FIRST AUSTRALIA PRIME INCOME FUND INC, DEF 14A, 1999-12-30

FIRST AUSTRALIA PRIME INCOME FUND INC
DEF 14A, 1999-12-30

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<PAGE>

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )

Filed by the Registrant [X]
-
Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement
-
[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
-
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

-------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

<PAGE>

[Logo appears here]
First
Australia
Prime Income
Fund, Inc.

Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
(800) 451-6788

December 30, 1999

Dear Shareholder:

The Annual Meeting of Shareholders is to be held at 2:00 p.m. (Eastern
time), on Wednesday, March 22, 2000 at the offices of Prudential Securities
Incorporated, One Seaport Plaza, 35th Floor, New York, New York. A Proxy
Statement regarding the meeting, a proxy card for your vote at the meeting and
an envelope postage prepaid in which to return your proxy card 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 PricewaterhouseCoopers LLP as
independent public accountants. 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 you vote in favor of each of the foregoing
matters.

/s/ Laurence S. Freedman /s/ Brian M. Sherman
- ------------------------- ---------------------
Laurence S. Freedman Brian M. Sherman
Chairman President

YOU ARE URGED TO SIGN AND MAIL THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE 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 22, 2000

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, 35th Floor, New York,
New York, on Wednesday, March 22, 2000, at 2:00 p.m. (Eastern time), 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 PricewaterhouseCoopers LLP as independent
public accountants of the Fund for the fiscal year ending October 31,
2000; and

(4) To transact any other business as may properly come before the meeting
or any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on December 29, 1999
as the record date for the determination of shareholders entitled to vote at
the meeting or any adjournment or postponement thereof.

In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the meeting, the
persons named as proxies may propose one or more adjournments of the meeting,
in accordance with applicable law, to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of the holders of a
majority of the Fund's shares present in person or by proxy at the meeting.
The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of any proposal and will vote
against any such adjournment those proxies to be voted against that proposal.

By Order of the Board of Directors,
Roy M. Randall, Secretary

Newark, New Jersey
December 30, 1999

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 proxy card 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 card 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 22, 2000

---------------

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., a Maryland corporation (the "Fund"), to be voted at the
Annual Meeting of Shareholders of the Fund (the "Meeting") to be held at the
offices of Prudential Securities Incorporated, One Seaport Plaza, 35th Floor,
New York, New York, on Wednesday, March 22, 2000, at 2:00 p.m. (Eastern time).
The approximate mailing date for this Proxy Statement is December 30, 1999 or
as soon as practicable thereafter.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked on the proxy card.
Unless instructions to the contrary are marked, proxies submitted by holders
of the Fund's common stock will be voted FOR Proposals 1, 3 and 4 and proxies
submitted by holders of the Fund's preferred stock will be voted FOR Proposals
2, 3 and 4. Any proxy may be revoked at any time prior to its exercise 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
Vote of Solicitation of
Common Vote of Preferred
Stockholders Stockholders (Series A-I)
--------------- -------------------------
<S> <C> <C>
Proposal 1:
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:
Transact Other Business Properly
Before the Meeting.............. Yes Yes
</TABLE>

The Board of Directors has fixed the close of business on December 29, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment or postponement thereof.
Shareholders on the record date will be entitled to one vote for each share
held. As of December 29, 1999, the Fund had outstanding 267,377,298 shares of
common stock, par value $0.01 per share; 3,000 shares of Auction Market
Preferred Stock, Series A, par value $0.01 per share; 3,000 shares of Auction
Market Preferred Stock, Series B, par value $0.01 per share; 2,000 shares of
Auction Market Preferred Stock, Series C, par value $0.01 per share; 4,000
shares of Auction Market Preferred Stock,

1
<PAGE>

Series D, par value $0.01 per share; 2,000 shares of Auction Market, Preferred
Stock, Series E, par value $0.01 per share; 2,000 shares of Auction Market
Preferred Stock, Series F, par value $0.01 per share; 3,000 shares of Auction
Market Preferred Stock, Series G, par value $0.01 per share; 2,500 shares of
Auction Market Preferred Stock, Series H, par value $0.01 per share; and 2,500
shares of Auction Market Preferred Stock, Series I, par value $0.01 per share.
To the best knowledge of management of the Fund, as of the record date, no
persons or group beneficially owned 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 on the enclosed proxy card 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, 1999, and any more recent reports, to
any Fund shareholder upon request. To request a copy, please call or write to
the Fund's Administrator, Prudential Investments Fund Management LLC, Gateway
Center 3, 100 Mulberry Street, Newark, NJ 07102, Telephone: 1-800-451-6788.

