INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
The France Growth 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.
[LOGO]
THE FRANCE GROWTH FUND, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1999
------------------------
THIS IS THE FORMAL AGENDA FOR THE ANNUAL MEETING OF STOCKHOLDERS OF THE FRANCE
GROWTH FUND, INC. (THE "FUND"). IT TELLS YOU WHAT MATTERS WILL BE VOTED ON AND
THE TIME AND PLACE OF THE MEETING, IN CASE YOU WANT TO ATTEND IN PERSON.
To our Stockholders:
The Annual Meeting of the Fund's stockholders will be held at 12:00 p.m.,
New York City time, on Thursday, April 29, 1999, at the offices of Credit
Agricole Indosuez, 7th Floor Board Room, 1211 Avenue of the Americas, New York,
New York 10036, for the following purposes:
1. To elect three (3) Directors in Class II to serve for a term expiring on
the date of the annual meeting of stockholders in 2002.
2. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants for the fiscal
year ending December 31, 1999.
3. To consider and act upon a stockholder proposal with respect to
realizing net asset value.
4. To consider and act upon a stockholder proposal to terminate the Fund's
investment advisory agreement with Indocam International Investment
Services.
5. To consider and act upon any other business that may properly come
before the meeting or any related adjourned meeting.
Stockholders of record of the Fund's common stock at the close of business
on February 9, 1999 are entitled to vote at this meeting and any related
adjourned meeting.
/s/ Steven M. Cancro
Secretary
Dated: March 11, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD. PLEASE TAKE A FEW MINUTES TO VOTE NOW AND HELP SAVE THE
FUND THE COST OF ADDITIONAL SOLICITATIONS.
TO THE STOCKHOLDERS OF THE FRANCE GROWTH FUND, INC.
Dear Fellow Stockholders:
The accompanying notice of meeting and proxy statement presents proposals
to be considered at The France Growth Fund Inc.'s (the "Fund") Annual Meeting of
Stockholders to be held on April 29, 1999.
Your Board of Directors unanimously recommends that you re-elect Messrs.
Longchampt and Rapaccioli who are standing for re-election as Board members of
the Fund, and elect Mr. Chauvel who is the current President of the Fund.
(Proposal 1)
Messrs. Rapaccioli and Longchampt have been Directors since the Fund's
inception and are long-time members of the Audit Committee which has, among
other things, overseen the successful reduction of Fund expenses. Mr. Chauvel
has served as President of the Fund for the last two years. All three nominees
are French nationals and have professional French backgrounds. They have and
would continue to make positive contributions to the Fund.
The Board also recommends that you re-elect PricewaterhouseCoopers LLP as
the Fund's independent accountants for the fiscal year ending December 31, 1999.
(Proposal 2)
The Notice of Meeting also refers to a proposal with respect to the
realization of net asset value, including the possible open-ending of the Fund.
(Proposal 3) THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THIS PROPOSAL. As more fully discussed in the attached proxy statement, your
Board believes that the Fund will best serve the long-term interests of
stockholders by continuing to focus on providing long-term capital appreciation,
which it has successfully done since inception, rather than change its focus to
the short-term goal of realizing net asset value. The Fund, which has received a
four star rating by Morningstar, is proud of its investment record. The Fund has
outperformed its benchmark index in all but one year since its inception in 1990
(please see the bar chart on page 9). The Fund has outperformed its benchmark
index by over 80% over the life of the Fund, providing a total return (based on
changes in net asset value per share) of 161% in U.S. dollars since inception.
In 1998 alone the Fund achieved an increase in net asset value of 40.9%. Your
directors believe that the Fund can best continue to seek excellent performance
by maintaining its closed-end fund structure. There are other adverse
consequences to open-ending as well, as outlined on pages 10 and 11 of the
attached proxy statement.
The Fund also has received a proposal (Proposal 4) to terminate the
advisory contract with Indocam International Investment Services, the Fund's
investment adviser, and to solicit proposals for a new investment adviser. YOUR
BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
Successful efforts to continue to reduce expenses have enhanced the
performance of the Fund. Indocam International Investment Services has
contributed to the reduction in expenses by voluntarily waiving a portion of its
management fee. Other expenses have also been reduced so that overall expense
ratios are below the average of other closed-end European country funds.
Termination of the advisory contract would likely increase expenses, cause
uncertainty and could significantly adversely effect the Fund's performance.
Further, your directors are not aware of any investment managers that have a
demonstrated record of performance in managing a pool of French equity
securities that match the performance of this Fund. Finally, while directors
continue
to seek ways to eliminate or reduce the Fund's discount, there is no evidence
that termination of the advisory contract would result in the reduction of the
discount.
We would like to report on important positive steps taken since our last
annual meeting. In its continuing efforts to seek to reduce the Fund's discount,
your directors have adopted an innovative, tax-advantaged Managed Distribution
Plan. Under the Plan, as more fully described on page 10, the Fund distributes,
primarily from capital gains, a quarterly dividend equal on an annual basis to
at least 12% of the Fund's net assets. The first payment under the Plan was made
in October 1998 and the Fund expects to make distributions during 1999 of at
least $7.55 million per quarter. The discount since the first payment under the
Plan was made has narrowed to 14.8% as of February 19, 1999.
While it is not possible to predict the future with certainty, your Board
and the Fund's adviser view the advent of the euro in January 1999 as another
positive event. It should over time produce lower transaction costs, reduced
exchange risk, generate greater competition and create an overall broadening of
the European financial markets. In light of this development, your Board is
considering whether it should recommend to you that the Fund's investment
objective be broadened to allow a greater percentage of investments in all
European markets.
If you have any questions about the meeting agenda or how to vote, please
call. We have a single focus at the Fund to which your Directors are
committed--adding continuing value to your investment. Thank you for investing
in the Fund.
Yours sincerely,
/s/ Jean A. Arvis
Jean A. Arvis
Chairman
THE FRANCE GROWTH FUND, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1999
------------------------
PROXY STATEMENT
------------------------
This proxy statement is being used by the Board of Directors of The France
Growth Fund, Inc. (the "Fund") to solicit proxies to be voted at the Annual
Meeting of the Fund's stockholders. This Meeting will be held at 12:00 p.m., New
York City time, on Thursday, April 29, 1999, at the offices of Credit Agricole
Indosuez, 7th Floor Board Room, 1211 Avenue of the Americas, New York, New York
10036. The purposes of the Meeting are to elect three (3) Directors, to ratify
the selection by the Board of Directors of PricewaterhouseCoopers LLP as
independent accountants for the fiscal year ending December 31, 1999, to
consider and act upon a stockholder proposal with respect to realizing net asset
value and to consider and act upon a stockholder proposal to terminate the
Fund's investment advisory agreement. This proxy statement and form of proxy are
being mailed to stockholders on or about March 12, 1999. The Fund's Annual
Report for the fiscal year ended December 31, 1999 was mailed to stockholders on
March 1, 1999. STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE FUND'S
MOST RECENT ANNUAL REPORT BY WRITING TO THE FUND AT THE ADDRESS LISTED ABOVE OR
BY CALLING (800)-852-4750.
