SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[x] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE UNITED KINGDOM FUND INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[ ] 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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THE UNITED KINGDOM FUND INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 24, 1996
To the Stockholders of
The United Kingdom Fund Inc.:
The annual meeting of the stockholders of The United Kingdom Fund Inc.
will be held on Tuesday, September 24, 1996 at 10:00 a.m., New York City time,
at the Waldorf-Astoria Hotel, 301 Park Avenue, 4th Floor, New York, New York
for the following purposes:
1. To elect directors.
2. To ratify or reject the selection of Ernst & Young LLP as
independent accountants for the Fund for the fiscal year ending March 31,
1997.
3. To consider whether to amend and restate the charter to convert
the Fund from a closed-end investment company to an open-end investment
company.
4. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on July 10, 1996 will be
entitled to vote at the meeting.
By order of the Board of Directors,
STEVEN W. GOLANN
Secretary
New York, N.Y.
[July 25, 1996]
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YOUR VOTE IS IMPORTANT. IT IS REQUIRED THAT THE HOLDERS OF MORE THAN 50% OF
THE OUTSTANDING SHARES BE REPRESENTED IN PERSON OR BY PROXY AT THIS MEETING.
IN ADDITION, THE PROPOSAL TO OPEN-END THE FUND REQUIRES A FAVORABLE VOTE OF
THE HOLDERS OF TWO-THIRDS OF THE FUND'S OUTSTANDING SHARES. YOU ARE URGED TO
SPECIFY YOUR CHOICE AND SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU
MAY NEVERTHELESS VOTE IN PERSON IF YOU DO ATTEND. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES.
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(This page has been left blank intentionally.)
THE UNITED KINGDOM FUND INC.
245 Park Avenue
Fifteenth Floor
New York, New York 10167
P R O X Y S T A T E M E N T
This proxy statement is furnished to stockholders of The United Kingdom
Fund Inc. (the "Fund") in connection with the solicitation of proxies for the
Annual Meeting of Stockholders of the Fund to be held at 10:00 a.m. on
Tuesday, September 24, 1996 at the Waldorf-Astoria Hotel, 301 Park Avenue, 4th
Floor, New York, New York in accordance with the attached notice of meeting.
It is expected that this proxy statement and the accompanying form of proxy
will be mailed to stockholders of the Fund on July 25, 1996 or as soon as
possible thereafter.
The solicitation of the accompanying form of proxy is made on behalf of
the Board of Directors of the Fund (the "Board of Directors"). Revocation of
any proxy may be effected orally at the meeting prior to voting or by notice
in writing to the Secretary of the Fund provided the notice is received by the
Secretary prior to voting. Each valid proxy received in time will be voted at
the meeting in favor of Proposals 1 and 2 and against Proposal 3 or, if a
contrary choice is specified on the proxy, will be voted in accordance with
the specification. It is required that holders of more than 50% of the
outstanding shares be represented in person or by proxy at this meeting.
Proposals 1 and 2 concerning the election of directors and the ratification of
accountants require the favorable vote of the holders of a majority of the
shares entitled to vote at the meeting at which a quorum is present, while
Proposal 3 concerning the possible open-ending of the Fund requires the
favorable vote of the holders of two-thirds of the Fund's outstanding shares.
The Fund does not intend to treat a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions
from the beneficial owner or other person entitled to vote shares on a
particular matter with respect to which the broker or nominee does not have
discretionary power) as present for quorum purposes unless the proxy
represented by that non-vote votes on at least one Proposal. Broker non-votes
will have no effect on the vote required for approval of Proposals 1 and 2
(unless the proxy voted for one Proposal), while abstentions will have the
effect of a vote against Proposals 1 and 2. Broker non-votes and abstentions
will have the effect of a vote against Proposal 3.
There were 4,011,655 shares of common stock of the Fund outstanding on
the record date, July 10, 1996. Each of these shares will be entitled to one
noncumulative vote. If a stockholder participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), any proxy given by the stockholder will also
govern the voting of all shares held for the stockholder's account under the
Plan, unless contrary instructions are received by The Bank of New York, as
agent under the Plan.
The Fund will furnish to shareholders upon request and without charge a
copy of its annual report (and the most recent quarterly report succeeding the
annual report, if available). To obtain a copy of these reports, call toll
free 1-800-543-6217 or write to the Fund's transfer agent, The Bank of New
York, Shareholder Relations Dept. - 11E, P.O. Box 11258, Church Street
Station, New York, New York, 10286.
PROPOSAL 1
Election of Directors
Eight directors are to be elected for the ensuing year and until their
successors have been elected and have qualified. The names of the persons
nominated for election as directors, their principal occupations and other
directorships and their previous occupations during the past five years are
set forth below.
Except where a stockholder has indicated that he does not wish his proxy
to be voted for all nominees or for any particular nominee or nominees, it is
intended that the proxies received in the accompanying form will be voted for
the election of all such nominees, all of whom are currently directors. Each
of the directors has indicated his willingness to serve for the ensuing term.
If for any reason any of the nominees shall become unavailable for election,
discretionary authority may be exercised by the persons named in the proxy to
vote for substitute nominees proposed by the Board of Directors.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Owned
Name, Principal Occupations and Beneficially as of Date of Election to
Other Directorships and Previous Occupations June 1, 1996*** Board of Directors Age
- ------------------------------------------------------------ ------------------ ------------------ ---
<S> <C> <C> <C>
Anthony M. Solomon, Chairman of the Board 1,000 June 1987 76
Chairman, The Europe Fund, Inc.; Director:
Health Science Properties, Inc., since
1994; Adviser: Banca Commerciale Italiana,
Blackstone Group; previously, Chairman,
S.G. Warburg (U.S.A.) Inc., President,
Federal Reserve Bank of New York, Director,
S.G. Warburg Group plc (investment banking),
Boards of Overseers: Teachers Insurance and
Annuity Association and College Retirement
Equities Fund, Syntex Corporation
George F. Bennett 25,475 June 1987 84
Director: Gefinor S.A., The Europe Fund,
Inc.; previously, Chairman, President and
Chief Executive Officer, State Street
Research & Management Co., Chairman and/or
President of various State Street investment
funds and affiliated companies (investment
management) and Trustee of Met Life - State
Street investment funds; Director, Mercury
Asset Management International Ltd.; Chairman,
Capital Trust Ltd.