PROPOSAL 1: ELECTION OF 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. David Lindsay Elsum, Laurence S.
Freedman, Michael R. Horsburgh and William J. Potter, Directors who were
elected to serve until the Meeting, and Peter J. O'Connell, who was appointed
to the Board in December 1999, have been nominated by the Board of Directors
of the Fund, including the Directors who are not interested persons of the
Fund, to serve as Class III Directors for a three-year term to expire at the
Annual Meeting of Shareholders to be held in 2003 and until their successors
are duly elected and qualified. Mr. O'Connell was appointed to the Board by
the Board of Directors, including the Directors who are not interested persons
of the Fund, to replace Sir Roden Cutler, a Class III Director who resigned
from the Board in December 1999. 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 on the enclosed proxy card to vote
for 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 of the
Fund's nominees for election as a Director and each Director of the Fund. Each
of the Fund's nominees is currently a Director of the Fund.

2
<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Business Experience, Present Office % of Total
Name and Address of with the Fund, Principal Occupation Director Outstanding
Each Director or Nominee or Employment and Directorships Age Since on 10/31/99(1)
------------------------ ------------------------------------------------------------ --- -------- --------------

Class III (Current Directors and Nominees for a Term Expiring at
the Annual Meeting to be held in 2003)

<S> <C> <C> <C> <C>
David Lindsay Elsum, A.M.+ Mr. Elsum has over 20 years' experience in investment and 62 1986 1,000
9 May Grove insurance markets. He isa member of the Australian
South Yarra, Victoria 3141 Securities and Investment Commission Takeover Panel and
Australia a member of the Australian Government Administrative
Appeals Tribunal. Previously he was founding Managing
Director of Capel Court Investment Bank and subsequently
Chief Executive of major public companies including The MLC
Limited (insurance) and President of the State of Victoria
Superannuation Fund (pension fund management).

Director, The First Australia Fund, Inc. (since 1985), The
First Commonwealth Fund, Inc. (since 1992) and First
Australia Prime Income Investment Company Limited
(since 1986); MaxiLink Limited (investment company);
Chairman, Audit Victoria; Chairman, Melbourne Wholesale
Fish Market Ltd.; Chairman, Queen Victoria Market; Chairman,
Stodart Investment Pty. Ltd.; Director, EquitiLink eLink
Limited (investment company); Director, Financial Planning
Association Limited.

Laurence S. Freedman* Mr. Freedman has over 35 years of experience in 56 1986 86,840
Level 3 funds management, with a focus on global investment
190 George Street analysis. Prior to founding EquitiLink in 1981, he was
Sydney, N.S.W. 2000 Director of Investments at BT Australia Limited. Mr.
Australia Freedman's areas of fund management specialization include
investment in resource and development companies,
international economies and the geo-political impact on
investment markets.

Chairman of the Fund (since 1995) and Vice President of the
Fund (since 1986); Vice President and Director
(since 1985) and Chairman (since 1995), The First Australia
Fund, Inc.; President and Director (since 1992), The First
Commonwealth Fund, Inc.; Joint Managing Director, First
Australia Prime Income Investment Company Limited
(since 1986); Founder and Joint Managing Director,
EquitiLink Australia Limited (since 1981); Director,
EquitiLink Limited (holding company)(since 1986);
Director, EquitiLink Holdings Limited (holding company)
(since 1998); Director, EquitiLink International

</TABLE>

3
<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Business Experience, Present Office % of Total
Name and Address with the Fund, Principal Occupation Director Outstanding
of Each Director or Nominee or Employment and Directorships Age Since on 10/31/99(1)
- --------------------------- ------------------------------------------------------------ --- -------- --------------
<S> <C> <C> <C> <C>
Management Limited (since 1985); Chairman and Joint Managing
Director, MaxiLink Limited (investment company) (since 1987);
Chairman and Joint Managing Director, EquitiLink eLink
Limited (investment company) (since 1994); Managing Director,
Link Enterprises (International) Pty. Limited (investment
management company) (since 1980); Director, Ten Group Pty.
Limited (since 1994); Director, Ten Network Holdings
Limited (commercial television operator) (since 1998).

Michael R. Horsburgh Mr. Horsburgh has over 30 years' experience in investment 54 1986 0
Suite 2213, Kyobo Building banking and management. He is currently a consultant for
1,1-ka, Chongro, Durham Asset Management--Malaysia, a financial industry
Chrongro-ku consulting firm. In that position, he provides consulting
Seoul 110-714 services to ABN AMRO Asia Ltd., a Hong Kong registered
South Korea securities company. Director, The First Australia Fund, Inc.
(since 1985); Director, The First Commonwealth Fund, Inc.
(since 1994); Executive Vice President, Hannuri Securities
& Investment (October 1997-September 1999); Director, The
First Hungary Fund (Jersey investment company); Director,
Luxonen (Luxemborg investment company); Director and Managing
Director, Carlson Investment Management, Inc. (1991-October
1997); Director and Chief Executive Officer, Horsburgh
Carlson Investment Management, Inc. (1991-1996).

Peter J. O'Connell Mr. O'Connell has acted as an international mergers and 46 1999 0
G.P.O. Box 10 acquisitions lawyer practicing principally in the Asian
Sydney, NSW 2001 region and in recent years has been actively involved in
Australia developing key businesses in telecommunications, IT and
on-line businesses. He is currently the Chief Executive
Officer of Ten Ventures Pty. Ltd., a wholly-owned
subsidiary of Network Ten which has been charged with
commercializing digital broadcasting for the network, acts
as a venture capitalist investing in technology and holds
Network Ten's 50% interest in the on-line joint venture with
Village Roadshow. Mr. O'Connell is a barrister and solicitor
and has practiced for 15 years in Australia.

