SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Check the appropriate box:
/ / Preliminary Proxy Statement
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/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

THE FIRST AUSTRALIA 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.
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and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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/ / Fee paid previously with preliminary materials.
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THE FIRST AUSTRALIA FUND, INC.

Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 23, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The First
Australia Fund, Inc. (the "Fund") will be held at the offices of Prudential
Securities Incorporated, One Seaport Plaza, 35th Floor, New York, New York, on
April 23, 1999, at 10:00 a.m. (Eastern time) for the following purposes:

(1) To elect five Directors to serve as Class II Directors for a
three-year term;

(2) To ratify the selection of independent public accountants for the
fiscal year ending October 31, 1999;

(3) To vote upon certain stockholder proposals, if properly presented; and

(4) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on January 26,
1999 as the record date for the determination of shareholders entitled to vote
at the meeting or any adjournment or postponement thereof.

In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the meeting, the
persons named as proxies may propose one or more adjournments of the meeting, in
accordance with applicable law, to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of the holders of a majority
of the Fund's shares present in person or by proxy at the meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor and will vote against any such adjournment those
proxies to be voted against that proposal.

By Order of the Board of Directors,

Roy M. Randall, Secretary

Newark, New Jersey
March 16, 1999

PROXY STATEMENT
THE FIRST AUSTRALIA FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102

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Annual Meeting of Shareholders
April 23, 1999

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INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The First Australia Fund, Inc., a
Maryland corporation (the "Fund"), to be voted at the Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at the offices of Prudential
Securities Incorporated, One Seaport Plaza, 35th Floor, New York, New York, on
April 23, 1999, at 10:00 a.m. (Eastern time). The approximate mailing date for
this Proxy Statement is March 16, 1999 or as soon as practicable thereafter.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked on the proxy card.
Unless instructions to the contrary are marked, proxies received will be voted
FOR Proposals 1 and 2 and AGAINST each of the stockholder proposals set forth
under Proposals 3 through 6. Any proxy may be revoked at any time prior to its
exercise by giving written notice to the Secretary of the Fund (addressed to the
Secretary at the principal executive office of the Fund, Gateway Center 3, 100
Mulberry Street, Newark, New Jersey 07102).

The Board of Directors has fixed the close of business on January 26, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment or postponement thereof.
Shareholders on the record date will be entitled to one vote for each share
held. As of January 26, 1999, the Fund had 17,189,998 shares of common stock
outstanding, par value $0.01 per share. To the best knowledge of management of
the Fund, as of the record date, no person or group beneficially owned more than
five percent of the outstanding shares of common stock of the Fund.

The Fund will furnish, without charge, a copy of the Fund's annual report
for its fiscal year ended October 31, 1998, and any more recent reports, to any
Fund shareholder upon request. To request a copy, please call or write to the
company assisting the Fund in the solicitation of proxies: Innisfree M & A
Incorporated, 501 Madison Avenue, 20th Floor, New York, NY, 10022, toll-free at
888-750-5834.

PROPOSAL 1: ELECTION OF DIRECTORS

The Fund's By-laws provide that the Board of Directors will be divided into
three classes, as nearly equal in number as possible, each of which, after a
transition period, will serve for three years with one class being elected each
year. Each year the term of office of one class will expire. Rt. Hon. Malcolm
Fraser, Harry A. Jacobs, Jr., Howard A. Knight, Richard H. McCoy and Brian M.
Sherman, Directors who were elected to serve until the Meeting, have been
nominated to serve as Class II Directors for a three-year term to expire at the
Annual Meeting of Shareholders to be held in 2002 and until their successors are
are duly elected and qualified. The nominees have indicated an intention to
serve if elected and have consented to be named in this Proxy Statement.

It is the intention of the persons named in the enclosed proxy to vote for
the election of the persons listed below under Class II for a three year term.
The Board of Directors of the Fund knows of no reason why any of these nominees
will be unable to serve, but in the event of any such inability, the proxies
received will be voted for such substituted nominees as the Board of Directors
may recommend.

The following table sets forth certain information concerning each of the
Fund's nominees for election as a Director and each Director of the Fund. Each
of the Fund's nominees is currently a Director of the Fund.

Class II (Current Directors and Nominees for a Term
Expiring at the Annual Meeting to be held in 2002)

Rt. Hon. Malcolm Fraser, Former Prime Minister of Australia. 68 1985 2,000
A.C., C.H.+ Mr. Fraser has over 20 years of
44/55 Collins Street experience in economics, global
Melbourne, Victoria 3000 financial markets and management of
Australia private investments. He has been a
member of the Advisory Board of the
Investment Company of America, a
company in the Capital Group of funds,
a consultant to the Prudential
Insurance Company of America, a
member of the Consultative Board of
Directors for ANZ Bank and a
consultant to Nomura Securities.
Mr. Fraser is a specialist in world
economic relationships, geo-political
affairs and government and private
sector interrelationships.

Director, The First Australia Prime
Income Fund, Inc. (since 1986), The
First Commonwealth Fund, Inc. (since
1992) and First Australia Prime
Income Investment Company Limited
(since 1986); Partner, Nareen
Pastoral Company (agriculture)
(until 1998); President, CARE
International (1990-1995).

Harry A. Jacobs, Jr.* Former Chairman of the Board of 77 1985 3,979
One New York Plaza Prudential Securities. Mr. Jacobs
New York, NY 10292 has 40 years of experience in fund
management, investment markets and
closed-end funds, with extensive
knowledge of international equity,
fixed income and commodity markets.

Howard A. Knight Mr. Knight has over 30 years of 57 1993 2,500
36 Ives Street experience in financial markets and
London SW3 2ND has been actively involved in the
United Kingdom Australian financial markets for
more than 25 years. From 1991 to
1994, he served as President of
Investment Banking, Equity
Transactions and Corporate Strategy
at Prudential Securities. Since 1996,
Mr. Knight has served as Vice Chairman
and Chief Operating Officer of SBS
Broadcasting SA, where he has been
actively involved in investment
management and capital markets.

Director, The First Australia Prime
Income Fund, Inc. (since 1993).

Richard H. McCoy++ Mr. McCoy has over 30 years of 56 1993 --
P.O. Box 1 experience in the securities
Toronto Dominion Bank Tower industry and investment markets.
Toronto, M5K 1A2 Since May 1997, he has been Vice
Canada Chairman of TD Securities, Inc.
Before that, he was Deputy Chairman of CIBC
Wood Gundy Securities and was primarily
involved in the firm's investment banking
activities. Mr. McCoy has extensive
experience in managing a wide range of
debt and equity financings.

Director, The First Australia Prime
Income Investment Company Limited
(since 1993).

