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<PAGE>
As filed with the U.S. Securities and Exchange Commission
on February 21, 1997
Securities Act File No. 333-08459
Investment Company Act File No. 811-07715
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. 1 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [x]
Amendment No. 2 [x]
(Check appropriate box or boxes)
Warburg, Pincus Global Post-Venture Capital Fund, Inc.
.......................................
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue
New York, New York 10017-3147
........................................................
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 878-0600
Mr. Eugene P. Grace
Warburg, Pincus Global Post-Venture Capital Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
.......................................
(Name and Address of Agent for Service)
Copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
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It is proposed that this filing will become effective (check appropriate box):
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24f-2
Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933, as amended, pursuant to Section
(a)(1) of Rule 24f-2 under the Investment Company Act of 1940, as amended. The
Rule 24f-2 Notice for Registrant's fiscal year ending on October 31, 1996 was
filed on December 27, 1996.
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WARBURG, PINCUS GLOBAL POST-VENTURE CAPITAL FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
Part A
Item No. Prospectus Heading*
- -------- -------------------
1. Cover Page................................ Cover Page
2. Synopsis.................................. The Funds' Expenses
3. Condensed Financial Information........... Financial Highlights
4. General Description of
Registrant.............................. Cover Page; Investment
Objectives and Policies;
Special Risk Considerations and
Certain Investment Strategies;
Investment Guidelines;
Additional Information
5. Management of the Fund.................... Management of the Funds
6. Capital Stock and Other
Securities.............................. Additional Information
7. Purchase of Securities Being
Offered................................. How to Open an Account; How to
Purchase Shares; Management of
the Funds; Net Asset Value
8. Redemption or Repurchase.................. How to Redeem and Exchange
Shares
9. Pending Legal Proceedings................. Not applicable
- ---------------------
* Relates to Registrant's common share prospectus, which is substantially
similar to Registrant's Advisor Share Prospectus.
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<PAGE>
Part B
Item No.
- --------
10. Cover Page................................ Cover Page
11. Table of Contents......................... Contents
12. General Information and History........... Management of the Funds
13. Investment Objectives
and Policies............................ Investment Objectives;
Investment Policies
14. Management of the Registrant.............. Management of the Funds
15. Control Persons and Principal
Holders of Securities................... Management of the Funds; See
Prospectus--"Management of the
Funds"
16. Investment Advisory and
Other Services.......................... Management of the Funds; See
Prospectus--"Management of the
Funds"
17. Brokerage Allocation
and Other Practices..................... Investment Policies--
Portfolio Transactions See
Prospectus--"Portfolio
Transactions and Turnover Rate"
18. Capital Stock and Other
Securities.............................. Management of the
Funds--Organization of the Fund;
See Prospectus-"General
Information"
19. Purchase, Redemption and Pricing
of Securities Being Offered............. Additional Purchase and
Redemption Information; See
Prospectus-"How to Open an
Account," "How to Purchase
Shares," "How to Redeem and
Exchange Shares," "Net Asset
Value"
2
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20. Tax Status................................ Additional Information
Concerning Taxes; See
Prospectus--"Dividend,
Distributions and Taxes"
21. Underwriters.............................. Investment Policies-- Portfolio
Transactions; See Prospectus--
"Management of the Funds"
22. Calculation of Performance Data........... Determination of Performance
23. Financial Statements...................... Report of Independent
Accountants; Financial
Statements
Part C
- ------
Information required to be included in Part C is set forth after the appropriate
item, so numbered, in Part C to this Registration Statement.
3
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<PAGE>
PROSPECTUS
February 21, 1997
WARBURG PINCUS
POST-VENTURE CAPITAL FUND
WARBURG PINCUS
GLOBAL POST-VENTURE CAPITAL FUND
[Logo]
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<PAGE>
PROSPECTUS February 21, 1997
Warburg Pincus Funds are a family of open-end mutual funds that offer investors
a variety of investment opportunities. Two funds are described in this
Prospectus:
WARBURG PINCUS POST-VENTURE CAPITAL FUND seeks long-term growth of capital.
The Fund will pursue its objective by investing primarily in equity securities
of issuers in their post-venture capital stage of development and pursues an
aggressive investment strategy.
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND seeks long-term growth of
capital. The Fund will pursue its objective by investing primarily in equity
securities of U.S. and foreign issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy.
Because of the nature of each Fund's investments and certain strategies it may
use, an investment in a Fund involves certain risks and may not be appropriate
for all investors.
NO LOAD CLASS OF COMMON SHARES
__________________________________________________
Each Fund offers two classes of shares. A class of Common Shares that is 'no
load' is offered by this Prospectus (i) directly from the Funds' distributor,
Counsellors Securities Inc., and (ii) through various brokerage firms including
Charles Schwab & Company, Inc. Mutual Fund OneSourceTM Program; Fidelity
Brokerage Services, Inc. FundsNetworkTM Program; Jack White & Company, Inc.; and
Waterhouse Securities, Inc.
LOW MINIMUM INVESTMENT
__________________________________________________________
The minimum initial investment in each Fund is $2,500 ($500 for an IRA or
Uniform Transfers to Minors Act account) and the minimum subsequent investment
is $100. Through the Automatic Monthly Investment Plan, subsequent investment
minimums may be as low as $50. See 'How to Purchase Shares.'
This Prospectus briefly sets forth certain information about the Funds that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about each
Fund, contained in a Statement of Additional Information, has been filed with
the Securities and Exchange Commission (the 'SEC'). The SEC maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference and other information regarding the Funds.
The Statement of Additional Information is also available upon request and
without charge by calling Warburg Pincus Funds at (800) 927-2874. Information
regarding the status of shareholder accounts may also be obtained by calling the
Funds at the same number. The Statement of Additional Information, as amended or
supplemented from time to time, bears the same date as this Prospectus and is
incorporated by reference in its entirety into this Prospectus.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR ENDORSED
BY ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENTS IN SHARES OF A FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
THE FUNDS' EXPENSES
_____________________________________________________________
Each of Warburg Pincus Post-Venture Capital Fund (the 'Post-Venture Capital
Fund') and Warburg Pincus Global Post-Venture Capital Fund (the 'Global
Post-Venture Capital Fund'; collectively, the 'Funds') currently offers two
separate classes of shares: Common Shares and Advisor Shares. For a description
of Advisor Shares, see 'General Information.' Common Shares pay the Fund's
distributor a 12b-1 fee. See 'Management of the Funds -- Distributor.'
<TABLE>
<CAPTION>
Post-Venture Global
Capital Post-Venture
Fund Capital Fund
------------ ------------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..................... 0 0
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees........................................... .62% .40%
12b-1 Fees................................................ .25% .25%
Other Expenses............................................ .78% 1.00%
----- ---
Total Fund Operating Expenses*............................ 1.65% 1.65%
EXAMPLE
You would pay the following expenses
on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption
at the end of each time period:
1 year................................................... $17 $17
3 years.................................................. $52 $52
5 years.................................................. $90 N/A
10 years.................................................. $195 N/A
</TABLE>
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* Absent the waiver of fees by a Fund's investment adviser and
co-administrator, Management Fees of the Post-Venture Capital and the Global
Post-Venture Capital Funds would have equalled 1.25%. Other Expenses would
have equalled .82% and 1.10%, respectively, and Total Fund Operating Expenses
would have equalled 2.32% and 2.60%, respectively. The investment adviser and
co-administrator are under no obligation to continue these waivers.
---------------------------
The expense table shows the costs and expenses that an investor will bear
directly or indirectly as a Common Shareholder of each Fund. Certain broker-
dealers and financial institutions also may charge their clients fees in
connection with investments in a Fund's Common Shares, which fees are not
reflected in the table. The Example should not be considered a representation of
past or future expenses; actual Fund expenses may be greater or less than those
shown. Moreover, while the Example assumes a 5% annual return, each Fund's
actual performance will vary and may result in a return greater or less than 5%.
Long-term shareholders of a Fund may pay more than the economic equivalent of
the maximum front-end sales charges permitted by the National Association of
Securities Dealers, Inc. (the 'NASD').
2
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FINANCIAL HIGHLIGHTS
____________________________________________________________
(FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following information regarding each Fund for the fiscal year or period
ended October 31, 1995 and October 31, 1996 has been derived from information
audited by Coopers & Lybrand L.L.P., independent accountants, whose report
dated December 18, 1996 is incorporated by reference in the relevant Fund's
Statement of Additional Information. Further information about the performance
of the Funds is contained in the Funds' annual report, dated October 31, 1996,
copies of which appear in the Funds' Statement of Additional Information or
may be obtained without charge by calling Warburg Pincus Funds at
(800) 927-2874.
POST-VENTURE CAPITAL FUND
<TABLE>
<CAPTION>
For the Period
September 29, 1995
(Commencement
For the of Operations)
Year Ended through
October 31, October 31,
1996 1995
----------- ------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $10.69 $10.00
----------- -----
Income from Investment Operations
Net Investment Income...................................... (.11) .00
Net Gain on Securities (both realized and unrealized)...... 5.45 .69
----------- -----
Total from Investment Operations........................... 5.34 .69
----------- -----
Less Distributions
Dividends from net investment income....................... .00 .00
Distributions from capital gains........................... .00 .00
----------- -----
Total Distributions........................................ .00 .00
----------- -----
Net Asset Value, End of Period.............................. $16.03 $10.69
----------- -----
----------- -----
Total Return................................................ 49.95% 6.90%`D'
Ratios/Supplemental Data
Net Assets, End of Period (000s)............................ $ 165,081 $3,024
Ratios to Average Daily Net Assets:
Operating expenses......................................... 1.65% 1.65%*
Net investment income...................................... (1.13%) .25%*
Decrease reflected in above operating expense ratios due to
waivers/reimbursements................................... .67% 23.76%*
Portfolio Turnover Rate..................................... 168.46% 16.90%*
Average Commission Rate#.................................... $.0529 --
</TABLE>
- --------------------------------------------------------------------------------
`D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
3
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<PAGE>
GLOBAL POST-VENTURE CAPITAL FUND
<TABLE>
<CAPTION>
For the Period
September 30, 1996
(Commencement of
Operations)
through
October 31,
1996
------------------
<S> <C>
Net Asset Value, Beginning of Period................................... $10.00
-----
Income from Investment Operations
Net Investment Income................................................. .00
Net Loss on Securities and Foreign Currency Related Items (both
realized and unrealized)............................................ (.14)
-----
Total from Investment Operations...................................... (.14)
-----
Less Distributions
Dividends from net investment income.................................. .00
Distributions from capital gains...................................... .00
-----
Total Distributions................................................... .00
-----
Net Asset Value, End of Period......................................... $ 9.86
-----
-----
Total Return........................................................... (1.40%)`D'
Ratios/Supplemental Data
Net Assets, End of Period (000s)....................................... $3,007
Ratios to Average Daily Net Assets:
Operating expenses.................................................... 1.65%*
Net investment loss................................................... (.20%)*
Decrease reflected in above operating expense ratio due to
waivers/reimbursements.............................................. 21.71%*
Portfolio Turnover Rate................................................ 5.85%`D'
Average Commission Rate#............................................... $.0323
</TABLE>
- --------------------------------------------------------------------------------
`D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
INVESTMENT OBJECTIVES AND POLICIES
______________________________________________
Because of the nature of each Fund's investments and certain strategies it
may use, such as investing in Private Funds (as defined below), an investment in
a Fund should be considered only for the aggressive portion of an investor's
portfolio and may not be appropriate for all investors.
The Post-Venture Capital Fund and Global Post-Venture Capital Fund each seeks
long-term growth of capital. This objective is a fundamental policy and may not
be amended without first obtaining the approval of a majority of the outstanding
shares of a Fund. Any investment involves risk and, therefore, there can be no
assurance that either Fund will achieve its investment objective. See 'Portfolio
Investments' and 'Certain Investment Strategies' for descriptions of certain
types of investments the Funds may make.
The Funds are diversified management investment companies that pursue an
aggressive investment strategy. The Post-Venture Capital Fund pursues its
investment objective by investing primarily in equity securities of U.S. issuers
and the Global Post-Venture Capital Fund pursues its investment objective by
investing primarily in equity securities of U.S. and foreign issuers, in each
case considered by Warburg, Pincus Counsellors, Inc., each Fund's investment
adviser ('Warburg'), to be in their post-venture capital stage of development.
The Funds intend to invest in post-venture capital companies, as defined below,
traded on national securities exchanges and in over-the-
4
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counter markets and, in the case of the Global Post-Venture Capital Fund, other
public markets in various developed countries as well as emerging securities
markets.
