SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240-14a-11(c) or ss.240-14a-12
1838 Bond-Debenture Trading Fund
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
---------------------------------------------------------------------------
<PAGE>
SUMMARY OF PROPOSAL 2
Q. WHY IS A SHAREHOLDER VOTE NECESSARY?
A. The Investment Company Act of 1940, as amended, requires a shareholder vote
on an investment management agreement whenever there is a change in control
of an investment advisor. The proposed merger between 1838 Investment
Advisors, Inc., the parent company of 1838 Investment Advisors, L.P., your
Fund's investment advisor, and MBIA, Inc. will result in a change of
control of the investment advisor and, therefore, requires a shareholder
vote on a new investment management agreement.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. Yes, under the terms of the proposed investment management agreement, the
investment management fees paid by your Fund will remain the same.
Q. HOW WILL THE MERGER AFFECT THE FUND, OR ME AS A FUND SHAREHOLDER?
A. Your Fund and its investment objectives and policies will not change. You
will still own the same shares in the same Fund. Upon the close of the
merger, the investment manager for each Fund will be 1838 Investment
Advisors, Inc., the corporate successor to 1838 Investment Advisors, L.P.,
as a wholly-owned subsidiary of MBIA, Inc.
Q. WHO IS PAYING THE COSTS ASSOCIATED WITH THE MERGER, THE SHAREHOLDER MEETING
AND THIS PROXY SOLICITATION?
A. 1838 Investment Advisors, Inc. will bear the costs associated with
consideration of the proposed merger, and 1838 Investment Advisors, Inc.
and the Fund will share the costs of the Annual Meeting of Shareholders and
the proxy solicitation.
Q. HOW DO THE BOARD OF DIRECTORS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the Board of Directors of your Fund, including
the independent Directors, unanimously recommend that you vote "FOR" all
the items on the enclosed proxy card.
PLEASE VOTE THE ENCLOSED PROXY CARD
YOUR VOTE IS IMPORTANT
<PAGE>
1838 BOND-DEBENTURE TRADING FUND
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 22, 1998
-------------------------
Radnor, Pennsylvania
July __, 1998
TO THE SHAREHOLDERS OF
1838 BOND-DEBENTURE TRADING FUND:
The Annual Meeting of Shareholders of 1838 Bond-Debenture Trading Fund (the
"Fund") will be held on July 22, 1998 at 2:00 p.m. Eastern Time, at the Fund's
executive offices, Five Radnor Corporate Center, Suite 320, 100 Matsonford Road,
Radnor, Pennsylvania, 19087, for the following purposes:
(1) the election of four directors;
(2) to approve or disapprove a new Investment Advisory Agreement
between 1838 Investment Advisors, Inc. and the Fund.
(3) to ratify or reject the selection of independent accountants made
by the Board of Directors for the fiscal year ending March 31,
1999;
(4) to transact such other business as may properly come before the
meeting and any adjournments thereof.
The subjects referred to above are discussed in detail in the Proxy
Statement attached to this notice. Each shareholder is invited to attend the
Annual Meeting of Shareholders in person. Shareholders of record at the close of
business on June 15, 1998 have the right to vote at the meeting. If you cannot
be present at the meeting, we urge you to fill in, sign, and promptly return the
enclosed proxy in order that the meeting can be held without additional expense
and a maximum number of shares may be voted.
ANNA M. BENCROWSKY
Secretary
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE,
SIGN AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND AND TO 1838 INVESTMENT ADVISORS, INC.
OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
- --------------------------------------------------------------------------------
<PAGE>
1838 BOND-DEBENTURE TRADING FUND
FIVE RADNOR CORPORATE CENTER, SUITE 320, 100 MATSONFORD ROAD, RADNOR,
PENNSYLVANIA 19087
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 22, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of 1838 Bond-Debenture Trading Fund (the "Fund") for
use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at
Five Radnor Corporate Center, Suite 320, 100 Matsonford Road, Radnor,
Pennsylvania 19087, on July 22, 1998 at 2:00 p.m. Eastern Time. Proxies may be
solicited by mail, telephone, telegraph and personal interview. The Fund has
also requested brokers, dealers, banks or voting trustees, or their nominees to
forward proxy material to the beneficial owners of stock of record. The enclosed
proxy is revocable by you at any time prior to the exercise thereof by
submitting a written notice of revocation or subsequently executed proxy to the
Secretary of the meeting. Signing and mailing the proxy will not affect your
right to give a later proxy or to attend the meeting and vote your shares in
person. The cost of soliciting proxies will be paid by 1838 Investment Advisors,
Inc. and the Fund. This statement is expected to be distributed to shareholders
on or about July __, 1998.
THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE THE NUMBER OF SHARES
REPRESENTED THEREBY AS DIRECTED OR, IN THE ABSENCE OF SUCH DIRECTION, FOR ALL OF
THE NOMINATED DIRECTORS, FOR THE APPROVAL OF THE NEW INVESTMENT ADVISORY
AGREEMENT, FOR THE RATIFICATION OF THE SELECTION OF THE FUND'S INDEPENDENT
ACCOUNTANTS AND TO TRANSACT SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE
THE MEETING AND ANY ADJOURNMENT THEREOF.
On June 15, 1998, the date for determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting, or any adjournment thereof,
there were issued and outstanding _________ shares of Common Stock of the Fund,
each entitled to one vote, constituting all of the Fund's then outstanding
securities.
