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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The United Kingdom Fund Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, 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.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 14, 1999
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To the Stockholders of
The United Kingdom Fund Inc.:
A special meeting of the Stockholders of The United Kingdom Fund Inc. will
be held on Wednesday, April 14, 1999 at 11:00 a.m., New York City time, at the
Waldorf-Astoria Hotel, 301 Park Avenue, 4th Floor, New York, New York to
consider and act upon a proposal to liquidate and dissolve the Fund as set forth
in the Plan of Liquidation and Dissolution (the "Plan") adopted by the Board of
Directors of the Fund.
The voting results from the last annual meeting of Stockholders suggest
that there now may be more Stockholders who would like the short-term
benefits from eliminating the discount to net asset value at which the
Fund's shares have been trading rather than the long-term investment
benefits which a closed-end fund can provide. As a result, the Board
recommends that Stockholders approve the Plan. In order to assure that the
action ultimately taken reflects Stockholders' views, the Board encourages
all Stockholders to vote on this proposal.
If the Plan is approved, Stockholders holding shares in the Fund can expect
to receive a liquidation distribution, in cash, as soon as reasonably
practicable.
Stockholders of record at the close of business on February 25, 1999 will
be entitled to vote at the meeting.
By order of the Board of Directors,
RITA J. KLEINMAN
Secretary
New York, New York
March 5, 1999
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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 LIQUIDATE AND DISSOLVE THE FUND REQUIRES A FAVORABLE
VOTE OF THE HOLDERS OF A MAJORITY 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 on behalf of the Board of Directors of
The United Kingdom Fund Inc. (the "Fund") to Stockholders of the Fund in
connection with the solicitation of proxies for the Special Meeting of
Stockholders of the Fund and any adjournments thereof (the "Meeting") to be held
at 11:00 a.m. on Wednesday, April 14, 1999 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 March 5, 1999 or as
soon as possible thereafter.
The purpose of the Meeting is to consider a proposal to liquidate and
dissolve the Fund as set forth in the Plan of Liquidation and Dissolution (the
"Plan"), attached hereto as Exhibit A. The affirmative vote of Stockholders
holding a majority of the Fund's outstanding shares, in person or by proxy, is
required for approval of the Plan. 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 accordance
with the instructions marked thereon or otherwise as provided therein. Unless
instructions to the contrary are marked, proxies will be voted FOR approval of
the Plan. It is required that holders of a majority of the outstanding shares be
represented in person or by proxy at the Meeting. If a majority of the
outstanding shares are not represented at the Meeting, or in the event that a
majority of the outstanding shares are represented at the Meeting but sufficient
votes to approve the Plan are not received, the persons named as proxies by the
Fund may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournments will require the affirmative vote
of a majority of the Fund's shares represented at the Meeting in person or by
proxy. The persons named as proxies by the Fund will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the Plan
and will vote against any such adjournment those proxies required to be voted
against the proposal. 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. Broker non-votes and
abstentions will have the same effect as a vote against the Plan.
There were 3,871,655 shares of common stock of the Fund outstanding on
the record date, February 25, 1999. 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 "Reinvestment and Purchase Plan"), any
proxy given by the Stockholder will also govern the voting of all shares held
for the Stockholder's account under the Reinvestment and Purchase Plan, unless
contrary instructions are received by The Bank of New York, as agent under the
Reinvestment and Purchase 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 to the
Fund's administrator, Bear Stearns Funds Management Inc., c/o The United Kingdom
Fund Inc., 245 Park Avenue, Fifteenth Floor, New York, New York 10167.
<PAGE>
PROPOSAL TO LIQUIDATE AND DISSOLVE THE FUND
The Fund proposes to liquidate its assets and dissolve pursuant to the
provisions of the Plan as approved by the Board on January 28, 1999. The Board
has determined that an orderly liquidation of the Fund's assets is advisable and
has directed that the matter be submitted for consideration by the Stockholders
of the Fund. The Plan provides for the complete liquidation of all of the assets
of the Fund. If the Plan is approved by the requisite Stockholder vote, Mercury
Asset Management International Ltd., the Fund's investment adviser (the
"Investment Adviser"), and Mercury Asset Management International Channel
Islands Ltd., the Fund's investment manager (together with the Investment
Adviser, the "Advisers"), will undertake to liquidate the Fund's assets at
market prices and on such terms and conditions as the Advisers shall determine
to be reasonable and in the best interests of the Fund and its Stockholders.