++Livio Borghese 5,000 June 1987 57
President, Borghese Investments, Chairman,
Curtis Industries Incorporated (wholesale industrial
distributor); Director: Revco D.S. Inc. (drug store
chain), OMI Corp. (ocean shipping company); The Noel
Group (operating and holding company); previously,
Chairman, International Investment Banking,
Prudential Securities
**Sir Arthur Bryan 1,000 June 1987 73
Director: The Europe Fund, Inc.; previously, Lord
Lieutenant of Staffordshire, Chairman and Managing
Director, Josiah Wedgwood & Sons Ltd. (manufacturers
of fine china and crystal), Director, JCB Inc. of
America; Director, Friends' Provident Life Office,
The Rank Organization plc
*Peter Stormonth Darling 0 June 1994 63
Chairman, Mercury Asset Management International Ltd.;
Director, consultant and former Chairman, Mercury Asset
Management Group plc; Chairman: Mercury European
Privatisation Trust plc, Deltec Panamerica S.A.;
Director: Mercury Asset Management Canada, Ltd.,
Scottish Equitable Life Assurance Society,
Scottish Hydro-Electric plc, The Europe Fund,
Inc., Mercury Selected Trust and other Mercury-advised
Funds; previously, Director, The Orion Insurance Company
plc
Leon Levy 500 June 1987 70
General Partner, Odyssey Partners, L.P. (private
investors); Chairman, Avatar Holdings, Inc., Oppenheimer
Mutual Funds; Director: The Europe Fund, Inc. and
various Mercury and other investment funds; previously,
Chairman, Oppenheimer Management Corporation, Director:
Mercury Asset Management Group plc, until
1994, Long Lake Energy Corporation
**J. Murray Logan 1,000 April 1990 61
Vice President and Chairman of Investment Policy
Committee, Rockefeller & Co., Inc. (investment management);
General Partner, various Rockefeller & Co., Inc.
related partnerships; Director: Mercury Selected
Trust (SICAV), The Europe Fund, Inc., World Trust
Fund (SICAV); previously, Trustee and Chairman,
Committee for Investments, The Johns Hopkins University
**James S. Martin 0 June 1989 60
Director: The Europe Fund, Inc.; previously Executive
Vice President, Chief Investment Officer and Trustee,
College Retirement Equities Fund, until March, 1995
<FN>
++ As of July 2, 1996, Mr. Borghese owned 156,559 shares of The Bear
Stearns Companies Inc., the parent of the Fund's administrator, Bear
Stearns Fund Management Inc.
* An "interested person" of the Fund, as defined by the Investment
Company Act of 1940, as amended (the "1940 Act"). Mr. Darling is an
"interested" director because he owns beneficially 385,787 shares of
Mercury Asset Management Group plc, an affiliate of the Fund's
Investment Manager and Investment Adviser, with sole voting and
investment power, and 30,000 non-beneficial interests in shares. Mr.
Darling is also an "interested" director because he is chairman of
Mercury Asset Management International Ltd., the Fund's Investment
Adviser.
** A member of the Audit Committee of the Board of Directors.
*** All shares listed in this table are owned with sole voting and
investment power.
</TABLE>
During the fiscal year ended March 31, 1996, four meetings of the Board
of Directors were held. Each director attended 75% or more of the total number
of meetings of the Board of Directors and the committees on which he served.
The Audit Committee is responsible for (1) reviewing with the independent
accountants the scope and results of their examination of the financial
statements of the Fund, changes in accounting practices or auditing standards,
and any other matters the Committee may determine; (2) recommending to the
Board of Directors each year independent accountants to examine the financial
statements of the Fund; and (3) reporting to the Board of Directors with
respect to the foregoing. The Audit Committee held two meetings during the
past fiscal year. At the present time, the Board of Directors has no
compensation or nominating committees, or other committees performing similar
functions.
No officer or director of the Fund received aggregate remuneration from
the Fund of over $60,000 during the fiscal year ended on March 31, 1996. The
officers received no remuneration from the Fund. Each director who is not an
interested person (as defined in the 1940 Act) received from the Fund an
annual fee of $7,500 for the fiscal year ended on March 31, 1996, except Mr.
Solomon, who received a fee of $12,500 for serving not only as a director but
also as the Chairman of the Board. All directors were entitled to receive any
out-of-pocket travel expenses for attendance at meetings. During the past
fiscal year, all directors as a group received aggregate remuneration
amounting to $57,500.
<TABLE>
<CAPTION>
1995 Compensation Table
Pension or Total Compensation
Retirement Benefits From Fund and
Aggregate Compensation Accrued As Part Fund Complex*
Name and Position From Fund of Fund Expenses Paid to Directors
- ----------------- ---------------------- ------------------- ------------------
<S> <C> <C> <C>
Anthony M. Solomon
Chairman of the Board............ $12,500 None $29,500
George F. Bennett
Director......................... 7,500 None 19,500
Livio Borghese
Director......................... 7,500 None 7,500
Sir Arthur Bryan
Director......................... 7,500 None 19,500
Peter Stormonth Darling
Director......................... None None None
Leon Levy
Director......................... 7,500 None 19,500
J. Murray Logan
Director......................... 7,500 None 19,500
James S. Martin
Director......................... 7,500 None 19,000
<FN>
- --------------------------
* The Fund Complex includes two funds: the Fund and The Europe Fund, Inc.
</TABLE>
The executive officers of the Fund are:
<TABLE>
<CAPTION>
Principal Occupation
Name and Age Position with Fund During Past 5 Years
- ------------------------- ---------------------------------- --------------------------------------------------------------
<C> <C> <C>
J. Loughlin Callahan, 48 President Director, Mercury Asset Management plc; previously, Director,
S.G. Warburg Securities
Steven W. Golann, 51 Vice President and Secretary Director, Mercury Asset Management International Ltd.;
previously, Managing Director, Wertheim Philippe International
James M. Donald, 34 Vice President, Treasurer and Vice President, Mercury Asset Management International Ltd.;
Assistant Secretary previously, Vice President and Senior Officer, Mercury Asset
Management Canada Ltd., Fund Manager, Mercury Asset Management
plc
</TABLE>
Mr. Golann is a director and Mr. Donald is an officer of the Fund's
Investment Adviser.
The executive officers of the Fund are elected by the Board of Directors.
While the Fund is a Maryland corporation, Sir Arthur Bryan and Mr. Peter
Stormonth Darling are not residents of the United States and substantially all
of their assets may be located outside of the United States. As a result, it
may be difficult for U.S.investors to effect service of process upon them
within the United States or to realize judgments against them of courts of the
United States predicated upon civil liabilities under the Federal securities
laws of the United States.
On June 1, 1996 the officers and directors of the Fund as a group owned
beneficially 33,975 shares, or less than .85% of the Fund's outstanding
shares.