Although each Fund may invest up to 10% of its assets in venture capital and
other investment funds, the Funds are not designed primarily to provide venture
capital financing. Rather, under normal market conditions, each Fund will invest
at least 65% of its total assets in equity securities of 'post-venture capital
companies.' In the case of the Global Post-Venture Capital Fund, these companies
will be located in at least three countries, including the United States. A
post-venture capital company is a company that has received venture capital
financing either (a) during the early stages of the company's existence or the
early stages of the development of a new product or service or (b) as part of a
restructuring or recapitalization of the company. The investment of venture
capital financing, distribution of such company's securities to venture capital
investors, or initial public offering ('IPO'), whichever is later, will have
been made within ten years prior to the Fund's purchase of the company's
securities. The Global Post-Venture Capital Fund currently intends to invest at
least 35% of its total assets in non-U.S. post-venture capital and other
companies. A company will be considered to be located in the country where (i)
the company is organized, (ii) where its principal business activities are
conducted and where at least 50% of its revenues or profits from goods produced
and sold are derived, investments are made or services are performed or (iii)
where the principal trading market for the company's securities is located.
Warburg believes that venture capital participation in a company's capital
structure can lead to revenue/earnings growth rates above those of older, public
companies such as those in the Dow Jones Industrial Average, the Fortune 500 or
the Morgan Stanley Capital International Europe, Australasia and Far East
('EAFE') Index. Venture capitalists finance start-up companies, companies in the
early stages of developing new products or services and companies undergoing a
restructuring or recapitalization, since these companies may not have access to
conventional forms of financing (such as bank loans or public issuances of
stock). Venture capitalists may hold substantial positions in companies that may
have been acquired at prices significantly below the initial public offering
price. This may create a potential adverse impact in the short-term on the
market price of a company's stock due to sales in the open market by a venture
capitalist or others who acquired the stock at lower prices prior to the
company's IPO. Warburg will consider the impact of such sales in selecting
post-venture capital investments. Venture capitalists may be individuals or
funds organized by venture capitalists which are typically offered only to large
institutions, such as pension funds and endowments, and certain accredited
investors. Outside of the United States, venture capitalists may also consist of
merchant banks and other banking institutions that provide venture capital
financing in a manner similar to U.S. venture capitalists. Venture capital
5
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participation in a company is often reduced when the company engages in an IPO
of its securities or when it is involved in a merger, tender offer or
acquisition.
Warburg has experience in researching smaller companies, companies in the
early stages of development and venture capital-financed companies. Its team of
analysts, led by Elizabeth Dater, portfolio manager of the Funds, and Stephen
Lurito, co-portfolio manager of the Post-Venture Capital Fund, regularly
monitors portfolio companies whose securities are held by over 250 of the larger
domestic venture capital funds. Ms. Dater and Mr. Lurito have managed
post-venture equity securities in separate accounts for institutions since 1989
and currently manage over $1 billion of such assets for investment companies and
other institutions. Robert Janis is an associate portfolio manager and research
analyst for the Funds and Christopher M. Nawn is an associate portfolio manager
and research analyst for the Post-Venture Capital Fund. Harold Ehrlich, an
associate portfolio manager and research analyst for the Global Post-Venture
Capital Fund, is also an associate portfolio manager and research analyst for
the Warburg Pincus International Equity Fund and other international Warburg
Pincus Funds. Warburg's international equity management team manages over $5
billion in assets for investment companies and separate accounts. Managers
travel world-wide to meet with corporate management as well as government and
economic leaders. The managers evaluate each company's value as a going concern
as if they were buying the company itself, an approach similar to that employed
by venture capital and post-venture capital investors.
PRIVATE FUND INVESTMENTS. Up to 10% of a Fund's assets may be invested in
U.S. or foreign private limited partnerships or other investment funds ('Private
Funds') that themselves invest in equity or debt securities of (a) companies in
the venture capital or post-venture capital stages of development or (b)
companies engaged in special situations or changes in corporate control,
including buyouts. In selecting Private Funds for investment, Abbott Capital
Management, L.P., each Fund's sub-investment adviser with respect to Private
Funds ('Abbott'), attempts to invest in a mix of Private Funds that will provide
an above average internal rate of return (i.e., the discount rate at which the
present value of an investment's future cash inflows (dividend income and
capital gains) are equal to the cost of the investment). Warburg believes that a
Fund's investments in Private Funds offers individual investors a unique
opportunity to participate in venture capital and other private investment
funds, providing access to investment opportunities typically available only to
large institutions and accredited investors. Although each Fund's investments in
Private Funds are limited to a maximum of 10% of the Fund's assets, these
investments are highly speculative and volatile and may produce gains or losses
in this portion of the Fund that exceed those of the Fund's other holdings and
of more mature companies generally.
6
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<PAGE>
Because Private Funds generally are investment companies for purposes of the
Investment Company Act of 1940, as amended (the '1940 Act'), a Fund's ability to
invest in them will be limited. In addition, Fund shareholders will remain
subject to the Fund's expenses while also bearing their pro rata share of the
operating expenses of the Private Funds. The ability of the Fund to dispose of
interests in Private Funds is very limited and will involve the risks described
under 'Risk Factors and Special Considerations -- Non-Publicly Traded
Securities; Rule 144A Securities.' In valuing the Fund's holdings of interests
in Private Funds, the Fund will be relying on the most recent reports provided
by the Private Funds themselves prior to calculation of the Fund's net asset
value. These reports, which are provided on an infrequent basis, often depend on
the subjective valuations of the managers of the Private Funds and, in addition,
would not generally reflect positive or negative subsequent developments
affecting companies held by the Private Fund. See 'Net Asset Value.' Debt
securities held by a Private Fund will tend to be rated below investment grade
and may be rated as low as C by Moody's Investors Service, Inc. ('Moody's') or D
by Standard & Poor's Ratings Services ('S&P'). Securities in these rating
categories are in payment default or have extremely poor prospects of attaining
any investment standing. For a discussion of the risks of investing in below
investment grade debt, see 'Investment Policies -- Below Investment Grade Debt
Securities' in the Statement of Additional Information. For a discussion of the
possible tax consequences of investing in foreign Private Funds, see 'Additional
Information Concerning Taxes -- Investment in Passive Foreign Investment
Companies' in the Statement of Additional Information.
A Fund may also hold non-publicly traded equity securities of companies in
the venture capital and post-venture capital stages of development, such as
those of closely-held companies or private placements of public companies. The
portion of the Fund's assets invested in these non-publicly traded securities
will vary over time depending on investment opportunities and other factors. The
Fund's illiquid assets, including Private Funds and other non-publicly traded
securities, may not exceed 15% of the Fund's net assets.
OTHER STRATEGIES. The Funds will invest in securities of post-venture capital
companies that are traded on a national securities exchange or in an organized
over-the-counter market, such as The Nasdaq Stock Market, Inc., and, in the case
of the Global Post-Venture Capital Fund, the Japan Securities Dealers
Association Automated Quotation System ('JASDAQ'), the European Association of
Securities Dealers Automated Quotation ('Easdaq') and the U.K. Alternative
Investment Market ('AIM'). Each Fund may invest up to 35% of its assets in
exchange-traded and over-the-counter securities that do not meet the definition
of post-venture capital companies. Up to 10% of the Fund's assets may be
invested, directly or through Private Funds, in securities of issuers engaged at
the time of purchase in 'special situations,' such as a restructuring or
recapitalization; an acquisition, consolidation, merger or tender offer; a
change in corporate control or investment by a venture
7
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<PAGE>
capitalist. For temporary defensive purposes, such as during times of
international political or economic uncertainty, all of the Global Post-Venture
Capital Fund's investments may be made temporarily in the United States.
Warburg believes that opportunities for growth of capital exist in post-
venture capital securities across global markets and that the Global Post-
Venture Capital Fund will provide access to those opportunities. To attempt to
reduce risk, a Fund will diversify its investments over a broad range of issuers
operating in a variety of industries and, in the case of the Global Post-Venture
Capital Fund, in various countries. Although the Global Post-Venture Capital
Fund may invest anywhere in the world, the Fund will not be invested in all
countries at all times depending upon available investments, market conditions
and other factors. Similarly, although the Post-Venture Capital Fund will invest
primarily in U.S. companies, up to 20% of the Fund's assets may be invested in
securities of issuers located in foreign countries. A Fund may hold securities
of companies of any size, and will not limit capitalization of companies in
which it selects to invest. However, due to the nature of the venture capital to
post-venture cycle, the Funds anticipate that the average market capitalization
of companies in which a Fund invests will be less than $1 billion at the time of
investment. Equity securities in which the Fund will invest are common stock,
preferred stock, warrants, securities convertible into or exchangeable for
common stock and partnership interests. The Funds may engage in a variety of
strategies to reduce risk or seek to enhance return, including currency hedging
and engaging in short selling (see 'Certain Investment Strategies').
PORTFOLIO INVESTMENTS
___________________________________________________________
DEBT SECURITIES. Each Fund may invest up to 20% of its total assets in
investment grade debt securities (other than money market obligations). The
interest income to be derived may be considered as one factor in selecting debt
securities for investment by Warburg. Because the market value of debt
obligations can be expected to vary inversely to changes in prevailing interest
rates, investing in debt obligations may provide an opportunity for capital
appreciation when interest rates are expected to decline. The success of such a
strategy is dependent upon Warburg's ability to accurately forecast changes in
interest rates. The market value of debt obligations may also be expected to
vary depending upon, among other factors, the ability of the issuer to repay
principal and interest, any change in investment rating and general economic
conditions.
A security will be deemed to be investment grade if it is rated within the
four highest grades by Moody's or S&P or, if unrated, is determined to be of
comparable quality by Warburg. Bonds rated in the fourth highest grade have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. Subsequent to
its purchase by a Fund, an issue of securities may cease to be rated or its
rating may be reduced. Neither event will require sale of such
8
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<PAGE>
securities, although Warburg will consider such event in its determination of
whether the Fund should continue to hold the securities.
When Warburg believes that a defensive posture is warranted, each Fund may
invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.
MONEY MARKET OBLIGATIONS. Each Fund is authorized to invest, under normal
market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less) and medium-term (five years or less remaining to
maturity) money market obligations and for temporary defensive purposes may
invest in these securities without limit. These instruments consist of
obligations issued or guaranteed by the U.S. government or a foreign government,
its agencies or instrumentalities; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic or foreign banks,
domestic savings and loans and similar institutions) that are high quality
investments or, if unrated, deemed by Warburg to be high quality investments;
commercial paper rated no lower than A-2 by S&P or Prime-2 by Moody's or the
equivalent from another major rating service or, if unrated, of an issuer having
an outstanding, unsecured debt issue then rated within the three highest rating
categories; and repurchase agreements with respect to the foregoing.
Repurchase Agreements. The Funds may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain
non-bank dealers. Repurchase agreements are contracts under which the buyer of a
security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under the terms of a typical repurchase agreement, a
Fund would acquire any underlying security for a relatively short period
(usually not more than one week) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will at all times be at least equal to the total amount of the
purchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
or becomes bankrupt and the Fund is delayed or prevented from exercising its
right to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period in which the
Fund seeks to assert this right. Warburg, acting under the supervision of the
Fund's Board of Directors (the 'Board'), monitors the creditworthiness of those
bank and non-bank dealers with which each Fund enters into repurchase agreements
to evaluate this risk. A repurchase agreement is considered to be a loan under
the 1940 Act.
Money Market Mutual Funds. Where Warburg believes that it would be beneficial
to the Fund and appropriate considering the factors of return and
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liquidity, each Fund may invest up to 5% of its assets in securities of money
market mutual funds that are unaffiliated with the Fund, Warburg or the Fund's
co-administrator, PFPC Inc. ('PFPC'). As a shareholder in any mutual fund, a
Fund will bear its ratable share of the mutual fund's expenses, including
management fees, and will remain subject to payment of the Fund's administration
fees and other expenses with respect to assets so invested.
U.S. GOVERNMENT SECURITIES. U.S. government securities in which a Fund may
invest include: direct obligations of the U.S. Treasury and obligations issued
by U.S. government agencies and instrumentalities, including instruments that
are supported by the full faith and credit of the United States, instruments
that are supported by the right of the issuer to borrow from the U.S. Treasury
and instruments that are supported by the credit of the instrumentality.
CONVERTIBLE SECURITIES. Convertible securities in which a Fund may invest,
including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock.
WARRANTS. Each Fund may invest up to 10% of its total assets in warrants.
Warrants are securities that give the holder the right, but not the obligation,
to purchase equity issues of the company issuing the warrants, or a related
company, at a fixed price either on a date certain or during a set period.
RISK FACTORS AND SPECIAL CONSIDERATIONS
_________________________________________
Investing in common stocks and securities convertible into common stocks is
subject to the inherent risk of fluctuations in the prices of such securities.