WHO IS ELIGIBLE TO VOTE
Shareholders of record on February 9, 1999 are entitled to attend and vote
at the Meeting or any related adjourned meeting. Each share is entitled to one
vote. Shares represented by properly executed proxies, unless revoked before or
at the Meeting, will be voted according to shareholders' instructions. If you
sign a proxy but do not fill in a vote, your shares will be voted FOR the
election of the nominees for Director named in this proxy statement, FOR
ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund for the fiscal year ending December 31, 1999, AGAINST
the stockholder proposal with respect to realizing net asset value and AGAINST
the stockholder proposal to terminate the Fund's investment advisory agreement.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Fund's Articles of Incorporation provide that the Board of Directors
shall be divided as equally as possible into three classes of Directors
(Class I, Class II and Class III) serving staggered three-year terms. The term
of office for Directors in Class II expires upon the election of Directors at
the Meeting, Class III at the 2000 annual meeting and Class I at the 2001 annual
meeting. Three (3) Class II nominees are named in this proxy statement for
election to a term expiring on the date of the annual meeting of stockholders in
2002 or until their successors are elected and qualified.
A plurality of all votes cast at the Meeting, with a quorum present, is
sufficient to elect a Director. This means that the three (3) nominees for
director who receive the greatest number of votes will be elected. Unless
authority is withheld, it is the intention of the persons named in the form of
proxy to vote each proxy for the election of all of the nominees listed below.
Each nominee has indicated he will serve as a Director if elected, and the Board
of Directors of the Fund knows of no reason why any of these nominees would be
unable to serve. However, if any nominee should be unable to serve, the proxies
received will be voted for any other person designated to replace the nominee by
the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING DIRECTORS AND NOMINEES
The following table shows certain information about the Directors and
nominees. Each Director, including each nominee, has served as a Director of the
Fund since 1990, except for Mr. Jean A. Arvis who became a Director in February
1993 and Mr. Walter J.P. Curley who became a Director in March 1993.
Two of the existing Class II Directors, Messrs. de Logeres and Somnolet,
will retire upon expiration of their terms at the Meeting. The Board of
Directors has decided to use their retirement as an opportunity to reduce the
aggregate fees paid by the Fund to the Directors by reducing the size of the
Board from twelve members to eleven. The Board of Directors has nominated
Mr. Bernard L. Chauvel, the President of the Fund, to stand for election as a
Class II Director to fill the remaining vacancy. As an "interested person", the
Fund will not pay Mr. Chauvel an annual fee for service on the Board.
The following have been nominated for election or re-election at the
Meeting:
SHARES OF THE COMMON
STOCK OF THE FUND
BENEFICIALLY OWNED
(DIRECTLY OR
INDIRECTLY)
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND ON FEBRUARY 9,
NAME AGE DIRECTORSHIPS 1999(1)
- -------------------- --- -------------------------------------------------- --------------------
Bernard L. Chauvel 46 President of the Fund since (June 1997); 139
Class II* President, Credit Agricole Indosuez (U.S.
(Nominee for operations) (since April 1997); President, Credit
election) Agricole (U.S.) (banking, asset management and
finance) (January 1991 to May 1997)
Michel 64 Chairman of the Board (since January 1998), Presi- 421
Longchampt (2)(3) dent and Chief Executive Officer (until December
Class II 1997), Francosteel Corporation (steel
distributor); Consultant, Longchampt Resources
(since January 1998), and Director, J&L Specialty
Products (stainless steel producer).
Michel A. 63 President, Arfin (consulting) (since June 1995); 7,032
Rapaccioli (2) Vice President and Chief Financial Officer,
Class II Texasgulf Inc. (fertilizers) (until May 1995);
Senior Vice President and Chief Financial
Officer, Elf Aquitaine, Inc. (holding company)
(until 1994); Chairman and Director, Elf Trading,
Inc. (oil) (until 1994); Chairman and Chief
Executive Officer, Elf Technologies, Inc. (until
1994) and Director and officer of other
affiliates of the Elf group of companies (until
1994).
- ------------------
* Denotes an "interested person," as defined in the Investment Company of 1940
(the "1940 Act"). Mr. Chauvel is an "interested person" by reason of his
affiliation with Caisse Nationale Du Credit Agricole, the indirect parent
company of the Fund's Investment Adviser.
2
The following are Directors whose terms continue:
SHARES OF THE COMMON
STOCK OF THE FUND
BENEFICIALLY OWNED
(DIRECTLY OR
INDIRECTLY)
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND ON FEBRUARY 9,
NAME AGE DIRECTORSHIPS 1999(1)
- -------------------- --- -------------------------------------------------- --------------------
Jean A. Arvis 63 Chairman of the Fund (since February 1993); Presi- 6,123
Class I (2)(3) dent, French Federation of Insurance Companies
(insurance) (since March 1997); Special Advisor,
American International Group, Inc. (insurance)
(since January 1993); Senior Adviser, Compagnie
de Suez (until December 1995); Director, AXA Eq-
uity and Law (U.K.) (insurance), Fonciere Lyon-
naise, AIG Banque, Sofrace (Liban) and New
London PLC.
Thomas C. 54 President and Chief Executive Officer, Zephyr Man- 1,333
Barry agement, Inc. (since December 1993); President
Class III and Chief Executive Officer, Rockefeller & Co.,
Inc. (registered investment adviser) (March 1983-
December 1993); and Director, Pacific Basin Bulk
Shipping Limited.
**John A. Bult 62 Chairman, PaineWebber International, Inc.; Direc- 1,000
Class III tor, PaineWebber Group Inc.; and Director, The
Germany Fund, Inc., The New Germany Fund, Inc.,
The Central European Equity Fund, Inc. and The
Greater China Fund, Inc. (investment companies).
Walter J.P. 76 Venture Capital Investor; United States Ambassa- 1,562
Curley dor to Ireland (1975-77) and to France (1989-93);
Class III Director, American Exploration Co. (oil and gas
exploration), Sotheby's Holdings, Inc., Banque
Paribas (International Advisory Board); Board of
Trustees, The Frick Collection, and Chairman of
the French American Foundation.
Pierre H.R. 55 Managing Director (since September 1998), Presi- 300
Daviron dent and Chief Investment Officer (August
Class I 1993-September 1998), Oppenheimer Capital In-
ternational (asset management); and Chairman of
the Board of the Fund (May 1990-February 1993).
