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meVC DRAPER FISHER JURVETSON FUND I, INC.
(d/b/a MVC CAPITAL)
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[MVC CAPITAL LETTERHEAD]
February 6, 2003
DEAR FELLOW STOCKHOLDER:
You may have recently received proxy material from a dissident stockholder,
a hedge fund operator -- Millenco, L.P. It is important for you to understand
why what Millenco is proposing could seriously imperil the long-term value of
your investment in MVC Capital.
Beware when Millenco tells you its interests are aligned with yours. We
believe Millenco and its handpicked director nominees have targeted MVC Capital
and its shareholders as their next victim. Here's their formula: buy in cheap,
control the board of directors under the guise of aligning their interests with
yours, grab profits and move on to the next target. The professional raiders
win, but the individual shareholder is left behind, cheated out of the potential
of the fund's long-term value. In short, these raiders are nothing more than
wolves in sheep's clothing. Millenco has done this before. Here is the proof:
THE PROBLEM WITH MILLENCO CAN BE SUMMED UP IN ONE LINE.
International Biotechnology Trust PLC
Weekly Closing Price Per Share (July 7, 2000 to February 4, 2003)
[GRAPH]
Share Price
Date (Pence)
---- -------
7/7/00 276.5
7/14/00 263.5
7/21/00 260
7/28/00 263
8/4/00 266
8/11/00 288
8/18/00 317.5
8/25/00 327.5
9/1/00 328.5
9/8/00 321.5
9/15/00 329
9/22/00 307.5
9/29/00 336.5
10/6/00 337
10/13/00 292.5
10/20/00 337.5
10/27/00 340
11/3/00 352.5
11/10/00 335.5
11/17/00 309.5
11/24/00 291
12/1/00 295
12/8/00 296
12/15/00 291
12/22/00 268.5
12/29/00 296.5
1/5/01 282.5
1/12/01 240
1/19/01 279
1/26/01 277.5
2/2/01 258.5
2/9/01 261.5
2/16/01 251
2/23/01 230
3/2/01 230
3/9/01 238.5
3/16/01 207.5
3/23/01 195.5
3/30/01 200
4/6/01 200
4/13/01 211
4/20/01 224.5
4/27/01 215
5/4/01 218.5
5/11/01 222.5
5/18/01 222.5
5/25/01 225
6/1/01 217.5
6/8/01 236
6/15/01 220
6/22/01 220
6/29/01 222.5
7/6/01 223.75
7/13/01 215
7/20/01 205.5
7/27/01 185.5
8/3/01 190
8/10/01 181.5
8/17/01 177.5
8/24/01 175
8/31/01 176.5
9/7/01 157.5
9/14/01 136.5
9/21/01 126
9/28/01 130
10/5/01 134
10/12/01 147.5
10/19/01 149.5
10/26/01 150
11/2/01 147.5
11/9/01 152.5
11/16/01 151.5
11/23/01 149
11/30/01 151
12/7/01 151.5
12/4/01 151
12/21/01 157
12/28/01 159
1/4/02 159
1/11/02 153.5
1/18/02 147.5
1/25/02 143.5
2/1/02 141
2/8/02 138
2/15/02 138.5
2/22/02 132
3/1/02 129.5
3/8/02 132
3/15/02 132
3/22/02 126.5
3/29/02 122
4/5/02 122.5
4/12/02 119.5
4/19/02 126.5
4/26/02 121
5/3/02 109
5/10/02 105.5
5/17/02 106
5/24/02 112.5
5/31/02 108
6/7/02 99
6/14/02 92.5
6/21/02 87
6/28/02 87
7/5/02 86
7/12/02 77
7/19/02 83
7/26/02 82
8/2/02 82.5
8/9/02 78
8/16/02 76
8/23/02 77
8/30/02 76.5
9/6/02 75
9/13/02 65
9/20/02 54.5
9/27/02 56.5
10/4/02 57.5
10/11/02 58.5
10/18/02 62
10/25/02 63
11/1/02 62.5
11/8/02 63
11/15/02 62
11/22/02 65
11/29/02 65.5
12/6/02 64.5
12/13/02 63.5
12/20/02 60.75
12/27/02 59.5
1/3/03 56.5
1/10/03 60
1/17/03 60.5
1/24/03 61.5
1/31/03 60.5
This is how the shareholders of International Biotechnology Trust (a
closed-end fund equivalent in the United Kingdom) fared when Millenco forced IBT
to buy back shares at net asset value, hire a new fund manager and replace
several directors. The fund was forced to buy back nearly 50% of its shares
through a tender offer. As you can see, the fund was crippled and IBT's share
price plummeted.
