UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
The First Commonwealth Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
IMPORTANT NEWS
[LOGO OF FIRST COMMONWEALTH FUND, INC.]
THE FIRST COMMONWEALTH FUND, INC.
1. The EquitiLink Group, the current manager and investment adviser of the
Fund, is being acquired by Aberdeen Asset Management, PLC.
2. Aberdeen is a publicly listed company based in the United Kingdom. It has
offices in the United States, United Kingdom, Ireland, Luxembourg,
Singapore and Hong Kong. With the acquisition of the EquitiLink Group, it
will have offices in Australia and Jersey, Channel Islands. Aberdeen has
total assets under management of approximately US$33 billion as of
September 30, 2000.
3. Aberdeen's investment philosophy is similar to that of the EquitiLink group
and it is expected that the EquitiLink investment team will remain under
the new Aberdeen structure. The Fund will therefore continue to benefit
from the skills and expertise of the current portfolio management and
administrative team, thereby ensuring continuity and consistency of
investment strategy, within a greater global structure brought by Aberdeen.
4. As a result of the change in ownership, you are being asked to approve new
management and investment advisory contracts, which will remain
substantially the same as the contracts currently in effect, except for the
new initial two year terms and the effective dates.
5. The Board of Directors has approved the new management and advisory
contracts. Your Board recommends that you vote in favor of the new
management and investment advisory contracts.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NEW INVESTMENT
ADVISORY AND MANAGEMENT CONTRACTS. SIMPLY FILL IN THE ATTACHED PROXY CARD AND
MAIL IT IN THE ENCLOSED ENVELOPE.
PLEASE READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT.
[LOGO OF THE FIRST COMMONWEALTH FUND, INC.]
The First Commonwealth Fund, Inc.
IMPORTANT NEWS
October 31, 2000
For Shareholders of The First Commonwealth Fund, Inc. (the "Fund")
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some changes affecting the Fund which
require a vote of shareholders.
Q&A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. The EquitiLink Group ("EquitiLink") investment management businesses are
being acquired by Aberdeen Asset Management PLC ("Aberdeen") (the
"Transaction"). The manager of the Fund, EquitiLink International
Management Limited (the "Manager"), and the investment adviser of the Fund,
EquitiLink Australia Limited (the "Adviser"), are among the EquitiLink
operations being acquired.
Q. WHO IS ABERDEEN?
A. Aberdeen is a globally diversified investment management firm with
approximately US$33 billion under management for institutional funds,
investment trusts, unit trusts, offshore funds and individuals, as of
September 30, 2000. Aberdeen is a publically listed company in the United
Kingdom. Aberdeen will bring to the Fund the benefits of greater resources,
an extensive global coverage and great depth of experience in asset
management. In particular, Aberdeen manages some 27 closed-end funds around
the world. In addition to its UK offices, Aberdeen has offices in Ireland,
Luxembourg, Singapore, Hong Kong, Fort Lauderdale, and Chicago. Its
acquisition of EquitiLink will add offices in Australia and Jersey, Channel
Islands, and will give it additional presence in North America, where
EquitiLink has a New York City Office and a representative office in
Toronto, Canada. Aberdeen also has a joint operating agreement with Phoenix
Home Life Mutual Insurance Co. of Hartford, Connecticut.
Q. WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON?
A. Shareholders are being asked to approve a new management agreement with the
Manager and a new investment advisory agreement with the Adviser (the "New
Agreements"). The New Agreements will commence following the closing of the
Transaction.
Q. WILL THERE BE CHANGES IN THE AGREEMENTS?
A. The New Agreements will be substantially the same in all respects as the
current agreements, except for the new initial two year terms and the
effective dates. There will be no changes in the rates of fees charged to
the Fund under the New Agreements.
Q. WILL THE TRANSACTION AFFECT THE DAY TO DAY OPERATIONS OF MY FUND?
A. Aberdeen's investment philosophy is similar to that of the EquitiLink
Group, and there will be no change in the Fund's investment objective and
policies. It is anticipated that the portfolio management personnel
responsible for the Fund will remain substantially the same.
Q. HOW WILL THE TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. The Transaction will not cause any change in the way the Fund is managed,
assuming shareholders of the Fund approve the new management and investment
advisory agreements. Messrs. Freedman and Sherman are expected to continue
as officers and directors of the Fund. The Fund will continue to benefit
from the skills and expertise of the current team, thereby ensuring
continuity and consistency of investment strategy, within a greater global
structure brought by Aberdeen. Similarly, the Transaction will not affect
the Fund's contractual relationships with its other service providers.
Laurence Freedman and Brian Sherman, the Joint Managing Directors of the
Adviser and directors of the Manager, will resign those positions.
Q. WILL THERE BE ANY BENEFITS TO SHAREHOLDERS FROM THE TRANSACTION?
A. Aberdeen is committed to the Fund and will bring to shareholders the
benefit of its extensive experience in the management of closed-end funds,
as well as Aberdeen's global facilities.
Q. HOW DOES THE FUND'S BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
A. The Board recommends you vote "YES" for the proposal. The Board appointed a
Due Diligence Committee, composed of board members of the three U.S.
closed-end funds (including your Fund) which are advised and managed by the
Adviser and the Manager, who are not "interested persons" (as defined under
the Investment Company Act of 1940, as amended) of Aberdeen or EquitiLink
("Non-Interested Directors"). After careful consideration, and with the
assistance of an investigation of the Transaction by the Due Diligence
Committee, the Fund's Board of Directors, including the Non-Interested
Directors, recommend that you vote in favor of the proposal on the enclosed
postage pre-paid proxy card. Shareholders of the Fund may also vote by
telephone or internet. Simply follow the instructions on your proxy card.
Q. HOW DO I GET MORE INFORMATION?
A. For more information, please call Innisfree M&A Incorporated, the Fund's
proxy solicitor, at (877)-750-9499, or EquitiLink USA, Inc. Investor
Relations at (800)-522-5465 or (212)-968-8800.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED
WITH THIS TRANSACTION?
A. No, EquitiLink and Aberdeen will bear these costs.
2
The First Commonwealth Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
[LOGO OF THE FIRST COMMONWEALTH FUND, INC.]
Dear Shareholder:
As explained in the preceding "Question & Answer" statement, Aberdeen Asset
Management PLC has entered into an agreement to acquire EquitiLink's
investment management businesses, which includes the Manager and Adviser. It
is necessary, in conjunction with the change in control of EquitiLink, for the
shareholders of the Fund to approve new management and investment advisory
agreements with the Manager and Adviser.
Aberdeen is a UK listed investment management specialist with approximately
US$33 billion, as of September 30, 2000, of funds under management. Aberdeen's
investment philosophy is similar to that of EquitiLink and it is expected that
the EquitiLink investment team will remain under the new Aberdeen structure,
thereby ensuring continuity of investment strategy. Aberdeen is committed to
the Fund and will bring to shareholders the benefit of its extensive
experience in the management of closed-end funds, as well as Aberdeen's global
investment capabilities.
The following outlines important facts about the Transaction that apply to
the Fund:
-- The new investment advisory and management agreements that you are being
asked to approve are substantially the same as those currently in
effect, except for the new initial two year terms and the effective
dates of the New Agreements.
