C. Maddock......................... 0 N/A N/A 0(3)
Neville Miles............................ 7,500 N/A N/A 21,250(2)
William J. Potter........................ 7,500 N/A N/A 29,250(3)
John T. Sheehy........................... 7,500 N/A N/A 29,250(3)
Brian M. Sherman......................... 0 N/A N/A 0(3)
</TABLE>
The Board of Directors recommends that holders of Common Stock vote FOR
the election of the four nominees to the Fund's Board of Directors.
PROPOSAL 2: SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected the firm of Price
Waterhouse LLP, independent public accountants, to examine the financial
statements of the Fund for the fiscal year ending October 31, 1998. Such
appointment is now subject to ratification or rejection by the shareholders of
the Fund.
Audit services performed by Price Waterhouse LLP during the most recent
fiscal year included examination of the financial statements of the Fund,
services related to filings with the Securities and Exchange Commission and
consultation on matters performed by such firm related to the preparation and
filing of tax returns. The Fund knows of no direct or indirect financial
interest of such firm in the Fund.
Representatives of Price Waterhouse LLP are expected to be present at the
Meeting and will have the opportunity to respond to questions from shareholders
and to make a statement if they so desire.
11
<PAGE>
The Board of Directors recommends that shareholders vote FOR ratification
of the selection of Price Waterhouse LLP as independent public accountants for
the fiscal year ending October 31, 1998.
PROPOSAL 3: AMENDMENT OF THE FUND'S ARTICLES OF
INCORPORATION TO ADD SUPERMAJORITY 75% VOTE REQUIREMENTS
TO APPROVE OPEN-ENDING, SHAREHOLDER INVESTMENT
PROPOSALS AND CERTAIN BUSINESS COMBINATIONS
The Board of Directors has approved and recommends the adoption by
shareholders of an amendment to the Fund's Articles of Incorporation be amended
to add a new Article Ninth, as set forth in Appendix A, requiring that a "fair
price" be paid for the Fund's shares in the event of a proposed merger or other
business combination which is not approved by either 75% of the Board of
Directors or the holders of 75% of the outstanding shares of the Fund (the "Fair
Price Provision"). Proposed Article Ninth would require the same supermajority
vote to amend the Articles of Incorporation to "open-end" the Fund by making the
Fund's shares redeemable or to adopt any shareholder proposal as to specific
investment decisions with respect to the Fund's assets.
Business combinations subject to the 75% shareholder vote provision would
include mergers and consolidations, sales and leases of the Fund's assets in
excess of $1,000,000 except in the ordinary course of business or in portfolio
transactions and the sale by the Fund of its securities with a value of
$1,000,000 or more except in connection with the public offerings, dividend
reinvestment plans or pursuant to stock subscription rights. At present, any
open-ending, shareholder proposal or business combination, such as a merger or
the sale of substantially all of the Fund's assets, requires the approval of a
simple majority of all of the Fund's outstanding common shares. The sale of less
than substantially all of the Fund's assets or the sale of the Fund's securities
from authorized capital generally requires no shareholder vote. Under the
proposed amendment to the Articles, if 75% of the Board of Directors were to
approve open-ending, a shareholder proposal or a business combination, either no
shareholder vote would be required or the vote would be a simple majority.
Reasons for Fair Price Provision. In recent years, attempts have been made
to open-end or acquire closed-end investment companies contrary to a
determination by the Board of Directors of such funds that any such open-ending
or acquisition would not be in the best interests of fund shareholders. Because
of the fact that the Fund's shares currently trade in the market at a discount
from net asset value, it is possible that attempts may be made in the future to
seek to open-end or effect a takeover of the Fund under circumstances which
might deprive the shareholders of the opportunity to realize the net asset value
of such shares.
Although there are no pending proposals for conversion of the Fund to an
open-end company, for specific investment decisions or for a takeover of the
Fund, Management believes that it is important to ensure that any proposal to
open-end the Fund or to permit shareholders to specify the investment of Fund
assets receives the overwhelming support of either the Board of Directors or
shareholders. In the case of any proposed merger or other specified business
combination, the same supermajority voting provisions would apply unless such
proposal provides for the payment of at least the full net asset value to
shareholders. However, the proposed
12
<PAGE>
amendment could impede or prevent transactions in which shareholders might
obtain prices for such shares, including prices at or above net asset value, in
excess of then current market prices at which the Fund's shares were then
trading.