- ------------------
** Denotes an "interested person," as defined in the 1940 Act. Mr. Bult is
an "interested person" by reason of his affiliation with PaineWebber
Incorporated. PaineWebber Incorporated and its affiliate, PaineWebber
International (U.K.) Ltd., were among the principal underwriters of the
initial offering of the Fund's Common Stock in 1990. PaineWebber
Incorporated was the dealer-manager of the Fund's rights offering in
1994. PaineWebber Incorporated, a broker-dealer registered under the
1934 Act, is the parent company of the Fund's Administrator.
3
Jacques 48 Associate Professor, Universite Paris II (since 1,019
Regniez June 1997); Researcher, French State Planning
Class I Agency; economic adviser to Prime Minister of
France; Administrator, Institut National de la
Statistique et des Etudes Economiques (economics
institute); Chairman and Director, Techniques de
Gestions Financieres S.A. (investment and
finance); and President, FICAC 40 (investment
company).
***Bernard Simon- 60 Executive Vice President, Credit Agricole Indosuez 1,000
Barboux (banking, asset management and finance) (until
Class III December 1998); Managing Director, Indocam As-
set Management (finance) (until December 1998);
Chairman, Indosuez Caisse de Retraites and Hima-
layan Fund (investment company); Director, In-
dosuez Investment Management Services (finance),
Cheuvreux de Virieu (securities brokerage), In-
dosuez North America Asset Management (fi-
nance), Korea Europe Fund, Rome Stockholm (real
estate), SEGESFI (finance); Suez Finance Counseil
for Compagnie de Suez; and Director, Union
Financiere de France (finance).
John W. 61 Managing Partner, Spurdle & Company (private fi- 1,000
Spurdle, Jr. (2) nance); Chairman, Investment Management Part-
Class I ners Inc. (holding company); President, Asset
Management Investment Co. (since August 1997);
and Managing Director, Bluestone Capital Partners
(investment banking) (since January 1998).
- ------------------
*** Denotes an "interested person" as defined in the 1940 Act.
Mr. Simon-Barboux has been an "interested person" by reason of his
affiliations with Credit Agricole Indosuez, the indirect parent company of
the Fund's Investment Adviser. Mr. Simon-Barboux retired from Credit
Agricole Indosuez on December 31, 1998. Since he no longer participates in
the management of Credit Agricole Indosuez or Indocam International
Investment Services, the Board of Directors will consider pursuant to a rule
under the 1940 Act whether Mr. Simon-Barboux may no longer be an
"interested" Director.
(1) As of February 9, 1999, the nominees and Directors listed above who owned
shares of the Common Stock owned individually less than 1% of the Fund's
outstanding shares, and the Directors and officers of the Fund beneficially
owned, directly or indirectly, in the aggregate less than 1% of the Fund's
outstanding shares.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
The Board of Directors presently has an Audit Committee and a Nominating
Committee. The Audit Committee is currently composed of
Messrs. Arvis, de Logeres, Longchampt, Rapaccioli and Spurdle (Chairman), none
of whom is an "interested person" (as defined in the 1940 Act) of the Fund or of
the Investment Adviser. The Audit Committee makes recommendations to the Board
with respect to the selection of independent accountants and reviews with the
independent accountants the scope and results of the audit engagement. The Audit
Committee also considers the range of audit and non-audit fees, reviews and
approves non-audit services provided by the independent accountants and reviews
the annual financial statements of the Fund. The Audit Committee held three
(3) meetings during the Fund's fiscal year ended December 31, 1998.
4
The Nominating Committee is composed of Messrs. Arvis, de Logeres,
Longchampt and Somnolet, none of whom is an "interested person" (as defined in
the 1940 Act) of the Fund or the Investment Adviser. The Nominating Committee
exercises all of the powers of the Board of Directors regarding nominations for
Directors who would not be "interested persons" (as defined in the 1940 Act).
The Board of Directors has also typically delegated to the Nominating Committee
the initial consideration of all candidates for selection as a Director of the
Fund. The members of the Board of Directors of the Fund who are not "interested
persons" nominated the nominees to stand for election by the stockholders. The
Nominating Committee will not consider prospective nominees suggested by
stockholders. The Nominating Committee did not hold a meeting during the Fund's
fiscal year ended December 31, 1998.
At the present time, the Board of Directors has no compensation committee
or other committee performing similar functions.
During the Fund's fiscal year ended December 31, 1998, the Board of
Directors met four (4) times, and each Director attended at least 75% of the
aggregate number of meetings of the Board and meetings of committees of the
Board of Directors on which such Director served.
Three of the Fund's Directors, Messrs. Arvis, Regniez and Simon-Barboux,
and one of the Fund's nominees, Mr. Rapaccioli, are residents of France, and
substantially all of the assets of such persons may be located outside of the
United States. As a result, it may be difficult for United States investors to
effect service of process upon such Directors within the United States or to
realize judgments of courts of the United States predicated upon civil
liabilities of such Directors under the federal securities laws of the United
States.
INFORMATION REGARDING OFFICERS
The executive officers of the Fund are as follows:
POSITION PRINCIPAL OCCUPATION
NAME AGE WITH FUND DURING PAST FIVE YEARS
- -------------------- --- ------------------------------ ---------------------------------------------
Jean A. Arvis....... 63 Chairman (since February 1993) Previously Indicated.
Bernard L.
Chauvel............ 46 President (since June Previously Indicated.
1997)
Steven M. Cancro.... 44 Vice President (since June First Vice President and Senior Counsel,
1992) and Secretary (since Credit Agricole Indosuez (New York).
1991)
Frederick J.
Schmidt............ 39 Vice President (since June Vice President, Indocam International
1992) and Treasurer (since Investment Services (since July 1997); Vice
1990) President, Credit Agricole Indosuez (New
York).
The persons listed above as officers of the Fund, other than Mr. Arvis, are
also employees of Credit Agricole Indosuez. The officers of the Fund were
elected by the Board of Directors at a meeting of the Board of Directors in June
1998. Messrs. Arvis, Cancro and Schmidt have indicated beneficial ownership of
6,123, 4,000 and 1,000 shares of the Fund, respectively, which represents less
than 1% of the shares of the Fund outstanding.
5
COMPENSATION OF DIRECTORS AND OFFICERS
The Investment Adviser pays the compensation and certain expenses of its
personnel, if any, who serve as Directors and officers of the Fund.
The Fund pays each of its Directors who is not an "interested person" (as
defined in the 1940 Act) of the Fund (except by reason of being a Director) or
of the Investment Adviser, the Fund's Administrator or any principal underwriter
of the Fund, an annual fee of $7,500, plus an attendance fee of $700 for each
meeting of the Board of Directors or of the Audit Committee attended. In
addition, the Fund reimburses all Directors for certain out-of-pocket travel
expenses in connection with their attendance at meetings of the Board of
Directors or any committees thereof. The Fund pays an additional fee of $5,000
per year to Mr. Arvis for providing certain consulting services to the Fund.