-- The Transaction is not intended to affect EquitiLink's day-to-day
operations, its investment process, or its portfolio management team.
-- The Transaction will not have an effect on the number of shares you own
or the value of those shares.
-- The rates of advisory fees and expenses paid by the Fund will not
increase as a result of the Transaction.
-- The investment objective of the Fund will remain the same.
-- The Fund's contractual relationships with its other service providers,
including the Fund's transfer agent and custodian, will not be affected.
-- The Fund's Board of Directors, including those directors who are not
"interested persons" of Aberdeen or EquitiLink have carefully reviewed
the Transaction, and have concluded that the Transaction should cause no
reduction in, and has the potential of enhancing, the quality of
services provided to the Fund.
THE FUND'S BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL SET FORTH IN THE
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS FOR THE FUND IS IMPORTANT AND
RECOMMENDS THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR
THE PROPOSAL.
Your vote is important, regardless of the number of shares you own. PLEASE
TAKE A MOMENT NOW TO SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE
PRE-PAID RETURN ENVELOPE, OR VOTE BY TELEPHONE OR INTERNET. TO VOTE BY
TELEPHONE OR INTERNET, YOU SHOULD FOLLOW THE INFORMATION CONTAINED ON YOUR
PROXY CARD. If we do not receive your executed proxy after a reasonable amount
of time, you may receive a telephone call from our proxy solicitor, Innisfree
M&A Incorporated ("Innisfree"), who will assist you in voting your shares.
Your directors recommend that you vote FOR the proposal, approving the new
management and investment advisory agreements.
Respectfully,
/s/ Brian M. Sherman /s/ Laurence S. Freedman
Brian M. Sherman Laurence S. Freedman
Chairman President
SHAREHOLDERS ARE URGED TO PROMPTLY COMPLETE THEIR PROXY BY MAIL, BY TELEPHONE
OR THE INTERNET, SO AS TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
2
The First Commonwealth Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
November 30, 2000
To the Shareholders of The First Commonwealth Fund, Inc. (the "Fund")
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of the Fund will be held at Hilton Newark Gateway, Raymond
Boulevard, Newark, NJ 07102, on November 30, 2000, at 10:00 a.m., Eastern
Time, for the following purpose:
The shareholders of the Fund will be asked to approve a new
management agreement with EquitiLink International Management
Limited and a new investment advisory agreement with EquitiLink
Australia Limited.
The Board of Directors of the Fund has fixed the close of business on
October 26, 2000 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 at the Meeting
is not obtained or a quorum is present at the Meeting but sufficient votes to
approve the proposal are not received, the proxy holders may propose one or
more adjournments of the Meeting to permit further solicitation of proxies.
Any adjournment will require the affirmative vote of a majority of those
shares present at the Meeting in person or by proxy. If the necessary quorum
is not obtained, the persons named as proxies will vote in favor of the
adjournment. If a quorum is present, the proxy holders will vote those proxies
required to be voted for the proposal with respect to which insufficient votes
for approval have been received, in favor of such adjournment, and will vote
those proxies required to be voted against the proposal, against adjournment.
By order of the Board of Directors,
Roy M. Randall, Secretary
Plainsboro, New Jersey
October 31, 2000
IMPORTANT: You are cordially invited to attend the meeting. Shareholders who
do not expect to attend the meeting in person are requested to complete, date
and sign the enclosed proxy card and return it promptly in the addressed
envelope which requires no postage and is intended for your convenience. Your
prompt return of the enclosed proxy card may save EquitiLink the necessity and
expense of further solicitations to assure a quorum at the meeting. The
enclosed proxy is being solicited on behalf of the Board of Directors of the
Fund.
PROXY STATEMENT
THE FIRST COMMONWEALTH FUND, INC.
800 Scudders Mill Road
Plainsboro, NJ 08536
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Special Meeting of Shareholders
November 30, 2000
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GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of The First Commonwealth
Fund, Inc., a Maryland corporation (the "Fund"). The proxies will be voted at
a Special Meeting of Shareholders (the "Meeting"), to be held at Hilton Newark
Gateway, Raymond Boulevard, Newark, NJ 07102, on November 30, 2000, at 10:00
a.m., Eastern Time, and at any adjournment thereof. The sole purpose of the
meeting is consideration of the following proposal (the "Proposal"):
The shareholders of the Fund will be asked to approve a
new management agreement with EquitiLink International
Management Limited (the "Manager") and a new investment
advisory agreement with EquitiLink Australia Limited
(the "Adviser").
This Proxy Statement, the Notice of Special Meeting, the Question & Answer
Statement, and the proxy card are first being mailed to shareholders on or
about October 31, 2000 or as soon as practicable thereafter. Any shareholder
giving a proxy has the power to revoke it in person at the Meeting, by mail
(addressed to the Secretary at the principal office of the Fund at 800
Scudders Mill Road, Plainsboro, New Jersey 08536) or by submitting a notice of
revocation to the Fund. All properly executed proxies received in time for the
Meeting will be voted as specified in the proxy or, if no specification is
made, in favor of the proposal referred to in the Proxy Statement.
Shareholders may vote using the enclosed postage pre-paid proxy card.
Shareholders may also vote by telephone or internet. To vote by telephone or
internet, shareholders should follow the instructions contained on their proxy
card.
The presence at any shareholders meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of the Fund entitled to be
cast shall be necessary and sufficient to constitute a quorum for the
transaction of business with respect to the Fund. In the event that the
necessary quorum to transact business at the Meeting is not obtained or a
quorum is present at the Meeting but sufficient votes to approve the Proposal
are not received, the proxy holders may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any adjournment will
require the affirmative vote of a majority of those shares present at the
Meeting in person or by proxy. If the necessary quorum is not obtained, the
persons named as proxies will vote in favor of the adjournment. If a quorum is
present, the proxy holders will vote those proxies required to be voted for
the Proposal with respect to which insufficient votes for approval have been
received, in favor of such adjournment, and will vote those proxies required
to be voted against the Proposal, against adjournment. For purposes of
determining the presence of a quorum for transacting business at the Meeting
and at any adjournment, abstentions will be treated as shares that are present
but which have not been voted. Abstentions will have the effect of a vote
against the Proposal. Accordingly, shareholders are urged to forward their
voting instructions promptly. In the Proposal, shareholders of the Fund are
asked to approve a new management agreement with the Manager and a new
investment advisory agreement with the Adviser.
1
In order to be approved, the Proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term
"majority of the outstanding voting securities," as defined by the Investment
Company Act of 1940, as amended (the "1940 Act") and as used in this Proxy
Statement, means: the affirmative vote of the lesser of (1) 67% of the voting
securities of the Fund present at the Meeting if more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (2) more
than 50% of the outstanding shares of the Fund.
Holders of record of the shares of the Fund at the close of business on
October 26, 2000 (the "Record Date"), will be entitled to one vote per share
on all business to be conducted at the Meeting. As of October 26, 2000, the
Fund had 9,266,209 shares of Common Stock, and 1,2000 shares of Auction Market
Preferred Stock, Series W-7, outstanding.