As of December 31, 1991, the date of its filing with the Securities and
Exchange Commission of a statement on Schedule 13G, Stichting Philips Pension
Funds, Eindhoven, Netherlands, indicated that it held 284,100 shares of the
Fund (7.1% of the outstanding shares). As of May 31, 1996, no other person, to
the knowledge of the management of the Fund, owned beneficially more than 5%
of the outstanding shares of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL OF THE NOMINEES LISTED ABOVE
PROPOSAL 2
Ratification or Rejection of Selection of Independent Accountants
Pursuant to the 1940 Act, a majority of the directors of the Fund who
are not `interested persons' of the Fund have selected Ernst & Young LLP as
independent accountants for the Fund for the fiscal year ending March 31,
1997. Ernst & Young LLP has advised the Fund that neither that firm nor any
of its partners have any direct or indirect material financial interest in the
Fund. In accordance with the By-Laws of the Fund and the 1940 Act, this
selection is being presented to stockholders for ratification or rejection. A
representative of Ernst & Young LLP will be present at the 1996 Annual Meeting
and will have the opportunity to make a statement if he so desires and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF ERNST & YOUNG LLP
PROPOSAL 3
Amendment and Restatement of the Charter to Convert
the Fund from a Closed-End Investment
Company to an Open-End Investment Company
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 3
I. Background of the Proposal
The Fund's prospectus dated August 6, 1987 provides that, in the event
the Fund's shares trade at an average discount from net asset value exceeding
10% on the last day of the first 12 weeks of a year, the Fund must submit to
its stockholders at the next annual meeting a proposal to amend the Fund's
charter to provide that, upon the adoption of an amendment by holders of
two-thirds of the Fund's outstanding shares, it will convert to an open-end
investment company.
During the first 12 full weeks of this year, the Fund's shares traded at
an average discount from net asset value of 19.68%, thus exceeding the 10%
threshold described above and triggering the proposal to convert the Fund to
an open-end investment company. As of May 31, 1996, as reported in The Wall
Street Journal, the Fund's shares traded at a discount from net asset value of
20.60%. On June 12, 1996, the Board of Directors of the Fund met to consider
the advisability of passing a charter amendment that would convert the Fund
from a closed-end investment company to an open-end investment company.
Section 2-604(b) of the Maryland corporation law requires that if a board of
directors proposes a charter amendment it must adopt a resolution declaring
the amendment advisable. Consequently, in order to present the charter
amendment to stockholders (as required by the charter), the Board adopted a
resolution declaring the charter amendment advisable. However, after
considering a number of factors, the Board of Directors determined that it is
in the best interest of stockholders to have the Fund remain a closed-end fund
at this time. The Board took into account advice from legal counsel
concerning the advantages and disadvantages of both closed-end and open-end
investment companies; the relatively low vote in favor of open-ending (16.55%
in 1995, 16.10% in 1992, 28.44% in 1991 and 20.20% in 1990) that was received
in each of the last four annual stockholders' meetings for years in which the
discount from net asset value was greater than 10%, when the then most recent
trading discounts from net asset value reflected in the Fund's respective
proxy statements were 20.40%, 12.56%, 13.37% and 17.03%; advice from the
Investment Adviser, who recommended that the Fund remain a closed-end
investment company at this time; and the fact that the Fund has outperformed
the FT-SE-A All Share Index in three of the past four years. Accordingly, the
Board adopted a resolution to recommend to stockholders that they vote against
the charter amendment that would convert the Fund from a closed-end investment
company to an open-end investment company.
The recommendation of the Investment Adviser was, and is, based, among
other things, on its belief that the discount from net asset value does not
warrant the fundamental change in investment strategy of the Fund that would
result if the Fund were to open-end. The discount from net asset value at
which the Fund's shares are traded has decreased from 20.60% on May 31, 1996
to 19.76% on June 21, 1996, as reported in The Wall Street Journal (a change
of 4.08 %). Over the same period, based on reports in The Wall Street
Journal, the non-weighted average discount for the other 15 European country
funds listed on the New York Stock Exchange decreased from 19.90% to 19.74% (a
change of 0.80%). The discount of 19.76% for the Fund is only 0.10% higher
than the average discount of 19.74% for the other 15 European country funds.
The factors considered by the Board in making its recommendation are
discussed in more detail below and the Board encourages stockholders to review
these factors to make their own determination on the appropriateness of
converting the Fund to an open-end investment company.
II. Comparison Between Closed-End and Open-End Investment Companies
The Fund is currently a closed-end fund. As such, it neither redeems its
outstanding shares of stock nor continuously offers new stock for sale; thus,
it operates with a relatively fixed capitalization. The Fund's shares of
stock are traded on the NYSE. Open-end funds (also known as `mutual funds')
issue redeemable shares entitling stockholders to tender for their
proportionate share of a fund's net asset value. Also, open-end funds
generally issue new shares at the fund's net asset value.
In addition to the definitional difference between closed-end and
open-end funds, several significant distinctions exist which tend to favor one
type or the other in terms of advantages or disadvantages to the stockholder,
although gray areas certainly exist. Grouped in this manner, some of the
legal, operational and practical differences between closed-end and open-end
investment companies are as follows:
Closed-End Fund Advantages and/or Open-End Fund Disadvantages
(1) Portfolio management. Whereas closed-end funds can be fully
invested, open-end funds generally maintain some buffer of highly liquid
assets or cash to meet net redemptions in order to avoid liquidating portfolio
securities at an inopportune time. Closed-end funds, therefore, may invest
with greater emphasis on longer-term appreciation. Further, although open-end
funds generally maintain that their ability to sell shares at any time that
results from their being priced at net asset value produces efficiencies,
others have suggested that large net purchases often occur around market highs
and net redemptions around market lows, inopportune times to invest or
liquidate portfolio positions, respectively. In a falling market situation,
for example, redemptions increase and liquidations in the open-end fund
portfolio must increase to meet those redemptions. In the event temporary
investments and borrowings are exhausted, the result may be that the more
liquid blue chip securities will be sold, leaving the open-end fund with the
less-liquid securities in the fund's portfolio which are not as well suited to
meeting future redemptions or changes in investment strategy.
(2) New York Stock Exchange listing. The Fund is currently listed on
the NYSE. It is believed in some investment circles that a fund listing on a
U.S. stock exchange, and in particular the NYSE, is an asset, especially in
terms of attracting non-U.S. investors. In addition, certain investors, such
as pension funds, have internal restrictions on the amount of their portfolio
which can be invested in non-listed securities. Conversion to an open-end
fund would require immediate de-listing of the Fund from the NYSE.
