0000894189-01-500477.txt : 20011019
0000894189-01-500477.hdr.sgml : 20011019
ACCESSION NUMBER: 0000894189-01-500477
CONFORMED SUBMISSION TYPE: PRE 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011107
FILED AS OF DATE: 20011011
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MEXICO EQUITY & INCOME FUND INC
CENTRAL INDEX KEY: 0000863900
STANDARD INDUSTRIAL CLASSIFICATION: []
IRS NUMBER: 133576061
STATE OF INCORPORATION: MD
FISCAL YEAR END: 0731
FILING VALUES:
FORM TYPE: PRE 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 811-06111
FILM NUMBER: 1757274
BUSINESS ADDRESS:
STREET 1: WORLD FINANCIAL CTR
STREET 2: 200 LIBERTY ST
CITY: NEW YORK
STATE: NY
ZIP: 10281
BUSINESS PHONE: 2126675000
MAIL ADDRESS:
STREET 1: OPPENHEIMER TOWER
STREET 2: 200 LIBERTY STREET, 38TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10281
FORMER COMPANY:
FORMER CONFORMED NAME: MEXICO ADVANTAGE FUND INC
DATE OF NAME CHANGE: 19900805
FORMER COMPANY:
FORMER CONFORMED NAME: MEXICO CONVERTIBLE ADVANTAGE FUND INC
DATE OF NAME CHANGE: 19900807
PRE 14A
1
mexicoproxy.txt
As filed with the Securities and Exchange
Commission on October 11, 2001
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:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Soliciting Material Pursuant to Rule 14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Additional Materials
THE MEXICO EQUITY AND INCOME FUND, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box): /x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (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:
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DRAFT FOR DISCUSSION PURPOSES ONLY
THE MEXICO EQUITY AND INCOME FUND, INC.
615 E. Michigan St., 2nd Floor
Milwaukee, Wisconsin 53202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On November 27, 2001
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of The Mexico Equity and Income Fund, Inc. (the "Fund"), a Maryland
corporation, will be held at _______________________________, New York, New York
______ on November 27, 2001, at ______ p.m., for the following purposes:
1. To elect one Class I Director to hold office until the year 2002
Annual Meeting, two Class II Directors to hold office until the year
2003 Annual Meeting, and one Class III Director to hold office until
the year 2004 Annual Meeting (Proposal 1);
2. To approve an amendment to the investment advisory agreement between
Acci Worldwide, S.A. de C.V. (the "Investment Adviser" or "Acci
Worldwide") and the Fund which would increase the annual fee paid to
the Investment Adviser by the Fund (Proposal 2);
3. To consider and act upon a proposal to pursue the creation and
registration of put warrants which are designed to afford stockholders
an opportunity to realize net asset value for their shares (Proposal
3); and
4. To consider and vote upon such other matters as may properly come
before said Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 1, 2001
as the record date for the determination of stockholders entitled to notice of,
and to vote at this Meeting or any adjournment thereof. The stock transfer books
will not be closed.
Copies of the Fund's most recent annual report and semi-annual report may
be ordered free of charge to any stockholder by writing to the Fund c/o Firstar
Mutual Fund Services, LLC, 615 E. Michigan St., 2nd Floor, Milwaukee, Wisconsin
53202, or by telephone at (800) 637-7549.
By Order of the Board of Directors,
_______________________________
Dated: ____________, 2001 Secretary
Unless you expect to be present at the meeting, please fill in, date, sign and
mail the enclosed proxy card in the enclosed reply envelope. Your prompt
response will assure a quorum at the Meeting.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION
Corporate Accounts Valid Signature
----------------
(1) ABC Corp..................................ABC Corp. (by John Doe, Treasurer)
(2) ABC Corp..................................John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer...................John Doe
(4) ABC Corp. Profit Sharing Plan.............John Doe, Trustee
Trust Accounts
(1) ABC Trust.................................Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d/ 12/28/78...........................Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA.............John B. Smith
(2) John B. Smith.............................John B. Smith, Jr., Executor
THE MEXICO EQUITY AND INCOME FUND, INC.
615 E. Michigan St., 2nd Floor
Milwaukee, Wisconsin 53202
-------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
to be held on November 27, 2001
-------------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Mexico Equity and Income Fund, Inc.
(the "Fund") for use at the Annual Meeting of Stockholders (the "Meeting") to be
held at ________________________, ____________, ___ Floor, New York, New York
________ on November 27, 2001, at _______ p.m., New York time, and at any and
all adjournments thereof. A form of proxy is enclosed herewith. This Proxy
Statement and the accompanying form of proxy are being first mailed to
stockholders on or about November 2, 2001.
Any stockholder who executes and delivers a proxy may revoke it by written
communication to the Secretary of the Fund at any time prior to its use or by
voting in person at the Meeting. Unrevoked proxies will be voted in accordance
with the specifications thereon and, unless specified to the contrary, will be
voted FOR the election of the nominees for Director, FOR the approval of an
amendment to the investment advisory agreement between Acci Worldwide, S.A. de
C.V. (the "Investment Adviser" or "Acci Worldwide") and the Fund, and FOR a
proposal to pursue the creation and registration of put warrants which are
designed to afford stockholders an opportunity to promptly realize net asset
value ("NAV") for their shares.
In general, abstentions and broker non-votes (reflected by signed but
unvoted proxies), as defined below, count for purposes of obtaining a quorum but
do not count as votes cast with respect to any proposal where the broker does
not have discretion. With respect to a proposal requiring the affirmative vote
of a majority of the Fund's outstanding shares of common stock, the effect of
abstentions and broker non-votes is the same as a vote against such proposal.
Otherwise, abstentions and broker non-votes have no effect on the outcome of a
proposal. Broker non-votes occur when shares held in the name of the broker or
nominee for whom an executed proxy is received by the Fund, but are not voted on
a proposal because voting instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power.
In the event that a quorum is not present at the Meeting, the persons named
as proxies may propose one or more adjournments of the Meeting to a date not
more than one hundred twenty (120) days after the original record date to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote FOR or AGAINST any such proposal in their discretion.
Under the By-laws of the Fund, a quorum is constituted by the presence in person
or by proxy of the holders of record of a majority of the outstanding shares of
common stock of the Fund entitled to vote at the Meeting.
The cost of soliciting the proxies will be borne by the Fund. Proxy
solicitations will be made primarily by mail, but solicitations may also be made
by telephone, telegraph or personal interviews conducted by officers or
employees of the Fund or Firstar Mutual Fund Services, LLC, the administrator to
the Fund (the "Administrator").
The Fund will, upon request, bear the reasonable expenses of brokers, banks
and their nominees who are holders of record of the Fund's common stock on the
record date, incurred in mailing copies of this Notice of Meeting and Proxy
Statement and the enclosed form of proxy to the beneficial owners of the Fund's
common stock.
Only holders of issued and outstanding shares of the Fund's common stock of
record at the close of business on November 1, 2001 are entitled to notice of,
and to vote at, the Meeting. Each such holder is entitled to one vote per share
of common stock so held. The number of shares of common stock outstanding on
November 1, 2001 was 8,595,573. The Fund is a closed-end, management investment
company.
Copies of the Fund's most recent annual report and semi-annual report may
be ordered free of charge to any stockholder by writing to the Fund c/o Firstar
Mutual Fund Services, LLC, 615 E. Michigan St., 2nd Floor, Milwaukee, Wisconsin
53202, or by telephone at (800) 637-7549. This report is not to be regarded as
proxy-soliciting material.
