<PAGE>
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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The First Australia Prime Income Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
The First Australia Prime Income Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/X/ 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 identifying 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.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
One Seaport Plaza
New York, New York 10292
(212) 214-1665
January 18, 1996
Dear Shareholder:
The Annual Meeting of Shareholders is to be held at 3:00 p.m. on Thursday,
March 14, 1996, at the offices of Prudential Securities Incorporated, One
Seaport Plaza, 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 holders of the Fund's common stock will elect the
Fund's Class II Directors for a three-year term, the holders of the Fund's
preferred stock will vote separately as a single class to elect two additional
Directors, and the holders of both common and preferred stock will consider the
ratification of the selection of Price Waterhouse LLP as independent public
accountants, and a proposal to amend the Fund's charter documents to decrease
the liquidation value of the shares of preferred stock, Series A-F, in order to
effect a stock split, and a proposal to amend the Fund's charter documents to
eliminate the limitation on the aggregate liquidation value of the Fund's
preferred stock. 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.
SIR RODEN CUTLER 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>
(This page has been left blank intentionally.)
<PAGE>
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 14, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The First
Australia Prime Income Fund, Inc. (the "Fund") will be held at the offices of
Prudential Securities Incorporated, One Seaport Plaza, New York, New York on
March 14, 1996, at 3:00 p.m., for the following purposes:
(1) To elect five Directors to serve as Class II Directors for a
three-year term;
(2) To elect two Directors to represent the interests of the holders of
preferred stock for the ensuing year;
(3) To ratify the selection of Price Waterhouse LLP as independent
public accountants of the Fund for the fiscal year ending October 31, 1996;
(4) To amend the Fund's charter documents to decrease the liquidation
value of the shares of preferred stock, Series A-F, in order to effect a
stock split of the Fund's shares of preferred stock, Series A-F;
(5) To amend the Fund's charter documents to eliminate the limitation on
the aggregate liquidation value of the Fund's preferred stock; and
(6) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 2, 1996 as
the record date for the determination of shareholders entitled to vote at the
meeting or any adjournment thereof.
By Order of the Board of Directors,
Roy M. Randall, SECRETARY
New York, New York
January 18, 1996
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.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
PROXY STATEMENT
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
---------------------
ANNUAL MEETING OF SHAREHOLDERS
MARCH 14, 1996
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The First Australia Prime Income
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, New York, New York, on
March 14, 1996, at 3:00 p.m. The approximate mailing date for this Proxy
Statement is January 18, 1996.
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
submitted by holders of the Fund's common stock will be voted in favor of
Proposals 1, 3, 4 and 5 and proxies submitted by holders of the Fund's preferred
stock will be voted in favor of Proposals 2, 3, 4 and 5. 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, One Seaport Plaza, New York, New York 10292).
1
<PAGE>
The following table indicates which class of the Fund's shareholders is
being solicited with respect to each Proposal to be considered at the Meeting.
<TABLE>
<CAPTION>
SOLICITATION OF SOLICITATION OF
VOTE OF COMMON VOTE OF PREFERRED
STOCKHOLDERS STOCKHOLDERS (SERIES A-G)
---------------- --------------------------
<S> <C> <C>
PROPOSAL 1:
Election of Class II Directors................................... Yes No
PROPOSAL 2:
Election of Preferred Directors.................................. No Yes
PROPOSAL 3:
Selection of Independent Public Accountants...................... Yes Yes
PROPOSAL 4:
Amendment to Charter to Decrease the Liquidation Value of the
Fund's Preferred Stock in Order to Effect a Stock Split......... Yes Yes
PROPOSAL 5:
Amendment to Charter to Eliminate the Limitation on the Aggregate
Liquidation Value of the Fund's Preferred Stock................. Yes Yes
</TABLE>
The Board of Directors has fixed the close of business on January 2, 1996 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 January 2,
1996, the Fund had outstanding 155,451,834 shares of common stock, par value
$.01 per share; 750 shares of Auction Market Preferred Stock, Series A, par
value $.01 per share; 750 shares of Auction Market Preferred Stock, Series B,
par value $.01 per share; 500 shares of Auction Market Preferred Stock, Series
C, par value $.01 per share; 1,000 shares of Auction Market Preferred Stock,
Series D, par value $.01 per share; 500 shares of Auction Market Preferred
Stock, Series E, par value $.01 per share; 500 shares of Auction Market
Preferred Stock, Series F, par value $.01 per share; and 3,000 shares of Auction
Market Preferred Stock, Series G, par value $.01 per share. To the best
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 or
preferred 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, 1995 to any Fund shareholder upon request.
To request a copy please call or write to the Fund's Administrator, Prudential
Mutual Fund Management, Inc., One Seaport Plaza, New York, New York 10292,
Telephone: 1-800-451-6788.
2
<PAGE>
PROPOSAL 1: ELECTION OF CLASS II DIRECTORS
The Fund's By-laws provide that the Board of Directors to be elected by
holders of the Fund's common stock will be divided into three classes, 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. Harry A. Jacobs, Jr., Rt. Hon. Malcolm
Fraser, Brian M. Sherman, Howard A. Knight, and Peter D. Sacks, 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 1999 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 the persons listed below under Class II for a
three-year term. 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 received will be voted for such substituted nominees as
the Board of Directors may recommend.
The following table sets forth certain information concerning each nominee
for election as a Director and each Director of the Fund. Each of the nominees
is currently a Director of the Fund.
