<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to ss.240.14a-11(c) or ss.240.14a-12
THE CENTRAL EUROPEAN VALUE FUND, INC.
-------------------------------------
Name of Registrant as Specified In Its Charter
N/A
---
Name of Person(s) Filing Proxy Statement if other than the Registrant
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
<PAGE>
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 such 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>
THE CENTRAL EUROPEAN VALUE FUND, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of The Central European Value Fund, Inc. (the
"Fund") will be held at the offices of Clemente Capital, Inc., 152 West 57th
Street, New York, New York 10019 on Tuesday, June 27, 2000, at 9:30 a.m., for
the following purposes:
1. To elect two (2) directors for the Fund to hold office until their
successors are duly elected and qualified. (Proposal 1).
2. To approve a new investment advisory agreement between Clemente Capital,
Inc. and the Fund. (Proposal 2).
3. To approve certain modifications to the Fund's investment policies, which,
if approved, will have the effect of broadening the scope of the Fund's
investment strategies from one of investing primarily in securities of
"Central European Issuers", to one of investing primarily in the
securities of "U.S. and non-U.S. Issuers." (Proposals 3(a) and 3(b)).
4. To approve an amendment to the Fund's charter to change the name of the
Fund to the "Cornerstone Strategic Return Fund." (Proposal 4).
5. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Fund's independent accountants for the
year ending December 31, 2000. (Proposal 5)
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on May 5, 2000 as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting.
Copies of the Fund's annual report are available free of charge to any
stockholder. Reports may be ordered by writing Clemente Capital, Inc., 152 West
57th Street, New York, New York 10019 or calling (800) 937-5449.
By Order of the Board of Directors,
William A. Clark
Secretary
Dated May 19, 2000
To avoid unnecessary expense of further solicitation, we urge you to indicate
voting instructions on the enclosed proxy card, date and sign it and return it
promptly in the envelope provided, no matter how large or small your holdings
may be.
4
<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 a name shown in the registration.
3. Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration.
For example:
REGISTRATION
Valid Signature
---------------
Corporate Accounts
(1) ABC Corp..............................ABC Corp. (by John Doe, Treasurer)
(2) ABC Corp..............................John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer.............John Doe
(4) ABC Corp. Profit Sharing Plan.........John Doe, Trustee
Trust Accounts
(1) ABC Trust.............................Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d/ 12/28/78.......................Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA.........John B. Smith
(2) John B. Smith.........................John B. Smith, Jr., Executor
<PAGE>
THE CENTRAL EUROPEAN VALUE FUND, INC.
152 West 57th Street
New York, New York 10019
------------------------
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
to be held June 27, 2000
------------------------
GENERAL INFORMATION
PROXY STATEMENT
The Board of Directors of the Fund solicits the proxies of the holders of the
Fund's Common Stock for use at the Annual Meeting of Stockholders (the
"Meeting") to be held at the offices of Clemente Capital, Inc., 152 West 57th
Street, New York, New York 10019, on June 27, 2000, at 9:30 a.m., New York time,
and at any and all adjournments thereof. A form of proxy is enclosed herewith.
This Proxy Statement and the accompanying form of proxy are first being mailed
to stockholders on or about May 22, 2000. Any stockholder who executes and
delivers a proxy may revoke it by written communication to the Secretary of the
Fund at any time prior to its use or by voting in person at the Meeting.
Unrevoked proxies will be voted in accordance with the specifications thereon
and, unless specified to the contrary, will be voted FOR the election of
Directors, FOR the approval of the investment advisory agreement between
Clemente Capital, Inc. and the Fund, FOR the approval of certain modifications
to the Fund's investment policies, which will have the effect of broadening the
scope of the Fund's investment strategies from one of investing primarily in
securities of "Central European Issuers", to one of investing primarily in the
securities of "U.S. and non-U.S. Issuers", FOR the approval of an amendment to
the Fund's charter to change the name of the Fund to the "Cornerstone Strategic
Return Fund", FOR the ratification of the selection of PricewaterhouseCoopers
LLP as the independent accountants of the Fund for the year ending December 31,
2000, and FOR any other matters that may properly come before the Meeting.
In general, abstentions and broker non-votes (reflected by signed but unvoted
proxies), as defined below, count for purposes of obtaining a quorum but do not
count as votes cast with respect to any proposal. With respect to a proposal
requiring the affirmative vote of a majority of the Fund's outstanding shares of
Common Stock, the effect of abstentions and broker non-votes is the same as a
vote against such proposal. Otherwise, abstentions and broker non-votes have no
effect on the outcome of a proposal. Broker non-votes are shares held in the
name of the broker or nominee for which an executed proxy is received by the
Fund, but are not voted on a proposal because voting instructions have not been
received from the beneficial owners or persons entitled to vote and the broker
or nominee does not have discretionary voting power.
In the event that a quorum is not present at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting to a date not more
than 120 days after the original record date to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the Meeting in person or by proxy. The persons named
as proxies will vote those proxies which they are entitled to vote FOR or
AGAINST any such proposal in their discretion. Under the By-Laws of the Fund, a
quorum is constituted by the presence in person or by proxy of the holders of
record of a majority of the outstanding shares of Common Stock of the Fund
entitled to vote at the Meeting.
6
<PAGE>
The cost of soliciting the proxies will be borne by the Fund. Directors,
officers and regular employees of the Fund may solicit proxies by telephone,
facsimile or personal interview. In addition, the Fund has engaged the services
of Georgeson Shareholder Communications, Inc. ("Georgeson"), a professional
proxy solicitation firm, to solicit proxies from its stockholders. The agreement
between the parties provides for Georgeson to provide general solicitation
services to the Fund at an estimated cost of $6,000, plus expenses. The Fund
will, upon request, bear the reasonable expenses of brokers, banks and their
nominees who are holders of record of the Fund's Common Stock on the record
date, incurred in mailing copies of this Notice of Meeting and Proxy Statement
and the enclosed form of proxy to the beneficial owners of the Fund's Common
Stock.
Only holders of issued and outstanding shares of the Fund's Common Stock of
record at the close of business on May 5, 2000 are entitled to notice of, and to
vote at, the Meeting. Each such holder is entitled to one vote per share of
Common Stock so held. The number of shares of Common Stock outstanding on May 5,
2000 was 5,669,747. The Fund is a closed-end management investment company.
Copies of the Fund's most recent Annual Report to Shareholders and its
Semi-Annual Report to Shareholders are available free of charge. Reports may be
ordered by writing Clemente Capital, Inc., 152 West 57th Street, New York, New
York 10019 or calling (800) 937-5449.
7
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Fund's Charter, the Fund's Board of Directors is divided
into three classes: Class I, Class II and Class III. At the Meeting,
stockholders will be asked to elect two (2) Class II Directors to hold office
until the year 2003 annual meeting of stockholders or thereafter until each of
their successors is duly elected and qualified. The term of office of the Class
III Directors, Messrs. Scott B. Rogers and Ralph Bradshaw expires at the next
annual meeting of stockholders in 2001 and the term of office of the Class I
Directors, Messrs. Edwin Meese, III, Gary A. Bentz and Glenn W. Wilcox, Sr.
expires at the annual meeting of stockholders in 2002, or thereafter in each
case until their successors are duly elected and qualified. The effect of these
staggered terms is to limit the ability of other entities or persons to acquire
control of the Fund by delaying the replacement of a majority of the Board of
Directors.