Director, The First Australia Fund, Inc. (since December 1999);
Chief Executive Officer, Ten Ventures Pty. Ltd. (since
October 1999); Director of Operations, Consolidated Press
Holdings Limited (1997-1999); Chief Executive Officer,
Hargrave Consultants Pty. Ltd. (1994-1997).
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Business Experience, Present Office % of Total
Name and Address with the Fund, Principal Occupation Director Outstanding
of Each Director or Nominee or Employment and Directorships Age Since on 10/31/99(1)
- --------------------------- ------------------------------------------- --- -------- --------------
<C> <S> <C> <C> <C>
William J. Potter+ Mr. Potter has extensive experience in 51 1986 236
236 West 27th Street investment banking and fund management,
New York, NY 10001 including senior positions with Toronto
Dominion Bank, Barclays Bank PLC and
Prudential Securities, Inc. and board of
director positions with investment funds
involving over $20 billion in assets
beginning in 1983. Mr. Potter has been
involved in the Australian capital
markets since 1974 including management
and board of director positions with a
noted Australian brokerage house.
Mr. Potter is President of a U.S.
investment bank and has securities
licenses in the U.S. and Canada.
Mr. Potter also has extensive securities
underwriting experience in various capital
markets with an emphasis on natural
resources.

Director, The First Australia Fund, Inc.
(since 1985), First Australia Prime Income
Investment Company Limited (since 1986)
and The First Commonwealth Fund, Inc.
(since 1992); President, Ridgewood Group
International Ltd. (international
consulting/investment banking) (since
1989); President, Ridgewood Capital
Funding, Inc. (NASD) (private placement
securities) (since 1989); Director,
Impulsora del Fondo Mexico; Director,
International Panorama Inc.; Director,
National Foreign Trade Counsel; Director,
Longevity International Ltd.; Director,
Alexandria Bancorp (banking group in
Cayman Islands); Partner, Sphere Capital
Partners (corporate consulting) (1989-
1997).

Class I (Term Expiring at the Annual Meeting to be held in 2001)

Anthony E. Aaronson++ Mr. Aaronson has extensive experience in 62 1986 500
116 South Anita Avenue the management of private investments.
Los Angeles, CA 90049 He is Chairman of the Audit Committee of
the Fund.

Director, The First Australia Fund, Inc.
(since 1985); Anthony Aaronson (textile
agent) (since 1993); Vice President,
Textile Association of Los Angeles (1996-
1998).

Neville J. Miles+ Mr. Miles has over 20 years of 53 1996 0
23 Regent Street international investment banking
Paddington, N.S.W. 2021 experience. He was formerly head of
Australia Corporate Treasury at Westpac Banking
Corporation and Chairman of Ord Minnett
Limited (stockbrokers). Mr. Miles has
extensive experience in the areas of
corporate acquisitions and equity
offerings.
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Business Experience, Present Office % of Total
Name and Address with the Fund, Principal Occupation Director Outstanding
of Each Director or Nominee or Employment and Directorships Age Since on 10/31/99(1)
- --------------------------- ------------------------------------------- --- -------- --------------
<C> <S> <C> <C> <C>
Director, The First Australia Fund, Inc.
(since 1996); Director, The First
Commonwealth Fund, Inc. (since December
1999); Chairman and Director, MTM Funds
Management Limited (since 1997); Director,
MaxiLink Limited (investment company);
Director, EquitiLink eLink Limited
(investment company); Executive Director,
EL&C Ballieu Limited (stockbroker) (1994-
1997); Executive Director, Ord Minnett
Securities Limited (stockbroker) (1988-
1994).

Dr. Anton E. Schrafl Mr. Schrafl is currently Deputy Chairman of 67 1998 0
Talstrasse 83 "Holderbank" Financiere Glaris Ltd., a
CH-8001 Zurich Switzerland global manufacturer and distributor of
cement and allied products. He also serves
on the Board of Directors of Franke
Holding AG, a global supplier of kitchen
systems and equipment, and Organogenesis,
Inc., a medical products company involved
in cell culture.

Director, The First Commonwealth Fund, Inc
(since 1993); Director, First Australia
Prime Income Investment Company Limited.

John T. Sheehy++ Mr. Sheehy has over 30 years' experience in 57 1986 0
235 Montgomery Street investment banking, including with J.P.
Suite 300 Morgan & Company and Bear, Stearns & Co.
San Francisco, CA 94104 Inc. His specialty areas include
securities valuation, public offerings and
private placements of debt and equity
securities, mergers and acquisitions and
management buyout transactions.