The affirmative vote of more than 50% of the shares voted at the Annual
Meeting, assuming a quorum is present, is required for the election of Directors
(Proposal 1) and for the ratification of the selection of Coopers & Lybrand
L.L.P. as independent accountants of the Fund (Proposal 3). The vote of the
holders of a "majority of the outstanding securities" of the Fund, as defined in
the Investment Company Act of 1940, as amended (the "1940 Act"), represented at
the meeting in person or by proxy, is required for approval of the new
Investment Advisory Agreement (Proposal 2) ("1940 Act Majority Vote"). A 1940
Act Majority Vote means the vote of (a) at least 67% of the shares of the Fund
present in person or by proxy, if more than 50% of the shares of the Fund are
represented at the meeting, or (b) more than 50% of the outstanding shares of
the Fund, whichever is less. Abstentions will not be counted for or against any
proposal to which they relate, but will be counted for purposes of determining
whether a quorum is present.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED MARCH 31, 1998 TO ANY SHAREHOLDER REQUESTING SUCH REPORT.
REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE IN WRITING TO THE FUND AT THE
ADDRESS SET FORTH ABOVE OR BY CALLING THE FUND AT 1-800-884-1838.
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
Four directors are to be elected at the Annual Meeting as the entire Board
of Directors, to hold office until the next annual meeting and until their
successors shall have been elected and shall have qualified. A condition to the
consummation of the proposed merger (the "Merger") between 1838 Investment
Advisors, Inc. (the parent company of 1838 Investment Advisors, L.P., the Fund's
investment adviser) and MBIA, Inc. (see Proposal 2 for detail of the Merger) is
that the Fund's Board of Directors must be restructured to comply with Section
15(f) of the 1940 Act. Pursuant to Section 15(f), for a period of three years
after the Merger, at least 75% of the members of the Board of the Fund may not
be "interested persons" (as defined in the 1940 Act) of 1838 Investment
Advisors, Inc., 1838 Investment Advisors, L.P. or MBIA, Inc. At a meeting held
on June 3, 1998, the Board of Directors of the Fund, including a majority of the
independent Directors, voted to reduce the size of the Board of Directors to
four members. Messrs. John H. Donaldson and John J. McElroy, both of whom are
"interested" Directors, will resign from the Board effective _________, 1998.
Consequently, if the four nominees below are elected as Directors of the Fund,
the composition of the Board will be in compliance with Section 15(f).Messrs. J.
Donaldson and John J. McElroy, III are not standing for re-election to the Board
of Directors. Mr. Donaldson, however, will continue to act as President of the
Fund.
If authority is granted on the accompanying proxy to vote in the election
of directors, it is the intention of the persons named in the proxy to vote at
the Annual Meeting for the election of the nominees named below, each of whom
has consented to being named in this proxy statement and to serve if elected. If
any of the nominees is unavailable to serve for any reason, the persons named as
proxies will vote for such other nominee or nominees nominated by the
independent Directors. The Fund currently knows of no reason why any of the
nominees listed below would be unable or unwilling to serve if elected. All of
the nominees are currently directors of the Fund, whose term expires on the date
of the Annual Meeting or when their successors are elected and qualify.
Certain information regarding each of the nominees as well as the current
directors and executive officers of the Fund is set forth below.
2
<PAGE>
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
YEAR FIRST SHARES OWNED PERCENT OWNED
NAME AND POSITION PRINCIPAL OCCUPATION BECAME BENEFICIALLY**** BENEFICIALLY
WITH FUND FOR PAST 5 YEARS AGE DIRECTOR JUNE 15, 1998 JUNE 15, 1998
--------- ---------------- --- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
W. Thacher Brown* President and Director of 1838 50 1988 _____ ****
Director Investment Advisors, Inc., an
employee of 1838 Investment
Advisors, L.P. and Director of Airgas
Inc. and Harleysville Mutual
Insurance Company; President,
Chairman and Trustee of 1838
Investment Advisors Funds; Chartered
Financial Analyst.
John Gilray Christy Chairman of Chestnut Capital 65 1983 3,750 ****
Director Corporation; Director of Echo Bay
Mines, Ltd., Vector Security, Inc.,
The Philadelphia Contributorship for
the Insurance of Houses from Loss by
Fire and Chairman of Foreign Policy
Research Institute; Former Chairman
of the Board and Chief Executive
Officer of IU International
Corporation.
Morris Lloyd, Jr. Former Director, President, Treasurer 60 1989 162 ****
Director and Chief Executive Officer of The
Philadelphia Contributionship for the
Insurance of Houses from Loss by
Fire; Former Director, Chairman and
Chief Executive Officer of Vector
Security, Inc.; Former Director and
Chairman of Franklin Agency, Inc.;
Regional Director, Trinity College.
J. Lawrence Shane Chairman of the Board of Managers 63 1974 507 ****
Director of Swarthmore College; Former Vice
Chairman of Scott Paper Company;
Former Director of CoreStates Bank,
N.A.
</TABLE>
CURRENT DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
PRINCIPAL SHARES OWNED
OCCUPATION BENEFICIALLY****
NAME POSITION WITH FUND AGE POSITION SINCE OR EMPLOYMENT JUNE 15, 1998
---- ------------------ --- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
W. Thacher Brown* Director 50 1988 See "Nominees for See above
Directors"
John Gilray Christy Director 65 1983 See "Nominees for See above
Directors"
3
<PAGE>
John H. Donaldson** President and 44 1990 President of the Fund and _________
Director 1991 an employee of 1838
Investment Advisors, L.P.;
Former Director and
Secretary of Financial
Analysts of Philadelphia
Inc.; Chartered Financial
Analyst
Morris Lloyd, Jr. Director 60 1989 See "Nominees for See Page 3
Directors"
John J. McElroy, III* Director 67 1971*** Treasurer and Director of _________
1838 Investment Advisors,
Inc. and an employee of
1838 Investment Advisors,
L.P.