(3) Blue sky restrictions and costs. Because the Fund is listed on the
NYSE, it is exempt from the securities laws of most states. As an open-end
fund no longer listed on the NYSE, it will be required to observe certain
state investment limitations from which it is now exempt. While state
investment limitations probably would not require changing fundamental
policies of the Fund and may not have a significant impact on the Fund's
investment operations, there is a cost of registering in the states, as noted
below in paragraph (3) of Open-End Fund Advantages and/or Closed-End Fund
Disadvantages.
(4) Underwriting costs. If the Fund converts to open-end status it will
need to sell new shares; otherwise redemptions will cause the Fund to become a
diminishing asset. A principal underwriter will be needed for selling the new
shares. The cost of the underwriting would be paid either by purchasers (in
the case of a front-end load) or by current stockholders (in the case of a
Rule 12b-1 distribution plan, which would require separate stockholder
approval). Redemption fees and contingent deferred sales charges may also be
employed. In any case, a selling effort is likely to result in increased
costs to the Fund.
(5) Leverage; Raising capital. The ability to borrow is more restricted
in the case of open-end funds than it is in the case of closed-end funds.
Closed-end funds can also issue preferred stock, not permitted to open-end
funds. The Fund has not to date utilized this additional flexibility.
(6) Dividend Reinvestment Plan. As a closed-end investment company, the
Fund's current Dividend Reinvestment Plan (the `Plan') permits stockholders to
elect to reinvest their distributions on a different basis than would be the
case if the Fund converted to an open-end investment company. Currently, if
shares are trading at a discount, the agent for the Plan will attempt to buy
shares of the Fund on the NYSE or elsewhere. This permits a reinvesting
stockholder to benefit from the agent's purchase of additional shares at a
discount. However, if before the agent for the Plan completes its purchases,
the market price exceeds the net asset value, then the average per share
purchase price of the reinvested shares may exceed the net asset value per
share. In addition, if shares are trading at a premium, reinvesting
shareholders are issued shares at the higher of net asset value or 95% of the
market price. As an open-end investment company, all distributions would have
to be reinvested at net asset value.
Open-End Fund Advantages and/or Closed-End Fund Disadvantages
(1) Redeemability of shares. Open-end funds are required to redeem their
shares at the holder's option on seven days' notice. This enables holders to
realize promptly the full value of the underlying assets. An open-end fund
thus eliminates the possibility of realizing a premium as well as the
possibility of suffering a discount on sale.
If the proposal to open-end the Fund is approved, the current discount on
the Fund's shares will most likely be reduced prior to the date the Fund
converts to an open-end fund because the market, in anticipation of the
ability to redeem shares at net asset value, will most likely cause the market
price for the Fund's shares to increase to net asset value.
(2) Raising capital. A closed-end fund trading at a discount may not be
able to raise capital through share sales (other than through a rights
offering) when it believes further investment would be advantageous because
the 1940 Act restricts the ability of a closed-end fund to sell its shares at
a price below net asset value. Open-end funds, on the other hand, are priced
at net asset value and therefore can sell additional shares at any time. This
ability to raise new money can achieve greater economies of scale and improve
investment management although, as noted above in paragraph (5) of Closed-End
Fund Advantages and/or Open-End Fund Disadvantages, this may not occur at the
most opportune times.
(3) NYSE fee. As an open-end fund, the Fund will no longer be listed on
the NYSE. The Fund will thus save the annual NYSE fee of $16,773, but will as
a result of de-listing have to pay the state blue sky fees discussed above,
which could range from $30,000 to $50,000 annually, depending on the channel
of distribution of the Fund's shares.
(4) Annual stockholder meetings. If the Fund remains a closed-end fund,
it is subject to NYSE rules requiring annual meetings of stockholders. By not
having to hold annual stockholders meetings, except when required for certain
1940 Act votes, the Fund would save the costs of preparing proxy materials and
soliciting stockholders' votes on the usual proposals contained therein.
Based on the number of outstanding shares and stockholders as of the record
date, such costs aggregate approximately $15,000 to $20,000 per year; however,
these savings would not be expected to materially affect the Fund's expense
ratio.
(5) Reporting of net asset value. As an open-end fund, net asset value
would be reported daily (as contrasted to weekly at present). Computing net
asset value on a daily basis will be more expensive for the Fund than only
having it computed on a weekly basis.
(6) Stockholder services. Open-end funds typically provide more
services to stockholders than closed-end funds. One service that is generally
offered by open-end funds is enabling stockholders to transfer their
investment from one fund into another fund which is part of a family of
open-end funds at little or no cost to the stockholders. This permits the
exchange of shares at relative net asset value when the holder's investment
objectives change. There does not currently exist a family of funds of which
the Fund could be a part and no assurance can be given that a family of funds
will be available in the future. Other services that could be offered include
use of the Fund for retirement plans and permitting purchases and sales of
shares in convenient amounts. There are, of course, additional costs for
these services which must be weighed against the anticipated benefit of the
particular service.
In addition to the relative inherent qualities of closed-end and open-end
investment companies, certain negative results will necessarily derive from
the act of conversion itself:
(1) Redemption expenses. Net redemptions are probable immediately after
open-ending the Fund, although the redemption fee mentioned below may reduce
the number of redemptions that would otherwise occur. Redemptions will result
in increased brokerage expense and increased recognition of taxable gains and
losses. These redemptions could reduce the Fund to a size smaller than is
economically viable, resulting in a decision to terminate and liquidate the
Fund. If the Fund decreased in size, the expense ratio may increase because
the cost of many services may remain the same although the size of the Fund
will have decreased. Of course, if the size of the Fund increases, the Fund's
expense ratio may be reduced.
(2) Capital gains. The treatment of capital gains required under U.S.
tax law can be very onerous to non-redeeming stockholders in the event of the
Fund's conversion to an open-end fund. To raise cash to satisfy redeeming
stockholders, the Fund may be required to sell portfolio securities to satisfy
redemption requests. If the Fund's basis in the portfolio securities sold is
less than the sale price obtained, net capital gain may be realized. U.S. tax
law imposes both an income tax and an excise tax on net capital gain realized
by closed-end and open-end funds unless the fund distributes net capital gain
to all stockholders. In the event of the Fund's conversion to an open-end
fund, two negative results may occur: first, because the Fund may sell
securities, non-redeeming stockholders may recognize a greater amount of
capital gain than would be the case if the Fund held such securities; and,
second, to make the capital gain distribution necessary to avoid capital gain
recognition by the Fund, the Fund may need to sell additional portfolio
securities, thereby reducing further the size of the Fund and, possibly,
creating additional capital gain.
(3) Conversion costs. Conversion would be expensive, requiring legal,
accounting and other expenses of establishing a new structure. Although the
Board has been advised that the cost of conversion would be at least $30,000
or $0.75 per share, it is unable to determine at this time the actual costs
that would be involved and it believes that the costs could be substantially
higher.