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
CLASS I (TERM EXPIRING AT THE ANNUAL MEETING TO BE HELD IN 1998)
Anthony E. Aaronson (+) Director, The First Australia Fund, Inc. (since 1985); Tony 59 1986 --
116 South Anita Avenue Aaronson (textile agent) (since 1993); Vice President,
Los Angeles, CA 90015 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);
Director, O.T.C. Sales, Emday Fabrics Co. (textiles)
(1986-91); Executive Vice-President and Secretary-Treasurer,
J&J Textiles Inc. (1982-1986).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
Roger C. Maddock* Director, The First Australia Fund, Inc. (since 1992) and 45 1992 --
Union House, Union Street The First Commonwealth Fund, Inc. (since 1992); Chairman and
St. Helier, Jersey Managing Director, EquitiLink International Management
Channel Islands Limited (since 1985); Partner, Jackson Fox, Chartered
United Kingdom Accountants (since 1981); Director, Worthy Trust Company
Limited (since 1981); 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
September 1994).
John A. Calvert-Jones Director, The First Australia Fund, Inc. (since 1985); 59 1986 --
Level 31 Chairman of the Board (1984-1994) and Chief Executive
101 Collins Street Officer (1984-1991), Prudential Securities (Australia)
Melbourne, Victoria 3000 Limited; Partner, Cortis & Carr (stockbrokers) (1970-1984);
Australia Director, Slough Estates Australia Pty. Limited (property),
Sedgwick Pty. Limited (insurance) and Crown Limited.
John T. Sheehy (+) Director, The First Australia Fund, Inc. (since 1985), First 53 1986 --
6920 Koll Center Parkway Australia Prime Income Investment Company Limited (since
Suite 225 1986) and The First Commonwealth Fund, Inc. (since 1992);
Pleasanton, CA 94566 Director, Greater Pacific Food Holdings, Inc. (food industry
investment company) (since 1993); Partner, Sphere Capital
Partners (corporate consulting) (since 1987); Director,
Sphere Capital Advisors (investment adviser); Director,
Sandy Corporation (corporate consulting, communication and
training) (since 1986); Associate Director, Bear, Stearns &
Co. Inc. (1985-1987); previously, Limited Partner, Bear,
Stearns & Co. Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
CLASS II (CURRENT DIRECTORS AND NOMINEES FOR A TERM EXPIRING
AT THE ANNUAL MEETING TO BE HELD IN 1999)
Harry A. Jacobs, Jr.* Director, The First Australia Fund, Inc. (since 1985); 74 1986 6,960
One New York Plaza Chairman and Chief Executive Officer, Prudential Mutual Fund
New York, NY 10292 Management, Inc. (June-September 1993); Senior Director,
Prudential Securities Incorporated (since 1986); previously,
Chairman of the Board, Prudential Securities Incorporated
(1982-1985); Chairman of the Board and Chief Executive
Officer, Bache Group, Inc. (1977-1982); Director, Center for
National Policy; Trustee, The Trudeau Institute
(eleemosynary); Director of 26 investment companies
affiliated with Prudential Securities Incorporated.
Rt. Hon. Malcolm Fraser, Director, The First Australia Fund, Inc. (since 1985), First 65 1986 --
A.C., C.H. (++) Australia Prime Income Investment Company Limited (since
55 Collins Street 1986) and The First Commonwealth Fund, Inc. (since 1992);
Melbourne, Victoria 3000 Partner, Nareen Pastoral Company (agriculture); Fellow,
Australia Center for International Affairs, Harvard University;
International Council of Associates, Claremont University;
Chairman, CARE Australia (since 1987); President, CARE
International (1990-1995); Member, Byrnes International
Advisory Board, University of South Carolina (1985-1990);
ANZ International Board of Advice (1987-1993); InterAction
Council for Former Heads of Government; 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; International Consultant on
Political, Economic and Strategic Affairs (since March
1983); Parliamentarian-Prime Minister of Australia
(1975-1983).
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
Brian M. Sherman* President and Director, The First Australia Fund, Inc. 52 1986 --
Level 3 (since 1985); Joint Managing Director (since 1986) and
190 George Street Chairman (since 1985), First Australia Prime Income
Sydney, N.S.W. 2000 Investment Company Limited; Sole Vice President and Director
Australia (since 1992) and Chairman (since 1995), The First
Commonwealth Fund, Inc.; President of the Fund (since 1986);
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); Director, First Resources Development Fund Limited
(since 1994); Director, Ten Group Limited (since 1994);
Director, Telecasters North Queensland Limited (since 1993);
Fund and Portfolio Manager, Westpac Banking Corporation
(1976-1981); Manager -- Investments, Outwich Limited (an
affiliate of Baring Brothers & Co. Ltd.) (merchant bank)
(1972-1976).
Howard A. Knight Director, The First Australia Fund, Inc.; Private Investor 53 1993 --
300 Park Avenue Consultant; and President of Investment Banking, Equity
New York, NY 10022 Transactions and Corporate Strategy, Prudential Securities
Incorporated (1991-June 1994); formerly Chairman and Chief
Executive Officer, Avalon Corporation (1984-1990); Managing
Director, President and Chief Executive 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); Director, Scandinavian Broadcasting System,
S.A.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
Peter D. Sacks (+) Director, The First Commonwealth Fund, Inc. (since 1992); 50 1993 --
33 Yonge Street President and Director, Toron Capital Markets, Inc.
Suite 706 (currency, interest rate and commodity risk management)
Toronto, Ontario M5E 1G4 (since 1988); Director, Toron Capital Management Ltd.