J. Lawrence Shane Director 63 1974 See "Nominees for See Page 3
Directors"
Anna M. Bencrowsky Vice President 47 1990 Director, Investment _________
and Secretary 1988 Advisory and Mutual Funds
Operations, 1838
Investment Advisors, L.P.;
Vice President, Treasurer
and Secretary of the 1838
Investment Advisors Funds.
Marcia Zercoe Vice President 38 1996 Principal - Head of Fixed 0
Income, 1838 Investment
Advisors, L.P.; 9/94 - 11/95
- Vice President - Head of
Fixed Income, FNB
Maryland; 9/88 - 9/94 -
Vice President - Head of
Fixed Income, Provident
Capital Management,
Philadelphia
</TABLE>
- ------------------
* An "interested person" (as defined in the Investment Company Act of
1940) of the Fund because he is an officer, director and owns shares
of the general partner of the Fund's investment adviser, is an
employee of the Fund's investment adviser and is a director of the
Fund.
** An "interested person" (as defined in the Investment Company Act of
1940) of the Fund because he owns shares of the general partner of the
Fund's investment adviser, is an employee of the Fund's investment
adviser and is an officer and director of the Fund.
*** Mr. McElroy resigned as a director of the Fund in 1983 and was
re-elected as a director of the Fund in 1988.
**** Shares owned beneficially by the directors and executive officers as a
group amounted to less than 1% of the Fund's outstanding shares. Of
Mr. Christy's 3,750 shares, 3,500 are owned by his wife. Of Mr.
Donaldson's _____ shares, _____ shares are held by his wife for the
benefit of their minor child.
The Board of Directors of the Fund held _____ regular meetings during the
Fund's fiscal year ended March 31, 1998. Each of the directors attended all
meetings of the Board of Directors and each committee of which he was a member.
The Audit Committee of the Board currently consists of Messrs. Christy, Lloyd
and Shane, none of whom is an "interested person" of the Fund. The Audit
Committee reviews the scope of the audit by the Fund's independent accountants,
confers with the accountants with respect to the audit and the internal
accounting
4
<PAGE>
controls of the Fund and with respect to such other matters as may be important
to an evaluation of the audit and the financial statements of the Fund, and
makes recommendations with respect to the selection of accountants for the Fund.
The Audit Committee met once during the fiscal year ended March 31, 1998. The
Board does not at present have a nominating or compensation committee. The Fund
pays those directors who are not "interested persons" of the Fund $1,500 per
quarter in addition to $500 for each meeting of the Board and $500 for each
committee meeting, if held separately, attended by him, plus reimbursement for
expenses. Such fees totaled $______ for the fiscal year ended March 31, 1998.
As of June 15, 1998, directors and executive officers (8 persons)
beneficially owned an aggregate of less than 1% of the Fund's outstanding shares
on that date.
The aggregate compensation paid by the Fund to each of its directors
serving during the fiscal year ended March 31, 1998 is set forth in the
compensation table below. Mr. W. Thacher Brown serves on the Board of the Fund
and on the Board of 1838 Investment Advisors Funds, a registered investment
company advised by 1838 Investment Advisors, L.P. (collectively, the "Fund
Complex"). Mr. Brown receives no direct compensation for his services on either
Board. None of the other directors serves on the Board of any other registered
investment company to which the Fund's investment adviser or an affiliated
person of the Fund's investment adviser provides investment advisory services.
<TABLE>
<CAPTION>
TOTAL COMPENSATION NUMBERS OF FUNDS
AGGREGATE PENSION OR RETIREMENT FROM FUND AND FUND IN FUND COMPLEX
NAME OF PERSON AND COMPENSATION BENEFITS ACCRUED COMPLEX PAID TO ON WHICH EACH
POSITION WITH FUND FROM THE FUND AS PART OF FUND EXPENSES DIRECTORS DIRECTOR SERVES
------------------ ------------- ------------------------ --------- ---------------
<S> <C> <C> <C> <C>
W. Thacher Brown*
Director $ 0 $0 $ 0 3
John Gilray Christy
Director $ 9,000 $0 $ 9,000 1
John H. Donaldson*
President and Director $ 0 $0 $ 0 1
Morris Lloyd, Jr.
Director $ 9,000 $0 $ 9,000 1
John J. McElroy, III*
Director $ 0 $0 $ 0 1
J. Lawrence Shane
Director $ 9,000 $0 $ 9,000 1
</TABLE>
* "Interested person" of the Fund as defined by Section 2(a)(19) of the
Investment Company Act of 1940.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE FUND'S SHAREHOLDERS VOTE "FOR"
THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
PROPOSAL NO. 2
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
Shareholders of the Fund are being asked to approve a new investment
advisory agreement ("New Agreement") between 1838 Investment Advisors Inc.
("1838 Inc.") and the Fund.
