PROXY STATEMENT IN OPPOSITION TO THE SOLICITATION BY THE BOARD OF
DIRECTORS OF LINCOLN NATIONAL CONVERTIBLE SECURITIES FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS (To be held on May__,
2001)
My name is Phillip Goldstein. I am a shareholder of Lincoln
National Convertible Securities Fund, Inc. (the "Fund"). I am
sending this proxy statement and the enclosed GREEN proxy card to
shareholders of record on March __, 2001 (the "Record Date") of
the Fund. I am soliciting a proxy to vote your shares at the 2001
Annual Meeting of Shareholders of the Fund (the "Meeting") on May
__, 2001 and at any adjournments or postponements of the Meeting.
This proxy statement and the enclosed GREEN proxy card are first
being sent to shareholders of the Fund on or about March __,
2001.
INTRODUCTION
There are two matters that the Fund has scheduled to be voted
upon at the Meeting:
1. To elect directors for the Fund to hold office until their
successors are elected and qualified.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent auditors for the fiscal year ending December 31,
2001.
In addition, I will present the following proposals at the
Meeting:
3. RESOLVED: The shareholders of the Fund request that it be
converted to an open-end fund.
4. RESOLVED: The following by-law shall be adopted: "The
investment advisory agreement shall be submitted to shareholders
for a vote in 2002 and every year thereafter. If the shareholders
do not approve continuance of the advisory contract, the board of
directors may subsequently approve its continuance if not
inconsistent with state or federal law. The provisions of this
by-law may only be amended, added to, rescinded or repealed by
the shareholders."
5. RESOLVED: The following bylaw shall be adopted: "No lawsuit
against any stockholder of the Company shall be pursued unless
ratified by the stockholders no later than (i) 120 days after
such lawsuit is filed or (ii) 120 days after adoption of this
bylaw. This bylaw may only be altered, amended or repealed by the
stockholders."
With respect to these matters, I am soliciting a proxy to vote
your shares FOR
the election of Phillip Goldstein and Ralph Bradshaw (and, if
applicable, FOR Andrew Dakos and Gary Bentz) as directors of the
Fund and FOR Proposals 3, 4 and 5. I am making no recommendation
as to how your shares should be voted on Proposal 2.
How Proxies Will Be Voted
All of the proposals to be voted on at the Meeting are included
on the enclosed GREEN proxy card. If you wish to vote FOR the
election of my nominees to the Board, you may do so by completing
and returning a GREEN proxy card. If you return a GREEN proxy
card to me or to my agent, your shares will be voted on each
matter as you indicate. If you do not indicate how your shares
are to be voted on a matter, they will be voted FOR the election
of Phillip Goldstein and Ralph Bradshaw (and, if applicable, FOR
Andrew Dakos and Gary Bentz) to the Board and FOR Proposals 3, 4,
and 5 and will ABSTAIN from voting on Proposal 2.
If you return a GREEN proxy card, you will be granting the
persons named as proxies discretionary authority to vote on any
other matters of which they are not now aware that may come
before the Meeting. These may include, among other things,
matters relating to the conduct of the Meeting. The proxies may
also temporarily decline to attend the Meeting, thereby
preventing a quorum, in order to solicit additional proxies or,
if they deem it to be in the interest of the shareholders, for
any other legal reason.
Voting Requirements
If a quorum is not present at the Meeting, or if 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 Meeting to permit further solicitation
of proxies, consideration of matters of which I am not aware at
this time, or negotiations with the incumbent directors. If an
adjournment of the Meeting is proposed, the persons named as
proxies on the GREEN proxy card will vote for or against such
adjournment in their discretion. Please refer to the Fund's
proxy statement for the voting requirements for Proposal 1 and
Proposal 2. Proposals 3, 4 and 5 require the affirmative vote of
the majority of votes cast at the meeting for passage.
Revocation of Proxies
You may revoke any proxy at any time prior to its exercise by (i)
delivering a written revocation of your proxy to the Fund; (ii)
executing and delivering a later dated proxy to me or to the Fund
or to our respective agents; or (iii) voting in person at the
Meeting. (Attendance at the Meeting will not in and of itself
revoke a proxy.) There is no limit on the number of times you may
revoke your proxy prior to the Meeting. Only the latest dated,
properly signed proxy card will be counted.