President of the Fund (since 1985); Vice
President and Director (since 1992) and
Chairman (since 1995), The First
Commonwealth Fund, Inc.; President and
Director, The First Australia Prime Income
Fund, Inc. (since 1986); Joint Managing
Director (since 1986) and Chairman (since
1995), First Australia Prime Income
Investment Company Limited; Chairman,
EquitiLink Limited (since 1986); Chairman
and Joint Managing Director, EquitiLink
Australia Limited (since 1981); Chairman and
Director, EquitiLink Holdings Limited (since
1998); Director, EquitiLink International
Management Limited (since 1985); Joint
Managing Director, MaxiLink Limited (since
1987); Joint Managing Director, First
Resources Development Fund Limited (since
1994); Director, Ten Group Pty. Limited
(since 1994); Director, Ten Network Holdings
Limited (since 1998); Director, Sydney
Organizing Committee for the Olympic Games.

Sir Roden Cutler, V.C., A.K., Former Governor of the State of New 82 1985 --
K.C.M.G., K.C.V.O., South Wales, Australia and past
C.B.E., K.St.J. Chairman of the Board of the Fund.
442 Edgecliff Road Sir Roden has held various senior
Edgecliff, N.S.W. 2027 positions as Australia's representative
Australia in the United States as Consul General
(responsible for the Trade Commission),
New Zealand as High Commissioner
(responsible for Trade) and South
East Asia. He has served as either
Director or Chairman of a number of public
companies, including Chairman of the State
Bank of New South Wales, Australia, and has
extensive experience in financial and
investment markets.

Chairman (1986-1995) and Director
(since 1986), The First Australia
Prime Income Fund, Inc. and First
Australia Prime Income Investment
Company Limited; Director, The First
Commonwealth Fund, Inc. (since
1992); Australia Director, Rothmans
Holding Ltd. (formerly Rothmans Pall
Mall) (tobacco) (1981-1994).

David Lindsay Elsum, A.M.+ Mr. Elsum has over 20 years' 61 1985 2,000
9 May Grove experience in investment and
South Yarra, Victoria 3141 insurance markets. He is a member
Australia of the Australian Securities and
Investment Commission Takeover Panel and a
member of the Australian Government
Administrative Appeals Tribunal. Previously
he was founding Managing Director of Capel
Court Investment Bank and subsequently Chief
Executive of major public companies
including The MLC Limited (insurance) and
President of the State of Victoria
Superannuation Fund (pension fund
management).

Shares
Beneficially
Business Experience, Present Office Owned and %
with the Fund, Principal of Total
Name and Address Occupation or Employment Director Outstanding
of Each Director or Nominee and Directorships Age Since on 3/16/99(1)
--------------------------- ----------------------------------- --- -------- --------------
Director, The First Australia Prime
Income Fund, Inc. (since 1986), The
First Commonwealth Fund, Inc. (since
1992) and First Australia Prime
Income Investment Company Limited
(since 1986); Director, MaxiLink
Limited; Chairman, Audit Victoria;
Chairman, Melbourne Wholesale Fish
Market Ltd.; Chairman, Queen
Victoria Market; Chairman, Stodart
Investment Pty. Ltd.; Director,
First Resources Development Fund
Limited; Director, Stateguard
Friendly Society.

Laurence S. Freedman* Mr. Freedman has over 35 years of 55 1985 50,062
Level 3 experience in funds management, with
190 George Street a focus on global investment
Sydney, N.S.W. 2000 analysis. Prior to founding
Australia EquitiLink in 1981, he was Director
of Investments at BT Australia
Limited. Mr. Freedman's areas of
fund management specialization
include investment in resource and
development companies, international
economies and the geo-political
impact on investment markets.

Chairman of the Fund (since 1995) and Vice
President of the Fund (since 1985); Vice
President and Director (since 1986) and
Chairman (since 1995), The First Australia
Prime Income Fund, Inc.; President and
Director (since 1992), The First
Commonwealth Fund, Inc.; Joint Managing
Director, First Australia Prime Income
Investment Company Limited (since 1986);
Founder and Joint Managing Director,
EquitiLink Australia Limited (since 1981);
Director, EquitiLink Limited (since 1986);
Director EquitiLink Holdings Limited (since
1998); Director, EquitiLink International
Management Limited (since 1985); Chairman
and Joint Managing Director, MaxiLink
Limited

Michael R. Horsburgh Mr. Horsburgh has over 30 years' 53 1985 2,000
21,22/FI Ssang Yong Tower experience in investment banking and
23-2 Yuido-dong management. He is currently
Youngdungpo-gu, Executive Vice President of Hannuri
Seoul 150-010, Korea Investment Securities Co., Ltd., a
Korean securities firm.

Director, The First Australia Prime
Income Fund, Inc. (since 1986);
Director, The First Commonwealth
Fund, Inc. (since 1994); Executive
Vice President, Hannuri Securities &
Investment (since October 1997);
Director, The First Hungary Fund;
Director and Managing Director,
Carlson Investment Management, Inc.
(1991-October 1997); Director and
Chief Executive Officer, Horsburgh
Carlson Investment Management, Inc.
(1991-1996); Managing Director,
Barclays de Zoete Wedd Investment
Management (U.S.A.) (1990-1991);
Special Associate Director, Bear,
Stearns & Co. Inc. (1989-1990);
Senior Managing Director, Bear,
Stearns & Co. Inc. (1985-1989);
General Partner, Bear, Stearns & Co.
Inc. (1981-1985).

William J. Potter+ Mr. Potter has extensive experience 50 1985 1,000
236 West 27th Street in investment banking and fund
New York, NY 10001 management, including senior
positions with Toronto Dominion
Bank, Barclays Bank PLC and
Prudential Securities, Inc. and
board of director positions with
investment funds

Shares
Beneficially
Business Experience, Present Office Owned and %
with the Fund, Principal of Total
Name and Address Occupation or Employment Director Outstanding
of Each Director or Nominee and Directorships Age Since on 3/16/99(1)
--------------------------- ----------------------------------- --- -------- --------------
involving over $20 billion in assets
beginning in 1983. Mr. Potter has
been involved in the Australian
capital markets since 1974 including
management and board of director
positions with a noted Australian
brokerage house. Mr. Potter is
President of a U.S. investment bank
and has securities licenses in the U.S.
and Canada. Mr. Potter also has
extensive securities underwriting
experience in various capital markets
with an emphasis on natural resources.

Director, The First Australia Prime
Income Fund, Inc. (since 1986),
First Australia Prime Income
Investment Company Limited (since
1986) and The First Commonwealth
Fund, Inc. (since 1992); Director
and Chairman of Finance, National
Foreign Trade Association (USA);
Director, Ridgewood Capital Funding,
Inc. (NASD); Director, Impulsora del
Fondo Mexico; Director,
International Panorama Resources
Ltd.; Director, E. C. Power LLC;
Director, Alexandria Bancorp
(banking group in Cayman Islands);
Consultant, Trieste Futures
Exchange, Inc.; Adviser, Guardian
Capital Group; Partner, Sphere
Capital Partners (corporate
consulting) (1989-1997); Director,
Canadian Health Foundation.