If the Plan is not approved by the requisite Stockholder vote but at the
same time more votes are in favor of the Plan than against, the Board intends to
resubmit the Plan or another plan of liquidation and dissolution to the Fund's
Stockholders at the Fund's next Annual Meeting of Stockholders. If the Plan is
not approved by the requisite Stockholder vote, the Board currently intends to
continue as a closed-end fund and does not intend to seek to open-end the Fund
or to merge the Fund with an open-end fund.
Reasons for the Liquidation
The Fund is a closed-end management investment company. The shares of
closed-end investment companies typically trade in the marketplace at a discount
to their net asset value (the "discount"). This has been true in the case of the
Fund as well as the other closed-end single country equity funds. Thus, the
market price paid for the Fund's shares generally has been less than the
underlying value of the Fund's portfolio. Since inception, the discount of the
Fund's shares has varied between a discount of 26.32% and a premium of 4.90%. In
1998, the discount ranged from high of 17.15% to a low of 5.58%. The Fund's
Articles of Incorporation provides that if the Fund's shares trade at an average
discount exceeding 10% on the last day of the first 12 weeks of the calendar
year, the Fund must submit to its Stockholders at its next annual meeting a
proposal to amend the Fund's Articles of Incorporation to provide that, upon
adoption of an amendment by the holders of two-thirds of the Fund's outstanding
shares, the Fund will convert to an open-end investment company. Since 1990, the
Fund's Stockholders have had to vote seven times on the open-ending proposal.
Over the years the Board has discussed and considered various alternative
strategies to address the discount, including instituting share repurchases,
making tender offers for outstanding shares, instituting a more frequent payment
of dividends, combining with other funds and converting to an open-end fund. The
Board has on each occasion concluded that maintaining the current closed-end
format was in the best long-term interests of the Fund and its Stockholders
because a closed-end format is the best structure for investing in the United
Kingdom with the Fund's investment strategies. Single country funds tend to be
closed-ended because the volatility of investor demand for individual countries
can cause an open-end fund to experience wide swings in net purchases (which
often adds cash in rising markets and dilutes returns) and net redemptions
(which often forces sales in falling markets and aggravates the downside). At
the same time, however, the Board has recognized that there are Stockholders of
the Fund who have short-term investment objectives.
At the Fund's 1998 Annual Meeting of Stockholders held on September 15,
1998 (the "1998 Annual Meeting"), the proposal to amend the Fund's Articles of
Incorporation to convert the Fund to an open-end fund received affirmative votes
representing 38% of the shares outstanding. Only 16% of the outstanding shares
were cast against open-ending the Fund. In light of the proportion of
Stockholders voting in favor of open-ending at the 1998 Annual Meeting, the
Board believes that the composition of the stockholder base has changed and
that there now may be more Stockholders who would like the short-term benefits
from eliminating the discount to net asset value at which the Fund's shares
have been trading rather than the long-term investment benefits which a
closed-end fund can provide. As a result, the Board decided on September
15, 1998, that it would give Stockholders the opportunity to realize the
net asset value of their investment in the Fund through one of the
following three options: (i) converting the Fund to an open-end fund, (ii)
merging the Fund with an open-end fund or (iii) liquidating the Fund.
Since the 1998 Annual Meeting, the Board and the Investment Adviser have
investigated and discussed the feasibility of each of these options. Based
on its findings, the Board determined that open-ending is not a viable
option, in part, because to open-end the Fund would be very costly to its
remaining
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Stockholders since anticipated net redemptions would likely increase the Fund's
operating expense ratio to an unacceptable level. According to the Fund's
Investment Adviser, demand for an open-end fund investing only in United Kingdom
equities is limited. As a result, distributors in the mutual fund industry have
shown little or no interest in selling such an investment. The Board also
considered merging or combining the Fund with an open-end fund, but determined
that merging the Fund is not a realistic option, in part, because a merger or
combination with an open-end fund would suffer from all the same considerations
as open-ending the Fund. Consequently, the most attractive option for achieving
net asset value for the Stockholders at this time is liquidation of the Fund.
