EX-99 2 proxystatementv1.txt THE EUROPEAN WARRANT FUND, INC. 330 Madison Avenue New York, New York 10017 ANNUAL MEETING OF STOCKHOLDERS June 26, 2002 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of The European Warrant Fund, ("Fund") for use at its Annual Meeting of Stockholders to be held on June 26, 2002 at 10:00 a.m. Eastern time, at 330 Madison Avenue, New York, NY 10017, 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 ("Stockholders") is May 31, 2002. At the Annual Meeting, Stockholders will be asked to consider and vote upon the following: 1. Election of two Directors of the Fund. 2. Transaction of such other business as may properly come before the meeting or any adjournment thereof. Proxy solicitations will be made, beginning on or about May 31, 2002, 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., the investment adviser of the Fund ("Julius Baer Securities" or the "Adviser"); and Investors Bank & Trust Company, the custodian, administrator and transfer agent of the Fund ("Investors Bank"). Julius Baer Securities is located at 330 Madison Avenue, New York, NY 10017 and Investors Bank is located at 200 Clarendon Street, 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 $3,500 plus out-of-pocket 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 ("Shares"). The Fund's Annual Report to Stockholders for the fiscal year ended March 31, 2002, which contains audited financial statements, may be obtained without charge by calling 1-800-387-6977 or mailing a 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 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 entitled to vote at the Annual Meeting. The Fund has one class of common stock, which has a par value of $.001 per Share. On May 1, 2002, the record date, there were 14,585,366.037 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) neither withholding authority to vote nor abstentions or broker nonvotes have any effect on the outcome of the voting on the matter. PROPOSAL 1: ELECTION OF DIRECTORS Stockholders are being asked to elect two (2) of the six (6) directors of the Fund. The Board of Directors is divided into three classes, designated as Class I, Class II and Class III. Each year the term of office of one class expires. At the Annual Meeting, the election of Thomas J. Gibbons and Robert S. Matthews as Class II directors is proposed. Each director is to hold office for a period of three years, and until his successor is elected and qualified. Mr. Gibbons currently serves as a director of the Fund. Mr. Matthews is being proposed for election as a new director to fill the vacancy that will be created upon the retirement of Lawrence A. Fox. Mr. Matthews is not presently serving as a director. The nominees have consented to stand for election and to serve if elected. If either nominee should be unable to serve, an event not now anticipated, the persons named in the proxy have discretionary authority to vote in favor of a substitute nominee or nominees as may be proposed by the Board of Directors. Each director serves for three years. 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 directors to fill any existing vacancies in the Board of Directors. Under the Funds retirement policy, directors must retire upon reaching age 75. Set forth below is certain information regarding each nominee for election to the Fund's Board of Directors. Name, Address and Age Position(s) Length of Principal Occupations(s) During Number of Other Held with Time Past 5 Years Portfolios in Directorships Fund Served Fund Complex1 Held by Overseen by Nominee for Nominee for Director Director Thomas J. Gibbons, Director, Since 1993 President, Cornerstone Associates 1 None age 54, P.O. Box 514, Class II2 Management (Consulting Firm) Sparta, NJ 07871 Robert S. Matthews, Nominee Managing Partner, Matthews & Co. 3 Julius Baer age 58, 331 Madison LLP (certified public accountants) Investment Avenue, 8th Floor, Funds New York, NY 10017 1 The Fund complex includes the Fund and the two portfolios of the Julius Baer Investment Funds, the investment adviser of which is an affiliate of the Adviser. 2 Mr. Gibbons served as a Class III director from 1993 to 2001 and as a Class II director since 2001. 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: Independent Directors (those directors who are not "interested persons" of the Fund as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) Name, Address and Age Position(s) Length of Principal Occupations(s) During Number of Other Held with Time Past 5 Years Portfolios in Directorships Fund Served Fund Complex1 Held by Overseen by Director Director Harvey B. Kaplan, age Director, Since Controller (Chief Financial 3 Julius Baer 64, 80 Voice Road, Class III 1990 Officer), Easter Unlimited, Inc. Investment Carle Place, NY 11514 (toy and novelty manufacturer and Funds importer) Antoine Bernheim, age Director, Since President, Dome Capital Management 1 None 47, 405 Park Ave., Class I 1990 Inc. (investment firm); Chairman, Ste. 500, New York, Dome Securities Corp. NY 10022 Interested Directors (those directors who are "interested persons" of the Fund as defined in the 1940 Act) Name, Address and Age Position(s) Length of Principal Occupations(s) During Number of Other Held with Time Past 5 Years Portfolios in Directorships Fund Served Fund Complex1 Held