<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
-----------------------
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
-----------------------
EUROPEAN WARRANT FUND, INC
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
-----------------------
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| 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:(1)
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 No.:
3) Filing Party:
4) Date Filed:
- ----------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
Preliminary Copies for use of The Securities
And Exchange Commission Only
THE EUROPEAN WARRANT FUND, INC.
330 Madison Avenue
New York, New York 10017
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 28, 1998
To the Stockholders of
The European Warrant Fund, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of The
European Warrant Fund, Inc. (the "Fund"), a Maryland corporation, will be held
at the offices of the Fund, 330 Madison Avenue, Floor 12A, New York, New York,
at 10:00 a.m. Eastern Time, on May 28, 1998, for the following purposes:
1. To elect two Directors of the Fund (PROPOSAL 1).
2. To approve rights offerings of shares of common stock of the
Fund at prices below the then current net asset value of
such shares (PROPOSAL 2).
3. To approve the distribution of shares at below the then
current net asset value in connection with Fund dividends
and capital gain distributions (PROPOSAL 3).
4. To ratify the selection of KPMG Peat Marwick, LLP as
independent accountants for the Fund for the fiscal year
ending March 31, 1999 (PROPOSAL 4).
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors of the Fund has fixed the close of business on
April 22, 1998 as the record date for the determination of Stockholders
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
MICHAEL QUAIN
Secretary
April 28, 1998
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE
PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED
IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION
OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
<PAGE>
Preliminary Copies for use of The Securities
And Exchange Commission Only
THE EUROPEAN WARRANT FUND, INC.
330 Madison Avenue
New York, New York 10017
ANNUAL MEETING OF STOCKHOLDERS
May 28, 1998
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of The European Warrant Fund, Inc. (the
"Fund") for use at its Annual Meeting of Stockholders to be held on May 28,
1998, at 10:00 a.m. at the offices of the Fund, 330 Madison Avenue, Floor 12A,
New York, New York, and at any adjournments thereof (collectively, the "Annual
Meeting"). A Notice of Annual Meeting of Stockholders and proxy card accompany
this Proxy Statement. The approximate date on which this Proxy Statement is
being mailed to stockholders (the "Stockholders") is April 28, 1998. At the
Annual Meeting, Stockholders will be asked to consider and vote upon the
following:
1. To elect two Directors of the Fund (PROPOSAL 1).
2. To approve rights offerings of shares of common stock of the
Fund at below the then current net asset value of such
shares (PROPOSAL 2).
3. To approve the distribution of shares at below the then
current net asset value in connection with Fund dividends
and capital gains distributions (PROPOSAL 3).
4. To ratify the selection of KPMG Peat Marwick as independent
accountants for the Fund for the fiscal year ending March
31, 1999 (PROPOSAL 4).
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Proxy solicitations will be made, beginning on or about April 28,
1998, primarily by mail, but proxy solicitations also may be made by
telephone, telegraph or personal interviews conducted by officers and
employees of the Fund; Julius Baer Securities Inc. ("Julius Baer Securities"
or the "Adviser "), the investment adviser of the Fund; and Investors Bank &
Trust Company ("Investors Bank "), the administrator and transfer agent of the
Fund. Julius Baer Securities is located at 330 Madison Avenue, New York, NY
10017 and Investors Bank is located at 200 Clarendon Street, 16th Floor,
Boston, MA 02116. In addition, the Fund has engaged D.F. King & Co., Inc. 77
Water Street, New York, NY 10005, (800) 848-3402, to solicit proxies on behalf
of the Fund's Board of Directors for a fee not to exceed $6,500 plus
out-of-pocket of expenses. The costs of proxy solicitation and expenses
incurred in connection with the preparation of this Proxy Statement and its
enclosures will be paid by the Fund. The Fund also will reimburse brokerage
firms and others for their expenses in forwarding solicitation material to the
beneficial owners of Fund shares (the "Shares").
The Fund's Annual Report to Stockholders for the fiscal year ended
March 31, 1998, containing audited financial statements may be obtained,
without charge, by calling 1-800-387-3977 or mailing your request to: The
European Warrant Fund, Inc., c/o Investors Bank & Trust Company, P.O. Box
9130, MFD-23, Boston, MA 02117-9130.
Any Stockholder giving a proxy has the power to revoke it prior to
its exercise by submission of a later dated proxy, by voting in person or by
letter to the Secretary of the Fund.
In the event that a quorum is not present at the Annual Meeting or in
the event that a quorum is present but sufficient votes to approve any of the
proposals are not received, the persons named as proxies may propose one or
more adjournments of the Annual Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority
of those Shares represented at the Annual Meeting in person or by proxy. The
persons named as proxies will vote those proxies which they are entitled to
vote FOR any such proposal in favor
<PAGE>
of such an adjournment and will vote those proxies required to be voted
AGAINST any such proposal against any such adjournment. A Stockholder vote may
be taken on one of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received for approval. Under the
Bylaws of the Fund, a quorum is constituted by the presence in person or by
proxy of the holders of a majority of the outstanding shares of the Fund
entitled to vote at the Annual Meeting.
The Fund has one class of common stock, which has a par value of
$.001 per share (the "Shares"). On April 22, 1998, the record date, there were
10,675,768 Shares outstanding. Each Share outstanding on the record date is
entitled to one vote on all matters submitted to Stockholders at the Annual
Meeting, with pro rata voting rights for any fractional shares. The Fund does
not know of any person who beneficially owned more than 5% of the Fund's
outstanding shares as of the record date.