Based upon the foregoing considerations, on November 24, 1998, the Board
announced its approval and authorization of the orderly liquidation and
subsequent dissolution of the Fund. On January 28, 1999, the Board, including
the Directors who are not "interested persons" of the Fund (as that term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act")), adopted the Plan and directed that the Plan be submitted to the
Fund's Stockholders for consideration. A copy of the Plan is attached hereto as
Exhibit A.
If the Plan is approved by the requisite Stockholder vote, the Fund's
assets will be liquidated at market prices and on such terms and conditions as
determined to be reasonable and in the best interests of the Fund and its
Stockholders in light of the circumstances in which they are sold and the Fund
will file Articles of Dissolution with the State of Maryland. Prior to
Stockholder approval of the Plan, the Fund will continue to invest its assets in
accordance with its current investment strategies. Stockholders will receive
their proportionate cash interest of the net distributable assets of the Fund
upon liquidation.
Under Maryland law and pursuant to the Fund's Articles of Incorporation and
By-Laws, the affirmative vote of the holders of at least a majority of the
outstanding shares of capital stock of the Fund entitled to vote thereon is
needed to approve the liquidation of the Fund. For purposes of the vote on the
Plan, abstentions and broker non-votes will have the same effect as a vote
against the Plan, but will be counted toward the presence of a quorum. In the
event that a majority of the outstanding shares of capital stock of the Fund are
not voted in favor of the Plan, with the result that the Plan is not approved,
the Fund will continue to exist as a registered investment company in accordance
with its stated investment objective and policies and, unless more votes are
against the Plan than in favor, the Board intends to resubmit the Plan or
another plan of liquidation and dissolution to the Fund's Stockholders at the
Fund's next Annual Meeting of Stockholders. In the event the Plan is not
approved by the requisite Stockholder vote, the Board currently intends to
continue as a closed-end fund and does not intend to seek to open-end or to
merge with an open-end fund.
The liquidation of the assets and dissolution of the Fund will permit the
Fund's Stockholders to invest the distributions to be received by them upon the
Fund's liquidation in investment vehicles of their own choice. The Board has
been advised by the Investment Adviser that Stockholders who wish to continue
investing in investment funds managed by the Investment Adviser will be given
the option for 60 days after the liquidation to invest in Class A shares
(without the normal 5.25% front end load) of Mercury Asset Management Funds,
Inc.'s recently launched open-end funds, including Mercury Pan-European Growth
Fund, Mercury International Fund, Mercury U.S. Large Cap Fund or Mercury Gold
and Mining Fund and any other funds launched by Mercury Asset Management Funds,
Inc. before the expiration of the 60 day period. The Board has not reviewed
these investments and makes no representations as to their suitability.
Prospective investors interested in these funds can obtain a prospectus
containing more complete information including charges and expenses by calling,
toll free, (888) 763-2260. Investors interested in these funds are urged to
carefully read the prospectus for each of these funds and to consult their
financial adviser before investing.
Summary of Plan of Liquidation and Dissolution
The following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the Plan which is attached hereto as Exhibit A. Stockholders are urged to read
the Plan in its entirety.
Effective Date of the Plan and Cessation of the Fund's Activities as an
Investment Company. The Plan will become effective only upon its adoption and
approval by the holders of a majority of the outstanding shares of the Fund (the
"Effective Date"). Following the Effective Date, the Fund (i) will cease to
invest its assets in accordance with its investment objectives and, to the
extent necessary, will, as soon as reasonable and practicable after the
Effective Date,
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complete the sale of the portfolio securities it holds in order to convert its
assets to cash or cash equivalents, (ii) will not engage in any business
activities except for the purpose of paying, satisfying, and discharging any
existing debts and obligations, collecting and distributing its assets, and
doing all other acts required to liquidate and wind up its business and affairs
and (iii) will file Articles of Dissolution with the State of Maryland and
dissolve in accordance with the Plan. (Plan, Sections 1-2, 5,8 and 13).
Closing of Books and Restriction on Transfer of Shares. After the Effective
Date, the Board will set a record date (the "Record Date") on which the
proportionate interests of Stockholders in the assets of the Fund will be fixed
on the basis of their holdings. On the Record Date, the books of the Fund will
be closed. Thereafter, unless the books of the Fund are reopened because the
Plan cannot be carried into effect under the laws of the State of Maryland or
otherwise, the Stockholders' respective interests in the Fund's assets will not
be transferable by the negotiation of share certificates and the Fund's shares
will cease to be traded on the NYSE. (Plan, Section 3).