The By-Laws of the Fund currently provide for the staggered election of
the Board of Directors, with directors divided into three classes, each having a
term of three years. This provision ensures the continuity of the Fund's
management, but would also tend to impede, for up to two years, the replacement
of a majority of the Board. The Fair Price Provision would also discourage
prospective acquirers from attempting to take advantage of any market discount
from net asset value on the Fund's shares. Accordingly, Management believes that
the adoption of the Fair Price Provision should serve to ensure continuity of
management and permit the Fund's Investment Manager to manage the Fund's assets
in a manner consistent with the Fund's investment objective and without concern
as to actions that could impede investment flexibility by requiring premature
liquidation of such assets.
The Board of Directors recommends that shareholders vote FOR the amendment
to the Fund's Articles of Incorporation to add supermajority 75% vote
requirements to approve open-ending, shareholder investment proposals and
certain business combinations.
OTHER MATTERS
The Board of Directors knows of no business to be brought before the
Meeting other than as set forth above. If, however, any other matters properly
come before the Meeting, it is the intention of the persons named in the
enclosed proxy form to vote such proxies on such matters in accordance with
their best judgment.
ADDITIONAL INFORMATION
Expenses. The expense of preparation, printing and mailing of the
enclosed form of proxy and accompanying Notice and Proxy Statement will be borne
by the Fund. The Fund will reimburse banks, brokers and others for their
reasonable expenses in forwarding proxy solicitation material to the beneficial
owners of the shares of the Fund. In order to obtain the necessary quorum at the
Meeting, supplementary solicitation may be made by mail, telephone, telegraph or
personal interview. Such solicitation may be conducted by, among others,
officers and employees of the Fund, the Investment Manager, the Investment
Adviser or State Street Bank and Trust Company, the Transfer Agent of the Fund.
It is anticipated that the cost of such supplementary solicitation, if any, will
be nominal. Shareholder Communications Corporation ("SCC") may be retained to
assist in the solicitation of proxies. If retained, SCC will be paid
approximately $10,000 by the Fund and the Fund will reimburse SCC for its
related expenses.
Solicitation and Voting of Proxies. Solicitation of proxies is being made
primarily by the mailing of this Proxy Statement with its enclosures on or about
April 3, 1998. As mentioned above, SCC may be engaged to assist in the
solicitation of proxies. As the meeting date approaches, certain shareholders of
the Fund may receive a call from a representative of SCC if the Fund has not yet
received their vote. Authorization to permit SCC to execute proxies may be
obtained by telephonic or electronically transmitted instructions from
shareholders of the Fund. Proxies that are obtained telephonically will be
recorded in accordance with the procedures set
14
<PAGE>
forth below. Management of the Fund believes that these procedures are
reasonably designed to ensure that the identity of the shareholder casting the
vote is accurately determined and that the voting instructions of the
shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
the number of shares owned and to confirm that the shareholder has received the
Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Fund, then the SCC representative has the
responsibility to explain the process, read the proposals listed on the proxy
card, and ask for the shareholder's instructions on each proposal. The SCC
representative, although he or she is permitted to answer questions about the
process, is not permitted to recommend to the shareholder how to vote, other
than to read any recommendation set forth in the proxy statement. SCC will
record the shareholder's instructions on the card. Within 72 hours, SCC will
send the shareholder a letter or mailgram to confirm the shareholder's vote and
asking the shareholder to call SCC immediately if the shareholder's instructions
are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting of shareholders, but
does not wish to give a proxy by telephone, such shareholder may still submit
the proxy card originally sent with the Proxy Statement or attend in person. Any
proxy given by a shareholder, whether in writing or by telephone, is revocable.
A shareholder may revoke the accompanying proxy or a proxy given telephonically
at any time prior to its use by filing with the Fund a written revocation or
duly executed proxy bearing a later date. In addition, any shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given.
Vote Required. The presence at any shareholders' meeting, in person or by
proxy, of the holders of a majority of the shares entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that the necessary quorum to transact business or the vote required
to approve or reject any proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law, to permit further solicitation of proxies with
respect to any proposal which did not receive the vote necessary for its passage
or to obtain a quorum. With respect to those proposals for which there is
represented a sufficient number of votes in favor, actions taken at the Meeting
will be effective irrespective of any adjournments with respect to any other
proposals. Any such adjournment will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons names as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor and will vote against any such
adjournment those proxies to be voted against that proposal. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions and broker "non-votes" will be treated as shares that are present
but which have not been voted. Broker non-votes are proxies received by the Fund
from brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to vote nor has
discretionary power to vote on a particular matter. Accordingly, shareholders
are urged to forward their voting instructions promptly.