by Overseen by Director Director Bernard Spilko,2 age Chairman of Since General Manager and Senior Vice 3 Julius Baer 61, Board of 1993 President, Bank Julius Baer & Co., Investment 330 Madison Avenue, Directors & Ltd. (New York Branch)(1998 to Funds New York, NY 10017 Director, present); Managing Director and Class III Member of Board of Directors, Julius Baer Securities Inc. (1983 to present) Martin Vogel,3 age Director, Since Member of Management Committee, 3 Julius Baer 39, Freighutstrasse Class I 1997 Julius Baer Investment Fund Investment 12, Zurich, Services, Ltd., (1996 to present) Funds Switzerland The officers of the Fund are listed below except for the Chairman of the Board, Mr. Spilko, for whom information is provided in the table above. The term of office for each officer is one year. Name, Address and Age Position(s) Length of Time Principal Occupations(s) During Past 5 Years Held with Fund Served Michael K. Quain, age 44, 330 President and Since 1997 First Vice President of Bank Julius Baer & Madison Avenue, New York, NY Chief Financial Co., Ltd. (New York Branch); Vice President of 10017 Officer Julius Baer Securities Inc.; President and Chief Financial Officer of Julius Baer Investment Funds (1998-present) Andrea Quapp, age 38, Vice President Since 2001 First Vice President, Julius Baer Asset BrandschenKestrasse 40, and Chief Management, (2001-present); Executive Vice Postfach CH-8010, Zurich, Investment President, UBS Asset Management, (1986-2001) Switzerland Officer Peter Reinmuth, age 33, Vice President Since 1999 Vice President of Investments, Julius Baer BrandschenKestrasse 40, and Investment Securities Inc. Postfach CH-8010, Zurich, Officer Switzerland Hector Santiago, age 33, Vice President Since 1998 First Vice President of Bank Julius Baer & 330 Madison Avenue, New York, Co., Ltd. (New York Branch) and Julius Baer NY 10017 Securities, Inc. (1998-present); Assistant Vice President-Accounting, Operations & Trading Manager, EFG Capital Intl. (broker-dealer firm) (1996-1998) Craig M. Giunta, age 30, Secretary and Since 2001 Assistant Vice President, Investment Funds 330 Madison Avenue, New York, Treasurer Department, Bank Julius Baer & Co. Ltd., (New NY 10017 York Branch) (2001-present); Supervisor of Fund Accounting, Neuberger Berman LLC (investment management firm) (1994-2001) Paul J. Jasinski, age 55, Assistant Since 1995 Managing Director, Investors Bank & Trust 200 Clarendon Street, Boston, Treasurer Company (1990-present) MA 02116 James L. Smith, age 42, Assistant Since 2001 Director, Investors Bank & Trust Company 200 Clarendon Street, Boston, Treasurer (2001-present); Executive Director, USAA/IMCO MA 02116 (investment management firm) (1999-2001); Compliance Officer, BISYS (mutual fund administrator) (1996-1999) Cynthia J. Surprise, age 55, Assistant Since 1999 Director and Counsel, Mutual Fund 200 Clarendon Street, Boston, Secretary Administration-Legal, Investors Bank & Trust MA 02116 Company (1999-present); Vice President, State Street Bank and Trust Company (1995-1999) Share Ownership of the Fund as of March 31, 2002 The following information regarding share ownership is based upon information provided by each director or nominee. Interested Directors Name of Director Dollar Range of Equity Securities in Aggregate Dollar Range of Equity the Fund Securities in All Registered Investment Companies Overseen by Director in Fund Family Bernard Spilko None None Martin Vogel None None Independent Directors Name of Director or Nominee Dollar Range of Equity Securities in Aggregate Dollar Range of Equity the Fund Securities in All Registered Investment Companies Overseen by Director in Fund Family Harvey B. Kaplan $1-$10,000 $1-$10,000 Antoine Bernheim $1-$10,000 $1-$10,000 Thomas J. Gibbons None None Robert S. Matthews None None As of March 31, 2002, the directors and officers of the Fund, as a group, beneficially owned less than 1% of the outstanding Shares. The Board of Directors held four meetings during the fiscal year ended March 31, 2002. All of the directors except Martin Vogel 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, 2002. For purposes of this table the term "Fund Complex" includes all funds that have an affiliated investment adviser. The remainder of the directors and officers did not receive compensation from either the Fund or the Fund complex. The Fund has no retirement or pension plan for its directors or officers. 1The Fund complex includes the Fund and the two portfolios of the Julius Baer Investment Funds, the investment adviser of which is an affiliate of the Adviser. 2 Mr. Spilko in considered to be "interested", as defined in the 1940 Act, because of his position with Julius Baer Securities Inc., the Fund's investment adviser, and with Bank Julius Baer & Co., Ltd., an affiliate of the Adviser. 3 Mr. Vogel is considered to be "interested", as defined in the 1940 Act, because of his position with Julius Baer Investment Fund Services, Ltd., an affiliate of the Adviser. COMPENSATION TABLE Aggregate Total Compensation Compensation from the Fund and the Name from the Fund Fund Complex $8,500 $8,500 Antoine Bernheim 8,250 8,250 Lawrence A. Fox3 8,500 8,500 Thomas J. Gibbons 8,750 18,5004 Harvey B. Kaplan Total $34,000 $43,750 The Board of Directors has an Audit Committee and a Nominating Committee, each of which is comprised of all of the Independent Directors of the Fund. Currently, Messrs. Bernheim, Fox, Gibbons and Kaplan comprise the Audit Committee and the Nominating Committee. The Nominating Committee makes nominations for Independent Directors of the Board of Directors and reviews committee assignments. The Nominating Committee also reviews compensation matters. The Nominating Committee did not have any meetings during the fiscal year ended March 31, 2002. 