Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
(800) 451-6788
February 11, 1997
Dear Shareholder:
The Annual Meeting of Shareholders is to be held at 3:00 p.m. on
Thursday, March 13, 1997, 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 III 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 increase the number of authorized shares of common 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.
Laurence S. Freedman
Chairman
Brian M. Sherman
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 PRIME INCOME FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 13, 1997
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 13, 1997, at 3:00 p.m., for the following purposes:
(1) To elect five Directors to serve as Class III 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, 1997;
(4) To amend the Fund's charter to increase the number of
authorized shares of common stock; and
(5) 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,
1997 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
Newark, New Jersey
February 11, 1997
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>
PROXY STATEMENT
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
-----------
Annual Meeting of Shareholders
March 13, 1997
-----------
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 13, 1997, at 3:00 p.m. The approximate mailing date for this
Proxy Statement is February 11, 1997.
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 and 4 and proxies submitted by holders of the Fund's preferred
stock will be voted in favor of Proposals 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 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-I)
------------ -------------------------
Proposal 1:
<S> <C> <C>
Election of Class III 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 Increase the
Number of Authorized Shares of
Common Stock................................. Yes No
</TABLE>
The Board of Directors has fixed the close of business on January 2,
1997 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, 1997, the Fund had outstanding 194,559,755.70 shares of common stock, par
value $.01 per share; 3,000 shares of Auction Market Preferred Stock, Series A,
par value $.01 per share; 3,000 shares of Auction Market Preferred Stock, Series
B, par value $.01 per share; 2,000 shares of Auction Market Preferred Stock,
Series C, par value $.01 per share; 4,000 shares of Auction Market Preferred
Stock, Series D, par value $.01 per share; 2,000 shares of Auction Market,
Preferred Stock, Series E, par value $.01 per share; 2,000 shares of Auction
Market Preferred Stock, Series F, par value $.01 per share; 3,000 shares of
Auction Market Preferred Stock, Series G, par value $.01 per share; 2,500 shares
of Auction Market Preferred Stock, Series H, par value $.01 per share; and 2,500
shares of Auction Market Preferred Stock, Series I, 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.
1
<PAGE>
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, 1996 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.
PROPOSAL 1: ELECTION OF CLASS III 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. Sir Roden Cutler, David Lindsay Elsum,
Laurence S. Freedman, Michael R. Horsburgh and William J. Potter, 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 2000 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 III 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 10/31/96 (1)
--------------------------- ----------------- --- ----- ---------------
Class I (Term Expiring at the Annual Meeting to be held in 1998)
<S> <C> <C> <C> <C>
Anthony E. Aaronson (+) Director, The First Australia Fund, Inc. (since 60 1986 -
116 South Anita Avenue 1985); Tony Aaronson (textile agent) (since
Los Angeles, CA 90049 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).
2
<PAGE>
Roger C. Maddock* Director, The First Australia Fund, Inc. (since 46 1992 -
Union House, Union Street 1992) 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 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).
John T. Sheehy (+) Director, The First Australia Fund, Inc. (since 54 1986 -
6920 Koll Center Parkway 1985), First Australia Prime Income Investment
Suite 225 Company Limited (since 1986) and The First
Pleasanton, CA 94566 Commonwealth Fund, Inc. (since 1992);
Managing Director, Black & Company
(broker-dealer and investment bankers); 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.
Class II (Term Expiring at the Annual Meeting to be held in 1999)
Harry A. Jacobs, Jr.* Director, The First Australia Fund, Inc. (since 75 1986 6,960
One New York Plaza 1985); Chairman and Chief Executive Officer,
New York, NY 10292 Prudential Mutual Fund 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); Trustee, The Trudeau
Institute (eleemosynary); Director of 11
investment companies affiliated with Prudential
Securities Incorporated.
3
<PAGE>
Rt. Hon. Malcolm Fraser, Director, The First Australia Fund, Inc. (since 66 1986 -
A.C., C.H. (++) 1985), First Australia Prime Income Investment
55 Collins Street Company Limited (since 1986) and The First
Melbourne, Victoria 3000 Commonwealth Fund, Inc. (since 1992); Partner,
Australia Nareen Pastoral Company (agriculture); Fellow,
Center for International Affairs, Harvard
University; International Council of Associates,
Claremont University; Member, ANZ
International Board of Advice (1987-1993);
InterAction Council for Former Heads of
Government (1987-1993); 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 1983);
Parliamentarian-Prime Minister of Australia
(1975-1983).