This Proxy Statement is first being mailed to stockholders on or about
November 2, 2001.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Fund's Articles of Incorporation, the terms of the
Fund's Board of Directors are staggered. The Board of Directors is divided into
three classes: Class I, Class II and Class III, each class having a term of
three years. Each year the term of office of one Class expires. The effect of
these staggered terms is to limit the ability of other entities or persons to
acquire control of the Fund by delaying the replacement of a majority of the
Board of Directors.
At the Meeting, stockholders will be asked to elect one Class I Director to
hold office until the year 2002 Annual Meeting or thereafter until his successor
is duly elected and qualified, two Class II Directors to hold office until the
year 2003 Annual Meeting or thereafter until each of their respective successors
are duly elected and qualified, and one Class III Director to hold office until
the year 2004 Annual Meeting or thereafter until his successor is duly elected
and qualified. In the event that any of the nominees should become unavailable
for election for any presently unforeseen reason, the persons named in the form
of proxy will vote for any nominee who shall be designated by the present Board
of Directors. Directors shall be elected by a plurality of the shares voting at
the Meeting.
On March 16, 2001, Alan H. Rappaport, a Director since 1990, Carroll W.
Brewster, a Director since 1991, and Sol Gittleman, a Director since 1990,
resigned as Directors of the Fund. As a result, at the April 3, 2001 Board
Meeting, the sole remaining Director, Phillip Goldstein, appointed an Advisory
Board (the "Advisory Board") consisting of Gerald Hellerman, Rajeev Das and
Andrew Dakos to furnish advisory services to the sole Director of the Fund. At a
special meeting of the Board of Directors held on October 15, 2001, Mr.
Goldstein appointed Mr. Glenn Goodstein as a Class I Director, Messrs. Das and
Dakos as Class II Directors, and Mr. Hellerman as a Class III Director.
At the Meeting, stockholders will be asked to vote for the election of the
following nominees: Mr. Glenn Goodstein as a Class I Director to serve until the
year 2002 Annual Meeting or thereafter until his successor is duly elected and
qualified, Messrs. Rajeev Das and Andrew Dakos as Class II Directors to serve
until the year 2003 Annual Meeting or thereafter until each of their respective
successors are duly elected and qualified, and Mr. Gerald Hellerman as a Class
III Director to serve until the year 2004 Annual Meeting or thereafter until his
successor is duly elected and qualified. If elected, each nominee has consented
to serve as a Director of the Fund until his successor is duly elected and
qualified.
The persons named in the accompanying form of proxy intend to vote at the
Meeting (unless directed not to vote) FOR the election of Messrs. Goodstein,
Das, Dakos and Hellerman. Each nominee has indicated that he will serve if
elected, and the Board of Directors has no reason to believe that any of the
nominees named above will become unavailable for election as a Director, but if
any nominee should be unable to serve, the proxy will be voted for any other
person determined by the persons named in the proxy in accordance with their
judgment.
The following table sets forth the ages and principal occupations of each
of the Directors and nominees for election as Class I, Class II, and Class III
Directors, and the number of shares of common stock of the Fund beneficially
owned by each of them, directly or indirectly:
Class I Director to serve until the Year 2002 Annual Meeting of Stockholders:
Shares of Common Stock
Beneficially Owned on
Position November 1, 2001*
Principal Occupation with the
Director Over Last 5 Years Fund Since Age Amount** %
------------------------ -------------------------------------- ----------- ----- -------- ---
Phillip Goldstein Director of the Fund since 2000; 2000 56 406,844 ___%
60 Heritage Drive President of Kimball & Winthrop,
Pleasantville, NY 10570 Inc., an investment advisory firm,
since 1992; Portfolio Manager and
President of the general partner of
Opportunity Partners L.P. since
1992; Investment Manager for a
limited number of clients since
1992; Advocate for shareholder
rights since 1996; Director of the
Italy Fund, Inc. since May 2000;
Director of the Dresdner RCM Global
Strategic Income Fund, Inc. since
November 2000; Director of the
Brantley Capital Corporation since
2001; Director of the Clemente
Strategic Value Fund, Inc. from 1998
until 2000; and Managing Member of
the general partner of Full Value
Partners L.P. since 2001.
Class I Director to serve until the Year 2002 Annual Meeting of Stockholders:
Shares of Common Stock
Beneficially Owned on
November 1, 2001*
Principal Occupation with the Position
Nominee Over Last 5 Years Fund Since Age Amount** %
-------------------- ------------------------------- ----------- ---- -------- ---
Glenn Goodstein Registered Investment Adviser since 2001 38 159,041 ___%
16830 Adlon Road 1999; Director of the Italy Fund,
Encino, CA 91436 Inc. since 2000; Director of the
Dresdner RCM Global Strategic Income
Fund, Inc. since 2000; and has held
several executive positions with
Automatic Data Processing, Inc. from
1988 until 1996.
Class II Directors to serve until the Year 2003 Annual Meeting of Stockholders:
Shares of Common Stock
Beneficially Owned on
Position November 1, 2001*
Principal Occupation with the
Nominee Over Last 5 Years Fund Since Age Amount** %
------------------------- ------------------------------ ------------ ---- --------- ---
Rajeev Das*** Member of the Fund's Advisory Board 2001 32 -500- ___
125 Seaman Avenue, 4B from April 2001 to October 2001;
New York, NY 10034 Senior Analyst for Kimball &
Winthrop, Inc. since 1997; and
Credit Manager for Muriel Siebert &
Company from 1996 until 1997.
Andrew Dakos*** Member of the Fund's Advisory Board 2001 35 -0- -0-
43 Waterford Drive from April 2001 to October 2001;
Montville, NJ 07045 President and CEO of Uvitec Printing
Ink, Inc. since 2001; Director of
Dresdner RCM Global Strategic Income
Fund, Inc.; and Managing Member of
the general partner of Full Value
Partners L.P. since 2001.
Class III Director to serve until the Year 2004 Annual Meeting of Stockholders:
Shares of Common Stock
Beneficially Owned on
November 1, 2001*
Principal Occupation with the Position
Nominee Over Last 5 Years Fund Since Age Amount** %
------------------------ --------------------------------------- ------------ --- ---------- -----
Gerald Hellerman*** Managing Director of Hellerman 2001 64 -0- -0-
10965 Eight Bells Lane Associates, a financial and
Columbia, MD 21044 corporate consulting firm; Trustee
of Third Avenue Value Trust since
1993; Trustee of the Third Avenue Variable
Series Trust since 1999; Member of the Fund's
Advisory Board from April 2001 to October 2001;
and Director of the Clemente Strategic Value
Fund, Inc. from 1998 until 2000.
* Unless otherwise noted, each nominee directly owns and has sole voting and
investment power with respect to the listed shares.
** For this purpose "beneficial ownership" is defined under Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
information as to beneficial ownership is based upon information furnished
to the Fund by the nominees.
*** Appointed as a Director of the Fund on October 15, 2001 and has served as a
member of the Fund's Advisory Board since April 2001.
At the Annual Meeting of Stockholders held on December 3, 1999 and
reconvened on February 4, 2000, stockholders of the Fund approved an amendment
to the Fund's By-laws which provides that all compensation earned by the
Directors of the Fund shall be held in escrow and not paid to them until the
stockholders of the Fund are able to realize NAV for all their shares.