5
<PAGE>
The reason that shareholders are being asked to approve the New Agreement
is that 1838 Inc. plans to merge with MBIA, Inc. ("MBIA") in a transaction (the
"Merger") that will result in a change of control of 1838 Inc., the parent
company of 1838 Investment Advisors, L.P. ("1838 L.P.") Under the 1940 Act, such
change of control would be deemed to cause the assignment of 1838 L.P.'s current
investment advisory agreement (the "Existing Agreement") with the Fund,
resulting in its automatic termination. Once the Existing Agreement has
terminated, the New Agreement between the Fund and 1838 Inc., the corporate
successor to 1838 L.P., must be submitted to the Fund's shareholders for their
approval.
The following summary provides information about 1838 Inc. and 1838 L.P.,
MBIA and the Merger, as well as the Existing Agreement and the New Agreement.
INFORMATION CONCERNING 1838 INC. AND 1838 L.P.
1838 Inc. is a Delaware corporation whose sole business activity is the
management and holding of its partnership interest in 1838 L.P. 1838 L.P. is a
Delaware limited partnership and is an investment adviser registered under the
Investment Adviser's Act of 1940. MeesPierson Capital Management, Inc. held a
24.9% limited partnership interest in 1838 L.P. until May 15, 1998, when it
redeemed its interest and withdrew as limited partner. At present, 1838 Inc.
holds a 99.33% partnership interest in 1838 L.P., and W. Thacher Brown, Director
of the Fund, holds a 0.67% partnership interest in 1838 L.P. Both 1838 Inc. and
1838 L.P. have offices at Five Radnor Corporate Center, Suite 320, 100
Matsonford Road, Radnor, Pennsylvania 19087.
Each officer or director of the Fund who is also an officer, director,
employee, general partner and/or a shareholder of 1838 L.P. is listed as
follows:
NAME & POSITION WITH THE FUND POSITION WITH 1838 L.P.
----------------------------- -----------------------
W. THACHER BROWN President, Chief Executive
Director Officer and Partner
JOHN H. DONALDSON Principal and Portfolio Manager
Director, Chairman and President
JOHN J. MCELROY, III Principal and Portfolio Manager
Director
MARCIA ZERCOE Principal and Portfolio Manager
Vice President
6
<PAGE>
ANNA M. BENCROWSKY Director, Investment Advisory
Vice President and Secretary and Mutual Funds Operations
INFORMATION CONCERNING MBIA AND THE MERGER
MBIA is a Connecticut corporation with principal offices at 113 King
Street, Armonk, New York 10504. MBIA is a reporting company under the Securities
Exchange Act of 1934. MBIA's common stock is listed on the New York Stock
Exchange under the symbol "MBI."
MBIA Inc., through its wholly-owned subsidiary, MBIA Insurance Corporation,
is an insurer of municipal bonds and structured finance transactions. MBIA also
is a provider of investment management services to the public sector. The name,
address and principal occupation of the principal executive officers and
directors of MBIA are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH MBIA PRINCIPAL OCCUPATION
- ---------------- ------------------ --------------------
<S> <C> <C>
JOSEPH W. BROWN, JR. Director Director of Insurance Entity
Talegen Holdings, Inc.
Seattle, Washington
DAVID C. CLAPP Director Investment Banker
The Goldman Sachs Group, L.P.
New York, New York
DAVID H. ELLIOTT Chairman and Chief Business Executive
MBIA Inc. Executive Officer
Armonk, New York
CLAIRE L. GAUDIANI Director College President
Connecticut College
New London, Connecticut
WILLIAM H. GRAY, III Director Executive of Non-Profit
United Negro College Fund, Inc. Entity
Fairfax, Virginia
FREDA S. JOHNSON Director Executive of Municipal
Government Finance Finance Entity
Associates, Inc.
New York, New York
7
<PAGE>
<CAPTION>
NAME AND ADDRESS POSITION WITH MBIA PRINCIPAL OCCUPATION
- ---------------- ------------------ --------------------
<S> <C> <C>
DANIEL P. KEARNEY Director Former Executive of
Retired Insurance Entity
Hartford, Connecticut
JAMES A. LEBENTHAL Director Executive of Broker/Dealer
Lebenthal & Co., Inc. Entity
New York, New York
PIERRE-HENRI RICHARD Director Executive of Foreign Banking
Credit Local deFrance Entity
Paris, France
JOHN A. ROLLS Director Business Executive
Thermion Systems International
Stamford, Connecticut
RICHARD L. WEILL Vice Chairman Business Executive
MBIA Inc. President
MBIA Insurance Corp.
Armonk, New York
NEIL G. BUDNICK President, Public and Business Executive
MBIA Inc. Corporate Finance
Armonk, New York
JOHN B. CAOUETTE President, Structured Business Executive
MBIA Inc. Finance
Armonk, New York
GARY C. DUNTON Chief Investment Officer, Business Executive;
MBIA Inc. President, Investment Investment Manager
Armonk, New York Management and
Financial Services
Division
LOUIS G. LENZI General Counsel and Attorney
MBIA Inc. Secretary
Armonk, New York
KEVIN D. SILVA Senior Vice President Business Executive
MBIA Inc.
