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
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/x/ Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
THE FIRST AUSTRALIA FUND, INC.
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO]
FIRST
AUSTRALIA
FUND
April 7, 1999
Dear First Australia Fund Shareholder:
The April 23, 1999 Annual Meeting is fast approaching. We strongly urge you to
vote FOR the re-election of your Class II directors and AGAINST DDA's Proposals
TODAY by returning the WHITE proxy card in the enclosed postage-paid envelope.
Why You Should Support The Fund - In Just Two Lines:
[GRAPHIC OMITTED]
[Graph Depicting the Total Market Return with Distributions
Reinvested for the First Australia Fund (+59.0%) VERSUS S&P 500 (+35.9%)
From August 31, 1998 Through March 31, 1999 (Quoted in US$)]
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| Look what we've done for shareholders in just the last seven months... |
| |
| * The discount to NAV: more than halved, to a recent low of 12.6%. |
| |
| * Total return to shareholders: 59%. |
| |
| * Share price: up 50%. |
| |
| * Two cash distributions: 40.5 cents per share, paid out of income |
| plus realized capital gains. |
| |
| * An additional 20 cent distribution payable April 16, 1999. |
| |
| * ...And we've done all this with an expense ratio that is among the |
| lowest of all similar funds. |
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The choice is yours - you can:
* Support experienced directors, under whose leadership a new management team
is producing outstanding results for shareholders
or
X Take a risk with DDA's untried hand-picked nominees, who have no sure-
fire answer to the discount - and whose proposals could destroy the Fund.
Do not be misled...understand who DDA is and what DDA really means!
X DDA are short-term market opportunists. They want to replace five of your
existing experienced directors with their own nominees.
o Four out of five of DDA's hand-picked nominees for the Board are DDA's own
employees. We believe they represent the interests of DDA only.
o DDA's own proxy materials indicate that their nominees have few
qualifications to manage a specialized international fund such as The First
Australia Fund. They have no stated experience in Australian investment
markets.
X DDA has also introduced other proposals which, if passed, could leave the
Fund without a manager, could seriously lower the value of your investment
in the Fund and increase your tax liabilities. They could also lead to the
Fund's ultimate dismemberment and liquidation.
For example, Proposal 4 recommends that the Board "take whatever steps
necessary" to realize net asset value within 60 days. This goal is
impossible to achieve for all shareholders without liquidating or
open-ending the Fund -- effectively destroying the Fund.
X Here is what DDA says about the schemes its candidates would consider if
elected. The first is a full tender offer for all of the Fund's shares at
NAV. That is essentially the same as liquidating the Fund and would trigger
tax liabilities.
Is that why you invested in The First Australia Fund?
To liquidate the portfolio, and to pay additional taxes?
X DDA's second scheme is to offer shareholders the option of an "in-kind,
proportionate distribution of the Fund's portfolio." What could this mean?
To use DDA's own words, "...the Fund could become so small that it is
impractical to operate...a merger or liquidation of the Fund might then
become necessary."
Taxes? Liquidation? Ask yourself if you, and your investment in the Fund,
would be better off if DDA's Proposal 4 was adopted.
X Let's look at another of DDA's proposals: Proposal 3 asks that EquitiLink
International Management Limited be terminated as the Fund's manager.
However, no alternative is proposed. Indeed, DDA acknowledges that "it is
possible that there will be a period of time during which the Fund will not
have an independent manager responsible for the management and supervision of
its investment portfolio."
Do you want your Fund without an independent manager? Is that in your best
interests?
2
Your Board's Record of Building Value
Your Board has always been committed to building value for shareholders, and to
exploring ways to address the discount from NAV without destroying your Fund.
* Some years ago, your Board initiated a share repurchase program. This had
no lasting effect on the discount.
* A new portfolio management team is in place. It has achieved outstanding
results for Fund shareholders. Over the past seven months, total return is up
59%.
* Your Directors have instituted a high cash quarterly distribution policy.
The cash distribution rate for 1999 has been set by the Board at 9%.
* Your Directors have also successfully initiated a comprehensive series of
meetings by management with analysts in major brokerage firms. This has
increased market awareness and created substantial buying interest in the
Fund.
All these initiatives undertaken by the Board and management have contributed to
the Fund's outstanding performance. Over the last seven months, the share price
has risen over 50% and the discount has been as low as 12.6%.