Accordingly, all compensation earned by the non-interested Directors since
February 4, 2000, and all members of the Advisory Board since April 2001, have
been held in escrow. As a result of the resignations of Messrs. Brewster and
Gittleman on March 16, 2001, Messrs. Brewster and Gittleman have been paid their
respective fees earned, and reimbursed any expenses incurred in connection with
their respective attendance at any meetings of the Fund's Board of Directors or
the Audit Committee, which were previously held in escrow. Compensation for each
of the nominees, if elected, as well as the compensation paid to Mr. Goldstein,
will be held in escrow in accordance with the By-laws of the Fund.
The aggregate remuneration paid or accrued to Directors not affiliated with
Acci Worldwide, or Advantage Advisers, Inc., the Fund's former U.S. Co-Adviser
("Advantage"), was approximately $32,485 during the fiscal year ended July 31,
2001, and, for that period, the aggregate amount of expenses reimbursed by the
Fund for Directors' attendance at Directors' meetings was $1,631. The Fund pays
each non-interested Director an annual fee of $5,000 plus $700 for each
Directors' meeting and committee meeting attended in person and $100 for each
meeting attended by means of a telephonic conference. The officers and
interested Directors of the Fund received no compensation from the Fund.
Under the federal securities laws, the Fund is required to provide to
stockholders in connection with the Meeting information regarding compensation
paid to Directors by the Fund as well as by the various other U.S. registered
investment companies advised by the Fund's investment adviser during its prior
fiscal year. The following table provides information concerning the
compensation paid or accrued during the year ended July 31, 2001, as well as the
total compensation earned by each Director of the Fund by the Fund and other
funds advised by the Investment Adviser or Advantage or their affiliates. The
Fund has no bonus, profit sharing, pension or retirement plans.
Director Aggregate Compensation From Fund Total Compensation From Other Funds
Name of Director Since for 2001 Advised by Acci Worldwide for 2001
------------------------- --------- ---------------------------------- ------------------------------------
Phillip Goldstein 2000 $9,650 $0
Alan H. Rappaport* 1990 $0 $0
Carroll W. Brewster* 1991 $5,150 $0
Sol Gittleman* 1990 $5,050 $0
Gerald Hellerman** 2001 $4,170 $0
Rajeev Das** 2001 $3,767 $0
Andrew Dakos** 2001 $3,067 $0
Glenn Goodstein 2001 $0 $0
---------------------
* Resigned as a member of the Board of Directors of the Fund on March 16,
2001.
** Appointed as a Director of the Fund on October 15, 2001 and has served as a
member of the Fund's Advisory Board since April 2001.
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 in combination require the Fund's directors
and officers, persons who own more than ten (10%) percent of the Fund's common
stock, and the Fund's investment adviser and their respective directors and
officers, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange, Inc. The
Fund believes that the Fund's directors and officers, the Fund's investment
adviser and their respective directors and officers have complied with
applicable filing requirements during the year ended July 31, 2001.
Required Vote
Directors are elected by a plurality of the votes cast by the holders of
shares of common stock of the Fund present in person or represented by proxy at
a meeting with a quorum present. For purposes of the election of Directors,
abstentions and broker non-votes will be counted as shares present for quorum
purposes, may be considered votes cast, and may affect the plurality vote
required for Directors.
MR. GOLDSTEIN, AS THE SOLE MEMBER OF THE BOARD OF DIRECTORS, RECOMMENDS
THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF MR. GOODSTEIN AS A CLASS I
DIRECTOR OF THE FUND, MESSRS. RAJEEV DAS AND ANDREW DAKOS AS CLASS II DIRECTORS
OF THE FUND, AND MR. GERALD HELLERMAN AS A CLASS III DIRECTOR OF THE FUND.
PROPOSAL NO. 2
CONSIDERATION OF THE APPROVAL OF AN
AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENT
BETWEEN THE FUND AND ACCI WORLDWIDE, S.A. DE C.V.
Pursuant to an Investment Advisory Agreement, dated October 14, 1991 (the
"Current Acci Worldwide Agreement"), between the Fund and Acci Worldwide, a
subsidiary of Acciones y Valores de Mexico, S.A. de C.V. ("AVM"), Acci Worldwide
has acted as the Fund's investment co-adviser with respect to Mexican securities
investments. Pursuant to a U.S. Co-Advisory Agreement, dated November 3, 1997
(the "Advantage Agreement"), Advantage, a subsidiary of Oppenheimer & Co., Inc.,
acted as the Fund's U.S. Co-Adviser until August 31, 2001. At a meeting held on
September 20, 2001, Mr. Goldstein, as the Fund's sole Director, approved an
amendment to the Current Acci Worldwide Agreement (the "Amended Acci Worldwide
Agreement") whereby: (i) the investment advisory fees to be paid to Acci
Worldwide for its investment advisory services are increased; (ii) Acci
Worldwide is the Fund's sole investment adviser and is responsible for any and
all advisory obligations and duties previously performed with Advantage; and,
(iii) all references made to Advantage are deleted. The Amended Acci Worldwide
Agreement is attached hereto as Exhibit A and shall be immediately effective
upon its approval by the stockholders.
With the exception of the aforementioned revisions to the annual investment
advisory fees and the increase in the scope of the management of the Fund's
affairs, as described below, the Amended Acci Worldwide Agreement is
substantially identical to the Current Acci Worldwide Agreement with respect to
the services to be provided to the Fund. Notwithstanding the revision to the
annual investment advisory fees payable to Acci Worldwide, the revised
compensation payable to the Investment Adviser is less than the yearly aggregate
compensation previously paid to both Acci Worldwide and Advantage, as
co-advisers to the Fund.
The Board of Directors hereby submits the Amended Acci Worldwide Agreement
to the stockholders for their consideration and approval.
Acci Worldwide was organized in 1990 as a company with limited liability
under the laws of Mexico to carry on investment management activities and is
registered as an investment adviser in the United States under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"). In addition to its
services to the Fund, Acci Worldwide acts as a sub-adviser to The Latin America
Capital Partners Limited. Acci Worldwide is a wholly owned subsidiary of AVM.
The principal address of Acci Worldwide is Paseo de la Reforma 398, Mexico City,
D.F., Mexico 06600.
AVM, organized in 1971, owns 1000 shares of the capital stock of Acci
Worldwide. AVM provides institutional and brokerage services as well as
financial advice to investors and securities issuers, specializing in money
market, brokerage and corporate finance operations, and provides investment
advice to Mexican investment funds. AVM is one of the leading brokerage firms in
Mexico. Through a family of mutual, pension and fixed income funds, AVM has over
$1 billion under management invested exclusively in Mexican equity and fixed
income securities. AVM is one of the leading brokerage firms in Mexico and is a
wholly owned subsidiary of Grupo Financiero Banamex Accival, S.A. de C.V.
("Grupo Banamex"). Grupo Banamex also holds the controlling interest in Banco
Nacional de Mexico, S.A., Mexico's largest commercial bank.
AVM holds one hundred (100%) percent of the capital stock of ACCI
Securities, Inc., a securities brokerage firm incorporated in Delaware in June
1990, with its principal place of business in New York, New York. ACCI
Securities, Inc. is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") and effects transactions as a broker in Mexican
securities, primarily for U.S. institutional investors and, solely incidental
thereto, provides investment advice and research.
The Advantage Agreement
From October 14, 1991 to August 31, 2001, Advantage served as the U.S.
co-adviser to the Fund. Advantage and the Fund mutually agreed to terminate this
relationship effective August 31, 2001. Advantage is a corporation organized
under the laws of the State of Delaware on May 31, 1990 and is registered under
the Advisers Act.