Class I (Term Expiring at the Annual Meeting to be held in 2001)

Anthony E. Aaronson++ Mr. Aaronson has extensive 62 1985 1,500
116 South Anita Avenue experience in the management of
Los Angeles, CA 90049 private investments. He is Chairman
of the Audit Committee of the Fund.

Neville J. Miles+ Mr. Miles has over 20 years of 52 1996 2,000
14 Argyle Place international investment banking
Sydney, N.S.W. 2000 experience. He was formerly head of
Australia Corporate Treasury at Westpac
Banking Corporation and Chairman of
Ord Minnett Limited (stockbrokers).
Mr. Miles has extensive experience
in the areas of corporate
acquisitions and equity offerings.

Director, The First Australia Prime Income
Fund, Inc. (since 1996); Director, MaxiLink
Limited (investment company); Director,
Walker Corp. Limited (property development);
Director, First Resources Development Fund
Limited (investment company); Chairman and
Director, MTM Funds Management Limited
(since 1997); Director, FXF Management
Limited (since 1997); Director, Crown
Limited (since 1998); Executive Director,
EL&C Ballieu Limited (stockbroker)
(1994-1996); Executive Director, Ord Minnett
Securities Limited (stockbroker)
(1988-1994).

John T. Sheehy++* Mr. Sheehy has over 30 years' 56 1985 5,000
2700 Garden Road experience in investment banking,
Suite G including with J.P. Morgan & Company
Monterey, CA 93940 and Bear, Stearns & Co. Inc. His
specialty areas include securities
valuation, public offerings and private
placements of debt and equity securities,
mergers and acquisitions and management
buyout transactions.

Shares
Beneficially
Business Experience, Present Office Owned and %
with the Fund, Principal of Total
Name and Address Occupation or Employment Director Outstanding
of Each Director or Nominee and Directorships Age Since on 3/16/99(1)
--------------------------- ----------------------------------- --- -------- --------------
Director, The First Australia Prime Income
Fund, Inc. (since 1986), The First
Commonwealth Fund, Inc. (since 1992) and
First Australia Prime Income Investment
Company Limited (since 1986); Managing
Director, Black & Company (broker-dealer and
investment bankers) (1996-March 1997);
Managing Director, The Value Group LLC
(merchant banking) (since 1997); Director,
Greater Pacific Food Holdings, Inc. (food
industry investment company) (since 1993);
Director, Video City, Inc. (video retail
merchandising) (since 1997); Director,
Sphere Capital Advisors (investment adviser)
(since 1988); Partner, Sphere Capital
Partners (corporate consulting) (since
1987); Director, Sandy Corporation
(corporate consulting, communication and
training) (1986-January 1996).

- -----------
* Directors considered by the Fund and its counsel to be persons who are
"interested persons" (which as used in this Proxy Statement is as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund or of the Fund's investment manager or investment adviser. Mr. Jacobs
is deemed to be an interested person because of his affiliation with
Prudential Securities Incorporated, a broker-dealer registered under the
Securities Exchange Act of 1934. Messrs. Freedman and Sherman are deemed to
be interested persons because of their affiliation with the Fund's
investment manager and investment adviser, or because they are officers of
the Fund or both.
+ Messrs. Miles, Elsum, Fraser and Potter are members of the Contract Review
Committee.
++ Messrs. Aaronson, McCoy and Sheehy are members of the Audit Committee.
(1)
(1) The information as to beneficial ownership is based on statements furnished
to the Fund by the Directors and nominees. As controlling shareholders of
the Investment Manager, Messrs. Freedman and Sherman share voting and
investment power for 46,062 shares of the Fund owned by the Investment
Manager. With the exception of those 46,062 shares, which constitute
0.27% of the outstanding shares of the Fund, all shares listed in this
table are owned with sole voting and investment power. In the aggregate,
all of the shares in the table represent approximately 0.44% of the total
shares outstanding as of March 16, 1999.

In addition to Messrs. Sherman and Freedman, Mr. David Manor, Ms. Ouma
Sananikone-Fletcher and Mr. Barry Sechos, as set forth below, serve as executive
officers of the Fund.

Name and Principal Business Address Present Principal Occupation

David Manor Managing Director, EquitiLink International
EquitiLink International Management Limited Management Limited
P.O. Box 578
St. Helier Jersey
Channel Islands JE4 5XB

Ouma Sananikone-Fletcher Chief Executive Officer, EquitiLink Australia
EquitiLink Australia Limited Limited
Level 3, 190 George Street
Sydney NSW 2000 Australia

Barry G. Sechos Director, EquitiLink Australia Limited
EquitiLink Australia Limited
Level 3, 190 George Street
Sydney NSW 2000 Australia

Please also see the information contained below under the heading "Further
Information Regardng Directors and Officers."

The Board of Directors recommends that shareholders vote FOR the election
of the Fund's five nominees to the Fund's Board of Directors.

PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected PricewaterhouseCoopers
LLP, independent public accountants, to examine the financial statements of the
Fund for the fiscal year ending October 31, 1999. This appointment is subject to
ratification or rejection by the shareholders of the Fund.

Audit services performed by PricewaterhouseCoopers LLP during the most
recent fiscal year included examination of the financial statements of the Fund,
services related to filings with the Securities and Exchange Commission and
consultation on matters performed by the firm related to the preparation and
filing of tax returns. The Fund knows of no direct or indirect financial
interest of PricewaterhouseCoopers LLP in the Fund.

Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Meeting and will have the opportunity to respond to questions from
shareholders and to make a statement if they so desire.

The Board of Directors recommends that shareholders vote FOR ratification
of the selection of PricewaterhouseCoopers LLP as independent public accountants
for the fiscal year ending October 31, 1999.

PROPOSALS 3-6: OTHER MATTERS

Deep Discount Advisors, Inc. and Ron Olin Investment Management Company
(together, "DDA") have informed the Fund that they intend to present at the
Meeting the following set of proposals (the "DDA

Proposals"): (a) to elect a slate of five individuals as Class II Directors in
place of the Directors referred to in Proposal 1 (certain information supplied
to the Fund concerning these individuals is set forth in Annex A to this Proxy
Statement), (b) to terminate the investment management agreement with EquitiLink
International Management Limited within 60 days, (c) to recommend that the Board
of Directors take whatever steps necessary to give all shareholders the option
to receive net asset value for their shares within 60 days of the Meeting, (d)
to recommend that all directors not standing for election at the Meeting who
oppose the resolution referred to in clause (c) resign their positions as
directors, and (e) to recommend that the Board of Directors approve the
reimbursement by the Fund of the reasonable fees and expenses associated with
DDA's initial proxy communication (including only printing, mailing,
distribution and tabulating costs, but not including attorneys' fees or other
solicitation fees).

Your Board of Directors believes that the DDA Proposals are harmful to the
Fund and its shareholders and unanimously recommends that shareholders vote
AGAINST each of the DDA Proposals.