Liquidation Distributions. Stockholders of record on the Record Date will
be entitled to receive their proportionate interest in the Fund's liquidation
distributions. The distribution of virtually all of the Fund's assets will most
likely be made in two cash payments. The first payment is expected to consist of
cash representing substantially all the assets of the Fund, less an estimated
amount necessary to discharge any (a) unpaid liabilities and obligations of the
Fund on the Fund's books on the Record Date, and (b) contingent liabilities as
the Board shall reasonably deem may exist against the assets of the Fund on the
Fund's books. The second payment will be made after acceptance of the Fund's
Articles of Dissolution and will consist of cash from any assets remaining after
payment of expenses, the proceeds of any sale of assets of the Fund under the
Plan not sold prior to the first distribution and any other miscellaneous income
to the Fund. The second payment will result in complete cancellation of all the
outstanding shares of capital stock of the Fund.
Each Stockholder will receive a confirmation showing such Stockholder's
proportionate interest in the net assets of the Fund and will be paid its
proportionate interest in the first distribution. Each Stockholder holding stock
certificates of the Fund will be paid its proportionate interest in the second
distribution upon return of its stock certificates to the Fund. Each Stockholder
not holding stock certificates of the Fund will receive its proportionate
interest in the second distribution upon the Fund's receipt of the stock
certificates, representing such Stockholder's interest, from either the
Stockholder's depositary agent or the Stockholder's broker or upon
confirmation from the Stockholder's depositary agent that such
Stockholder's shares are to be cancelled. All Stockholders will receive
information concerning the sources of the liquidating distributions.
(Plan, Section 7).
Any unclaimed assets will be held in trust for remaining Stockholders for a
period of three years, at which time such unclaimed assets may be distributed to
the remaining Stockholders who have proved their interest. After this
distribution, the interest of Stockholders who have not proved their interest
will be forever barred and foreclosed. Any assets remaining unclaimed 60 days
after such distribution shall escheat to the State of Maryland.
Expenses of Liquidation and Dissolution. All of the expenses incurred by
the Fund in carrying out the Plan will be borne by the Fund. (Plan, Section
10).
Continued Operation of the Fund. The Plan provides that the Board has the
authority to modify or amend the Plan at any time without Stockholder approval,
if the Board determines that such action would be advisable and in the best
interests of the Fund and its Stockholders. In addition, the Board may abandon
the Plan, with Stockholder approval, prior to the filing of Articles of
Dissolution with the State Department of Assessments and Taxation of Maryland if
the Board determines that such abandonment would be advisable and in the best
interests of the Fund and its Stockholders. (Plan, Sections 11 and 12).
The Distributions
At present, the dates on which the Fund will be liquidated and on which
the Fund will pay liquidation distributions to its Stockholders are uncertain,
but if the Plan is adopted by the Stockholders, it is the Board's current
intention to liquidate and dissolve the Fund as soon as reasonable and
practicable. The Fund's net assets on February 26, 1999 totaled
$59,334,675. At such date, the Fund had 3,871,655 shares outstanding.
Accordingly, on February 26, 1999, the net asset value per share of the
Fund was $15.33. The amounts to be distributed to Stockholders of the Fund
upon liquidation will be the Fund's net asset value reduced by the expenses
of the Fund in connection with the liquidation and portfolio transaction
costs.
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Federal Income Tax Consequences
The following is a general summary of certain United States federal income
tax consequences of the Plan to U.S. Stockholders. Stockholders should consult
their own tax advisers regarding the application of current United States
federal income tax law to their particular situations and with respect to state,
local and foreign tax consequences of the Plan.
After its fiscal year ending March 31, 1999, prior to the final
distributions, the Fund will make a distribution of ordinary income and capital
gain dividends earned during the fiscal year ending March 31, 1999.