Canada (commodity trading adviser) (since 1994); Vice President and
Treasurer, Midland Bank Canada (1987-1988); Vice President
and Treasurer, Chase Manhattan Bank of Canada (1985-1987).
CLASS III (TERM EXPIRING AT THE ANNUAL MEETING TO BE HELD IN 1997)
Sir Roden Cutler, V.C., Director, The First Australia Fund, Inc. (since 1985), First 79 1986 --
A.K., K.C.M.G., K.C.V.O., Australia Prime Income Investment Company Limited (since
C.B.E., K.St.J. (++) 1986) and The First Commonwealth Fund, Inc. (since 1992);
22 Ginahgulla Road Australia Director, Rothmans Holding Ltd. (formerly Rothmans
Bellevue Hill, N.S.W. 2023 Pall Mall) (tobacco) (1981-1994); Chairman, State Bank of
Australia New South Wales (1981-1986); Governor of New South Wales,
Australia (1966-1981).
David Lindsay Elsum (++) Director, The First Australia Fund, Inc. (since 1985), First 58 1986 --
9 May Grove Australia Prime Income Investment Company Limited (since
South Yarra, Victoria 3141 1986) and The First Commonwealth Fund, Inc. (since 1992);
Australia Director, MaxiLink Ltd.; President, State Superannuation
Fund of Victoria (1986-1993); Managing Director, The MLC
Limited (insurance) (1984-1985); Managing Director, Renison
Goldfields Consolidated Limited (mining) (1983-1984);
Member, Administrative Appeals Tribunal; Member,
Corporations and Securities Panel of the Australian States
and Territories; Chairman, Queen Victoria Market; Director,
First Resources Development Fund and Statewide Friendly
Society.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
Laurence S. Freedman* Sole Vice President (since 1986) and Chairman (since 1995) 52 1986 --
Level 3 of the Fund; Sole Vice President and Director (since 1985)
190 George Street and Chairman (since 1995), The First Australia Fund, Inc.;
Sydney, N.S.W. 2000 Joint Managing Director, First Australia Prime Income
Australia Investment Company Limited (since 1986); President and
Director, The First Commonwealth Fund, Inc. (since 1992);
Founder and Joint Managing Director, EquitiLink Limited
(since 1986); Joint Managing Director, EquitiLink Australia
Limited (since 1981); 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
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 (an
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 Fund, Inc. (since 1985); 50 1986 --
675 Third Avenue Director, The First Commonwealth Fund, Inc.; Director and
22nd Floor Chief Executive Officer, Horsburgh Carlson Investment
New York, NY 10017 Management, Inc. (since 1991); 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.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
NAME AND ADDRESS OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
OF EACH DIRECTOR OR NOMINEE AND DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
William J. Potter (++) Director, The First Australia Fund, Inc. (since 1985), First 47 1986 --
156 W. 56th Street Australia Prime Income Investment Company Limited (since
17th Floor 1986) and The First Commonwealth Fund, Inc. (since 1992);
New York, NY 10019 Partner, Sphere Capital Partners (corporate consulting)
(since 1989); President, Ridgewood Partners, Ltd.
(investment banking) (since 1989); Managing Director,
Prudential-Bache Securities Inc. (1984-1989); Director,
National Foreign Trade Association; Director, Alexandria
Bancorp Limited; Director, Battery Technologies, Inc.;
Director, Compuflex Inc.; Director, Impulsora del Fondo
Mexico; Director, Canadian Health Foundation; First Vice
President, Barclays Bank, plc (1982-1984); previously,
various positions with Toronto Dominion Bank.
</TABLE>
- --------------------------
* 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.
+ Messrs. Aaronson, Sacks and Sheehy are members of the Audit Committee.
++ Messrs. Cutler, Elsum, Fraser and Potter are members of the Contract Review
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 of common
stock as of October 31, 1995. No shares of the Fund's preferred stock are
owned by the Directors.
Please also see the information contained below under the heading "Further
Information Regarding Directors and Officers."
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.
9
<PAGE>
PROPOSAL 2: ELECTION OF PREFERRED DIRECTORS
The Fund has outstanding 750 shares of Auction Market Preferred Stock,
Series A, par value $.01 per share; 750 shares of Auction Market Preferred
Stock, Series B, par value $.01 per share; 500 shares of Auction Market
Preferred Stock, Series C, par value $.01 per share; 1,000 shares of Auction
Market Preferred Stock, Series D, par value $.01 per share; 500 shares of
Auction Market Preferred Stock, Series E, par value $.01 per share; 500 shares
of Auction Market Preferred Stock, Series F, par value $.01 per share; and 3,000
shares of Auction Market Preferred Stock, Series G, par value $.01 per share.
Section 18 of the 1940 Act requires that the holders of any preferred
shares, voting separately as a single class without regard to series, have the
right to elect at least two Directors at all times. David Manor and Marvin
Yontef, who were elected to fill the two preferred stock Board seats and to
represent exclusively the holders of all series of the Fund's preferred stock
(the "Preferred Directors") at the Annual Meeting of Shareholders held on March
16, 1995, have been nominated to serve as Preferred Directors until the Annual
Meeting of Shareholders to be held in 1997. The nominees have indicated an
intention to continue 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 the persons listed below. The Board of Directors of the
Fund knows of no reason why either of these nominees will be unable to serve,
but in the event of any such inability, the proxies received will be voted for
such substituted nominees as the holders of preferred stock shall recommend, and
if no such recommendations are made, such substituted nominees as the Board of
Directors may recommend.