Armonk, New York
8
<PAGE>
<CAPTION>
NAME AND ADDRESS POSITION WITH MBIA PRINCIPAL OCCUPATION
- ---------------- ------------------ --------------------
<S> <C> <C>
JULIETTE S. TEHRANI Executive Vice President, Business Executive
MBIA Inc. Chief Financial Officer
Armonk, New York and Treasurer
</TABLE>
Pursuant to an Agreement and Plan of Merger dated June __, 1998
("Agreement"), 1838 Inc. will merge with MBIA through a stock swap. Pursuant to
the Agreement, MBIA will issue shares of MBIA in exchange for shares of 1838
Inc. The terms of the Agreement generally provide for an exchange of 2.134
shares of MBIA common stock for each share of 1838 Inc. common stock issued and
outstanding. The following Directors of the Fund own shares of 1838 Inc. and
therefore shall receive MBIA common stock in exchange for their 1838 Inc. shares
pursuant to the Agreement: W. Thacher Brown (owns 208,300 shares, or
approximately 36% of the outstanding shares of 1838 Inc.); John H. Donaldson
(owns 13,500 shares, or approximately ___% of the outstanding shares of 1838
Inc.) and John J. McElroy, III (owns 80,200 shares, or ___% of the outstanding
shares of 1838 Inc.). Additionally, according to the terms of the Agreement, Mr.
Brown will enter into an employment agreement with 1838 Inc.
After the Merger, MBIA plans to collapse 1838 L.P. into 1838 Inc., with
1838 Inc. being the corporate successor to 1838 L.P. Following consummation of
the Merger (which is expected to occur on July 31, 1998), 1838 Inc. will be a
wholly-owned subsidiary of MBIA. MBIA plans to create a new holding company
called MBIA Asset Management Corporation, which will hold all the asset
management subsidiaries of MBIA, including 1838 Inc. W. Thacher Brown is
expected to be appointed President of MBIA Asset Management Corporation.
Although the Merger will result in a change of control of 1838 Inc., and
therefore, 1838 L.P., it is expected that 1838 Inc., the corporate successor to
1838 L.P., will continue to operate as 1838 L.P. currently operates. The
investment philosophy and procedures of 1838 L.P. will not change following the
Merger, nor will the current investment personnel. 1838 L.P., and therefore the
Fund, should benefit from the Merger because they will have access to the
personnel and resources of MBIA.
After completion of the Merger, the principal executive officers and
directors of 1838 Inc. and its parent, MBIA, will be the same as listed above,
except that W. Thacher Brown will become a principal executive officer as
President of MBIA Asset Management Corporation.
INFORMATION CONCERNING THE EXISTING AGREEMENT
Subject to the supervision of the Board, 1838 L.P. provides portfolio
management, research and analysis, advice and recommendations with respect to
the purchase and sale of securities for the Fund pursuant to the Existing
Agreement between the Fund and 1838 L.P., dated July 20, 1988. 1838 L.P. also
maintains certain books and records in connection with its services to the
Trust.
9
<PAGE>
The Existing Agreement provides that all costs and expenses not expressly
assumed by 1838 L.P. under the Agreement shall be paid by the Fund, including,
but not limited to, the Fund's operating expenses, including taxes, interest
charges, fees of its attorneys, independent accountants, custodians, transfer
agents and registrars, independent Directors' fees, out-of-pocket costs, if any,
incurred in obtaining prices of portfolio securities and costs incurred in
preparing shareholder reports and proxy materials. The Fund also pays brokerage
commissions on its portfolio transactions.
Pursuant to the Existing Agreement, 1838 L.P. is entitled to be paid by the
Fund on the last day of each month on which the New York Stock Exchange is open
for trading, a fee at the rate of 5/96 of 1% of the first $40 million of the net
asset value of the Fund on such day and 1/24 of 1% of the net asset value of the
Fund on such day in excess of $40 million. For the fiscal year ended March 31,
1998, the Fund paid $446,510 to 1838 L.P. for its services.
1838 L.P. is not liable for any error of judgment or mistake of law for any
loss suffered by the Fund in rendering services under the Existing Agreement
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from the reckless disregard by it of its obligations and duties under
the Existing Agreement.
The Existing Agreement was approved for a two year period by the initial
shareholders of the Fund, was last approved by shareholders at an annual meeting
of shareholders held on September 28, 1988, and was last approved by the
Directors at a meeting held for that purpose on May 7, 1998. The Existing
Agreement remains in effect from year to year if specifically approved at least
annually by vote of "a majority of the outstanding voting securities" of the
Fund, as defined under the Act, or by the Board of Directors and, in either
event, by the vote of a majority of the Directors who are not parties to the
Agreement or interested persons of any such party, cast in person at a meeting
called for such purpose.
The Existing Agreement may be terminated at any time, without the payment
of any penalty, on 60 days' written notice by 1838 L.P., by the Fund acting
pursuant to a resolution adopted by the Board, or by the vote of a majority of
the outstanding shares of the Fund. The Existing Agreement provides for its
automatic termination upon assignment.
The Merger will result in a change of control of 1838 L.P. and may be
deemed to be an "assignment" (as defined in the 1940 Act) of the Existing
Agreement. Such an assignment triggers the automatic termination of the
Agreement pursuant to its terms as required under the 1940 Act. Thus, in order
for the Fund to continue to receive the investment management services it now
receives from 1838 L.P., it is necessary for the Fund, to enter into the New
Agreement to become effective after consummation of the Merger. Except for the
effective date, termination date and change of corporate structure of 1838 L.P.,
the New Agreement contains the
10
<PAGE>
same terms as the Existing Agreement (see "Information Concerning the New
Agreement," below).
If the New Agreement is not approved by the shareholders of the Fund, the
Directors will consider what other action is appropriate based upon the best
interests of the shareholders.
INFORMATION CONCERNING THE NEW AGREEMENT
The terms of the New Agreement are substantially identical to the Existing
Agreement, except for a change in the effective and termination dates and change
of corporate structure of 1838 L.P. The New Agreement has been rewritten from
the Existing Agreement, however, to update the Existing Agreement to show such
things as the change in name of the Fund (from Drexel Bond-Debenture Trading
Fund), and to show the change of address of 1838 L.P. A form of the New
Agreement is attached to this Proxy Statement as Exhibit A.