If the Plan is approved, Stockholders will receive final cash distributions
that will be treated for federal income tax purposes as full payment in exchange
for the Stockholder's shares. Thus, a Stockholder who is a United States
resident or citizen will recognize gain to the extent that these payments exceed
his or her basis in such shares; if the amount received is less than his or her
basis, the Stockholder will realize a loss. The Stockholder's gain or loss will
be a capital gain or capital loss if such shares are held as capital assets. The
deduction of capital loss is subject to limitations.
Stockholders may also receive distributions of ordinary income or
capital gain dividends that are designated by the Fund with respect to earnings
in its final short tax year, which will be treated as ordinary income or capital
gain of the Stockholders. Within 60 days after the close of the Fund's final
short tax year, the Fund will notify Stockholders of the amounts of such
ordinary income or capital gain dividends, as well as the amounts qualifying for
a credit or deduction against foreign taxes paid by the Fund, if any.
Some Stockholders may be subject to a "backup withholding" tax of 31%
on the distributions described above, generally Stockholders for whom no
taxpayer identification number is on file with the Fund or who, to the Fund's
knowledge, have furnished an incorrect number.
Foreign Stockholders (including non-resident alien individuals and
foreign corporations) not engaged in U.S. trade or business will generally not
be subject to U.S. federal income tax on any payments of proceeds treated as
payment for shares, nor on any capital gain dividends, as described above.
However, any ordinary income distributions from the Fund will generally be
subject to a withholding tax of 30% or a lower treaty rate.
Impact of the Plan on the Fund's Status under the Investment Company Act
On the Effective Date, the Fund will cease doing business as a registered
investment company and, as soon as practicable, will apply for de-registration
under the Investment Company Act. It is expected that the Securities and
Exchange Commission will issue an order approving the de-registration of the
Fund if the Fund is no longer doing business as an investment company.
Accordingly, the Plan provides for the eventual cessation of the Fund's
activities as an investment company and its de-registration under the Investment
Company Act, and a vote in favor of the Plan will constitute a vote in favor of
such a course of action. (Plan, Sections 1, 2 and 11).
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Until the Fund's withdrawal as an investment company becomes effective, the
Fund, as a registered investment company, will continue to be subject to and
intends to comply with the Investment Company Act.
Procedure for Dissolution Under Maryland Law
After the Effective Date, pursuant to the Maryland General Corporation Law
and the Fund's Articles of Incorporation, as amended, and By-Laws, as amended,
Articles of Dissolution stating that the dissolution has been authorized will in
due course be executed, acknowledged and filed with the Maryland State
Department of Assessments and Taxation, and will become effective in accordance
with such law. Upon such Articles of Dissolution becoming effective, the Fund
will be legally dissolved, but thereafter the Fund will continue to exist for
the purposes of paying, satisfying, and discharging any existing debts or
obligations, collecting and distributing its assets, and doing all other acts
required to liquidate and wind up its business and affairs, but not for the
purpose of continuing the business for which the Fund was organized. The Fund's
Board will be the trustees of its assets for purposes of liquidation after the
acceptance of the Articles of Dissolution, unless and until a court appoints a
receiver. The Director-trustees will be vested in their capacity as trustees
with full title to all the assets of the Fund. (Plan, Sections 2 and 13).
Appraisal Rights
Stockholders will not be entitled to appraisal rights under Maryland law
in connection with the Plan. (Plan, Section 14).
Voting Information
Approval of the Plan requires the affirmative vote of the holders of at
least a majority of the outstanding shares of capital stock of the Fund. Unless
a contrary specification is made, the accompanying proxy will be voted FOR
approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE PROPOSED PLAN OF LIQUIDATION AND DISSOLUTION
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OTHER MATTERS
Stock Ownership of Certain Beneficial Owners
The following table sets forth the beneficial ownership of the Fund's
outstanding shares by each of the Fund's directors and all directors as a group
and each person who is known by the Fund to beneficially own five percent or
more of the Fund's outstanding shares as of January 1, 1999. No shares of the
Fund are beneficially owned by any executive officer of the Fund. The Company
has relied upon information supplied by its officers, directors and certain
stockholders and upon information contained in filings with the SEC.