EXPERIENCE OF DIRECTORS

The Board of the Fund is well qualified to promote the objectives of the
Fund as a vehicle to invest for long-term capital appreciation in international
(and, in particular, Australian) stocks. Cross-border investment requires
knowledge of and experience in dealing with tax, currency and accounting
matters, in addition to portfolio investment expertise. Each of the existing
directors who is being proposed for re-election by the Fund has the necessary
depth of experience to represent the best interests of all of the Fund's
shareholders.

Malcolm Fraser served for eight years until 1983 as the Prime Minister of
Australia and since then has been involved in global geopolitical and economic
issues. Harry Jacobs was the Chairman of one of the world's major investment
banks with international operations and substantial offshore funds under
management. Howard Knight has been involved for many years in international
finance in both fund management and strategic investment decisions, and has
lived and worked in Australia. Richard McCoy served as Deputy Chairman of one of
Canada's leading investment banks with world-wide interests in investment,
currency trading and international banking operations. He has a long-term
business association in Australian investment markets. Brian Sherman, the Fund's
President, is recognized as one of Australia's most influential fund managers
with a long-term successful investment history.

DDA, which represents holders of less than five percent of the Fund's
shares, is proposing to replace these five existing highly experienced directors
with DDA's nominees, four out of five of whom are employees of Deep Discount
Advisors, Inc. The information sent to the Fund by DDA does not identify any
experience of any of the DDA nominees in investing in Australian securities.

Your directors believe that shareholders are best served by directors who
will represent the interests of ALL of the Fund's shareholders, not by directors
who are beholden to one particular shareholder group. This is particularly true
given the breadth of experience of the five directors whom DDA is seeking to
replace: a former Prime Minister of Australia; a Senior Director of Prudential
Securities Incorporated; the Vice Chairman and Chief Operating Officer of
Scandinavian Broadcasting System SA; the former Deputy Chairman of CIBC Wood
Gundy Securities Inc.; and the President of the Fund. All of the existing
directors have many years experience of investment markets, international
economies and the complex laws and regulations relating to closed-end funds.

THE PROPOSAL TO "RECEIVE NET ASSET VALUE"

DDA's proposed recommendation that the Board take "whatever steps
necessary" to give shareholders the option of receiving net asset value within
60 days of the Meeting is in the Board's view, fundamentally inconsistent with
the best interests of shareholders of the Fund.

WHY A CLOSED-END STRUCTURE IS BETTER

The Fund was organized to provide investors a vehicle for long-term
appreciation and, secondarily, current income, through investment primarily in
equity securities of Australian companies listed on the Australian Stock
Exchange. As a closed-end fund, it does not need to retain high levels of
non-productive cash and other short-term investments in order to meet
anticipated redemptions. In addition, the closed-end structure provides more
flexibility to the Fund to invest, when appropriate, in less liquid stocks which
may afford better long-term capital gains potential than investments in larger
capitalized companies.

The Fund's directors are convinced that an open-end structure is not a good
way to build shareholder value through long-term investment in Australian
equities. This is so because, among other things:

Redemption of Fund shares would shrink the Fund's asset base and so would
tend to increase the Fund's expense ratio--that is, the Fund's overall expenses,
divided by the number of shares outstanding. The result would be to increase the
expenses of the Fund, and thereby to reduce the returns to shareholders.

Your directors do not believe it would be possible to prevent an increase
in the expense ratio resulting from redemptions by selling additional fund
shares. Attempts to market an open-end fund for U.S. investors to invest in
Australia, including a significant effort made by the Fund's Investment Manager,
have never succeeded.

ADVERSE CONSEQUENCES OF REDEMPTION

Among the possible steps that could be taken to give shareholders the
option to receive net asset value for their shares would be to make the shares
redeemable, either for cash or for securities from the Fund's portfolio. Both
approaches, however, would have adverse consequences.

If redemptions were to be made in cash, the need to hold a significant
portion of Fund assets in short-term cash reserves to meet possible redemption
requests would hurt shareholder returns. That is because, over time, investing
in stock typically produces results far in excess of the returns from short-term
money market investments. This is particularly true in the current climate of
low short-term interest rates.

Further, the sale of securities to enable the Fund to produce cash and meet
redemption requests of shareholders like DDA would result in the Fund realizing
any capital gains inherent in the securities sold. These capital gains would
have to be distributed, at least in part, to shareholders who choose not to
redeem. As a result, non-redeeming shareholders would receive capitals gains
distributions and be obliged to pay taxes in order to enable other shareholders
to redeem their Fund shares. Your Directors do not believe shareholders of a
closed-end fund who choose to remain in the fund should be subjected to tax just
to accommodate the interests of those short-term shareholders who redeem.

Redemptions paid in kind (that is, by delivering to redeeming shareholders
securities from the Fund's portfolio instead of cash)--which DDA has suggested
to other closed-end funds in the past--also would shrink the Fund's asset base
and increase the expense ratio. Further, redemptions in kind would present all
redeeming shareholders with significant costs. Redeeming shareholders who sell
the securities they receive will have

to do so in most cases on the Australian Stock Exchange through Australian
brokers at substantially higher commissions than are payable by the Fund,
particularly in the case of small or "odd lot" parcels. They will also incur the
cost, and carry the risk, of converting Australian dollars to US dollars. Should
shareholders decide to hold Australian shares, they will receive dividends in
most cases in Australian dollars paid by checks drawn on Australian banks. These
may be difficult to negotiate in the United States.

INDEPENDENT ANALYSIS

A September 1998 study by CDA Wiesenberger* of closed-end funds that
converted to an open-end structure noted that selling pressure caused by
redemptions following open-ending has had a detrimental effect on the funds and
on remaining investors because of the following:

o Net assets plunged due to large redemptions
o Portfolio holdings were liquidated to meet redemptions
o Funds realized significant capital gains
o Expense ratios increased due to reduction in total assets
o Investment styles were altered

The CDA Wiesenberger study concluded:

"When closed-end funds convert to open-end funds, long-term investors lose
the benefits they sought and may incur significant expenses. Based on the
data examined in this study, conversion from closed-end to open-end
structure is generally not in the best long-term interest of shareholders
in the fund."

This study supports the conclusion of the Fund's directors that, although
open-ending may enable opportunists to realize some degree of short-term gains,
it also would disadvantage long-term investors seeking to invest in a
diversified portfolio of Australian securities.

NEW MANAGEMENT GETS RESULTS

A new portfolio management team was put in place 18 months ago. As a
consequence, the Fund outperformed its benchmark, the Australian All Ordinaries
Accumulation Index, pre-expenses, for the 12 month period ended January 31,
1999.

In addition, the Fund has just been awarded the NO. 1 RANKING IN THE LIPPER
CLOSED-END FUNDS PERFORMANCE SURVEY over five years to December 1998 in the
category of Pacific ex-Japan Funds.