At its March 21, 2000 meeting, the Board of Directors nominated William A. Clark
and Andrew Strauss to serve as Class II Directors and to accept the resignation
of Stephen J. Treadway, the former President of the Fund and Class II Director
of the Board, and an affiliate of PIMCO Advisors L.P. ("PIMCO"). Mr. Treadway's
resignation followed the announcement by the Fund on March 21, 2000, that, after
a series of discussions with PIMCO, the Fund's previous investment manager and
administrator, and OpCap Advisors, the Fund's previous investment adviser, the
parties had mutually agreed to discontinue management and advisory relationships
effective March 31, 2000. On March 22, 2000, Mr. Ron Olin notified the Board of
Directors that he had decided to resign from the Board of Directors, effective
immediately. Mr. Olin's resignation was accepted by the Board. The Board then
elected to resign the seats on the Board occupied by Messrs. Olin and Treadway
and reduced the size of the Board to 7 from 9.
At the Meeting, stockholders will be asked to elect William A. Clark and Andrew
Strauss as Class II Directors to serve until the year 2003 or thereafter until
each of their successors is duly elected and qualified. If elected, each nominee
has consented to serve as a director of the Fund until their successors are duly
elected and qualified.
The persons named in the accompanying form of proxy intend to vote at the
Meeting (unless directed not to vote) FOR the election of William A. Clark and
Andrew Strauss. Each nominee has indicated that he will serve if elected, but if
any nominee should be unable to serve, the proxy will be voted for any other
person determined by the persons named in the proxy in accordance with their
judgment.
The following table sets forth the ages and principal occupations of each of the
nominees for election as Class II Directors, and the number of shares of Common
Stock of the Fund beneficially owned by each of them, directly or indirectly:
8
<PAGE>
NOMINEES
Class II Director Nominees to serve until the Year 2003 Annual Meeting of
Stockholders:
Shares of Common
Stock
Beneficially
Director Principal Occupation Owned as of
Name and Address Since Age During Past Five Years May 5, 2000(A)
---------------- ----- --- ---------------------- --------------
William A. Clark* 1999 54 Consultant to Deep 2,600
One West Pack Square Discount Advisors,
Suite 777 Inc., an investment
Asheville, NC 28801 advisory firm;
Director of The
Austria Fund, Inc.,
The Portugal Fund,
Inc. and Clemente
Strategic Value Fund,
Inc.
Andrew Strauss 1999 45 Attorney and senior 2,600
77 Central Avenue member of Strauss &
Suite F Associates, P.A.,
Asheville, NC 28801 attorneys, Asheville,
N.C.; previous
President of White
Knight Healthcare,
Inc. and LMV Leasing,
Inc., a wholly owned
subsidiary of Xerox
Credit corporation;
Director of The
Portugal Fund, Inc.
and Clemente Strategic
Value Fund, Inc.
9
<PAGE>
REMAINING BOARD OF DIRECTORS
The following tables set forth the names, ages and principal occupations of each
of the remaining Directors of the Fund, and the number of shares of Common Stock
of the Fund beneficially owned by them, directly or indirectly, as of May 5,
2000:
Class I Director serving until the Year 2002 Annual Meeting of Stockholders:
Shares of
Common Stock
Beneficially
Owned Directly
or Indirectly
Principal Occupation Director on May 5, 2000
Director Over Last 5 Years Since Age (A)
-------- ----------------- ----- --- ---
Edwin Meese, III Distinguished Fellow, The 1999 68 0
Heritage Foundation,
Washington, DC; Distinguished
Visiting Fellow at the Hoover
Institution, Stanford
University; Distinguished
Senior Fellow at the
Institute of United States
Studies, University of
London. Formerly U.S.
Attorney General under
President Ronald Reagan;
Chairman of the Domestic
Policy Council and the
National Drug Policy Board
and a member of the National
Security Council.
Gary A. Bentz* Chief Financial Officer and 1999 43 4,800
Treasurer, Deep Discount
Advisors, Inc.; Director, The
Austria Fund and Clemente
Strategic Value Fund, Inc
Glenn W. Wilcox, Sr. Chairman of the Board and 1999 67 0
Chief Executive Officer of
Wilcox Travel Agency;
Director, Champion
Industries, Inc.; Chairman,
the Board of Blue Ridge
Printing Co., Inc.; Chairman,
Tower Associates, Inc. (a
real estate venture);
Director, Asheville Chamber
of Commerce; Vice Chairman,
the Board of First Union
National Bank; Trustee,
Appalachian State University;
Trustee and Director, Mars
Hill College; Director of The
Portugal Fund, Inc. and
Clemente Strategic Value
Fund, Inc
10
<PAGE>
Class III Director serving until the Year 2001 Annual Meeting of Stockholders:
Shares of
Common Stock
Beneficially
Owned
Directly or
Indirectly
Principal Occupation Director on May 5,
Director Over Last 5 Years Since Age 2000 (A)
-------- ----------------- ----- --- --------
Ralph W. Bradshaw* Consultant to Deep Discount 1999 49 800
Advisors, Inc.; Director of
Clemente Strategic Value
Fund, Inc., The Austria Fund,
Inc., The Portugal Fund, Inc.
and Clemente Strategic Value
Fund, Inc.
Scott B. Rogers Chief Executive Officer, 1999 44 -0-
Asheville Buncombe Community
Christian Ministry;
President, ABCCM Doctor's
Medical Clinic; Director,
National Urban Strategy
Com-mission; Director,
Southeastern Jurisdiction
Urban Networkers; Director,
Asheville Area Red Cross;
Appointee, NC Governor's
Commission on Welfare to
Work; Chairman, Recycling
Unlimited; Director,
Interdenominational
Ministerial Alliance;
Director, The Portugal Fund,
Inc. and Clemente Strategic
Value Fund, Inc.
- --------------------
* May be deemed to be an "interested person" as defined in the Investment
Company Act of 1940 ("1940 Act") because of his position as an officer of the
Fund.
(A) Each director has sole voting and investment power with respect to the
listed shares.
In addition to Messrs. Bentz (Treasurer), Bradshaw (Chairman), and Clark
(Secretary), Leopoldo M. Clemente, Jr. was elected President of the Fund at the
Board's March 21, 2000 meeting. Certain biographical information about Mr.
Clemente, including his age and principal occupations during the past five years
and the number of shares of Common Stock of the Fund beneficially owned by him,
directly or indirectly, as of May 5, 2000 is set forth in the following table.
Mr. Clemente is not a Director of the Fund. Each of the executive officers
serves at the pleasure of the Board of Directors.
11
<PAGE>
Shares of
Common Stock
Beneficially
Principal Occupation Owned as of
Name and Address Age During Past Five Years May 5, 2000(A)
---------------- --- ---------------------- --------------
Leopoldo M. Clemente, Jr. 61 President of the Fund since March 2,600
152 West 57th Street 21, 2000; President of Clemente
New York, NY 10019 Strategic Value Fund, Inc. and
President of Clemente Capital
Inc. since January 1989; Director
of The First Philippine Fund Inc.
and Philippine Strategic
Investment (Holdings) Limited.
Audit Committee
The Fund's Audit Committee is currently composed of Messrs. Wilcox, Strauss,
Meese and Rogers. The principal functions of the Audit Committee are to
recommend to the Board the appointment of the Fund's independent accountants, to
review with the independent accountants the scope and anticipated cost of their
audit and to receive and consider a report from the independent accountants
concerning their conduct of the audit, including any comments or recommendations
they might want to make in connection thereto. The Audit Committee met once
during the period January 1, 2000 through March 31, 2000. The Fund has no
nominating or compensation committees.