The Fund provides periodic reports to all of its shareholders which
highlight relevant information including investment results and a review of
portfolio changes. You may receive an additional copy of the annual report of
the Fund for the period ended October 31, 1999 and the semi-annual report for
the six-month period ended April 30, 2000, without charge, by calling
EquitiLink USA at (800) 522-5645 or (212) 968-8800, or write to EquitiLink
USA, Inc. at 45 Broadway, 31st Floor, New York, NY 10006, or email:
InvestorRelations@equitilinkny.com; shareholders may also contact Innisfree
M&A Incorporated at (877) 750-9499.
PROPOSAL: APPROVAL OF THE NEW MANAGEMENT AGREEMENT
AND THE NEW INVESTMENT ADVISORY AGREEMENT
INTRODUCTION
The Manager and Adviser provide management and investment advisory services,
respectively, to the Fund pursuant to a management agreement and an investment
advisory agreement (the "Agreements"). The current Agreements (the "Current
Agreements") for the Fund are as follows: the Management Agreement dated
September 9, 1999, and the Advisory Agreement dated February 20, 1992.
The terms and conditions of the proposed new Agreements ("New Agreements")
are substantially the same as each of the Current Agreements, except for the
new initial two-year terms and the effective dates of the New Agreements.
BACKGROUND INFORMATION
The EquitiLink Group ("EquitiLink"), comprising the Fund's Manager and
Adviser, is being acquired by Aberdeen Asset Management PLC ("Aberdeen").
Under applicable law, the Fund's management agreement with the Manager and its
investment advisory agreement with the Adviser will automatically terminate at
the time of the Aberdeen acquisition (the "Transaction").
Established in 1981, the EquitiLink Group has grown into one of largest
independently owned funds management companies in Australia and a specialist
in Australian stocks and Australian and Asian bonds.
In an increasingly globalized environment, EquitiLink is of the view that an
association with a major company with greater global capabilities and reach
represents a natural growth evolution. This will ensure that the Fund not only
continues to benefit from the expertise and experience of the existing
investment staff but also gains from greater capabilities brought by
Aberdeen's global structure.
2
Aberdeen Asset Management, PLC
Aberdeen is a globally diversified investment management firm managing unit
trusts, institutional funds, investment trusts and offshore funds for private
individuals and institutions around the world. The group has a global presence
with offices in the United States, Singapore, Hong Kong, the United Kingdom,
Ireland and Luxembourg. With the acquisition of the EquitiLink Group, this
coverage will extend to Australia and New Zealand. Additionally, Aberdeen also
has a joint operating agreement with Phoenix Home Life Mutual Insurance Co. of
Hartford, Connecticut.
Aberdeen's shares are publicly held. Shareholders holding more than 5% of
its outstanding shares are The Scottish Provident Institution (37.8%), Phoenix
Home Life Mutual Insurance Co. (20.44%), and Shell Pension Fund (5.51%).
The Aberdeen group has experienced substantial growth in recent years. It
has expanded at an annual rate of 56.2% since 1995, through a combination of
acquisitions and organic growth. As of September 30, 2000, Aberdeen had
approximately US$33 billion in assets under management.
Positive Implications for Shareholders
The New Agreements for the Fund are substantially the same as the Current
Agreements. With the existing investment management personnel remaining
substantially in place, the current investment strategy will continue, thus
ensuring consistency of investment management.
In addition, Aberdeen will bring to the Fund the benefits of greater
resources, an extensive global coverage and great depth of experience in asset
management. In particular, Aberdeen manages some 27 closed-end funds around
the world. The synergy between the EquitiLink and Aberdeen groups should
enhance the research capabilities and management skills available to the Fund.
The Transaction
The Transaction involves the sale of all shares of the Manager, of
EquitiLink Limited ("EL," parent of the Adviser) and of EquitiLink
International (Channel Islands) Limited ("EICIL") with the result that all the
Australian, United States and Canadian investment management business of the
EquitiLink complex will be transferred to Aberdeen. This includes the
Adviser's Australian funds management operation consisting of 12 wholesale
unit trusts, 2 closed-end funds and several wholesale mandates; and the
investment advisory, investment management, administrative, and investor
relations services related to three U.S. funds, including the Fund
(collectively, the "Funds") and two Canadian funds. The sale will be effected
pursuant to a Share Sale Agreement between Aberdeen on the one side and
EquitiLink Holdings Limited ("EHL") (parent of EL), EIML Australia Pty Limited
(parent of the Manager) and the shareholders of EICIL on the other side. Total
consideration for the sale is US$80 million, subject to certain adjustments.
This consideration is payable in a combination of cash and preference shares
to be issued by Aberdeen.
In order for the aforementioned management and investment advisory services
to continue to be performed by the Manager and Adviser, certain approvals of
the New Agreements with the Manager and the Adviser need to be obtained by the
Shareholders of the Funds, as well as by the directors and trustees of certain
non-US funds, in addition to the approvals already obtained by the Funds'
Boards of Directors. Approval must be received with respect to the foregoing
funds representing at least 75% of the combined revenue estimated for those
funds for the year ending June 30, 2000 for the sale to proceed. The
Transaction is also contingent upon: Jersey (Channel Islands) regulatory
approval of the sale of the Manager and consent of the Australian Foreign
Investment Review Board for the purchase by Aberdeen of EL. Additionally,
certain assets held by the EquitiLink entities being sold are not included in
the sale and must be transferred out of the relevant company prior to the
Transaction closing. This includes shares of certain Funds (including 4.8% of
the Fund) that are
3
beneficially owned by EL and EUSA. These holdings will be transferred to EHL
(or an affiliate). Other conditions include repayment of certain indebtedness
by the Manager and EL and cancellation of an EquitiLink employee stock option
plan. The Share Sale Agreement requires Messrs. Sherman and Freedman to sign
one-year non-compete agreements and claims releases. Finally, Aberdeen's
shareholders must approve the purchase. The closing is to occur three business
days following approval of the Proposal by Fund shareholders. If the Proposal
is not approved by all Funds, the closing may be delayed.
The Transaction will not affect the day-to-day operations of the Fund or of
its portfolio management teams. Laurence Freedman and Brian Sherman will
resign as Joint Managing Directors of the Adviser and as directors of the
Manager. Richard Fabricius of Aberdeen will be transferred to Sydney and will
be appointed a director of EL and the Adviser. These changes are not expected
to have a material effect on the Fund or the Manager or the Adviser. Messrs.
Freedman and Sherman are expected to continue as officers and directors of the
Fund. As noted earlier, the investment objective of the Fund will remain the
same, and the transaction will have no effect on the number of shares
outstanding or the net asset value of the Fund. The rates of management and
advisory fees and expenses paid by the Fund will not increase as a result of
the Transaction.
Consummation of the Transaction would constitute an "assignment," as that
term is defined in the 1940 Act, of the Fund's Current Agreements. As required
by the 1940 Act, each Current Agreement provides for its automatic termination
in the event of its assignment. In anticipation of the Transaction,
shareholders of the Fund must approve the New Agreements to permit the Manager
and Adviser to continue to provide services to the Fund. Copies of the forms
of the New Agreements are attached hereto as Exhibits A and B. EACH NEW
AGREEMENT IS THE SAME IN EVERY MATERIAL RESPECT AS THE FUND'S CURRENT
AGREEMENT, EXCEPT FOR THE NEW INITIAL TWO-YEAR TERMS AND THE EFFECTIVE DATE OF
THE NEW AGREEMENT.