For certain additional risks relating to each Fund's investments, see 'Portfolio
Investments' beginning at page 8 and 'Certain Investment Strategies' beginning
at page 13.
EMERGING GROWTH AND SMALL COMPANIES. Investing in securities of emerging
growth and small-sized companies may involve greater risks since these
securities may have limited marketability and, thus, may be more volatile.
Because small- and medium-sized companies normally have fewer shares outstanding
than larger companies, it may be more difficult for a Fund to buy or sell
significant amounts of such shares without an unfavorable impact on prevailing
prices. In addition, small- and medium-sized companies are typically subject to
a greater degree of changes in earnings and business prospects than are larger,
more established companies. There is typically less publicly available
information concerning small- and medium-sized companies than for larger, more
established ones. Securities of issuers in
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'special situations' also may be more volatile, since the market value of these
securities may decline in value if the anticipated benefits do not materialize.
Companies in 'special situations' include, but are not limited to, companies
involved in an acquisition or consolidation; reorganization; recapitalization;
merger, liquidation or distribution of cash, securities or other assets; a
tender or exchange offer, a breakup or workout of a holding company; or
litigation which, if resolved favorably, would improve the value of the
companies' securities. Although investing in securities of emerging growth
companies or 'special situations' offers potential for above-average returns if
the companies are successful, the risk exists that the companies will not
succeed and the prices of the companies' shares could significantly decline in
value. Therefore, an investment in a Fund may involve a greater degree of risk
than an investment in other mutual funds that seek capital appreciation by
investing in better-known, larger companies.
NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Funds may purchase
securities that are not registered under the Securities Act of 1933, as amended
(the 'Securities Act'), but that can be sold to 'qualified institutional buyers'
in accordance with Rule 144A under the Securities Act ('Rule 144A Securities').
An investment in Rule 144A Securities will be considered illiquid and therefore
subject to a Fund's limitation on the purchase of illiquid securities, unless
the Fund's Board determines on an ongoing basis that an adequate trading market
exists for the security. In addition to an adequate trading market, the Boards
will also consider factors such as trading activity, availability of reliable
price information and other relevant information in determining whether a Rule
144A Security is liquid. This investment practice could have the effect of
increasing the level of illiquidity in the Funds to the extent that qualified
institutional buyers become uninterested for a time in purchasing Rule 144A
Securities. The Board of each Fund will carefully monitor any investments by the
Fund in Rule 144A Securities. The Boards may adopt guidelines and delegate to
Warburg the daily function of determining and monitoring the liquidity of Rule
144A Securities, although each Board will retain ultimate responsibility for any
determination regarding liquidity.
Non-publicly traded securities (including interests in Private Funds and Rule
144A Securities) may involve a high degree of business and financial risk and
may result in substantial losses. These securities may be less liquid than
publicly traded securities, and a Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized on such sales could be less than those originally paid by the Fund.
Further, companies whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements applicable to
companies whose securities are publicly traded. A Fund's investment in illiquid
securities is subject to the risk that should the Fund desire to sell any of
these securities when a ready buyer is not available at a
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price that is deemed to be representative of their value, the value of the
Fund's net assets could be adversely affected.
WARRANTS. At the time of issue, the cost of a warrant is substantially less
than the cost of the underlying security itself, and price movements in the
underlying security are generally magnified in the price movements of the
warrant. This effect enables the investor to gain exposure to the underlying
security with a relatively low capital investment but increases an investor's
risk in the event of a decline in the value of the underlying security and can
result in a complete loss of the amount invested in the warrant. In addition,
the price of a warrant tends to be more volatile than, and may not correlate
exactly to, the price of the underlying security. If the market price of the
underlying security is below the exercise price of the warrant on its expiration
date, the warrant will generally expire without value.
EMERGING MARKETS. (Global Post-Venture Capital Fund only) The Fund may invest
in securities of issuers located in less developed countries considered to be
'emerging markets.' Investing in securities of issuers located in emerging
markets involves not only the risks described below, with respect to investing
in foreign securities, but also other risks, including exposure to economic
structures that are generally less diverse and mature than, and to political
systems that can be expected to have less stability than, those of developed
countries. Other characteristics of emerging markets that may affect investment
there include certain national policies that may restrict investment by
foreigners in issuers or industries deemed sensitive to relevant national
interests and the absence of developed legal structures governing private and
foreign investments and private property. The typically small size of the
markets for securities of issuers located in emerging markets and the
possibility of a low or nonexistent volume of trading in those securities may
also result in a lack of liquidity and in price volatility of those securities.
PORTFOLIO TRANSACTIONS AND TURNOVER RATE
________________________________________
A Fund will attempt to purchase securities with the intent of holding them
for investment but may purchase and sell portfolio securities whenever Warburg
believes it to be in the best interests of the relevant Fund. A Fund will not
consider portfolio turnover rate a limiting factor in making investment
decisions consistent with its investment objective and policies. High portfolio
turnover rates (100% or more) may result in dealer mark ups or underwriting
commissions as well as other transaction costs, including correspondingly higher
brokerage commissions. In addition, short-term gains realized from portfolio
turnover may be taxable to shareholders as ordinary income. See 'Dividends,
Distributions and Taxes -- Taxes' below and 'Investment Policies -- Portfolio
Transactions' in each Fund's Statement of Additional Information.
All orders for transactions in securities or options on behalf of a Fund are
placed by Warburg with broker-dealers that it selects, including Counsellors
Securities Inc., the Fund's distributor ('Counsellors Securities'). A Fund may
utilize Counsellors Securities in connection with a purchase or sale of
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securities when Warburg believes that the charge for the transaction does not
exceed usual and customary levels and when doing so is consistent with
guidelines adopted by the Board.
CERTAIN INVESTMENT STRATEGIES
___________________________________________________
Although there is no intention of doing so during the coming year, each Fund
is authorized to engage in the following investment strategies: (i) purchasing
securities on a when-issued basis and purchasing or selling securities for
delayed delivery, (ii) lending portfolio securities and (iii) entering into
reverse repurchase agreements and dollar rolls. Detailed information concerning
a Fund's strategies and related risks is contained below and in the Fund's
Statement of Additional Information.
FOREIGN SECURITIES. There are certain risks involved in investing in
securities of companies and governments of foreign nations which are in addition
to the usual risks inherent in domestic investments. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. In addition, with respect to certain foreign countries, there
is the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Funds,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that would reduce the net yield on such securities.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments positions. Investment in foreign securities will also result in higher
operating expenses due to the cost of converting foreign currency into U.S.
dollars, the payment of fixed brokerage commissions on foreign exchanges, which
generally are higher than commissions on U.S. exchanges, higher valuation and
communications costs and the expense of maintaining securities with foreign
custodians.
OPTIONS, FUTURES AND CURRENCY TRANSACTIONS. At the discretion of Warburg,
each Fund may, but is not required to, engage in a number of strategies
involving options, futures and forward currency contracts. These strategies,
commonly referred to as 'derivatives,' may be used (i) for the purpose of
hedging against a decline in value of the Fund's current or anticipated
portfolio holdings, (ii) as a substitute for purchasing or selling
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portfolio securities or (iii) to seek to generate income to offset expenses or
increase return. TRANSACTIONS THAT ARE NOT CONSIDERED HEDGING SHOULD BE
CONSIDERED SPECULATIVE AND MAY SERVE TO INCREASE A FUND'S INVESTMENT RISK.
Transaction costs and any premiums associated with these strategies, and any
losses incurred, will affect a Fund's net asset value and performance.
Therefore, an investment in a Fund may involve a greater risk than an investment
in other mutual funds that do not utilize these strategies. The Funds' use of
these strategies may be limited by position and exercise limits established by
securities and commodities exchanges and the NASD and by the Internal Revenue
Code of 1986, as amended (the 'Code').
Securities and Stock Index Options. Each Fund may write covered call and put
options on up to 25% of the net asset value of the stock and debt securities in
its portfolio and will realize fees (referred to as 'premiums') for granting the
rights evidenced by the options. The Funds may each utilize up to 10% of its
assets to purchase options on stocks and debt securities that are traded on U.S.
and foreign exchanges, as well as OTC options. The purchaser of a put option on
a security has the right to compel the purchase by the writer of the underlying
security, while the purchaser of a call option on a security has the right to
purchase the underlying security from the writer. In addition to purchasing and
writing options on securities, each Fund may also utilize up to 10% of its total
assets to purchase exchange-listed and OTC put and call options on stock
indexes, and may also write such options. A stock index measures the movement of
a certain group of stocks by assigning relative values to the common stocks
included in the index.
The potential loss associated with purchasing an option is limited to the
premium paid, and the premium would partially offset any gains achieved from its
use. However, for an option writer the exposure to adverse price movements in
the underlying security or index is potentially unlimited during the exercise
period. Writing securities options may result in substantial losses to a Fund,
force the sale or purchase of portfolio securities at inopportune times or at
less advantageous prices, limit the amount of appreciation the Fund could
realize on its investments or require the Fund to hold securities it would
otherwise sell.
Futures Contracts and Related Options. Each Fund may enter into foreign
currency, interest rate and stock index futures contracts and purchase and write
(sell) related options that are traded on an exchange designated by the
Commodity Futures Trading Commission (the 'CFTC') or, if consistent with CFTC
regulations, on foreign exchanges. These futures contracts are standardized
contracts for the future delivery of foreign currency or an interest rate
sensitive security or, in the case of stock index and certain other futures
contracts, are settled in cash with reference to a specified multiplier times
the change in the specified index, exchange rate or interest rate. An option on
a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract.
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Aggregate initial margin and premiums required to establish positions other
than those considered by the CFTC to be 'bona fide hedging' will not exceed 5%
of a Fund's net asset value, after taking into account unrealized profits and
unrealized losses on any such contracts. Although the Funds are limited in the
amount of assets that may be invested in futures transactions, there is no
overall limit on the percentage of Fund assets that may be at risk with respect
to futures activities.
Currency Exchange Transactions. The Funds will conduct their currency
exchange transactions either (i) on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, (ii) through entering into futures
contracts or options on futures contracts (as described above), (iii) through
entering into forward contracts to purchase or sell currency or (iv) by
purchasing exchange-traded currency options. A forward currency contract
involves an obligation to purchase or sell a specific currency at a future date
at a price set at the time of the contract. An option on a foreign currency
operates similarly to an option on a security. Risks associated with currency
forward contracts and purchasing currency options are similar to those described
in this Prospectus for futures contracts and securities and stock index options.
In addition, the use of currency transactions could result in losses from the
imposition of foreign exchange controls, suspension of settlement or other
governmental actions or unexpected events.
Hedging Considerations. The Funds may engage in options, futures and currency
transactions for, among other reasons, hedging purposes. A hedge is designed to
offset a loss on a portfolio position with a gain in the hedge position; at the
same time, however, a properly correlated hedge will result in a gain in the
portfolio position being offset by a loss in the hedge position. As a result,
the use of options, futures contracts and currency exchange transactions for
hedging purposes could limit any potential gain from an increase in value of the
position hedged. In addition, the movement in the portfolio position hedged may
not be of the same magnitude as movement in the hedge. A Fund will engage in
hedging transactions only when deemed advisable by Warburg, and successful use
of hedging transactions will depend on Warburg's ability to correctly predict
movements in the hedge and the hedged position and the correlation between them,
which could prove to be inaccurate. Even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or trends.
Additional Considerations. To the extent that a Fund engages in the
strategies described above, the Fund may experience losses greater than if these
strategies had not been utilized. In addition to the risks described above,
these instruments may be illiquid and/or subject to trading limits, and the Fund
may be unable to close out an option or futures position without incurring
substantial losses, if at all. The Fund is also subject to the risk of a default
by a counterparty to an off-exchange transaction.
Asset Coverage. Each Fund will comply with applicable regulatory requirements
designed to eliminate any potential for leverage with respect to
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options written by the Fund on securities and indexes; currency, interest rate
and stock index futures contracts and options on these futures contracts; and
forward currency contracts. The use of these strategies may require that the
Fund maintain cash or liquid securities in a segregated account with its
custodian or a designated sub-custodian to the extent the Fund's obligations
with respect to these strategies are not otherwise 'covered' through ownership
of the underlying security, financial instrument or currency or by other
portfolio positions or by other means consistent with applicable regulatory
policies. Segregated assets cannot be sold or transferred unless equivalent
assets are substituted in their place or it is no longer necessary to segregate
them. As a result, there is a possibility that segregation of a large percentage
of the Fund's assets could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.