Brian M. Sherman* President and Director of the Fund; President and 53 1986 -
Level 3 Director, The First Australia Fund, Inc. (since
190 George Street 1985); Joint Managing Director (since 1986) and
Sydney, N.S.W. 2000 Chairman (since 1985), First Australia Prime
Australia Income Investment Company Limited; Sole Vice
President and Director (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); 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; Fund and Portfolio Manager, Westpac
Banking Corporation (1976-1981);
Manager-Investments, Outwich Limited (an
affiliate of Baring Brothers & Co. Ltd.)
(merchant bank) (1972-1976).
4
<PAGE>
Howard A. Knight Director, The First Australia Fund, Inc. 54 1993 -
87 Cadogan Gardens (since 1993); Director and Vice Chairman,
Suite #1 Scandinavian Broadcasting System S.A.
London SW3 2RD (television and radio broadcasting) (since July
United Kingdom 1996); Private Investor 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 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).
Peter D. Sacks (+) Director, The First Commonwealth Fund, Inc. 51 1993 -
33 Yonge Street (since 1992); President and Director, Toron
Suite 706 Capital Markets, Inc. (currency, interest rate and
Toronto, Ontario M5E 1G4 commodity risk management) (since 1988); Vice
Canada President and Treasurer, Midland Bank Canada
(1987-1988); Vice President and Treasurer,
Chase Manhattan Bank of Canada (1985-1987).
Class III (Current Directors and Nominees for a Term Expiring at the Annual Meeting to be held in 2000)
Sir Roden Cutler, V.C., Director, The First Australia Fund, Inc. (since 80 1986 -
A.K., K.C.M.G., 1985); Chairman (1986-1995) and Director (since
K.C.V.O., C.B.E., 1986), First Australia Prime Income Investment
K.St.J. (++) Company Limited; Chairman (1992-1995) and
22 Ginahgulla Road Director (since 1992), The First Commonwealth
Bellevue Hill, N.S.W. 2023 Fund, Inc.; Australia Director, Rothmans
Australia 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).
5
<PAGE>
David Lindsay Elsum (++) Director, The First Australia Fund, Inc. (since 59 1986 -
9 May Grove 1985), First Australia Prime Income Investment
South Yarra, Victoria 3141 Company Limited (since 1986) and The First
Australia Commonwealth Fund, Inc. (since 1992);
Chairman, Health Computing Services Limited;
Director, MaxiLink Ltd.; 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); Member, Corporations and
Securities Panel of the Australian Securities
Commission; Chairman, Queen Victoria Market;
Director, First Resources Development Fund;
Chairman, Melbourne Wholesale Fish Market
Ltd.; Member, Administrative Appeals Tribunal.
Laurence S. Freedman* Sole Vice President and Director (since 1986) 53 1986 -
Level 3 and Chairman (since 1995) of the Fund; Sole
190 George Street Vice President and Director (since 1985) and
Sydney, N.S.W. 2000 Chairman (since 1995), The First Australia Fund,
Australia Inc.; Joint Managing Director, First Australia
Prime Income 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 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).
6
<PAGE>
Michael R. Horsburgh Director, The First Australia Fund, Inc. (since 51 1986 -
675 Third Avenue 1985); Director, The First Commonwealth Fund,
22nd Floor Inc. (since 1994); Director and Chief Executive
New York, NY 10017 Officer (since 1991) and Managing Director
(since 1996), Carlson Investment Management,
Inc.; 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.
William J. Potter (++) Director, The First Australia Fund, Inc. (since 48 1986 286
380 Lexington Avenue 1985), The First Australia Prime Income
Suite 517 Investment Company Limited (since 1986) and
New York, NY 10168 The First Commonwealth Fund, Inc. (since
1992); Partner, Sphere Capital Partners
(corporate consulting) (since 1989); President,
Ridgewood Partners Group International Ltd.
(investment banking) (since 1989); Advisor,
Guardian Capital Group; Managing Director,
Prudential-Bache Securities Inc. (1984-1989);
Director, National Foreign Trade Association;
Director, Ridgewood Capital Funding, Inc.
