SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The United Kingdom Fund Inc.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE UNITED KINGDOM FUND INC.
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1998
----------------------
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 15, 1998 at 11:00 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, 1999.
3. To amend and restate the Articles of Incorporation
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 26,
1998 will be entitled to vote at the meeting.
By order of the Board of Directors,
Rita J. Kleinman
Secretary
New York, New York
August 14, 1998
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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
------------
PROXY STATEMENT
------------
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 11:00 a.m. on
Tuesday, September 15, 1998 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 August 14, 1998 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. Proposal 1 concerning the election of directors
requires the favorable vote of the holders of a majority of the shares present
at a meeting at which a quorum is present. Proposal 2 concerning the
ratification of accountants requires the favorable vote of the holders of a
majority of the shares present and entitled to vote at a meeting at which a
quorum is present. 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 intends 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 if the proxy
represented by that non-vote votes on at least one Proposal. Consequently,
broker non-votes counting toward the quorum and votes to abstain will have the
effect of a vote against Proposals 1, 2 and 3 (and therefore against 1) the
proposal to elect the directors, 2) the proposal to ratify the selection of
Ernst & Young LLP as independent accountants for the Fund and 3) the proposal
to amend and restate the Articles of Incorporation (the "Articles of
Incorporation") to convert the Fund from a closed-end investment company to an
open-end investment company).
There were 4,011,655 shares of common stock of the Fund
outstanding on the record date, June 26, 1998. 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.
Stockholders may obtain upon request and without charge a copy
of the Fund's annual report (and its most recent quarterly report succeeding
the annual report, if available), by calling toll free 1-888-243-9154 or
writing Bear Stearns Funds Management Inc., c/o The United Kingdom Fund Inc.,
245 Park Avenue, Fifteenth Floor, New York, New York 10167.
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 principal 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 3, 1998** Board of Directors Age
-------------------------------------------- ------------------- ------------------- ---
<S> <C> <C> <C>
Anthony M. Solomon, Chairman of the Board 1,000 June 1987 78
Chairman, The Europe Fund, Inc.; Director, Alexandria
Real Estate Inc.; Adviser, Blackstone Group; previously,
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 86
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 59
Private Investor; previously, Chairman, Curtis Industries
Incorporated (wholesale industrial distributor),
International Investment Banking, Prudential Securities;
Director: Revco D.S. Inc. OMI Corp. (ocean shipping
company), The Noel Group (operating and holding
company).
*Sir Arthur Bryan 1,275 June 1987 75
Director: The Europe Fund, Inc., Dartington Crystal Ltd.;
previously, Lord Lieutenant of Staffordshire; Director,
Friends' Provident 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 65
Chairman: Mercury European Privatisation Trust plc,
Deltec International S.A.; Director: Scottish Equitable
plc, Scottish Hydro-Electric plc, The Europe Fund, Inc.,
Greenwich Associates, Mercury Keystone Investment
Trust plc, The National Association of Securities Dealers
International Advisory Board, Sagitta Asset Management
Ltd; previously, Chairman, Mercury Asset Management
International Ltd; Director, Mercury Asset Management
Group Ltd.
Leon Levy 500 June 1987 72
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 Ltd and
Long Lake Energy Corporation.
*J. Murray Logan 1,000 April 1990 63
Investment Manager, Rockefeller & Co., Inc. (investment
management); Managing Partner, L-R Global Partners,
L.P.; Director: 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 62
Director, The United Kingdom Fund Inc.; previously,
Executive Vice President, Chief Investment Officer and
Trustee, College Retirement Equities Fund.
</TABLE>
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+ As of June 3, 1998, Mr. Borghese owned 70,337 shares of The Bear Stearns
Companies Inc., the parent of the Fund's Administrator, Bear Stearns Funds
Management Inc.
++ On December 22, 1997, Mr. Darling disposed of 345,794 shares of Mercury
Asset Management Group Ltd. Mr. Darling is an "interested person" of the
Fund, as defined by the Investment Company Act of 1940, as amended (the
"1940 Act"), because he currently holds 12,000 shares of Merrill Lynch &
Co., Inc. ("Merrill Lynch"), the ultimate parent of the Fund's Investment
Manager, Mercury Asset Management International Channel Islands Ltd., and
the Fund's Investment Adviser, Mercury Asset Management International Ltd.
(individually, the "Investment Manager" and the "Investment Adviser",
respectively, and together the "Advisers").
* 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, 1998, 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, 1998. The officers received no remuneration from the Fund. Each
director who is not an "interested person" (as defined in the 1940 Act) of the
Fund received from the Fund an annual fee of $7,500 for the fiscal year ended
on March 31, 1998, 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.