SHORT SELLING. Each Fund may from time to time sell securities short. A short
sale is a transaction in which a Fund sells securities it does not own in
anticipation of a decline in the market price of the securities. The current
market value of the securities sold short (excluding short sales 'against the
box') will not exceed 10% of the Fund's assets.
To deliver the securities to the buyer, the Fund must arrange through a
broker to borrow the securities and, in so doing, the Fund becomes obligated to
replace the securities borrowed at their market price at the time of
replacement, whatever that price may be. The Fund will make a profit or incur a
loss as a result of a short sale depending on whether the price of the
securities decreases or increases between the date of the short sale and the
date on which the Fund purchases the security to replace the borrowed securities
that have been sold. The amount of any loss would be increased (and any gain
decreased) by any premium or interest the Fund is required to pay in connection
with a short sale.
A Fund's obligation to replace the securities borrowed in connection with a
short sale will be secured by cash or liquid securities deposited as collateral
with the broker. In addition, the Fund will place in a segregated account with
its custodian or a qualified subcustodian an amount of cash or liquid securities
equal to the difference, if any, between (i) the market value of the securities
sold at the time they were sold short and (ii) any cash or liquid securities
deposited as collateral with the broker in connection with the short sale (not
including the proceeds of the short sale). Until it replaces the borrowed
securities, a Fund will maintain the segregated account daily at a level so that
(a) the amount deposited in the account plus the amount deposited with the
broker (not including the proceeds from the short sale) will equal the current
market value of the securities sold short and (b) the amount deposited in the
account plus the amount deposited with the broker (not including the proceeds
from the short sale) will not be less than the market value of the securities at
the time they were sold short.
Short Sales Against the Box. Each Fund may, in addition to engaging in short
sales as described above, enter into a short sale of securities such that when
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the short position is open the Fund owns an equal amount of the securities sold
short or owns preferred stocks or debt securities, convertible or exchangeable
without payment of further consideration, into an equal number of securities
sold short. This kind of short sale, which is referred to as one 'against the
box,' may be entered into by a Fund to, for example, lock in a sale price for a
security the Fund does not wish to sell immediately or to postpone a gain or
loss for federal income tax purposes. The Fund will deposit, in a segregated
account with its custodian or a qualified subcustodian, the securities sold
short or convertible or exchangeable preferred stocks or debt securities in
connection with short sales against the box. Not more than 10% of a Fund's net
assets (taken at current value) may be held as collateral for short sales
against the box at any one time.
The extent to which a Fund may make short sales may be limited by Code
requirements for qualification as a regulated investment company. See
'Dividends, Distributions and Taxes' for other tax considerations applicable to
short sales.
INVESTMENT GUIDELINES
___________________________________________________________
Each Fund may invest up to 15% of its net assets in securities with
contractual or other restrictions on resale and other instruments that are not
readily marketable ('illiquid securities'), including (i) securities issued as
part of a privately negotiated transaction between an issuer and one or more
purchasers; (ii) repurchase agreements with maturities greater than seven days;
(iii) time deposits maturing in more than seven calendar days; and (iv) certain
Rule 144A Securities. Each Fund may borrow from banks for temporary or emergency
purposes, such as meeting anticipated redemption requests, provided that reverse
repurchase agreements and any other borrowing by the Fund may not exceed 30% of
its total assets. Each Fund may pledge its assets to the extent necessary to
secure permitted borrowings. Whenever borrowings (including reverse repurchase
agreements) exceed 5% of the value of the Fund's net assets, the Fund will not
make any investments (including roll-overs). Except for the limitations on
borrowing, the investment guidelines set forth in this paragraph may be changed
at any time without shareholder consent by vote of a Fund's Board, subject to
the limitations contained in the 1940 Act. A complete list of investment
restrictions that each Fund has adopted identifying additional restrictions that
cannot be changed without the approval of the majority of the Fund's outstanding
shares is contained in the Fund's Statement of Additional Information.
MANAGEMENT OF THE FUNDS
_________________________________________________________
INVESTMENT ADVISERS. Each Fund employs Warburg as its investment adviser. The
Funds also employ Abbott as their sub-investment adviser. Warburg, subject to
the control of a Fund's officers and its Board, manages the investment and
reinvestment of the assets of the Fund in accordance with that Fund's investment
objective and stated investment policies. Warburg makes investment decisions for
the Fund, places orders to purchase or sell
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securities on behalf of the Fund and supervises the activities of Abbott.
Warburg also employs a support staff of management personnel to provide services
to the Funds and furnishes each Fund with office space, furnishings and
equipment. Abbott, in accordance with the investment objective and policies of
the Fund, makes investment decisions for the Fund regarding investments in
Private Funds, effects transactions in interests in Private Funds on behalf of
the Fund and assists in administrative functions relating to investments in
Private Funds.
For the services provided by Warburg, each Fund pays Warburg a fee calculated
at an annual rate of 1.25% of the Fund's average daily net assets, out of which
Warburg pays Abbott for sub-advisory services. Warburg and each Fund's
co-administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be paid by the Fund.
Warburg. Warburg is a professional investment counselling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of January 31,
1997, Warburg managed approximately $17.9 billion of assets, including
approximately $10.7 billion of investment company assets. Incorporated in 1970,
Warburg is a wholly owned subsidiary of Warburg, Pincus Counsellors G.P.
('Warburg G.P.'), a New York general partnership, which itself is controlled by
Warburg, Pincus & Co. ('WP&Co.'), also a New York general partnership. Lionel I.
Pincus, the managing partner of WP&Co., may be deemed to control both WP&Co. and
Warburg. Warburg G.P. has no business other than being a holding company of
Warburg and its subsidiaries. Warburg's address is 466 Lexington Avenue, New
York, New York 10017-3147.
Abbott. Abbott, which was founded in 1986, is an independent specialized
investment firm with assets under management of approximately $3.5 billion.
Abbott is a registered investment adviser which concentrates on venture capital,
buyout and special situations partnership investments. Abbott's management team
provides full-service private equity programs to clients. Abbott's principal
office is located at 50 Rowes Wharf, Suite 240, Boston, Massachusetts
02110-3328.
For tax and other business purposes, the partners of Abbott plan to merge
Abbott with and into, or transfer all of the assets of Abbott to, a newly-formed
Delaware limited liability company ('Abbott LLC'), with Abbott LLC to survive
and assume all of the liabilities of Abbott as part of the transaction. This
transaction, which is expected to occur before May 31, 1997 and is subject to
certain contingencies, will not involve any material change in the management,
ownership, personnel, operations or activities of Abbott. The present partners
of Abbott will be members of Abbott LLC and will hold officerships and other
positions in Abbott LLC carrying responsibilities generally commensurate with
their present responsibilities. Pursuant to a new sub-advisory agreement, Abbott
LLC, as successor to Abbott, will perform the services then being performed by
Abbott. The new sub-advisory
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agreement will be substantially identical to the current sub-advisory agreement
among Warburg, each Fund and Abbott, except for the change of the service
provider from Abbott to Abbott LLC.
PORTFOLIO MANAGER. The co-portfolio managers of the Post-Venture Capital Fund
are Elizabeth B. Dater and Stephen J. Lurito. Ms. Dater is a senior managing
director of Warburg and has been a portfolio manager of Warburg since 1978. Mr.
Lurito is a managing director of Warburg and has been with Warburg since 1987,
before which time he was a research analyst at Sanford C. Bernstein & Company,
Inc. Robert S. Janis and Christopher M. Nawn are associate portfolio managers
and research analysts for the Post-Venture Capital Fund. Mr. Janis is a senior
vice president of Warburg and has been with Warburg since October 1994, before
which time he was a vice president and senior research analyst at U.S. Trust
Company of New York. Mr. Nawn is also a senior vice president of Warburg and has
been with Warburg since September 1994, before which time he was a senior sector
analyst and portfolio manager at the Dreyfus Corporation.
Elizabeth B. Dater is also the portfolio manager of the Global Post-Venture
Capital Fund. Harold W. Ehrlich, Robert S. Janis and Christopher M. Nawn are
associate portfolio managers and research analysts for the Fund. Mr. Ehrlich is
a managing director of Warburg and has been with Warburg since February 1995,
before which time he was a senior vice president, portfolio manager and analyst
at Templeton Investment Counsel Inc.
Raymond L. Held and Gary H. Solomon, investment managers and general partners
of Abbott, manage each Fund's investments in Private Funds.
CO-ADMINISTRATORS. The Funds employ Counsellors Funds Service, Inc.
('Counsellors Service'), a wholly owned subsidiary of Warburg, as a co-
administrator. As co-administrator, Counsellors Service provides shareholder
liaison services to the Funds including responding to shareholder inquiries and
providing information on shareholder investments. Counsellors Service also
performs a variety of other services, including furnishing certain executive and
administrative services, acting as liaison between a Fund and its various
service providers, furnishing corporate secretarial services, which include
preparing materials for meetings of the Board, preparing proxy statements and
annual, semiannual and quarterly reports, assisting in the preparation of tax
returns and monitoring and developing compliance procedures for the Fund. As
compensation, each Fund pays Counsellors Service a fee calculated at an annual
rate of .10% of the Fund's average daily net assets.
Each Fund employs PFPC, an indirect, wholly owned subsidiary of PNC Bank
Corp., as a co-administrator. As a co-administrator, PFPC calculates the Fund's
net asset value, provides all accounting services for the Fund and assists in
related aspects of the Fund's operations. As compensation the Post-Venture
Capital Fund pays PFPC a fee calculated at an annual rate of .10% of the Fund's
first $500 million in average daily net assets, .075% of the next $1
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billion in average daily net assets and .05% of assets exceeding $1.5 billion
and the Global Post-Venture Capital Fund pays PFPC a fee calculated at an annual
rate of .12% of the Fund's first $250 million in average daily net assets, .10%
of the next $250 million in average daily net assets, .08% of the next $250
million in average daily net assets and .05% of the average daily net assets
exceeding $750 million, in each case exclusive of out-of-pocket expenses. PFPC
has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.
CUSTODIANS. PNC Bank, National Association ('PNC') serves as custodian of
each Fund's U.S. assets, and State Street Bank and Trust Company ('State
Street') and Fiduciary Trust Company International ('Fiduciary') serve as
custodian of the Post-Venture Capital and the Global Post-Venture Capital Fund's
non-U.S. assets, respectively. Like PFPC, PNC is a subsidiary of PNC Bank Corp.
and its principal business address is 1600 Market Street, Philadelphia,
Pennsylvania 19103. State Street's principal business address is 225 Franklin
Street, Boston, Massachusetts 02110. Fiduciary's principal business address is
Two World Trade Center, New York, New York 10048.
TRANSFER AGENT. State Street also acts as shareholder servicing agent,
transfer agent and dividend disbursing agent for the Funds. It has delegated to
Boston Financial Data Services, Inc., a 50% owned subsidiary ('BFDS'),
responsibility for most shareholder servicing functions. BFDS's principal
business address is 2 Heritage Drive, North Quincy, Massachusetts 02171.
DISTRIBUTOR. Counsellors Securities serves as distributor of the shares of
the Funds. Counsellors Securities is a wholly owned subsidiary of Warburg and is
located at 466 Lexington Avenue, New York, New York 10017-3147. Counsellors
Securities receives a fee at an annual rate equal to .25% of the average daily
net assets of each Fund's Common Shares for distribution services, pursuant to a
shareholder servicing and distribution plan (the '12b-1 Plans') adopted by the
Fund pursuant to Rule 12b-1 under the 1940 Act. Amounts paid to Counsellors
Securities under the 12b-1 Plans may be used by Counsellors Securities to cover
expenses that are primarily intended to result in, or that are primarily
attributable to, (i) the sale of the Common Shares, (ii) ongoing servicing
and/or maintenance of the accounts of Common Shareholders of the Funds and (iii)
sub-transfer agency services, subaccounting services or administrative services
related to the sale of the Common Shares, all as set forth in the 12b-1 Plans.
Payments under the 12b-1 Plans are not tied exclusively to the distribution
expenses actually incurred by Counsellors Securities and the payments may exceed
distribution expenses actually incurred. Each Board evaluates the
appropriateness of the relevant 12b-1 Plan on a continuing basis and in doing so
considers all relevant factors, including expenses borne by Counsellors
Securities and amounts received under the 12b-1 Plan.
Warburg or its affiliates may, at their own expense, provide promotional
incentives to parties who support the sale of shares of the Funds, consisting of
securities dealers who have sold Fund shares or others, including banks
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and other financial institutions, under special arrangements. In some instances,
these incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or expected sale of
significant amounts of Fund shares.