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 Audit Committee, pursuant to an Amended and Restated Audit Committee Charter adopted by the Board (included in this Proxy Statement as an Appendix), oversees the Fund's accounting and financial reporting policies and practices, its internal controls and the internal controls of certain service providers; oversees the quality and objectivity of the Fund's financial statements and the independent audit thereof; ascertains the independence of the Fund's independent auditors; and acts as a liaison between the Fund's independent auditors and the full Board of Directors. The Audit Committee had three meetings during the fiscal year ended March 31, 2002. Each member of the Audit Committee is independent, as defined in the applicable listing standards of the New York Stock Exchange. 1 Mr. Fox will resign as a Director, effective June 26, 2002. 2 Mr. Kaplan also receives compensation for service as a Trustee of the Julius Baer Investment Funds, which has an affiliated investment adviser. 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. ADDITIONAL INFORMATION INDEPENDENT ACCOUNTANTS KPMG LLP ("KPMG") has served as the Fund's independent accountants since the Fund's inception. KPMG has extensive experience in investment company accounting and auditing and performs various audit and tax services for the Fund. Such services include an annual audit of the Fund's financial statements, review of certain filings with the Securities and Exchange Commission, internal control reviews, consultation on tax, financial accounting and reporting matters, and meetings with the Audit Committee of the Fund's Board of Directors. The financial statements included in the most recent Annual Report to the Fund's Stockholders have been examined by KPMG. For services rendered to the Fund or its investment adviser for the fiscal year ended March 31, 2002, KPMG will receive the following fees: Audit Fees For audit services rendered to the Fund for the fiscal year ended March 31, 2002, including fees billed for professional services rendered for the audit of the Fund's annual financial statements, KPMG will receive a fee of $37,500. Financial Information Systems Design and Implementation Fees The Fund did notpayany financial information systems design and implementation fees to KPMG for the fiscal year ended March 31, 2002. All Other Fees For all other services rendered by KPMG to the Fund, Julius Baer Securities, and all entities controlling, controlled by, or under common control with Julius Baer Securities that provide services to the Fund for the fiscal year ended March 31, 2002, KPMG will receive a fee of $4,000 for tax return preparation. AUDIT COMMITTEE REPORT The Audit Committee has discussed with KPMG the matters required to be discussed by the Statement on Auditing Standards No. 61. The Audit Committee has received from KPMG the written statements required by Independence Standards Board No. 1, Independence Discussions with Audit Committees, and has discussed with KPMG the matter of the firm's independence. Based on such reviews and discussions, the Audit Committee has recommended to the Board that the audited financial statements be included in the Fund's Annual Report for the fiscal year ended March 31, 2002 for filing with the Securities and Exchange Commission. The Audit Committee also has considered whether the provision of non-audit services by KPMG to the Fund, Julius Baer Securities, and all entities controlling, controlled by, or under common control with Julius Baer Securities that provide services to the Fund, is compatible with the maintenance of the independent accountant's continued independence. KPMG has represented to the Fund that KPMG and its members do not have any direct or indirect material financial interest in or connection with the Fund in any capacity other than as independent accountants. Based on these statements and discussions, the Audit Committee will recommend to the Board the selection of KPMG as independent auditors for the Fund for the fiscal year ended March 31, 2003. It is expected that the Board of Directors will unanimously approve this selection at its Board meeting on June 26, 2002. Representatives from KPMG expect to be present at the Annual Meeting. THE AUDIT COMMITTEE The Audit Committee is comprised of the following Independent Directors: Antoine Bernheim, Lawrence A. Fox, Thomas J. Gibbons and Harvey B. Kaplan. 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 2003 must be received by the Fund for consideration for inclusion in the Fund's proxy statement relating to that meeting no later than January 12, 2003. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's executive 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. 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 directors, officers and greater than ten percent owners were complied with during the fiscal year ended March 31, 2002. 