During the period January 1, 2000 through March 31, 2000, the Board of Directors
met once. During the period when he was a Director, each Director attended at
least 75% of the meetings of the Board or the Committee of the Board for which
he was eligible.
Under the federal securities laws, the Fund is required to provide to
stockholders in connection with the Meeting information regarding compensation
paid to Directors by the Fund as well as by the various other investment
companies advised by the Fund's investment adviser during its prior fiscal year.
The following table provides information concerning the compensation paid during
the year ended December 31, 1999, to each Director of the Fund. No remuneration
was paid to any Director by any other investment companies advised by PIMCO
Advisors or OpCap during that period. Certain of the Directors received
compensation for serving as a Director of Clemente Strategic Value Fund, Inc.
which is also advised by Clemente Capital, Inc. Please note that the Fund does
not provide any pension or retirement benefits to Directors.
12
<PAGE>
<TABLE>
<CAPTION>
Total
Compensation
Aggregate From Other
Compensation Funds Advised
Form Fund for by Clemente Total
Name of Director Director Since 1999 Capital, Inc. Compensation
---------------- -------------- ---- ------------- ------------
<S> <C> <C> <C> <C>
Ralph W. Bradshaw 1999 $4,050 $10,500 $14,550
Gary A. Bentz 1999 $1,702 $10,000 $11,702
Glenn W. Wilcox, Sr. 1999 $1,702 $0 $ 1,702
William A. Clark 1999 $1,702 $4,166 $ 5,868
Andrew Strauss 1999 $1,702 $0 $ 1,702
Edwin Meese, III 1999 $ 934 $0 $ 934
Scott B. Rogers 1999 $ 934 $0 $ 934
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and Section 30(h) of the
1940 Act in combination require the Fund's Directors and officers, persons who
own more than 10% of the Fund's Common Stock, the Fund's investment advisers and
their respective directors and officers, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange, Inc. The Fund believes that the Fund's directors and
officers, the Fund's investment advisers and their respective directors and
officers have complied with applicable filing requirements during the year ended
December 31, 1999.
THE BOARD OF DIRECTORS RECOMMEND THAT THE STOCKHOLDERS VOTE
"FOR" THE ELECTION OF WILLIAM A. CLARK AND ANDREW STRAUSS AS
CLASS II DIRECTORS OF THE FUND.
Required Vote
Directors are elected by a plurality (a simple majority of the votes cast at the
meeting) of the votes cast by the holders of shares of Common Stock of the Fund
present in person or represented by proxy at a meeting with a quorum present.
For purposes of the election of Directors, abstentions and broker non-votes will
be counted as shares present for quorum purposes, but will not be considered
votes cast, and do not affect the plurality vote required for Directors.
13
<PAGE>
PROPOSAL 2
CONSIDERATION OF THE APPROVAL OF THE INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE
FUND AND CLEMENTE CAPITAL, INC.
Clemente Capital, Inc. ("Clemente Capital") currently serves as interim
investment manager to the Fund subject to stockholder approval, pursuant to an
investment management agreement with the Fund dated April 1, 2000 (the "Clemente
Agreement"). The Board of Directors unanimously approved the Clemente Agreement
at a meeting of the Board of Directors duly held on March 21, 2000 and hereby
submits the Clemente Agreement to the stockholders for their consideration and
approval. Clemente, which has its principal office at 152 West 57th Street, New
York, New York 10019, provides investment advisory services to partnerships and
investment companies worldwide and currently manages in excess of $200 million
in assets of closed-end investment companies including, Clemente Strategic Value
Fund, Inc. ($66,903,850) and The First Phillipine Fund, Inc. ($66,298,016).
Leopoldo M. Clemente, Jr. is the President, Chief Investment Officer and a
Director of Clemente Capital and is President of the Fund. A copy of the
Clemente Agreement is attached hereto as Appendix A.
At a meeting held on March 21, 2000, the Board of Directors voted unanimously to
accept the resignation and terminate the (i) Investment Management Agreement
("PIMCO Agreement") between the Fund and PIMCO Advisors L.P. ("PIMCO Advisors"),
the Fund's investment manager and administrator, and (ii) the Investment
Advisory Agreement ("OpCap Agreement") among the Fund, PIMCO Advisors and OpCap
Advisors ("OpCap"), a subsidiary of PIMCO Advisors, which then served as
investment adviser to the Fund. In connection with the termination of the Fund's
management and advisory relationships with PIMCO Advisors and OpCap as stated
above, Stephen J. Treadway, who is affiliated with PIMCO Advisors and OpCap,
resigned as President and Director of the Fund, effective March 31, 2000.
The Board's decision to accept the resignation and terminate the PIMCO Agreement
followed a series of discussions with PIMCO and OpCap after which the parties
mutually agreed to discontinue management and advisory relationships effective
March 31, 2000. PIMCO's agreement to the termination of the management and
advisory relationships with the Fund is consistent with PIMCO's strategic plans
and was driven by its desire to allocate resources to other business lines.
Similarly, the Fund's agreement to the termination of the management and
advisory relationships with the Fund is consistent with the Board's
determination to modify certain fundamental investment policies of the Fund and
that it would be in the best interests of the Fund and its stockholders to
pursue the management and advisory services needed to implement these
modifications from alternative sources.
The Fund's stockholders most recently approved the PIMCO Agreement at a Special
Meeting of Stockholders ("Special Meeting") held on February 24, 2000. At the
Special Meeting, the Board requested that the Fund's stockholders consider a
substantially identical form of the then-existing PIMCO Agreement that would
take effect upon consummation of a series of transactions contemplated by the
Implementation and Merger Agreement (the "Transaction"), dated as of October 31,
1999 (the "Merger Agreement"), by and among PIMCO Advisors, its general
partners, PIMCO Advisors Holdings L.P. ("PAH") and PIMCO Partners G.P.
("Partners GP"), certain of their affiliates, Allianz of America, Inc. ("Allianz
of America") and certain other parties named therein. Pursuant to the Merger
Agreement, Allianz of America acquired
14
<PAGE>
approximately 70% of the outstanding partnership interests in PIMCO Advisors. As
required by the Investment Company Act of 1940, as amended (the "1940 Act"),
consummation of the Transaction caused the automatic termination of the existing
PIMCO Agreement. Therefore, in order to ensure continuity in the management of
the Fund, stockholders of the Fund were asked to, and did, approve a
substantially identical management agreement with PIMCO Advisors that took
effect immediately upon termination of the existing PIMCO Agreement. Moreover,
because PIMCO Advisors was a party to the investment advisory agreement with the
Fund and OpCap, a subsidiary of PIMCO Advisors, stockholders of the Fund were
also asked to, and did, approve a new investment advisory agreement with PIMCO
Advisors and OpCap so that OpCap could continue to serve as investment adviser
to the Fund.
Comparison of PIMCO Agreement and Clemente Agreement
The PIMCO Agreement and the Clemente Agreement are substantially identical with
respect to the scope of the services provided to the Fund and the amount of
compensation paid by the Fund for such services. These agreements differ only to
the extent that the Clemente Agreement does not contemplate the delegation of
advisory and research services to regional advisers or sub-advisors as did the
PIMCO Agreement, all such responsibilities therein being vested solely in
Clemente, and the commencement date and termination date. The following
description of the Clemente Agreement is qualified in its entirety by reference
to the form of the Clemente Agreement attached hereto as Appendix A.