For its services, Advantage received a monthly fee at an annual rate of
0.40% of the Fund's average monthly net assets. For the fiscal years ended July
31, 1999, 2000 and 2001, Advantage earned a fee under the Advantage Agreement of
$375,924, $436,909 and $377,149, respectively, which was paid or payable by the
Fund.
Pursuant to the Advantage Agreement, Advantage provided advice and
consultation to Acci Worldwide regarding the Fund's overall investment strategy
and Acci Worldwide's individual decisions to buy, sell or hold particular
securities. In addition, Advantage furnished to Acci Worldwide and the Fund
international economic information and analysis with particular emphasis on
macroeconomic issues relating to Mexico and North America. Advantage also
furnished to the Investment Adviser investment advice regarding global and U.S.
debt securities, particularly with respect to investments made during defensive
periods, and regarding the Fund's assets held for distribution or payment of
expenses or pending reinvestment in securities. In addition, Advantage made
investment decisions jointly with Acci Worldwide regarding any convertible debt
security acquisitions made by the Fund and would participate in the process of
negotiating and structuring any future acquisitions of convertible debt
securities directly from Mexican companies.
Advantage and Acci Worldwide both provided investors with information with
respect to the Mexican economy and securities market, the net asset value of the
Fund's portfolio and the general composition of such portfolio, including by
making available to investors a toll free telephone number. Advantage also
supervised and coordinated the work of the Fund's administrator with respect to
regulatory filings and the overall administration of the Fund in the United
States.
The Current Acci Worldwide Agreement
Pursuant to the Current Acci Worldwide Agreement, Acci Worldwide receives a
monthly fee at an annual rate of .52% of the Fund's average monthly net assets.
For the fiscal years ended July 31, 1999, 2000 and 2001, Acci Worldwide earned a
fee under the Current Acci Worldwide Agreement of $488,702, $567,982 and
$490,294, respectively, which was paid or payable by the Fund.
Pursuant to the Current Acci Worldwide Agreement, Acci Worldwide makes
investment decisions for the Fund, prepares and makes available to the Fund
research and statistical data in connection therewith and supervises the
acquisition and disposition of securities by the Fund, including the selection
of brokers or dealers to carry out such transactions on behalf of the Fund,
subject to the direct participation by Advantage in any investment decisions
with respect to investments by the Fund in convertible debt securities. All
decisions to acquire convertible debt securities require the concurrence of both
Acci Worldwide and Advantage. In the case of securities transactions other than
the acquisition of convertible debt securities, Acci Worldwide receives advice
from, and consults with, Advantage regarding the Fund's overall investment
strategy and Acci Worldwide's individual decisions to buy, sell or hold
particular securities. Subject to this participation by Advantage and the
oversight and supervision of the Fund's Board of Directors, Acci Worldwide is
responsible for the management of the Fund's portfolio in accordance with the
Fund's investment objective and policies and for making decisions to buy, sell
or hold particular securities. The Current Acci Worldwide Agreement provides
that the Acci Worldwide shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with the matters to
which the Current Acci Worldwide Agreement relates, except liability resulting
from willful misfeasance, bad faith or gross negligence on the Investment
Adviser's part in the performance of its duties or from reckless disregard of
its obligations and duties under the Current Acci Worldwide Agreement. The
Current Acci Worldwide Agreement was last approved by a majority of the Fund's
outstanding voting shares on November 7, 1994 and by the Directors, including a
majority of the Directors who are not parties to the Current Acci Worldwide
Agreement or interested persons (as defined in the Advisers Act) of such
parties, on June 28, 2001. By its terms, the Current Acci Worldwide Agreement
continues in effect from year to year, provided, if it is approved annually by a
vote of a majority of the members of the Fund's Board of Directors who are not
parties to the Current Acci Worldwide Agreement or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval, and by a majority vote of either the Fund's Board of Directors or the
Fund's outstanding voting securities. The Fund or the Investment Adviser may
terminate the Current Acci Worldwide Agreement at any time, without payment of
penalty, upon sixty (60) days written notice. The Current Acci Worldwide
Agreement will terminate automatically in the event of its assignment (as
defined in the Advisers Act).
The Amended Acci Worldwide Agreement
As a result of the mutual termination of the Advantage Agreement, Mr.
Goldstein, as the sole Director of the Fund, with the advice and consent of the
Advisory Board, approved entering into the Amended Acci Worldwide Agreement at a
meeting held on September 20, 2001.
The Amended Acci Worldwide Agreement amends the Current Acci Worldwide
Agreement in several respects. The references to the U.S. co-adviser have been
deleted including, the description of the U.S. co-adviser's investment advisory
role under its agreement with the Fund which was terminated as of September 1,
2001. Moreover, due to the increased scope of Acci Worldwide's advisory services
to the Fund, as a result of Advantage's mutual termination, Acci Worldwide will
receive a monthly fee at an annual rate of 0.80% of the Fund's average monthly
net assets.
Acci Worldwide will continue to make investment decisions for the Fund,
prepare and make available to the Fund research and statistical data and
supervise the acquisition and disposition of securities by the Fund, including
the selection of brokers or dealers to carry out such transactions on behalf of
the Fund, without the participation of Advantage in any investment decisions
with respect to investments by the Fund in convertible debt securities.
Advantage no longer participates in any investment decisions for the Fund after
September 1, 2001.
In the case of all portfolio securities transactions, Acci Worldwide has
been the Fund's sole investment adviser since September 1, 2001. Subject only to
the oversight and supervision of the Fund's Board of Directors, Acci Worldwide
will be solely responsible for the management of the Fund's portfolio in
accordance with the Fund's investment objective and policies and for making
decisions to buy, sell or hold particular securities.
The Amended Acci Worldwide Agreement continues to provide that Acci
Worldwide shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which the
Amended Acci Worldwide Agreement relates, except liability resulting from
willful misfeasance, bad faith or gross negligence on the Investment Adviser's
part in the performance of its duties or from reckless disregard of its
obligations and duties under the Amended Acci Worldwide Agreement. The Fund or
the Investment Adviser may terminate the Amended Acci Worldwide Agreement at any
time, without payment of penalty, upon sixty (60) days written notice. The
Amended Acci Worldwide Agreement will terminate automatically in the event of
its assignment (as defined in the Advisers Act).
Information Concerning the Effect of the Amended Acci Worldwide Agreement
The following table compares the compensation paid to Acci Worldwide and
Advantage, as co-advisers, by the Fund under the Current Acci Worldwide
Agreement and the Advantage Agreement, in the Fund's fiscal year ended July 31,
2001 and the compensation that the Fund would have paid Acci Worldwide for
similar services in fiscal year 2001, had the Amended Acci Worldwide Agreement
been in effect and had the Advantage Agreement no longer been in effect
throughout such period. All figures contained in the table below represent
percentages based on average monthly net assets.
FEES AND EXPENSES
FOR FISCAL 2001
UNDER THE AMENDED
ACCI WORLDWIDE
AGREEMENT
ACTUAL FEES AND
EXPENSES FOR 2001*
Advisory Fee . . . . . . . . . . . . . . . . . . . .92% .80%
Other Expenses . . . . . . . . . . . . . . . . . . .98% .98%
Total Expenses . . . . . . . . . . . . . . . . . . 1.90% 1.78%
Decrease in Fee Payable by Fund for
Investment Advisory Services** . . . . . . . . . . (0.12)%
------------------------
* Actual fees and expenses for fiscal year 2001 are the aggregate of fees and
expenses paid to both Acci Worldwide and Advantage, as co-advisers,
pursuant to the Current Acci Worldwide Agreement and the Advantage
Agreement, respectively.