1997 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 19,000
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 19,000
James S. Martin
Director....................... 7,500 None 19,500
</TABLE>
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* 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, 50 President and Treasurer Managing Director, Mercury Asset
Management Ltd;
Steven W. Golann, 54 Vice President and Assistant Treasurer Director, Mercury Asset Management
International Ltd; previously, Managing
Director, Wertheim Philippe International
Rita J. Kleinman, 41 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, Mr.
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.
The Fund has received notification from Phillip Goldstein, a
stockholder in the Fund, of his intention to nominate a slate of five
candidates (the "Goldstein Nominees") for election to the Board of
Directors. The Board believes that election of any of the Goldstein
Nominees would be contrary to the best interests of the Fund and its
stockholders.
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, 1999. 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 1998 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 Articles of Incorporation
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 Articles of Incorporation to provide that, upon the adoption of an
amendment by holders of two-thirds of the Fund's outstanding shares, the Fund
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 11.25%, thus exceeding the 10% threshold described above and
triggering the proposal to convert the Fund to an open-end investment company.
As of August 7, 1998, as reported in The Wall Street Journal, the Fund's
shares traded at a discount from net asset value of 16.04%.
Section 2-604(b) of the Maryland General Corporation Law
requires that for a board of directors to propose an amendment to a
corporation's articles of incorporation, the board must first adopt a
resolution which sets forth the proposed amendment and must declare that the
articles of incorporation amendment is advisable. On June 3, 1998, 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 would likely 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; 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 Financial Times Stock Exchange ("FTSE") All-Share Index in four of the
past six 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 Board, however, has determined that although it currently
recommends against open-ending, in order to be responsive to stockholder
concerns, if holders of a majority of outstanding shares vote for open-
ending, the Board will reconvene and implement a plan to either convert the
Fund to an open-end fund, liquidate the Fund or merge with an open-end fund
as soon as practicable after the stockholders vote.
As of August 7, 1998, the Fund's shares traded at a discount
from net asset value of 16.04%, which was 1.03 percentage points lower than
the 17.07% average discount 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. The
Board believes that there are significant arguments for and against conversion
and recommends that stockholders consider both their short-term and long-term
investment goals when deciding how to vote on this Proposal.
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 may be payable upon redemption of both
current and newly-issued shares. In addition, contingent deferred sales
charges may also be payable upon redemption of newly-issued shares. 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
stockholders 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 be significantly more than the NYSE fee,
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. 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 which case the
stockholders would be subject to tax on such gain. 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 may 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 (the "Amended and Restated Articles of Incorporation") as set forth
in Exhibit A, attached hereto. The Amended and Restated Articles of
Incorporation 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
structure 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 structure has occurred generally in extreme
circumstances (e.g., as a defense against a hostile bid) which are not present
in this instance. The Board believes that conversion to an open-end fund
would require a fundamental and undesirable change in 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 structure 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 four of the past six
years. However, the Board wishes to be responsive to stockholder concerns.
Therefore, if holders of a majority of outstanding shares vote for open-ending,
the Board will reconvene and implement a plan to either convert the Fund to an
open-end fund, liquidate the Fund or merge with an open-end fund as soon as
practicable after the stockholders vote.
If the Fund remains a closed-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
structure continues to be more appropriate to the Fund's investment objective
and strategy than the open-end structure.
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
Stock Ownership of Certain Beneficial Owners
On June 26, 1998, 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. The following chart lists those stockholders owning 5% or
more of the Fund's outstanding shares.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Amount and Nature
of Beneficial
Title of Class Name and Address of Beneficial Owner Ownership Percent of Class
- ---------------- ---------------------------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Common Stock Lazard Freres & Co. LLC
30 Rockefeller Plaza 656,300 shares of 16.4% of the
New York, New York 10020 The UK Fund* outstanding shares
Common Stock Stichting Philips Pension Funds,
Tramstraat 62 284,100 shares of 7.1% of the
5611 CR The UK Fund** outstanding shares
Eindhoven, Netherlands
Common Stock President and Fellows of Harvard College
c/o Harvard Management Company, Inc.
600 Atlantic Avenue, 241,700 shares of The 6.0% of the
Boston, MA 02210 UK Fund*** outstanding shares
* This information was derived from a statement on Schedule 13G, which Lazard Freres & Co. LLC filed with the Commission
on December 10, 1997.
** This information was derived from a statement on Schedule 13G, which Stichting Philips Pension Funds filed with the
Commission on December 31, 1991.
*** This information was derived from a statement on Schedule 13G, which Harvard College filed with the Commission on
February 13, 1998.
</TABLE>
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. The Investment Manager is a wholly-owned
subsidiary of the Investment Adviser, which in turn is a wholly-owned
subsidiary of Mercury Asset Management Ltd, 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 Ltd ("MAM") of the same address whose ultimate parent is Merrill Lynch,
located at 250 Vesey Street, New York, New York 10281, USA.