Services to be Performed
Pursuant to the Clemente Agreement, Clemente conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
investment securities for the Fund's portfolio, subject to the supervision and
direction of the Board of Directors. Clemente provides the Fund with investment
advice, supervises the Fund's management and investment programs and provides
investment advisory facilities and executive and supervisory personnel for
managing the investments and effectuating portfolio transactions. Clemente also
furnishes, at its own expense, all necessary administrative services, office
space, equipment and clerical personnel for servicing the investments of the
Fund. In addition, Clemente pays the salaries and fees of all officers of the
Fund who are affiliated with Clemente.
PFPC, Inc., whose address is 400 Bellevue Parkway, Wilmington, Delaware 19809,
and is the former sub-administrator of the Fund, has assumed the role of
administrator following the resignation of PIMCO Advisors as the Fund's
administrator effective March 31, 2000.
Expenses and Advisory Fees
Like the PIMCO Agreement, the Clemente Agreement provides that the Fund is
responsible for all of its expenses and liabilities, except that Clemente is
responsible for the expenses in connection with maintaining a staff within its
organization to furnish the above services to the Fund.
The annual rate used to determine fees payable by the Fund pursuant to the
Clemente Agreement is identical to the rate in the PIMCO Agreement. The Fund
pays Clemente an annual fee of 1.00% of the Fund's average weekly net assets for
the investment management and research services provided by Clemente. The Fund
will pay Clemente this annual fee in monthly installments at a rate under the
Clemente Agreement which is identical to the fee rate for the
15
<PAGE>
PIMCO Agreement. The approximate net assets of the Fund at December 31, 1999
were $78.7 million. The Fund formerly operated based on a September 1 through
August 31 fiscal year. During the period September 1, 1998 through August 31,
1999, the aggregate amount of fees paid by the Fund to PIMCO under the PIMCO
Agreement was $746,140. For the period September 1, 1999 through December 31,
1999, the aggregate amount of fees paid by the Fund to PIMCO under the PIMCO
Agreement was $240,299. PIMCO was responsible for paying fees owing to OpCap for
investment advisory services rendered to the Fund. The Fund would have paid the
same amount to Clemente under the terms of the Clemente Agreement had that
agreement been in effect for the same period. The Fund also paid PIMCO fees for
administrative services rendered pursuant to an administrative services
agreement between the Fund and PIMCO for the periods September 1, 1998 through
August 31, 1999 and September 1, 1999 through December 31, 1999 in an aggregate
amount of $149,229 and $48,060, respectively. PIMCO was responsible for paying
fees owing to PFPC, Inc. for sub-administrative services rendered to the Fund.
The Fund would have paid the same amount to PFPC as the administrator of the
Fund had an administrative services agreement with PFPC been in effect for the
same period.
Limitation of Liability
Like the PIMCO Agreement, the Clemente Agreement provides that, in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard for
its obligations and duties thereunder ("disabling conduct"), Clemente shall not
be liable to the Fund or its stockholders for any act or omission in the course
of or in connection with the rendering of its services thereunder. In addition,
the Clemente Agreement provides that the Fund, under certain circumstances, will
indemnify Clemente against any losses or expenses incurred, including amounts
paid in satisfaction of judgments and reasonable legal costs, not resulting from
disabling conduct.
Duration and Termination
The Clemente Agreement will have an initial term of two years, and thereafter
will continue in effect for successive annual periods provided such continuance
is specifically approved at least annually by (i) a majority of the members of
the Fund's Board of Directors who are not parties to the Clemente Agreement, and
who are not "interested persons" of any such party, and (ii) a majority of the
Fund's Board of Directors or the holders of a "majority of the outstanding
voting securities" of the Fund. The Clemente Agreement may be terminated,
without penalty, on 60 days' notice, by the Fund's Board of Directors, by a vote
of the holders of a "majority of the outstanding voting securities" of the Fund
(as defined under "Required Vote" below) or by Clemente.
Evaluation by the Board of Directors
The Fund's Board of Directors, including the Directors who are not interested
persons of any party to the Clemente Agreement or its affiliates, has approved
the Clemente Agreement for the Fund and recommends that stockholders of the Fund
approve such agreement. The Board's deliberations and approval occurred at the
Director's meeting held on March 21, 2000. The Clemente Agreement became
effective on April 1, 2000 and will only remain in effect thereafter subject to
stockholder approval within 180 days of such effective date. If the stockholders
do not approve the Clemente Agreement at the Meeting (or at an adjournment
thereof), the Board will either resubmit the Clemente Agreement to the
stockholders for their consideration and approval
16
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or consider alternative sources from which to obtain investment management and
research services for the Fund.
In approving the Clemente Agreement and determining to submit it to stockholders
for their approval, the Board of Directors has sought to obtain high quality and
specialized management and advisory services. The Board of Directors of the Fund
believes that the Clemente Agreement will enable the Fund to obtain high-quality
services at costs which it deems appropriate and reasonable and that approval of
the Clemente Agreement is in the best interests of the Fund and its
stockholders.
In approving the Clemente Agreement, the Board of Directors of the Fund focused
primarily on the nature, quality and scope of the operations and services to be
provided by Clemente to the Fund and the fact that the PIMCO Agreement and the
Clemente Agreement, including the terms relating to the services to be performed
thereunder by Clemente, are substantially identical. Based upon its review of
the above factors, the Board of Directors of the Fund concluded that the
Clemente Agreement is in the best interests of the Fund and its stockholders.
THE DIRECTORS OF THE FUND, INCLUDING THE DIRECTORS
WHO ARE NOT "INTERESTED PERSONS" OF THE FUND, CLEMENTE
OR THEIR AFFILIATES, RECOMMEND THAT THE STOCKHOLDERS OF THE FUND
VOTE "FOR" THE CLEMENTE AGREEMENT.
Required Vote
As provided by the 1940 Act, approval of the Clemente Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund, which means the affirmative vote of the lesser of (a) 67% or more of the
shares of the Fund entitled to vote thereon present or represented by proxy at
the Meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote thereon are present or represented by proxy, or (b) more
than 50% of the total outstanding shares of the Fund entitled to vote thereon.
For this purpose, abstentions and broker non-votes will be counted as shares
present at the Meeting for quorum purposes but not voting and will have the same
effect as votes cast against the Proposal.
17
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PROPOSAL 3
MODIFICATION OF THE FUND'S FUNDAMENTAL POLICIES
TO BROADEN THE SCOPE OF THE FUND'S INVESTMENT STRATEGY
The Proposals
At its meeting held on March 21, 2000, the Board of Directors unanimously
approved and authorized for submission to stockholders certain modifications to
the Fund's investment strategies and fundamental investment policies that would
have the effect of broadening the scope of the Fund's investment strategy to
include not only Central and Eastern European Issuers but U.S. and other
non-U.S. Issuers as well. Under the proposals, which are set forth in more
detail below, the Fund's overall investment objective of long-term capital
appreciation would not change. The Board recommends only that the Fund seek to
achieve the Fund's stated investment objective without regard to geographic
region in order to allow the investment adviser to exploit profitable investment
opportunities in all capital markets worldwide, albeit with an emphasis on U.S.
securities, rather than limiting the Fund to investing in solely in Central and,
to a lesser extent, Eastern Europe.
Specifically, the Board proposes the following modifications:
Proposal 3(a):
Current: The investment objective of the Fund is long-term capital appreciation,
which it seeks to achieve by investing primarily in securities of Central
European Issuers.
Proposed: The investment objective of the Fund is long-term capital
appreciation, which it seeks to achieve by investing in securities of U.S. and
non-U.S. issuers.
Proposal 3(b):
Current: It is the Fund's fundamental investment policy, under normal market
conditions, to invest at least 65% of the Fund's total assets in securities of
Central European Issuers.