10
<PAGE>
The following table sets forth certain information concerning each of the
nominees as a Preferred Director of the Fund.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
PRESENT OFFICE WITH OWNED AND
THE FUND, PRINCIPAL % OF TOTAL
OCCUPATION OR EMPLOYMENT DIRECTOR OUTSTANDING
NAME AND ADDRESS OF NOMINEE AND PUBLIC DIRECTORSHIPS AGE SINCE ON 10/31/95 (1)
- ---------------------------- ------------------------------------------------------------ ---- -------- ----------------
<S> <C> <C> <C> <C>
David Manor** Treasurer of the Fund, The First Australia Fund, Inc. and 55 1988 --
Level 3 First Australia Prime Income Investment Company Limited;
190 George Street Director and Treasurer, The First Commonwealth Fund, Inc.;
Sydney, N.S.W. 2000 Executive Director, EquitiLink Australia Limited and
Australia EquitiLink Limited (since 1986); Director, EquitiLink
International Management Limited (since 1987) and EquitiLink
U.S.A., Inc.
Marvin Yontef** Director of and counsel to First Australia Prime Income 49 1988 --
P.O. Box 85 Investment Company Limited; Partner, Stikeman, Elliott
5500 Commerce Court (Canadian law firm).
Toronto, Ontario M5L 1B9
Canada
</TABLE>
- --------------------------
** Directors considered by the Fund and its counsel to be "interested persons"
(which as used in this Proxy Statement is as defined in the 1940 Act) of the
Fund or of the Fund's investment advisers. Mr. Manor is deemed to be an
interested person because of his affiliation with the Investment Manager and
Investment Adviser and because he is an officer of the Fund. Mr. Yontef is
deemed to be an interested person because the law firm of which he is a
Partner acts as legal counsel for the Investment Adviser and its parent.
(1) As of October 31, 1995, the Preferred Directors of the Fund owned no shares
of the Fund's common or preferred stock.
Please also see the information contained below under the heading "Further
Information Regarding Directors and Officers."
The Board of Directors recommends that the holders of preferred stock vote
FOR the election of the two nominees as Preferred Directors to the Fund's Board
of Directors.
PROPOSAL 3: 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, 1996. 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
11
<PAGE>
Exchange Commission and consultation on matters performed by the firm related to
the preparation and filing of tax returns. The Fund knows of no direct or
indirect financial interest of the 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.
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, 1996.
PROPOSAL 4: AMENDMENT OF THE FUND'S CHARTER DOCUMENTS TO
DECREASE THE LIQUIDATION VALUE OF THE FUND'S SHARES OF PREFERRED
STOCK, SERIES A-F, IN ORDER TO EFFECT A STOCK SPLIT
The Fund's Board of Directors has determined that it would be in the Fund's
best interest to amend the Fund's charter documents to reduce the liquidation
value of each share of preferred stock, Series A-F, from $100,000 to $25,000 in
order to effect a four for one stock split. If the proposal is approved, it is
the intention of the Board of Directors to declare a split of each share of the
Fund's preferred stock in each of Series A-F, liquidation value $100,000 per
share into four shares of preferred stock of the same series, liquidation value
$25,000 per share.
The Fund's Board of Directors has proposed this reduction in liquidation
value and accompanying stock split in order to increase the potential universe
of preferred stock investors, and to give these investors greater flexibility to
tailor the size of their investment. If an increased number of potential
investors is bidding at the auctions at which the dividend rate paid by the Fund
with respect to the preferred stock is determined, the dividend rates paid by
the Fund to the preferred stockholders may be lower than they would be if a
smaller pool of investors is bidding at the auctions.
If the proposed stock split is effected, the Fund's common stockholders
should not be affected, except to the extent that the Fund may benefit from a
reduction in the dividends paid with respect to its preferred stock. Preferred
stockholders would have the option of investing in increments of $25,000 rather
than $100,000, and thus would have greater flexibility and liquidity with
respect to their investment.
The proposed amendment to the Fund's charter documents, which includes the
changes described below under "Proposal 5: Amendment of the Fund's Charter
Documents to Eliminate the Limitation on the Aggregate Liquidation Value of the
Fund's Preferred Stock", is attached hereto as Appendix A. In addition to
reducing the liquidation value, the proposed amendment also increases, where
necessary, the authorized number of shares of preferred stock, Series A-F. In
the opinion of Dechert Price & Rhoads, the proposed amendment does not
constitute a reorganization within the meaning of Section 2(a)(33) of the 1940
Act or give rise to a separate class vote by holders of preferred stock pursuant
to Section 18(a)(2)(D) of the 1940 Act.
12
<PAGE>
The Board of Directors recommends that shareholders vote FOR the amendments
to the Fund's charter documents (the form of which is set forth in Appendix A
hereto) as described above to decrease the liquidation value of the Fund's
preferred stock, Series A-F, in order to effect a stock split.
PROPOSAL 5: AMENDMENT OF THE FUND'S CHARTER DOCUMENTS
TO ELIMINATE THE LIMITATION ON THE AGGREGATE
LIQUIDATION VALUE OF THE FUND'S PREFERRED STOCK
At a special meeting of shareholders held in December, 1988, the Fund's
holders of common stock authorized the creation of a class of 100 million shares
of preferred stock with an aggregate liquidation value of $500 million, such
shares to be issued in series from time to time as authorized by the Fund's
Board of Directors. Since that date, the Fund has issued seven series of
preferred stock with an aggregate liquidation value of $475 million.