The following table provides information regarding the fees paid by the
Fund to the non-interested Directors for their services for the Fund's fiscal
year ended December 31, 1998.
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS FROM THE
DIRECTOR COMPENSATION ACCRUED FUND
- ----------------------------------- ------------ ---------- ------------
Jean A. Arvis...................... $ 14,900 $ 0 $ 14,900
Thomas C. Barry.................... 10,300 0 10,300
Walter J.P. Curley................. 11,000 0 11,000
Pierre H.R. Daviron................ 10,300 0 10,300
Marc de F. de Logeres*............. 13,800 0 13,800
Michel Longchampt.................. 13,800 0 13,800
Michel A. Rapaccioli............... 13,800 0 13,800
Jacques Regniez.................... 11,000 0 11,000
Michel Somnolet*................... 11,000 0 11,000
John W. Spurdle, Jr................ 13,800 0 13,800
- ------------------
* Messrs. de Logeres and Somnolet, each a Class II Director, will retire from
the Board of Directors upon expiration of their terms at the 1999 annual
meeting, or until their successors are elected and qualified.
6
OWNERSHIP OF COMMON STOCK
As of February 9, 1999, to the knowledge of the management of the Fund,
there were no persons known to be control persons of the Fund, as such term is
defined in Section 2(a)(9) of the 1940 Act. As of such date, the only persons
known to the Fund to have record or beneficial ownership of more than 5% of the
outstanding Common Stock are the following*:
NAME AND ADDRESS AMOUNT OF PERCENT
OF BENEFICIAL/ BENEFICIAL/ OF
RECORD OWNER RECORD OWNERSHIP CLASS
- ------------------------------------------------------------- -------------------- -------
(Record Owner)
Cede & Co., as nominee for 15,144,280 shares 98.7%
The Depository Trust Company
P.O. Box 20
Bowling Green Station
New York, NY 10004
(Beneficial Owners)
State Street Bank & Trust Co. 2,510,700 shares 16.4%
Global Corporate Action Dept.
JAB5W
P.O. Box 1631
Boston, MA 01201-1631
Chase Manhattan Bank 2,310,153 shares 15.1%
4 New York Plaza
New York, NY 10004
Brown Brothers Harriman & Co. 1,905,880 shares 12.4%
63 Wall Street
New York, NY 10005
Citicorp Inc. 1,578,660 shares 10.1%
388 Greenwich Street
New York, NY 10013
Bank of New York 791,146 shares 5.1%
925 Patterson Plank Road
Secaucus, NJ 07094
- ------------------
* The Fund is also aware of five other entities which recently reported
beneficial ownership of more than 5% of the outstanding Common Stock as of
dates on or about February 9, 1999: President and Fellows of Harvard
College, care of Harvard Management Co., Inc., 600 Atlantic Ave., Boston, MA
02210--1,770,851 shares 11.54%, Bankgesellschaft Berlin AG Postfach, 110801,
D-10838, Berlin, Germany--1,476,221 shares 9.62%, Lazard Freres Asset
Management, 30 Rockefeller Plaza, New York, NY 10112--1,084,915 shares
7.07%, Fidelity Management and Research Corp., 82 Devonshire Street, Boston,
MA 02109--909,978 shares 5.93%, and Tattersall Advisory Group, 6620 West
Broad Street, Richmond, VA 23230--779,543 shares 5.08%.
7
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
At a meeting of the Board of Directors held on December 8, 1998, a majority
of the members of the Board of Directors, including a majority of Directors who
are not "interested persons" (as defined in the 1940 Act) of the Fund, in
accordance with the recommendation of the Audit Committee of the Board of
Directors, selected PricewaterhouseCoopers LLP as independent accountants for
the Fund for the fiscal year ending December 31, 1999.
PricewaterhouseCoopers LLP has audited the accounts of the Fund since the Fund's
commencement of operations. PricewaterhouseCoopers LLP has informed the Fund
that it does not have any direct interest or any material indirect financial
interest in the Fund.
The ratification of the selection of independent accountants is to be voted
upon at the Meeting and, if no direction is made, it is the intention of the
persons named in the accompanying proxy to vote proxies received in favor of
ratification of PricewaterhouseCoopers LLP. A representative of
PricewaterhouseCoopers LLP will be present at the Meeting to answer questions
from the stockholders and will have an opportunity to make a statement if he or
she chooses to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
STOCKHOLDER PROPOSAL
WITH RESPECT TO REALIZING NET ASSET VALUE
(PROPOSAL 3)
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY AND STRONGLY RECOMMENDS THAT
STOCKHOLDERS VOTE AGAINST PROPOSAL 3. THE DIRECTORS BELIEVE THE PROPOSAL IS
CONTRARY TO THE BEST INTERESTS OF STOCKHOLDERS.
STOCKHOLDER PROPOSAL
A stockholder has submitted the following proposal and supporting statement
for inclusion in this proxy statement. The stockholder claims beneficial
ownership of common stock of the Fund valued at over $2,000. The Fund will
provide the address of the proposing stockholder to any person who requests that
information by written or oral request to Steven M. Cancro, Secretary of the
Fund, 1211 Avenue of the Americas, New York, New York 10036.
"RESOLVED: The stockholders of The France Growth Fund (the "Fund")
request that they be afforded an opportunity to realize net asset
value ("NAV") for their investment in the Fund as soon as
practicable."
SUPPORTING STATEMENT
"My name is Phillip Goldstein and I have been a shareholder of the Fund for
several years. Its shares have long traded at a large discount to NAV. On
October 23, 1998, the discount was 21.2%, representing a total loss to
shareholders of approximately $50 million.
"The Board has taken some commendable steps recently to try to narrow the
discount but, unfortunately, the discount is still there. Therefore, we think
the Board should now allow shareholders to realize NAV for their investment.
That would be a concrete benefit to shareholders that, we believe, outweighs any
theoretical advantages of maintaining the status quo. Some possible alternatives
are open-ending, liquidation, or a tender offer."
THE BOARD OF DIRECTORS RESPONSE TO THE STOCKHOLDER'S PROPOSAL
8
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE PROPOSAL DESCRIBED ABOVE AND
STRONGLY URGES ALL STOCKHOLDERS TO VOTE AGAINST THE PROPOSAL. THE REASONS FOR
THIS UNANIMOUS RECOMMENDATION ARE AS FOLLOWS:
Your Board believes that the Fund has and will continue to best serve the
long-term interests of our stockholders by focusing on maximizing its investment
objective of long-term capital gain and can best do so within a closed-end
rather than open-end structure.