Director, The First Australia Fund, Inc.
(since 1985), The First Commonwealth Fund,
Inc. (since 1992) and First Australia
Prime Income Investment Company Limited
(since 1986); Managing Director, The
Value Group LLC (investment banking)
(since 1997); Director, Video City, Inc.
(video retail merchandising) (since 1997);
Managing Director, Black & Company
(investment banking) (1996-1997); Managing
Director, Sphere Capital Partners
(investment banking) (1987-1996); Director,
Sandy Corporation (corporate consulting,
communication and training) (1986-
January 1996).
</TABLE>

6
<PAGE>

Class II (Term Expiring at the Annual Meeting to be held in 2002)
<C> <S> <C> <C> <C>
Rt. Hon. Malcolm Fraser, Former Prime Minister of Australia. Mr. Fraser has over 20 69 1986 0
A.C., C.H.+ years of experience in economics, global financial markets and
44/55 Collins Street management of private investments. He has been a member of the
Melbourne, Victoria 3000 Advisory Board of the Investment Company of America, a company in
Australia the Capital Group of funds, a consultant to the Prudential
Insurance Company of America, a member of the Consultative Board
of Directors for ANZ Bank and a consultant to Nomura Securities.
Mr. Fraser is a specialist in world economic relationships,
geo-political affairs and government and private sector
interrelationships and is an international consultant on political,
economic and strategic affairs.

Harry A. Jacobs, Jr.* Former Chairman of the Board of Prudential Securities. Mr. Jacobs 78 1986 11,136
One New York Plaza has over 40 years of experience in fund management, investment
New York, NY 10292 markets and closed-end funds, with extensive knowledge of
international equity, fixed income and commodity markets.

Director, The First Australia Fund, Inc. (since 1985); Senior
Director, Prudential Securities Incorporated (since 1986); Trustee,
The Trudeau Institute (eleemosynary); Director of eleven investment
companies affiliated with Prudential Securities Incorporated
(until November 1998).

Howard A. Knight Mr. Knight has over 30 years of experience in financial markets and 57 1993 0
36 Ives Street has been actively involved in the Australian financial markets
London SW3 2ND for more than 25 years. From 1991 to 1994, he served as President
United Kingdom of Investment Banking, Equity Transactions and Corporate Strategy
at Prudential Securities. Since 1996, Mr. Knight has served as
Vice Chairman, Director and Chief Operating Officer of SBS
Broadcasting SA (television and radio broadcasting), where he has
been actively involved in investment management and capital
markets.

Director, The First Australia Fund, Inc. (since 1993).
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Name and Address Business Experience, Present Office % of Total
of Each Director or with the Fund, Principal Occupation Director Outstanding
Nominee or Employment and Directorships Age Since on 10/31/99(1)
------------------- ---------------------------------------- --- -------- --------------
<C> <S> <C> <C> <C>
Peter D. Sacks++ Mr. Sacks' career has spanned 20 years in executive positions 54 1993 250
333 Yonge Street,Suite 706 in treasury management with CIBC, Chase Manhattan Bank and
Toronto, Ontario M5E 1G4 Midland Bank. He is currently president and director of
Canada Toron Capital Markets, Inc., a company which he established
in 1988 to design and manage customized hedging solutions
for institutional clients with commodity risks and currency
and interest rate exposures.

Director, The First Australia Fund, Inc. (since June 1999);
Director, The First Commonwealth Fund, Inc. (since 1992);
Director, First Australia Prime Income Investment Company
Limited (since December 1998); President, Toron Capital
Management Inc. (investment management) (since 1997);
President, Toron Capital Markets, Inc. (currency and interest
rate risk advice and management) (since 1988); President and
Director, First Horizons Holdings Limited (Canadian mutual
fund distributor).

Brian M. Sherman* Mr. Sherman is President of The First Australia Fund and 56 1986 86,840
Level 3 Chairman of EquitiLink Australia Limited, the Fund's
190 George Street Investment Adviser. He has 35 years experience in
Sydney, N.S.W. 2000 international funds management, stockbroking and in
Australia particular 23 years in the funds management industry
in Australia, managing money in equities and bonds.

President of the Fund (since 1986); Vice President and
Director (since 1992) and Chairman (since 1995), The First
Commonwealth Fund, Inc.; President and Director, The First
Australia Fund, Inc. (since 1985); Joint Managing Director
(since 1986) and Chairman (since 1995), First Australia
Prime Income Investment Company Limited; Chairman, EquitiLink
Limited (holding company) (since 1986); Chairman and Joint
Managing Director, EquitiLink Australia Limited (since 1981);
Chairman and Director, EquitiLink Holdings Limited (holding
company) (since 1998); Director, EquitiLink International
Management Limited (since 1985); Joint Managing Director,
MaxiLink Limited (investment company) (since 1987); Joint
Managing Director, EquitiLink eLink Limited (investment
company) (since 1994); Director, Ten Group Pty. Limited
(since 1994); Director, Ten Network Holdings Limited
(commercial television operator) (since 1998); Director,
Sydney Organizing Committee for the Olympic Games.
</TABLE>

8
<PAGE>

- ---------------
* 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 and Sherman 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. Elsum, Fraser, Miles and Potter are members of the Contract Review
Committee.