The tellers appointed for the Annual Meeting will count the total
number of votes cast FOR approval of the proposals for purposes of determining
whether sufficient affirmative votes have been cast. The tellers will count
Shares represented by proxies that withhold authority to vote for a nominee
for election as a Director or that reflect abstentions or "broker nonvotes"
(i.e., Shares held by brokers or nominees as to which (i) instructions have
not been received from the beneficial owners or persons entitled to vote and
(ii) the broker or nominee does not have the discretionary voting power on a
particular matter) as Shares that are present and entitled to vote on the
matter for purposes of determining the presence of a quorum. With respect to
the election of Directors (Proposal 1) , approval of a rights offering
(Proposal 2) and ratification of accountants (Proposal 4), neither withholding
authority to vote nor abstentions or broker nonvotes have any effect on the
outcome of the voting on the matter. However, withholding authority to vote,
abstentions and broker non-votes will have the effect of a "no" vote for
purposes of obtaining the requisite approval of the distribution of Shares of
the Fund at prices below net asset value in connection with Fund dividends and
capital gains distributions (Proposal 3).
PROPOSAL 1: ELECTION OF DIRECTORS
The first proposal to be considered at the Annual Meeting is the
election of two (2) of the six (6) Directors of the Fund. The Board of
Directors is divided into three classes and each year the term of office of
one class expires. At the Annual Meeting, election of Martin Vogel and Antoine
Bernheim - Class I Directors - is proposed, with each Class I Director to hold
office for a period of three years, and until their successors are elected and
qualified. Each of the nominees currently serves as a Director of the Fund and
has consented to continue to serve as a Director of the Fund if elected at the
Annual Meeting. If a designated nominee declines or otherwise becomes
unavailable for election, however, the persons named in the proxy have
discretionary authority to vote in favor of a substitute nominee or nominees.
Any Director may resign and any Director may be removed at any Annual
or Special Meeting of Stockholders called for that purpose by a vote of at
least 75% of the votes entitled to be cast on the matter. In case a vacancy
shall exist for any reason, the remaining Directors may fill such vacancy by
appointing another Director. If, at any time, less than a majority of the
Directors holding office have been elected by the Stockholders, the Directors
then in office will call a Stockholders meeting for the purpose of electing a
Board of Directors.
Set forth below is a list of the nominees for election to the Fund's
Board of Directors, together with certain other information.
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Served as Beneficial Ownership(2)
Name, Age, Principal Occupation and Other Director of Shares of the Fund as
Directorships(1) During the Past Five Years Since Class of March 31, 1998
---------------------------------------------- ---------- ------- --------------------------
<S> <C> <C> <C>
Martin Vogel*, age 34...................................... 1997 I --
Director of the Legal and Tax Department, Julius Baer Investment Funds
Services, Ltd. (Zurich) (1996-present); Attorney, Schaufelberger & van Hoboken
(1994-1996); Attorney, Rohner & Partner (1993-1994); Attorney, Rinderknecht
Schaufelberger Glaus & Stadelhofer (prior to 1993). Secretary of the Board of
Directors of the Luxembourg domiciled investment companies and of Julius Baer
Investment Funds Services, Ltd. (1996-present). Trustee of BJB Investment
Funds (1997-present)
Antoine Bernheim, age 44................................... 1990 I --
President, Dome Capital Management Inc.; Chairman,
Dome Securities Corp. (1995-present); President, The U.S.
Offshore Funds Directory Inc.; Director, Dome Capital
Ltd.; Director, W. P. Stewart & Co. Growth Fund, Inc.;
Director, College Savings Bank.
</TABLE>
The following Directors of the Fund will continue to serve in such
capacity until their terms of office expire and their successors are elected
and qualified:
<TABLE>
<CAPTION>
Amount and Nature of
Served as Beneficial Ownership(2)
Name, Age, Principal Occupation and Other Director of Shares of the Fund as
Directorships(1) During the Past Five Years Since Class of March 31, 1998
---------------------------------------------- ---------- ------- --------------------------
<S> <C> <C> <C>
Bernard Spilko*, age 56.................................... 1993 III --
Chairman of the Board; Deputy Branch Manager & Senior
Vice President, Bank Julius Baer & Co., Ltd. (New York
Branch); Managing Director, Julius Baer Securities Inc.;
Director, Baer American Banking Corp.;Chairman of the
Board, BJB Investment Funds.
Lawrence A. Fox, age 75.................................... 1990 II --
Consulting Economist
Thomas J. Gibbons, age 50.................................. 1993 III --
President, Cornerstone Associates Management
(Consulting Firm)
Harvey B. Kaplan, age 60................................... 1990 III --
Controller (Chief Financial Officer), Easter
Unlimited, Inc. (toy manufacturer and importer); Trustee,
BJB Investment Funds
</TABLE>
* "Interested person" of the Fund as defined in the Investment Company Act of
1940 (the "1940 Act").
(1)Directorships of companies that are required to report to the Securities
and Exchange Commission (the "SEC") or are registered as investment
companies under the 1940 Act. Except as otherwise noted, each individual
has held the office indicated or other offices in the same organization for
at least five years.
(2)For this purpose "beneficial ownership" is determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The information as to
beneficial ownership is based upon information furnished to the Fund by the
Directors. Mr. Spilko has shared voting power with respect to 2500 of his
Shares. As of March 31, 1998, the Directors and officers of the Fund
collectively beneficially owned less than 1% of the outstanding Shares.
3
<PAGE>
The Board of Directors held 4 meetings during the fiscal year ended
March 31, 1998, and all of the Directors attended at least 75% of the Board
and Committee meetings of which they were members.
The following table lists the compensation paid to each of the
Directors by both the Fund and the Fund Complex during the Fund's fiscal year
ended March 31, 1998. For purposes of this table the term "Fund Complex"
includes all funds that have a common or affiliated investment adviser:
Compensation Table*
Name of Person, Aggregate Compensation Total Compensation from
Position From Fund Fund and Fund Complex
-------- --------- ---------------------
Antoine Bernheim, Director $8,500 $8,500
Lawrence A. Fox, Director $8,500 $8,500
Thomas J. Gibbons, Director $8,500 $8,500
Harvey B. Kaplan, Director $8,750 $8,750
Total . . . . . $34, 250
- -----------
* The remainder of the Directors and officers of the Fund did not receive
compensation from either the Fund or the Fund Complex. The Fund has no
retirement or pension plan for its Directors and officers.