The material terms of the Current and New Agreements are described under
"Description of the Current and New Agreements" below.
BOARD OF DIRECTORS RECOMMENDATION
On October 10, 2000, the Board of Directors of the Fund, including the
directors who are not "interested persons" (as defined under the 1940 Act) of
Aberdeen or EquitiLink ("Non-Interested Directors"), voted to approve the New
Agreements for the Fund and to recommend their approval by Fund shareholders.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Director's Evaluation" below.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE IN
FAVOR OF THE APPROVAL OF THE NEW AGREEMENTS.
BOARD OF DIRECTOR'S EVALUATION
At a telephonic meeting of the Boards of the Funds (collectively, the
"Boards") held on September 7, 2000, representatives of EquitiLink described
the proposed Transaction to the Boards and the anticipated effect and benefits
for the Funds and their shareholders. The Boards appointed a Due Diligence
Committee ("Committee"), including members of each Fund's Board, to
investigate the Transaction in detail and provide a report to the Boards. The
Committee held telephonic meetings on September 10, and September 26, 2000, at
which information about the Transaction developed in advance of the meeting
and distributed to the Committee was discussed. At the direction of the
Committee, Fund counsel and a Committee member met on two separate occasions
with Aberdeen representatives in the United Kingdom to discuss matters
4
of particular concern to the Committee. Additionally, a Committee member met
with an Aberdeen representative in Sydney, and Mr. Richard Fabricius, the
Aberdeen representative who will be transferred to Sydney, met with Fund
representatives in the United States. Finally, a video conference on October
2, 2000, that included Committee members, Fund counsel and Aberdeen
representatives, provided an opportunity for further discussion of important
issues. Thereafter, the Committee prepared a report concerning its
investigations which was distributed to the full Boards.
At an in-person meeting of the Board held on October 10, 2000, in addition
to the Committee report, the Board was provided with information concerning
the Transaction and the New Agreements and was informed of the standards they
should apply in determining whether to approve the New Agreements. The
additional information provided by the Manager and Adviser to the Board
included a description of the Transaction and a discussion of how the
Transaction would affect the ability of the Manager and Adviser to perform
their duties as set forth in the New Agreements. The Board was also provided
information comparing the fees to be charged under the New Agreements with
those paid by comparable funds.
The Board, including the Non-Interested Directors, considered all of the
information presented at the October 10, 2000 meeting concerning the terms of
the Transaction and the effect the Transaction would likely have on the duties
of the Manager and Adviser to the Fund under the New Agreements.
In the course of these discussions, the Manager and Adviser advised the Non-
Interested Directors that they did not expect that the Transaction would have
a material effect on the operations of the Fund or its shareholders. The
Manager and Adviser also noted that the Transaction did not contemplate any
changes in the operations of the Fund. The Manager and Adviser assured the
Board that they would continue to provide the high quality of service they
have provided in the past. The Adviser and Manager emphasized that the
Transaction, if consummated, would provide them with access to Aberdeen's
expertise in Asian securities and to Aberdeen's international investment
management and operational facilities.
During the course of their deliberations, the Non-Interested Directors
considered the information provided by the Committee and by the Manager and
Adviser. The Board also considered a variety of other factors, including the
effect that the Transaction may have on the ability of the Manager and Adviser
to perform their duties to the Fund under the New Agreements; the nature,
quality and extent of the services furnished by the Manager and Adviser to the
Fund; the investment record of the Manager and Adviser in managing the Fund;
comparative data as to investment performance, advisory fees and other fees,
including expense ratios; possible benefits to the Manager and Adviser and
their affiliates from their services to the Fund; the financial resources of
the Manager and Adviser before and after the Transaction; and the presence of
appropriate incentives to assure that the Manager and Adviser will continue to
furnish high quality services to the Fund and that current investment
management personnel will be retained.
In addition to the foregoing factors, the Non-Interested Directors gave
careful consideration to the likely impact of the Transaction on the
EquitiLink organization. In this regard, the Non-Interested Directors
considered, among other things, the structure of the Transaction, whether
there were appropriate assurances that Fund fees and expenses would not be
increased, directly or indirectly, and the anticipated effects of the
Transaction on EquitiLink's continuing financial strength and on the
effectiveness of the Manager's and Adviser's operations. They considered
evidence regarding Aberdeen's business and performance history and also
information regarding Aberdeen's treatment of acquired entities. The Board
noted that Aberdeen had built its business both internally and through
acquisitions, and was informed that Aberdeen's acquisition of EquitiLink was
consistent with Aberdeen's long-term growth strategy for expansion into
Australia and to broaden its U.S. presence. It considered information bearing
on the seriousness of Aberdeen's continued support for the Fund, noting
consistencies between the investment philosophy of Aberdeen and EquitiLink as
well as Aberdeen's experience with closed-end funds and issues related to that
type of fund.
5
Based on the foregoing, the Non-Interested Directors concluded that the
Transaction should cause no reduction in the quality of services provided to
the Fund and that certain benefits might flow to the Fund. Thus, the directors
of the Fund, including the Non-Interested Directors, approved the New
Agreements.
The Board was advised that EquitiLink intends to rely on Section 15(f) of
the 1940 Act, which provides a non-exclusive safe harbor for an investment
adviser to an investment company or any of the investment adviser's affiliated
persons (as defined under the 1940 Act) to receive any amount or benefit in
connection with a change in control of the investment adviser so long as two
conditions are met. First, for a period of three years after the transaction,
at least 75% of the board members of the investment company must not be
"interested persons" of the investment company's investment adviser or its
predecessor adviser. On or prior to the consummation of the Transaction, the
Board would be in compliance with this provision of Section 15(f). Second, an
"unfair burden" must not be imposed upon the investment company as a result of
such transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the transaction
whereby the investment adviser, or any interested person of any such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its shareholders (other than fees for bona fide
investment advisory or other services) or from any person in connection with
the purchase or sale of securities or other property to, from or on behalf of
the investment company (other than bona fide ordinary compensation as
principal underwriter for such investment company). No such compensation
agreements are contemplated in connection with the Transaction.
EquitiLink and Aberdeen have undertaken to pay the costs of preparing and
distributing proxy materials to, and of holding the Meeting of, the Fund's
shareholders as well as other fees and expenses in connection with the
Transaction, including the fees and expenses of legal counsel to the Fund.
DESCRIPTION OF THE CURRENT AND NEW AGREEMENTS
The Investment Advisory and Management Agreements of the Fund were last
submitted to shareholders at a meeting held March 15, 1993. At that meeting
shareholders were asked to initially approve the Investment Advisory and the
Management Agreements.
The following discussion is qualified in its entirety by reference to the
forms of the New Agreements provided in Exhibits A and B.
The New Agreements for the Fund are substantially the same as the Current
Agreements for the Fund, except for the new initial two-year terms and the
effective dates of the New Agreements.
The Management Agreement
The Management Agreement provides that the Manager will manage the Fund's
investments and make investment decisions for the Fund in accordance with the
Fund's investment objective, policies and limitations. The Manager will also
select brokers and dealers to effect the Fund's portfolio transactions. The
Management Agreement authorizes the Manager, at its own expense, to retain
others to assist in performing its obligations, subject to compliance with
applicable legal requirements.