The Fund was organized, and has consistently operated, with the objective
to maximize long-term capital gains by investing in a diversified portfolio of
French equity securities. While there are many European funds, the Fund is one
of only a few investment companies that provides investors with exposure
primarily to the French securities markets. The Board believes that this is an
exciting and dynamic time for the European economies as a result of Economic and
Monetary Union and the adoption of a single currency, the euro, and that French
equity markets have and will continue to present attractive investment
opportunities. The Board believes that the Fund, given the experience and
performance of its investment adviser, is well positioned to capitalize upon
these developments.
THE FUND HAS PRODUCED CONSISTENTLY EXCELLENT PERFORMANCE
The Fund has been extremely successful in achieving its investment
objective. It has a four star rating from Morningstar, the investment company
rating service, as of the date of this proxy statement. From commencement of
operations through December 31, 1998, the Fund's total return in U.S. dollars
based upon changes in net asset value per share was 161.95% (including
dividends). Over the same period, the Fund's benchmark index, the Societe de
Bourse Francaise ("SBF") 120 Index, has generated a total return of 90.20% in
U.S. dollars. The Fund has outperformed the index by 80% over that time even
though the index does not reflect any expenses. The following chart shows the
performance of the Fund's shares for each calendar year since the Fund's
inception in 1990.
ANNUAL TOTAL RETURN*
The fund's performance varies from year to year. The fund's past performance
does not necessarily indicate how it will perform in the future. As a
shareowner; you may experience a loss or gain on your investment.
FUND'S
PERFORMANCE RETURN
BASED UPON BASED UPON
CHANGES IN CHANGES IN RETURN
NET ASSET THE MARKET FOR THE
VALUE PRICE OF THE SBF 120
PER SHARE FUND'S SHARES INDEX
--------- ------------- -------
1990 -7.4% -18.0% -25.8%
1991 6.2% 5.5% 17.8%
1992 -2.2% 4.7% -3.8%
1993 22.8% 47.3% 22.3%
1994 -5.1% -27.1% -9.4%
1995 13.1% 16.6% 8.8%
1996 23.2% 13.9% 18.9%
1997 12.1% 19.3% 9.4%
1998 40.9% 48.2% 39.5%
*The red bars show the Fund's performance based upon changes in net
asset value per share (assuming reinvestment of dividends and
distributions, if any, at prices obtained under the Fund's dividend
reinvestment plan). The blue bars show the return based upon changes
in the market price of the Fund's shares (calculated
9
assuming a purchase of common stock at the current market price on the
first day, the purchase of common stock pursuant to any rights offering
during the year and sale at current market prices on the last day of each
year with dividends and distributions, if any, reinvested at prices
obtained under the Fund's dividend reinvestment plan). The yellow bars show
the return for the SBF 120 Index, the Fund's benchmark. The return of the
index does not reflect expenses and does not include reinvestment of
dividends and distributions. You can not invest directly in the index.
Your Board unanimously believes that taking short-term actions to realize
net asset value, such as open-ending the Fund, liquidating the Fund or engaging
in periodic tender offers, are not in the best interests of the Fund's
shareholders but are intended to benefit opportunistic short-term speculators.
YOUR BOARD HAS ADDRESSED THE EXISTENCE OF A DISCOUNT
Your Board recognizes the existence of the discount of the market price to
net asset value is a significant matter. The Board has diligently examined this
phenomena and has been active in seeking to address it in a manner that is
consistent with the interests of all of the Fund's shareholders. The Board has
regularly reviewed the amount of the discount and has carefully evaluated
alternatives suggested in the proposal as well as a variety of other options. In
evaluating each option, the Board carefully considers whether there is
sufficient evidence to support the proposition that implementation of the option
is likely to reduce the discount over the long-term. Among other things, the
Board has sought the advice of consultants and investment banks as to what
actions, if any, could lead to the reduction of the discount while keeping the
Fund as an attractive investment vehicle for its shareholders. The Board has
also considered the experiences of other funds and the actions they have taken
to reduce the discount, including conversion to an open-end fund. The Fund has
also been increasingly active in promoting investor awareness of the Fund and
its performance history.
These deliberations and advice led the Board to adopt in 1998 a
Tax-Advantaged Managed Distribution Plan (the "Plan"). Under the Plan, the Fund
distributes, on a quarterly basis, a dividend equal on an annual basis to at
least 12% of the Fund's net assets as of the end of the previous year. To the
extent possible, these distributions will be made from realized long-term
capital gains, thereby reducing the tax impact to the Fund's shareholders. The
first dividend under the Plan was declared on October 27, 1998. Based upon the
net assets of the Fund at December 31, 1998, the Fund will make distributions
during 1999 equal to at least $7.55 million per quarter. The Plan will remain in
effect at least until 2001, subject only to a significant downturn of the French
equity markets.
Since the first dividend was paid pursuant to the Plan on November 20,
1998, the Fund's discount has narrowed significantly. After being as high as
22.9% on August 28, 1998 and, as noted in the shareholder proposal, 21.2 % on
October 23, 1998, the discount was 16.97% on December 31, 1998 and has been as
low as 14.64% since adoption of the Plan. The Board feels that, as the Plan
continues to operate and generate a history of dividend payments, the market
will gain greater appreciation of the Plan
The effect of the discount also needs to be considered in context. To the
extent any investor purchased shares of the Fund at times when the market
discount was equal to or greater than the current discount (which has been the
case for most of the past few years), that investor would not be negatively
effected by the Fund's current discount. It is also important to remember that
the discount is not unique to the Fund, but is a characteristic of most
closed-end funds. In addition, the Fund is one of the few investment vehicles
available to investors who are seeking exposure to the French securities
markets.
10
Your Board has concluded that the closed-end structure is the best for this
Fund in its efforts to continue to realize its objective of maximizing long-term
capital gains. The Fund's closed-end structure allows substantially all its
assets to remain invested in French equity securities. If the Fund were to
operate as an open-end fund, it would need to keep a cash reserve to meet
redemption requests, which would disrupt the investment management process and
incur otherwise unnecessary capital gains for Fund shareholders.
Your Board believes that conversion to an open-end fund may have adverse
consequences for our stockholders. First, conversion would raise the possibility
of the Fund suffering substantial redemptions of shares, particularly in the
period immediately following the conversion. This would have the effect of
significantly increasing stockholder expenses on a per share basis because the
Fund's fixed operating expenses would be spread over a smaller asset base.