Proposed: It is the Fund's fundamental investment policy, under normal market
conditions, to invest at least 65% of the Fund's total assets in securities of
U.S. issuers.
Basis for Recommendation of Proposals
The Board's recommendation to modify the Fund's fundamental investment
strategies and policies is based on its findings that the proposed modifications
would benefit the Fund's stockholders, by shifting the concentration of the
Fund's investments from Central Europe, and, to a lesser extent, Eastern Europe,
to the United States and providing a broader basket of potential investment
opportunities from which Clemente may select portfolio securities. The proposals
seek to accomplish this by permitting the Fund to exploit investment
opportunities that are consistent with the Fund's investment criteria in the
United States and other foreign capital markets rather than limiting the Fund's
investments to Central and Eastern European Issuers. The Board has considered
various factors in arriving at this conclusion including: the long-term
prospects for capital appreciation in the securities of Central European issuers
only, the prospects for capital appreciation in the securities of issuers in
other financial markets such as the U.S. and
18
<PAGE>
Asia, the performance record of Clemente as an investment adviser to other
registered closed-end investment companies that invest in U.S. and other
non-U.S. capital markets, and the risks to the Fund and its stockholders that
could arise in connection with the transition from investment in solely Central
and Eastern European Issuers to primarily U.S. issuers and other non-U.S.
Issuers. The Board also considered the fact that, initially, the Fund was
conceived as one specialized member of a family of funds, advised by PIMCO or
its affiliate, whose primary objective was to provide an investment vehicle for
specific diversification in Eastern Europe, at a time when there was much
enthusiasm over emerging markets in that part of the world. Also, despite
relatively poor performance in recent years, the Fund's dedication to retaining
its concentration in Central and Eastern Europe was driven, in large part, by
the specialized expertise in investing in Central and Eastern Europe that was
provided by the Fund's former investment adviser.
Upon consideration of these issues, the Board concluded that the reasons for the
Fund to remain concentrated in Central and Eastern Europe are no longer valid or
practical. In view of the Fund's investment objective of capital appreciation,
the Board reasoned that access to capital markets in the United States, Western
Europe and Asia, will enable the investment adviser to structure a more
diversified portfolio of investments with stronger prospects for capital
appreciation in the most stable, mature and efficient capital markets. Also, a
shift in the Fund's primary focus from Central Europe to the United States would
result in a reduction of the Fund's exposure to investment risks associated with
investment in foreign securities, including currency fluctuations and political
and economic instability. Therefore, based on these considerations, the Board
believes that such a change would be in the best interests of the Fund and its
stockholders.
Analysis of Proposals
Proposal 3(a) would modify the investment strategy which requires the Fund to
seek to achieve its objective through investing primarily in securities of
"Central European Issuers". If modified, the investment strategy would permit
the Fund to invest its assets without specifically restricting the geographical
location of the issuer. Proposal 3(b) similarly would modify the Fund's current
fundamental investment policy requiring the maintenance of at least 65% of the
Fund's total assets in the securities of Central European Issuers. If modified,
the Fund would be required, under normal market conditions, to invest at least
65% of its total assets in the securities of U.S. issuers. The Fund's operating
policy of investing at least 65% of its total assets in equities, under normal
market conditions is not proposed to be modified.
In connection with the proposed changes to the Fund's investment strategy, the
Board of Directors has approved the modification of the operating policy which
currently permits up to 35% of the Fund's total assets to be invested in Eastern
European Issuers. Under the proposed changes to the Fund's investment strategy
and policies, the Board has approved, subject to stockholder approval of this
Proposal 3, the modification of the operating policy in order to permit the Fund
to invest 35% of its assets in non-U.S. Issuers, which may include Central and
Eastern European Issuers in addition to Asia and other capital markets. The
Board believes that the Fund will be able to benefit by diversifying its
non-U.S. investments among several countries as global market conditions and
investment opportunities develop over the next few years. Operating policies may
be modified by the Board without stockholder approval.
For purposes of clarification, please note that the Board does not propose
changing or modifying any other fundamental investment strategy or policy of the
Fund that requires stockholder approval. It will continue to (i) invest up to
35% of the Fund's total assets in debt securities, (ii) invest in investment
funds which invest principally in securities in which the Fund is authorized
19
<PAGE>
to invest, and (iii) engage in a temporary defensive strategy when circumstances
warrant pending investment in accordance with the Fund's investment objective
and strategies.
In connection with the proposed changes, the investment adviser anticipates that
within 90 days of obtaining shareholder approval for this proposal, a
significant portion of the Fund's current portfolio securities will be sold and
replaced with other securities in accordance with the new investment policies.
As a result, the Fund may incur additional brokerage costs to sell existing
portfolio securities, some of which are currently illiquid. The sale of certain
of the Fund's securities including, the illiquid securities may be at losses
which may detract from the ability of the Fund to meet its objective of
long-term capital appreciation. The Fund may also generate significant capital
gains as a result of its sale of portfolio securities. As a regulated investment
company, the Fund may elect to either distribute realized long-term gains or
retain such gains. If such gains are distributed to the stockholders,
stockholders would pay the taxes on such gains. If such gains are retained,
taxes thereon would be paid by the Fund and appropriate credit and/or refunds
would be allowed to the stockholders. In this regard, stockholders would receive
a Form 2439 election permitting them to file for a credit on their federal
income tax forms filed for the year 2000. The Board will meet with the Fund's
independent auditors throughout the year to review the matter and provide for
the appropriate treatment. Stockholders will be advised prior to the end of the
year 2000 of the Board's decision with respect to the distribution or retention
of these gains.
THE DIRECTORS, INCLUDING THE "NON-INTERESTED" DIRECTORS,
UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS VOTE
FOR APPROVAL OF THE PROPOSED MODIFICATIONS TO
THE FUND'S INVESTMENT STRATEGIES AND
FUNDAMENTAL POLICIES AS STATED IN PROPOSAL 3 ABOVE.
In the event that the proposed changes are not approved, the Board of Directors
would consider the options available to the Fund in light of the Fund's
investment policies and market conditions.
Required Vote
Approval of each modification of the investment policies of the Fund requires
the affirmative vote of a "majority" of the Fund's outstanding voting
securities. The term "majority" means the vote of the lesser of (i) 67% of the
Fund's outstanding shares present at the Meeting if stockholders holding more
than 50% of the outstanding shares of the Fund are present in person or
represented by proxy, or (ii) more than 50% of the Fund's outstanding shares.
For purposes of this proposal, abstentions and broker non-votes will be counted
as shares present at the Meeting for quorum purposes but not for voting and will
have the same effect as votes cast against the proposal.
Proposals 3 and 4 are part of a related plan to modify the Fund's investment
strategy and fundamental polices, therefore, each Proposal will be adopted only
if the other Proposal is approved by the stockholders.
20
<PAGE>
PROPOSAL 4
APPROVAL OF AN AMENDMENT TO THE FUND'S ARTICLES
OF INCORPORATION TO CHANGE THE NAME OF THE FUND TO
"THE CORNERSTONE STRATEGIC RETURN FUND, INC."
At the Meeting, stockholders will be asked to approve an amendment to the Fund's
Articles of Incorporation to change the name of the Fund to "The Cornerstone
Strategic Return Fund, Inc." A form of the Articles of Amendment to the Articles
of Incorporation of the Fund is attached to this Proxy Statement as Appendix B.