The Manager agrees to pay the salaries and expenses of all of its personnel
and all expenses incurred by it arising out of its duties under the Management
Agreement. The Fund bears its own expenses, as specified in the Agreement. In
addition, certain expenses incurred by the Manager's employees who serve as
officers and directors of the Fund may be reimbursed by the Fund under the
Fund's policy governing reimbursement of Fund-related expenses. In return for
the services provided
6
by the Manager to the Fund, the Fund pays the Manager fees at the following
annual rates, computed on the basis of the Fund's net asset value at the end
of each week and payable at the first day of each calendar month: 0.65% of
average weekly net assets related to both common and preferred shares up to
$200 million, 0.60% of such net assets between $200 million and $500 million,
and 0.55% of such net assets in excess of $500 million.
The Management Agreement has an initial term of two years, with continuation
thereafter subject to yearly approval by the Board or Fund shareholders, as
well as by the Non-Interested Directors. The Management Agreement may be
terminated at any time, without payment of penalty, on 60 days' written notice
by the Board or by vote of holders of a majority of the outstanding voting
securities of the Fund, or by the Manager upon 90 days' written notice. The
Agreement automatically terminates in the event of its assignment (as defined
in the 1940 Act).
The Management Agreement provides that the Manager is not liable for any
error of judgment or any loss suffered by the Fund, in connection with matters
to which the Agreement relates, except a loss resulting from breach of
fiduciary duty with respect to the receipt of compensation (subject to
applicable legal limits) or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Manager in the performance of its
duties or from reckless disregard by the Manager of its obligations and duties
under the Management Agreement.
The Management Agreement provides that the Manager and its affiliates may
provide similar services to other funds and clients and may engage in other
activities. It also provides that investment opportunities shall be allocated
among the Fund and other clients in a fair and equitable manner.
The Management Agreement for the Fund provides that the Fund may, on 60
days' notice, limit the scope of the Manager's engagement to managing only
investments denominated in stipulated currencies, and that the Manager's fees
under the Management Agreement would be with respect to only the assets under
its management.
During the fiscal year ended October 31, 1999, the fees paid to the Manager
by the Fund under its Current Management Agreement amounted to US$ 972,558.
The Investment Advisory Agreement
The Investment Advisory Agreement provides that, to the extent requested by
the Manager, the Adviser will make recommendations as to the overall structure
of the Fund's portfolio, including asset allocation and general investment
strategy in light of the Fund's investment objective. For this portion of the
Adviser's services, the Manager pays the Adviser fees at an annual rate of
0.15% of the Fund's net assets related to both common and preferred shares at
the end of each week and payable on the first business day of each calendar
month. The Investment Advisory Agreement also provides that, to the extent
requested by the Manager, the Adviser will make recommendations regarding
specific portfolio securities to be purchased, retained or sold by the Fund,
and will provide related research and statistical data. For these services,
the Manager pays the Adviser's fees at an annual rate of up to 0.10% of the
Fund's average net assets related to both common and preferred shares at the
end of each week and payable on the first business day of each calendar month.
These fees may be reduced to the extent the Manager pays other entities for
such services.
The Investment Advisory Agreement also provides that the Adviser agrees to
pay the salaries and expenses of all of its personnel and all expenses
incurred by it arising out of its duties under the agreement. However, certain
expenses incurred
7
by the Adviser's employees who serve as officers and directors of the Fund may
be reimbursed by that Fund under the Fund's policy governing reimbursement of
Fund-related expenses.
During the fiscal year ended October 31, 1999, the fees paid to the Adviser
by the Manager in respect to the Fund under its Current Investment Advisory
Agreement amounted to US$ 360,358.
The provisions of the Investment Advisory Agreement regarding liability,
non-exclusivity of services, allocation of investment opportunities, duration
and termination are comparable to those of the Management Agreement.
EquitiLink has indicated to the Fund that it intends to ensure that there
will be no lapse in the provision of management and investment advisory
services to the Fund and that there will be continuity in the investment
philosophy used in managing the Fund. In the event that shareholders do not
approve the New Agreements, EquitiLink intends to have one or more EquitiLink
entities, that are not being transferred to Aberdeen and that are controlled
by the same persons who currently control the Manager and Adviser, assume the
responsibilities of manager and investment adviser. Any such action would be
subject to review and approval by the Fund's Board of Directors.
INVESTMENT MANAGER AND ADVISER
The Manager, P.O. Box 578, 17 Bond Street, St. Helier, Jersey JE45X8,
Channel Islands, UK, a Jersey, Channel Islands corporation, was established in
October 1985. The Adviser, 190 George Street, Sydney, NSW 2000, Australia, a
New South Wales, Australia corporation, was established in April 1981. The
Manager and Adviser provide investment advice to the Fund and to certain other
funds that are both registered and are not registered in the United States.
Laurence Freedman and Brian Sherman, 190 George Street, Sydney, NSW 2000,
Australia, are principally employed as Joint Managing Directors of the
Adviser, and as directors of the Manager; they are also directors and officers
of the Fund. Each of them will resign as Joint Managing Directors of the
Adviser and as directors of the Manager, but each is expected to continue his
positions as officer and director of the Fund. In addition to Messrs. Freedman
and Sherman, the directors of the Adviser and their principal occupations are:
Ouma Sananikone, Chief Executive Officer of the Adviser; Barry Sechos, General
Counsel of the Adviser; and Vincent Parrot, Chief Investment Officer of the
Adviser. The address of all the directors of the Adviser is 190 George Street,
Sydney, NSW 2000, Australia.
Mr. David Manor, P.O. Box 578, 17 Bond Street, St. Helier, Jersey, Channel
Islands, JE45X8, is principally employed as Managing Director of the Manager.
In addition to Mr. Manor, the directors of the Manager and their principal
occupations are: Richard Strickler, Managing Director of EquitiLink USA, Inc.,
45 Broadway, 31st Floor, New York, NY 10006; Eugene Wolfson, stock broker, One
Exchange Place, Suite 517, Jersey City NJ 07302; Henry Lipworth, attorney,
Flat 1, 26 Belsize, London, NW3 5AB, England, UK; and Laurence Freedman and
Brian Sherman, Joint Managing Directors of the Adviser, 190 George Street,
Sydney, NSW 2000, Australia.
The ultimate beneficial owners of approximately 85% of EquitiLink are
interests controlled by Laurence Freedman and Brian Sherman; associates of
Laurence Freedman and Brian Sherman hold the remaining 15%.
ADMINISTRATOR
The Administrator is Princeton Administrators LLP, 500 College Road East,
Princeton, NJ 08540, (800) 543-6217.