It is anticipated that the New Agreement will be dated as of the effective
date of the Merger, which is expected to close on July 31, 1998. The New
Agreement will continue in effect for an initial term of two years and may
continue thereafter from year to year if specifically approved at least annually
by the vote of "a majority of the outstanding voting securities" of the Fund or
by the Board of Directors of the Fund and, in either event, by the vote of a
majority of the Directors who are not parties to the New Agreement or interested
persons of any such party, cast in person at a meeting called for such purpose.
EVALUATION OF THE MERGER AND NEW AGREEMENT BY THE BOARD OF DIRECTORS
Section 15(f) of the 1940 Act permits, in the context of a change in
control of an investment adviser to a registered investment company, the receipt
by such adviser, or any of its affiliated persons, of any amount or benefit in
connection with a sale of an interest in the adviser, as long as two conditions
are satisfied. First, an "unfair burden" (as defined in the 1940 Act) must not
be imposed on the investment company as a result of the sale of the interest in
the company's adviser. For purposes of Section 15(f), an unfair burden would
include any arrangement during a two year period after the sale of such interest
whereby the investment adviser, or any interested persons of such adviser,
receives or is entitled to receive any compensation from the investment company
or its shareholders other than fees for bona fide investment advisory or other
services. The second condition of Section 15(f) is that during the three year
period after the sale of such interest, at least 75% of the investment company's
board of directors must not be "interested persons" of the investment company's
adviser or predecessor adviser.
Management of the Fund is not aware of any circumstances arising from the
Merger that might result in the imposition of an "unfair burden" on the Fund.
Furthermore, the second condition of Section 15(f), the 75% disinterested
director requirement, will be satisfied prior to the closing of the Merger if
each nominee for the Board of Directors (Proposal 1) is elected.
11
<PAGE>
The Board of Directors of the Fund met on June 3, 1998 to consider the
Merger and its anticipated effects upon the investment management services that
1838 Inc. currently provides to the Fund. The Board, including a majority of the
Directors who are not parties to the investment advisory agreement or interested
persons of any such party, voted to recommend the New Agreement to the Fund's
shareholders for their approval.
At the June 3, 1998 meeting, the Directors had the opportunity to question
directly representatives of MBIA to determine why MBIA chose to acquire 1838
L.P. and to determine how the Merger will benefit the Fund. MBIA, in acquiring
1838 L.P., is seeking to build its equity management capabilities. MBIA is
experienced and active in fixed income management, and expects to realize
efficiencies in combining its business with that of 1838 L.P.. The Directors, on
behalf of the Fund, considered the structure that 1838 L.P. will be incorporated
into following the Merger. As part of the streamlined organization of the MBIA
investment management entities, 1838 Inc., as corporate successor to 1838 L.P.,
will have access to the personnel and resources of MBIA, which should be of
benefit to the Fund. In addition, MBIA intends to focus on expanding its
external marketing network, which also should benefit the Fund by helping to
expand the Fund's asset base to achieve economies of scale.
The Board of Directors, on behalf of the Fund, requested and reviewed
various materials with respect to MBIA and the Merger, including materials
furnished by MBIA. These materials included information about MBIA, its
personnel, operations and financial condition. MBIA provided its annual report
for its fiscal year ended 1997, as well as MBIA's most recent 10-K and 10-Q
filings. The Board of Directors also reviewed the terms of the Merger of 1838
L.P. into MBIA, and evaluated the ability of MBIA to provide a stable financial
environment for the operation of 1838 Inc., as corporate successor to 1838 L.P.,
and the Fund.
In considering the New Agreement, the Directors considered that the terms
do not contemplate any change in (i) the management or operations of 1838 Inc.,
as corporate successor to 1838 L.P., relating to the Fund; (ii) the personnel
managing the Fund; or (iii) the fees paid by the Fund to 1838 Inc., as corporate
successor to 1838 L.P., for its services. MBIA and 1838 L.P., has informed the
Board of Directors that the Merger is not expected to result in any changes to
the foregoing and that at present MBIA has no plans or proposals to make any
changes in its business or the composition of management or personnel of 1838
Inc., as corporate successor to 1838 L.P., other than as already described
herein, or in the fees charged to the Fund. Following the consummation of the
Merger, 1838 Inc., as corporate successor to 1838 L.P., is expected to continue
to operate in substantially the same manner as 1838 L.P. presently operates.
There can be no assurances, however, that changes may not occur. If, after the
consummation of the Merger, changes in 1838 Inc., as corporate successor to 1838
L.P., are proposed that might materially affect its services to the Fund, the
Board of Directors will consider the effect of those changes and take such
action as it deems advisable under the circumstances.
12
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF PROPOSAL NO. 2 TO APPROVE THE NEW
INVESTMENT ADVISORY AGREEMENT.
RATIFICATION OR REJECTION OF
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 3)
Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia,
Pennsylvania, independent accountants for the Fund, has examined the Fund's
financial statements for the fiscal year ended March 31, 1998, and in connection
therewith has reported on the financial statements of the Fund, prepared the
Fund's tax returns and reviewed certain filings of the Fund with the Securities
and Exchange Commission. Coopers & Lybrand L.L.P. has not performed any other
services for the Fund. The Audit committee of the Board of Directors met on May
7, 1998 and recommended the selection of Coopers & Lybrand L.L.P. as independent
accountants for the Fund for the fiscal year ending March 31, 1999. At a meeting
held on May 7, 1998, the Board of Directors, including a majority of those
directors who are not "interested persons" of the Fund, after considering the
recommendation of the Audit Committee, selected Coopers & Lybrand L.L.P. to act
as independent accountants for the Fund for the year ending March 31, 1999.