AUSTRALIA'S OUTLOOK POSITIVE

Although the "Asian contagion" had a negative impact on the Australian
market in the early months of 1998, Australia's economic performance has been
robust. In 1998, Australia's gross domestic product rose an estimated 4.6%,
making it one of the world's fastest growing economies. Moreover, management is
convinced that Australia's economy will continue to perform well as Asian
economies recover, since Asia is Australia's main export market.

- -----------------------
* Permission to quote CDA Weisenberger has not been sought or obtained.

HIGHER DISTRIBUTIONS CONTINUE

The Fund's directors have also significantly increased and regularized cash
returns to shareholders through the adoption of a managed distribution policy,
effectively giving shareholders immediate access to a portion of the Fund's
capital gains every quarter. Commencing in January 1998, the Fund's quarterly
distributions have been made at an annual rate that is a percentage of the
rolling average of the Fund's net assets at the end of the four prior quarters.
The Board of Directors has set the distribution rate for 1999 at 9%.
Distributions are made initially from net investment income, then from net
realized gains, and, to the extent necessary, from paid-in capital. So far, no
distributions from capital have been made and the Fund anticipates that its
level of retained profits will allow the policy to be maintained for the
foreseeable future. The distribution yield, based on the closing share price of
$7.63 on March 12, 1999, was 11.62%.

PROPOSAL TO TERMINATE THE MANAGER

DDA is also proposing that the Fund's investment management agreement with
EquitiLink International Management Limited ("EquitiLink" or the "Investment
Manager") be terminated within 60 days. EquitiLink, which has managed the Fund
since its inception in 1985 and which has over A$5.5 billion under management,
specializes in managing investments in Australian securities and is therefore
well qualified to serve as investment manager for the Fund. The Fund's
investment adviser, EquitiLink Australia Limited (the "Investment Adviser"), is
one of Australia's largest independent asset management firms and also
specializes in managing investments in Australian securities. In the Board's
view, the Fund would be badly harmed if it lost EquitiLink's services.

PAYING THE COSTS OF DDA

Finally, DDA is seeking to be reimbursed by the Fund for certain of its
expenses in connection with its solicitation of proxies. Because the DDA
proposals are contrary to the interests of the Fund and all of its shareholders,
the Board of Directors believes it is inappropriate and unfair to burden
shareholders with DDA's expenses.

Your Board of Directors urges you to reject DDA's self-serving agenda
by voting AGAINST all of the DDA Proposals.

Other than Proposals 1 and 2 described in this Proxy Statement and the
possible shareholder proposals listed above, the Board of Directors knows of no
business to be brought before the Meeting. If any other matter, besides the
possible shareholder proposals listed above, is properly presented at the
Meeting or any adjournment or postponement thereof, it is the intention of the
persons named in the enclosed proxy to vote in accordance with their best
judgment.

FURTHER INFORMATION REGARDING DIRECTORS AND OFFICERS

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Section 30(h) of
the 1940 Act, as applied to the Fund, require the Fund's officers, Directors,
investment manager or adviser, affiliates of the investment manager or adviser,
and persons who beneficially own more than 10% of a registered class of the
Fund's outstanding securities ("Reporting Persons") to file reports of
ownership of the Fund's securities and changes in such ownership with the
Securities and Exchange Commission and the American Stock Exchange. Such persons
are required by Securities and Exchange Commission regulations to furnish the
Fund with copies of all such filings.

Based solely on its review of the copies of such forms received by it and
written representations from certain Reporting Persons that no year-end reports
were required for those persons, the Fund believes that during the fiscal year
ended October 31, 1998, its Reporting Persons complied with all applicable
filing requirements.

Committees and Board of Directors Meetings. The Board of Directors has a
standing Audit Committee, which consists of certain Directors who are not
interested persons of the Fund as defined in the 1940 Act. The principal purpose
of the Audit Committee is to review the scope and results of the annual audit
conducted by the Fund's independent public accountants and the evaluation by
such accountants of the accounting procedures followed by the Fund. The Board of
Directors also has a standing Contract Review Committee, comprising independent
members of the Board only, that reviews and makes recommendations to the Board
with respect to entering into, renewal or amendment of the Management Agreement,
the Advisory Agreement and the Administration Agreement. The Board of Directors
does not have a standing nominating or compensation committee.

During the Fund's fiscal year ended October 31, 1998, the Board of
Directors held four regularly scheduled meetings and two special meetings, the
Audit Committee held two meetings and the Contract Review Committee held one
meeting. Each of the Directors then in office attended at least 75% of the
aggregate number of regularly scheduled meetings of the Board of Directors and
all of the Committees of the Board on which he served. However, Mr. Horsburgh
missed both special meetings, bringing his aggregate attendance at all board
meetings below 75%.

Officers of the Fund. The officers of the Fund, all of whom serve at the
pleasure of the Board of Directors, and, with the exception of Messrs. Manor,
Sechos and Kozlowski, and Mesdames Bancroft and Sananikone-Fletcher, all of whom
have served since the Fund was organized in 1985, are as follows: Brian M.
Sherman, President; Laurence S. Freedman, Vice President; David Manor (age 58),
Treasurer; Ouma Sananikone-Fletcher (age 40), Assistant Vice President-Chief
Investment Officer; Barry G. Sechos (age 37), Assistant Treasurer; Kenneth T.
Kozlowski (age 37), Assistant Treasurer; Roy M. Randall (age 62), Secretary;
Allan S. Mostoff (age 66), Assistant Secretary; and Margaret A. Bancroft (age
60), Assistant Secretary.

The respective principal occupations during the past five years of the
Fund's officers are as follows: Messrs. Sherman and Freedman, shown above in the
table of nominees and Directors under "Proposal 1: Election of Class II
Directors"; David Manor, Director, EquitiLink International Management Limited;
Executive Director, EquitiLink Australia Limited and EquitiLink Limited
(1986-1998); Ouma Sananikone-Fletcher, Investment Director, EquitiLink Australia
Limited (since 1994), Chief Executive Officer, EquitiLink Australia Limited
(since 1997), Director, EquitiLink Holdings Limited (since 1998) and Executive
Director, Banque Nationale de Paris (1986-1994); Barry G. Sechos, General
Counsel, EquitiLink Australia Limited (since 1993), Director, EquitiLink
Australia Limited (since 1994) and Director, EquitiLink Holdings Limited (since
1998); Kenneth T. Kozlowski, Director, Prudential Investments (since 1996) and
Vice President, Prudential Mutual Fund Management, Inc. (1992-1996); Roy M.
Randall, Partner of Stikeman, Elliott (Australian office of Canadian law firm)
(since 1997) and Partner, Freehill Hollingdale & Page (1981-1996); Allan S.
Mostoff and Margaret A. Bancroft, Partners of Dechert Price & Rhoads (U.S. law
firm).

Relationship of Directors or Nominees with the Investment Adviser and the
Investment Manager. EquitiLink International Management Limited serves as
investment manager to the Fund and EquitiLink Australia Limited serves as
investment adviser to the Fund pursuant to a management agreement dated February
1, 1990 and an advisory agreement dated February 1, 1990.