8
REQUIRED VOTE
Approval of the Proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of the Fund, as defined herein on page two. THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE PROPOSAL.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and Proxy Statement and all other costs incurred in connection with the
solicitation of proxies, including any additional solicitation made by letter,
telephone or telegraph, will be paid by EquitiLink and Aberdeen. In addition
to solicitation by mailing of this proxy statement, Innisfree M&A Incorporated
("Innisfree") is engaged by the Adviser and the Manager to assist in the
solicitation of proxies. The anticipated cost of Innisfree's services is
estimated to be approximately $50,000. This cost will be paid by EquitiLink
and Aberdeen. As the meeting date approaches, certain shareholders of the Fund
may receive a phone call from an Innisfree representative if the Fund has not
yet received their vote. Innisfree may obtain authorization from shareholders
by telephonic or electronically transmitted instructions to execute proxies on
their behalf. 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.
If a shareholder wishes to participate in the Meeting, but does not wish to
give his or her proxy, the 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,
or electronically 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.
BENEFICIAL OWNERSHIP
To the best of the Fund's knowledge, based on filings made with the
Securities and Exchange Commission, the following shareholders are beneficial
holders of 5% or more of the Fund's outstanding voting securities, as of
September 30, 2000:
The First Commonwealth Fund, Inc.
Name and Address of Beneficial Number of Shares Percentage of Shares
Owner Beneficially Owned Beneficially Owned
------------------------------ ------------------ --------------------
First Union Capital Management 1,319,395 5.22%
Group
One First Union Center
Charlotte, NC 28288-0137
9
The table below sets forth the number of shares of the Fund owned directly
or beneficially by the directors and executive officers of the Fund as of
September 30, 2000 and the percentage of the Fund that this amount represents.
(Directors who do not own any shares have been omitted from the table.)
The First Commonwealth Fund, Inc.
Shares of Common Stock
Beneficially Owned and
Name of Directors and % of Total Outstanding
Executive Officers on September 30, 2000(1)
--------------------- ------------------------
David Lindsay Elsum, A.M. + 650
9 May Grove
South Yarra, Victoria 3141
Australia
Laurence S. Freedman * 417,534
Level 3
190 George Street
Sydney, N.S.W. 2000
Australia
Michael Gleeson-White, A.O. 1,000
9A Wellington Street
Woollahra, N.S.W. 2025
Australia
Peter D. Sacks + ++ 250
Toron Capital Markets Inc.
445 King Street West
4th Floor
Toronto, Ontario
M5V 1K4 Canada
E. Duff Scott ++ 5,000
70 University Avenue
Toronto, Ontario M4N 3J6
Canada
Brian M. Sherman * 417,534
Level 3
190 George Street
Sydney, N.S.W. 2000
Australia
Warren C. Smith 6,800
1002 Sherbrooke Street West
Suite 1600
Montreal, Quebec
Canada H3A 3L6
footnotes on next page
10
- -------------------
(1) As controlling shareholders of the Manager and EquitiLink Limited, Messrs.
Freedman and Sherman share voting and investment power for 417,534 shares
of the Fund's common stock owned by the Manager, EquitiLink Limited and
EquitiLink USA, Inc. With the exception of those 417,534 shares, which
constituted approximately 4.50% of the outstanding shares of common stock
of the Fund as of September 30, 2000, all shares listed in this table were
owned with sole voting and investment power. In the aggregate, all of the
shares in the table represented approximately 4.60% of the total shares of
common stock outstanding as of September 30, 2000. Excluding the shares
owned by Messrs. Freedman and Sherman, the directors of the Fund
representing the common stock, as a group, owned approximately 0.10% of
the total shares of common stock outstanding as of September 30, 2000. No
other director or executive officer owns 1% or greater of the outstanding
shares of the Fund. No director or executive officer of the Fund owns any
preferred stock. The information provided as of September 30, 2000 is
based on statements furnished to the Fund by the directors and officers.
* 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. Messrs.
Freedman and Sherman are deemed to be interested persons because of their
affiliation with the Manager and Adviser, or because they are officers of
the Fund or both.
+ A member of the Contract Review Committee.
++ A member of the Audit Committee.
Proposals of Shareholders
The deadline for the shareholders of the Fund for submitting proposals to be
included with the Fund's proxy materials for the 2001 Annual Meeting of
Shareholders of the Fund was October 28, 2000. Shareholders wishing to present
proposals at the 2001 Annual Meeting of Shareholders of the Fund which would
not be included in the Fund's proxy materials should send written notice of
such proposals to the Secretary of the Fund by December 22, 2000, but no
earlier than November 22, 2000, in the form prescribed in the Fund's By-Laws.
PLEASE TAKE A FEW MOMENTS TO COMPLETE YOUR PROXY PROMPTLY. YOU MAY DO SO BY
MAILING THE PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED.
By order of the Board of Directors,
Roy M. Randall, Secretary
11
EXHIBIT A
THE FIRST COMMONWEALTH FUND, INC.
MANAGEMENT AGREEMENT
Agreement executed this [ ] day of [ ], between The First Commonwealth
Fund, Inc. (the "Fund"), a Maryland corporation registered under the
Investment Company Act of 1940 (the "1940 Act"), and EquitiLink International
Management Limited, a Jersey, Channel Islands corporation (the "Investment
Manager").
Whereas, the Fund is a closed-end management investment company; and
Whereas, the Fund engages in the business of investing its assets in the
manner and in accordance with its stated current investment objective and
restrictions;
Now Therefore, in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1.Obligations.
1.1 The Investment Manager will manage, in accordance with the Fund's stated
investment objective, policies and limitations and subject to the supervision
of the Fund's Board of Directors, the Fund's investments. The Investment
Manager will make investment decisions on behalf of the Fund including the
selection of and placing of orders with brokers and dealers to execute
portfolio transactions on behalf of the Fund. The Investment Manager shall
give the Fund the benefit of the Investment Manager's best judgment and
efforts in rendering services under this Agreement.
1.2 The Fund will pay the Investment Manager a fee at the annual rate of
0.65% of the Fund's average weekly net assets applicable to shares of common
stock and shares of preferred stock up to $200 million, 0.60% of such amounts
between $200 million and $500 million and 0.55% of such assets in excess of
$500 million, computed based upon net asset value applicable to shares of
common stock and shares of preferred stock determined weekly and payable on
the first business day of each calendar month it being understood that the
portion of the fee which is equal to the percentage of the Fund's net assets,
measured at the end of each week, held in securities (or cash) denominated in
the currencies of Australia and New Zealand, Canada, and the United Kingdom
shall be paid to the Investment Manager in, respectively, the currencies of
Australia, Canada and the United Kingdom. For the purpose of determining the
fees payable to the Investment Manager hereunder, the value of the Fund's net
assets shall be computed initially at the times and in the manner specified in
the Fund's registration statement on Form N-2, as such times and manner may be
amended from time to time by action of the Fund's Board.
1.3 In rendering the services required under this Agreement, the Investment
Manager may, at its expense, employ, consult or associate with itself such
person or persons as it believes necessary to assist it in carrying out its
obligations under this Agreement. However, the Investment Manager may not
retain any person or company that would be an "investment adviser," as that
term is defined in the 1940 Act, to the Fund unless (i) the Fund is a party to
the contract with such person or company and (ii) such contract is approved by
a majority of the Fund's Board of Directors and a majority of Directors who
are not parties to any agreement or contract with such company and who are not
"interested persons," as defined in the 1940 Act, of the Fund, the Investment
Manager, or any such person or company retained by the Investment Manager, and
is approved by the vote of a majority of the outstanding voting securities of
the Fund to the extent required by the 1940 Act.