Second, the Fund would incur a number of new ongoing expenses in order to
operate as an open-end investment company, including distribution expenses. Your
Board believes that many stockholders who would otherwise choose to remain
stockholders of the Fund in closed-end form, may nonetheless choose to redeem
because of the fear that other stockholders will redeem first to avoid the
higher expense ratio, leaving them to bear the higher expenses. Third, if
redemptions upon conversion are significant, the Fund would have to either
liquidate a substantial amount of its holdings to generate cash to satisfy the
redemptions or distribute portfolio securities in-kind to redeeming
stockholders. The liquidation of portfolio securities could trigger a
significant tax liability for the Fund and all of the remaining stockholders as
the Fund sells portfolio securities and realizes capital gains. In the case of
distributions-in-kind, any capital gains tax exposure will be borne by the
redeeming stockholder who receives the securities.
A study conducted by CDA/Wiesenberger1, an independent mutual fund tracking
service, on the impact open-ending has on a fund's long-term stockholders
provides empirical evidence that long-term stockholders can be harmed by a
conversion. The study reviewed the recent conversion of 10 closed-end funds and
found that:
o Within six months after conversion, the converted funds experienced an
average decrease in net assets of 28.18%
o the converted funds' average expense ratio increased from 1.33% to 1.89%
o the amount of cash held by the converted fund rose from an average of
2.44% of assets as a closed-end fund to 7.75% of assets as an open end
fund.
o Shareholders experienced significant tax liability as they received
post-conversion capital gains distributions averaging $6.21 per share
versus an average distribution during the five years prior to conversion
of $1.20 per share.
CONCLUSION
The Fund was designed for those who seek long-term exposure to French
equity securities through a professionally managed portfolio. Your Board
strongly believes that the Fund has been very successful at maximizing long-term
capital gains for these stockholders. Your Directors believe that changing the
Fund's focus to realizing net asset value would be harmful to the long-
term interests of our stockholders and would result in the creation of an
investment vehicle which is different from the vehicle which our long-term
stockholders have chosen to invest in.
- ------------------
1 Copyright (Copyright) 1998 Wiesenberger, A Thomson Financial Company,
Reprinted by permission.
11
STOCKHOLDER PROPOSAL TO TERMINATE
THE FUND'S INVESTMENT ADVISORY AGREEMENT
WITH INDOCAM INTERNATIONAL INVESTMENT SERVICES
(PROPOSAL 4)
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY AND STRONGLY RECOMMENDS THAT
STOCKHOLDERS VOTE AGAINST PROPOSAL 4. THE DIRECTORS BELIEVE THE PROPOSAL IS
CONTRARY TO THE BEST INTERESTS OF STOCKHOLDERS.
STOCKHOLDER PROPOSAL
A stockholder has submitted the following proposal and supporting statement
for inclusion in this proxy statement. The stockholder claims beneficial
ownership of common stock of the Fund valued at over $2,000. The Fund will
provide the name and address of the proposing stockholder to any person who
requests that information by written or oral request to Steven M. Cancro,
Secretary of the Fund, 1211 Avenue of the Americas, New York, New York 10036.
"RESOLVED: The Fund's investment advisory agreement with its
investment advisor, Indocam International Investment Services
(Indocam), shall be terminated and the shareholders recommend that the
board solicit competitive proposals for a new investment advisor."
SUPPORTING STATEMENT
This supporting statement has been prepared by the proposing stockholder
and does not reflect the views of the Board of Directors. The Fund does not
assume any responsibility for the accuracy of the information in this supporting
statement.
"I believe Indocam's advisory contract should be terminated because
shareholder results with the Fund have been unimpressive, and because management
fees are apparently so lucrative to Indocam that effective steps to enhance
shareholder value are not taken.
"Since inception on 5/18/90, the Fund's shareholders have paid
$177 million to buy new shares, received $80 million in distributions, and have
an investment with a market value of $179 million as of 10/2/98. The resulting
gain of only $82 million spread over more than 8 years brings into question the
value of this manager and this entire economic endeavor. The Net Asset Value
(NAV) return of the Fund is somewhat better, but it fails to reflect the
devastating impact of the discount on shareholder investment results.
"The shareholders paid out $36 million in advisory fees, director fees,
underwriting fees, and other expenses while making only about $82 million on
their investment. As of 10/2/98, the discount was costing each and every
shareholder an additional $36 million ($2.44 a share) or a +20% extra return
over and above the market value of the Fund's shares.
"After 25 years as a private investor and 10 additional years as a
investment professional managing up to $240 million in closed-end fund shares, I
am convinced that the biggest problem in fixing discounts and adding market
value is the investment advisor. Fees are so lucrative that the Fund manager
will rarely recommend more than token steps (such as a 12% distribution policy
or a small reduction in his fees) to enhance shareholder value. I believe the
Directors owe their positions to Indocam and therefore will not take effective
actions such as committing to perpetual share buybacks, tender offers,
open-endings, or other means to deliver Net Asset Value to shareholders. Such
steps would reduce the Fund size and result in a major reduction in advisory
fees. Instead, this Fund conducted a rights offering and sold new shares at a
discount, which diluted the asset value, added to the supply of shares, and
increased the advisory fees paid to Indocam.
12
"It is very expensive and time consuming for shareholders to wage
successful proxy fights to replace staggered Boards of Directors hand picked by
the investment advisor. Fortunately, the law gives shareholders one practical
tool to fix this problem. A majority can vote to 'fire' the investment manager.
Qualified advisors are available that will work with a motivated Board to
enhance shareholder value.
"We have a chance to send a loud and clear message to the Board that we
want the Fund run exclusively for the benefit of the Fund's owners. Vote for
this shareholder sponsored resolution."
THE BOARD OF DIRECTORS' RESPONSE TO THE STOCKHOLDER'S PROPOSAL
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE PROPOSAL DESCRIBED ABOVE AND
STRONGLY URGES ALL STOCKHOLDERS TO VOTE AGAINST PROPOSAL 4. THE REASONS FOR THIS
UNANIMOUS RECOMMENDATION ARE AS FOLLOWS:
Your Board strongly believes that Indocam International Investment Services
("IIIS" or the "Adviser") is the investment adviser best suited to manage the
Fund and is responsible for the outstanding performance of the Fund. Your Board
also believes that IIIS's expertise, experience and performance history make it
the best choice to manage the Fund in the face of a changing European investment
environment. In addition, the termination of the investment advisory agreement
would lead to a period of uncertainty and increased costs that could
substantially harm the Fund's performance and therefore the interests of its
long-term stockholders.
EXCELLENT PERFORMANCE
The Fund's performance has been excellent both in absolute terms and also
compared to its benchmark. The Fund's performance should be compared to the
investment return on the French equity markets and not investments in other
countries or with different investment focus. The Fund's performance is
graphically depicted in response to proposal 3 and only some aspects of that
performance will be highlighted here. The Fund has achieved a four-star rating
by Morningstar. It has generated since its inception in 1990 a total return
(based upon changes in net asset value per share) of 161.95% in U.S. dollars.