** Reflects the difference between the fees and expenses paid to Acci
Worldwide and Advantage in 2001 and the fees and expenses which would have
been payable to Acci Worldwide in fiscal year 2001 under the Amended Acci
Worldwide Agreement, without Advantage.
Evaluation by the Board of Directors
Mr. Goldstein, as the sole member of the Board of Directors and who is not
an interested person of any party to the Amended Acci Worldwide Agreement or its
affiliates, has approved the Amended Acci Worldwide Agreement for the Fund and
recommends that stockholders of the Fund approve such agreement. The Fund's sole
Director deliberated with members of the Advisory Board and approved the Amended
Acci Worldwide Agreement at the Director's meeting held on September 20, 2001.
The Amended Acci Worldwide Agreement is effective upon stockholder approval. If
the stockholders do not approve the Amended Acci Worldwide Agreement at the
Meeting (or at an adjournment thereof), the Board will either resubmit the
Amended Acci Worldwide Agreement to the stockholders for their consideration and
approval or consider alternative sources from which to obtain investment
management and research services for the Fund.
In approving the Amended Acci Worldwide Agreement and determining to submit
it to the stockholders of the Fund for their approval, Mr. Goldstein considered
the best interests of the stockholders and took into account factors he deemed
relevant. The factors considered by Mr. Goldstein included the nature, quality
and scope of the operations and services to be provided by Acci Worldwide, while
focusing on the experience of Acci Worldwide with respect to its prior services
provided to the Fund. Furthermore, Mr. Goldstein considered the fact that the
revised investment advisory fees payable to Acci Worldwide are less than the
aggregate compensation paid to both Acci Worldwide and Advantage, as co-advisers
to the Fund, for substantially the same services.
Based upon its review of the above factors, the Board, consisting of Mr.
Goldstein as the sole Director of the Fund, determined that the Amended Acci
Worldwide Agreement is in the best interests of the Fund and its stockholders.
Required Vote
As provided by the Advisers Act, approval of the Amended Acci Worldwide
Agreement will require the affirmative vote of a "majority of the outstanding
voting securities" of the Fund, which means the affirmative vote of the lesser
of (a) sixty-seven (67%) percent or more of the shares of the Fund entitled to
vote thereon present or represented by proxy at the Meeting, if the holders of
more than fifty (50%) percent of the outstanding shares of the Fund entitled to
vote thereon are present or represented by proxy, or (b) more than fifty (50%)
percent of the total outstanding shares of the Fund entitled to vote thereon.
For this purpose, abstentions and broker non-votes will be counted as shares
present at the Meeting for quorum purposes, but not as votes cast and will have
the same effect as votes cast against the Proposal.
MR. GOLDSTEIN, AS THE SOLE MEMBER OF THE BOARD OF DIRECTORS, WHO IS NOT AN
"INTERESTED PERSON" OF THE FUND, ACCI WORLDWIDE OR ITS AFFILIATES, RECOMMENDS
THAT THE STOCKHOLDERS OF THE FUND VOTE "FOR" THE APPROVAL OF THE AMENDED ACCI
WORLDWIDE AGREEMENT.
PROPOSAL NO. 3
PROPOSAL TO pursue the creation and registration
of put warrants which are designed to
AFFORD STOCKHOLDERS A SERIES OF OPPORTUNITIES
TO REALIZE NET ASSET VALUE ("NAV") FOR THEIR SHARES
Phillip Goldstein, the sole member of the Board of Directors, with the
advice and consent of the members of the Advisory Board, believes that it is in
the best interest of the stockholders of the Fund that the Fund undertake an
initiative to pursue the creation and registration of put warrants designed to
afford the stockholders a series of opportunities to realize NAV for their
shares. Although this proposal is not binding, if it is approved by the
stockholders, the newly constituted Board of Directors will undertake an
initiative to effectuate the creation and registration of put warrants.
Initially conceived by Mr. Goldstein as an innovative means by which
stockholders of a closed-end investment company might realize NAV for their
shares, Mr. Goldstein has developed the terms for the creation and issuance of a
new instrument entitled a "put warrant". The proposed put warrant concept is
currently being reviewed, on an informal basis, by the staff (the "Staff") of
the SEC. Should the Staff provide a favorable initial response to the concept,
the Fund will proceed to seek the necessary authorization and approvals to issue
such put warrants, provided this proposal is approved by the stockholders.
THERE CAN, HOWEVER, BE NO ASSURANCE THAT THE STAFF WILL PROVIDE A FAVORABLE
RESPONSE TO THIS CONCEPT OR THAT THE FUND WILL BE ABLE TO REGISTER THE PUT
WARRANTS AS CONCEIVED BY MR. GOLDSTEIN IN THE NEAR FUTURE.
If the put warrants, as proposed by Mr. Goldstein, are utilized by the Fund
(subject to the formal review, authorization and approval of various exemptions
by the SEC), they would, subject to the terms of the put warrants, entitle a
holder thereof to surrender to the Fund one share of the Fund's common stock
(the "Share") for each put warrant held once each calendar quarter, in exchange
for an in-kind pro-rata distribution of the Fund's portfolio securities (and, if
applicable, cash) of the Fund valued at NAV per Share or cash equal to NAV per
Share.
Should the development of the put warrant concept be subject to extensive
delays, the Board of Directors will consider the use of more traditional means
of promptly delivering NAV to stockholders.
The Board of Directors may consider the appropriateness of conducting a
rights offering or other offering in order to increase the number of issued and
outstanding shares after it delivers NAV to stockholders. However, it is
currently intended that any such offering will be combined with a commitment
from the Board of Directors to combine any offering, if appropriate, with a
provision for a subsequent opportunity to realize NAV.
Required Vote
Although this proposal is not binding, if it is approved by a simple
majority of the votes cast at the meeting, the Board of Directors will undertake
an initiative to effectuate a policy to afford the stockholders an opportunity
to promptly realize NAV for their shares, utilizing any viable means including
the implementation of put warrants, if favorably reviewed, authorized and
approved by the Securities and Exchange Commission (the "SEC") on terms
acceptable to the Board of Directors, or, at the sole discretion of the Board of
Directors, using more traditional means including, but not necessarily limited
to, a tender offer. For purposes of voting on this proposal, abstentions and
broker non-votes will be counted as shares present for quorum purposes but are
not considered votes cast.
MR. GOLDSTEIN, THE SOLE DIRECTOR OF THE BOARD OF DIRECTORS, TOGETHER WITH
THE ADVICE AND CONSENT OF THE ADVISORY BOARD, RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE PROPOSAL TO PURSUE THE CREATION AND REGISTRATION OF PUT WARRANTS.
AUDIT COMMITTEE
The Fund's Audit Committee is currently composed of three (3) independent
Directors, Messrs. Hellerman (as Chairman), Das and Goldstein. Messrs. Hellerman
and Das served on the Audit Committee while they were members of the Advisory
Board. It is proposed that after this meeting, these three (3) Directors will
continue to comprise the Audit Committee. The principal functions of the Audit
Committee include but are not limited to: (i) recommendations to the Board for
the appointment of the Fund's independent accountants; (ii) review of the scope
and anticipated cost of the independent accountant's audit; and (iii)
consideration of the independent accountant's reports concerning their conduct
of the audit, including any comments or recommendations the Board of Directors
might make in connection thereto. The Audit Committee convened ________ during
the fiscal year ended July 31, 2001.