A-1
2.Expenses. The Investment Manager shall bear all expenses of its employees,
except as provided in the following sentence, and overhead incurred in
connection with its duties under this Agreement and shall pay all salaries and
fees of the Fund's Directors and officers who are interested persons (as
defined in the 1940 Act) of the Investment Manager. The Fund will bear all of
its own expenses, including: expenses of organizing the Fund; fees of the
Fund's Directors who are not interested persons (as defined in the 1940 Act)
of any other party; out-of-pocket expenses for all Officers and Directors of
the Fund, including expenses incurred by the Manager's employees, who serve as
Directors and officers of the Fund, which may be reimbursed by the Fund under
the Fund's policy governing reimbursement of Fund-related expenses; and other
expenses incurred by the Fund in connection with meetings of Directors and
shareholders; interest expense; taxes and governmental fees including any
original issue taxes or transfer taxes applicable to the sale or delivery of
shares or certificates therefor; brokerage commissions and other expenses
incurred in acquiring or disposing of the Fund's portfolio securities;
expenses in connection with the issuance, offering, distribution, sale or
underwriting of securities issued by the Fund; expenses of registering and
qualifying the Fund's shares for sale with the Securities and Exchange
Commission and in various states and foreign jurisdictions; auditing,
accounting, insurance and legal costs; custodian, dividend disbursing and
transfer agent expenses; and the expenses of shareholders' meetings and of the
preparation and distribution of proxies and reports to shareholders.
3.Liability. The Investment Manager shall not be liable for any error of
judgment or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of,
or from reckless disregard by it of its obligations and duties under, this
Agreement.
4.Services Not Exclusive. It is understood that the services of the
Investment Manager are not deemed to be exclusive, and nothing in this
Agreement shall prevent the Investment Manager or any affiliate, from
providing similar services to other investment companies and other clients
(whether or not their investment objectives and policies are similar to those
of the Fund) or from engaging in other activities. When other clients of the
Investment Manager desire to purchase or sell a security at the same time such
security is purchased or sold for the Fund, such purchases and sales will be
allocated among the Investment Manager's clients, including the Fund, in a
manner that is fair and equitable in the judgment of the Investment Manager in
the exercise of its fiduciary obligations to the Fund and to such other
clients.
5.Scope of Engagement. The Investment Manager hereby agrees that the Fund,
may, at any time, upon at least 60 days' notice, advise the Investment Manager
that it wishes to limit the scope of the Investment Manager's engagement
hereunder to that of managing the Fund's investments solely with respect to
securities denominated in certain stipulated currencies, in which case the fee
otherwise payable to the Investment Manager as provided in Paragraph 1.2
hereof shall be reduced to reflect the proportion of the Fund's aggregate net
assets measured at the end of each week which are denominated in the
stipulated currencies.
6.Duration and Termination. This Agreement shall become effective upon
shareholder approval thereof as required under the 1940 Act and shall continue
in effect for two (2) years from the date of its execution. If not sooner
terminated, this Agreement shall continue in effect with respect to the Fund
for successive periods of twelve months thereafter, provided that each such
continuance shall be specifically approved annually by the vote of a majority
of the Fund's Board of Directors who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval and
either (a) the vote of a majority of the outstanding voting securities of the
Fund, or (b) the vote of a majority of the Fund's entire Board of Directors.
Notwithstanding the foregoing, this Agreement may be terminated with respect
to the Fund at any time, without the payment
A-2
of any penalty, by a vote of a majority of the Fund's Board of Directors or a
majority of the outstanding voting securities of the Fund upon at least sixty
(60) days' written notice to the Investment Manager or by the Investment
Manager upon at least ninety (90) days' written notice to the Fund. This
Agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act).
7.Miscellaneous.
7.1 This Agreement shall be construed in accordance with the laws of the
State of New York, provided that nothing herein shall be construed as being
inconsistent with the 1940 Act and any rules, regulations and orders
thereunder.
7.2 The captions in this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect.
7.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to that extent, the provisions of this
Agreement shall be deemed to be severable.
7.4 Nothing herein shall be construed as constituting the Investment Manager
an agent of the Fund.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
The First Commonwealth Fund, Inc.
By: _____________________________________
Title: President
EquitiLink International Management
Limited
By: _____________________________________
Title: Director
A-3
EXHIBIT B
THE FIRST COMMONWEALTH FUND, INC.
INVESTMENT ADVISORY AGREEMENT
Agreement executed this [ ] day of [ ] among The First Commonwealth
Fund, Inc. (the "Fund") a Maryland corporation registered under the Investment
Company Act of 1940 (the "1940 Act"), and EquitiLink International Management
Limited, a Jersey, Channel Islands corporation (the "Investment Manager") and
EquitiLink Australia Limited, a New South Wales, Australia corporation (the
"Investment Adviser").
Whereas, the Fund is a closed-end management investment company;
Whereas, the Fund engages in the business of investing and reinvesting its
assets in the manner and in accordance with its stated investment objectives
and restrictions;
Whereas, the Fund has entered into a management agreement with the
Investment Manager dated [ ] (the "Management Agreement"), pursuant to
which the Investment Manager will manage the Fund's investments and will make
investment decisions on behalf of the Fund for which the Investment Manager
will receive a monthly fee from the Fund as specified in the Management
Agreement;
Whereas, in connection with rendering the services required under the
Management Agreement, the Investment Manager is permitted to retain, at its
expense and in the manner set forth in the Management Agreement, investment
advisers and others to assist it in carrying out its obligations to the Fund
under the Management Agreement;
Whereas, the Investment Manager wishes to retain the Investment Adviser to
assist it in carrying out certain of its obligations to the Fund under the
Management Agreement, and the Investment Adviser is willing to furnish such
assistance to the Investment Manager in connection with the services specified
below with regard to the Fund; and
Whereas, the Fund hereby appoints the Investment Adviser to provide the
investment advisory services specified below with regard to the Fund, and the
Investment Adviser hereby accepts such appointment;
Now, Therefore, in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1.Investment Adviser.
1.1 To the extent requested by the Investment Manager, the Investment
Adviser will make recommendations to the Investment Manager as to the-overall
structure of the Fund's portfolio, including asset allocation advice and
general advice on investment strategy relating to the Fund's overall
investment objectives. The Investment Adviser shall give the Investment
Manager (and the Fund) the benefit of the Investment Adviser's best judgment
and efforts in rendering services under this Agreement.
1.2 For the services rendered to the Investment Manager under Section 1.1
hereof, the Investment Manager will pay the Investment Adviser a fee computed
at the annual rate of 0.15% of the Fund's average weekly net assets, computed
based upon net asset value applicable to shares of common stock and shares of
preferred stock determined weekly and payable on the first business day of
each calendar month.
1.3 To the extent requested by the Investment Manager, the Investment
Adviser will make recommendations to the Investment Manager as to specific
portfolio securities to be purchased, retained or sold by the Fund and will
provide or
B-1
obtain such research and statistical data as may be necessary in connection
therewith. The Investment Adviser shall give the Investment Manager (and the
Fund) the benefit of the Investment Adviser's best judgment and efforts in
rendering services under this Agreement.