In connection with its approval of the proposals to modify certain of the Fund's
fundamental investment strategies and policies, the Board of Directors of the
Fund unanimously approved the change of the Fund's name and directed that the
name change be submitted to stockholders. The proposed name change would not
change the Fund's fundamental investment objective of seeking long-term capital
appreciation, which may only be changed by shareholder vote. The Board of
Directors believes that the new name is consistent with that of a registered
investment company whose investment objective is long-term capital appreciation
achieved by strategically investing the Fund's assets in both U.S. and non-U.S.
securities. The name change is necessitated because of Section 35(d) of the
Investment Company Act of 1940. Under Section 35(d), the Fund may retain its
current name only if the Fund has a policy of investing at least 65% of its
assets in Central European Issuers. Accordingly, the Board of Directors believes
that changing the name of the Fund to "The Cornerstone Strategic Return Fund,
Inc." is necessary and appropriate and in the best interests of the Fund and its
stockholders.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT THE
STOCKHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO
THE FUND'S ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE FUND
TO "THE CORNERSTONE STRATEGIC RETURN FUND, INC."
Required Vote
The affirmative vote of at least a majority of the outstanding shares of the
Fund (more than 50% of the shares of Common Stock outstanding on the record
date) is required to approve the change in the Fund's name to "The Cornerstone
Strategic Return Fund, Inc". For purposes of this proposal, abstentions and
broker non-votes will have the same effect as votes cast against the proposal.
The effectiveness of Proposal 4 is conditioned on stockholder approval of
Proposal 3.
21
<PAGE>
PROPOSAL NO. 5
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
By vote of the Board of Directors, including the vote of the non-interested
Directors, the firm of PricewaterhouseCoopers LLP has been selected as the
Fund's independent accountants for the year ending December 31, 2000. Such
selection is being submitted to the stockholders for ratification. The
employment of PricewaterhouseCoopers is conditioned on the right of the Fund, by
majority vote of its stockholders, to terminate such employment.
PricewaterhouseCoopers has acted as the Fund's independent accountants from its
inception through December 31, 1999.
The services to be provided by the Fund's independent accountants include
examination of the Fund's annual financial statements and limited review of its
unaudited quarterly statements, assistance and consultation in connection with
Securities and Exchange Commission and New York Stock Exchange filings, and
preparation of the Fund's annual federal and state income tax returns.
A representative of PricewaterhouseCoopers is expected to be present at the
Meeting and will have the opportunity to make a statement if he or she so
desires. This representative will also be available to respond to appropriate
questions.
THE FUND'S BOARD OF DIRECTORS INCLUDING THE NON-INTERESTED
DIRECTORS, RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP
AS THE FUND'S INDEPENDENT ACCOUNTANTS
Required Vote
Ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund requires the affirmative vote of the holders of a simple
majority, defined as a majority of the votes cast by holders of shares of Common
Stock of the Fund present in person or represented by proxy at a meeting with a
quorum present. For purposes of this proposal, abstentions and broker non-votes
will be counted as shares present at the Meeting for quorum purposes, but will
not be considered votes cast for the foregoing purpose.
22
<PAGE>
INFORMATION PERTAINING TO THE FUND'S
INVESTMENT ADVISER AND ADMINISTRATOR
The Investment Adviser
Clemente Capital, Inc., the Fund's investment adviser, has its principal office
at 152 West 57th Street, New York, New York 10019. Lilia C. Clemente is Chairman
and Richard W. McWalters is Chief Executive Officer of the Adviser. Leopoldo M.
Clemente, Jr., President of the Fund, is President, Chief Investment Officer and
a Director of the Adviser. In addition to Mr. and Mrs. Clemente and Mr.
McWalters, the Adviser's Directors are: Salvador Diaz-Verson, Jr., President of
Diaz-Verson Capital Investments, Inc., an investment advisory firm located in
Columbus, Georgia; Robert J. Christian, Chief Investment Officer, Wilmington
Trust Company; and Irving L. Gartenberg, Esq., general counsel to the Adviser.
Mrs. Clemente owns approximately 60% of the outstanding Common Stock of the
Adviser. The address for Mr. and Mrs. Clemente and Mr. McWalters is 152 West
57th Street, New York, New York 10019. The address for Mr. Diaz-Verson is 1200
Brookstone Centre Parkway, Suite 105, Columbus, Georgia 31904. The address for
Mr. Christian is 1100 North Market Street, Wilmington, Delaware 19890, and the
address for Mr. Gartenberg is 122 East 42nd Street, 46th Floor, New York, New
York 10017. Wilmington Trust Company owns 24% of the outstanding Common Stock of
the Adviser. The remaining 16% of the Clemente Capital Common Stock is currently
held by Sal Diaz-Vernon, who is not affiliated with Clemente Capital other than
as a result of his ownership of such Common Stock.
The Administrator
PFPC, Inc., whose address is 400 Bellevue Parkway, Wilmington, Delaware 19809,
and is the former sub-administrator of the Fund, has assumed the role of
administrator following the resignation of PIMCO Advisors as the Fund's
administrator effective March 31, 2000.
23
<PAGE>
INFORMATION PERTAINING TO CERTAIN STOCKHOLDERS
The following table sets forth the beneficial ownership of shares of the Fund,
at March 30, 2000, by each person known to the Fund to be deemed the beneficial
owner of more than 5% of the outstanding shares of the Fund:
% of Fund's Outstanding
Shares of Common Stock Shares Beneficially
Beneficially Owned, Owned,
Name and Address of Directly or Indirectly, Directly or Indirectly,
Beneficial Owner on March 30, 2000(1) on March 30, 2000(1)
---------------- -------------------- --------------------
Deep Discount Advisors, Inc. 1,467,200 25.3%
One West Pack Square
Suite 777
Asheville, NC 28801
Ron Olin Investment 845,000 14.6%
Management Company
One West Pack Square
Suite 777
Asheville, NC 28801
- --------------------------------
(1) Based solely upon information presented in Schedule 13D, dated March 30,
2000, filed jointly by Deep Discount Advisors, Inc. and Ron Olin Investment
Management Company. The Fund's understanding is that the aggregate
beneficial ownership of shares of the Fund by these entities as of March
30, 2000 was 2,312,200 shares, representing 39.9% of the Fund.
In addition, on May 5, 2000, Cede & Co., a nominee for participants in the
Depository Trust Company, held of record 5,634,557 shares of the Fund, equal to
approximately 99.38% of the outstanding shares of the Fund.
OTHER BUSINESS
The Board of Directors of the Fund does not know of any other matter which may
come before the Meeting. If any other matter properly comes before the Meeting,
it is the intention of the persons named in the proxy to vote the proxies in
accordance with their judgment on that matter.
24
<PAGE>
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Fund which are intended to be presented at
the Fund's next Annual Meeting of Stockholders, to be held in the year 2001,
must be received by the Fund (addressed to The Cornerstone Strategic Return
Fund, assuming the passage of Proposals 3 and 4, at 152 West 57th Street, New
York, New York 10019 or to the Fund at the same address if such proposals are
not approved) for inclusion in the Fund's proxy statement and proxy relating to
that meeting in advance of the meeting as set forth below. Any stockholder who
desires to bring a proposal at the Fund's 2001 annual meeting of stockholders
without including such proposal in the Fund's proxy statement must deliver (via
the U.S. Post Office or such other means that guarantees delivery) written
notice thereof to the Secretary of the Fund addressed to the Fund at 152 West
57th Street, New York, New York 10019 no earlier than 90 days (approximately
January 1, 2001) and no later than 60 days (approximately February 1, 2001)
before the date of the annual meeting of stockholders which will be scheduled to
be held in April 2001 or the tenth day after public announcement is made by way
of publication by the New York Stock Exchange of the Fund's annual meeting date.