The Investment Manager is a Jersey, Channel Islands corporation organized
in October 1985 with its registered office located at Level 2, 17 Bond Street,
St. Helier, Jersey, Channel Islands. The Investment Adviser is an indirect
wholly owned subsidiary of EquitiLink Holdings Limited, an Australian
corporation. The registered offices of the Investment Adviser and EquitiLink
Holdings Limited are located at Level 3, 190 George Street, Sydney, N.S.W.,
Australia.

Messrs. Freedman and Sherman, both Directors of the Fund, serve as
directors of the Investment Manager. In addition, Messrs. Freedman and Sherman
are the principal shareholders of the Investment Manager. Messrs. Freedman and
Sherman also serve as, respectively, joint managing director, and joint managing
director and chairman, of the Investment Adviser, and are the principal
shareholders of EquitiLink Holdings Limited.

Compensation of Directors and Certain Officers. The following table sets
forth information regarding compensation of Directors by the Fund and by the
fund complex of which the Fund is a part for the fiscal year ended October 31,
1998. Officers of the Fund and Directors who are interested persons of the Fund
do not receive any compensation from the Fund or any other fund in the fund
complex. In the column headed "Total Compensation From Fund and Associated Funds
Paid to Directors," the number in parentheses indicates the total number of
boards in the fund complex on which the Director serves.

Compensation Table
Fiscal Year Ended 10/31/98

Total
Pension or Estimated Compensation
Aggregate Retirement Annual From Fund
Compensation Benefits Accrued Benefits and Associated
From As Part of Upon Funds Paid
Name of Director Fund Fund Expenses Retirement to Directors
- ---------------- ------------ ----------------- ---------- --------------

Anthony E. Aaronson........................ $13,500 N/A N/A $35,750(2)
Sir Roden Cutler........................... 12,000 N/A N/A 47,750(3)
David Lindsay Elsum........................ 12,000 N/A N/A 48,250(3)
Rt. Hon. Malcolm Fraser.................... 12,000 N/A N/A 60,250(3)
Laurence S. Freedman....................... 0 N/A N/A 0(3)
Michael R. Horsburgh....................... 11,500 N/A N/A 42,750(3)
Harry A. Jacobs, Jr........................ 0 N/A N/A 0(2)
Howard A. Knight........................... 10,500 N/A N/A 28,250(2)
Richard H. McCoy........................... 12,500 N/A N/A 12,500(1)
Roger C. Maddock*.......................... 0 N/A N/A 0(3)
Neville J. Miles........................... 11,500 N/A N/A 40,250(2)
William J. Potter.......................... 12,500 N/A N/A 60,250(3)
John T. Sheehy............................. 12,500 N/A N/A 58,750(3)
Brian M. Sherman........................... 0 N/A N/A 0(3)

- ----------
* Mr. Maddock resigned from the Board of Directors effective December, 1998.

The Board of Directors recommends that shareholders vote FOR the
election of the Fund's five nominees to the Fund's Board of Directors.

ADDITIONAL INFORMATION

Persons making the Solicitation. The solicitation of proxies may be made
by, among others, officers, Directors and employees of the Fund, the Investment
Manager, the Investment Adviser or State Street Bank and Trust Company, Transfer
Agent of the Fund. Proxies will be solicited by mail, advertisement, telephone,
telecopier and in person.

Innisfree M & A Incorporated has been retained to assist in the
solicitation of proxies. Innisfree will be paid approximately $50,000 by the
Fund and will employ approximately 25 people to solicit security holders. The
Fund will reimburse Innisfree for its related expenses.

The expense of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Fund. The
Fund will reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. Expenses related to the solicitation of security holders, in excess of
those normally expended in an election of Directors, including fees for
attorneys, accountants, public relations, solicitors, advertising, printing,
transportation and other related expenses, are expected to aggregate
approximately $775,000, of which approximately $270,000 has been spent to date.

Certain information about the employees of the Investment Manager and the
Investment Adviser who will be soliciting proxies on the Fund's behalf is set
forth in Annex B. Annex C sets forth certain other information relating to the
Directors and executive officers of the Fund and these employees (collectively,
the "Participants").

Solicitation and Voting of Proxies. Solicitation of proxies is being made
primarily by the mailing of this Proxy Statement with its enclosures on or about
March 16, 1999. As mentioned above, Innisfree will assist in the solicitation of
proxies. As the meeting date approaches, certain shareholders of the Fund may
receive a call from a representative of Innisfree if the Fund has not yet
received their vote. Authorization to permit Innisfree to execute proxies may be
obtained by telephonic or electronically transmitted instructions from
shareholders of the Fund. Proxies that are obtained telephonically will be
recorded in accordance with the procedures set forth below. Management of the
Fund believes that these procedures are reasonably designed to ensure that the
identity of the shareholder casting the vote is accurately determined and that
the voting instructions of the shareholder are accurately determined.

In all cases where a telephonic proxy is solicited, the Innisfree
representative is required to ask the shareholder for such shareholder's full
name, address, social security or employer identification number, title (if the
person giving the proxy is authorized to act on behalf of an entity, such as a
corporation), the number of shares owned and to confirm that the shareholder has
received the Proxy Statement in the mail. If the information solicited agrees
with the information provided to Innisfree by the Fund, then the Innisfree
representative has the responsibility to explain the process, read the proposals
listed on the proxy card, and ask for the shareholder's instructions on each
proposal. The Innisfree representative, although he or she is permitted to
answer questions about the process, is not permitted to recommend to the
shareholder how to vote, other than to read any recommendation set forth in the
proxy statement. Innisfree will record the shareholder's instructions on the
card. Within 72 hours, Innisfree will send the shareholder a letter or mailgram
to confirm the shareholder's vote and asking the shareholder to call Innisfree
immediately if the shareholder's instructions are not correctly reflected in the
confirmation.

If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Proxy Statement or attend in person. Any

proxy given by a shareholder, whether in writing or by telephone, is revocable.
A shareholder may revoke the accompanying proxy or a proxy given telephonically
at any time prior to its use by filing with the Fund a written revocation or
duly executed proxy bearing a later date. In addition, any shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given.

Vote Required. The presence at any shareholders' meeting, in person or by
proxy, of shareholders entitled to cast a majority of the votes entitled to be
cast shall be necessary and sufficient to constitute a quorum for the
transaction of business. In the event that the necessary quorum to transact
business or the vote required to approve or reject any proposal is not obtained
at the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting in accordance with applicable law, to permit further
solicitation of proxies with respect to any proposal which did not receive the
vote necessary for its passage or to obtain a quorum. With respect to those
proposals for which there is represented a sufficient number of votes in favor,
actions taken at the Meeting will be effective irrespective of any adjournments
with respect to any other proposals. Any such adjournment will require the
affirmative vote of the holders of a majority of the Fund's shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of such adjournment those proxies which they are entitled to vote in favor
and will vote against any such adjournment those proxies to be voted against
that proposal. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" will be
treated as shares that are present. Broker non-votes are proxies received by the
Fund from brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to vote nor has
discretionary power to vote on a particular matter. Accordingly, shareholders
are urged to forward their voting instructions promptly.