1.4 For the services rendered to the Investment Manager under Section 1.3
hereof, the Investment Manager will pay the Investment Adviser a fee computed
at the annual rate of up to 0.10% of the Fund's average weekly net assets
computed based upon net asset value applicable to shares of common stock and
shares of preferred stock determined weekly and payable on the first business
day of each calendar month; it being understood that any such fee shall be
reduced by the amount, if any, that the Investment Manager may pay other
entities for rendering any of the services contemplated by Section 1.3 hereof.
1.5 For the purpose of determining the fees payable to the Investment
Adviser hereunder, the value of the Fund's net assets shall be computed
initially at the times and in the manner specified in the Fund's Registration
Statement an Form N-2, as such times and manner may be amended from time to
time by action of the Fund's Board.
2.Expenses. The Investment Adviser shall bear all expenses of its respective
employees, except certain expenses incurred by the Investment Adviser's
employees who serve as officers and directors of the Fund which are reimbursed
by the Fund under the Fund's policy governing reimbursement of Fund-related
expenses. The Investment Adviser shall bear all overhead incurred in
connection with its duties under this Agreement and shall pay all salaries and
fees of the Fund's directors and officers who are interested persons (as
defined in the 1940 Act) of the Investment Adviser but who are not interested
persons of the Investment Manager.
3.Liability. Neither the Investment Manager nor the Investment Adviser shall
be liable for any error of judgment or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the 1940 Act) or
a loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Investment Manager or the Investment Adviser, as appropriate,
in the performance of, or from reckless disregard by such party of such
party's obligations and duties under, this Agreement.
4.Services Not Exclusive. It is understood that the services of the
Investment Manager and the Investment Adviser are not deemed to be exclusive,
and nothing in this Agreement shall prevent the Investment Manager or the
Investment Adviser, or any affiliate of either of them, from providing similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities. When other clients of the Investment Manager or
the Investment Adviser desire to purchase or sell a security at the same time
such security is purchased or sold for the Fund, such purchases and sales will
be allocated among the clients of each in a manner that is fair and equitable
in the judgment of the Investment Manager and the Investment Adviser in the
exercise of their fiduciary obligations to the Fund and to such other clients.
5.Duration and Termination. This Agreement is effective upon shareholder
approval thereof as required under the 1940 Act and shall continue in effect
for two (2) years from the date of its execution. If not sooner terminated,
this Agreement shall continue in effect with respect to the Fund for
successive periods of twelve months thereafter, provided that each such
continuance shall be specifically approved annually by the vote of a majority
of the Fund's Board of Directors who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval and
either (a) the vote of a majority of the outstanding voting securities of the
Fund, or (b) the vote of a majority of the Fund's entire Board of Directors.
Notwithstanding the foregoing, this Agreement may be terminated with respect
to the Fund at any time, without the payment of any penalty, by a vote of a
majority of the Fund's Board of Directors or a majority of the outstanding
voting securities of the Fund upon at least sixty
B-2
(60) days' written notice to the Investment Manager and the Investment
Adviser, or by either the Manager or the Investment Adviser upon at least
ninety (90) days' written notice to the Fund and the other party but any such
termination shall not affect continuance of this Agreement as to the remaining
parties. This Agreement shall automatically terminate as to any party in the
event of its assignment (as defined in the 1940 Act).
6.Miscellaneous.
6.1 This Agreement shall be construed in accordance with the laws of the
State of New York, provided that nothing herein shall be construed as being
inconsistent with the 1940 Act and any rules, regulations and orders
thereunder.
6.2 The captions in this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect.
6.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to that extent, the provisions of this
Agreement shall be deemed to be severable.
6.4 Nothing herein shall be construed as constituting any party an agent of
the Fund or of any other party.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
The First Commonwealth Fund. Inc.
By: _____________________________________
Title: President
EquitiLink International Management
Limited
By: _____________________________________
Title: Director
EquitiLink Australia Limited
By: _____________________________________
Title: Director
B-3
IMPORTANT DATES:
RECORD DATE: OCTOBER 26, 2000
MEETING DATE: NOVEMBER 30, 2000 AT 10:00 a.m. Eastern Time
Hilton Newark Gateway
Raymond Boulevard
Newark, New Jersey
FOR MORE INFORMATION, PLEASE CONTACT:
Investor Relations:
EquitiLink USA, Inc.
(800) 522-5465
(212) 968-8800
InvestorRelations@equitilinkny.com
45 Broadway, 31st Floor
New York, NY 10006
Proxy Solicitor:
Innisfree M&A Incorporated
(877) 750-9499
THE FIRST COMMONWEALTH FUND, INC.
Your vote is important. Please take a moment now to vote your shares of The
First Commonwealth Fund, Inc. for the upcoming Special Meeting of Stockholders.
YOU CAN VOTE TODAY IN ONE OF THREE WAYS:
1. Vote by Telephone: This method of voting is available for residents of the
U.S. and Canada. On a touch-tone telephone, call TOLL FREE 1-888-216-1353,
24 hours a day, 7 days a week. You will be asked to enter the Control
Number below followed by the pound sign (#). Then, if you wish to vote as
recommended by the Board of Directors, simply press 1. If you do not wish
to vote as the Board recommends, respond to the few simple prompts.
OR
2. Vote by Internet: Visit the Internet voting Website at
http://www.proxyvotenow.com/aus and respond to a few simple prompts after
entering the Control Number below.
--------------------------------
Your Control Number is:
For Telephone of Internet Voting
--------------------------------
. Your Telephone or Internet vote authorizes the named Proxies to vote your
shares in the same manner as if you had marked, signed and returned your
proxy card.
. You may vote by Telephone or Internet anytime until 5:00 p.m. Eastern time,
November 29, 2000.
OR
3. Vote by Mail: If you do not have access to a touch-tone telephone or to the
Internet, complete and return the proxy card below in the envelope
provided.
. Do not return your Proxy Card if you are voting by Telephone or Internet.
PROXY THE FIRST COMMONWEALTH FUND, INC. PROXY
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Shareholders -- November 30, 2000
The undersigned hereby appoints Laurence S. Freedman, William J. Potter, and
Brian M. Sherman, 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 and the
Auction Market Preferred Stock Series W-7 of The First Commonwealth Fund, Inc.
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of The First Commonwealth Fund, Inc. to be held at Hilton Newark Gateway,
Raymond Boulevard, Newark, New Jersey on November 30, 2000 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------
[X] PLEASE MARK VOTE
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 the Proposal.
================================================================================
THE FIRST COMMONWEALTH FUND, INC.
================================================================================
COMMON STOCK AND THE AUCTION MARKET PREFERRED STOCK SERIES W-7
Mark box at right if address change or comment has been noted
on the reverse side of this card. [ ]
THE BOARD OF DIRECTORS RECOMMENDS
YOU VOTE FOR THE PROPOSAL.
1. To approve a new management agreement with EquitiLink International
Management Limited and a new investment advisory agreement with EquitiLink
Australia Limited.
For Against Abstain
[ ] [ ] [ ]
Please be sure to sign and date this Voting Instruction Card.
- -------------------------------------------------------------
Date
- -------------------------------------------------------------
Shareholder sign here
- -------------------------------------------------------------
Co-owner sign here
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.