Central European Value Fund, Inc.
William A. Clark
Secretary
May 19, 2000
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
25
<PAGE>
FORM OF PROXY CARD
THE CENTRAL EUROPEAN VALUE FUND, INC.
The undersigned stockholder of The Central European Value Fund, Inc. (the
"Fund") hereby constitutes and appoints Ralph W. Bradshaw, Gary A. Bentz and
William A. Clark, or any of them, the action of a majority of them voting to be
controlling, as proxy of the undersigned, with full power of substitution, to
vote all shares of Common Stock of the Fund standing in his or her name on the
books of the Fund at the Annual Meeting of Stockholders of the Fund to be held
on Tuesday, June 27, 2000 at 9:30 A.M., New York time, at the offices of
Clemente Capital, Inc., 152 West 57th Street, 25th Floor, New York, New York
10019 or at any adjournment thereof, with all the powers which the undersigned
would possess if personally present, as designated on the reverse hereof:
The undersigned hereby instructs the said proxies to vote in accordance
with the aforementioned instructions with respect to (a) the election of two
Class II Directors, (b) the approval of a new investment advisory agreement
between Clemente Capital, Inc. and the Fund, (c) the approval of certain
modifications to the Fund's investment policies, (d) the approval of an
amendment to the Fund's charter to change the name of the Fund; and (e) the
ratification of the selection by the Board of Directors of the Fund's
independent accountants. If no such specification is made, the undersigned will
vote FOR each of the proposals set forth above, and in their discretion with
respect to such other matters as may properly come before the Meeting. Proposals
3 and 4 are part of a related plan to modify the Fund's investment strategy and
fundamental policies. Each proposal will be adopted only if the other proposal
is approved by the stockholders.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF CENTRAL EUROPEAN VALUE FUND, INC.'S
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
June 27, 2000
(To be dated and signed on reverse side)
26
<PAGE>
Please mark boxes / / or /X/ in blue or black ink.
Please mark your votes as in this example:
/X/
1. To elect two Class II Directors: FOR WITHHELD ABSTAIN
William A. Clark / / / / / /
Andrew Strauss / / / / / /
2. To approve of a new investment advisory agreement between Clemente
Capital, Inc. and the Fund:
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve certain modifications to the Fund's investment policies, which,
if approved, will have the effect of broadening the scope of the Fund's
investment strategies from one of primarily investing in securities of
"Central European Issuers" to one of investing primarily in the securities
of "U.S. and non-U.S. Issuers", as more fully described in the Proxy
Statement:
FOR AGAINST ABSTAIN
/ / / / / /
4. To approve an amendment to the Fund's charter to change the name of the
Fund to the "The Cornerstone Strategic Return Fund, Inc.":
FOR AGAINST ABSTAIN
/ / / / / /
5. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Fund's independent accountants for the
year ending December 31, 2000:
27
<PAGE>
FOR AGAINST ABSTAIN
/ / / / / /
6. In their discretion to act upon such other matters as may properly come
before the Annual Meeting or any adjournment thereof:
FOR AGAINST ABSTAIN
/ / / / / /
This proxy, when properly executed, will be voted in the manner directed herein
by the stockholder. If no specification is made, this proxy will be voted in
favor of each Proposal.
Your proxy is important to assure a quorum at the annual general meeting whether
or not you plan to attend the meeting in person. You may revoke this proxy at
anytime, and the giving of it will not effect your right to attend the special
general meeting and vote in person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature(s) Date
---------------------------- ----------------------
NOTE: Please sign exactly as name appears. When shares are held as joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer and if a
partnership, please sign in full partnership name by authorized person.
28
<PAGE>
APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT dated and effective as of May 1, 2000
between THE CENTRAL EUROPEAN VALUE FUND, INC., a Maryland corporation (herein
referred to as the "Fund"), and CLEMENTE CAPITAL, INC., a New York corporation
(herein referred to as the "Investment Manager").
1. Appointment of Investment Manager. The Investment Manager hereby
undertakes and agrees, upon the terms and conditions herein set forth, to
provide overall investment management services for the Fund, and in connection
therewith to (i) supervise the Fund's investment program, including advising and
consulting with the Fund's Board of Directors regarding the Fund's overall
investment strategy; (ii) make, in consultation with the Fund's Board of
Directors, investment strategy decisions for the Fund; (iii) manage the
investing and reinvesting of the Fund's assets; (iv) place purchase and sale
orders on behalf of the Fund; (v) advise the Fund with respect to all matters
relating to the Fund's use of leveraging techniques; (vi) provide or procure the
provision of research and statistical data to the Fund in relation to investing
and other matters within the scope of the investment objective and limitations
of the Fund; (vii) monitor the performance of the Fund's outside service
providers, including the Fund's administrator, transfer agent and custodian;
(viii) be responsible for compliance by the Fund with U.S. federal, state and
other applicable laws and regulations; and (ix) pay the salaries, fees and
expenses of such of the Fund's directors, officers or employees who are
directors, officers or employees of the Investment Manager or any of its
affiliates, except that the Fund will bear travel expenses or an appropriate
portion thereof of directors and officers of the Fund who are directors,
officers or employees of the Investment Manager, to the extent that such
expenses relate to attendance at meetings of the Board of Directors or any
committees thereof. The Investment Manager may delegate any of the foregoing
responsibilities to a third party with the consent of the Board of Directors.
2. Expenses. In connection herewith, the Investment Manager agrees to
maintain a staff within its organization to furnish the above services to the
Fund. The Investment Manager shall bear all expenses arising out of its duties
hereunder.
Except as provided in Section 1 hereof, the Fund shall be responsible
for all of the Fund's expenses and liabilities, including expenses for legal,
accounting and auditing services; taxes and governmental fees; dues and expenses
incurred in connection with membership in investment company organizations; fees
and expenses incurred in connection with listing the Fund's shares on any stock
exchange; costs of printing and distributing shareholder reports, proxy
materials, prospectuses, stock certificates and distribution of dividends;
charges of the Fund's custodians and sub-custodians, administrators and
sub-administrators, registrars, transfer agents, dividend disbursing agents and
dividend reinvestment plan agents; payment for portfolio pricing services to a
pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission; expenses of registering or qualifying securities of the
Fund for sale in the various states; freight and other charges in connection
with the shipment of the Fund's portfolio securities; fees and expenses of
non-interested directors or non-interested members of any advisory or investment
board, committee or panel of the Fund; fees and expenses of any officers and
interested directors of the Fund who are not affiliated with the Investment
Manager, the Administrator or their respective affiliates; travel expenses or an
appropriate portion thereof of directors and officers of the Fund, or members of
any advisory or investment board, committee or panel of the Fund, to the extent
that such expenses relate to attendance at meetings of the Board of Directors or
any committee thereof, or of any such advisory or investment board,
A-1
<PAGE>
committee or panel; salaries of shareholder relations personnel; costs of
shareholders meetings; insurance; interest; brokerage costs; and litigation and
other extraordinary or non-recurring expenses.
3. Transactions with Affiliates. The Investment Manager is authorized on
behalf of the Fund, from time to time when deemed to be in the best interests of
the Fund and to the extent permitted by applicable law, to purchase and/or sell
securities in which the Investment Manager or any of its affiliates underwrites,
deals in and/or makes a market and/or may perform or seek to perform investment
banking services for issuers of such securities. The Investment Manager is
further authorized, to the extent permitted by applicable law, to select brokers
(including any brokers affiliated with the Investment Manager) for the execution
of trades for the Fund.