We believe in the Fund and its future.
Your Chairman and President have invested their own money to buy over 1.6
million of the Fund's shares.1
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| |
| In order to protect your investment and to |
| continue its strong growth, we strongly urge |
| you to vote on the enclosed WHITE proxy |
| card: |
| |
| * FOR Proposals 1 and 2 |
| and |
| * AGAINST DDA's Proposals 3, 4, 5 and 6 |
| |
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Once you have voted the WHITE proxy card, you should not return any proxy card
you may receive from DDA.
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1 On March 23, 1999, EquitiLink Limited and EquitiLink U.S.A., Inc., both of
which are controlled by Laurence M. Freedman, Chairman of the Fund, and Brian M.
Sherman, President of Fund, purchased 1,624,627 shares of the Fund, accompanied
by proxies from holders as of the record date of the Meeting as to 1,624,127
shares, for a total purchase price of approximately $13.9 million. $1,868,500 of
the purchase price was obtained by an unsecured demand borrowing from Hestian
Pty. Limited, which is controlled by Mr. Sherman, and $1,868,500 was obtained by
an unsecured demand borrowing from Link Enterprises (Holding) Pty. Limited,
which is controlled by Mr. Freedman. As a result of these purchases, EquitiLink
Limited now owns 1,171,227 shares, EquitiLink U.S.A., Inc. now owns 453,400
shares and Messrs. Freedman and Sherman now share voting and investment power
for a total of 1,674,684 shares, or 9.8% of the outstanding shares. The business
address of EquitiLink Limited is Level 3, 190 George Street, Sydney, N.S.W.
2000, Australia. The business address of EquitiLink U.S.A., Inc., which is a
Delaware corporation, is 45 Broadway, New York, New York 10006.
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We want you to know...
* A substantial majority - 11 of 13 - of the Directors are independent of the
Fund's Manager.
* All Directors are committed to act solely in the best interests of all
shareholders.
* Your Fund Directors have outstanding qualifications. They are uniquely
qualified to help the Fund achieve its long-term growth objective.
* All Directors know the Fund and the challenges and opportunities of managing
a portfolio of Australian equity securities.
We appreciate your continuing support.
Sincerely,
/s/ Laurence S. Freedman /s/ Brian M. Sherman
LAURENCE S. FREEDMAN BRIAN M. SHERMAN
Chairman President
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| |
| TO PROTECT YOUR INVESTMENT: |
| |
| * VOTE FOR Proposals 1 and 2 |
| and |
| * VOTE AGAINST DDA's Proposals 3, 4, 5 and 6 |
| |
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Important Instructions
If your shares are held in the name of your bank or broker,
only they can vote your shares. Please return the enclosed
WHITE PROXY CARD to your bank or broker in the envelope provided
or contact the person responsible for your account and give
instructions to vote FOR Proposals 1 and 2 and AGAINST
Proposals 3, 4, 5 and 6.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE IN VOTING
YOUR SHARES PLEASE CONTACT: INNISFREE M&A INCORPORATED
1-888-750-5834
www.factcentral.com
4
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.
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PLEASE VOTE, DATE AND SIGN ON REVERSE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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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.
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Your Board of Directors recommends a vote FOR Proposals 1 & 2 below
---
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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
FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Proposals 3-6 below
- --------------------------------------------------------------------------------
3. Shareholder proposal to terminate the Investment Management Agreement with
EquitiLink
FOR / / AGAINST / / ABSTAIN / /
4. Shareholder proposal that the Board take whatever steps necessary for
shareholders to receive net asset value for their shares within 60 days
of the Meeting
FOR / / AGAINST / / ABSTAIN / /
5. Shareholder proposal that all Directors not standing for reelection who
oppose Item 4 resign
FOR / / AGAINST / / ABSTAIN / /
6. Shareholder proposal to reimburse shareholder proponent's fees and expenses
FOR / / AGAINST / / ABSTAIN / /
DATE ____________________, 1999
_______________________________
_______________________________
Signatures(s)
Please sign exactly as name(s) appear(s) on this proxy card. If signing for a
corporation or partnership or as an agent or attorney, indicate the capacity in
which you are signing. If signing as trustee, custodian or other fiduciary,
please state your title.
2