THE UNITED KINGDOM FUND INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 16, 1997
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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 16, 1997 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, 1998.
3. 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 June 27,
1997 will be entitled to vote at the meeting.
By order of the Board of Directors,
Rita J. Kleinman
Secretary
New York, N.Y.
July 23, 1997
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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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THE UNITED KINGDOM FUND INC.
245 Park Avenue
Fifteenth Floor
New York, New York 10167
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PROXY STATEMENT
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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 16, 1997 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 23, 1997 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" or 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, June 27, 1997. Each of these shares will be
entitled to one noncumulative vote. If a stockholder participates in the
Fund's Dividend Reinvestment and Cash Purchase 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 10 , 1997*** Board of Directors Age
- ------------------------------------------------------ ------------------- ------------------- ---
<S> <C> <C> <C>
Anthony M. Solomon, Chairman of the Board 1,000 June 1987 77
Chairman, The Europe Fund, Inc.; Director: Alexandria
Real Estate Equities; Adviser: Banca Commerciale
Italiana, Blackstone Group, Toyota Chairman;
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 85
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 58
Chairman, Curtis Industries Incorporated (wholesale
industrial distributor); Director: OMI Corp. (ocean
shipping company), The Noel Group (operating and
holding company); previously, Chairman, International
Investment Banking, Prudential Securities, Director,
Revco D.S. Inc.
**Sir Arthur Bryan 1,000 June 1987 74
Director: The Europe Fund, Inc., Dartington Crystal Ltd.;
previously, Lord Lieutenant of Staffordshire, Director,
Friends' President Life Office, Chairman and Managing
Director, Josiah Wedgwood & Sons Ltd. (manufacturers
of fine china and crystal), Director, JCB Inc. of America,
Director, The Rank Organization plc.
*Peter Stormonth Darling 0 June 1994 64
Chairman, Mercury Asset Management International Ltd.;
Director, consultant and former Chairman, Mercury
Asset Management Group plc; Chairman: Mercury
European Privatisation Trust plc, Deltec International
S.A.; Director: Mercury Asset Management Canada,
Ltd., Scottish Equitable plc., Scottish Hydro-Electric plc,
The Europe Fund, Inc., Mercury Selected Trust (SICAV)
and other Mercury-advised Funds; Sagitta Asset
Management Ltd. previously, Director, The Orion
Insurance Company plc, The First Hungary Fund
Leon Levy 500 June 1987 71
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, Long
Lake Energy Corporation
**J. Murray Logan 1,000 April 1990 62
Managing Partner of L. R. Global Partners, L.P., Vice
President, 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, Chairman, IPC, Rockefeller & Co., Inc.
**James S. Martin 0 June 1989 61
Director: The Europe Fund, Inc., GTF Asset Management,
Inc.; previously Executive Vice President, Chief
Investment Officer and Trustee, College Retirement
Equities Fund.
</TABLE>
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++ As of June 10, 1997, Mr. Borghese owned 142,437 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 345,794 shares of Mercury Asset
Management Group plc, an affiliate of the Fund's Investment Manager and
Investment Adviser, with sole voting and investment power. 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.
During the fiscal year ended March 31, 1997, four meetings of
the Board of Directors were held. Except for Mr. Borghese, 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, 1997. 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,
1997, 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.
1996 Compensation Table
<TABLE>
<CAPTION>
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
</TABLE>
- ----------
* The Fund Complex includes two funds: the Fund and The Europe Fund, Inc.
The executive officers of the Fund are:
<TABLE>
<CAPTION>
Principal Occupation
Name and Age Position with Fund During Past 5 Years
------------ ------------------ --------------------
<S> <C> <C>
J. Loughlin Callahan, 49 President, Treasurer Director, Mercury Asset Management
plc; previously, Director, S.G. Warburg
Securities
Steven W. Golann, 53 Vice President Director, Mercury Asset Management
International Ltd.; previously, Managing
Director, Wertheim Philippe International
Rita J. Kleinman, 40 Secretary Vice President, Mercury Asset
Management International Ltd.;
previously, Director of Client Services,
SBC Portfolio Management International
</TABLE>
Mr. Golann is a director and Ms. Kleinman 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, J.
Loughlin Callahan 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 10, 1997 the officers and directors of the Fund as a
group owned beneficially 33,975 shares, or less than 1.0% 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 August 6, 1996,
Lloyds Bank as nominee for British Empire Securities and General Trust held
692,200 shares of the Fund (17.25% of the outstanding shares). As of May 31,
1997, 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, 1998. 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 1997 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
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 15.48%, 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, 1997, as
reported in The Wall Street Journal, the Fund's shares traded at a discount
from net asset value of 15.59%.