Information Concerning the Soliciting Shareholder
The shareholder making this solicitation is Phillip Goldstein, 60
Heritage Drive, Pleasantville, NY 10570. I am an investment
manager who presently manages investment portfolios having assets
totaling in excess of $60 million. Since December 1, 1992, I
have been the president and 50% shareholder of a company that
serves as the general partner of a private investment
partnership. That partnership is a shareholder in the Fund.
Since 1996, I have taken an active role in urging the management
of certain registered closed-end investment companies to take
various actions that I believe would benefit those companies and
their shareholders.
As of March -- 2001, I owned jointly with my wife one share of
Common Stock of the Fund. I am also deemed to be the beneficial
owner of _____ shares of Common Stock held in brokerage accounts
by my clients and me. Combined, these personal and client
positions total _____ shares, representing approximately __% of
the Fund's outstanding Common Stock. Exhibit 1 to this proxy
statement contains a schedule showing my purchases and sales of
Common Stock within the past two years.
REASONS FOR THE SOLICITATION
The shares of the Fund have traded at a substantial discount from
net asset value ("NAV") for many months. I believe that
insufficient measures have been taken to address the discount.
For example, the Fund's most recent report indicates that less
than --% of the shares had been repurchased. Repurchasing shares
at a discount benefits all shareholders by increasing the NAV per
share. At the same time, it reduces the Fund's total assets.
Since it is paid a percentage of total assets as a management
fee, the Fund's investment advisor has a conflict of interest
because repurchasing shares will reduce its fees. Thus, the
board of directors must provide firm leadership to provide this
clear benefit to the owners of the Fund. I believe that the
incumbent directors are too close to the investment advisor to be
true watchdogs for the Fund`s shareholders.
I am conducting this contest in order to (1) give all
shareholders an opportunity to
elect directors who have no affiliation with the investment
advisor, (2) afford shareholders an opportunity to vote on a
proposal to eliminate the discount by converting the Fund to an
open-end fund, (3) make the investment manager more accountable
to the shareholders, and (4) allow shareholders to determine
whether they want the Fund to pursue lawsuits against
shareholders. Election of my director nominees and passage of my
proposals will send a strong message that the status quo is
unacceptable.
CERTAIN CONSIDERATIONS
In deciding whether to give me your proxy, you should consider
the following:
Implementation of certain actions may require shareholder
approval, and no assurance can be given that such approval will
be obtained. In addition, various costs, which would be borne
indirectly by shareholders, may be associated with certain
actions, including but not limited to those associated with
holding a special meeting of shareholders. I believe that such
costs are far outweighed by the benefits to most shareholders of
these actions. In addition, certain actions may have tax
consequences for some shareholders that cannot be quantified at
this time.
I believe that all shareholders of the Fund will benefit if
actions are taken to reduce or eliminate the discount from NAV.
However, I have another reason for wanting the market value of
the Fund's shares to increase. My clients who hold shares of the
Fund pay me fees that are based upon a share of the profits they
earn. Those fees will be greater if the value of the Fund's
shares increases.
ELECTION OF DIRECTORS
Last year, immediately after the board announced that it had
staggered itself without shareholder approval, I attempted to
nominate Mr. Bradshaw and myself for election as Class I
directors. Even though many shareholders gave instructions to
vote their shares for us at the meeting, the board refused to
allow us to present any nominations. After eliminating any
competition, the incumbents claimed they were "elected." I have
sued the directors for abusing their positions and stealing the
election for the Class I seats. I intend to nominate Mr.
Bradshaw and myself as nominees for Class I seats (because I
believe that the persons claiming to hold those positions were
not legally elected) and Mr. Dakos and Mr. Bentz for the Class II
seats. However, if the court rules otherwise, Mr. Bradshaw and I
will be the (only) nominees for the Class II seats. The
following are the nominees to have a term of office until their
successors are elected and qualified. Each nominee has consented
to serve if elected and to being named in the proxy statement.