In order to give the Fund the flexibility to issue additional preferred
stock, the Board of Directors has determined that it would be in the best
interest of the Fund to amend the Fund's charter documents to eliminate the
limitation on aggregate liquidation value. This would permit the Fund's Board of
Directors to issue additional series of preferred stock on a timely basis,
should the Board believe that the issuance of additional series would benefit
holders of the Fund's common stock.
In determining to recommend this action, the Fund's Board of Directors took
into account the fact that since inception of the preferred stock in January
1989, holders of the Fund's common stock have benefited from the issuance of the
outstanding series of preferred shares in terms of a positive impact on net
asset value. However, in determining whether to eliminate the limitation on
aggregate liquidation value, holders of the Fund's common stock should consider,
as they did when authorizing the creation of the class of preferred stock in
1988, certain factors which are inherent in the issuance of any series of
preferred stock. These include:
1. EFFECT ON YIELD. As is presently the case, the Board of Directors of
the Fund has full discretion, in the exercise of its business judgment, as to
the terms upon which each series of preferred stock may be issued and as to the
exercise of any redemption rights the Fund may have with respect to such stock.
It is the Board's practice and present intention to issue preferred stock only
under circumstances where it believes that such issuance will result in yield
enhancement to the holders of common stock, but there can be no assurance that
the actual terms of any preferred stock issuances will ensure this result. The
yield to holders of common stock would be negatively impacted by outstanding
preferred stock with a dividend rate in excess of the yield on the Fund's
investments made with the proceeds from issuance of preferred stock. Under
certain circumstances, the Fund may be required to redeem outstanding preferred
stock. In addition, the Fund may have the option to redeem preferred stock at
any time or from time to time. However, the Fund may in fact determine not to
redeem preferred stock during periods when the dividend rate on preferred stock
exceeds the yield on the Fund's portfolio. Any decisions with respect to
redemption will be taken by the Board or a committee of the Board based upon
recommendations by the Investment Manager. The Investment Manager has advised
the Board that it would not anticipate recommending redemption except to the
extent that the Investment Manger believes the existence of outstanding
preferred stock is having or
13
<PAGE>
likely to have a materially adverse effect on the net investment income of the
Fund. Even in such event, the Investment Manager may not recommend redemption
if, in its judgment, it would be necessary to liquidate portfolio securities, in
order to make redemption payments, in a manner that would disrupt the Fund's
long-term investment program, result in the realization of foreign currency
gains or losses that would materially increase or decrease the amount of net
investment income distributable to holders of common stock or jeopardize the
Fund's status as a regulated investment company under the Internal Revenue Code.
2. EFFECT ON CURRENCY RISKS. The Fund invests predominantly in debt
securities denominated in Australian dollars. Accordingly, the net asset value
of and yield to the Fund are affected by changes in the exchange rate between
the U.S. dollar and the Australian dollar and, to a lesser extent, by changes in
the value of the New Zealand dollar in which a relatively small part of the
Fund's assets may be invested from time to time. Unless the designation of a
particular series of preferred stock otherwise provides, holders of preferred
stock are not subject to any significant foreign currency exchange risks as the
dividends payable to and amounts payable in respect of redemption or liquidation
to the holders of preferred stock will be determined solely in U.S. dollar terms
and without reference to any changes in the underlying net asset value of or
yield to the Fund. Accordingly, the entire risk of any adverse changes in
currency exchange rates, which would be applicable to all of the Fund's assets
and income (including assets acquired with the proceeds of preferred share
issuances), is borne solely by the holders of common stock. Although the
underlying purpose of issuing preferred stock is to enhance the yield to common
stockholders, adverse currency movements can reduce or eliminate any such yield
enhancement and can result in a reduction of net asset value and distributable
net investment income.
3. EFFECT ON NET ASSET VALUE. Upon the issuance of any series of preferred
stock, all issuance costs, including underwriting discounts and commissions and
other offering costs, are charged to the paid-in capital of the Fund, thereby
resulting in an immediate reduction of net asset value applicable to common
stock. Accordingly, assuming that the relationship between the Fund's net asset
value and the market price at which its shares trade remains the same, holders
of shares of common stock disposing of such shares after a preferred stock
issuance might realize a lower price for their shares as any anticipated yield
enhancement and the increase, if any, in net asset value could be expected to
occur only over a period of time sufficient to invest the proceeds of preferred
stock issuances and realize the benefits, if any, from such investments in
amounts adequate to recover the costs of issuance.
The proposed amendment to the Fund's charter documents, which includes the
changes described above under "Proposal 4: Amendment of the Fund's Charter
Documents to Decrease the Liquidation Value of the Fund's Shares of Preferred
Stock, Series A-F, In Order to Effect a Stock Split", is attached hereto as
Appendix A.
The Board of Directors recommends that shareholders vote FOR the amendments
to the Fund's charter documents (the form of which is set forth in Appendix A
hereto) as described above to eliminate the limitation on the aggregate
liquidation value of the Fund's preferred stock.
14
<PAGE>
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.