The Board of Directors has an Audit Committee consisting of all of
the Directors who are not "interested persons" (as defined in the 1940 Act) of
the Fund. Currently, Messrs. Bernheim, Fox, Gibbons and Kaplan comprise the
Audit committee. The Audit Committee reviews the scope and results of the
Fund's annual audit with the Fund's independent accountants and recommends the
engagement of such accountants. The Audit Committee had one meeting during the
fiscal year ended March 31, 1998. The Fund does not have a compensation or
nominating committee. Compensation matters and nominations are considered by
the full Board of Directors.
Nominees recommended by Stockholders will be considered by the Board
of Directors. Recommendations should be submitted in writing to the Secretary
of the Fund.
The executive officers of the Fund are listed in the table below,
with the exception of its Chairman of the Board Mr. Spilko, for whom
information is provided above. Robert Discolo, Hansruedi Huber and Michael
Quain were first elected to office in 1993, 1992 and 1997 respectively. This
table also shows certain additional information regarding Messrs. Discolo,
Huber and Quain. Each officer of the Fund will hold such office until a
successor has been elected by the Board of Directors.
<TABLE>
<CAPTION>
Principal Occupations and Other
Name, Age Position Affiliations During the Past Five Years
- --------- -------- ---------------------------------------
<S> <C> <C>
Robert Discolo President First Vice President, Bank Julius Baer & Co., Ltd. (New
age 36 York Branch) and Julius Baer Securities; prior to July
1991, President of BJB Investment Funds; prior to 1991
Assistant Controller (Partnerships), Merrill Lynch & Co.
Hansruedi Huber Chief Investment Officer Senior Vice President, Julius Baer Securities Inc.; First
age 39 Vice President, Bank Julius Baer & Co., Ltd.; Senior
Vice President of Julius Baer Asset Management Ltd.
Philipp Burger Assistant Vice President Vice President, Julius Baer Securities Inc.;
age __ Vice President of Julius Baer Asset Management Ltd.
4
<PAGE>
Michael Quain Treasurer, Chief Financial Officer Vice President of Bank Julius Baer & Co., Ltd.
age 40 and Secretary (New York Branch) and Julius Baer Securities Inc.
Jack W. Clark Assistant Treasurer Director, Investors Bank & Trust Company.
age __
Paul J. Jasinski Assistant Treasurer Managing Director, Investors Bank & Trust
age __ Company.
Susan Mosher Assistant Secretary Director, Investors Bank & Trust Company, since
age __ 1994; Manager, Business Assurance, Coopers &
Lybrand 1988-1994.
Andrew S. Josef Assistant Secretary Director, Investors Bank & Trust Company.
age __
</TABLE>
Required Vote
Election of each of the listed nominees for Director of the Fund will
require the affirmative vote of a plurality of the votes cast at the Annual
Meeting in person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH NOMINEE.
PROPOSAL 2: APPROVAL OF SALES PURSUANT TO RIGHTS OFFERINGS OF SHARES OF
COMMON STOCK OF THE FUND AT PRICES BELOW THE THEN
CURRENT NET ASSET VALUE OF SUCH SHARES
The second proposal to be submitted at the Meeting will be the
approval or disapproval of sales pursuant to a rights offering to existing
common Stockholders of Shares of the Fund and of future rights offerings, each
of which may be at prices below the then current net asset value of such
Shares.
Under the 1940 Act, a registered closed-end investment company such
as the Fund may not sell any shares of common stock of which it is the issuer
at a price below the then current net asset value of such shares, exclusive of
any distributing commission or discount, except (i) in connection with an
offering to the holders of one or more classes of its capital stock; (ii) with
the consent of a majority of its common shareholders; (iii) upon conversion of
a convertible security in accordance with its terms; (iv) upon the exercise of
a warrant issued in accordance with the provisions of the 1940 Act; or (v)
under such other circumstances as the SEC may permit by rules and regulations
or orders for the protection of investors.
A rights offering of additional shares to then existing common
Stockholders of the Fund is a technique for raising additional funds for
investment. The staff of the SEC has taken the position, in connection with
rights offerings made without shareholder approval and at a price below the
then current net asset value of the common stock of a registered closed-end
investment company, that the company's directors must make a good faith
determination that the offering, including the number of rights per share and
offering price of the rights, would result in a net benefit to existing
shareholders. The Board of Directors of the Fund, including those directors
who are not "interested persons" of the Fund, approved a Transferable Rights
Offering (the "Offer") for the Fund at an April 16, 1998 Special Board Meeting
(the "Special Board Meeting"). The Board determined that it would be in the
best interests of the Fund and its Stockholders to increase the assets of the
Fund available for investments thereby permitting the Fund to be in a better
position to more fully take advantage of investment opportunities consistent
with the Fund's investment objective. Among other things, the Board of Directors
took into account the fact that a well-subscribed rights offering may reduce the
Fund's expense ratio and considered that such a rights offering could result
in an improvement in the liquidity of the trading market for shares of the
Fund's Common Stock, although no assurance can be given that either of these
results will be achieved.
THE OFFER
Following is a summary of the Offer approved by the Fund's Board of
Directors at the Special Board Meeting. In the event Stockholders approve the
Offer, it is expected that the Fund will provide Stockholders with a
5
<PAGE>
current prospectus describing the Offer in greater detail. At that time,
Stockholders will be asked to consider whether they wish to purchase additional
shares of the Fund. Stockholders are not being asked at this time to consider
purchasing additional Shares of the Fund.