++ Messrs. Aaronson, Sacks and Sheehy are members of the Audit Committee.

(1) The information as to beneficial ownership as of October 31, 1999 is
based on statements furnished to the Fund by the Directors and nominees.
As controlling shareholders of the Investment Manager, Messrs. Freedman
and Sherman share voting and investment power for 86,840 shares of the
Fund's common stock owned by the Investment Manager. With the exception
of those 86,840 shares, which constitute 0.032% of the outstanding shares
of common stock of the Fund, all shares listed in this table are owned
with sole voting and investment power. In the aggregate, all of the
shares in the table represent approximately 0.037% of the total shares of
common stock outstanding as of October 31, 1999. As of October 31, 1999,
the Directors and nominees owned no shares of the Fund's preferred stock.

In addition to Messrs. Sherman and Freedman, Mr. David Manor, Ms. Ouma
Sananikone-Fletcher and Mr. Barry Sechos, as set forth below, serve as
executive officers of the Fund. As of October 31, 1999, the executive officers
of the Fund owned no shares of the Fund's common or preferred stock.

<TABLE>
<CAPTION>
Name and Principal Present Office Present Principal
Business Address with the Fund Occupation
- ----------------------------------------- --------------------------- ------------------------------------
<S> <C> <C>
David Manor Treasurer Managing Director, EquitiLink
EquitiLink International Management International Management Limited
Limited
P.O. Box 578
St. Helier Jersey
Channel Island JE4 5XB

Ouma Sananikone-Fletcher Assistant Vice President -- Chief Executive Officer, EquitiLink
EquitiLink Australia Limited Chief Investment Officer Australia Limited
Level 3, 190 George
Street
Sydney, N.S.W. 2000 Australia

Barry G. Sechos Assistant Treasurer Director, EquitiLink Australia Limited
EquitiLink Australia Limited
Level 3, 190 George
Street
Sydney, N.S.W. 2000 Australia
</TABLE>

9
<PAGE>

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.

PROPOSAL 2: ELECTION OF PREFERRED DIRECTORS

The Fund has outstanding 3,000 shares of Auction Market Preferred Stock,
Series A, par value $0.01 per share; 3,000 shares of Auction Market Preferred
Stock, Series B, par value $0.01 per share; 2,000 shares of Auction Market
Preferred Stock, Series C, par value $0.01 per share; 4,000 shares of Auction
Market Preferred Stock, Series D, par value $0.01 per share; 2,000 shares of
Auction Market Preferred Stock, Series E, par value $0.01 per share; 2,000
shares of Auction Market Preferred Stock, Series F, par value $0.01 per share;
and 3,000 shares of Auction Market Preferred Stock, Series G, par value $0.01
per share; 2,500 shares of Auction Market Preferred Stock, Series H, par value
$0.01 per share; and 2,500 shares of Auction Market Preferred Stock, Series I,
par value $0.01 per share.

Section 18 of the Investment Company Act of 1940, as amended (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 have been nominated by
the Board of Directors of the Fund, including the Directors who are not
interested persons of the Fund, 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") and to serve as Preferred Directors until
the Annual Meeting of Shareholders to be held in 2001. 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 on the enclosed proxy card 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 biographical information concerning
each of the nominees as a Preferred Director of the Fund.

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Present Office with % of Total
the Fund, Principal Outstanding
Name and Address of Each Occupation or Employment Director on
Nominee and Directorships Age Since 10/31/99(1)
------------------------ ------------------------------------------------ --- -------- ------------
<S> <C> <C> <C> <C>
David Manor* Mr. Manor is a Managing Director of EquitiLink 59 1988 0
P.O. Box 578 International Management Limited, the Fund's
17 Bond Street Investment Manager. He has previously served
St. Helier, Jersey as an Executive Director of EquitiLink
JE4 5XB Channel Islands Australia Limited, the Fund's Investment
Adviser, and as Chief Executive of the
Australian division of an international
trade finance corporation.
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Present Office with % of Total
the Fund, Principal Outstanding
Name and Address of Each Occupation or Employment Director on
Nominee and Directorships Age Since 10/31/99(1)
------------------------ ----------------------------------------- --- -------- ------------
<S> <C> <C> <C> <C>
Treasurer of the Fund, The First Australia 59 1988 0
Fund, Inc. and First Australia Prime
Income Investment Company Limited;
Director and Treasurer, The First
Commonwealth Fund, Inc. (since 1992);
Executive Director, EquitiLink Australia
Limited and EquitiLink Limited
(holding company) (1986-1998); Director,
EquitiLink International Management Limited
(since 1987).

Marvin Yontef* Mr. Yontef is currently a senior practitioner 53 1989 0
P.O. Box 85 and partner at Stikeman, Elliott (Canadian
5100 Commerce Court law firm) in the corporate group whose
West Toronto, Ontario practice comprises advising on mergers and
M5L 1B9 Canada acquisitions, corporate finance and business
and financial restructurings.