On June 28, 2001, the Audit Committee, followed by the Board of Directors,
approved the continuance of the Fund's written charter setting forth the duties
and responsibilities of the Audit Committee. A copy of the charter, as adopted
by the Board of Directors of the Fund, is included in this Proxy Statement as
Exhibit B.
The following table sets forth the aggregate fees billed by the independent
accountants for the Fund's most recent fiscal year for professional services
rendered for: (i) the audit of the Fund's annual financial statements and the
review of financial statements included in the Fund's reports to stockholders
("Audit Fees"); (ii) financial information systems design and implementation
services provided to the Fund, its investment adviser and entities that control,
are controlled by or under common control with the Investment Adviser that
provides services to the Fund ("Financial Information Systems Design"); and
(iii) all other services provided to the Fund, its investment adviser and
entities that control, are controlled by or under common control with the
Investment Adviser that provides services to the Fund ("All Other Fees").
------------------------- --------------------------------------- ---------------------------
Audit Fees Financial Information Systems Design All Other Fees
------------------------- --------------------------------------- ---------------------------
$57,704 $____________ $______________
------
------------------------- --------------------------------------- ---------------------------
The Fund has no nominating or compensation committees.
Each Director attended at least seventy-five (75%) percent or more of the
_______ (____) meetings of the Board of Directors (including regularly scheduled
and special meetings) held during the period for which he was a Director.
Audit Committee Report
The Audit Committee has met and held discussions with the Fund's
Administrator and the Fund's independent accountants. The Administrator
represented to the Audit Committee that the Fund's financial statements were
prepared in accordance with U.S. generally accepted accounting principles, and
the Audit Committee has reviewed and discussed the financial statements with the
Fund's Administrator and its independent accountants. The Audit Committee also
discussed with the independent accountants matters required to be discussed by
Statement on Auditing Standards No. 61.
The Fund's independent accountants also provided to the Audit Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants' their independence, in light of the
services they were providing.
Based upon the Audit Committee's discussion with the Fund's Administrator
and the independent accountants and the Audit Committee's review of the
representations of the Fund's Administrator and the report of the independent
accountants to the Audit Committee, the Audit Committee recommended that the
Board of Directors include the audited financial statements in the Fund's Annual
Report for the fiscal year ended July 31, 2001 filed with the Securities and
Exchange Commission.
Respectfully submitted,
G. hellerman
R. das
P. goldstein
INFORMATION PERTAINING TO THE FUND'S
INVESTMENT ADVISER AND ADMINISTRATOR
The Investment Adviser
From November 7, 1997 to August 31, 2001, Acci Worldwide and Advantage
served as co-advisers to the Fund. As of August 31, 2001, Advantage ceased being
a co-adviser to the Fund. Acci Worldwide continues to serve as the investment
adviser to the Fund pursuant to the Current Acci Worldwide Agreement and will
continue to serve as the investment adviser under the Amended Acci Agreement,
subject to stockholder approval.
Acci Worldwide was organized in 1990 as a company with limited liability
under the laws of Mexico to carry on investment management activities, and is a
registered investment adviser under the Advisers Act. Acci Worldwide has served
as co-adviser to the Fund since the Fund's inception. The principal business
address of Acci Worldwide is Paseo de la Reforma 398, Mexico City, D.F., Mexico
06600. Acci Worldwide is a wholly owned subsidiary of AVM.
AVM, organized in 1971, provides institutional and brokerage services as
well as financial advice to investors and securities issuers, specializing in
money market, brokerage and corporate finance operations, and provides
investment advice to Mexican investment funds. AVM is one of the leading
brokerage firms in Mexico and is a wholly owned subsidiary of Grupo Banamex.
The names, titles and principal occupations of the current Directors and
executive officers of Acci Worldwide are set forth in the following table. The
business address of each person listed below is Paseo de la Reforma 398, Mexico
City, D.F., Mexico 06600.
Name Title and Principal Occupation
Alfredo Loera . . . . . . . . . . . Deputy President of Banamex, Head of
Asset Management of AVM and
Chairman of Acci Worldwide
Maria Eugenia Pichardo . . . . . . . . Deputy Asset Management Director of
AVM and Director General and
Secretary of Acci Worldwide
Enrique Garay . . . . . . . . . . . . Deputy Managing Director of
the Trading Equities Division of
AVM and Director of Acci Worldwide
Vidal Lavin . . . . . . . . . . . . Asset Management Director of AVM and
Director of Acci Worldwide
Francisco Lopez . . . . . . . . . . . Executive Director of Acci Worldwide
Marcela Martinez . . . . . . . . . . . Operational Executive Manager of Acci
Worldwide
The Administrator
Prior to September 1, 2001, PFPC, Inc. ("PFPC"), whose address is 400
Bellevue Parkway, Wilmington, DE 19809, acted as the administrator of the Fund.
At the June 28, 2001 meeting of the Board of Directors, PFPC and the Fund
mutually terminated the Administration Agreement effective as of September 1,
2001.
At the same meeting when the PFPC Administration Agreement was terminated,
the Board approved a new Administration Agreement with Firstar Mutual Funds
Services, LLC, whose address is 615 E. Michigan St., 2nd Floor, Milwaukee,
Wisconsin 53202. The new Administration Agreement is effective as of September
1, 2001. The Board also approved, at the June 28, 2001 meeting of the Board of
Directors (i) a Custody Agreement, effective as of September 1, 2001, and (ii) a
Stock Transfer Agency Agreement, effective September 1, 2001, both agreements
are with Firstar Bank, N.A., whose address is 425 Walnut St., 6th Floor,
Cincinnati, Ohio 45202;.
INFORMATION PERTAINING TO CERTAIN STOCKHOLDERS
The following table sets forth the beneficial ownership of shares of the
Fund, as of November 1, 2001, by each person known to the Fund to be deemed a
beneficial owner of more than five (5%) percent of the total outstanding shares
of common stock of the Fund:
Shares of Common Stock % of Fund's Outstanding
Name and Address Beneficially Owned on Shares Beneficially Owned
of Beneficial Owner (1) November 1, 2001 on November 1, 2001
------------------------ ---------------- -------------------
--------------------------------
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934. Accordingly, a beneficial owner of a
security includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or
shares the power to vote such security or the power to dispose of such
security.
(2) This percentage is calculated on the basis of _______ shares of stock
outstanding as of November 1, 2001.
OTHER BUSINESS
The Board of Directors of the Fund does not know of any other matter which
may come before the Meeting, but should any other matter requiring a vote of
stockholders arise, including any questions as to the adjournment of the
Meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter.
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Fund which are intended to be
presented at the Fund's next Annual Meeting of Stockholders, to be held in the
year 2002, must be received by the Fund addressed to The Mexico Equity and
Income Fund, Inc. c/o Firstar Mutual Fund Services, LLC, 615 E. Michigan St.,
2nd Floor, Milwaukee, Wisconsin 53202, for inclusion in the Fund's proxy
statement and proxy relating to that meeting in advance of the meeting as set
forth below. Any stockholder who desires to bring a proposal at the Fund's 2002
Annual Meeting of Stockholders without including such proposal in the Fund's
proxy statement must deliver (via the U.S. Post Office or such other means that
guarantees delivery) written notice thereof to the Secretary of the Fund c/o
Firstar Mutual Fund Services, LLC, 615 E. Michigan St., 2nd Floor, Milwaukee,
Wisconsin 53202, no less than one hundred twenty (120) calendar days
(approximately June, 2002) before the date of the Annual Meeting of Stockholders
which will be scheduled to be held in October 2002 or the tenth (10th) day after
public announcement is made by way of publication by the New York Stock Exchange
of the Fund's Meeting date.