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 proxy will vote thereon in accordance with their judgment. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. APPENDIX EUROPEAN WARRANT FUND, INC. AMENDED AND RESTATED AUDIT COMMITTEE CHARTER 1. The Audit Committee shall be composed of three or more Directors as determined by the Board of Directors, each of whom shall be an independent Director, and free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise or his or her independent judgment as a member of the Audit Committee. For purposes of the Audit Committee, a Director is independent if he or she is not an "interested person" of the Fund (as that term is defined in the Investment Company Act of 1940, as amended) and meets the independence requirements set forth in New York Stock Exchange Rule 303.01(B) (3). Each member of the Audit Committee shall be financially literate, as such qualification is interpreted by the Board of Directors in its business judgment (or must become financially literate within a reasonable time after his or her appointment to the Audit Committee). At least one member of the Audit Committee must have accounting or related financial management expertise, as the Board of Directors interprets such qualification in its business judgment. 2. The purposes of the Audit Committee are to: (a) oversee the Fund's accounting and financial reporting policies and practices, its internal controls and, as appropriate, the internal controls of certain service providers; (b) oversee the quality and objectivity of the Fund's financial statements and the independent audit thereof; (c) ascertain the independence of the Fund's independent auditors; and (d) act as a liaison between the Fund's independent auditors and the full Board of Directors. The function of the Audit Committee is oversight; it is management's responsibility to maintain appropriate systems for accounting and internal control, and the auditor's responsibility to plan and carry out a proper audit. 3. To carry out its purposes, the Audit Committee shall have the following duties and powers to: (a) recommend the selection, retention or termination of auditors and, in connection therewith, to evaluate the independence of the auditors, including whether the auditors provide any consulting services to the manager, to receive the auditors' specific written representations as to their independence and to actively engage in a dialogue with the auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditors: the independent auditors are ultimately accountable to the Board of Directors and the Audit Committee and that the Audit Committee and the Board of Directors, consistent with the requirements of the Investment Company Act of 1940, as amended, and relevant state law, have the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent auditors (or to nominate the independent auditors to be proposed for shareholder approval in any proxy statement); (b) meet with the Fund's independent auditors, including private meetings, as necessary: (i) to review the arrangements for and scope of the annual audit and any special audits; (ii) to discuss any matters of concern relating to the Fund's financial statements, including any adjustments to such statements recommended by the auditors, or other results of said audit(s); (iii) to consider the auditor's comments with respect to the Fund's financial policies, procedures and internal accounting controls and management's responses thereto; and (iv) to review the form of opinion the auditors propose to render to the Board and shareholders; (c) consider the effect upon the Fund of any changes in accounting principles or practices proposed by management or the auditors; (d) review the fees charged by the auditors for audit and non-audit services; (e) investigate improprieties or suspected improprieties in fund and adviser operations; (f) review the findings of SEC and internal Fund audits, and consult with Fund management on appropriate responses; (g) review any violations of the Code of Ethics for the Fund, its adviser and any other service provider required to have its employees report their personal securities trades; and report the Committee's findings to the Board with recommendations for appropriate action; (h) report its activities to the full Board on a regular basis and to make such recommendations with respect to the above and other matters as the Committee may deem necessary or appropriate; and (i) review, in consultation with Fund management, any proposed plans of Fund mergers, sales, acquisitions, conversions or other similar transactions for the Fund or its adviser and report its findings and recommendations to the Board. 4. The Committee shall meet at least twice a year and is empowered to hold special meetings as circumstances require. 5. The Committee shall meet as may be appropriate with the Treasurer of the Fund and with internal auditors, if any, for the management company. 6. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to retain special counsel and other experts or consultants at the expense of the Fund. 7. The Committee shall review this Charter at least annually and recommend any changes to the full Board of Directors. Adopted: June 27, 2001