DIRECTORS AND OFFICERS. The officers of each Fund manage its day-to-day
operations and are directly responsible to its Board. The Board of a Fund sets
broad policies for each Fund and chooses the Fund's officers. A list of the
Directors and officers of each Fund and a brief statement of their present
positions and principal occupations during the past five years is set forth in
the Statement of Additional Information of each Fund.
HOW TO OPEN AN ACCOUNT
__________________________________________________________
In order to invest in a Fund, an investor must first complete and sign an
account application. To obtain an application, an investor may telephone Warburg
Pincus Funds at (800) 927-2874 An investor may also obtain an account
application by writing to:
Warburg Pincus Funds
P.O. Box 9030
Boston, Massachusetts 02205-9030
Completed and signed account applications should be mailed to Warburg Pincus
Funds at the above address.
RETIREMENT PLANS AND UTMA ACCOUNTS. For information (i) about investing in
the Funds through a tax-deferred retirement plan, such as an Individual
Retirement Account ('IRA') or a Simplified Employee Pension IRA ('SEP-IRA'), or
(ii) about opening a Uniform Transfers to Minors Act ('UTMA') account, an
investor should telephone Warburg Pincus Funds at (800) 927-2874 or write to
Warburg Pincus Funds at the address set forth above. Investors should consult
their own tax advisers about the establishment of retirement plans and UTMA
accounts.
CHANGES TO ACCOUNT. For information on how to make changes to an account, an
investor should telephone Warburg Pincus Funds at (800) 927-2874.
HOW TO PURCHASE SHARES
__________________________________________________________
Common Shares of each Fund may be purchased either by mail or, with special
advance instructions, by wire. The minimum initial investment in a Fund is
$2,500 and the minimum subsequent investment is $100, except that subsequent
minimum investments can be as low as $50 under the Automatic Monthly Investment
Plan described below. For retirement plans and UTMA accounts, the minimum
initial investment is $500. The Fund reserves the right to change the initial
and subsequent investment minimum requirements at any time. In addition, the
Fund may, in its sole discretion, waive the initial and subsequent investment
minimum requirements with respect to investors who are employees of Warburg or
its affiliates or persons with whom Warburg has entered into an investment
advisory agreement. Existing
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investors will be given 15 days' notice by mail of any increase in investment
minimum requirements.
After an investor has made his initial investment, additional shares may be
purchased at any time by mail or by wire in the manner outlined below. Wire
payments for initial and subsequent investments should be preceded by an order
placed with the Fund and should clearly indicate the investor's account number
and the name of the Fund in which shares are being purchased. The Fund reserves
the right to suspend the offering of shares for a period of time or to reject
any specific purchase order. In the interest of economy and convenience,
physical certificates representing shares in the Fund are not normally issued.
BY MAIL. If the investor desires to purchase Common Shares by mail, a check
or money order made payable to the Fund or Warburg Pincus Funds (in U.S.
currency) should be sent along with the completed account application to Warburg
Pincus Funds through its distributor, Counsellors Securities, at the address set
forth above. Checks payable to the investor and endorsed to the order of the
Fund or Warburg Pincus Funds will not be accepted as payment and will be
returned to the sender. If payment is received in proper form by the close of
regular trading on the New York Stock Exchange (the 'NYSE') (currently 4:00
p.m., Eastern time) on a day that the Fund calculates its net asset value (a
'business day'), the purchase will be made at the Fund's net asset value
calculated at the end of that day. If payment is received after the close of
regular trading on the NYSE, the purchase will be effected at the Fund's net
asset value determined for the next business day after payment has been
received. Checks or money orders that are not in proper form or that are not
accompanied or preceded by a complete account application will be returned to
the sender. Shares purchased by check or money order are entitled to receive
dividends and distributions beginning on the day after payment has been
received. Checks or money orders in payment for shares of more than one Warburg
Pincus Fund should be made payable to Warburg Pincus Funds and should be
accompanied by a breakdown of amounts to be invested in each fund. If a check
used for purchase does not clear, the Fund will cancel the purchase and the
investor may be liable for losses or fees incurred. For a description of the
manner of calculating the Fund's net asset value, see 'Net Asset Value' below.
BY WIRE. Investors may also purchase Common Shares in a Fund by wiring funds
from their banks. Telephone orders by wire will not be accepted until a
completed account application in proper form has been received and an account
number has been established. Investors should place an order with the Fund prior
to wiring funds by telephoning (800) 927-2874. Federal funds may be wired to
Counsellors Securities using the following wire address:
State Street Bank and Trust Co.
225 Franklin St.
Boston, MA 02101
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ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
[Insert Warburg Pincus Fund name(s) here]
DDA# 9904-649-2
[Shareowner name]
[Shareowner account number]
If a telephone order is received by the close of regular trading on the NYSE
and payment by wire is received on the same day in proper form in accordance
with instructions set forth above, the shares will be priced according to the
net asset value of the Fund on that day and are entitled to dividends and
distributions beginning on that day. If payment by wire is received in proper
form by the close of the NYSE without a prior telephone order, the purchase will
be priced according to the net asset value of the Fund on that day and is
entitled to dividends and distributions beginning on that day. However, if a
wire in proper form that is not preceded by a telephone order is received after
the close of regular trading on the NYSE, the payment will be held uninvested
until the order is effected at the close of business on the next business day.
Payment for orders that are not accepted will be returned to the prospective
investor after prompt inquiry. If a telephone order is placed and payment by
wire is not received on the same day, the Fund will cancel the purchase and the
investor may be liable for losses or fees incurred.
PURCHASES THROUGH INTERMEDIARIES. Common Shares of the Funds are available
through the Charles Schwab & Company, Inc. Mutual Fund OneSourceTM Program;
Fidelity Brokerage Services, Inc. FundsNetworkTM Program; Jack White & Company,
Inc.; and Waterhouse Securities, Inc. Generally, these programs do not require
customers to pay a transaction fee in connection with purchases or redemptions.
Each Fund is also available through certain broker-dealers, financial
institutions and other industry professionals (including the programs described
above, collectively, 'Service Organizations'). Certain features of a Fund, such
as the initial and subsequent investment minimums, redemption fees and certain
trading restrictions, may be modified or waived by Service Organizations.
Service Organizations may impose transaction or administrative charges or other
direct fees, which charges and fees would not be imposed if a Fund's shares are
purchased directly from the Fund. Therefore, a client or customer should contact
the Service Organization acting on his behalf concerning the fees (if any)
charged in connection with a purchase or redemption of Fund shares and should
read this Prospectus in light of the terms governing his accounts with the
Service Organization. Service Organizations will be responsible for promptly
transmitting client or customer purchase and redemption orders to the Funds in
accordance with their agreements with the Fund and with clients or customers.
Service Organizations that have entered into agreements with a Fund or its agent
may enter confirmed purchase orders on behalf of clients and customers, with
payment to follow no later than the Fund's
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pricing on the following business day. If payment is not received by such time,
the Service Organization could be held liable for resulting fees or losses.
For administration, subaccounting, transfer agency and/or other services,
Warburg, Counsellors Securities or their affiliates may pay Service
Organizations and certain recordkeeping organizations a fee up to .35% (the
'Service Fee') of the average annual value of accounts with a Fund maintained by
such Service Organizations or recordkeepers. A portion of the Service Fee may be
borne by the Fund as a transfer agency fee. In addition, a Service Organization
or recordkeeper may directly or indirectly pay a portion of its Service Fee to
the Fund's custodian or transfer agent for costs related to accounts of its
clients or customers. The Service Fee payable to any one Service Organization or
recordkeeper is determined based upon a number of factors, including the nature
and quality of services provided, the operations processing requirements of the
relationship and the standardized fee schedule of the Service Organization or
recordkeeper.
AUTOMATIC MONTHLY INVESTING. Automatic monthly investing allows shareholders
to authorize a Fund to debit their bank account monthly ($50 minimum) for the
purchase of Fund shares on or about either the tenth or twentieth calendar day
of each month. To establish the automatic monthly investing option, obtain a
separate application or complete the 'Automatic Investment Program' section of
the account applications and include a voided, unsigned check from the bank
account to be debited. Only an account maintained at a domestic financial
institution which is an automated clearing house member may be used.
Shareholders using this service must satisfy the initial investment minimum for
the Fund prior to or concurrent with the start of any Automatic Investment
Program. Please refer to an account application for further information, or
contact Warburg Pincus Funds at (800) 927-2874 for information or to modify or
terminate the program. Investors should allow a period of up to 30 days in order
to implement an automatic investment program. The failure to provide complete
information could result in further delays.
GENERAL. Each Fund reserves the right to reject any specific purchase order.
A Fund may discontinue sales of its shares if management believes that a
substantial further increase in assets may adversely affect the Fund's ability
to achieve its investment objective. In such event, however, it is anticipated
that existing shareholders would be permitted to continue to authorize
investment in the Fund and to reinvest any dividends or capital gains
distributions.
HOW TO REDEEM AND EXCHANGE SHARES
_______________________________________________
REDEMPTION OF SHARES. An investor in a Fund may redeem (sell) his shares on
any day that the Fund's net asset value is calculated (see 'Net Asset Value'
below).
Common Shares of the Funds may either be redeemed by mail or by telephone.
Investors should realize that in using the telephone redemption and exchange
option, you may be giving up a measure of security that you may have if you were
to redeem or exchange your shares in writing. If an
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investor desires to redeem his shares by mail, a written request for redemption
should be sent to Warburg Pincus Funds at the address indicated above under 'How
to Open an Account.' An investor should be sure that the redemption request
identifies the Fund, the number of shares to be redeemed and the investor's
account number. In order to change the bank account or address designated to
receive the redemption proceeds, the investor must send a written request (with
signature guarantee of all investors listed on the account when such a change is
made in conjunction with a redemption request) to Warburg Pincus Funds. Each
mail redemption request must be signed by the registered owner(s) (or his legal
representative(s)) exactly as the shares are registered. If an investor has
applied for the telephone redemption feature on his account application, he may
redeem his shares by calling Warburg Pincus Funds at (800) 927-2874. An investor
making a telephone withdrawal should state (i) the name of the Fund, (ii) the
account number of the Fund, (iii) the name of the investor(s) appearing on the
Fund's records, (iv) the amount to be withdrawn and (v) the name of the person
requesting the redemption.
After receipt of the redemption request by mail or by telephone, the
redemption proceeds will, at the option of the investor, be paid by check and
mailed to the investor of record or be wired to the investor's bank as indicated
in the account application previously filled out by the investor. The Funds
currently do not impose a service charge for effecting wire transfers but each
Fund reserves the right to do so in the future. During periods of significant
economic or market change, telephone redemptions may be difficult to implement.
If an investor is unable to contact Warburg Pincus Funds by telephone, an
investor may deliver the redemption request to Warburg Pincus Funds by mail at
the address shown above under 'How to Open an Account.' Although each Fund will
redeem shares purchased by check or through the Automatic Investment Program
before the funds or check clear, payments of the redemption proceeds will be
delayed for five days (for funds received through the Automatic Investment
Program) or 10 days (for check purchases) from the date of purchase. Investors
should consider purchasing shares using a certified or bank check or money order
if they anticipate an immediate need for redemption proceeds.
If a redemption order is received by a Fund or its agent, prior to the close
of regular trading on the NYSE, the redemption order will be effected at the net
asset value per share as determined on that day. If a redemption order is
received after the close of regular trading on the NYSE, the redemption order
will be effected at the net asset value as next determined. Except as noted
above, redemption proceeds will normally be mailed or wired to an investor on
the next business day following the date a redemption order is effected. If,
however, in the judgment of Warburg, immediate payment would adversely affect a
Fund, each Fund reserves the right to pay the redemption proceeds within seven
days after the redemption order is effected. Furthermore, each Fund may suspend
the right of redemption or postpone the date of payment
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upon redemption (as well as suspend or postpone the recordation of an exchange
of shares) for such periods as are permitted under the 1940 Act.
The proceeds paid upon redemption may be more or less than the amount
invested depending upon a share's net asset value at the time of redemption. If
an investor redeems all the shares in his account, all dividends and
distributions declared up to and including the date of redemption are paid along
with the proceeds of the redemption.
If, due to redemptions, the value of an investor's account drops to less than
$2,000 ($250 in the case of a retirement plan or UTMA account), each Fund
reserves the right to redeem the shares in that account at net asset value.
Prior to any redemption, the Fund will notify an investor in writing that this
account has a value of less than the minimum. The investor will then have 60
days to make an additional investment before a redemption will be processed by
the Fund.
TELEPHONE TRANSACTIONS. In order to request redemptions by telephone,
investors must have completed and returned to Warburg Pincus Funds an account
application containing a telephone election. Unless contrary instructions are
elected, an investor will be entitled to make exchanges by telephone. Neither
Fund nor its agents will be liable for following instructions communicated by
telephone that it reasonably believes to be genuine. Reasonable procedures will
be employed on behalf of a Fund to confirm that instructions communicated by
telephone are genuine. Such procedures include providing written confirmation of
telephone transactions, tape recording telephone instructions and requiring
specific personal information prior to acting upon telephone instructions.