Approval of the election of Class II Directors to the Board of Directors
will require the affirmative vote of a majority of the shares present in person
or by proxy at the Meeting. Abstentions and broker "non-votes" will have the
effect of a vote against the election of Class II Directors.

The ratification of the selection of independent accountants and the
approval of any of the shareholder proposals set forth above (other than with
respect to the election of directors and the termination of the investment
management agreement) will require the affirmative vote of a majority of the
votes validly cast at a meeting at which a quorum is present. Abstentions will
have no effect on the vote on these proposals since they are not considered
votes cast.

Approval of the shareholder proposal to terminate the investment management
agreement will require the vote of a majority of the outstanding voting
securities, which is defined in the 1940 Act as either (a) 67 percent or more of
the voting securities present at the Meeting, if the holders of more than 50
percent of the outstanding voting securities of the Fund are present or
represented by proxy or (b) 50 percent or more of the outstanding voting
securities of the Fund, whichever is less. Abstentions and broker "non-votes"
will have the effect of a vote against this proposal.

Beneficial Ownership. The only person known by the Fund to be the
beneficial owner of %5 or more of the Fund's shares is Mira, L.P., located at
One Chase Manhattan Plaza, 42nd Floor, New York, NY 10005, which on February 26,
1999 filed a Schedule 13G indicating that as of such date it was the beneficial
owner of 871,800 shares of the Fund, representing approximately 5.072% of the
total shares outstanding.

Litigation. An individual who claims to hold shares in the Fund has brought
a purported class action against the Directors of the Fund, the Investment
Manager and the Investment Adviser alleging that the Directors, the Investment
Manager and the Investment Adviser have breached their fiduciary duties to the
Fund in failing to take adequate steps to diminish the discount of the Fund's
share price to its net asset value.

Ariel Marquit v. Sherman et al., Civil Action No. 2:99cv00289, D.N.J. The
complaint seeks an order directing the defendants to take steps to reduce the
discount to net asset value; an award of an unspecified amount of monetary and
punitive damages; and interest, attorneys' fees, expert fees and other costs.
The Fund has been advised by counsel that the complaint is without merit and
that the defendants will vigorously defend the action.

Shareholder Proposals. If a shareholder intends to present a proposal at
the Annual Meeting of Shareholders of the Fund to be held in 2000 and desires to
have the proposal included in the Fund's proxy statement and form of proxy for
that meeting, the shareholder must deliver the proposal to the offices of the
Fund by November 17, 1999.

Shareholders wishing to present proposals at the Annual Meeting of
Shareholders of the Fund to be held in 2000 which they do not wish to be
included in the Fund's proxy materials should send written notice to the
Secretary of the Fund of such proposals by January 31, 2000 in the form
prescribed in the Fund's By-Laws.

By Order of the Board of Directors,

Roy M. Randall, Secretary

Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
March 16, 1999

ANNEX A

THE FOLLOWING INFORMATION HAS BEEN FURNISHED TO THE FUND BY DDA. THE FUND HAS
NOT VERIFIED THE TRUTH OR ACCURACY OF THE INFORMATION SET FORTH BELOW.

The Soliciting Shareholder is Deep Discount Advisors, Inc. and Ron Olin
Investment Management Co. who are beneficial owners 839,489 of shares of the
Fund on behalf of clients as of January 26, 1999. The Soliciting Shareholder
will nominate Messrs. Bentz, Bradshaw, Clark, Hellerman and Olin for election
as Class II Directors of the Fund. Information about the nominees proposed by
the soliciting shareholder follows:

Name, Business Address Age Principal Business Occupations
- ---------------------------------------------------------------------------------------------------------------------------

Gary A. Bentz 42 Mr. Bentz has served as Vice President and Chief Financial Officer of
One West Pack Square Deep Discount Advisors, Inc., a registered investment advisor
Suite 777 specializing in closed-end fund investments, for over five years. He
Asheville, NC 28801 has also provided financial accounting, investment analysis and
consulting services to companies and private investors for the
last 13 years. After commencing his career with Arthur Andersen & Co.,
Mr. Bentz held various financial managerial positions in industry.
He currently serves as a Director on the Boards of Clemente Global
Growth Fund and The Austria Fund, both NYSE-traded closed-end funds.

Number of Shares Owned Directly or 615
Indirectly As of January 26, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Ralph W. Bradshaw 48 Mr. Bradshaw has served as Vice President and Secretary of Deep
One West Pack Square Discount Advisors, Inc., a registered investment advisor specializing
Suite 777 in closed-end fund investments, for over five years. During that
Asheville, NC 28801 period he has also provided financial consulting services in the area
of closed-end funds. In previous years, he has held various
managerial positions. Mr. Bradshaw currently serves as a Director on
the Boards of Clemente Global Growth Fund and The Austria Fund, both
NYSE-traded closed-end funds.

Number of Shares Owned Directly or 500
Indirectly As of January 26, 1999

A-1

Name, Business Address Age Principal Business Occupations
- ---------------------------------------------------------------------------------------------------------------------------
William A. Clark 53 Since 1995 Mr. Clark has served as Director of Research for Deep
One West Pack Square Discount Advisors, a registered investment advisor specializing in
Suite 777 closed-end fund investment, in addition to providing consulting
Asheville, NC 28801 services in closed-end fund portfolio management. Mr. Clark has
served as an investment analyst and advisor to private clients
for over 17 years. Before joining Deep Discount Advisors, Mr. Clark
served in various managerial positions, and provided financial services
to banks, telecommunications/software companies, private investors, and
regional developers. During this period, he also served as CFO of a
company in the energy related business. Mr. Clark currently serves
as a Director on the Board of The Austria Fund, Inc., a NYSE-traded
closed-end fund.

Number of Shares Owned Directly or 1,231
Indirectly As of January 26, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Gerald Hellerman 51 Since 1993, Mr. Hellerman has served as the managing director of
10965 Eight Bells Lane Hellerman Associates, which provides financial consulting and
Columbia, Maryland 21044 litigation support services to private clients in government related
matters. From 1976 to 1993, Mr. Hellerman was the Chief
Financial Analyst for the United States Department of Justice. He is
a Trustee of Third Avenue Trust, Third Avenue Value Fund, Third
Avenue Small Cap Value Fund, and Third Avenue High Yield Fund,
which are registered open-end investment companies. Mr. Hellerman
currently serves as a Director on the Board of Clemente Global
Growth Fund, a NYSE-traded closed-end fund with an internationally
diversified portfolio.