III. Measures to be Adopted in the Event the Fund Becomes an Open-End Fund
In the event that a sufficient number of stockholders vote for the
proposal to open-end the Fund, the Board will convene and consider the method
and time period for the conversion of the Fund into an open-end investment
company. The Board would currently project that a period of six to nine
months would be necessary to effect the conversion. The Board, however, has
already determined that in this event a redemption fee of 1% will be imposed
for redemptions (whether in cash or in-kind) occurring within the first six
months of the change in status of the Fund. This redemption fee is similar to
that imposed by other funds which have converted into open-end funds and is a
method of reducing the number of immediate redemptions and offsetting the cost
of liquidations.
The conversion of the Fund to an open-end investment company would be
accomplished by: (i) the filing of an Open-End Certificate with the Maryland
State Department of Assessments and Taxation and (ii) changing the Fund's
subclassification under the 1940 Act from a closed-end investment company to
an open-end investment company. In addition, because shares of an open-end
investment company are offered to the public on a continuous basis, the Board
would need to approve a distribution contract for the distribution of the
Fund's shares to become effective upon the Fund's conversion to an open-end
investment company. The Open-Ending Certificate would not be filed until a
registration statement under the Securities Act of 1933, as amended, covering
the offering of the shares of the Fund and appropriate state securities law
qualifications had become effective, which is expected to occur within two to
four months after filing of the registration statement.
In addition, in order to reduce the problem of recognition of capital
gains discussed above, the Board has determined that aggregate redemptions by
any single investor or related group of investors in an amount greater than
$250,000 occurring within the first three months of the conversion of the Fund
to an open-end fund, will be made in securities held by the Fund. This
payment-in-kind will shift the brokerage cost of liquidating those securities
to the redeeming stockholder and will reduce the recognition of capital gain
by the Fund and non-redeeming stockholders. Any in-kind distributions will be
done on an across-the-board basis, to the extent practicable, to avoid
partiality in the selection of securities to be distributed.
In the event that the requisite stockholder vote to open-end the Fund is
received, the Articles of Incorporation will be amended and restated as set
forth in Schedule I, attached hereto. The Amendment and Restatement will be
filed in Maryland at the time the conversion is implemented. In addition, if
stockholders of the Fund vote to approve the conversion of the Fund to an
open-end investment company, it is anticipated that the Fund will require
additional flexibility to meet stockholders' demands for redemptions and will
be required to conform to certain investment restrictions applicable to
open-end investment companies under the 1940 Act and certain state
regulations. Accordingly, stockholders will need to approve certain changes in
the Fund's investment restrictions, some of which would constitute fundamental
policies of the Fund.
In the event that the requisite stockholder vote to open-end the Fund is
received, the Board will consider other methods of easing the transition into
becoming an open-end fund. These methods will be adopted if the Board finds
that they are in the best interest of stockholders.
IV. Further Considerations
The Board believes that the decision to convert to an open-end format
will eliminate the discount to net asset value but may reduce the potential
long-term investment return on the Fund's shares and could, in the event of
significant capital outflow, result in the liquidation of the Fund. Conversion
to an open-end fund has been done by other funds generally in extreme
circumstances (e.g., as a defense against a hostile bid). In the view of the
Board, there does not appear to be any circumstance that would warrant the
fundamental change in investment strategy of the Fund. Rather, the Board
believes that conversion to an open-end fund would hamper the investment
strategy of the Fund. There are many opportunities in the United Kingdom to
invest in smaller market capitalization stocks which historically have
outperformed larger companies. Such holdings of `special situation' stocks,
though, can only be acquired gradually over a long period of time and would be
particularly vulnerable to high levels of redemptions. The Board believes
that the decision to convert to an open-end format may result in a fundamental
change in the Fund's investment strategy, which may preclude the Fund from
realizing the long-term potential of these special situation stocks. The
Board believes that the Fund is successfully implementing this strategy as the
Fund has outperformed the FT-SE-A All Share Index in three of the past four
years. The Board considers its judgment on the above issues supported by and
reflective of the wishes of stockholders, whose unwillingness to open- end the
Fund was evidenced by the relatively low favorable vote on the issue in each
of the last four annual stockholders' meetings for years in which the discount
was greater than 10%.
If stockholders choose not to convert the Fund to an open-end investment
company, the Board will continue with the effort to improve communication with
the investment community, in particular, research analysts and brokers.
Management will continue a program of regular visits to analysts specializing
in the closed-end fund sector and hopes that these efforts will create greater
demand for the Fund's shares and help reduce the Fund's discount. If the
Fund's shares, however, continue to trade at a discount and that discount is
greater than 10% during next year's test period, the Board and stockholders
will have an opportunity to again consider converting the Fund to an open-end
investment company.
In light of the above, the Board believes at this time that the
closed-end format continues to be more appropriate to the Fund's character and
investment objective than the open-end format.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST CONVERSION
OF THE FUND FROM A CLOSED-END INVESTMENT COMPANY
TO AN OPEN-END INVESTMENT COMPANY
OTHER MATTERS
The Investment Manager and the Investment Adviser
The Fund's Investment Manager is Mercury Asset Management International
Channel Islands Ltd. (formerly known as Warburg Investment Management
International (Jersey) Limited) and its Investment Adviser is Mercury Asset
Management International Ltd. (formerly known as Warburg Investment Management
International Limited) (individually, the `Investment Manager' and the
`Investment Adviser', respectively, and together the `Advisers'). The
Investment Manager is a wholly-owned subsidiary of the Investment Adviser,
which in turn is a wholly-owned subsidiary of Mercury Asset Management plc,
one of the largest investment managers in Europe. It is headquartered in
London, England, at 33 King William Street, EC4R 9AS and is a wholly-owned
subsidiary of Mercury Asset Management Group plc (`MAM') of the same address.
The Investment Manager is a corporation organized under the laws of
Jersey (Channel Islands), with its principal office at Forum House, Grenville
Street, St. Helier, Jersey JE4 8RL, Channel Islands. The Investment Manager
was formed in January 1983 for the purposes of providing investment advisory
and management services for international portfolios desiring to utilize the
services of the Investment Adviser and is registered as an investment adviser
with the Securities and Exchange Commission. The Investment Manager's other
clients include individuals, a charitable organization and a registered
investment company, The Europe Fund, Inc. The Investment Adviser is a
corporation incorporated in 1981 under the Companies Act of Great Britain with
its registered office and principal place of business at 33 King William
Street, London EC4R 9AS, England. The Investment Adviser is registered as an
investment adviser with the Securities and Exchange Commission and is
regulated by the United Kingdom's Investment Management Regulatory
Organization Ltd. The Investment Adviser's advisory clients include
charitable organizations, corporations and pension plans. The Investment
Adviser has also entered into a sub-advisory contract with the Investment
Manager to provide advisory services to The Europe Fund, Inc.