(NASD); Director, Alexandria Bancorp Limited;
Director, Battery Technologies, Inc.; Director,
Compuflex Inc.; Director, Impulsora del Fondo
Mexico; Director, International Panorama
Resources Ltd.; Director, Voicenet, Inc.;
Director, Alexandria Bancorp (banking group in
Cayman Islands); Director, Canadian Health
Foundation; First Vice President, Barclays Bank,
plc (1982-1984); previously, various positions
with Toronto Dominion Bank.
<FN>
- -----------
* 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,
1996. No shares of the Fund's preferred stock are owned by the Directors.
</FN>
</TABLE>
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 five nominees to the Fund's Board of Directors.
7
<PAGE>
PROPOSAL 2: ELECTION OF PREFERRED DIRECTORS
The Fund has outstanding 3,000 shares of Auction Market Preferred
Stock, Series A, par value $.01 per share; 3,000 shares of Auction Market
Preferred Stock, Series B, par value $.01 per share; 2,000 shares of Auction
Market Preferred Stock, Series C, par value $.01 per share; 4,000 shares of
Auction Market Preferred Stock, Series D, par value $.01 per share; 2,000 shares
of Auction Market Preferred Stock, Series E, par value $.01 per share; 2,000
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; 2,500 shares of Auction Market Preferred Stock, Series H, par value $.01
per share; and 2,500 shares of Auction Market Preferred Stock, Series I, 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
14, 1996, have been nominated to serve as Preferred Directors until the Annual
Meeting of Shareholders to be held in 1998. 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.
The following table sets forth certain information concerning each of
the nominees as a Preferred 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 10/31/96 (1)
--------------------------- ----------------- --- ----- ---------------
<S> <C> <C> <C> <C> <C>
David Manor** Treasurer of the Fund, The First Australia Fund, 56 1988 -
Level 3 Inc. and First Australia Prime Income Investment
190 George Street Company Limited; Director and Treasurer, The
Sydney, N.S.W. 2000 First Commonwealth Fund, Inc.; Executive
Australia Director, EquitiLink Australia Limited and
EquitiLink Limited (since 1986); Director,
EquitiLink International Management Limited
(since 1987) and EquitiLink U.S.A., Inc.
Marvin Yontef** Director, First Australia Prime Income 50 1989 -
P.O. Box 85 Investment Company Limited; Partner, Stikeman,
5500 Commerce Court West Elliott (Canadian law firm); Director and
Toronto, Ontario M5L 1B9 Executive Committee Member, Gordon Capital
Canada Corporation (Canadian investment dealer) (since
1996); Director, Pendaries Petroleum Ltd. (since
1996).
<FN>
- -----------
** 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, 1996, the Preferred Directors of the Fund owned no
shares of the Fund's common or preferred stock.
</FN>
</TABLE>
8
<PAGE>
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, 1997. 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 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, 1997.
PROPOSAL 4: AMENDMENT OF THE FUND'S CHARTER DOCUMENTS TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Background
The Fund's charter gives it the authority to issue 300,000,000 shares
of stock with an aggregate par value of $3,000,000 divided into two classes of
200,000,000 shares of Common Stock, $0.01 par value per share and of 100,000,000
shares of Preferred Stock, $0.01 par value per share.
Since the Fund's inception in 1986, through January 2, 1997, it has
issued 194,559,755.70 shares of Common Stock and 24,000 shares of Preferred
Stock.
Given the fact that only 5,440,244.3 shares of Common Stock remain
available for issuance, the Fund's Board of Directors, at a meeting held on
December 10, 1996 adopted the following resolution: RESOLVED, that the first
sentence of Article Fifth of the Fund's Charter be amended to read in its
entirety as follows: "The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 500,000,000 shares with an
aggregate par value of $5,000,000, divided into two classes, comprised of
400,000,000 shares of Common Stock, $.01 par value per share ("Common Stock")
and 100,000,000 shares of Preferred Stock, $.01 par value per share ("Preferred
Stock"); and
RESOLVED FURTHER, that the Board of Directors declare such amendment to be
advisable and directs that the proposed amendment be submitted for consideration
at the 1997 annual meeting of stockholders."
The Fund issued 85,643,095 shares of common stock in connection with
its initial public offering and over-allocation option in 1986. Since that time,
the fund has issued an additional 108,916,660.70 shares of its Common Stock in
connection with its Dividend Reinvestment Plan, stock dividends and with rights
offerings undertaken in 1992, 1993, 1995 and 1996.