AUTOMATIC CASH WITHDRAWAL PLAN. Each Fund offers investors an automatic cash
withdrawal plan under which investors may elect to receive periodic cash
payments of at least $250 monthly or quarterly. To establish this service,
complete the 'Automatic Withdrawal Plan' section of the account application and
attach a voided check from the bank account to be credited. For further
information regarding the automatic cash withdrawal plan or to modify or
terminate the plan, investors should contact Warburg Pincus Funds at (800)
927-2874.
EXCHANGE OF SHARES. An investor may exchange Common Shares of a Fund for
Common Shares of another Fund or for Common Shares of another Warburg Pincus
Fund at their respective net asset values. Exchanges may be effected by mail or
by telephone in the manner described under 'Redemption of Shares' above. If an
exchange request is received by Warburg Pincus Funds or their agent prior to the
close of regular trading on the NYSE, the exchange will be made at each Fund's
net asset value determined at the end of that business day. Exchanges may be
effected without a sales charge but must satisfy the minimum dollar amount
necessary for new purchases. Due to the costs involved in effecting exchanges,
each Fund reserves the right to refuse to honor more than three exchange
requests by a shareholder in any 30-day period. The exchange privilege may be
modified or terminated at any
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time upon 60 days' notice to shareholders. Currently, exchanges may be made with
the following other funds:
WARBURG PINCUS CASH RESERVE FUND -- a money market fund investing in
short-term, high quality money market instruments;
WARBURG PINCUS NEW YORK TAX EXEMPT FUND -- a money market fund investing in
short-term, high quality municipal obligations designed for New York investors
seeking income exempt from federal, New York State and New York City income
tax;
WARBURG PINCUS NEW YORK INTERMEDIATE MUNICIPAL FUND -- an intermediate-term
municipal bond fund designed for New York investors seeking income exempt from
federal, New York State and New York City income tax;
WARBURG PINCUS TAX FREE FUND -- a bond fund seeking maximum current income
exempt from federal income taxes, consistent with preservation of capital;
WARBURG PINCUS INTERMEDIATE MATURITY GOVERNMENT FUND -- an intermediate-term
bond fund investing in obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities;
WARBURG PINCUS FIXED INCOME FUND -- a bond fund seeking current income and,
secondarily, capital appreciation by investing in a diversified portfolio of
fixed-income securities;
WARBURG PINCUS GLOBAL FIXED INCOME FUND -- a bond fund investing in a portfolio
consisting of investment grade fixed-income securities of governmental and
corporate issuers denominated in various currencies, including U.S. dollars;
WARBURG PINCUS BALANCED FUND -- a fund seeking maximum total return through a
combination of long-term growth of capital and current income consistent with
preservation of capital through diversified investments in equity and debt
securities;
WARBURG PINCUS GROWTH & INCOME FUND -- an equity fund seeking long-term growth
of capital and income and a reasonable current return;
WARBURG PINCUS CAPITAL APPRECIATION FUND -- an equity fund seeking long-term
capital appreciation by investing principally in equity securities of
medium-sized domestic companies;
WARBURG PINCUS STRATEGIC VALUE FUND -- an equity fund seeking capital
appreciation by investing in undervalued companies and market sectors;
WARBURG PINCUS EMERGING GROWTH FUND -- an equity fund seeking maximum capital
appreciation by investing in emerging growth companies;
WARBURG PINCUS SMALL COMPANY VALUE FUND -- an equity fund seeking long-term
capital appreciation by investing primarily in equity securities of small
companies;
WARBURG PINCUS SMALL COMPANY GROWTH FUND -- an equity fund seeking capital
growth by investing in equity securities of small sized domestic companies;
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WARBURG PINCUS HEALTH SCIENCES FUND -- an equity fund seeking capital
appreciation by investing primarily in equity and debt securities of health
sciences companies;
WARBURG PINCUS INTERNATIONAL EQUITY FUND -- an equity fund seeking long-term
capital appreciation by investing primarily in equity securities of non-United
States issuers;
WARBURG PINCUS EMERGING MARKETS FUND -- an equity fund seeking growth of
capital by investing primarily in securities of non-United States issuers
consisting of companies in emerging securities markets;
WARBURG PINCUS JAPAN GROWTH FUND -- an equity fund seeking long-term growth of
capital by investing primarily in equity securities of Japanese issuers; and
WARBURG PINCUS JAPAN OTC FUND -- an equity fund seeking long-term capital
appreciation by investing in a portfolio of securities traded in the Japanese
over-the-counter market.
The exchange privilege is available to shareholders residing in any state in
which the Common Shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain or
loss in connection with the exchange. Investors wishing to exchange Common
Shares of a Fund for Common Shares in another Warburg Pincus Fund should review
the prospectus of the other fund prior to making an exchange. For further
information regarding the exchange privilege or to obtain a current prospectus
for another Warburg Pincus Fund, an investor should contact Warburg Pincus Funds
at (800) 927-2874.
DIVIDENDS, DISTRIBUTIONS AND TAXES
______________________________________________
DIVIDENDS AND DISTRIBUTIONS. Each Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period less
applicable expenses. Each Fund declares dividends from its net investment income
and net realized short-term and long-term capital gains annually and pays them
in the calendar year in which they are declared, generally in November or
December. Net investment income earned on weekends and when the NYSE is not open
will be computed as of the next business day. Unless an investor instructs a
Fund to pay dividends or distributions in cash, dividends and distributions will
automatically be reinvested in additional Common Shares of the relevant Fund at
net asset value. The election to receive dividends in cash may be made on the
account application or, subsequently, by writing to Warburg Pincus Funds at the
address set forth under 'How to Open an Account' or by calling Warburg Pincus
Funds at (800) 927-2874.
A Fund may be required to withhold for U.S. federal income taxes 31% of all
distributions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications,
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or who have been notified by the U.S. Internal Revenue Service that they are
subject to backup withholding.
TAXES. The Funds intend to qualify each year as a 'regulated investment
company' within the meaning of the Code. A Fund, if it qualifies as a regulated
investment company, will be subject to a 4% non-deductible excise tax measured
with respect to certain undistributed amounts of ordinary income and capital
gain. The Funds expect to pay such additional dividends and to make such
additional distributions as are necessary to avoid the application of this tax.
Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, and
distributions derived from net realized long-term capital gains are taxable to
investors as long-term capital gains, in each case regardless of how long the
shareholder has held Fund shares and whether received in cash or reinvested in
additional Fund shares. As a general rule, an investor's gain or loss on a sale
or redemption of his Fund shares will be a long-term capital gain or loss if he
has held his shares for more than one year and will be a short-term capital gain
or loss if he has held his shares for one year or less. However, any loss
realized upon the sale or redemption of shares within six months from the date
of their purchase will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain during such
six-month period with respect to such shares. Investors may be proportionately
liable for taxes on income and gains of a Fund, but investors not subject to tax
on their income will not be required to pay tax on amounts distributed to them.
The Fund's investment activities, including short sales of securities, will not
result in unrelated business taxable income to a tax-exempt investor. A Fund's
dividends may qualify for the dividends received deduction for corporations to
the extent they are derived from dividends attributable to certain types of
stock issued by U.S. domestic corporations.
Certain provisions of the Code may require that a gain recognized by a Fund
upon the closing of a short sale be treated as a short-term capital gain, and
that a loss recognized by the Fund upon the closing of a short sale be treated
as a long-term capital loss, regardless of the amount of time that the Fund held
the securities used to close the short sale. A Fund's use of short sales may
also affect the holding periods of certain securities held by the Fund if such
securities are 'substantially identical' to securities used by the Fund to close
the short sale. The Funds' short selling activities will not result in unrelated
business taxable income to a tax-exempt investor.
Dividends and interest received by a Fund may be subject to withholding and
other taxes imposed by foreign countries. However, tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes.
Special Tax Matters Relating to the Global Post-Venture Capital Fund. If the
Global Post-Venture Capital Fund qualifies as a regulated investment company, if
certain asset and distribution requirements are satisfied and if
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more than 50% of the Fund's total assets at the close of its fiscal year consist
of stock or securities of foreign corporations, the Fund may elect for U.S.
income tax purposes to treat foreign income taxes paid by it as paid by its
shareholders. The Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. If the Fund were to make an election,
shareholders of the Fund would be required to take into account an amount equal
to their pro rata portions of such foreign taxes in computing their taxable
income and then treat an amount equal to those foreign taxes as a U.S. federal
income tax deduction or as a foreign tax credit against their U.S. federal
income taxes. Shortly after any year for which it makes such an election, the
Fund will report to its shareholders the amount per share of such foreign tax
that must be included in each shareholder's gross income and the amount which
will be available for the deduction or credit. No deduction for foreign taxes
may be claimed by a shareholder who does not itemize deductions. Certain
limitations will be imposed on the extent to which the credit (but not the
deduction) for foreign taxes may be claimed.
GENERAL. Statements as to the tax status of each investor's dividends and
distributions are mailed annually. Each investor will also receive, if
applicable, various written notices after the close of a Fund's prior taxable
year with respect to certain dividends and distributions which were received
from the Fund during the Fund's prior taxable year. Investors should consult
their own tax advisers with specific reference to their own tax situations,
including their state and local tax liabilities.
NET ASSET VALUE
_________________________________________________________________
Each Fund's net asset value per share is calculated as of the close of
regular trading on the NYSE (currently 4:00 p.m., Eastern time) on each business
day, Monday through Friday, except on days when the NYSE is closed. The NYSE is
currently scheduled to be closed on New Year's Day, Washington's Birthday, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day
and Christmas Day, and on the preceding Friday or subsequent Monday when one of
these holidays falls on a Saturday or Sunday, respectively. The net asset value
per share of each Fund generally changes each day.
The net asset value per Common Share of a Fund is computed by adding the
Common Shares' pro rata share of the value of the Fund's assets, deducting the
Common Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Common Shares and then dividing the result by the
total number of outstanding Common Shares.
Securities listed on a U.S. securities exchange (including securities traded
through the Nasdaq National Market System) or foreign securities exchange or
traded in an over-the-counter market will be valued at the most recent sale
price when the valuation is made. Options and futures contracts will be valued
similarly. Debt obligations that mature in 60 days or less from the valuation
date are valued on the basis of amortized cost, unless the Board
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determines that using this valuation method would not reflect the investments'
value. Investments in Private Funds will be valued initially at cost and,
thereafter, in accordance with periodic reports received by Abbott from the
Private Funds (generally quarterly). Because the issuers of securities held by
Private Funds are generally not subject to the reporting requirements of the
federal securities laws, interim changes in value of investments in Private
Funds will not generally be reflected in a Fund's net asset value. However,
Warburg will report to the Board of Directors of a Fund information about
certain holdings of Private Funds that, in its judgment, could have a material
impact on the valuation of a Private Fund. The Board of Directors will take
these reports into account in valuing Private Funds. Securities, options and
futures contracts for which market quotations are not readily available and
other assets, including Private Funds, will be valued at their fair value as
determined in good faith pursuant to consistently applied procedures established
by a Board. Further information regarding valuation policies is contained in the
Funds' Statement of Additional Information.
PERFORMANCE
_____________________________________________________________________
The Funds quote the performance of Common Shares separately from Advisor
Shares. The net asset value of Common Shares is listed in The Wall Street
Journal each business day under the heading 'Warburg Pincus Funds.' From time to
time, each Fund may advertise the average annual total return of its Common
Shares over various periods of time. These total return figures show the average
percentage change in value of an investment in the Common Shares from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Common Shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in Common Shares of the Fund. Total return will be shown
for recent one-, five- and ten-year periods, and may be shown for other periods
as well (such as from commencement of the Fund's operations or on a
year-by-year, quarterly or current year-to-date basis).
When considering average total return figures for periods longer than one
year, it is important to note that the annual total return for one year in the
period might have been greater or less than the average for the entire period.
When considering total return figures for periods shorter than one year,
investors should bear in mind that each Fund seeks long-term appreciation and
that such return may not be representative of any Fund's return over a longer
market cycle. A Fund may also advertise aggregate total return figures of its
Common Shares for various periods, representing the cumulative change in value
of an investment in the Common Shares for the specific period (again reflecting
changes in share prices and assuming reinvestment of dividends and
distributions). Aggregate and average total returns may be shown by means of
schedules, charts or graphs and may indicate various components of total return
(i.e., change in value of initial investment, income dividends and capital gain
distributions).