THE MEXICO EQUITY AND INCOME Fund,
Inc.
By:_______________________________
Secretary
Dated: ______________, 2001
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
EXHIBIT A
AMENDED and restated INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated and effective as of October 14, 1991, as amended and
restated as of _________, 2001, between THE MEXICO EQUITY AND INCOME FUND, INC.,
a Maryland corporation (herein referred to as the "Fund") and ACCI WORLDWIDE,
S.A. de C.V., a company organized under the laws of the Mexico (herein referred
to as the "Investment Adviser").
WHEREAS, the Fund and the Investment Adviser are parties to an Investment
Advisory Agreement dated October 14, 1991 (the "Original Agreement"); and,
WHEREAS, the Fund and the Investment Adviser desire to amend the terms of
the Original Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed by the parties as follows:
1. Appointment of the Investment Adviser.
(a) The Investment Adviser hereby undertakes and agrees, upon the terms and
conditions herein set forth, (i) to make investment decisions for the Fund, to
prepare and make available to the Fund research and statistical data in
connection therewith, and to supervise the acquisition and disposition of
securities by the Fund, including the selection of brokers or dealers to carry
out the transactions, all in accordance with the Fund's investment objective and
policies and in accordance with guidelines and directions from the Fund's Board
of Directors; (ii) to assist the Fund as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Fund's Board of Directors; (iii) to maintain and furnish or cause to be
maintained and furnished for the Fund all records, reports and other information
required under the United States Investment Company Act of 1940, as amended (the
"1940 Act"), to the extent that such records, reports and other information are
not maintained or furnished by the administrators, custodians or other agents of
the Fund; (iv) to furnish at the Investment Adviser's expense for the use of the
Fund such office space and facilities as the Fund may reasonably require for its
needs in Mexico City, Mexico, and to furnish at the Investment Adviser's expense
clerical services in the United States or Mexico related to research,
statistical and investment work; and (v) to pay the reasonable salaries and
expenses of such of the Fund's officers and employees (including, where
applicable, the Fund's share of payroll-taxes) and any fees and expenses of such
of the Fund's directors as are directors, officers or employees of the
Investment Adviser or any of its affiliates; provided, however, that the Fund,
and not the Investment Adviser or any of its affiliates, shall bear travel
expenses or an appropriate fraction thereof of directors and officers of the
Fund who are directors, officers or employees of the Investment Adviser or any
of its affiliates to the extent that such expenses relate to attendance at
meetings of the Board of Directors of the Fund or any committees thereof. The
Investment Adviser shall bear all expenses arising out of its duties hereunder
but shall not be responsible for any expenses of the Fund other than those
specifically allocated to the Investment Adviser in this Section 1.
(b) In particular, but without limiting the generality of the foregoing,
the Investment Adviser shall not be responsible, except to the extent of the
compensation of such of the Fund's employees as are directors, officers or
employees of the Investment Adviser whose services may be involved, for the
following expenses of the Fund; organization expenses (but not the overhead or
employee costs of the Investment Adviser); legal fees and expenses of counsel
(United States and Mexican) to the Fund and, if counsel is retained by the
directors who are not "interested persons" of the Fund, of such counsel;
auditing and accounting expenses; taxes and governmental fees; New York Stock
Exchange listing fees; dues and expenses incurred in connection with membership
in investment company organizations; fees and expenses of the Fund's custodians,
transfer agents and registrars; fees and expenses with respect to administration
except as may be provided otherwise pursuant to administration agreements;
expenses for portfolio pricing services by a pricing agent, if any; expenses of
preparing share certificates and other expenses in connection with the issuance,
offering and underwriting of shares issued by the Fund; expenses relating to
investor and public relations; fees and expenses involved in registering and
maintaining registration of the Fund and of its shares with the United States
Securities and Exchange Commission, and qualifying its shares under state
securities laws, including the preparation and printing of the Fund's
registration statements and prospectuses for such purposes; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions, stamp duties or other costs of acquiring or
disposing of any portfolio holding of the Fund; expenses of preparation and
distribution of reports, notices and dividends to shareholders; expenses of the
dividend reinvestment and share purchase plan; costs of stationery; any
litigation expenses; and costs of shareholders' and other meetings.
(c) In selecting brokers or dealers to execute portfolio transactions on
behalf of the Fund, the Investment Adviser will seek the best overall terms
available. In assessing the best overall terms available for any transaction,
the Investment Adviser must consider the factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In addition, the Investment Adviser may, in selecting brokers
or dealers to execute a particular transaction and in evaluating the best
overall terms available, consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund and/or accounts over which the Investment Adviser exercises
investment discretion.
(d) The Investment Adviser may contract with or consult with such banks,
other securities firms or other parties in Mexico or elsewhere as it may deem
appropriate to obtain additional advisory information and advice, including
investment recommendations, advice regarding economic factors and trends, advice
as to currency exchange matters and clerical and accounting services and other
assistance. It is acknowledged and agreed that the Investment Adviser will be
responsible for the management of the Fund's portfolio and overall investment
strategy, in accordance with the Fund's investment policies, and for making
decisions to buy, sell or hold particular securities, including but not limited
to all investment decisions with respect to the Fund's portfolio of convertible
debt securities.
2. Remuneration. The Fund agrees to pay to the Investment Adviser, in
either U.S. dollars or pesos, as may from time to time be agreed among the Fund
and the Investment Adviser, as full compensation for the services to be rendered
and expenses to be borne by the Investment Adviser hereunder, a monthly fee at
an annual rate equal to 0.80% of the value of the Funds average monthly net
assets. For purposes of computing the fee, the average monthly net assets of the
Fund are determined at the end of each month on the basis of the average net
assets of the Fund for each week during the month. The assets for each weekly
period are determined by averaging the net assets at the last business day of a
week with the net assets at the last business day of the prior week. The value
of the net assets of the Fund shall be determined pursuant to the applicable
provisions of the 1940 Act and the directions of the Fund's Board of Directors.
Subject to the provisions of Section 6 of this-Agreement, such fee shall be
computed beginning on __________________, 2001 (the "Effective Date") until the
termination, for whatever reason, of this Agreement. The fee for the period from
the end of the last month ending prior to termination of this Agreement to the
date of termination and the fee for the period from the Effective Date through
the end of the month in which the Effective Date occurs shall be pro rated
according to the proportion which such period bears to the full monthly period.
Except as provided below, each payment of a monthly fee to the Investment
Adviser shall be made within ten days of the first day of each month following
the day as of which such payment is computed. Upon the termination of this
Agreement before, the end of any month, such fee shall be payable on the date of
termination of this Agreement.
3. Representations and Warranties. The Investment Adviser represents and
warrants that it is duly registered and authorized as an investment adviser
under the United States Investment Advisers Act of 1940, as amended, and agrees
to maintain effective all requisite registrations, authorizations and licenses,
as the case may be, until the termination of this Agreement.