14
<PAGE>
Approval of both the election of Class I Directors of the Board of
Directors (Proposal 1) and the ratification of the selection of independent
public accountants (Proposal 2) will require the affirmative vote of the holders
of a majority of the outstanding shares of common stock present or represented
by proxy at the Meeting. Approval of the proposed amendment to the Fund's
Articles of Incorporation to add supermajority 75% vote requirements to approve
open-ending, shareholder investment proposals and certain business combinations
(Proposal 3) will require the affirmative vote of a majority of the outstanding
shares of common stock. Abstentions and broker "non-votes" will have the effect
of a "no" vote on all proposals.
Shareholder Proposals. If a shareholder intends to present a proposal at
the Annual Meeting of Shareholders of the Fund to be held in 1999 and desires to
have the proposal included in the Fund's proxy statement and form of proxy for
that meeting, the shareholder must deliver the proposal to the offices of the
Fund within a reasonable time before the solicitation of proxies for such
meeting.
By Order of the Board of Directors,
Roy M. Randall, Secretary
Gateway Center 3
100 Mulberry Street
Newark New Jersey 07102
April 1, 1998
15
<PAGE>
APPENDIX A
The proposed amendment to the Fund's Articles of Incorporation is set out below.
NINTH: Special Vote of Stockholders.
(a) Except as otherwise provided in this Article Ninth, the vote of the
holders of at least 75% of the voting power of the then outstanding shares of
Voting Stock (as hereinafter defined), in addition to any vote of the Directors
of the Corporation as may be required by law or by the By-Laws, shall be
necessary to effect any of the following actions:
(i) any amendment to these Articles of Incorporation to make the
Corporation's Common Stock a "redeemable security" (as such term is
defined in the Investment Company Act of 1940) unless the Continuing
Directors (as hereinafter defined) of the Corporation, by a vote of at
least 75% of such Directors, approve such amendments;
(ii) any stockholder proposal as to specific investment decisions made
or to be made with respect to the Corporation's assets; or
(iii) any Business Combination (as hereinafter defined) unless either
the condition in clause (A) below is satisfied or the conditions in
clauses (B), (C), (D), (E) and (F) below are satisfied:
(A) The Business Combination shall have been approved by a vote of
at least 75% of the Continuing Directors.
(B) The aggregate amount of cash and the Fair Market Value (as
hereinafter defined), as of the date of the consummation of the
Business Combination, of consideration other than cash to be received
per share by holders of any class of outstanding Voting Stock in such
Business Combination shall be at least equal to the higher of the
following:
(x) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by
an Interested Party (as hereinafter defined) for any shares
acquired by it (aa) within the two-year period immediately prior
to the first public announcement of the proposal of the Business
Combination (the "Announcement Date"), or (bb) in the Threshold
Transaction (as hereinafter defined), whichever is higher; and
(y) in the case of Common Stock, the net asset value per share
of such Common Stock on the Announcement Date or on the date of
the Threshold Transaction, whichever is higher, and in the case of
any Preferred Shares, the highest preferential amount per share to
which the holders of shares of such class of Preferred Shares
would be entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up
A-1
<PAGE>
of the affairs of the Fund, regardless of whether the Business
Combination to be consummated constitutes such an event.
(C) The consideration to be received by holders of the
particular class of outstanding Voting Stock shall be in cash or
in the same form as the Interested Party has previously paid for
shares of any class of Voting Stock. If the Interested Party has
paid for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of Voting
Stock shall be either cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired
by it.
(D) After the occurrence of the Threshold Transaction, and
prior to the consummation of such Business Combination, such
Interested Party shall not have become the beneficial owner of any
additional shares of Voting Stock except by virtue of the
Threshold Transaction.
(E) After the occurrence of the Threshold Transaction, such
Interested Party shall not have received the benefit, directly or
indirectly (except proportionately as a shareholder of the
Corporation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(F) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the Investment Company Act of
1940 and the rules and regulations thereunder (or any subsequent
provisions replacing such Acts, rules or regulations) shall be
prepared and mailed by the Interested Party, at such Interested
Party's expense, to the shareholders of the Corporation at least
30 days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions).
(b) For the purposes of this Article Ninth:
(i) "Business Combination" shall mean any of the transactions
described or referred to in any one or more of the following
subparagraphs:
(A) any merger or consolidation of the Corporation with or
into any other person;
(B) any sales, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions)
to or with any other person of any assets of the Corporation
having an aggregate Fair Market Value of $1,000,000 or more except
for portfolio transactions of the Corporation effected in the
ordinary course of the Corporation's business;
A-2
<PAGE>
(C) the issuance or transfer by the Corporation (in one
transaction or a series of transactions) of any securities of the
Corporation to any other person in exchange for cash, securities
or other property (or a combination thereof) having an aggregate
Fair Market Value of $1,000,000 or more excluding (x) sales of any
securities of the Corporation in connection with a public offering
thereof, (y) issuance of any securities of the Corporation
pursuant to a dividend reinvestment plan adopted by the
Corporation and (z) issuances of any securities of the Corporation
upon the exercise of any stock subscription rights distributed by
the Corporation;
(ii) "Continuing Director" means any member of the Board of
Directors of the Corporation who is not an Interested Party or an
Affiliate of an Interested Party and has been a member of the Board of
Directors for a period of at least 12 months, or is a successor of a
Continuing Director who is unaffiliated with an Interested Party and
is recommended to succeed a Continuing Director by a majority of the
Continuing Directors then on the Board of Directors.