Terms of the Offer
If this proposal is approved by Stockholders, it is anticipated that
each Stockholder as of a specified date (the "Record Date") will be issued one
transferable right (the "Right") for each share of Common Stock owned on the
Record Date. The Rights entitle the holder to acquire at a given price (the
"Subscription Price") one Share for each three Rights held (the "Primary
Subscription"). In addition, any Stockholder as of the Record Date ("Record
Date Stockholder") who fully exercises all Rights initially issued to him
(other than those Rights which cannot be exercised because they represent the
right to acquire less than one Share) will be entitled to subscribe for Shares
which were not otherwise subscribed for by others through the Primary
Subscription (the "Over-Subscription Privilege"). Rights will be evidenced by
subscription certificates. The number of Rights issued to each holder will be
stated on subscription certificates delivered to such holder. The Rights are
transferable until the expiration of the offer and will be admitted for
trading on the New York Stock Exchange (the "Exchange"). Although no assurance
can be given that a market for the Rights will develop, trading in the Rights
on the Exchange may be conducted until the close of trading on the last
Exchange trading day prior to expiration.
The Subscription Price is yet to be determined, but will likely be
below the then current net asset value of the Fund's common stock. If the
Offer by the Fund is made at a price below the then current net asset value of
the shares and if the proceeds of the Offer were to be invested over a period
of months in the types of securities in which the Fund invests, then, because
such a use of proceeds would not involve any precisely determinable return to
the Fund's existing Stockholders, the Offer might not ultimately result in a
measurable net benefit to such Stockholders. For this reason, the Board of
Directors of the Fund is seeking Stockholder approval of this below net asset
value Offer and/or future rights offerings, although such approval is not
required as a matter of law.
Under the 1940 Act, the subscription period for both a transferable
and non-transferable rights offerings may not exceed one hundred twenty (120)
days.
Purpose of the Offer
The Board of Directors of the Fund has determined that it would be in
the best interests of the Fund and its Stockholders to increase the assets of
the Fund available for investment thereby permitting the Fund to be in a
better position to more fully take advantage of investment opportunities in the
European warrant market. The Adviser advised the Board at the Special Board
Meeting, that the Adviser believes that the raising of new assets will allow the
Fund to better position itself and take advantage of unique investment
opportunities and fundamental changes arising from the European Monetary Union
("EMU") which commences January 1, 1999. The EMU is expected to cover a large
part of Western Europe, bounded on its periphery by Finland in the North,
Ireland and Portugal in the West, Italy in the South and Austria in the East.
Approximately five percent of the world's population (290 million people) live
in this area which produces no less than 24 percent of total global economic
output. The Adviser believes that with the introduction of the Euro, the second
largest capital market and the second largest equity market (after the United
States) will be created. The Adviser expects the Euro to revolutionize the whole
investment process in European stocks. The Adviser believes that from a top down
investment approach, sector allocation will be of much greater significance than
country selection. The Adviser expects that the demand for the European
corporate sector leaders will increase. New countries joining the EMU will
converge their interest rates to the Euro interest rate. The former high
yielding countries such as Italy, Spain, Portugal and Ireland have greatly
benefited from this convergence and have significantly outperformed the European
equity index over the last 2 years. The Adviser believes that over the next 5 to
10 years additional countries will join the EMU providing exceptional investment
opportunities for the Fund. The Directors concluded that it was in the
Shareholders' best interest to issue new Shares of the Fund to take advantage of
the growing European market.
The Directors also considered that as of the date of the Special
Board Meeting the Fund had significant unrealized capital gains on Fund
investments and that if the Adviser were to have to sell existing investments
in order to take advantage of new opportunities available in the European
markets, the Fund would recognize taxable gains and would be required under
the Internal Revenue Code of 1986, as amended (the "Code") to distribute these
gains to Shareholders. In addition, the Board of Directors took into account
the fact that a well-subscribed rights offering, in increasing the size of the
Fund, may reduce the Fund's expense ratio after the expenses associated with
6
<PAGE>
the Offer have been recouped and considered that such a rights offering could
result in an improvement in the liquidity of the trading market for shares of
the Fund's Common Stock, although no assurance can be given that any of these
results will be achieved.
In addition, the Offer seeks to reward the long-term Stockholder by
giving existing Stockholders the right to purchase additional shares at a
price that may be below market and/or net asset value without incurring any
commission charge. The distribution to Stockholders of transferable Rights
which themselves may have intrinsic value will also afford nonsubscribing
Stockholders the potential of receiving a cash payment upon sale of such
Rights, receipt of which may be viewed as compensation for the possible
dilution of their interest in the Fund.
The Board of Directors also considered alternatives to the Offer as
well as the proposed terms of the Offer, the estimated expenses of the Offer,
and its dilutive effect, including its effect on stockholders of the Fund who
do not exercise their Rights. The Board also considered the possible impact of
the Offer on the trading price of the Fund's shares of Common Stock, and the
treatment of foreign shareholders under the Offer. In its deliberations, the
Board recognized that the Adviser was subject to a conflict of interest in
recommending approval of the Offer. After careful consideration, the Board of
Directors unanimously voted to approve the Offer.
The Adviser's view as to current investment opportunities available
in the European warrant markets is based on prevailing market conditions.
There can be no assurance that these conditions will not materially change
prior to the investment of the proceeds of the Offer or thereafter, in
which case the benefits expected to be derived from the Offer may not be
realized.
The Fund's Adviser and Administrator will benefit from the Offer
because the Adviser's fee and the Administrator's fee are based on the average
weekly net assets of the Fund. It is not possible to state precisely the
amount of additional compensation the Adviser or the Administrator will
receive as a result of the Offer because the proceeds of the Offer will be
invested in additional portfolio securities which will fluctuate in value.
However, assuming all Rights are exercised and that the Fund receives the
maximum proceeds of the Offer, the annual compensation to be received by the
Adviser and the Administrator would be increased by approximately $_______and
$______, respectively.
Furthermore, the 1940 Act limits the Funds investments in warrants
issued by any one broker-dealer to 5% of the Fund's total assets and prohibits
the Fund's investment in warrants issued by certain affiliates of the Fund,
including affiliates of the Adviser. It is currently expected that an
affiliate of the Adviser will merge with an entity from which the Fund
purchases a significant supply of its warrants. After the merger, the Fund
will no longer be permitted to purchase warrants issued by such entity. The
merger could impede the Fund's ability to satisfy its investment objective.