The Advisers now act as investment adviser or sub-investment adviser for
other persons and entities and may, under agreements with the Fund, act as
investment adviser or sub-investment adviser to other registered investment
companies.
Messrs. Frank P. Le Feuvre and Robin E.R. Rumboll are the directors of
the Investment Manager. Mr. John Gillespie is the Secretary of the Investment
Manager. The address of Mr. Le Feuvre and Mr. Gillespie is Forum House,
Grenville Street, St. Helier, Jersey JE4 8RL, Channel Islands. The address of
Mr. Rumboll is Windsor House, St. Lawrence, Jersey, Channel Islands.
Ms. C. Consuelo Brooke and Messrs. Steven W. Golann, Roderick J. MacLeod,
J. Eric Nelson and David M.F. Scott are the directors of the Investment
Adviser. Mr. Peter Stormonth Darling is Chairman and Mr. Charles B.
Farquharson is Secretary of the Investment Adviser. The address of Ms. Brooke
and Messrs. Darling, Farquharson, MacLeod and Scott is 33 King William Street,
London, EC4R 9AS, England. The address of Mr. Golann and Mr. Nelson is 780
Third Avenue, 34th Floor, New York, NY, 10017, USA.
The Investment Management Agreement and the Investment Advisory Agreement
Under the Investment Management Agreement dated as of August 4, 1987
between the Fund and the Investment Manager, the Investment Manager, on the
basis of advice given by the Investment Adviser, will structure the Fund's
portfolio, manage the Fund's investments and make investment decisions on
behalf of the Fund in accordance with the Fund's stated investment objective,
policies and limitations and subject to the supervision, review and direction
of the Board of Directors.
Under the Investment Advisory Agreement dated as of August 4, 1987
between the Investment Manager and the Investment Adviser, the Investment
Adviser will advise the Investment Manager with respect to the investment and
reinvestment of the assets of the Fund in accordance with the Fund's stated
investment objective, policies and limitations and subject to the supervision,
review and direction of the Board of Directors.
Under the Agreements, the Investment Manager or the Investment Adviser,
with the consent of the Investment Manager, will select and place orders with
brokers and dealers to execute portfolio transactions on behalf of the Fund
and furnish to the Board of Directors periodic reports on the Fund's
investment performance.
The Investment Management Agreement provides that the Fund will pay the
Investment Manager a fee at the annual rate of 0.75% of the Fund's average
weekly net assets up to $150 million and 0.65% of such assets in excess of
$150 million based upon net asset value at the end of each week and payable at
the end of each calendar month. For the fiscal year ended March 31, 1996, the
Investment Manager earned from the Fund investment management fees totalling
$430,730. The fee paid by the Fund to the Investment Manager is higher than
that paid by most investment companies, although lower than the fee paid by
most other closed-end investment companies which invest primarily in the
securities of companies in foreign countries. Pursuant to the Investment
Advisory Agreement, the Investment Adviser is paid by the Investment Manager a
fee at the annual rate of 0.1875% of the net assets of the Fund.
The Agreements provide that neither the Investment Manager nor the
Investment Adviser will be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which the Investment
Management Agreement or the Investment Advisory Agreement, respectively,
relate, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance, or from reckless disregard by it,
of its obligations and duties under the Agreements.
Each of the Agreements provides that each party will bear all expenses of
its employees and overhead incurred by it in connection with its duties under
the Agreements. Each party (other than the Fund) further agrees to pay all
salaries and fees of the Fund's directors and officers who are `interested
persons' of that party. The Fund will bear all of its own expenses, including
but not limited to: expenses of organizing the Fund; fees of the Fund's
directors who are not `interested persons' of any other party; out-of-pocket
travel expenses for all directors and officers in connection with their
attendance at, and other expenses incurred by the Fund relating to, directors'
or committee meetings; interest expense; taxes and governmental fees;
brokerage commissions and other expenses incurred in acquiring or disposing of
the Fund's portfolio securities; expenses of preparing stock certificates;
expenses in connection with the issuance, offering, distribution, sale or
underwriting of securities by the Fund; expenses of registering and qualifying
the Fund's shares for sale with the Securities and Exchange Commission and in
various states and foreign jurisdictions; auditing, accounting, insurance and
legal costs; custodian, dividend disbursing and transfer agent expenses;
expenses of obtaining and maintaining the listing of the Fund's shares on the
New York Stock Exchange; membership dues to professional organizations; and
expenses of stockholders' meetings and preparing and distributing proxies and
reports to stockholders.
Both the Investment Management Agreement and the Investment Advisory
Agreement were approved by the stockholders of the Fund on October 20, 1988.
The Board of Directors at subsequent annual meetings approved the continuation
of the Agreements. At the same meetings, the Agreements were approved
unanimously by the directors who are not `interested persons' of the Fund.
Each Agreement may be terminated at any time by the Fund on 60 days' written
notice, without the payment of any penalty, upon the vote of a majority of the
Fund's Board of Directors or a majority of the outstanding voting securities
of the Fund. Each Agreement will terminate automatically in the event of its
assignment, as defined in the 1940 Act. The Investment Adviser may terminate
the Investment Advisory Agreement without penalty on 90 days' written notice
to the Fund and the Investment Manager. In addition, the Investment Manager
may terminate the Investment Management Agreement on 90 days' written notice
to the Fund and the Investment Advisory Agreement on 90 days' written notice
to the Fund and the Investment Adviser.
Securities Transactions For and With the Fund
Total brokerage commissions paid by the Fund amounted to $18,411 for the
fiscal year ended March 31, 1996. The rate of total portfolio turnover of the
Fund for the fiscal year ended March 31, 1996 was 20.85%.
The Investment Manager is responsible for the selection of brokers to
execute the Fund's portfolio transactions. In placing such transactions, the
Investment Manager will seek to obtain best execution for the Fund, taking
into account factors such as price, commission, size of order, difficulty of
execution, skill required of the broker and investment market and statistical
information provided by the broker. In seeking best execution of its
transactions, the Fund may employ several different brokers.
Orders may be placed with banks who supply research to the Fund, the
Investment Manager and the Investment Adviser. The research may be used by
the Investment Manager and the Investment Adviser in advising other clients,
and the Fund's commissions to brokers supplying research may not represent the
lowest obtainable commission rates. Although the Fund may receive research
from banks affiliated with the Investment Manager or the Investment Adviser,
the Fund will not pay any higher commission to any of these entities than
would have been paid if that affiliated entity had not provided any research.