<TABLE>
Number of Shares Percent of
Name Beneficially Owned Outstanding Shares
---- ------------------ ------------------
<S> <C> <C>
Directors
Anthony M. Soloman 1,000 *
George F. Bennett 25,475 *
Livio Borghese 5,000 *
Sir Arthur Bryan 1,279 *
Peter Stormonth Darling -- --
Leon Levy 500 *
J. Murray Logan 1,000 *
James S. Martin -- --
All current directors as a group 34,254 *
5% Stockholders
Lazard Freres & Co. LLC
30 Rockefeller Plaza 339,400 1 8.77% of the outstanding
New York, New York 10020 shares
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* Less than 1.0%
1 This information was derived from a statement on Schedule 13G, which Lazard
Freres & Co. LLC filed with the Commission on February 16, 1999.
</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 & Co., Inc., 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, trusts, 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
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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 clients include open-ended investment companies, charitable
organizations, corporations, pension plans and private investment companies. 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 a director of Mercury Asset
Management Ltd; Mr. Gillespie is secretary of the Investment Manager and a
director and secretary of Mercury Asset Management Channel Islands Ltd; Mr. Le
Feuvre is a director of Mercury Asset Management Channel Islands Ltd; and Mr.
Rumboll is a director of Mercury Asset Management Channel Islands Ltd and 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 and principal executive officer 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.
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.
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 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 totaling
$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.
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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 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 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
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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 securities transactions with the
Investment Manager, the Investment Adviser or their affiliates, except pursuant
to an exemptive order under the Investment Company Act of 1940.
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.
Independent Public Accountants
Representatives of Ernst & Young LLP are expected to be available to
respond to appropriate questions posed by Stockholders and Management and to
make a statement if they desire to do so.
General
The Management of the Fund does not intend to present at the meeting any
business other than the matters set forth in this Proxy Statement. 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. Only matters
referred to in the enclosed proxy will be considered at the Meeting.
The cost of soliciting proxies for the Meeting will be borne by the
Fund. The Fund has retained Corporate Investor Communications, Inc. ("CIC") for
a fee of approximately $13,000, 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. 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 the Plan set forth in the
notice of meeting are not received by the time scheduled for the Meeting of the
Stockholders, the persons named as proxies may propose one or more adjournments
of such 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 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 the Plan
and will vote against such adjournment those proxies required to be voted
against the Plan.
It is expected that if the Fund holds an annual meeting of Stockholders in
1999, it will be held in the month of September. Stockholder proposals intended
to be included in the Fund's proxy statement and form of proxy for the Fund's
1999 annual meeting of Stockholders 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
March 5, 1999
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11
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EXHIBIT A
THE UNITED KINGDOM FUND INC.
PLAN OF LIQUIDATION AND DISSOLUTION
The United Kingdom Fund Inc. (the "Fund"), a corporation organized and
existing under the laws of the State of Maryland, shall proceed to a complete
liquidation and dissolution of the Fund according to the procedures set forth in
this Plan of Liquidation and Dissolution (the "Plan") and in conformity with the
provisions of the Fund's Amended and Restated Articles of Incorporation, dated
August 3, 1987 (the "Articles of Incorporation").
WHEREAS, the Fund's Board of Directors has deemed it advisable for the
Fund and its Stockholders to liquidate and dissolve the Fund; and
WHEREAS, the Board of Directors on January 28, 1999, considered and adopted
this Plan as the method of liquidating and dissolving the Fund and has directed
that this Plan be submitted to Stockholders of the Fund for approval at a
special meeting of Stockholders and has authorized the distribution of a proxy
statement in connection with the solicitation of proxies for such meeting;
NOW, THEREFORE, upon Stockholder approval of the Plan, the Fund shall
voluntarily liquidate and dissolve in accordance with the requirements of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), the
Maryland General Corporation Law (the "MGCL") and the Internal Revenue Code of
1986, as amended (the "Code") and in the manner hereinafter set forth:
1. Effective Date of Plan. The Plan shall be and become effective upon the
adoption and approval of the Plan at a meeting of Stockholders called for the
purpose of voting upon the Plan by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Fund. The date of
such adoption and approval of the Plan by Stockholders is hereinafter called the
"Effective Date."
2. Cessation of Business. After the Effective Date of the Plan, the Fund
shall cease its business as an investment company and shall not engage in any
business activities except for the purpose of paying, satisfying, and
discharging any existing debts and obligations, collecting and distributing its
assets, and doing all other acts required to liquidate and wind up its business
and affairs and will dissolve in accordance with the Plan.