Name, Address, Age Principal Business
Occupation(s)
Phillip Goldstein (56)
60 Heritage Drive
Pleasantville, NY 10570
Since 1992, Mr. Goldstein has managed investments for a limited
number of clients and has served as the portfolio manager and
president of the general partner of Opportunity Partners LP, a
private investment partnership. Mr. Goldstein has been an
advocate for shareholder rights since 1996. He was a director of
Clemente Strategic Value Fund from 1998 to 2000 and has been a
director of The Mexico Equity and Income Fund since February
2000,The Italy Fund since May 2000 and Dresdner Global Strategic
Income Fund since November 2000.
Ralph Bradshaw (50)
One West Pack Square, Suite 750
Asheville, NC 28801
Mr. Bradshaw is President of Cornerstone Advisors Inc.
specializing in closed-end fund investments and a Financial
Consultant. Formerly he was a Vice-President of Deep Discount
Advisors, Inc. (1993-1999). Mr. Bradshaw currently serves as a
Director on the boards of The Clemente Strategic Value Fund
(1998), The Austria Fund (1999), Cornerstone Strategic Return
Fund (1999), and Progressive Return Fund (1999), all NYSE listed
closed-end funds.
Andrew Dakos (34)
14 Mill Street
Lodi, NJ 07644
Mr. Dakos is a Private Investor and Vice-President- Sales Uvitec
Printing Ink since 1997. He was Sales Manager from 1992-1997. He
has been a director of Dresdner Global Strategic Income Fund
since November 2000.
Gary Bentz (44)
One West Pack Square, Suite 750
Asheville, NC 28801
Mr. Bentz is Vice-President of Cornerstone Advisors Inc.
specializing in closed-end fund investments. He has served as a
Financial, Accounting, and Investment Consultant and Certified
Public Accountant. Formerly he was a Vice-President of Deep
Discount Advisors, Inc. (1993-2000). Mr. Bentz currently serves
as a Director on the Board of The Austria Fund (1999); formerly
served on the Boards of Clemente Strategic Value Fund (1999), and
Cornerstone Strategic Return Fund (2000), and is currently
Treasurer of these two funds, as well as Progressive Return Fund,
all NYSE listed closed-end funds.
As of March __, 2001 Mr. Goldstein, Mr. Bradshaw, and Mr. Bentz
beneficially owned _______, 1,001, and 3,900 shares of the Fund
respectively. Mr. Dakos is not a shareholder.
Other than fees that may be payable by the Fund to its directors,
no nominee has any arrangement or understanding with any person
with respect to any future employment by the Fund or by any
affiliate of the Fund.
The persons named as proxies on the enclosed GREEN proxy card
intend, in the absence of contrary instructions, to vote all
proxies they are entitled to vote FOR the election of the above
persons, each of whom have consented to stand for election and to
serve if elected. If any nominee is unable to serve, an event not
now anticipated, the proxies will be voted for such other person
(who shall be disinterested), if any, as is designated by the
persons named as proxies.
RATIFICATION OF THE INDEPENDENT AUDITOR
The incumbent board of directors has selected
PricewaterhouseCoopers LLP as
the independent auditor of the Fund for the fiscal year ending
December 31, 2001. Without further information, I cannot make
any recommendation. Therefore, in the absence of contrary
instructions, the persons named as proxies on the GREEN proxy
card intend to ABSTAIN from voting on this matter.
PROPOSAL 3: TO REQUEST THAT THE FUND BE CONVERTED TO AN OPEN-END
FUND
Supporting Statement
This proposal, while not binding on the Fund, enables
shareholders to vote on whether the Fund should be converted to
an open-end fund. Upon conversion, there would be no discount
and shareholders could redeem their shares at NAV at any time.
PROPOSAL 4: TO AMEND THE FUND'S BY-LAWS TO REQUIRE ANNUAL
APPROVAL OF THE INVESTMENT ADVISORY CONTRACT BY A
VOTE OF THE SHAREHOLDERS
RESOLVED: The following by-law shall be adopted: "The investment
advisory agreement shall be submitted to shareholders for a vote
in 2002 and every year thereafter. If the shareholders do not
approve continuance of the advisory contract, the board of
directors may subsequently approve its continuance if not
inconsistent with state or federal law. The provisions of this
by-law may only be amended, added to, rescinded or repealed by
the shareholders."