The Board of Directors of the Fund may, at any time prior to the
issuance and sale of Shares by the Fund, determine to take such actions, which
may include withdrawal, cancellation or postponement of the Offer, as it deems
appropriate in light of then prevailing market conditions.
Over-Subscription Privilege
It is expected that the offer will include an Over-Subscription
Privilege. Any Shares for which subscriptions have not been received will be
offered, by means of the Over-Subscription Privilege, to Record Date
Stockholders who have exercised all the exercisable Rights initially issued to
them and who wish to acquire more than the number of Shares for which the
Rights issued to them are exercisable. Record Date Stockholders who exercise
all the Rights initially issued to them will have the opportunity to indicate
on the Subscription Certificate how many Shares they are willing to acquire
pursuant to the Over-Subscription Privilege. If sufficient Shares remain after
the Primary Subscriptions have been exercised, all over-subscriptions will be
honored in full. If sufficient Shares are not available to honor all
over-subscriptions, the available Shares will be allocated among those who
over-subscribe based on the number of Rights originally issued to them by the
Fund so that the number of Shares issued to Record Date Stockholders who
subscribe pursuant to the Over-Subscription Privilege will generally be in
proportion to the number of Shares owned by them in the Fund on the Record
Date. The percentage of remaining Shares each over-subscribing Record Date
Stockholder may acquire will be rounded down to result in delivery of whole
Shares. The allocation process may involve a series of allocations in order to
assure that the total number of Shares available for Over-Subscriptions is
distributed on a pro rata basis.
7
<PAGE>
Dilution
The Fund's shares have generally traded at prices below their current
net asset value. Since the prices at which a public offering of the Fund's
shares could be made must, as a practical matter, be less than the values set
in the securities markets, the Fund would be precluded from increasing its
asset base through a common stock rights offering to existing Stockholders if
such offering cannot be made at a price below the then current net asset
value, assuming that the shares are trading at a price below their net asset
value at the time of the offering. However, such a below net asset value
offering involves immediate dilution of the assets, earnings and relative
voting power of those existing Stockholders who do not fully exercise their
subscription privileges.
An immediate dilution of the aggregate net asset value of the shares
owned by Record Date Stockholders is likely to be experienced as a result of
the Offer because the Subscription Price is likely to be less than the then
net asset value per share, and the number of shares outstanding after the
Offer is likely to increase by a greater percentage than the increase in the
size of the Fund's assets. In addition, as a result of the terms of the Offer,
Record Date Stockholders who do not fully exercise their rights should expect
that they will, at the completion of the Offer, own a smaller proportional
interest in the Fund than would have been the case had they fully exercised
their Rights. Although it is not possible to state precisely the amount of
such a decrease in value, such dilution may be substantial. For example, as of
April 16, 1998, the net asset value of the Fund shares was $___, the closing
price of the Fund's shares on the New York Stock Exchange was $____, and the
Fund had _________ shares outstanding. If the Fund had sold an additional
__________ shares on such date pursuant to a rights offering at a price of
$____ per share before expenses, then the net asset value of each of shares
outstanding prior to the Offer would have been reduced by __% to $____.
The risk exists with the Offer and with future rights offerings that
such dilution to non-exercising Stockholders will not be wholly offset, and
may even be increased, by the investment performance of the Fund attributable
to the additional cash raised by such an offering. The Board has attempted to
reduce this risk by not authorizing an offering unless it first determines
that, notwithstanding any immediate dilution suffered by the Fund's then
existing Stockholders, such offering may ultimately result in a net benefit to
such Stockholders because of one or more of the following: (i) a reduction of
the Fund's expenses per share expected to result therefrom, (ii) prevailing
securities market conditions, (iii) the Adviser's views as to the prospects
for issuers of the types of securities in which the Fund invests and (iv) in
the case of a transferable rights offering, management has used its best
efforts to ensure an adequate trading market in the rights exists for use by
those Stockholders who do not wish to exercise such rights, which may include
listing the rights for trading on a national securities exchange. It is
impossible to determine whether or the extent to which the Fund's Board will
succeed in reducing the risk of dilution to non-exercising Stockholders.
This proposal covers the approval of the Offer and future rights
offerings which may, but are not required to, have similar terms. A
Stockholder's approval of the Offer does not obligate such Stockholder to
purchase additional shares of the Fund. If the proposal is approved by
Stockholders and market conditions remain at a level where management
continues to believe that the Offer is in the best interests of the Fund and
its Stockholders, the Fund will provide a prospectus to Stockholders
containing a more detailed description of the Offer. The rights offering is
subject to the effectiveness of the Fund's registration statement which has
been filed with the Securities and Exchange Commission. These securities may
not be sold nor may offers be accepted prior to the time that the registration
statement becomes effective. This communication shall not constitute an offer
to sell or the solicitation of offers to buy nor shall there be any sale of
the Fund's securities in any state in which such offer, solicitation or sale
would be unlawful prior to the registration or qualification under the
securities laws of any such state. The rights offering will be made only by
means of a prospectus. In the event market conditions or other considerations
lead management to believe that the Offer is no longer in the best interests
of the Fund and its Stockholders, management may postpone or terminate the
Offer.
Required Vote
Approval of this proposal by the Stockholders will require the
affirmative vote of a plurality of the votes cast on this proposal in person
or by proxy. The Fund will not be obligated to either make or refrain from
making the Offer or another rights offering as a result of Stockholder
approval or disapproval of this proposal. Any specific rights offering
proposal must be approved by the Fund's Board after making the determination
described in the second preceding paragraph.
8
<PAGE>
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE DIRECTORS WHO ARE NOT "INTERESTED
PERSONS" OF THE FUND, RECOMMEND THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL OF
SALES PURSUANT TO THE RIGHTS OFFERING AND FUTURE RIGHTS OFFERINGS OF SHARES OF
THE FUND AT PRICES BELOW THE THEN CURRENT NET VALUE ASSET OF SUCH SHARES.