FURTHER INFORMATION ABOUT DIRECTORS AND OFFICERS
COMMITTEES AND BOARD OF DIRECTORS 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, 1995, the Board of Directors
held five 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 total number of the meetings of the Board of Directors and
all the Committees of the Board on which he served, except Mr. Calvert-Jones,
who attended three of the five meetings held by 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 1986, are as follows: Brian
M. Sherman, President; Laurence S. Freedman, Vice President; David Manor,
Treasurer; Ouma Sananikome-Fletcher (age 37), Assistant Vice President -- Chief
Investment Officer; Barry G. Sechos (age 34), Assistant Treasurer; Eugene S.
Stark (age 38), Chief Financial Officer & Assistant Treasurer; Kenneth T.
Kozlowski (age 34), Assistant Treasurer; Roy M. Randall (age 59), Secretary;
Allan S. Mostoff (age 63), Assistant Secretary; and Margaret A. Bancroft (age
57), Assistant Secretary.
The respective principal occupations 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 II Directors"; David Manor, shown in the
table of nominees as Preferred Directors under "Proposal 2: Election of
Preferred Directors"; Ouma Sananikome-Fletcher, Investment Director, EquitiLink
Australia Limited (since 1994) and Executive Director, Banque Nationale de Paris
(1986-1994); Barry G. Sechos, General Counsel to the EquitiLink Group (since
1993) and Solicitor, Allen, Allen & Hemsley (1986-1993); Eugene S. Stark, First
Vice President, Prudential Mutual Fund Management, Inc. (since January 1990);
Kenneth T. Kozlowski, Vice President, Prudential Mutual Fund Management, Inc.
15
<PAGE>
(since 1992) and Fund Accounting Manager, Pruco-Life Insurance Company
(1990-1992); Roy M. Randall, Partner of Freehill, Hollingdale & Page (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 December 15, 1992.
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, Sherman and Manor, all Directors of the Fund, also 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, of which Mr. Manor is also a shareholder. Messrs. Freedman, Sherman and
Manor also serve as, respectively, joint managing director, joint managing
director and chairman, and executive director of the Investment Adviser. Messrs.
Freedman and Sherman are the principal shareholders of EquitiLink Limited, of
which Messrs. Maddock and Manor are also shareholders.
In a transaction effected on March 10, 1995, Transek Trust sold 13,689,944
shares of EquitiLink Limited to Transek Pty Limited, a wholly-owned subsidiary
of the Investment Manager, at a price of $0.69 per share, as determined by an
independent valuation, which price was paid in three installments. Messrs.
Freedman and Sherman are the principal beneficiaries of Transek Trust, and as
mentioned above, are also the principal shareholders of the Investment Manager,
the parent of Transek Pty Limited.
During the fiscal year ended October 31, 1995, 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,
1995. 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.
16
<PAGE>
COMPENSATION TABLE
FISCAL YEAR ENDED 10/31/95
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
AGGREGATE BENEFITS ANNUAL FROM REGISTRANT
COMPENSATION ACCRUED BENEFITS AND FUND
FROM AS PART OF UPON COMPLEX PAID
NAME OF PERSON, POSITION REGISTRANT FUND EXPENSES RETIREMENT TO DIRECTORS
- --------------------------------------------------- ------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C>
Anthony E. Aaronson................................ $ 13,750 N/A N/A $ 21,250(2)
John A. Calvert-Jones.............................. 13,750 N/A N/A 21,250(2)
Sir Roden Cutler................................... 13,750 N/A N/A 29,250(3)
David Lindsay Elsum................................ 13,750 N/A N/A 29,250(3)
Rt. Hon. Malcolm Fraser............................ 13,750 N/A N/A 29,250(3)
Laurence S. Freedman............................... 0 N/A N/A 0(3)
Michael R. Horsburgh............................... 13,750 N/A N/A 29,250(3)
Harry A. Jacobs, Jr................................ 0 N/A N/A 0(2)
Howard A. Knight................................... 13,750 N/A N/A 21,250(2)
Roger C. Maddock................................... 0 N/A N/A 0(3)
William J. Potter.................................. 13,750 N/A N/A 29,250(3)
Peter D. Sacks..................................... 13,750 N/A N/A 21,750(2)
John T. Sheehy..................................... 13,750 N/A N/A 29,250(3)
Brian M. Sherman................................... 0 N/A N/A 0(3)
PREFERRED DIRECTORS:
David Manor........................................ 0 N/A N/A 0(2)
Marvin Yontef...................................... 13,750 N/A N/A 0(1)
</TABLE>
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 $25,000 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
January 18, 1996. As mentioned above, SCC may
17
<PAGE>
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
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.
The Fund has received an opinion of Maryland counsel that addresses the
validity, under the applicable law of the State of Maryland, of authorization to
execute a proxy given orally. The opinion given by Maryland counsel concludes
that a Maryland court would find that there is no Maryland law or public policy
against the acceptance of proxies signed by an orally-authorized agent, provided
it adheres to the procedures set forth below.
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
cancelling any proxy previously given.