(iii) "Interested Party" shall mean any person, other than an
investment company advised by the Corporation's initial investment
manager or any of its Affiliates, which enters, or proposes to enter,
into a Business Combination with the Corporation.
(iv) "Person" shall mean an individual, a corporation, a trust or
a partnership.
(v) "Voting Stock" shall mean capital stock of the Corporation
entitled to vote in the election of Directors, as well as any class of
capital stock of the Corporation entitled, as a class, to elect one of
more Directors.
(vi) A Person shall be a "beneficial owner" of any Voting Stock:
(A) which such Person or any of its Affiliates or Associate
(as hereinafter defined) beneficially owns, directly or
indirectly; or
(B) which such Person or any of its Affiliates or Associates
has the right to acquire (whether such rights is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options; or
(C) which is beneficially owned, directly or indirectly, by
any other Person with which such Person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares of Voting Stock.
A-3
<PAGE>
(vii) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934.
(viii) "Fair Market Value" means:
(A) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the relevant date
of a share of such stock on any principal United States securities
exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to a
share of such stock during the 30-day period preceding the
relevant date on the National Association of Securities Dealers,
Inc. Automated Quotation Systems (NASDAQ) or any system then in
use, or if no such quotation are available, the fair market value
on the relevant date of a share of such stock as determined by 75%
of the Continuing Directors in good faith, and
(B) in the case of property other than cash or stock, the fair
market value of such property on the relevant date as determined
by 75% of the Continuing Directors in good faith.
(ix) "Threshold Transaction" means the transaction by or as a
result of which an Interested Party first become the beneficial owner
of Voting Stock.
(x) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in subparagraph (a)(iii)(B) above shall include the
shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
(xi) Continuing Directors of the Corporation, acting by a vote of
75% shall have the power and duty to determine, on the basis of
information known to them after reasonable inquiry, all facts
necessary to determine (a) the number of shares of Voting Stock
beneficially owned by any person, (b) whether a person is an Affiliate
or Associate of another, (c) whether the requirements of subparagraph
(a) (iii) above have been met with respect to any Business
Combination, and (d) whether the assets which are the subject to any
Business Combination have, or the consideration to be received for the
issuance or transfer of securities by the Corporation in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more.
(c) The provisions of this Article Ninth may not be amended, altered or
repealed except by the approval of both (i) 75% of the outstanding shares of the
Fund voting as a single class, and (ii) 75% of the outstanding shares of each
class of shares voting separately, with shares of Preferred Stock of all series
voting separately as a single class.
A-4
<PAGE>
COMMON STOCK
PROXY THE FIRST AUSTRALIA FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - May 7, 1998
The undersigned hereby appoints Sir Roden Cutler, Brian M. Sherman and
Laurence S. Freedman, and each of them, the proxies of the undersigned, with
power of substitution to each of them, to vote all shares of the common stock of
The First Australia Fund, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of The First Australia Fund, Inc. to be held at
One Seaport Plaza, New York, New York, on May 7, 1998, at 2:00 p.m., New York
City time, and any adjournment or postponement thereof.
Unless otherwise specified in the squares provided, the undersigned's vote
will be cast FOR items (1), (3) and (4).
1. The election of four Directors to serve as Class I Directors for a
three-year term:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) o listed below o
Nominees: Anthony E. Aaronson, Roger C. Maddock, Neville Miles and
John T. Sheehy.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
<PAGE>
3. Ratification of the selection of Price Waterhouse LLP as independent
public accountants.
o FOR o AGAINST o ABSTAIN
4. Approval of an amendment to the Fund's charter to add supermajority 75%
vote requirements to approve open-ending, shareholder investment proposals
and certain business combinations.
o FOR o AGAINST o ABSTAIN
The appointed proxies will vote in their discretion on any other business
as may properly come before the meeting or any adjournments or
postponements thereof.
Please sign exactly as your name or names
appear hereon. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title or status.
-----------------------------------
(Signature of Shareholder)
-----------------------------------
(Signature of Joint Tenant, if any)
Date , 1998
------------------------
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