The Fund cannot engage in principal transactions with the Investment
Manager, the Investment Adviser or their affiliates.
Administrator
The Fund's Administrator is Bear Stearns Funds Management Inc., which is
headquartered at 245 Park Avenue, 15th Floor, New York, New York, 10167.
General
The Management of the Fund does not intend to present to the meeting any
business other than the matters stated above. As of the date of this proxy
statement, the Management of the Fund was not aware of any other matters which
might be presented for action at the meeting. If any matter not referred to
in the enclosed proxy should properly come before the meeting, the persons
named in the enclosed proxy will have discretionary authority to vote all
proxies in accordance with their best judgment.
The cost of soliciting proxies for the annual meeting will be borne by
the Fund. In addition to the solicitation by mail, the Fund's officers may
solicit proxies personally, for which they will receive no special
compensation. The Fund also has retained Corporate Investor Communications,
Inc. to assist in the solicitation of proxies for a fee of $6,500, plus
out-of-pocket expenses. The Fund may reimburse brokers or persons holding
stock in their names or in the name of their nominees for their expenses in
sending proxy material to the beneficial owners.
In the event that sufficient votes in favor of any of the items set forth
in the notice of annual meeting of stockholders are not received by the time
scheduled for the annual meeting of the stockholders, the persons named as
proxies may propose one or more adjournments of such annual meeting to permit
further solicitation of proxies with respect to any such items. Any such
adjournment will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of such annual meeting to be
adjourned. The persons named as proxies will vote in favor of such
adjournment, if proposed, those proxies which they are entitled to vote in
favor of such items and against such adjournment those proxies required to be
voted against such items.
In order for any stockholder proposal to be included in the Fund's proxy
statement and form of proxy for the Fund's 1997 annual meeting of
stockholders, the stockholder proposal must be received by the Fund on or
before March 15, 1997 and must satisfy other applicable legal requirements.
By order of the Board of Directors,
/s/ ANTHONY M. SOLOMON
---------------------------------
ANTHONY M. SOLOMON
Chairman of the Board
New York, New York
[July 25, 1996]
(This page has been left blank intentionally.)
THE UNITED KINGDOM FUND INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
FIRST: I, Alan P. Goldberg, whose post office address is 450 Lexington
Avenue, New York, New York 10017, being at least eighteen years of age, do
under and by virtue of the General Laws of the State of Maryland authorizing
the formation of corporations, associate myself as incorporator with the
intention of forming a corporation.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
The United Kingdom Fund Inc.
THIRD: Corporate Purposes.
(a) The purposes for which and any of which the Corporation is formed
and the business and objects to be carried on and promoted by it are:
(1) To act as an open-end, management investment company under the
Investment Company Act of 1940, as amended.
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts
and on such terms and conditions and for such purposes and for such amount
or kind of consideration as may now or hereafter be permitted by the
General Laws of the State of Maryland and by these Articles of
Incorporation, as the Board of Directors may determine; provided, however,
that the value of the consideration per share to be received by the
Corporation upon the sale or other disposition of any shares of its
capital stock shall not be less than the net asset value per share of such
capital stock outstanding at the time of such event.
(4) To redeem, purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of
the stockholders of the Corporation) shares of its capital stock, in any
manner and to the extent now or hereafter permitted by the General Laws of
the State of Maryland and by these Articles of Incorporation.
(5) To engage in any one or more businesses or transactions, or to
acquire all or any portion of any entity engaged in any one or more
businesses or transactions which the Board of Directors may from time to
time authorize or approve, whether or not related to the business
described elsewhere in this Article or to any other business at the time
or theretofore engaged in by the Corporation.
(6) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate
or desirable for the accomplishment of all or any of the foregoing
purposes.
(b) The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any
other clause of this or any other Article of the charter of the Corporation,
and each shall be regarded as independent; and they are intended to be and
shall be construed as powers as well as purposes and objects of the
Corporation and shall be in addition to and not in limitation of the general
powers of corporations under the General Laws of the State of Maryland.
FOURTH: Address and Resident Agent.
The post office address of the principal office of the Corporation in the
State of Maryland is The Prentice-Hall Corporation System, Maryland, 929 North
Howard Street, Baltimore, Maryland 21201. The name and address of the
resident agent of the Corporation in the State of Maryland is The
Prentice-Hall Corporation System, Maryland, whose post office address is 929
North Howard Street, Baltimore, Maryland 21201.
FIFTH: Capital Stock.
(a) The total number of shares of stock which the Corporation shall have
authority to issue is fifteen million (15,000,000) shares, all of one class
called Common Stock of one cent ($.01) par value each, having an aggregate par
value of $150,000.
(b) At all meetings of stockholders, each stockholder of the Corporation
shall be entitled to one vote for each share of stock standing in his name on
the books of the Corporation on the date fixed in accordance with the By-Laws
for determination of stockholders entitled to vote at such meeting. Any
fractional share shall carry proportionately all the rights of a whole share,
including the right to vote and the right to receive dividends and
distributions.
(c) Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a majority or
other designated proportion of the shares, or to be otherwise taken or
authorized by a vote of the stockholders, and subject to Articles Eighth and
Ninth, such actions shall be effective and valid if taken or authorized by the
affirmative vote of the holders of a majority or other designated proportion
of the total number of shares outstanding and entitled to vote thereon
pursuant to the provisions of the charter of the Corporation.
(d) No holder of stock of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of the capital stock of the
Corporation of any class or any other security of the Corporation which it may
issue or sell (whether out of the number of shares authorized by the charter
of the Corporation, or out of any shares of the capital stock of the
Corporation acquired by it after the issue thereof, or otherwise).
(e) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of the charter of the Corporation.
SIXTH: Board of Directors.
The number of Directors of the Corporation shall be fixed by the By-Laws
and shall be not less than three. The names of the current directors of the
Corporation are: Anthony M. Solomon, George F. Bennett, Livio Borghese, Sir
Arthur Bryan, Peter Stormonth Darling, Leon Levy, J. Murray Logan and James S.
Martin.
The By-Laws of the Corporation may (1) fix the number of Directors at a
number other than that fixed in the charter of the Corporation and (2)
authorize the Board of Directors, by the vote of a majority of the entire
Board of Directors, to increase or decrease the number of Directors fixed by
the charter of the Corporation or by the By-Laws within a limit specified in
the By-Laws and to fill the vacancies created by any such increase in the
number of Directors. Unless otherwise provided by the By-laws of the
Corporation, the Directors of the Corporation need not be stockholders
thereof.