4. Services Not Deemed Exclusive. Nothing herein shall be construed as
prohibiting the Investment Adviser from providing investment management and
advisory services to, or entering into investment management and advisory
agreements with, other clients, including other registered investment companies
and clients which may invest in securities of Mexican issuers, or from utilizing
(in providing such services) information furnished to the Investment Adviser by
others as contemplated by Section 1 of this Agreement; nor, except as explicitly
provided herein, shall anything herein be construed as constituting the
Investment Adviser an agent of the Fund.
5. Limit of Liability. The Investment Adviser may rely on information
reasonably believed by it to be accurate and reliable. Neither the Investment
Adviser nor its officers, directors, employees, agents or controlling persons as
defined in the 1940 Act shall be subject to any liability for any act or
omission, error of judgment or mistake of law, or for any loss suffered by the
Fund, in the course of, connected with or arising out of any services to be
rendered hereunder, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or by reason of reckless disregard on the part of the Investment Adviser
of its obligations and duties under this Agreement. Any person, even though also
employed by the Investment Adviser, who may be or become an employee of the Fund
shall be deemed, when acting within the scope of his employment by the Fund, to
be acting in such employment solely for the Fund and not as an employee or agent
of the Investment Adviser.
6. Duration and Termination. This Agreement shall continue in effect from
year to year, provided, such continuance is specifically approved at least
annually by the affirmative vote of (i) a majority of the members of the Fund's
Board of Directors who are neither parties to this Agreement nor interested
persons of the Fund or of the Investment Adviser or of any entity regularly
furnishing investment advisory services with respect to the Fund pursuant to an
agreement with the Investment Adviser, cast in person at a meeting called for
the purpose of voting on such approval, and (ii) a majority of the Fund's Board
of Directors or the holders of a majority of the outstanding voting securities
of the Fund.
Notwithstanding the above, this Agreement (a) may nevertheless be
terminated at any time without penalty, by the Fund's Board of Directors, by
vote of holders of a majority of the outstanding voting securities of the Fund
or by the Investment Adviser upon 60 days' written notice delivered or sent to
the other party, and (b) shall automatically be terminated in the event of its
assignment; provided, however, that a transaction which does not, in accordance
with the 1940 Act, result in a change of actual control or management of the
Investment Adviser's business shall not be deemed to be an assignment for the
purposes of this Agreement. Any such notice shall be deemed given when received
by the addressee.
7. Non-Assignment and Amendment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged by either party hereto
other than pursuant to Section 6. It may be amended by mutual agreement, but
only after authorization of such amendment by the affirmative vote of (i) the
holders of a majority of the outstanding voting securities of the Fund, and (ii)
a majority of the members of the Fund's Board of Directors who are not
interested persons of the Fund or of the Investment Adviser or of an entity
regularly furnishing investment advisory services with respect to the Fund
pursuant to any agreement with the Investment Adviser, cast in person at a
meeting called for the purpose of voting on such approval.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York; provided, however, that
nothing herein shall be construed as being inconsistent with the 1940 Act. As
used herein, the terms "interested person," "assignment" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
1940 Act.
9. Notices. Any notice hereunder shall be in writing and shall be delivered
in person or by telex or facsimile followed by delivery in person to the parties
at the addresses set forth below:
If to the Fund:
The Mexico Equity and Income Fund, Inc.
615 E. Michigan St., 2nd Floor
Milwaukee, Wisconsin 53202
Telephone: (414) 765-5307
Facsimile: (414) 276-8207
Attention: Andrew P. Chica
with a copy to:
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
Telephone: (212) 888-6680
Facsimile: (212) 838-7472
Attention: Thomas R. Westle, Esq.
If to the Investment Adviser:
Acci Worldwide, S.A. de C.V.
Paseo de la Reforma 398
00660 Mexico, D.F.
Telephone: 52 5 3264719
Fax: 52 5 3264898
Attention: Eugenia Pichardo, Director General
or to such other address as to which the recipient shall have informed the other
parties in writing.
Unless specifically provided elsewhere, notice given as provided above
shall be deemed to have been given, if by personal delivery, on the day of such
delivery, and, if by telex or facsimile and mail, on the date on which such
telex or facsimile and confirmatory letter are sent.
10. Consent to Jurisdiction. Each party hereto irrevocably agrees that any
suit, action or proceeding against the Investment Adviser or the Fund arising
out of or relating to this Agreement shall be subject exclusively to the
jurisdiction of the United States District Court for the Southern District of
New York and the Supreme Court of the State of New York, New York County, and
each party hereto irrevocably submits to the jurisdiction of each such court in
connection with any such suit, action or proceeding. Each party hereto waives
any objection to the laying of venue of any such suit, action or proceeding in
either such court, and waives any claim that such suit, action or proceeding has
been brought in an inconvenient forum. Each party hereto irrevocably consents to
service of process in connection with any such suit, action or proceeding by
mailing a copy thereof registered or certified mail, postage prepaid, to their
respective addresses as set forth in this Agreement.
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused their duly authorized
signatories to execute this Agreement as of the day and year first written
above.
THE MEXICO EQUITY AND INCOME FUND, INC.
By:__________________________________
Name:
Title:
ACCI WORLDWIDE, S.A. de C.V.
By:__________________________________
Name:
Title:
EXHIBIT B
AUDIT COMMITTEE CHARTER
THE MEXICO EQUITY AND INCOME FUND, INC.
AUDIT COMMITTEE CHARTER
Objectives:
I. The Board of Directors (the "Board") of the Fund has established a
committee of certain independent directors (the "Audit Committee"). The
objectives of the Audit Committee are:
(a) to oversee the Fund's accounting and financial reporting policies and
practices, its internal controls and, as appropriate, the internal controls of
certain service providers;
(b) to oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof; and
(c) to act as a liaison between the Fund's independent auditors and the
full Board.
II. The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control, and the auditor's responsibility to plan and carry out a proper audit.
Responsibilities:
I. To carry out its objectives, the Audit Committee shall have the
following responsibilities:
(a) to recommend the selection, retention or termination of independent
auditors and, in connection therewith, to evaluate the independence of the
auditors, including whether the auditors provide any consulting services to the
investment manager(s), and to receive the auditors' specific representations as
to their independence;
(b) to meet with Fund's independent auditors, including private meetings,
as necessary, (i) to review the arrangements for and scope of the annual audit
and any special audits; (ii) to discuss any matters of concern relating to the
Fund's financial statements, including any adjustments to such statements
recommended by the auditors, or other results of said audit(s); (iii) to
consider the auditors' comments with respect to the Fund's financial policies,
procedures and internal accounting controls and management's responses thereto;
and (iv) to review the form of opinion the auditors render to the Board and
stockholders;
(c) to review significant current financial reporting issues and practices
with management and the auditors and to consider the effect upon the Fund of any
changes in accounting principles or practices proposed by management or the
auditors;
(d) to review the fees charged by the auditors for audit and non-audit
services;
(e) to investigate improprieties or suspected improprieties in Fund
operations;
(f) to review the Fund's process for monitoring compliance with investment
restrictions and applicable laws and regulations and with the code of ethics;
(g) to report its activities to the full Board on a regular basis and to
made such recommendations with respect to the above and other matters as the
Audit Committee may deem necessary or appropriate; and
(h) to review this Charter and recommend any changes to the full Board.
II. The Audit Committee shall meet on a regular basis and is empowered to
hold special meetings as circumstances require. The Audit Committee shall
regularly meet with the Treasurer of the Fund and with representatives of the
management company and other service providers responsible for financial
reporting and controls.
III. The Audit Committee shall have the resources and authority appropriate
to discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the Fund.