And what about Millenco? They got out. They sold their entire stake in IBT
in January of 2001 at a price substantially higher than where it is today. Other
investors? They were left holding shares in a depleted fund.
Now, Millenco and its cohorts are asking you to vote on a proposal that
would require MVC Capital to deplete your fund by buying back shares through
tender offers. They also say they want to look for a new fund manager. Sound
familiar? Just look at the graph and decide if you want the same thing to happen
to your investment.
How can you prevent this from happening to your Company? It's up to you.
VOTE FOR THE MVC BOARD OF DIRECTORS ON THE ENCLOSED WHITE PROXY CARD TODAY.
WHAT ABOUT THE WOLF PACK THAT MILLENCO WANTS YOU TO INSTALL
AS DIRECTORS OF MVC CAPITAL?
Knapp. Hellerman. Feeney. Karpus. They are among a close group of hedge fund
cronies that rove from target to target, trying to force short-term gains at the
expense of the long-term shareholder.
The wolf pack has already done this to other closed-end funds and their
unsuspecting shareholders. On at least three occasions, their intimidating
tactics have caused funds to deplete their cash and buy them out -- at premiums
to what other shareholders could receive on the open market.
WHO IS THE UNSEEN PUPPETEER BEHIND MILLENCO?
It is Israel Englander, the hedge fund arbitrageur who heads Millennium
International Management, which owns Millenco and operates some of his holdings
from an offshore tax haven in the Cayman Islands.
Englander's name was dragged into the news as far back as the '80s when his
close business partner, John Mulheren, was charged with orchestrating stock
trades for the notorious Ivan Boesky and was even charged with going after
Boesky with a loaded gun. And it was that very same close business partner in
the now defunct arbitrage fund Jamie Securities who actually went to jail for
stock manipulation. And in 2000, another employee of Englander's, Hal Herman,
was found guilty of engaging in improper trading among other charges.
HERE IS MORE YOU SHOULD KNOW ABOUT HEDGE FUNDS.
Just this year, the Financial Times reported that the Securities and
Exchange Commission, amid growing concerns about hedge fund fraud, is
considering a radical overhaul of hedge fund regulation.
Forbes recently said that hedge funds 'charge outrageous fees, deliver
mediocre returns and in some cases cross the line into illegal
activity.'
And, in September 2002, the Wall Street Journal reported, 'The Bush
Administration today will take a major step in its effort to increase
oversight of hedge funds when the Treasury Department proposes new
anti-money-laundering rules requiring the private investment pools to
disclose their identities to its financial-intelligence
unit . . . Because they are virtually unregulated and operate in secret,
many investigators fear hedge funds are vulnerable to money laundering
by terrorists and other criminals. `It's high time' that hedge funds
receive more scrutiny, said Treasury Department General Counsel David
Aufthauser.'
Offshore hedge funds operate under the radar screen of the U.S. Government.
Unlike mutual funds, offshore hedge funds do not have to report their assets or
operations to the Securities and Exchange Commission. They simply cater to
wealthy investors, frequently by destroying long-term value in closed-end mutual
funds designed for individual investors.
MVC CAPITAL STANDS FOR BUILDING SHAREHOLDER VALUE.
Most of you invested in MVC Capital to have the opportunity to participate
in long-term venture capital investments in information technology. And venture
capital is a growth engine of America, creating jobs, opportunities, fostering
new technology and building the future. Compare that to Englander, Millenco and
the rest of the wolf pack, angling for quick profits for themselves at the
expense of long-term investors.
MVC CAPITAL: THE RIGHT TIME, THE RIGHT STRATEGY, THE RIGHT TEAM.
The right time. We believe the current market environment offers substantial
investment opportunities to create value for both the near- and long-term. We
believe we have reached a turning point in the venture capital investing cycle
and prospects to meet the Fund's original long-term investment objective have
never been better.