With that return, the Fund outperformed its benchmark index (the Societe de
Bourse Francaise 120 Index ("SBF") Index) by 80% over that period of time.
During the past two years, the Fund has reported total returns of 12.06% for
1997 and 40.88% for 1998.
IIIS'S SUCCESSFUL EFFORTS TO REDUCE THE FUND'S EXPENSES
A key element in a fund's performance is its expenses. While the Fund's
expenses have historically been in line with those of other country funds, IIIS
has taken significant efforts to lower the Fund's expenses, and thereby improve
its performance, during 1999. In July 1998, well before this proposal was made,
IIIS agreed to reduce its advisory fee each month by a percentage equal to the
size of the discount. For example, if the Fund's shares have traded at an
average discount to net asset value of 15% during the month of December, IIIS
will reduce its investment advisory fee for that period by 15%. However, if the
Fund's shares were to trade at a premium to net asset value in the future, IIIS
will not increase its investment advisory fee by the percent of the premium. To
the Fund's knowledge, no other adviser has undertaken such a policy to align its
interest with those of the fund's shareholders. Since IIIS adopted this policy,
the Fund has paid advisory fees at an average annual rate of 0.70% of the Fund's
average annual net assets.
In addition to reducing its own fee, IIIS has reduced other operating
expenses, including fees of other services providers. The Fund estimates that
its expenses for the current year will be
13
approximately 1.25% of average daily net assets.1 That compares to an expense
ratio for the Fund of 1.38% in 1998, 1.48% in 1997 and 1.54% in 1996. The
average total operating expenses for closed-end European equity funds during
1998 was approximately 1.48%.2
IN DEPTH REVIEW PROCESS BY THE BOARD
Your Board reviews the terms of the investment advisory agreement between
the Fund and IIIS annually. Your Board compares the fees paid by the Fund to
those charged by other funds it considers comparable. It also reviews the Fund's
overall performance and the qualification and background of the investment
adviser. In this connection, it takes into account not only IIIS's expertise in
the French securities markets, but also its depth of knowledge of the French
economy and the political trends that could effect the securities markets. Your
Board also considers that IIIS and its advisory affiliates manage over
$150 billion of assets.
TERMINATION COULD HAVE A NEGATIVE EFFECT ON PERFORMANCE AND EXPENSES
Termination of the investment advisory agreement would not by itself result
in the elimination of the discount and there is no evidence that it would
materially affect the discount in the long-term. Further, upon termination of
the agreement, the Board would have to make new investment advisory arrangements
which would have to be approved by shareholders. This would cause a significant
disruption of the Fund's investment process which could have a negative effect
on investment performance, as well as causing the Fund to incur significant
additional expenses. Such costs would include the costs associated with the
holding of a special shareholders meeting and the increased charges by existing
service providers to accommodate the transition. The Board also does not feel
that another manager would be as qualified to manage the Fund as IIIS. There
certainly can be no assurance, and in fact the Board is not aware of any basis
for concluding, that a new investment adviser would agree to an advisory fee
lower than that charged by IIIS or would be able to provide superior performance
to the SBF Index as IIIS has been able to achieve.
CONCLUSION
The investment policy of the Fund has since inception been to seek
long-term appreciation by investing in a professionally managed portfolio of
French equity securities. Under the stewardship of IIIS, the Fund's goals are
being realized. Your Board carefully reviews the performance of the Adviser, the
resources necessary for it to continue to do a first-rate job and the
application of those resources to the Fund. The Directors do not believe that
they would be able to replace IIIS with another investment adviser which has
comparable expertise in French equity markets at comparable costs. The Board is
not aware of any investment managers that have a demonstrated record of
performance managing a pool of French equity securities that approaches the
record established by the Fund. The Board believes IIIS has served shareholders
well and termination would cause uncertainty, as well as an increase in Fund
expenses, and could significantly adversely effect the Fund's short, as well as
long-term investment performance. Therefore, your Directors concluded that
termination of the advisory contract would not be in the best interest of
shareholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL 4.
- ------------------
1 Assumes an average reduction of the advisory fee equal to the discount on
December 31, 1998 of 16.97% and net assets of $251.8 million, which was the
size of the fund as of December 31, 1998.
2 As determined by the Fund based upon information contained in a Salomon Smith
Barney--CDA/ Wiesenberger report on 11 closed-end European equity funds.
14
INFORMATION CONCERNING THE MEETING
SOLICITATION OF PROXIES
The cost of preparing, printing and mailing these proxy materials will be
borne by the Fund. In addition to the mailing of these proxy materials, proxies
may be solicited by telephone, by fax or in person by the directors, officers
and employees of the Fund; Indocam International Investment Services, the Fund's
Investment Adviser, whose principal address is 90, boulevard Pasteur,
75015 Paris France; or Mitchell Hutchins Asset Management, Inc., the Fund's
Administrator, whose principal address is 1285 Avenue of the Americas, New York,
New York 10019. Shareholder Communications Corporation, a third party
solicitation firm, has agreed to provide proxy solicitation services to the Fund
at a cost of approximately $125,000. Brokerage houses, banks and other
fiduciaries may also be requested to forward these proxy materials to the
beneficial owners of Fund shares to obtain authorization for completing the
proxies and will be reimbursed by the Fund for their out-of-pocket expenses.
REVOKING PROXIES
A stockholder signing and returning a proxy has the power to revoke it at
any time before it is exercised by filing a written notice of revocation with
the Fund's secretary, c/o The France Growth Fund, Inc., 1211 Avenue of the
Americas, New York, NY 10036; or by returning a duly executed proxy with a later
date before the time of the Meeting; or if a stockholder has executed a proxy
but is present at the Meeting and wishes to vote in person, by notifying the
secretary of the Fund (without complying with any formalities) at any time
before it is voted.
Being present at the Meeting alone does not revoke a previously executed
and returned proxy.
OUTSTANDING SHARES AND QUORUM
As of February 9, 1999, 15,345,333 shares of Common Stock of the Fund were
outstanding. Only stockholders of record on February 9, 1999 are entitled to
notice of and to vote at the Meeting. Thirty-three percent (33%) of the shares
of Common Stock issued and outstanding and entitled to vote at the Meeting will
be considered a quorum for the transaction of business.