Number of Shares Owned Directly or 0
Indirectly As of January 26, 1999

A-2

Name, Business Address Age Principal Business Occupations
- ---------------------------------------------------------------------------------------------------------------------------
Ronald G. Olin 53 Mr. Olin Is President and Chief Executive Officer of Deep Discount
One West Pack Square Advisors, Inc. and General Partner of Ron Olin Investment Management
Suite 777 Co. Both firms are registered investment advisors specializing in
Asheville, NC 28801 investments in closed-end funds. Prior to founding these investment
management firms, Mr. Olin was a senior manager with IBM supporting
government software contracts with the N.A.S.A. and D.O.D..
He currently serves as Chairman of the Board of Clemente Global
Growth Fund, a NYSE Traded closed-end fund with an internationally
diversified portfolio, and as a Director on the Board of The Austria
Fund, Inc., a NYSE-traded closed-end fund.

Number of Shares Owned Directly or 300
Indirectly As of January 26, 1999

A-3

ANNEX B

The following table sets forth the names and the present principal
occupations of the employees of the Investment Manager and Investment Adviser of
the Fund who will be soliciting proxies on behalf of the Fund's Board of
Directors. Information regarding Directors and those executive officers who will
be soliciting proxies is set forth in "Proposal 1: Election of Directors" in
this Proxy Statement. The principal business address of each person listed below
is EquitiLink Australia Limited, Level 3, 190 George Street, Sydney NSW 2000
Australia.

Name Present Principal Occupation
- ---- ----------------------------

Craig Alexander Hood Director-Head of Equities, EquitiLink
Australia Limited

Irfan Naseeb Khan Product Manager-Overseas Funds, EquitiLink
Australia Limited

Munib Madni Equity Portfolio Manager, EquitiLink Australia
Limited

Vincent John Parrott Director-Business Operations, EquitiLink
Australia Limited

B-1

ANNEX C

INFORMATION CONCERNING THE PARTICIPANTS

Messrs. Freedman and Sherman, as Directors and executive officers of the
Fund, and Messrs. Manor and Sechos and Ms. Sananikone-Fletcher, as executive
officers of the Fund, may be deemed to have a substantial interest in Proposals
3 through 6 because of their share ownership in, and employment relationship
with, the Fund's Investment Manager or Investment Adviser.

In addition to the Fund's Directors and executive officers, Messrs. Craig
Hood, Irfan Khan, Munib Madni and Vincent Parrott, respectively the Director -
Head of Equities, Product Manager - Overseas Funds, Equity Portfolio Manager and
Director - Business Operations, at the Investment Adviser, may solicit proxies
on behalf of the Fund. The business address of the Fund's Directors and its
executive officers, if not otherwise indicated in the Fund's proxy solicitation
materials, is The First Australia Fund, Inc., Gateway Center 3, 100 Mulberry
Street, Newark, New Jersey, 07102.

The Investment Manager, which is controlled by Messrs. Freedman and
Sherman, has purchased 5,616 of the Fund's shares since January 1, 1997, by
virtue of its participation in the Fund's Dividend Reinvestment Plan (the
"DRIP"). Purchases of Fund shares made by the Investment Manager pursuant to the
DRIP are as follows:

Date Shares Number of Shares
Purchased Purchased (Sold)
--------- ----------------
January 17, 1997 366
July 11, 1997 293
January 16, 1998 386
April 9, 1998 1,175
July 10, 1998 957
October 16, 1998 1,380
January 15, 1999 1,059

In addition, certain directors have purchased Fund shares during the same
time period, as described in the table below:

Date Shares Number of Shares
Name of Director Purchased Purchased (Sold)
---------------- --------- ----------------

Anthony A. Aaronson March 11, 1999 1,500
David Lindsay Elsum March 16, 1999 2,000
Rt. Hon. Malcolm Fraser March 16, 1999 2,000
Laurence S. Freedman March 16, 1999 4,000
Michael R. Horsburgh March 11, 1999 1,000
March 15, 1999 1,000
Howard A. Knight March 16, 1999 2,500
Neville J. Miles (through Ballyshaw March 16, 1999 2,000
Pty Ltd., a company controlled by
Mr. Miles)
John T. Sheehy March 12, 1999 5,000
Brian M. Sherman March 16, 1999 4,000

C-1

No part of the purchase price of any of the shares purchased either by the
directors or pursuant to the DRIP is represented by funds borrowed or otherwise
obtained for the purpose of acquiring or holding such shares. Other than as
described herein, none of the Participants has bought or sold any shares of the
Fund since January 1, 1997.

Except as disclosed in this Proxy Statement, none of the Participants owns
any securities of the Fund, beneficially or of record, or is or was within the
past year a party to any contract, arrangement or understanding with any person
with respect to such securities. Except as disclosed in this Proxy Statement, to
the knowledge of the Participants, none of their associates beneficially owns,
directly or indirectly, any securities of the Fund.

Except as disclosed in this Proxy Statement, none of the Fund, the
Participants or other representatives of the Fund or, to their knowledge, their
associates has any arrangement or understanding with any person with respect to
(1) any future employment by the Fund or its affiliates or (2) future
transactions to which the Fund or any of its affiliates will or may be a party.
Except as disclosed in this Proxy Statement, none of the Fund, the Participants
or other representatives of the Fund or, to their knowledge, their associates
has any material interest, direct or indirect, in any transaction that has
occurred since November 1, 1997, or any currently proposed transaction, or
series of similar transactions, which the Fund or any of its affiliates was or
is to be a party and in which the amount involved exceeds $60,000.

C-2

THE FIRST AUSTRALIA FUND, INC.

THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - April 23, 1999

The undersigned hereby appoints William J. Potter, Brian M. Sherman and
Laurence S. Freedman, and each of them, the proxies of the undersigned, with
power of substitution to each of them, to vote all shares of the common stock of
The First Australia Fund, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of The First Australia Fund, Inc. to be held at
One Seaport Plaza, New York, New York on April 23, 1999 at 10:00 a.m. (Eastern
time) and at any adjournment or postponement thereof. By signing this proxy card
on the reverse side, the undersigned authorizes the appointed proxies to vote in
their discretion on any other business which may properly come before the
meeting or any adjournments or postponements thereof.

- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS:

- ----------------------------------- ----------------------------------------

(X) Please mark your votes as in this example

This proxy, when properly executed, will be voted in the manner directed. If no
direction is made, this proxy will be voted FOR Items 1, and 2 and AGAINST Items
3, 4, 5 and 6.

- --------------------------------------------------------------------------------

Your Board of Directors recommends a vote FOR Proposals 1 & 2 below
---
- --------------------------------------------------------------------------------

1. Election of 5 Directors for a three year term:

FOR ALL / / WITHHOLD ON ALL / /
FOR ALL EXCEPT / /
Nominees: M. Fraser, H.A. Jacobs, Jr., H.A. Knight, R.H. McCoy, B.M. Sherman
FOR, except withhold vote from following nominees:___________________________

2. Ratification of selection of independent public accountants