3. Restriction of Transfer and Redemption of Shares. As soon as reasonable
and practicable after the Effective Date, the Board will set a record date (the
"Record Date") on which the proportionate interests of Stockholders in the
assets of the Fund shall be fixed on the basis of their respective
stockholdings. On the Record Date, the books of the Fund shall be closed.
Thereafter, unless the books of the Fund are reopened because the Plan cannot be
carried into effect under the laws of the State of Maryland or otherwise, the
Stockholders' respective interests in the Fund's assets shall not be
transferable by the negotiation of share certificates and the Fund's shares will
cease to be traded on the New York Stock Exchange.
4. Notice of Liquidation. As soon as practicable after the Effective Date,
the Fund shall mail notice to the appropriate parties, including creditors of
the Fund, if any, that the Plan has been approved by the Board of Directors and
the Stockholders and that the Fund will be liquidating its assets, to the extent
such notice is required under the Investment Company Act or the MGCL.
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5. Liquidation of Assets. As soon as is reasonable and practicable after
the Effective Date, or as soon thereafter as practicable depending on market
conditions and consistent with the terms of the Plan, the Fund, the Fund's
investment adviser, Mercury Asset Management International Ltd. and the Fund's
investment manager, Mercury Asset Management International Channel Islands Ltd.,
under the supervision of the Board of Directors, shall have the authority to
commence the sale of all portfolio securities, invest all proceeds of such sale
in investment grade short-term debt securities denominated in U.S. dollars and
engage in such transactions as may be appropriate for the Fund's liquidation and
dissolution.
6. Payments of Debts. As soon as practicable after the Effective Date of
the Plan, the Fund shall pay, or discharge or set aside a reserve fund for, or
otherwise provide for the payment or discharge of, any liabilities and
obligations, including, without limitation, contingent liabilities.
7. Liquidating Distributions. As soon as practicable after the Effective
Date, the Fund shall declare a cash dividend (the "Liquidating Dividend") to be
paid pro rata as soon as practicable to its Stockholders of record on the Record
Date, equal to substantially all the assets of the Fund, except for cash, bank
deposits or cash equivalents in an estimated amount necessary to (a) discharge
any unpaid liabilities and obligations of the Fund on the Fund's books on the
Record Date, including, but not limited to, income dividends and capital gains
distributions, if any, payable through the Record Date, and (b) pay or provide
for the payment of such contingent liabilities as the Board of Directors shall
reasonably deem may exist against the assets of the Fund on the Fund's books.
After acceptance of the Fund's Articles of Dissolution by the Maryland State
Department of Assessments and Taxation, a second payment to the Fund's
Stockholders will be made in complete cancellation and redemption of all the
outstanding shares of the Fund. This second payment will consist of cash from
any assets remaining after payment of expenses, the proceeds of any sale of
assets of the Fund under the Plan not sold prior to the Liquidating Dividend and
any other miscellaneous income to the Fund.
Each Stockholder will receive a confirmation showing such Stockholder's
proportionate interest in the net assets of the Fund and will be paid its
proportionate interest in the Liquidating Dividend. Each Stockholder holding
stock certificates of the Fund will be paid its proportionate interest in the
second distribution upon return of its stock certificates to the Fund. Each
Stockholder not holding stock certificates of the Fund will receive its
proportionate interest in the second distribution upon the Fund's receipt of the
stock certificates, representing such Stockholder's interest, from either the
Shareholder's depositary agent or the Stockholder's broker or upon
confirmation from the Stockholder's depositary agent that such
Stockholder's shares are to be cancelled. All Stockholders will receive
information concerning the sources of the liquidating distributions.
8. Dissolution. As promptly as practicable, consistent with the provisions
of the Plan, the Fund shall be dissolved in accordance with the laws of the
State of Maryland and the Fund's Articles of Incorporation.
9. Filings. As soon as practicable after the Effective Date, the Fund shall
prepare and file Articles of Dissolution, Form N-8F under the Investment Company
Act and any other documents as are necessary to effect the dissolution and
de-registration of the Fund in accordance with the requirements of the
Investment Company Act, the MGCL, the Code, the Fund's Articles of Incorporation
and any other applicable securities laws, and any rules and regulations of the
Securities and Exchange Commission or any state securities commission,
including, without limitation, withdrawing any qualification to conduct business
in any state in which the Fund is so qualified, as well as the preparation and
filing of any federal or state tax returns.