Under the Investment Company Act of 1940, such selection must be submitted to
shareholders for ratification or rejection at the Annual Meeting.
A representative of Coopers & Lybrand L.L.P. is expected to be available by
telephone during the course of the meeting and will have the opportunity to
respond to appropriate questions from shareholders and to make such statements
as desired.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE FUND'S SHAREHOLDERS VOTE "FOR"
THE SELECTION OF COOPERS & LYBRAND L.L.P. AS THE FUND'S INDEPENDENT ACCOUNTANTS.
ADDITIONAL INFORMATION
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA
19428, serves as the Fund's administrator.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of June 15, 1998, there were no persons known by the Fund to own
beneficially more than 5% of the outstanding voting shares of the Fund, and all
directors and officers of the Fund as a group beneficially owned less than 1% of
the outstanding voting shares of the Fund.
13
<PAGE>
SHAREHOLDER PROPOSALS
Proposals intended to be presented by shareholders for consideration at the
1998 Annual Meeting of Shareholders must be received by the Secretary of the
Fund no later than March 24, 1999 in order to be included in the proxy statement
for that meeting.
OPEN MATTERS
The management does not know of any matters to be presented at the Annual
Meeting other than those mentioned in this Proxy Statement. If any other
business should come before the meeting, the proxies will vote thereon in
accordance with their best judgment.
By Order of the Directors,
Anna M. Bencrowsky
Secretary
DATED: July __, 1998 1838 Bond-Debenture Trading Fund
IF YOU CANNOT ATTEND THE ANNUAL MEETING, IT IS REQUESTED THAT YOU COMPLETE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED SO THAT THE
MEETING MAY BE HELD AND ACTION TAKEN ON THE MATTERS DESCRIBED HEREIN WITH THE
GREATEST POSSIBLE NUMBER OF SHARES PARTICIPATING.
14
<PAGE>
EXHIBIT A
1838 BOND-DEBENTURE TRADING FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made by and between 1838 BOND-DEBENTURE TRADING FUND, a Delaware
corporation (hereinafter called the "Fund"), and 1838 INVESTMENT ADVISORS, INC.,
a Delaware corporation (hereinafter called the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and engages
in the business of investing and reinvesting its assets in securities, and the
Investment Adviser is a registered Investment Adviser under the Investment
Advisers Act of 1940 (the "Advisers Act") and engages in the business of
providing investment management services; and
WHEREAS, the Fund has selected the Investment Adviser to serve as the
investment adviser for the Fund effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Adviser to manage the
investment and reinvestment of the Fund's assets and to administer its affairs,
subject to the direction of the Board of Directors and officers of the Fund for
the period and on the terms hereinafter set forth. The Investment Adviser hereby
accepts such employment and agrees during such period to render the services and
assume the obligations herein set forth for the compensation herein
15
<PAGE>
provided. The Investment Adviser shall for all purposes herein, be deemed to be
an independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or to represent the Fund in any way, or
in any way be deemed an agent of the Fund. The Investment Adviser shall
regularly make decisions as to what securities to purchase and sell on behalf of
the Fund and shall record and implement such decisions and shall furnish the
Board of Directors of the Fund with such information and reports regarding the
Fund's investments as the Investment Adviser deems appropriate or as the
Directors of the Fund may reasonably request. Subject to compliance with the
requirements of the 1940 Act, the Investment Adviser may retain as a sub-adviser
to the Fund, at the Investment Adviser's own expense, any investment adviser
registered under the Advisers Act.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; and taxes. Officers and employees of
the Investment Adviser may be trustees, directors, officers and employees of the
funds of which the Investment Adviser serves as investment adviser. Officers and
employees of the Investment Adviser who are directors, officers and/or employees
of the Fund shall not receive any compensation from the Fund for acting in such
dual capacity.
16
<PAGE>
In the conduct of the respective businesses of the parties hereto and in
the performance of this Agreement, the Fund and Investment Adviser may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) The Investment Adviser shall place and execute Fund orders for
the purchase and sale of portfolio securities with broker-dealers. Subject to
the primary objective of obtaining the best available prices and execution, the
Investment Adviser will place orders for the purchase and sale of portfolio
securities for the Fund with such broker-dealers as it may select from time to
time, including brokers who provide statistical, factual and financial
information and services to the Fund, to the Investment Adviser, or to any other
fund for which the Investment Adviser provides investment advisory services
and/or with broker-dealers who sell shares of the Fund or who sell shares of any
other fund for which the Investment Adviser provides investment advisory
services. Broker-dealers who sell shares of the funds of which the Investment
Adviser is investment adviser, shall only receive orders for the purchase or
sale of portfolio securities to the extent that the placing of such orders is in
compliance with the Rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Adviser is authorized to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Investment Adviser has determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services
17
<PAGE>
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Adviser's overall responsibilities with
respect to the Fund and to other funds for which the Investment Adviser
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Adviser under the provisions of this Agreement, the Fund shall pay to
the Investment Adviser from the Fund's assets on the last day in each month on
which the New York Stock Exchange is open for trading, a fee at the rate of 5/96
of 1% of the first $40,000,000 of the net asset value of the Fund on such day
and 1/24 of 1% of the net asset value of the Fund on such day in excess of
$40,000,000. The net asset value of the Fund shall be defined as the total
assets of the Fund, less its liabilities, and shall be determined in accordance
with any instructions of the Board of Directors.