Director, First Australia Prime Income
Investment Company Limited; Director and
Executive Committee Member, Gordon Capital
Corporation (Canadian investment dealer)
(1996-1998).
</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 manager or investment adviser. 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
Manager and for the Investment Adviser and its parent.

(1) As of October 31, 1999, the Preferred Directors of the Fund as a group
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 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
PricewaterhouseCoopers LLP ("PwC"), independent public accountants, to examine
the financial statements of the Fund for the fiscal year ending October 31,
2000. This appointment is subject to ratification or rejection by the
shareholders of the Fund.

11
<PAGE>

Audit services performed by PwC 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 PwC in
the Fund.

Representatives of PwC 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 PwC as independent public accountants for the fiscal year
ending October 31, 2000.

PROPOSAL 4: OTHER BUSINESS

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 on the
enclosed proxy card to vote such proxies on such matters in accordance with
their best judgment.

FURTHER INFORMATION REGARDING DIRECTORS AND OFFICERS

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Section 30(h) of
the 1940 Act, as applied to the Fund, require the Fund's officers, Directors,
investment manager or adviser, affiliates of the investment manager or
adviser, and persons who beneficially own more than 10% of a registered class
of the Fund's outstanding securities ("Reporting Persons"), to file reports of
ownership of the Fund's securities and changes in such ownership with the
Securities and Exchange Commission and the American Stock Exchange. Such
persons are required by Securities and Exchange Commission regulations to
furnish the Fund with copies of all such filings.

Based solely on its review of the copies of such forms received by it and
written representations from certain Reporting Persons that no year-end
reports were required for those persons, the Fund believes that during the
fiscal year ended October 31, 1999, its Reporting Persons complied with all
applicable filing requirements.

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,
comprised of independent members of the Board only, that reviews and makes
recommendations to the Board with respect to entering into, renewal or
amendment of the Management Agreement, the Advisory Agreement and the
Administration Agreement. The Board of Directors does not have a standing
nominating or compensation committee.

During the Fund's fiscal year ended October 31, 1999, the Board of
Directors held four regularly scheduled meetings, the Audit Committee held two
meetings, and the Contract Review Committee held one meeting. Each of the
Directors then in office (except Mr. Fraser) attended at least 75% of the
aggregate number of meetings of the Board of Directors and all of the
Committees of the Board on which he served.

12
<PAGE>

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. Bieber,
Fortner, Manor and Sechos and Mesdames Bancroft and Sananikone-Fletcher, all
of whom have served since the Fund was organized in 1986, are as follows:
Brian M. Sherman, President (age 56); Laurence S. Freedman, Vice President
(age 56); David Manor, (age 59), Treasurer; Ouma Sananikone-Fletcher (age 41),
Assistant Vice President-Chief Investment Officer; Barry G. Sechos (age 38),
Assistant Treasurer; Peter W. Fortner (age 41), Assistant Treasurer; Roy M.
Randall (age 63), Secretary; Allan S. Mostoff (age 67), Assistant Secretary;
Sander M. Bieber (age 49), Assistant Secretary; and Margaret A. Bancroft (age
61), Assistant Secretary.

The respective principal occupations during the past five years of the
Fund's officers are as follows: Messrs. Sherman and Freedman, shown above in
the table of nominees and Directors under "Proposal 1: Election of Class III
Directors"; David Manor, shown in the table of nominees as Preferred Directors
under "Proposal 2: Election of Preferred Directors"; Ouma Sananikone-Fletcher,
Investment Director, EquitiLink Australia Limited (since 1994), Chief
Executive Officer, EquitiLink Australia Limited (since 1997), Director,
EquitiLink Holdings Limited (since 1998) and Executive Director, Banque
Nationale de Paris (1986-1994); Barry G. Sechos, General Counsel, EquitiLink
Australia Limited (since 1993), Director, EquitiLink Australia Limited (since
1994) and Director, EquitiLink Holdings Limited (since 1998); Peter W.
Fortner, Director, Prudential Investments Fund Management LLC (since December
1996), Vice President, Prudential Securities Inc. (since 1992) and Vice
President, Prudential Mutual Funds (1991-September 1996); Roy M. Randall,
Partner of Stikeman, Elliott (Australian office of Canadian law firm) (since
1997) and Partner, Freehill Hollingdale & Page (1981-1996); Allan S. Mostoff ,
Sander M. Bieber 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, as
amended, 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 17 Bond Street, St.
Helier, Jersey, Channel Islands. The Investment Adviser is an indirect wholly
owned subsidiary of EquitiLink Holdings Limited, an Australian corporation.
The registered offices of the Investment Adviser and EquitiLink Holdings
Limited are located at Level 3, 190 George Street, Sydney, N.S.W., Australia.

Messrs. Freedman and Sherman, both Directors of the Fund, serve as
directors of the Investment Manager. Mr. Manor, a Director of the Fund, is
also 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 and Sherman also
serve as, respectively, Joint Managing Director, and Joint Managing Director
and Chairman of the Investment Adviser. Messrs. Freedman and Sherman are the
principal shareholders of EquitiLink Holdings Limited, of which Mr. Manor is
also a shareholder.