To the full extent permitted by applicable law, no Director of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages by reason of being or having been a director of the
Corporation or by reason of serving or having served the Corporation in any
other capacity. No amendment or repeal of this Article Sixth of the charter
of the Corporation shall have the effect of increasing the liability of any
Director of the Corporation for or in respect of any acts or omissions of such
Director occurring prior to such amendment or repeal.
SEVENTH: Management of the Affairs of the Corporation.
(a) All corporate powers and authority of the Corporation (except as at
the time otherwise provided by statute, by the charter of the Corporation or
by the By-Laws) shall be vested in and exercised by the Board of Directors.
(b) The Board of Directors shall have the power to make, alter or repeal
the By-Laws of the Corporation except to the extent that the By-Laws otherwise
provide. The By-Laws may provide that meetings of the stockholders may be
held at any place in the United States provided in, or fixed by the Board of
Directors pursuant to, the By-Laws. The By-Laws may also provide for the
conduct of meetings of the Board of Directors or committees thereof by means
of a telephone conference circuit.
(c) The Board of Directors shall have power from time to time to
authorize payment of compensation to the Directors for services to the
Corporation, as provided in the By-Laws, including fees for attendance at
meetings of the Board of Directors and of committees.
(d) The Board of Directors shall have power from time to time to
determine whether and to what extent, and at what times and places and under
what conditions and regulations, the accounts and books of the Corporation
(other than the stock ledger) or any of them shall be open to the inspection
of stockholders; and no stockholder shall have the right to inspect any
account, book or document of the Corporation except at such time as is
conferred by statute or the By-Laws.
(e) Both stockholders and Directors shall have power, if the By-Laws so
provide, to hold their meetings and to have one or more offices, within or
without the State of Maryland and to keep the books of the Corporation (except
as otherwise required by statute) outside the State of Maryland, at such
places as from time to time may be designated by the By-Laws or the Board of
Directors.
EIGHTH: Special Vote Requirements.
Notwithstanding any other provisions of this Charter, a favorable vote of
the holders of at least two-thirds of the shares of the Corporation then
entitled to be voted on the matter shall be required to approve, adopt or
authorize (i) a merger or consolidation of the Corporation with any other
corporation or share exchange transaction in which the Corporation is not the
surviving corporation, (ii) a sale of all or substantially all of the assets
of the Corporation (other than in the regular course of its investment
activities), or (iii) a liquidation or dissolution of the Corporation, unless
such action has previously been approved, adopted or authorized by the
affirmative vote of two-thirds of the total number of Directors fixed in
accordance with the By-Laws.
NINTH: Reservation of Right to Amend.
From time to time any of the provisions of the charter of the
Corporation, with the exception of Articles Third, Eighth and this Article
Ninth, may be amended, altered or repealed (including any amendment which
changes the terms of any of the outstanding stock by classification,
reclassification or otherwise) upon the vote of the holders of a majority of
the shares of capital stock of the Corporation at the time outstanding and
entitled to vote, and other provisions which might under the statutes of the
State of Maryland at the time in force be lawfully contained in the charter of
the Corporation may be added or inserted upon the vote of the holders of a
majority of the shares of Common Stock of the Corporation at the time
outstanding and entitled to vote; and all rights at any time conferred upon
the stockholders of the Corporation by the charter of the Corporation are
granted subject to the provisions of this Article Ninth. The provisions of
Article Third may be amended, altered or repealed only upon the vote of the
holders of a majority of the outstanding voting securities of the Corporation,
as defined in the Investment Company Act of 1940. The provisions of Article
Eighth and this Article Ninth may be amended, altered or repealed only upon
the vote of the holders of two-thirds of the outstanding shares of Common
Stock of the Corporation.
TENTH: Redemption.
Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of such holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the
redemption price of such shares as in effect from time to time as may be
determined by the Board of Directors of the Corporation in accordance with the
provisions hereof, subject to the right of the Board of Directors of the
Corporation to suspend the right of redemption of shares of capital stock of
the Corporation or postpone the date of payment of such redemption price in
accordance with provisions of applicable law. The redemption price of shares
of capital stock of the Corporation shall be the net asset value thereof as
determined by the Board of Directors of the Corporation from time to time in
accordance with the provisions of applicable law, less such redemption fee or
other charge, if any, as may be fixed by resolution of the Board of Directors
of the Corporation. Payment of the redemption price shall be made in cash or
in-kind by the Corporation at such time and in such manner as may be
determined from time to time by the Board of Directors of the Corporation.
ELEVENTH: Duration.
The duration of the Corporation shall be perpetual.
THE UNITED KINGDOM FUND INC.
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- SEPTEMBER 24, 1996
The undersigned, revoking previous proxies, hereby appoints Anthony M.
Solomon, Steven W. Golann and James M. Donald, and each of them, the proxies
of the undersigned, with power of substitution to each of them, to vote all
shares of common stock of The United Kingdom Fund Inc. which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of The United
Kingdom Fund Inc. to be held at the Waldorf-Astoria Hotel, 301 Park Avenue,
4th Floor, New York, New York, on September 24, 1996 at 10:00 A.M., New York
City time, and at any and all adjournments thereof.
(Continued on reverse side)
Please mark boxes or X in blue or black ink. Unless otherwise specified in
the squares provided, the undersigned's vote will be cast FOR items 1 and 2
and AGAINSTL item 3 below.
<TABLE>
<CAPTION>
<S> <C> <C>
1 -- ELECTION OF DIRECTORS. [ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees listed below)
</TABLE>
Anthony M. Solomon, George F. Bennett, Livio Borghese, Sir Arthur Bryan,
Peter Stormonth Darling, Leon Levy, J. Murray Logan and James S. Martin.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below).
2 -- RATIFICATION OF SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING MARCH 31, 1997:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3 -- AMENDMENT AND RESTATEMENT OF THE CHARTER TO CONVERT THE FUND FROM A
CLOSED-END INVESTMENT COMPANY TO AN OPEN-END INVESTMENT COMPANY:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSALS 1
AND 2, AND AGAINST PROPOSAL 3.
Please mark, date and sign as
your name appears and return
in the enclosed envelope. If
acting as executor,
administrator, trustee,
guardian, etc., you should so
indicate when signing. If the
signer is a corporation,
please sign the full
corporate name, by duly
authorized officer. If shares
are held jointly, each
stockholder named should
sign.
The undersigned hereby
acknowledges receipt of a
copy of the accompanying
notice of meeting and proxy
statement and hereby revokes
any proxy or proxies
heretofore given.
------------------------------
Signature
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Signature
Date____________________, 1996
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE - NO POSTAGE IS REQUIRED