VOTE REQUIRED. The presence in person or by proxy of the holders of a
majority of the outstanding voting shares of the Fund is required to constitute
a quorum at the Meeting. Approval of the election of Class II Directors of the
Board of Directors (Proposal 1) 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 election of Preferred Directors of the
Board of Directors (Proposal 2) will require the affirmative vote of the holders
of a majority of the outstanding shares of preferred stock present or
represented by proxy at the Meeting. Ratification of the selection of
independent public
18
<PAGE>
accountants (Proposal 3) will require the affirmative vote of the holders of a
majority of the outstanding shares of both the common and preferred stock
present or represented by proxy at the Meeting, voting together as a single
class. Approval of the proposed amendment to the Fund's charter documents to
decrease the liquidation value of the Fund's shares of preferred stock, Series
A-F (Proposal 4) and approval of the proposed amendment to the Fund's charter
documents to eliminate the limitation on the aggregate liquidation value of the
Fund's preferred stock (Proposal 5) will each require the affirmative vote of
the holders of a majority of the outstanding shares of both the common and
preferred stock, voting together as a single class. For purposes of determining
the presence of a quorum for transacting business at the Meeting, abstentions
and broker "non-votes" (that is, proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owner or
other persons entitled to vote shares on a particular matter with respect to
which the brokers or nominees do not have discretionary power) will be treated
as shares that are present but which have not been voted. For this reason,
abstentions and broker non-votes will have the effect of a "no" vote for
purposes of obtaining the requisite approval of each proposal.
SHAREHOLDER PROPOSALS. If a shareholder intends to present a proposal at
the Annual Meeting of Shareholders of the Fund to be held in 1997 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 by September 20, 1996.
By Order of the Board of Directors,
Roy M. Randall, SECRETARY
One Seaport Plaza
New York, NY 10292
January 18, 1996
19
<PAGE>
APPENDIX A
THE FIRST AUSTRALIA PRIME INCOME FUND, INC
PROPOSED AMENDMENT TO CHARTER DOCUMENTS
FIRST: The charter of The First Australia Prime Income Fund, Inc. (the
"Corporation"), as heretofore amended and restated by Articles filed with the
Maryland State Department of Assessments and Taxation (the "Department") on
December 13, 1988 and May 29, 1991, is further amended as of the effective time
of these Articles of Amendment, by striking from Article FIFTH, first paragraph,
of the Amended and Restated Articles of Incorporation the clause ", with a
maximum liquidation preference of $500,000,000".
SECOND: The charter of the Corporation is further amended by splitting and
changing each issued and outstanding share of Auction Market Preferred Stock,
Series A, B, C, D, E, and F, par value $.01 per share, liquidation preference
$100,000 per share, into four issued and outstanding shares of Auction Market
Preferred Stock of the same series, each unit with a par value of $.01 per share
and a liquidation preference of $25,000 per share.
THIRD: After the effective time of this amendment, each holder of any
outstanding certificate or certificates representing shares of Auction Market
Preferred Stock, Series A, B, C, D, E or F, par value $.01 per share,
liquidation preference of $100,000 per share, may surrender same to the
Corporation and receive in exchange therefore, a certificate or certificates
representing the number of whole shares of Auction Market Preferred Stock, par
value $.01 per share, liquidation preference of $25,000 per share of the series
into which the shares of the applicable series of Auction Market Preferred Stock
of the Corporation shall have been split pursuant to these Articles of
Amendment. Until so surrendered, any outstanding certificate for shares of
Series A, Series B, Series C, Series D, Series E or Series F of the Auction
Market Preferred Stock of the Corporation shall be deemed evidence of ownership
of the number of whole shares of Auction Market Preferred Stock of the
applicable series, par value $.01 per share, liquidation preference of $25,000
per share, into which such outstanding shares of the Corporation shall have been
split and changed pursuant to these Articles of Amendment, and shall be subject
to the changes hereunder to the Articles Supplementary for the applicable series
of Auction Market Preferred Stock.
FOURTH: The various Articles Supplementary of the Corporation by which the
Board of Directors has heretofore authorized the issuance of 4,750 shares of its
authorized preferred stock, par value $.01 per share, liquidation preference
$100,000 per share, designated Auction Market Preferred Stock, Series A, Series
B, Series C, Series D, Series E and Series F respectively (sometimes
collectively herein the "Articles Supplementary") are amended, as of the
effective time of this amendment, by:
(a) Striking from Article First of the Articles Supplementary creating
Series A, Series B, and Series C of the Auction Market Preferred Stock filed
with the Department on January 17, 1989, as
A-1
<PAGE>
corrected by a Certificate of Correction filed with the Department on August
11, 1989, the clause ", the issuance of three series of up to 750 shares
each of its authorized preferred stock, par value $.01 per share,
liquidation preference $100,000 per share," and inserting in lieu thereof
the clause ", the issuance of three series of up to 3,000 shares each of its
authorized preferred stock, par value $.01 per share, liquidation preference
$25,000 per share," and
(b) Striking from Article First of the Articles Supplementary creating
Series D of the Auction Market Preferred Stock filed with the Department on
July 26, 1989, as corrected by a Certificate of Correction filed with the
Department on August 10, 1989, the clause ", the issuance of one series of
up to 1,000 shares of its authorized preferred stock, par value $.01 per
share, liquidation preference $100,000 per share," and inserting in lieu
thereof the clause ", the issuance of a series of up to 4,000 shares of its
authorized preferred stock, par value $.01 per share, liquidation preference
$25,000 per share," and
(c) Striking from Article First of the Articles Supplementary creating a
Series E of Auction Market Preferred Stock filed with the Department on