VOTING RIGHTS AND REQUIRED VOTE
A plurality of all votes cast at the Meeting, with a quorum present, is
sufficient to elect a Director. This means that the three (3) nominees for
Director who receive the greatest number of votes will be elected. The
affirmative vote of a majority of the shares cast at the Meeting, with a quorum
present, is required for the ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants. The affirmative vote of a
majority of the shares cast at the Meeting, with a quorum present, is required
for approval of the stockholder proposal with respect to realizing net asset
value. Approval of the stockholder proposal to terminate the advisory agreement
requires the affirmative vote of a majority of the outstanding voting securities
of the Fund, as defined in the 1940 Act, which is the vote of (a) 67% or more of
the shares of the Fund present at the meeting if the holders of more than 50% of
the outstanding shares are present in person or by proxy, or (b) more than 50%
of the outstanding shares, whichever is less. If the Advisory Agreement is
terminated by stockholders at the Meeting, the Board of Directors will consider
the Fund's options which may include, among other alternatives, liquidating the
Fund, merging the Fund with another fund, or searching for a replacement
investment adviser.
15
The Fund expects that broker-dealer firms holding shares of the Fund in
"street name" for the benefit of their customers and clients will ask their
customers and clients how they want their shares voted on each proposal before
the Meeting. The Fund understands that, under the rules of the NYSE, these
broker-dealers may, without instructions from their customers and clients, grant
authority to the proxies designated by the Fund to vote on certain items to be
considered at the Meeting if no instructions have been received prior to the
date specified in the broker-dealer firm's request for voting instructions.
Certain broker-dealer firms may also exercise discretion over shares held in
their name for which no instructions are received by voting such shares in the
same proportion as they have voted shares for which they have received
instructions.
The shares as to which the broker-dealer firms have granted authority to
the proxies designated by the Fund to vote on the items to be considered at the
Meeting, the shares as to which broker-dealer firms have declined to vote
("broker non-votes"), and the shares as to which proxies are returned by record
stockholders but which are marked "abstain" on any item will be included in the
Fund's tabulation of the total number of votes present for purposes of
determining whether the necessary quorum of stockholders exists. However,
abstentions and broker non-votes will not be counted as votes cast. Therefore,
abstentions and broker non-votes will not have an effect on the election of
Directors, the ratification of the selection of independent accountants or the
stockholder proposal with respect to realizing net asset value, although they
will count toward the presence of a quorum. With respect to the stockholder
proposal to terminate the advisory agreement, abstentions and broker non-votes
will have no effect on the vote in determining whether the proposal has been
adopted in accordance with clause (a) above, but will have the same effect as a
vote against the proposal in determining whether the proposal has been adopted
in accordance with clause (b) above.
OTHER BUSINESS
The Fund has been advised by a stockholder that it intends to introduce
certain proposals for consideration at the Meeting. One proposal relates to a
recommendation that the Board of Directors take action to provide all
stockholders the option of realizing net asset value within two months of the
annual Meeting. Another proposal recommends that the Directors who do not
support the proposal described in the previous sentence resign. If these
proposals are presented at the Meeting or any adjournment thereof, the proxy
holders will, if necessary, use their discretionary authority to vote against
such proposals.
The Board of Directors knows of no other matters to be presented for
consideration at the Meeting. If other business including any question as to an
adjournment of the Meeting is properly brought before the Meeting, proxies will
be voted according to the best judgment of the persons named as proxies.
TRANSACTIONS BY AFFILIATES
During the fiscal year of the Fund ended December 31, 1998, there were no
transactions in the Common Stock of the Investment Adviser, its Parents or
Subsidiaries by any officer, Director or nominee for election of Director of the
Fund or the Investment Adviser in an amount equal to or exceeding 1% of the
outstanding common stock of such entity. Mr. Arvis has indicated ownership of
Directors' qualifying shares (less than 1% of the outstanding shares) of Credit
Agricole Indosuez. Mr. Simon-Barboux has indicated ownership of one share of
stock of Indocam Asset Management International, which is a subsidiary of Credit
Agricole Indosuez.
16
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Fund's Annual Meeting
of Stockholders in 2000 must be received by the Fund on or before November 8,
1999, in order to be included in the Fund's proxy statement and form of proxy
relating to that meeting. For a stockholder proposal which is not included in
the Fund's proxy statement to be considered timely, it must be received by the
Fund at least 15 days before the Fund's Annual Meeting of Stockholders in 2000.
/s/ Steven M. Cancro
Steven M. Cancro
Secretary
Dated: March 11, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD. PLEASE TAKE A FEW MINUTES TO VOTE NOW AND HELP SAVE THE
COST OF ADDITIONAL SOLICITATIONS.
17
THE FRANCE GROWTH FUND, INC.
1211 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10036
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frederick J. Schmidt and Steven M. Cancro as
Proxies, each with full power of substitution, and hereby authorizes each of
them, with authority in each to act in the absence of the other, to represent
and to vote, as designated below, all the shares of Common Stock of The France
Growth Fund, Inc. (the "Fund") held of record by the undersigned on February 9,
1999 at the Annual Meeting of Stockholders of the Fund to be held on April 29,
1999, or any adjournments thereof.
PROPOSALS (Please check one box for each proposal)
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES.
1. ELECTION OF DIRECTORS. The election of Class II directors to serve for a
term expiring on the date on which the Annual Meeting of Stockholders is
held in 2002.
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary below) to vote for all nominees listed below
Nominees: Bernard L. Chauvel, Michel Longchampt and Michel A. Rapaccioli
(UNLESS AUTHORITY TO VOTE FOR ANY OF THE FOREGOING NOMINEES IS WITHHELD, THIS
PROXY WILL BE DEEMED TO CONFER AUTHORITY TO VOTE FOR EVERY NOMINEE WHOSE NAME IS
NOT LISTED BELOW.)
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the following space:
- --------------------------------------------------------------------------------
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
2. TO RATIFY THE SELECTION BY THE BOARD OF DIRECTORS OF PRICE WATERHOUSE LLP AS
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
FOR / / AGAINST / / ABSTAIN / /
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 3.
3. TO CONSIDER AND ACT UPON A STOCKHOLDER PROPOSAL WITH RESPECT TO REALIZING
NET ASSET VALUE.
FOR / / AGAINST / / ABSTAIN / /
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 4.
4. TO CONSIDER AND ACT UPON A STOCKHOLDER PROPOSAL TO TERMINATE THE FUND'S
INVESTMENT ADVISORY AGREEMENT WITH INDOCAM INTERNATIONAL INVESTMENT
SERVICES.
FOR / / AGAINST / / ABSTAIN / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
5. In their discretion, the proxies are authorized to consider and act upon such
other business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3 AND 4.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. If shares are held jointly, each
Shareholder named should sign. If only one signs, his or her signature will be
binding. If the Shareholder is a corporation, the President or a Vice President
should sign in his or her own name, indicating title. If the Shareholder is a
partnership, a partner should sign in his or her own name, including that he or
she is a "Partner."
Dated: ___________________________________________________________________, 1999
(By) ___________________________________________________________________________
Signature
(By) ___________________________________________________________________________
Signature