Reasons for the Amendment
The Fund's Board of Directors deems it advisable to increase the
authorized Common Stock of the Fund in order to permit the long-term continuance
of the Dividend Reinvestment Plan and to give the Fund the flexibility to engage
in such activities as further rights offerings, acquisitions or stock dividends
or splits. Any issuance of additional shares of the Fund would require the
Board's approval after a determination that the proposed issuance of shares
would be in the best interest of the Fund's stockholders.
9
<PAGE>
Through January 2, 1997, the Fund has issued 194,559,755.70 shares of
its common stock under its Dividend Reinvestment Plan. The Fund has also had
four previous rights offerings, as a result of which the Fund raised an
aggregate $804,062,331. The rights offerings also supported issuance of
$600,000,000 of Auction Market Preferred Stock, the issuance of which has
favorably affected the Fund's total return to holders of its common stock.
Although the Fund's cash distribution rate has decreased in the past four years
reflecting generally declining interest rates in Australia, the tactical
investment of the proceeds from the rights offerings has served to temper
reductions in the cash distribution rate over that period by permitting the Fund
to restructure its portfolio without having to recognize capital losses or sell
securities with positive characteristics, such as relatively favorable interest
rates.
Rights offerings were made in 1992 and 1993 for the stated purposes of
giving the Fund the flexibility to adjust the average maturity of its portfolio,
and to make appropriate tactical adjustments to its portfolio, to permit it to
increase its investments in the Australian dollar Eurobond market and, if
possible, to reduce the Fund's expense ratio. The purpose of the 1995 rights
offering was to increase Fund assets available for investment in the Australian
and New Zealand bond markets in light of the higher yields available compared
with U.S. dollar-denominated investments of similar quality. The Fund also
sought to emphasize investments in the Eurobond markets and to provide a modest
reduction in the Fund's expense ratio. The 1996 rights offering was undertaken
to capture capital gains to be used to supplement investment income and offset
unrealized portfolio losses in the Fund's portfolio. As was the case with prior
rights offerings, the 1996 rights offering was also expected to permit the Fund
to emphasize Eurobond investments and to result in a further decline in the
Fund's expense ratio.
Each of the rights offerings was approved by the Fund's Board of
Directors, based in part on the deliberations and favorable recommendation of a
board committee appointed to review each proposal in depth.
In the case of the 1992 rights offering and the 1995 rights offering,
the Fund used the proceeds to capture higher yields then available for long-term
securities, and in 1993, the Fund sought to reduce its exposure to long-term
securities in order to reduce the volatility in its NAV in a period of changing
market conditions. Overall, the Fund's investment in Australian
dollar-denominated Eurobonds ("Eurobonds") rose from 15.8% of its total assets
at October 31, 1992, immediately prior to the investment of the proceeds of the
1992 rights offering, to 24% of the Fund's total assets at January 31, 1994, the
last day of the quarter in which the proceeds of the 1993 offer were invested.
Prior to the investment of the proceeds of the 1995 rights offering at April 30,
1995, 33.8% of the Fund's total assets were invested in Eurobonds. Following the
investment of the proceeds of that offering at July 31, 1995, the Fund's holding
in Eurobonds represented 36.9% of its assets and following investment of the
proceeds of the 1996 rights offering, at July 31, 1996, the Fund's holdings in
Eurobonds represented 34.4% of its assets.
For the four fiscal years ended October 31, 1996, 1995, 1994, 1993 and
1992, the Fund's expense rations were, respectively, 1.29%, 1.47%, 1.41%, 1.44%
and 1.43%, compared with expense ratios of 1.59% and 1.54% for the 1991 and 1990
fiscal years. In the opinions of the Investment Manager and Investment Adviser,
the expense ratios for the 1996, 1995, 1994, 1993 and 1992 fiscal years (which
are the fiscal years in which the proceeds of the 1996, 1995, 1993 and 1992
rights offerings were invested) were favorably affected by the rights offerings.
Should the Fund determine to undertake a rights offering in the future,
shareholders who do not participate would experience some dilution of their
interests. Although the Fund has sought in the past to restrict dilution
occasioned by rights offerings, the extent of dilution will always depend on the
amount, if any, by which the subscription price at which shares may be purchased
represents a discount to NAV on the date new shares are issued. Although the
1992 rights offering had an anti-dilutive effect of $0.03 per share, dilution in
the case of the 1993, 1995 and 1996 rights offerings was, respectively, $0.10
per share, $0.35 per share and $0.40 per share.