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,
1999. 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 Fund and
Associated Funds Paid to Directors," the number in parentheses indicates the
total number of boards in the fund complex on which the Director serves.

13
<PAGE>

Compensation Table
Fiscal Year Ended 10/31/99

<TABLE>
<CAPTION>
Total
Pension Estimated Compensation
or Retirement Annual From Fund and
Aggregate Benefits Accrued Benefits Associated Funds
Compensation As Part of Upon Paid to
Name of Director From Fund Fund Expenses Retirement Directors
- ---------------- ------------ ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
Anthony E. Aaronson..... $19,750 N/A N/A $33,250(2)
Sir Roden Cutler*....... 18,750 N/A N/A 41,850(3)
David Lindsay Elsum..... 18,250 N/A N/A 42,200(3)
Rt. Hon. Malcolm
Fraser................. 18,250 N/A N/A 40,550(3)
Laurence S. Freedman.... 0 N/A N/A 0(3)
Michael R. Horsburgh.... 17,750 N/A N/A 40,750(3)
Harry A. Jacobs, Jr..... 0 N/A N/A 0(2)
Howard A. Knight........ 17,750 N/A N/A 29,250(2)
Neville J. Miles........ 17,750 N/A N/A 49,250(2)
William J. Potter....... 18,250 N/A N/A 64,250(3)
Peter D. Sacks.......... 18,750 N/A N/A 43,250(3)
Dr. Anton E. Schrafl.... 17,750 N/A N/A 28,650(2)
John T. Sheehy.......... 18,750 N/A N/A 44,750(3)
Brian M. Sherman........ 0 N/A N/A 0(3)

Preferred Directors:
David Manor............. 0 N/A N/A 0(2)
Marvin Yontef........... 17,750 N/A N/A 17,750(1)
</TABLE>
- -------
* Sir Roden Cutler retired form the Board of Directors effective December,
1999.

ADDITIONAL INFORMATION

Expenses. The expense of preparation, printing and mailing of the enclosed
proxy card 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, Directors and employees of the Fund, the Investment Manager, the
Investment Adviser or State Street Bank and Trust Company, the Transfer Agent
of the Fund. Shareholders Communications Corporation ("SCC") may be retained
to assist in the solicitation of proxies. If retained, SCC will be paid
approximately $5,000 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 December 30, 1999. As mentioned above, SCC may be engaged to assist in
the solicitation of proxies. As the meeting date approaches, certain
shareholders of the Fund may receive a call from a representative of SCC if
the Fund has not yet received their vote. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of the Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set 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.

14
<PAGE>

In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
the number of shares owned and to confirm that the shareholder has received
the Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Fund, then the SCC representative has the
responsibility to explain the process, read the proposals listed on the proxy
card, and ask for the shareholder's instructions on each proposal. The SCC
representative, although he or she is permitted to answer questions about the
process, is not permitted to recommend to the shareholder how to vote, other
than to read any recommendation set forth in the Proxy Statement. SCC will
record the shareholder's instructions on the card. Within 72 hours, SCC will
send the shareholder a letter or mailgram to confirm the shareholder's vote
and asking the shareholder to call SCC immediately if the shareholder's
instructions are not correctly reflected in the confirmation.

If a shareholder wishes to participate in the Meeting of shareholders, but
does not wish to give a proxy by telephone, such shareholder may still submit
the proxy card originally sent with the Proxy Statement or attend in person.
Any proxy given by a shareholder, whether in writing or by telephone, is
revocable. A shareholder may revoke the accompanying proxy or a proxy given
telephonically at any time prior to its use by filing with the Fund a written
revocation or duly executed proxy bearing a later date. In addition, any
shareholder who attends the Meeting in person may vote by ballot at the
Meeting, thereby canceling any proxy previously given.

Vote Required. The presence at any shareholders' meeting, in person or by
proxy, of shareholders entitled to cast a majority of the votes entitled to be
cast shall be necessary and sufficient to constitute a quorum for the
transaction of business. In the event that the necessary quorum to transact
business or the vote required to approve or reject any proposal is not
obtained at the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting in accordance with applicable law, to permit
further solicitation of proxies with respect to any proposal which did not
receive the vote necessary for its passage or to obtain a quorum. With respect
to those proposals for which there is represented a sufficient number of votes
in favor, actions taken at the Meeting will be effective irrespective of any
adjournments with respect to any other proposals. Any such adjournment will
require the affirmative vote of the holders of a majority of the Fund's shares
present in person or by proxy at the Meeting. The persons named as proxies
will vote in favor of such adjournment those proxies which they are entitled
to vote in favor of any proposal and will vote against any such adjournment
those proxies to be voted against that proposal. For purposes of determining
the presence of a quorum for transacting business at the Meeting, abstentions
and broker "non-votes" will be treated as shares that are present but which
have not been voted. Broker non-votes are proxies received by the Fund from
brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to vote nor
has discretionary power to vote on a particular matter. Accordingly,
shareholders are urged to forward their voting instructions promptly.