If this Agreement shall become effective subsequent to the first day of the
month, or shall terminate before the last day of the month, the Investment
Adviser's compensation for such fraction of the month shall be determined by
applying the foregoing percentages to the average of the weekly net asset values
of the Fund during such fraction of a month (or if none, to the net asset value
of the Fund as calculated on the last day of the preceding month on which the
New York Stock Exchange was open for trading) and in the proportion that such
fraction of a month bears to the entire month.
If this Agreement is terminated prior to the end of any calendar month, the
management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days, during which the
18
<PAGE>
Agreement is in effect, bears to the number of calendar days in the month, and
shall be payable within 10 days after the date of termination.
5. The services to be rendered by the Investment Adviser to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Adviser shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
6. The Investment Adviser, its officers, employees, and agents may engage
in other businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual, and may
render underwriting services to the Fund or to any other investment company,
corporation, association, firm or individual.
7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Investment Adviser to
the Fund, the Investment Adviser shall not be subject to liabilities to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. The Fund agrees that, in the event that the Investment Adviser ceases
to be the Fund's investment adviser for any reason, the Fund will (unless the
Investment Adviser otherwise agrees in writing) promptly take all necessary
steps to propose to the Fund's shareholders at the next regular meeting that the
Fund change to a name not including the word "1838." The Fund agrees that the
word "1838" in the Fund's name is derived from the name of the Investment
Adviser and is the property of the Investment Adviser for copyright and all
other
19
<PAGE>
purposes and that therefore such word may be freely used by the Investment
Adviser as to other investment activities or other investment products.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by vote of
a majority of the outstanding voting securities of the Fund and only if the
terms and the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. No amendment to this Agreement shall be effective unless the terms
thereof have been approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Directors of the Fund
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund at
any time, without the payment of a penalty, on sixty days' written notice to the
Investment Adviser of the Fund's intention to do so, pursuant to action by the
Board of Directors of the Fund or pursuant to a vote of a majority of the
outstanding voting securities of the Fund. The Investment Adviser may terminate
this Agreement at any time, without the payment of penalty on sixty days'
written notice to the Fund of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of
20
<PAGE>
the Fund to pay to the Investment Adviser the fee provided in Paragraph 4
hereof, prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers the day of , 199 .
21
<PAGE>
Attest: 1838 BOND-DEBENTURE TRADING FUND
By:
- ------------------------------ -------------------------------
John H. Donaldson
President
Attest: 1838 INVESTMENT ADVISORS, INC.
By:
- ------------------------------ -------------------------------
W. Thacher Brown
President
22
<PAGE>
PROXY SOLICITED BY THE BOARD OF DIRECTORS
OF 1838 BOND-DEBENTURE TRADING FUND
The undersigned hereby appoints John H. Donaldson, W. Thacher Brown and
John J. McElroy, III, and each of them attorneys, with full powers of
substitution and revocation, to attend the Annual Meeting of Shareholders of
1838 Bond-Debenture Trading Fund on July 22, 1998 and any adjournments thereof
and thereat to vote all shares which the undersigned would be entitled to vote
if personally present, upon the following matters, as set forth in the Notice of
Annual Meeting of Shareholders, and upon such other business as may properly
come before the meeting or any adjournment thereof.
If more than one of said attorneys or their respective substitutes shall be
present and vote at said meeting or any adjournment thereof, a majority of them
so present and voting (or if only one be present and voting, then that one)
shall have and exercise all the powers hereby granted. The undersigned revokes
any proxy or proxies heretofore given to vote such shares at said meeting or any
adjournment thereof.
ALL PROXIES WILL BE VOTED, AND WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS NOTED HEREON.
IF INSTRUCTIONS ARE NOT GIVEN, THIS PROXY WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE IN FAVOR OF THE ELECTION OF ALL OF THE NOMINATED DIRECTORS AND
WILL BE VOTED FOR ITEMS 2, 3, AND 4.
You are encouraged to specify your choices by marking the appropriate boxes
below, but you need not mark any box with regard to a particular proposal if you
wish to vote FOR such proposal. The Proxies cannot vote your shares unless you
sign and return this card.
---------------------------------
<TABLE>
<CAPTION>
|X| Please mark your
votes as in this
example.
1. Election of For all nominees listed WITHHOLD authority NOMINEES: W. Thacher Brown, John
Directors (except as indicated to to vote for all nominees Gilray Christy, Morris Lloyd, Jr., and
the contrary below) listed hereon. J. Lawrence Shane.
<S> <C> <C> <C>
For, except vote withheld from the |_| |_| INSTRUCTION: To withhold authority to
following nominee(s): vote for any individual nominee, write that
nominee's name in the space provided.
___________________________
2. Approval of new Imvestment FOR AGAINST ABSTAIN
Advisory Agreement with 1838 |_| |_| |_|
Investment Advisors, Inc.
3. Proposal to ratify the selection FOR AGAINST ABSTAIN
of Coopers & Lybrand LLP as |_| |_| |_|
Independent accountants for the
Fund for the year ending
March 31, 1999.
4. In their discretion, the proxies FOR AGAINST ABSTAIN
are authorized to vote upon |_| |_| |_|
such other business as may
properly come before the
meeting.
</TABLE>
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
------------------------------------------------------------