The Board of Directors recommends that the holders of its common stock
vote FOR the amendment to the Fund's charter to increase the number of shares of
its authorized common stock.
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.
10
<PAGE>
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, 1996, the Board of
Directors held four regularly scheduled meetings and two special 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. Aaronson who attended only one of the two
Audit Committee Meetings. Messrs. Knight and Yontef, who attended at least 75%
of the regularly scheduled meetings, missed one or both of the special meetings,
both of which were called on short notice. Mr. Calvert-Jones attended one
regular meeting and one special meeting of the Board prior to his resignation
from the Board at the June 13, 1996 meeting. Mr. Calvert Jones was replaced by
Mr. Neville Miles at the September 12, 1996 meeting.
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 38), Assistant Vice President-Chief
Investment Officer; Barry G. Sechos (age 35), Assistant Treasurer; Eugene S.
Stark (age 38), Chief Financial Officer & Assistant Treasurer; Kenneth T.
Kozlowski (age 35), Assistant Treasurer; Roy M. Randall (age 60), Secretary;
Allan S. Mostoff (age 64), Assistant Secretary; and Margaret A. Bancroft (age
58), 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 III 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 Australia Limited (since 1993) and Solicitor, Allen, Allen & Hemsley
(1986-1993); Eugene S. Stark, First Vice President, Prudential Mutual Fund
Management, Inc. (since 1990); 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 office of Canadian 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.
11
<PAGE>
During the fiscal year ended October 31, 1996, 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 $240,000.
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, 1996.
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.
<TABLE>
<CAPTION>
Compensation Table
Fiscal Year Ended 10/31/96
Total
Pension or Estimated Compensation
Aggregate Retirement Annual From Registrant
Compensation Benefits 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)
J. Calvert-Jones (through Sept. 1996).............. 10,313 N/A N/A 15,938(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)
Neville Miles (since Sept. 1996) .................. 3,438 N/A N/A 5,313(2)
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 (2)
Marvin Yontef...................................... 13,750 N/A N/A 13,750(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 $29,000 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 February 11, 1997. As mentioned above, SCC may be engaged to assist in
the solicitation of proxies. As
12
<PAGE>
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 III 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 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 increase the number of authorized shares of common stock (Proposal
4) will require the affirmative vote of the holders of a majority of the
outstanding shares of the common stock. 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.
13
<PAGE>
Shareholder Proposals. If a shareholder intends to present a proposal at the
Annual Meeting of Shareholders of the Fund to be held in 1998 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 26, 1997.
By Order of the Board of Directors,
Roy M. Randall, Secretary
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
February 11, 1997
14
<PAGE>
APPENDIX A
THE FIRST AUSTRALIA PRIME INCOME FUND, INC
PROPOSED AMENDMENT TO CHARTER DOCUMENTS
FIRST: Immediately prior to the filing of these Articles of Amendment,
the total number of shares of all classes which the Corporation had the
authority to issue was 300,000,000 shares of stock with an aggregate par value
of $3,000,000 divided into two classes of shares: 200,000,000 shares of Common
Stock, $0.01 par value per share and 100,000,000 shares of Preferred Stock,
$0.01 par value per share.
SECOND: The first sentence of Article Fifth of the Charter of the
Corporation is hereby amended to read: "The total number of shares of all
classes of stock which the Corporation shall have authority to issue is
500,000,000 shares with an aggregate par value of $5,000,000, divided into two
classes comprised of 400,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock") and 100,000,000 shares of Preferred Stock, $0.01 par
value per share ("Preferred Stock")."
15
<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 13, 1997
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 13,
1997, 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) and (4).
1. The election of five Directors to serve as Class III Directors for a
three-year term:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees listed
contrary below [_] below [_]
Nominees: Sir Roden Cutler, David Lindsay Elsum, Laurence S. Freedman,
Michael R. Horsburgh and William J. Potter.
(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 to increase
the number of authorized shares of common stock.
|_| FOR |_| AGAINST |_| ABSTAIN
5. 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 , 1997
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
<PAGE>
AUCTION MARKET PREFERRED
STOCK, SERIES A-I
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 13, 1997
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-I, 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 13, 1997, 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) and (4).
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 to increase the
number of authorized shares of common stock.
|_| FOR |_| AGAINST |_| ABSTAIN
5. 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 , 1997
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
<PAGE>