PROPOSAL 3: APPROVAL OF THE DISTRIBUTION OF SHARES
AT BELOW NET ASSET VALUE OF SUCH SHARES IN CONNECTION
WITH FUND DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The third proposal to be submitted at the Meeting will be the
approval or disapproval of the distribution of common shares of the Fund in
connection with the Fund's dividends and capital gains distributions.
Stockholders are being asked to re-approve certain provisions of the Fund's
Dividend Reinvestment and Cash Purchase Plan (the "Reinvestment Plan")
relating to the issuance by the Fund of Shares at below the then current net
asset value and to approve the Fund's Dividend Reinvestment Privilege (the
"Reinvestment Privilege") as more fully described below.
The Fund has offered the Reinvestment Plan since __________ and is
seeking re-approval of certain provisions of the Reinvestment Plan and is also
seeking Stockholder approval for the Reinvestment Privilege. Each of the plans
offers existing Stockholders the option in certain cases to elect to receive
Fund dividends and capital gains in the form of additional shares of the
Fund's common stock instead of cash. Such stock may be issued by the Fund at
below the then current net asset value of such shares. As discussed above in
proposal 2, under the 1940 Act, a registered closed-end investment company
such as the Fund may not sell any shares of common stock of which it is the
issuer at a price below the current net asset value of such shares, exclusive
of any distributing commission or discount, except (i) in connection with an
offering to the holders of one or more classes of its capital stock; (ii) with
the consent of a majority of its common shareholders; (iii) upon conversion of
a convertible security in accordance with its terms; (iv) upon the exercise of
a warrant issued in accordance with the provisions of the 1940 Act; or (v)
under such other circumstances as the SEC may permit by rules and regulations
or orders for the protection of investors. For this reason, the Directors are
seeking stockholder approval to permit the Fund to issue new shares to existing
Stockholders at below net asset value in connection with Fund dividends and
capital gain distributions.
The Fund has qualified, and intends to continue to qualify each year,
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, generally, the Fund
will not be subject to U.S. Federal income tax on its net investment income and
net realized long-term and short-term capital gains, if any, that it distributes
to its Stockholders, but will be subject to tax at regular corporate rates on
any income or gains that it does not distribute. Accordingly, the Fund has and
intends to continue to distribute annually to its Stockholders substantially all
of its net investment income and net realized capital gains.
The Reinvestment Plan and the Reinvestment Privilege give
Stockholders the option to elect to receive their dividends and capital gains
distributions in the form of additional shares of the Fund instead of cash.
Below is a summary of each plan.
Dividend Reinvestment and Cash Purchase Plan
The Reinvestment Plan seeks to reward the long-term Stockholder by
giving Stockholders the right to purchase additional shares at a price that
may be below net asset value without incurring any commission charge. Pursuant
to the Reinvestment Plan, each Stockholder is deemed to have elected, unless
the plan agent is otherwise instructed by the Stockholder in writing, to have
all distributions, net of any applicable U.S. withholding tax,
automatically reinvested in additional shares of the Fund by Investors Bank &
Trust Company, the Fund's transfer agent (the "Transfer Agent"), as the plan
agent. Stockholders who do not participate in the Reinvestment Plan will
receive all dividends and distributions in cash, net of any applicable U.S.
withholding tax, paid in dollars by check mailed directly to the Stockholder
by the Transfer Agent as dividend-paying agent. Stockholders who do not wish
to have dividends and distributions automatically reinvested must notify the
Transfer Agent, as the plan agent for the Fund. Dividends and distributions
with respect to shares registered in the name of a broker-dealer or other
nominee (i.e., in "street name") will be reinvested under the Reinvestment
Plan unless the service is not provided by the broker or nominee or the
Stockholder elects to receive dividends and distributions in cash.
9
<PAGE>
The plan agent serves as agent for the Stockholders in administering
the Reinvestment Plan. If the Directors of the Fund declare an income dividend
or a capital gains distribution payable either in the Fund's Common Stock or
in cash, as Stockholders may have elected, generally nonparticipants in the
Reinvestment Plan will receive cash and participants in the Reinvestment Plan
will receive Common Stock to be issued by the Fund. If the market price per
share on the valuation date equals or exceeds net asset value per share on
that date, the Fund will issue new shares to participants valued at net asset
value or, if the net asset value is less than 95% of the market price on the
valuation date, then valued at 95% of the market price. If net asset value per
share on the valuation date exceeds the market price per share on that date,
participants in the Reinvestment Plan will receive shares of stock from the
Fund valued at market price. The valuation date is the dividend or
distribution payment date or, if that date is not a New York Stock Exchange
trading day, the next preceding trading day. To the extent the Fund issues
shares of Common Stock to participants in the Reinvestment Plan at a discount
to net asset value, the remaining Stockholders' interests in the Fund's net
assets will be diluted proportionately. See the section entitled "Dilution"
under Proposal 2 for a more detailed discussion of the effects of
dilution on Stockholders. If the Fund should declare an income dividend or
capital gains distribution payable only in cash, the plan agent will, as agent
for the participants, buy Fund shares in the open market, on the New York
Stock Exchange or elsewhere, for participants' accounts on, or shortly after,
the payment date.
Participants in the Reinvestment Plan have the option of making
additional cash payments to the plan agent, semi-annually, in any amount from
$100 to $3,000, for investment in the Fund's Common Stock. The plan agent will
use all funds received from participants to purchase Fund shares in the open
market on or about February 15 and August 15 of each year. Any voluntary cash
payments received more than 30 days prior to these dates will be returned by
the plan agent; interest will not be paid on any uninvested cash payments. To
avoid unnecessary cash accumulations, and also to allow ample time for receipt
and processing by the plan agent, it is suggested that participants send in
voluntary cash payments to be received by the plan agent approximately 10 days
before February 15 or August 15, as the case may be. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the plan agent not less than 48 hours before the payment is to be invested,
a participant's tax basis in his shares acquired through this optional
investment right will equal his cash payments to the Reinvestment Plan,
including any cash payments used to pay brokerage commissions allocable to his
acquired shares.