31
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<PAGE>
Investors should note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Funds'
Statement of Additional Information describes the method used to determine the
total return. Current total return figures may be obtained by calling Warburg
Pincus Funds at (800) 927-2874.
In reports or other communications to investors or in advertising material, a
Fund may describe general economic and market conditions affecting the Fund. A
Fund may compare its performance with (i) that of other mutual funds as listed
in the rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds or as set forth
in the publications listed below; (ii) with the Venture Capital 100 Index
(compiled by Venture Capital Journal), the Russell 2000 Small Stock Index, the
EAFE Index, the Salomon Russell Global Equity Index, the FT-Actuaries World
Indices (jointly compiled by The Financial Times, Ltd., Goldman, Sachs & Co. and
NatWest Securities Ltd.) and the S&P 500 Index; all of which are unmanaged
indexes of common stocks; or (iii) other appropriate indexes of investment
securities or with data developed by Warburg derived from such indexes. The
Funds may also make comparisons using data and indexes compiled by the National
Venture Capital Association, VentureOne and Private Equity Analysts Newsletter
and similar organizations and publications. A Fund may include evaluations of
the Fund published by nationally recognized ranking services and by financial
publications that are nationally recognized, such as Barron's, Business Week,
Financial Times, Forbes, Fortune, Inc., Institutional Investor, Investor's
Business Daily, Money, Morningstar, Inc., Mutual Fund Magazine, SmartMoney and
The Wall Street Journal.
In reports or other communications to investors or in advertising, each Fund
may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. In addition, a Fund and its portfolio managers may render periodic
updates of Fund activity, which may include a discussion of significant
portfolio holdings and analysis of holdings by industry, country, credit quality
and other characteristics. The Funds may discuss characteristics of venture
capital financed companies and the benefits expected to be achieved from
investing in these companies. Each Fund may also discuss measures of risk, the
continuum of risk and return relating to different investments and the potential
impact of foreign stocks on a portfolio otherwise composed of domestic
securities. Morningstar, Inc. rates funds in broad categories based on
risk/reward analyses over various time periods. In addition, a Fund may from
time to time compare the expense ratio of its Common Shares to that of
investment companies with similar objectives and policies, based on data
generated by Lipper Analytical Services, Inc. or similar investment services
that monitor mutual funds.
32
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<PAGE>
GENERAL INFORMATION
_____________________________________________________________
ORGANIZATION. The Post-Venture Capital Fund was incorporated on July 12, 1995
under the laws of the State of Maryland under the name 'Warburg, Pincus
Post-Venture Capital Fund, Inc.' The Global Post-Venture Capital Fund was
incorporated on July 16, 1996 under the laws of the State of Maryland under the
name 'Warburg, Pincus Global Post-Venture Capital Fund, Inc.' The charter of
each Fund authorizes the Board to issue three billion full and fractional shares
of capital stock, $.001 par value per share, of which one billion shares are
designated Common Shares and two billion shares are designated Advisor Shares in
the case of the Post-Venture Capital Fund and two billion shares are designated
Common Shares and one billion shares are designated Advisor Shares in the case
of the Global Post-Venture Capital Fund. Under each Fund's charter documents,
the Board has the power to classify or reclassify any unissued shares of the
Fund into one or more additional classes by setting or changing in any one or
more respects their relative rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption. The Board
of a Fund may similarly classify or reclassify any class of its shares into one
or more series and, without shareholder approval, may increase the number of
authorized shares of the Fund.
MULTI-CLASS STRUCTURE. Each Fund offers a separate class of shares, the
Advisor Shares, pursuant to a separate prospectus. Individual investors may only
purchase Advisor Shares through institutional shareholders of record,
broker-dealers, financial institutions, depository institutions, retirement
plans and financial intermediaries. Shares of each class represent equal pro
rata interests in the respective Fund and accrue dividends and calculate net
asset value and performance quotations in the same manner. Because of the higher
fees paid by the Advisor Shares, the total return on such shares can be expected
to be lower than the total return on Common Shares. Investors may obtain
information concerning the Advisor Shares from their investment professional or
by calling Counsellors Securities at (800) 369-2728.
VOTING RIGHTS. Investors in a Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held. Shareholders of a
Fund will vote in the aggregate except where otherwise required by law and
except that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding office have
been elected by investors. Any Director of a Fund may be removed from office
upon the vote of shareholders holding at least a majority of the relevant Fund's
outstanding shares, at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of a Fund. Lionel I. Pincus
may be deemed to be a controlling person
33
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<PAGE>
of the Global Post-Venture Capital Fund because he may be deemed to possess or
share investment power over shares owned by clients of Warburg.
SHAREHOLDER COMMUNICATIONS. Each investor will receive a quarterly statement
of his account, as well as a statement of his account after any transaction that
affects his share balance or share registration (other than the reinvestment of
dividends or distributions or investment made through the Automatic Investment
Program). Each Fund will also send to its investors a semiannual report and an
audited annual report, each of which includes a list of the investment
securities held by the Fund and a statement of the performance of the Fund.
Periodic listings of the investment securities held by a Fund, as well as
certain statistical characteristics of the Fund, may be obtained by calling
Warburg Pincus Funds at (800) 927-2874.
The prospectuses of the Funds are combined in this Prospectus. Each Fund
offers only its own shares, yet it is possible that a Fund might become liable
for a misstatement, inaccuracy or omission in this Prospectus with regard to
another Fund.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE FUNDS'
STATEMENT OF ADDITIONAL INFORMATION OR THE FUNDS' OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFERING OF SHARES OF THE FUNDS, AND IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY EACH FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF THE
COMMON SHARES OF THE FUNDS IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFER MAY NOT LAWFULLY BE MADE.
34
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Funds' Expenses..................................................... 2
Financial Highlights.................................................... 3
Investment Objectives and Policies...................................... 4
Portfolio Investments................................................... 8
Risk Factors and Special Considerations................................. 10
Portfolio Transactions and Turnover Rate................................ 12
Certain Investment Strategies........................................... 13
Investment Guidelines................................................... 17
Management of the Funds................................................. 17
How to Open an Account.................................................. 21
How to Purchase Shares.................................................. 21
How to Redeem and Exchange Shares....................................... 24
Dividends, Distributions and Taxes...................................... 28
Net Asset Value......................................................... 30
Performance............................................................. 31
General Information..................................................... 33
</TABLE>
[Logo]
P.O. BOX 9030, BOSTON, MA 02205-9030
800-WARBURG (800-927-2874)
COUNSELLORS SECURITIES INC., DISTRIBUTOR. WPPVF-1-0297
<PAGE>
<PAGE>
Prospectus
February 21, 1997
Warburg Pincus Advisor Funds
G
GLOBAL POST-VENTURE CAPITAL FUND
[LOGO]
<PAGE>
<PAGE>
PROSPECTUS February 21, 1997
Warburg Pincus Advisor Funds are a family of open-end mutual funds that are
offered to investors who wish to buy shares through an investment professional,
to financial institutions investing on behalf of their customers and to
retirement plans that elect to make one or more Advisor Funds an investment
option for participants in the plans. One Advisor Fund is described in this
Prospectus:
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND seeks long-term growth of
capital. The Fund will pursue its objective by investing primarily in equity
securities of U.S. and foreign issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy. Because of the nature
of the Fund's investments and certain strategies it may use, an investment in
the Fund involves certain risks and may not be appropriate for all investors.
The Fund currently offers two classes of shares, one of which, the Advisor
Shares, is offered pursuant to this Prospectus. The Advisor Shares of the Fund,
as well as Advisor Shares of certain other Warburg Pincus-advised funds, are
sold under the name 'Warburg Pincus Advisor Funds.' Individual investors may
purchase Advisor Shares only through institutional shareholders of record,
broker-dealers, financial institutions, depository institutions, retirement
plans and other financial intermediaries ('Institutions'). The Advisor Shares
impose a 12b-1 fee of .50% per annum, which is the economic equivalent of a
sales charge. The Fund's Common Shares are available for purchase by individuals
directly and are offered by a separate prospectus.
NO MINIMUM INVESTMENT
___________________________________________________________
There is no minimum amount of initial or subsequent purchases of shares imposed
on Institutions. See 'How to Purchase Shares.'
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information, has been filed with
the Securities and Exchange Commission (the 'SEC'). The SEC maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference and other information regarding the Fund. The
Statement of Additional Information is also available upon request and without
charge by calling Warburg Pincus Advisor Funds at (800) 369-2728. Information
regarding the status of shareholder accounts may also be obtained by calling the
Fund at the same number. The Statement of Additional Information, as amended or
supplemented from time to time, bears the same date as this Prospectus and is
incorporated by reference in its entirety into this Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR ENDORSED
BY ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENTS IN SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
THE FUND'S EXPENSES
_____________________________________________________________
The Warburg Pincus Global Post-Venture Capital Fund (the 'Fund') currently
offers two separate classes of shares: Common Shares and Advisor Shares. See
'General Information.' Because of the higher fees paid by Advisor Shares, the
total return on such shares can be expected to be lower than the total return on
Common Shares.
<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)..................................................................... 0
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees.............................................................. .40%
12b-1 Fees................................................................... .50%'D'
Other Expenses............................................................... 1.00%
----
Total Fund Operating Expenses*............................................... 1.90%
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 year...................................................................... $19
3 years..................................................................... $60
</TABLE>
- --------------------------------------------------------------------------------
'D' Current 12b-1 fees are .50% out of a maximum .75% authorized under the
Advisor Shares' Distribution Plan. At least a portion of these fees should
be considered by the investor to be the economic equivalent of a sales
charge.
* Absent the waiver of fees by the Fund's investment adviser and
co-administrator, Management Fees would have equalled 1.25%, Other Expenses
would have equalled 1.10% and Total Fund Operating Expenses would have
equalled 2.85%. The investment adviser and co-administrator are under no
obligation to continue these waivers.
---------------------------
The expense table shows the costs and expenses that an investor will bear
directly or indirectly as an Advisor Shareholder of the Fund. Institutions also
may charge their clients fees in connection with investments in Advisor Shares,
which fees are not reflected in the table. The Example should not be considered
a representation of past or future expenses; actual Fund expenses may be greater
or less than those shown. Moreover, while the Example assumes a 5% annual
return, the Fund's actual performance will vary and may result in a return
greater or less than 5%. Long-term holders of Advisor Shares may pay more than
the economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc. (the 'NASD').
2
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<PAGE>
FINANCIAL HIGHLIGHTS
____________________________________________________________
(FOR AN ADVISOR SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following information regarding the Fund for the fiscal period ended
October 31, 1996 has been derived from information audited by Coopers & Lybrand
L.L.P., independent accountants, whose report dated December 18, 1996 is
incorporated by reference in the Fund's Statement of Additional Information.
Further information about the performance of the Fund is contained in the Fund's
annual report, dated October 31, 1996, copies of which appear in the Fund's
Statement of Additional Information or may be obtained without charge by calling
Warburg Pincus Advisor Funds at (800) 369-2728.
<TABLE>
<CAPTION>
For the Period
September 30,
1996
(Commencement of
Operations)
through
October 31, 1996
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $10.00
-----
Income from Investment Operations
Net Investment Income............................................ .00
Net Loss on Securities and Foreign Currency Related Items (both
realized and unrealized)....................................... (.15)
-----
Total from Investment Operations................................. (.15)
-----
Less Distributions
Dividends from Net Investment Income............................. .00
Distributions from Capital Gains................................. .00
-----
Total Distributions.......................................... .00
-----
NET ASSET VALUE, END OF PERIOD.................................... $ 9.85
-----
-----
Total Return...................................................... (1.50%)'D'
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000s).................................. $6
Ratios to Average Daily Net Assets:
Operating expenses............................................... 1.90%*
Net investment loss.............................................. (.78%)*
Decrease reflected in above operating expense ratio due to
waivers/reimbursements......................................... 22.23%*
Portfolio Turnover Rate........................................... 5.85%'D'
Average Commission Rate#.......................................... $.0323
</TABLE>
- --------------------------------------------------------------------------------
'D' Non-annualized.
* Annualized.
# Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a
commission charged.
3
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INVESTMENT OBJECTIVE AND POLICIES
_______________________________________________
Because of the nature of the Fund's investments and certain strategies it may
use, such as investing in Private Funds (as defined below), an investment in the
Fund should be considered only for the aggressive portion of an investor's
portfolio and may not be appropriate for all investors.
The Fund seeks long-term growth of capital. This objective is a fundamental
policy and may not be amended without first obtaining the approval of a majority
of the outstanding shares of the Fund. Any investment involves risk and,
therefore, there can be no assurance that the Fund will achieve its investment
objective. See 'Portfolio Investments' and 'Certain Investment Strategies' for
descriptions of certain types of investments the Fund may make.