The right strategy. Your Board of Directors has put into place a refined
strategy that we believe is the best course to build long-term value for
shareholders. We have a strengthened investment team with a streamlined
management organization. We now offer venture debt financing in addition to
equity investing. This is a unique strategy that diversifies your Company's
portfolio, generates interest income and gives us greater access to invest in
attractive companies backed by leading venture capitalists. And, we have put
into place a $20 million share repurchase program to take advantage of
opportunities to buy back MVC shares at appropriate levels to benefit all
shareholders.
The right team. In our view, your Board of Directors' candidates are among
the most experienced and visionary business leaders in the United States. They
helped create over 200 information technology companies. They have started
companies that have created over 10,000 jobs. They have led or worked in senior
positions for companies that have created over 100 billion dollars in
shareholder value.
All seven of these individuals are running for election at the Annual
Meeting and all are pledged to building value for you.
I also want you to know that, in the continued effort to align their
interests with yours, Directors and officers of MVC Capital have been buying
additional company stock.
Here is what you should do to protect your long-term investment:
VOTE FOR THE MVC BOARD OF DIRECTORS ON THE ENCLOSED WHITE PROXY CARD TODAY.
YOUR VOTE IS CRUCIAL; it will determine the future direction of the Company.
Please help us fulfill the Company's original mission of superior returns
through long-term venture capital investments.
On Behalf of your Board of Directors
Sincerely,
John M. Grillos
John M. Grillos
Chief Executive Officer
STATEMENTS IN THIS ANNOUNCEMENT OTHER THAN HISTORICAL DATA AND INFORMATION
CONSTITUTE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. POTENTIAL RISKS AND UNCERTAINTIES MAY INCLUDE,
BUT ARE NOT LIMITED TO, RECENT CHANGES IN SENIOR MANAGEMENT, FLUCTUATIONS IN
OPERATING RESULTS, MARKET CONDITIONS, CHANGES IN TECHNOLOGY, INCREASED
COMPETITION AND OTHER RISKS IDENTIFIED BY MVC CAPITAL FROM TIME TO TIME IN ITS
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
IN CONNECTION WITH THE ABOVE-DESCRIBED MATTERS AND ITS 2003 ANNUAL MEETING OF
SHAREHOLDERS, meVC DRAPER FISHER JURVETSON FUND I, INC. (d/b/a MVC CAPITAL) HAS
FILED A PROXY STATEMENT AND INTENDS TO FILE OTHER MATERIALS WITH THE SECURITIES
AND EXCHANGE COMMISSION. SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND
THESE OTHER MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. SHAREHOLDERS MAY OBTAIN A FREE COPY OF THE PROXY
STATEMENT AND THESE OTHER MATERIALS WHEN THEY BECOME AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CONCERNING
MVC CAPITAL AT THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT
HTTP://WWW.SEC.GOV. SHAREHOLDERS MAY ALSO OBTAIN FOR FREE THE PROXY STATEMENT
AND OTHER DOCUMENTS FILED BY MVC CAPITAL WITH THE SECURITIES AND EXCHANGE
COMMISSION IN CONNECTION WITH THE ABOVE-DESCRIBED MATTERS BY DIRECTING A REQUEST
TO BRIAN MATTHEWS AT 3000 SAND HILL ROAD, BUILDING ONE, SUITE 155, MENLO PARK,
CA 94025 OR 650-926-7015.
MVC CAPITAL AND ITS DIRECTORS AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE
PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM MVC CAPITAL SHAREHOLDERS WITH
RESPECT TO THE ABOVE-DESCRIBED MATTERS. INFORMATION REGARDING THESE DIRECTORS
AND EXECUTIVE OFFICERS AND THEIR OWNERSHIP OF MVC CAPITAL COMMON STOCK IS SET
FORTH IN MVC CAPITAL'S PROXY STATEMENT FOR ITS 2003 ANNUAL MEETING OF
SHAREHOLDERS. ADDITIONAL INFORMATION REGARDING THESE DIRECTORS AND EXECUTIVE
OFFICERS AND THEIR INTERESTS IS INCLUDED IN THE PROXY STATEMENT.
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IF YOU HAVE ANY QUESTIONS OR NEED HELP VOTING YOUR SHARES,
PLEASE CALL:
[MACKENZIE LOGO]
105 Madison Avenue
New York, New York 10016
email: proxy@mackenziepartners.com
Call collect: (212) 929-5500
OR TOLL FREE: (800) 322-2885
Facsimile: (212) 929-0308
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