The plan agent maintains all Stockholder accounts in the Reinvestment
Plan and furnishes written confirmations of all transactions in the accounts,
including information needed by Stockholders for personal and tax records.
Shares in the account of each Reinvestment Plan participant will be held by
the plan agent in the name of the participant, and each Stockholder's proxy
will include those shares purchased pursuant to the Reinvestment Plan.
In the case of a Stockholder, such as a bank, broker or nominee, that
holds shares for others who are the beneficial owners, the plan agent will
administer the Reinvestment Plan on the basis of the number of shares
certified from time to time by the Stockholder as representing the total
amount registered in the Stockholder's name and held for the account of
beneficial owners who are to participate in the Reinvestment Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions payable in either stock or cash. The plan agent's fees for
the handling of reinvestment of such dividends and capital gains distributions
will be paid by the Fund. There will be no brokerage charges with respect to
shares issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, each participant will
be charged by the plan agent a pro rata share of brokerage commissions incurred
with respect to the plan agent's open market purchases in connection with
voluntary cash payments made by the participant or the reinvestment of dividends
or capital gains distributions payable only in cash. Brokerage charges for
purchasing small amounts of stock for individual accounts through the
Reinvestment Plan are expected to be less than the usual brokerage charges for
such transactions because the plan agent will be purchasing stock for all
participants in blocks and prorating the lower commission thus obtainable.
Brokerage commissions will vary based on, among other things, the broker
selected to effect a particular purchase and the number of participants on whose
behalf such purchase is being made. The Fund cannot predict, therefore, whether
the cost to a participant who makes a voluntary cash payment will be less than
if a participant were to make an open market purchase of the Fund's Common Stock
on his own behalf.
The receipt of dividends and distributions in stock under the
Reinvestment Plan will not relieve participants of any income tax or
withholding tax that may be payable on such dividends or distributions.
Experience under the Reinvestment Plan may indicate that changes in
the Reinvestment Plan are desirable. Accordingly, the Fund and the plan agent
reserve the right to terminate the Reinvestment Plan as applied to any
voluntary cash payments made and any dividends or distributions paid
subsequent to notice of the termination sent to
10
<PAGE>
the members of the Reinvestment Plan at least 30 days before the semi-annual
contribution date, in the case of voluntary cash payments, or the record date
for dividends or distributions. The Reinvestment Plan also may be amended by the
Fund or the plan agent, but (except when necessary or appropriate to comply with
applicable law, rules or policies of a regulatory authority) only by at least 30
days' written notice to members of the Reinvestment Plan.
The Dividend Reinvestment Privilege
Like the Reinvestment Plan, the Reinvestment Privilege seeks to
reward the long-term Stockholder by giving Stockholders the right to purchase
additional shares at a price that may be below net asset value without
incurring any commission charge. The Reinvestment Plan, however, may not
always be a practical way for many Fund Stockholders who desire to reinvest
the Fund's dividends and capital gains distributions to do so, especially
Stockholders who own their Shares through a broker who does not offer a
dividend reinvestment plan. For these Stockholders, the Fund has designed the
Dividend Reinvestment Privilege. Pursuant to the Reinvestment Privilege, if
the Directors of the Fund declare a dividend or capital gains distribution
payable either in the Fund's Common Stock or in cash, Stockholders will be
given the option each year to receive cash or common stock issued by the Fund.
The Fund will send Stockholders a notice indicating a distribution payable in
cash or in Common Stock and Stockholders who desire the distribution in the
form of Common Stock need do nothing further. Stockholders who desire the
distribution in cash need only notify the Fund in the form specified in the
notice. Like the Reinvestment Plan, the Reinvestment Privilege provides that
if the market price per share on the valuation date equals or exceeds net
asset value per share on that date, the Fund will issue new shares to
participants valued at net asset value or, if the net asset value is less than
95% of the market price on the valuation date, then valued at 95% of the
market price. If net asset value per share on the valuation date exceeds the
market price per share on that date, participants in the Plan will receive
shares of stock from the Fund valued at market price. The valuation date is
the dividend or distribution payment date or, if that date is not a New York
Stock Exchange trading day, the next preceding trading day. To the extent the
Fund issues shares of Common Stock to Stockholders at a discount to net asset
value, the remaining Stockholders' interests in the Fund's net assets will be
diluted proportionately. See the section entitled "Dilution" under Proposal 2
for more a more detailed discussion of the effects of dilution on
Stockholders. If the Fund should declare a dividend or capital gains
distribution payable only in cash, Stockholders not in the Reinvestment Plan
will receive cash and Stockholders in the Reinvestment Plan will receive
distributions as provided for in the Reinvestment Plan.
There will be no charge to Stockholders for reinvesting such
dividends or capital gains distributions payable in either stock or cash. The
fees for the handling of reinvestment of such capital gains distributions will
be paid by the Fund. There will be no brokerage charges with respect to shares
issued directly by the Fund as a result of capital gains distributions payable
either in stock or in cash. The Directors unanimously approved the
Reinvestment Privilege at the Special Meeting.
The receipt of distributions in stock will not relieve Stockholders
of any income tax or withholding tax that may be payable on such
distributions.
Experience under the Reinvestment Privilege may indicate
that changes in the Reinvestment Privilege are desirable. Accordingly, the Fund
reserves the right to terminate the Reinvestment Privilege as applied to any
distributions paid subsequent to notice of the termination sent to Stockholders
at least 30 days before the record date for distributions. The Reinvestment
Privilege also may be amended by the Fund, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to Stockholders.
Dividends of net investment income and distributions of net realized
short-term capital gains are taxable as ordinary income, whether paid in cash or
in shares. Distributions of net long-term capital gains, if any, that the Fund
designates as capital gains dividends are taxable as long-term capital gains,
whether paid in cash or in shares and regardless of how long a Stockholder has
held his Fund shares. Dividends and distributions paid by the Fund will not
qualify for the deduction for dividends received by corporations.