10. Expenses of the Liquidation and Dissolution. The Fund shall bear all of
the expenses incurred by it in carrying out the Plan including, but not limited
to, all printing, legal, accounting, custodian and transfer agency fees, and the
expenses of any reports to or meeting of Stockholders whether or not the
liquidation contemplated by this Plan is effected.
11. Power of Board of Directors. The Board of Directors and, subject to the
direction of the Board of Directors, the Fund's officers, shall have authority
to do or authorize, without further Stockholder action, any or all acts and
things
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as provided for in the Plan and any and all such further acts and things as they
may consider appropriate or desirable to carry out the purposes of the Plan,
including, without limitation, the interpretation of any provision of the Plan,
the execution, delivery and filing of such other agreements, conveyances,
assignments, transfers, certificates, documents, information returns, tax
returns, forms, and other papers which may be necessary or desirable to
implement the Plan and effect the complete liquidation of the Fund or which may
be required by the provisions of the Investment Company Act, the MGCL, the Code,
or any other applicable laws.
The death, resignation or other disability of any director or any officer
of the Fund shall not impair the authority of the surviving or remaining
directors or officers to exercise any of the powers provided for in the Plan.
12. Amendment or Abandonment of Plan. The Board of Directors shall have the
authority to modify or amend the Plan at any time without Stockholder approval,
if the Board of Directors determines that such action would be advisable and in
the best interests of the Fund and its Stockholders. If any amendment or
modification appears necessary and in the judgment of the Board of Directors
will materially and adversely affect the interests of the Fund's Stockholders,
such amendment or modification will be submitted to the Fund's Stockholders for
approval. In addition, the Board of Directors may abandon the Plan, with
Stockholder approval, at any time prior to the filing of the Articles of
Dissolution if the Board of Directors determines that abandonment would be
advisable and in the best interests of the Fund and its Stockholders.
13. Articles of Dissolution. As soon as practicable after the Effective
Date and pursuant to the MGCL, the Fund shall prepare and file Articles of
Dissolution with and for acceptance by the Maryland State Department of
Assessments and Taxation.
(a) The Fund's Board of Directors shall be the trustees of the Funds's
assets for purposes of liquidation after the acceptance of the Articles of
Dissolution, unless and until a court appoints a receiver. The
Director-trustees will be vested in their capacity as trustees with full
title to all the assets of the Fund.
(b) The Director-trustees shall (i) collect and distribute any
remaining assets, applying them to the payment, satisfaction and discharge
of existing debts and obligations of the Fund, including necessary expenses
of liquidation; and (ii) distribute the remaining assets among the
Stockholders.
(c) The Director-trustees may (i) carry out the contracts of the Fund;
(ii) sell all or any part of the assets of the Fund at public or private
sale; (iii) sue or be sued in their own names as trustees or in the name of
the Fund; and (iv) do all other acts consistent with law and the Articles
of Incorporation of the Fund necessary or proper to liquidate the Fund and
wind up its affairs.
14. Appraisal Rights. Stockholders will not be entitled to appraisal rights
under Maryland law in connection with the Plan.
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[ ]
Unless otherwise specified in the squares provided, the undersigned's vote
will be cast FOR the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL.
TO APPROVE THE LIQUIDATION AND DISSOLUTION OF THE FUND, AS SET FORTH IN THE PLAN
OF LIQUIDATION AND DISSOLUTION ADOPTED BY THE BOARD OF DIRECTORS OF THE FUND:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Address Change
and/or Comments [ ]
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.
Date , 1999
-----------------------------
---------------------------------------
Signature
---------------------------------------
Signature
Votes MUST be indicated
(X) in Black or Blue Ink. [ ]
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE-NO POSTAGE IS REQUIRED
<PAGE>
THE UNITED KINGDOM FUND INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS--APRIL 14, 1999
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 Special 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 April 14, 1999 at 11:00
A.M., New York City time, and at any and all adjournments thereof.
(Continued and to be dated and signed on the other side)
THE UNITED KINGDOM FUND INC.
P.O. BOX 11388
NEW YORK, N.Y. 10203-0388