Approval of the election of Class III Directors to the Board of Directors
(Proposal 1) will require the affirmative vote of a majority of the shares of
common stock present in person or 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 a majority of the shares of preferred stock
present in person or by proxy at the Meeting. Abstentions and broker non-votes
will have the effect of a "no" vote for these proposals.

Ratification of the selection of the independent public accountants
(Proposal 3) and approval to transact any other business as may properly come
before the Meeting (Proposal 4) will require the affirmative vote of a
majority of the votes of the common and preferred stock, voting together as a
single class, validly cast at a meeting at which a quorum is present.
Abstentions and broker non-votes will have no effect on the vote on these
proposals since they are not considered votes cast.

15
<PAGE>

Shareholder Proposals. If a shareholder intends to present a proposal at the
Annual Meeting of Shareholders of the Fund to be held in 2001 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 1, 2000.

Shareholders wishing to present proposals at the Annual Meeting of
Shareholders of the Fund to be held in 2001 which they do not wish to be
included in the Fund's proxy materials should send written notice to the
Secretary of the Fund of such proposals no sooner than November 22, 2000 and no
later than December 22, 2000 in the form prescribed in the Fund's By-Laws.

By Order of the Board of Directors,

Roy M. Randall, Secretary

Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
December 30, 1999

16
<PAGE>

PROXY THE FIRST AUSTRALIA PRIME INCOME FUND, INC. PROXY

THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - March 22, 2000

The undersigned hereby appoints Laurence S. Freedman, William J. Potter, and
Brian M. Sherman, 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 22, 2000 at 2:00 p.m. (Eastern time) and at any
adjournment or postponement thereof. By signing this proxy card on the reverse
side, the undersigned authorizes the appointed proxies to vote in their
discretion on any other business which may properly come before the meeting or
any adjournments or postponements thereof.

- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------

<PAGE>

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

<TABLE>
<S> <C>
- ------------------------------------------- The proxy, when properly executed, will be voted in the manner
THE FIRST AUSTRALIA PRIME INCOME FUND, INC. directed. If no direction is made, this proxy will be voted FOR
- ------------------------------------------- Items (2) AND (3).

AUCTION MARKET PREFERRED STOCK SERIES A-I 2. The election of two Directors to represent the interests of the
holders of preferred stock for the ensuing year.
For All With- For All
Mark box at right if address change or comment (01) David Manor Nominees held Except
has been noted on the reverse side of this card. [ ] (02) Marvin Yontef [ ] [ ] [ ]

CONTROL NUMBER: NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME OF THE NOMINEE.
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE.

For Against Abstain
3. To ratify the selection of PricewaterhouseCoopers [ ] [ ] [ ]
LLP as independent public accountants of the Fund
for the fiscal year ending October 31, 2000.

4. In their discretion on any other business which may properly come before the
meeting or any adjournments or postponements thereof.

Please be sure to sign and date this Voting Instruction Card. [Date ]
- ---------------------------------------------------------------------------------

- --------Shareholder sign here-----------------------------Co-owner sign here----- RECORD DATE SHARES:
</TABLE>

<PAGE>

PROXY THE FIRST AUSTRALIA PRIME INCOME FUND, INC. PROXY

THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - March 22, 2000

The undersigned hereby appoints Laurence S. Freedman, William J. Potter, and
Brian M. Sherman, 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 22, 2000
at 2:00 p.m. (Eastern time) and at any adjournment or postponement thereof. By
signing this proxy card on the reverse side, the undersigned authorizes the
appointed proxies to vote in their discretion on any other business which may
properly come before the meeting or any adjournments or postponements thereof.

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------

<PAGE>

<TABLE>
<CAPTION>
___
|
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

<S> <C>
- ------------------------------------------- The proxy, when properly executed, will be voted in the manner
THE FIRST AUSTRALIA PRIME INCOME FUND, INC. directed. If no direction is made, this proxy will be voted FOR
- ------------------------------------------- Items (1) AND (3).

COMMON STOCK 1. The election of five Directors to serve as Class III
Directors for a three-year term:
For All With- For All
Mark box at right if address change or comment (01) David Lindsay Elsum Nominees hold Except
has been noted on the reverse side of this card. [ ] (02) Laurence S. Freedman
(03) Michael R. Horsburgh [ ] [ ] [ ]
(04) William J. Potter
(05) Peter J. O'Connell

CONTROL NUMBER: NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEE(S). YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).

For Against Abstain
3. To ratify the selection of PricewaterhouseCoopers
LLP as independent public accountants of the Fund [ ] [ ] [ ]
for the fiscal year ending October 31, 2000.

4. In their discretion on any other business which may properly come before the
meeting or any adjournments or postponements thereof.

Please be sure to sign and date this Voting Instruction Card. [Date ]
- ---------------------------------------------------------------------------------

- --------Shareholder sign here-----------------------------Co-owner sign here----- RECORD DATE SHARES:
</TABLE>