December 21, 1992, the clause ", the issuance of a series of up to 1,000
shares of its authorized preferred stock, par value $.01 per share,
liquidation preference $100,000 per share," and inserting in lieu thereof
the clause ", the issuance of a series of up to 4,000 shares of its
authorized preferred stock, par value $.01 per share, liquidation preference
$25,000 per share," and
(d) Striking from Article First of the Articles Supplementary creating a
Series F of Auction Market Preferred Stock filed with the Department on
December 16, 1993, the clause ", the issuance of a series of up to 500
shares of its authorized preferred stock, par value $.01 per share,
liquidation preference $100,000 per share," and inserting in lieu thereof
the clause ", the issuance of a series of up to 2,000 shares of its
authorized preferred stock, par value $.01 per share, liquidation preference
$25,000 per share," and
(e) Amending each of the following sections of Article Third of each of
the Articles Supplementary creating each of the Series A through F of the
Auction Market Preferred Stock under the heading DESIGNATION as follows:
Series A: Deleting clauses "750 shares of preferred stock" and
"$100,000 per share" and inserting in lieu thereof "3,000 shares of
preferred stock" and "$25,000 per share,"
Series B: Deleting clauses "750 shares of preferred stock and
"$100,000 per share" and inserting in lieu thereof "3,000 shares of
preferred stock" and "$25,000 per share,"
Series C: Deleting clauses "500 shares of preferred stock" and
"$100,000 per share" and inserting in lieu thereof "2,000 shares of
preferred stock" and "$25,000 per share,"
Series D: Deleting clauses "1000 shares of preferred stock" and
"$100,000 per share" and inserting in lieu thereof "4,000 shares of
preferred stock" and "$25,000 per share,"
Series E: Deleting clauses "500 shares of preferred stock" and
"$100,000 per share" and inserting in lieu thereof "2,000 shares of
preferred stock" and "$25,000 per share,"
A-2
<PAGE>
Series F: Deleting clauses "500 shares of preferred stock" and
"$100,000 per share" and inserting in lieu thereof "2,000 shares of
preferred stock" and "$25,000 per share," and
(f) In each of the following sections of Article THIRD of each of the
Articles Supplementary creating each of the Series A through F of Auction
Market Preferred Stock the sum "$25,000" is inserted in lieu of "$100,000":
1. DEFINITIONS.
"AMPS Basic Maintenance Amount"
"Dividend Coverage Amount,"
3. DIVIDENDS. (c)(ii)
4. LIQUIDATION RIGHTS (a)
5. REDEMPTION. (a), (b); and
(g) In addition to the amendments to each of the Articles Supplementary
specifically set forth above, each of said Articles Supplementary is hereby
amended MUTATIS MUTANDIS to the extent necessary to give effect to the
reduction of the per share liquidation preference from "$100,000" to
"$25,000" and the related four to one split of the outstanding shares of
Series A, Series B, Series C, Series D, Series E and Series F of the Auction
Market Preferred Stock set forth in Article Second hereof.
A-3
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
COMMON STOCK
PROXY THE FIRST AUSTRALIA PRIME INCOME FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 14, 1996
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 Prime Income Fund, Inc. which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of The First Australia Prime Income
Fund, Inc. to be held at One Seaport Plaza, New York, New York, on March 14,
1996, at 3:00 p.m., New York City time, and any adjournment thereof.
Unless otherwise specified in the squares provided, the undersigned's vote
will be cast FOR items (1), (3), (4) and (5).
1. The election of five Directors to serve as Class II Directors for a
three-year term:
FOR all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY TO VOTE FOR ALL NOMINEES LISTED
BELOW) / / BELOW / /
NOMINEES: Harry A. Jacobs, Jr., Rt. Hon. Malcolm Fraser, Brian M. Sherman,
Howard A. Knight and Peter D. Sacks.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THE NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
----------------------------------------------------------------------------
3. Ratification of the selection of Price Waterhouse LLP as independent public
accountants.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
4. Approval of the proposed amendment to the Fund's charter documents to
decrease the liquidation value of the Fund's shares of preferred stock,
Series A-F, in order to effect a stock split.
/ / FOR / / AGAINST / / ABSTAIN
5. Approval of the proposed amendment to the Fund's charter documents to
eliminate the limitation on the aggregate liquidation value of the Fund's
preferred stock.
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion on any other business which may properly come before the
meeting or any adjournment 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 ________________________, 1996
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
<PAGE>
AUCTION MARKET PREFERRED
STOCK, SERIES A-G
PROXY THE FIRST AUSTRALIA PRIME INCOME FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 14, 1996
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 Auction Market
Preferred Stock, Series A-G, of The First Australia Prime Income Fund, Inc.
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of The First Australia Prime Income Fund, Inc. to be held at One Seaport Plaza,
New York, New York, on March 14, 1996, at 3:00 p.m., New York City time, and any
adjournment thereof.
Unless otherwise specified in the squares provided, the undersigned's vote
will be cast FOR items (2), (3), (4) and (5).
2. The election of two Directors to represent the interests of Preferred
Stock for the ensuing year:
FOR all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY TO VOTE FOR ALL NOMINEES LISTED
BELOW) / / BELOW / /
NOMINEES: David Manor and Marvin Yontef.
(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.
/ / FOR / / AGAINST / / ABSTAIN
4. Approval of the proposed amendment to the Fund's charter documents to
decrease the liquidation value of the Fund's shares of preferred stock,
Series A-F, in order to effect a stock split.
/ / FOR / / AGAINST / / ABSTAIN
5. Approval of the proposed amendment to the Fund's charter documents to
eliminate the limitation on the aggregate liquidation value of the Fund's
preferred stock.
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion on any other business which may properly come before
the meeting or any adjournment 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 ________________________, 1996
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