Supporting Statement
The advisor collects around $1 million a year to manage the Fund.
So, it is only fair that the shareholders who pay those fees be
able to vote "yea or nay" on the advisory contract each year. The
law specifically permits us to vote on the re-approval of the
advisory contract for a very good reason. It makes the
investment advisor accountable to the people who pay the
advisor's fees and not just to a friendly board of directors.
PROPOSAL 5: TO AMEND THE BYLAWS TO REQUIRE APPROVAL BY THE
SHAREHOLDERS OF ANY LAWSUIT AGAINST A SHAREHOLDERS
RESOLVED: The following by-law shall be adopted: "No lawsuit
against any stockholder of the Company shall be pursued unless
ratified by the stockholders no later than (i) 120 days after
such lawsuit is filed or (ii) 120 days after adoption of this
bylaw. This bylaw may only be altered, amended or repealed by the
stockholders."
Supporting Statement
Until last year, shareholders were able to elect the entire board
of directors every year at the annual meeting. Then, without a
shareholder vote, the board of directors unilaterally decided to
stagger their own terms so that only one third of them would have
stand for election each year. In part to protest the board's
action, I tried to nominate two candidates for election as
directors at last year's shareholder meeting. The incumbents
were concerned that shareholders might elect some directors who
were not in their "club." So, the board simply refused to allow
anyone other than club members to be nominated. They claimed
that because I was not in their club, I had to give them advance
notice of any nominations even though the bylaws do not require
notice and the directors never considered any restrictions on
nominations.
I then sued the directors for stealing the election. They
responded by filing a frivolous countersuit against me falsely
alleging that some other shareholders and I own too many shares
of the Fund and that we have not made a proper filing with the
SEC. For these sins, the incumbents want the court to strip me
of my right to solicit proxies. I believe their lawsuit was
instigated by their lawyers and is nothing more than a shameless
attempt to entrench themselves in their positions. What is worse
is that even though their lawsuit is designed to benefit only the
directors, the manager and their lawyers, it is the shareholders
who are stuck paying the enormous legal bills. But don't take my
word for it. Check it out for yourself. Feel free to contact
the incumbent directors (that is, if you can locate them) and me
to get both sides of the story. Then make up your own mind.
PRINCIPAL HOLDERS OF VOTING SECURITIES
A Schedule 13G filing dated ___________ indicates that Deep
Discount Advisors,
Inc. and Ron Olin Investment Management Company are beneficial
owners of
________ shares and __________ shares or ___% and ____%
respectively of the Fund's
outstanding shares. Ralph Bradshaw and Gary Bentz, nominees for
director, are former employees of Deep Discount Advisors. They
have also been consultants to Ron Olin Investment Management
Company since 1995. Neither company is a party to this
solicitation and, to the best of my knowledge, has not endorsed
any nominees.
THE SOLICITATION
I am making this solicitation personally. Persons affiliated with
or employed by the general partner of the investment partnership
that I manage may assist me in the solicitation of proxies, as
may Mr. Bradshaw. They will not receive any special compensation
for their services. Banks, brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward this proxy
statement and the enclosed GREEN proxy card to the beneficial
owners of shares of Common Stock for whom they hold shares of
record. I will reimburse these organizations for their
reasonable out-of-pocket expenses.
Initially, Ralph Bradshaw and I will personally bear all of the
expenses related to this proxy solicitation, which I estimate to
be approximately $25,000. Because I believe that the shareholders
will benefit from this solicitation, I intend to seek
reimbursement of these expenses from the Fund. Shareholders will
not be asked to vote on the reimbursement of solicitation
expenses incurred by either the incumbent directors or me. If I
am not reimbursed by the Fund, I may seek reimbursement from one
or more of my clients or from the general partner of the
investment partnership that I manage.
I am not and, within the past year, have not been a party to any
contract, arrangement or understanding with any person with
respect to any securities of the Fund. In addition, there is no
arrangement or understanding involving either myself or any
affiliate that relates to future employment by the Fund or any
future transaction with the Fund.