Section 2-604(b) of the Maryland General Corporation Law
requires that for a board to propose an amendment to a corporation's charter,
the board must first adopt a resolution which sets forth the proposed
amendment and must declare that the charter amendment is advisable. On June
10, 1997, the Board satisfied these requirements with respect to this Proposal
when it approved an amendment to the Fund's Articles of Incorporation that
would convert the Fund to an open-end investment company (if approved by
two-thirds of the outstanding shares entitled to vote on the matter) and
declared the proposed amended and restated Articles of Incorporation advisable.
On that same date, the Board considered whether or not to
recommend to stockholders that the Proposal to convert to an open-end fund be
approved. The Board took into account the likelihood that, if the Fund were
open-ended, stockholders might realize a short-term gain, but determined that
it is in the long-term best interest of stockholders for the Fund to remain a
closed-end fund. The Board consequently recommends that stockholders vote
against this Proposal. In reaching this determination, 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 (20.20% in 1996, 16.55% in 1995, 16.10% in 1992 and
28.44% in 1991) 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 18.35 %,
20.40%, 12.56% and 13.37%; 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 FTSE All-Share Index in two 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 15.59% on
May 31, 1997 to 14.01% on July 18, 1997, as reported in The Wall Street
Journal (a change of 10.13%). 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 increased from
17.09% to 18.49% (a change of 8.19%). The discount of 14.01% for the Fund is
4.48% lower than the average discount of 18.49% 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
(resulting 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 state securities regulation. Prior to
the enactment of the National Securities Market Improvement Act of 1996
("NSMIA"), had the Fund converted to an open-end fund, the Fund would have
been required to observe certain state limitations from which it is currently
exempt. NSMIA, however, pre-empted the state securities laws which imposed
merit standards on investment companies registered under the 1940 Act.
Accordingly, if the Fund converted to an open-end fund, the Fund would not be
subject to state investment limitations and other restrictions contained in
the state securities laws. However, the Fund would still be required to
submit notice filings to the states and would be required to pay substantial
fees in connection with those filings.
(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) Automatic Dividend Reinvestment and Cash Purchase Plan. As
a closed-end investment company, the Fund's current 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.
Although an open-end fund eliminates the possibility of realizing a premium,
it eliminates 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 (1) 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 $16,170,
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) 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 $300,000 or 7.5 cents 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 FTSE All-Share Index in two 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 continue to trade at a discount and that
discount is greater than 10% during next year's test period, the Board and
stockholders will again have an opportunity to consider converting the Fund to
an open-end investment company.
In light of the above, the Board believes 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. and its Investment Adviser is Mercury Asset
Management International Ltd. (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, headquartered in London,
England, at 33 King William Street, EC4R 9AS and 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, C. Nigel Hurst-Brown 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.
Mrs. C. Consuelo Brooke and Messrs. Steven W. Golann, J. Eric
Nelson, C. Nigel Hurst-Brown 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 Mrs.
Brooke and Messrs. Stormonth Darling, Farquharson, Hurst-Brown 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, 1997,
the Investment Manager earned from the Fund investment management fees
totalling $487,653. 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
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, research capabilities 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.
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 1998 annual meeting of
stockholders, the stockholder proposal must be received by the Fund on or
before March 15, 1998 and must satisfy other applicable legal requirements.
By order of the Board of Directors,
Anthony M. Solomon
Chairman of the Board
New York, New York
July 23, 1997
(This page has been left blank intentionally.)
SCHEDULE 1
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.
[ ]
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 AGAINST item 3 below.
1--ELECTION OF DIRECTORS. [ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY
LISTED BELOW (to vote for all
(except as marked to the nominees listed
contrary below) below)
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 OR ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING MARCH 31, 1998:
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 [ ]
4--TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
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
------------------------------
Signature
Date , 1997
-------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE-NO POSTAGE IS REQUIRED
THE UNITED KINGDOM FUND INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS--SEPTEMBER 16, 1997
The undersigned, revoking previous proxies, hereby appoints
Anthony M. Solomon, J. Loughlin Callahan and Thaddea Feldman, and each of
them, the proxies of the undersigned, with power of substitution of 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 16, 1997 at 10:00 A.M.,
New York City time, and at any and all adjournments thereof.
(Continued on reverse side)