4. Best Execution; Research Services. The Investment Manager is
authorized, for the purchase and sale of the Fund's portfolio services, to
employ such dealers and brokers as may, in the judgment of the Investment
Manager, implement the policy of the Fund to obtain the best results taking into
account such factors as price, including dealer spread, the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. Consistent with this policy, the Investment Manager is authorized to
direct the execution of the Fund's portfolio transactions to dealers and brokers
furnishing statistical information or research deemed by the Investment Manager
to be useful or valuable to the performance of its investment advisory functions
for the Fund. It is understood that in these circumstances, as contemplated by
Section 28(e) of the Securities Exchange Act of 1934, the commissions paid may
be higher than those which the Fund might otherwise have paid to another broker
if those services had not been provided. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Investment Manager. It is understood that the expenses of the Investment Manager
will not necessarily be reduced as a result of the receipt of such information
or research. Research services furnished to the Investment Manager by brokers
who effect securities transactions for the Fund may be used by the Investment
Manager in servicing other investment companies and accounts which it manages.
Similarly, research services furnished to the Investment Manager by brokers who
effect securities transactions for other investment companies and accounts which
the Investment Manager manages may be used by the Investment Manager in
servicing the Fund. It is understood that not all of these research services are
used by the Investment Manager in managing any particular account, including the
Fund.
5. Remuneration. In consideration of the services to be rendered by the
Investment Manager under this Agreement, the Fund shall pay the Investment
Manager a monthly fee in United States dollars on the fifth (5th) business day
of each month for the previous month at an annual rate of 1.00% of the Fund's
average weekly net assets. If the fee payable to the Investment Manager pursuant
to this paragraph 5 begins to accrue before the end of any month or if this
Agreement terminates before the end of any month, the fee for the period from
such date to the end of such month or from the beginning of such month to the
date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Fund's net assets shall be computed at the time and in the manner
specified in the Registration Statement.
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6. Representations and Warranties. The Investment Manager represents and
warrants that it is duly registered and authorized as an investment adviser
under the Investment Advisers Act of 1940, as amended, and the Investment
Manager agrees to maintain effective all requisite registrations, authorizations
and licenses, as the case may be, until the termination of this Agreement.
7. Services Not Deemed Exclusive. The services provided hereunder by the
Investment Manager are not to be deemed exclusive and the Investment Manager and
any of its affiliates or related persons are free to render similar services to
other and to use the research developed in connection with this Agreement for
other clients or affiliates. Nothing herein shall be construed as constituting
the Investment Manager an agent of the Fund.
8. Limit of Liability. The Investment Manager shall exercise its best
judgment in rendering the services in accordance with the terms of this
Agreement. The Investment Manager shall not be liable for any error of judgment
or mistake of law or for any act or omission or any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Investment
Manager against any liability to the Fund or its shareholders to which the
Investment Manager would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Agreement
("disabling conduct"). The Fund will indemnify the Investment Manager against,
and hold it harmless from, any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses), including any amounts
paid in satisfaction of judgments, in compromise or as fines or penalties, not
resulting from disabling conduct by the Investment Manager. Indemnification
shall be made only following: (i) a final decision on the merits by a court or
other body before whom the proceeding was brought that the Investment Manager
was not liable by reason of disabling conduct, or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
Investment Manager was not liable by reason of disabling conduct by (a) the vote
of a majority of a quorum of directors of the Fund who are neither "interested
persons" of the Fund nor parties to the proceeding ("disinterested non-party
directors"), or (b) an independent legal counsel in a written opinion. The
Investment Manager shall be entitled to advances from the Fund for payment of
the reasonable expenses (including reasonable counsel fees and expenses)
incurred by it in connection with the matter as to which it is seeking
indemnification in the manner and to the fullest extent permissible under law.
Prior to any such advance, the Investment Manager shall provide to the Fund a
written affirmation of its good faith belief that the standard conduct necessary
for indemnification by the Fund has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following additional
conditions shall be met: (a) the Investment Manager shall provide a security in
form and amount acceptable to the Fund for its undertaking; (b) the Fund is
insured against losses arising by reason of the advance; or (c) a majority of a
quorum of disinterested non-party directors, or independent legal counsel, in a
written opinion, shall have determined, based on a review of facts readily
available to the Fund at the time the advance is proposed to be made, that there
is reason to believe that the Investment Manager will ultimately be found to be
entitled to indemnification.
9. Duration and Termination. This Agreement shall remain in effect until
April 30, 2002 provided, that the Fund's shareholders approve this Agreement
within 180 days of the date hereof, and then shall continue in effect thereafter
for successive annual periods, but only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) a
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majority of the members of the Fund's Board of Directors who are not parties to
this Agreement or "interested persons" (as defined in the Investment Company Act
of 1940 (the "1940 Act")) of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) the Fund's Board of
Directors or the holders of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund.
Notwithstanding the above, this Agreement (a) may nevertheless be
terminated at any time, without penalty, by the Fund's Board of Directors, by
vote of holders of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund or by the Investment Manager, upon 60 days' written
notice delivered to each party hereto, and (b) shall automatically be terminated
in the event of its assignment (as defined in the 1940 Act). Any such notice
shall be deemed given when received by the addressee.
10. Governing Law. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of New York, provided,
however, that nothing herein shall be construed as being inconsistent with the
1940 Act.
11. Notices. Any notice hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by delivery in person) to
the parties at the addresses set forth below:
If to the Fund:
THE CENTRAL EUROPEAN VALUE FUND, INC.
152 West 57th Street
New York, NY 10019
Attention: Mr. William A. Clark, Secretary
Telephone No.: (828) 255-4835
Fax No.: (828) 255-4834
If to the Investment Manager:
CLEMENTE CAPITAL, INC.
152 West 57th Street
New York, NY 10019
Attention: Mr. Leopoldo M. Clemente
Telephone No.: (212) 765-0700
Fax No.: (212) 765-1939
or to such other address as to which the recipient shall have informed the other
party in writing.
Unless specifically provided elsewhere, notice given as provided above
shall be deemed to have been given, if by personal delivery, on the day of such
delivery, and, if by facsimile and mail, on the date on which such facsimile or
mail is sent.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto caused their duly authorized
signatories to execute this Agreement as of the day and year first written
above.
THE CENTRAL EUROPEAN VALUE FUND, INC.
By:
-----------------------------------------
Name: William A. Clark
Title: Secretary
CLEMENTE CAPITAL, INC.
By:
-----------------------------------------
Name: Leopoldo M. Clemente, Jr.
Title: President
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<PAGE>
APPENDIX B
FORM OF
ARTICLES OF AMENDMENT
of
THE CENTRAL EUROPEAN VALUE FUND, INC.
THE CENTRAL EUROPEAN VALUE FUND, INC. (hereinafter referred to as the
"Corporation"), a Maryland corporation, hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: Article II of the Charter is hereby amended in its entirety to read
as follows:
The name of the corporation (which is hereinafter referred to as the
"Corporation") is "The Cornerstone Strategic Return Fund, Inc."
SECOND: The foregoing amendment to the Charter of the Corporation has been
advised by the Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its President and witnessed by its Secretary on
this __ day of June, 2000.
THE CENTRAL EUROPEAN VALUE FUND, INC.
By:
-----------------------------------------
Name: Leopoldo M. Clemente, Jr.
Title: President
WITNESS:
- ----------------------------
Name: William A. Clark
Title: Secretary
The Central European Value Fund, Inc.
c/o Clemente Capital, Inc.
at 152 West 57th Street
New York, New York 10019
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