ADDITIONAL PROPOSALS
I know of no business that will be presented for consideration at
the Meeting other than that set forth in this proxy statement and
in the Fund's proxy statement. If any other matters are properly
presented for consideration at the Meeting, it is the intention
of the persons named as proxies in the enclosed GREEN proxy card
to vote in accordance with their own best judgment on such
matters.
DATED: March__,2001
EXHIBIT 1: SECURITIES OF THE FUND PURCHASED OR
SOLD
WITHIN THE PAST TWO YEARS BY THE SOLICITING
SHAREHOLDER
Except as disclosed in this proxy statement, I have not had any
interest, direct or indirect in the Fund. The following table
sets forth certain information with respect to purchases and
sales of shares of Common Stock of the Fund within the past two
years by me and by accounts holding shares as to which I am
deemed to be the beneficial owner. Some of the shares are held
in margin accounts, together with other securities. Therefore, a
portion of the purchase price and market value of the shares may
from time to time be represented by margin borrowings, depending
upon the net debit balances, if any, of the margin accounts,
which fluctuate daily.
[Insert Table of Purchases and Sales]
PROXY CARD
PROXY SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF
LINCOLN NATIONAL CONVERTIBLE SECURITIES FUND, INC. BY PHILLIP
GOLDSTEIN, A SHAREHOLDER
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON May___,
2001
The undersigned hereby appoints Rajeev Das, Ralph Bradshaw, and
Phillip Goldstein, and each of them, as the undersigned's
proxies, with full power of substitution, to attend the Annual
Meeting of Stockholders of LINCOLN NATIONAL CONVERTIBLE
SECURITIES FUND, INC. (the "Fund") on May__, 2001at _________
(the "Meeting"), and any adjournment or postponement thereof, and
to vote on all matters that may come before the Meeting and any
such adjournment or postponement the number of shares that the
undersigned would be entitled to vote, with all the power the
undersigned would possess if present in person, as specified
below. The proxies may vote in their discretion with respect to
such other matter or matters as may come before the Meeting and
with
respect to all matters incident to the conduct of the Meeting.
The proxies may also temporarily decline to attend the Meeting,
thereby preventing a quorum in order to solicit additional
proxies or for any other legal reason.
(INSTRUCTIONS: Mark votes by placing an "x" in the appropriate [
].)
1. ELECTION OF TWO CLASS I DIRECTORS AND/OR TWO CLASS II
DIRECTORS (note: If only Class II directors are elected, the
nominees shall only be Goldstein and Bradshaw.)
FOR all of the nominees listed below [ ] WITHHOLD
AUTHORITY [ ]
(except as indicated to the contrary below) to vote for
all of the nominees listed
below
CLASS I DIRECTORS - PHILLIP GOLDSTEIN, RALPH BRADSHAW
CLASS II DIRECTORS - ANDREW DAKOS, GARY BENTZ (see note
above)
To withhold authority to vote for one or more nominees, enter
the
name(s) of the nominee(s) below.
--------------------------------------------------------------
- -------------------------------------------
2. To ratify the selection of PricewaterhouseCoopers L.L.P.
as Independent Auditors for the Fund for the fiscal year ending
December 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To request that the fund be converted to an open-end fund.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To adopt a by-law to require the investment advisory agreement
to be submitted to shareholders for a vote in 2002 and every year
thereafter.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. To adopt a by-law to require shareholder approval of any
lawsuit against a shareholder.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Important - - Please sign and date below. Your shares will be
voted as directed. If no direction is made, this proxy will be
voted for the election of the nominees named above in Proposal 1
and for Proposals 3, 4 and 5 and will abstain from voting on
Proposal 2. The undersigned hereby acknowledges receipt of the
proxy statement dated March __ 2001of Phillip Goldstein and
revokes any proxy previously executed. (Important - Please be
sure to enter date.)
Please sign exactly as your name appears hereon. When shares are
held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full
corporate name by the President or other duly authorized officer.
If a partnership, please sign in partnership name by authorized
person. Please return promptly in the enclosed envelope.
SIGNATURE(S)_________________________ Dated _______