Stockholders receiving dividends or distributions in the form of
additional shares pursuant to the Reinvestment Plan or the Reinvestment
Privilege should be treated for U.S. Federal income tax purposes as receiving
a distribution in an amount equal to the amount of money that the Stockholders
receiving cash dividends or distributions will receive, and should have a cost
basis in the shares received equal to such amount.
11
<PAGE>
Required Vote
The proposal requires for the affirmative vote of a majority of the
outstanding voting securities of the Fund which, as defined in the 1940 Act,
means the lesser of (a) 67% of the shares of the Fund present at a meeting of
Stockholders where a quorum exists or (b) more than 50% of the outstanding
shares of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE DISTRIBUTION OF SHARES AT BELOW NET ASSET VALUE OF SUCH SHARES
IN CONNECTION WITH FUND DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
PROPOSAL 4: RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick, LLP, 99 High Street, Boston, Massachusetts 02110,
have served as independent accountants for the Fund since the Fund's
commencement of operations on July 17, 1990, and is being recommended by the
Directors of the Fund to serve in such capacity for the Fund's fiscal year
ending March 31, 1999. The Board of Directors of the Fund approved KPMG as
independent accountants of the Fund at a Board of Directors Meeting held on
March 11, 1998.
KPMG also serves as independent accountants for BJB Investment Funds,
an investment company affiliated with the Fund, but has no relationship with
such funds other than as independent accountants. During the fiscal year ended
March 31, 1998, the services provided to the Fund by KPMG included examination
of financial statements, review of filings with the SEC and preparation of tax
returns. No other services were provided by KPMG to the Fund.
It is intended that proxies not limited to the contrary will be voted
in favor of ratifying KPMG as independent public accountants to certify every
financial statement of the Fund required by any law or regulation to be
certified by independent public accountants and filed with the SEC in respect
of all or any part of the fiscal year ending March 31, 1999. KPMG has no
direct or material indirect interest in the Fund. Representatives of KPMG are
expected to be present at the Annual Meeting, will be given the opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions.
Required Vote
A majority of the votes cast at the Annual Meeting, in person or by
proxy, is required for ratification of KPMG as independent accountants for the
Fund.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE DIRECTORS WHO ARE NOT "INTERESTED
PERSONS" OF THE FUND, RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE SELECTION OF KPMG PEAT MARWICK AS INDEPENDENT ACCOUNTANTS FOR THE FUND.
SUBMISSION OF STOCKHOLDER PROPOSALS
All proposals by Stockholders of the Fund that are intended to be
presented at the Fund's next Annual Meeting of Stockholders to be held in 1999
must be received by the Fund for consideration for inclusion in the Fund's
proxy statement relating to that meeting no later than January __, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Fund's officers and
directors, and persons who beneficially own more than ten percent of the
Fund's Shares, to file reports of initial ownership and changes in ownership
with the SEC, the New York Stock Exchange, Inc. and the Fund. Hansruedi Huber,
an officer of the Fund, inadvertently failed to file on a timely basis
Statements of Changes in Beneficial Ownership on form 4 regarding one
transaction. Julius Baer Asset Management also failed to timely file a form 4
regarding two transactions. These omissions have been corrected through the
filing of Annual Statements of Changes of Beneficial Ownership on form 5.
Except as noted above, to the Fund's knowledge, based solely upon review of
the copies of such reports furnished to the Fund and written representations
that no other reports were required, all Section 16(a) filing requirements
applicable to its
12
<PAGE>
directors, officers, and greater than ten percent owners were complied with
during the fiscal year ended March 31, 1998.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
The Directors do not intend to present any other business at the
Annual Meeting, nor are they aware that any Stockholder intends to do so. If,
however, any other matters are properly brought before the Annual Meeting, the
persons named in the accompanying form of proxy will vote thereon in
accordance with their judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING ARE THEREFORE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
13
<PAGE>
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 the name shown in the registration on the
proxy card.
3. All 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 Valid Signature
Corporate Accounts
(1) ABC Corp ....................................ABC Corp.
(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
Custodian 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
<PAGE>
THE EUROPEAN WARRANT FUND, INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Bernard Spilko, Michael Quain or Andrew
Josef and each of them, attorneys and proxies for the undersigned, with full
powers of substitution and revocation, to represent the undersigned and to vote
on behalf of the undersigned all shares of The European Warrant Fund, Inc. (the
"Fund") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Fund to be held at the office of the Fund, 330 Madison
Avenue, New York, New York on May 28, 1998 at 10:00 a.m., and any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement and hereby instructs said attorneys and proxies to
vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
PLEASE SIGN, DATE AND RETURN PROMPTLY
IN THE ENVELOPE PROVIDED
NOTE: Please sign exactly as your
name appears on this Proxy. If joint
owners, EITHER may sign this Proxy.
When signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your
full title.
Date
-----------------------------------
---------------------------------------
---------------------------------------
Signature(s), (Title(s), if applicable)
THE EUROPEAN WARRANT FUND (EURF)
ORIGINAL FRONT 4 -__- 98
Please indicate your vote by an "X" in the appropriate boxes below.
This Proxy, if properly executed, will be voted in the manner directed by the
undersigned Stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF NOMINEES AS DIRECTORS AND FOR PROPOSALS 2 AND 4. Please refer to
the Proxy Statement for a discussion of the Proposals.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) |_| to vote for all nominees listed below |_|
</TABLE>
Martin Vogel -- Class I Antoine Bernheim -- Class I
(INSTRUCTION: To withhold authority for any individual, write his or her
name on the line provided below.)
2. To approve rights offerings of shares of common stock of the Fund.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To approve the distribution of shares at below net asset value in connection
with Fund dividend and capital gain distributions.
|_| FOR |_| AGAINST |_| ABSTAIN
4. To ratify the election of KPMG Peat Marwick LLP as independent accountants
for the Fund.
|_| FOR |_| AGAINST |_| ABSTAIN
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
|_| FOR |_| AGAINST |_| ABSTAIN
EUROPEAN WARRANT FUND (EURB)
ORIGINAL BACK4 -__- 98
14