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, pension plans, private
investment companies and a registered investment company. 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. Peter J. Gibbs, John Gillespie, Frank P. Le Feuvre and
Robin E.R. Rumboll are the directors of the Investment Manager. The principal
occupation of each director is as follows: Mr. Gibbs is the principal executive
officer of the Investment Manager and a director of Mercury Asset Management
Ltd; Mr. Gillespie is secretary of the Investment Manager and a director of
Mercury Asset Management Channel Islands Ltd; Mr. Le Feuvre is a director of
Mercury Asset Management Channel Islands Ltd; and Mr. Rumboll is an
independent financial consultant. The address of Mr. Gibbs is 33 King William
Street, London, EC4R 9AS, England. The address of Messrs. Gillespie and Le
Feuvre 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. David M.F. Scott, Peter J.
Gibbs, Steven W. Golann and J. Eric Nelson are the directors of the Investment
Adviser. The principal occupation of each director is as follows: Mrs. Brooke
and Mr. Scott are fund managers of the Investment Adviser; Mr. Gibbs is
chairman of the Investment Adviser and a director of Mercury Asset Management
Ltd; and Messrs. Golann and Nelson are directors of the Investment Adviser.
The address of Mrs. Brooke and Messrs. Gibbs and Scott is 33 King William
Street, London, EC4R 9AS, England. The address of Messrs. Golann and 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 December
11, 1997 between the Fund and the Investment Manager (the "Investment
Management Agreement"), 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 December
11, 1997 between the Investment Manager and the Investment Adviser (together
with the Investment Management Agreement, the "Agreements"), 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
on the last day of each calendar month. For the fiscal year ended March 31,
1998, the Investment Manager earned from the Fund investment management fees
totalling $474,387. 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; expenses of stockholders' meetings and preparing
and distributing proxies and reports to stockholders; and costs of information
obtained from services other than the Investment Manager or its affiliated
persons relating to the valuation of securities.
Both the Investment Management Agreement and the Investment
Advisory Agreement were approved by the stockholders of the Fund on February
25, 1998. The prior Investment Management Agreement and the prior Investment
Advisory Agreement (collectively, the "Prior Agreements") had been 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. On December 22, 1997, the Prior
Agreements terminated pursuant to the 1940 Act as a result of the acquisition
by Merrill Lynch of MAM (the "Acquisition"). The Investment Manager and the
Investment Adviser provided services under interim arrangements, in accordance
with an order granted by the Securities and Exchange Commission, between
December 22, 1997 and January 12, 1998 (at no more than cost) and between
January 12, 1998 and February 25, 1998 (at standard fee levels).
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.
Orders may be placed with brokers and 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 firms affiliated with the Investment Manager or the
Investment Adviser, the Fund will not pay any higher commission to 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 at 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. The Fund has retained Corporate Investor Communications,
Inc. ("CIC") for a fee of approximately $67,000, together with the
reimbursement of its expenses, to assist in the solicitation of proxies. CIC
will identify record and beneficial owners of shares of the Fund and contact
them by mail, telephone or otherwise to solicit their proxies. It is expected
that approximately 15 employees of CIC will be involved in this solicitation
effort. In addition to the solicitation by CIC, the Fund's officers may
solicit proxies personally, for which they will receive no special
compensation. 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 1999 annual meeting of
stockholders, the stockholder proposal must be received by the Fund on or
before April 30, 1999 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
August 14, 1998
(This page has been left blank intentionally.)
EXHIBIT A
THE UNITED KINGDOM FUND INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
FIRST: I, [ ], 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 Amended and
Restated Articles of Incorporation (the "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 these Articles of
Incorporation, 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 these Articles of Incorporation.
(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
these Articles of Incorporation, 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 these Articles of
Incorporation.
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 these Articles of Incorporation
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 these Articles of Incorporation 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 these
Articles of Incorporation 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 these Articles of
Incorporation 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 these Articles of
Incorporation, 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 these Articles of
Incorporation, 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 these Articles
of Incorporation 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 these Articles of Incorporation 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 boxes below, the undersigned's vote will be cast FOR
proposals 1 and 2 and AGAINST proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES LISTED BELOW.
1--ELECTION OF [ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY
DIRECTORS. LISTED BELOW (to vote for all
(except as marked to nominees listed below)
to the contrary 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. If authority is not withheld
with respect to any nominee, the undersigned's vote will be cast for such
nominee).
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
2--RATIFICATION OF SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING MARCH 31, 1999:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 3.
3--AMENDMENT AND RESTATEMENT OF THE ARTICLES OF INCORPORATION 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
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 _____________________, 1998
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 15, 1998
The undersigned, revoking previous proxies, hereby appoints
Anthony M. Solomon, J. Loughlin Callahan and Thaddea M. Maguire, 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 15, 1998 at 11:00 A.M.,
New York City time, and at any and all adjournments thereof.