The Fund is a diversified management investment company that pursues an
aggressive investment strategy. The Fund pursues its investment objective by
investing primarily in equity securities of U.S. and foreign issuers considered
by Warburg, Pincus Counsellors, Inc., the Fund's investment adviser ('Warburg')
to be in their post-venture capital stage of development. The Fund intends to
invest in post-venture capital companies, as defined below, traded on national
securities exchanges and in over-the-counter markets and other public markets in
various developed countries as well as emerging securities markets.
Although the Fund may invest up to 10% of its assets in venture capital and
other investment funds, the Fund is not designed primarily to provide venture
capital financing. Rather, under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of 'post-venture capital
companies' located in at least three countries, including the United States. A
post-venture capital company is a company that has received venture capital
financing either (a) during the early stages of the company's existence or the
early stages of the development of a new product or service or (b) as part of a
restructuring or recapitalization of the company. The investment of venture
capital financing, distribution of such company's securities to venture capital
investors, or initial public offering ('IPO'), whichever is later, will have
been made within ten years prior to the Fund's purchase of the company's
securities. The Fund currently intends to invest at least 35% of total assets in
non-U.S. post-venture capital and other companies. A company will be considered
to be located in the country where (i) the company is organized, (ii) where its
principal business activities are conducted and where at least 50% of its
revenues or profits from goods produced or sold are derived, investments are
made or services are performed or (iii) where the principal trading market for
the company's securities is located.
Warburg believes that venture capital participation in a company's capital
structure can lead to revenue/earnings growth rates above those of older, public
companies such as those in the Dow Jones Industrial Average, the Fortune 500 or
the Morgan Stanley Capital International Europe, Australasia and Far East
('EAFE') Index. Venture capitalists finance start-up companies, companies in the
early stages of developing new products or services and
4
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<PAGE>
companies undergoing a restructuring or recapitalization, since these companies
may not have access to conventional forms of financing (such as bank loans or
public issuances of stock). Venture capitalists may hold substantial positions
in companies that may have been acquired at prices significantly below the
initial public offering price. This may create a potential adverse impact in the
short-term on the market price of a company's stock due to sales in the open
market by a venture capitalist or others who acquired the stock at lower prices
prior to the company's IPO. Warburg will consider the impact of such sales in
selecting post-venture capital investments. Venture capitalists may be
individuals or funds organized by venture capitalists which are typically
offered only to large institutions, such as pension funds and endowments, and
certain accredited investors. Outside of the United States, venture capitalists
may also consist of merchant banks and other banking institutions that provide
venture capital financing in a manner similar to U.S. venture capitalists.
Venture capital participation in a company is often reduced when the company
engages in an IPO of its securities or when it is involved in a merger, tender
offer or acquisition.
Warburg has experience in researching smaller companies, companies in the
early stages of development and venture capital-financed companies. Its team of
analysts, led by Elizabeth Dater, portfolio manager of the Fund, regularly
monitors portfolio companies whose securities are held by over 250 of the larger
domestic venture capital funds. Ms. Dater, also a portfolio manager of the
Warburg Pincus Post-Venture Capital Fund, has managed post-venture equity
securities in separate accounts for institutions since 1989 and currently
manages over $1 billion of such assets for investment companies and other
institutions. Robert Janis, an associate portfolio manager and research analyst
for the Fund, is also an associate portfolio manager and research analyst for
the Warburg Pincus Post-Venture Capital Fund. Warburg's international equity
management team manages over $5 billion in assets for investment companies and
separate accounts. Managers travel world-wide to meet with corporate management
as well as government and economic leaders. The managers evaluate each company's
value as a going concern as if they were buying the company itself, an approach
similar to that employed by venture capital and post-venture capital investors.
Harold Ehrlich, an associate portfolio manager and research analyst for the
Fund, is also an associate portfolio manager and research analyst for the
Warburg Pincus International Equity Fund and other international Warburg Pincus
Funds.
PRIVATE FUND INVESTMENTS. Up to 10% of the Fund's assets may be invested in
U.S. or foreign private limited partnerships or other investment funds ('Private
Funds') that themselves invest in equity or debt securities of (a) companies in
the venture capital or post-venture capital stages of development or (b)
companies engaged in special situations or changes in corporate control,
including buyouts. In selecting Private Funds for investment, Abbott Capital
Management, L.P., the Fund's sub-investment adviser with respect to Private
Funds ('Abbott'), attempts to invest in a mix
5
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<PAGE>
of Private Funds that will provide an above average internal rate of return
(i.e., the discount rate at which the present value of an investment's future
cash inflows (dividend income and capital gains) are equal to the cost of the
investment). Warburg believes that the Fund's investments in Private Funds
offers individual investors a unique opportunity to participate in venture
capital and other private investment funds, providing access to investment
opportunities typically available only to large institutions and accredited
investors. Although the Fund's investments in Private Funds are limited to a
maximum of 10% of the Fund's assets, these investments are highly speculative
and volatile and may produce gains or losses in this portion of the Fund that
exceed those of the Fund's other holdings and of more mature companies
generally.
Because Private Funds generally are investment companies for purposes of the
Investment Company Act of 1940, as amended (the '1940 Act'), the Fund's ability
to invest in them will be limited. In addition, Fund shareholders will remain
subject to the Fund's expenses while also bearing their pro rata share of the
operating expenses of the Private Funds. The ability of the Fund to dispose of
interests in Private Funds is very limited and will involve the risks described
under 'Risk Factors and Special Considerations -- Non-Publicly Traded
Securities; Rule 144A Securities.' In valuing the Fund's holdings of interests
in Private Funds, the Fund will be relying on the most recent reports provided
by the Private Funds themselves prior to calculation of the Fund's net asset
value. These reports, which are provided on an infrequent basis, often depend on
the subjective valuations of the managers of the Private Funds and, in addition,
would not generally reflect positive or negative subsequent developments
affecting companies held by the Private Fund. See 'Net Asset Value.' Debt
securities held by a Private Fund will tend to be rated below investment grade
and may be rated as low as C by Moody's Investors Service, Inc. ('Moody's') or D
by Standard & Poor's Ratings Services ('S&P'). Securities in these rating
categories are in payment default or have extremely poor prospects of attaining
any investment standing. For a discussion of the risks of investing in below
investment grade debt, see 'Investment Policies -- Below Investment Grade Debt
Securities' in the Statement of Additional Information. For a discussion of the
possible tax consequences of investing in foreign Private Funds, see 'Additional
Information Concerning Taxes -- Investment in Passive Foreign Investment
Companies' in the Statement of Additional Information.
The Fund may also hold non-publicly traded equity securities of companies in
the venture capital and post-venture capital stages of development, such as
those of closely-held companies or private placements of public companies. The
portion of the Fund's assets invested in these non-publicly traded securities
will vary over time depending on investment opportunities and other factors. The
Fund's illiquid assets, including Private Funds and other non-publicly traded
securities, may not exceed 15% of the Fund's net assets.
6
<PAGE>
<PAGE>
OTHER STRATEGIES. The Fund will invest in securities of post-venture capital
companies that are traded on a national securities exchange or in an organized
over-the-counter market, such as The Nasdaq Stock Market, Inc., the Japan
Securities Dealers Association Automated Quotation System ('JASDAQ'), the
European Association of Securities Dealers Automated Quotation ('Easdaq') and
the U.K. Alternative Investment Market ('AIM'). The Fund may invest up to 35% of
its assets in exchange-traded and over-the-counter securities that do not meet
the definition of post-venture capital companies without regard to market
capitalization. Up to 10% of the Fund's assets may be invested, directly or
through Private Funds, in securities of issuers engaged at the time of purchase
in 'special situations,' such as a restructuring or recapitalization; an
acquisition, consolidation, merger or tender offer; a change in corporate
control or investment by a venture capitalist. For temporary defensive purposes,
such as during times of international political or economic uncertainty, all of
the Fund's investments may be made temporarily in the United States.
Warburg believes that opportunities for growth of capital exist in post-
venture capital securities across global markets and that the Fund will provide
access to those opportunities. To attempt to reduce risk, the Fund will
diversify its investments over a broad range of issuers operating in a variety
of industries in various countries. Although the Fund may invest anywhere in the
world, the Fund will not be invested in all countries at all times depending
upon available investments, market conditions and other factors. The Fund may
hold securities of companies of any size, and will not limit capitalization of
companies it selects to invest in. However, due to the nature of the venture
capital to post-venture cycle, the Fund anticipates that the average market
capitalization of companies in which it invests will be less than $1 billion at
the time of investment. Equity securities in which the Fund will invest are
common stock, preferred stock, warrants, securities convertible into or
exchangeable for common stock and partnership interests. The Fund may engage in
a variety of strategies to reduce risk or seek to enhance return, including
currency hedging and engaging in short selling (see 'Certain Investment
Strategies').
PORTFOLIO INVESTMENTS
___________________________________________________________
DEBT SECURITIES. The Fund may invest up to 20% of its total assets in
investment grade debt securities (other than money market obligations) for the
purpose of seeking capital appreciation. The interest income to be derived may
be considered as one factor in selecting debt securities for investment by
Warburg. Because the market value of debt obligations can be expected to vary
inversely to changes in prevailing interest rates, investing in debt obligations
may provide an opportunity for growth of capital when interest rates are
expected to decline. The success of such a strategy is dependent upon Warburg's
ability to accurately forecast changes in interest rates. The market value of
debt obligations may also be expected to vary depending
7
<PAGE>
<PAGE>
upon, among other factors, the ability of the issuer to repay principal and
interest, any change in investment rating and general economic conditions.
A security will be deemed to be investment grade if it is rated within the
four highest grades by Moody's or S&P or, if unrated, is determined to be of
comparable quality by Warburg. Bonds rated in the fourth highest grade have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. Subsequent to
its purchase by the Fund, an issue of securities may cease to be rated or its
rating may be reduced. Neither event will require sale of such securities,
although Warburg will consider such event in its determination of whether the
Fund should continue to hold the securities.
When Warburg believes that a defensive posture is warranted, the Fund may
invest temporarily without limit in investment grade debt obligations and in
domestic and foreign money market obligations, including repurchase agreements.
MONEY MARKET OBLIGATIONS. The Fund is authorized to invest, under normal
market conditions, up to 20% of its total assets in domestic and foreign
short-term (one year or less) and medium-term (five years or less remaining to
maturity) money market obligations and for temporary defensive purposes may
invest in these securities without limit. These instruments consist of
obligations issued or guaranteed by the U.S. government or a foreign government,
its agencies or instrumentalities; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic or foreign banks,
domestic savings and loans and similar institutions) that are high quality
investments or, if unrated, deemed by Warburg to be high quality investments;
commercial paper rated no lower than A-2 by S&P or Prime-2 by Moody's or the
equivalent from another major rating service or, if unrated, of an issuer having
an outstanding, unsecured debt issue then rated within the three highest rating
categories; and repurchase agreements with respect to the foregoing.
Repurchase Agreements. The Fund may invest in repurchase agreement
transactions with member banks of the Federal Reserve System and certain
non-bank dealers. Repurchase agreements are contracts under which the buyer of a
security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under the terms of a typical repurchase agreement,
the Fund would acquire any underlying security for a relatively short period
(usually not more than one week) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will at all times be at least equal to the total amount of the
purchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its
8
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obligations or becomes bankrupt and the Fund is delayed or prevented from
exercising its right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during the
period in which the Fund seeks to assert this right. Warburg, acting under the
supervision of the Fund's Board of Directors (the 'Board'), monitors the
creditworthiness of those bank and non-bank dealers with which the Fund enters
into repurchase agreements to evaluate this risk. A repurchase agreement is
considered to be a loan under the 1940 Act.
Money Market Mutual Funds. Where Warburg believes that it would be beneficial
to the Fund and appropriate considering the factors of return and liquidity, the
Fund may invest up to 5% of its assets in securities of money market mutual
funds that are unaffiliated with the Fund, Warburg or the Fund's
co-administrator, PFPC Inc. ('PFPC'). As a shareholder in any mutual fund, the
Fund will bear its ratable share of the mutual fund's expenses, including
management fees, and will remain subject to payment of the Fund's administration
fees and other expenses with respect to assets so invested.
U.S. GOVERNMENT SECURITIES. U.S. government securities in which the Fund may
invest include: direct obligations of the U.S. Treasury and obligations issued
by U.S. government agencies and instrumentalities, including instruments that
are supported by the full faith and credit of the United States, instruments
that are supported by the right of the issuer to borrow from the U.S. Treasury
and instruments that are supported by the credit of the instrumentality.
CONVERTIBLE SECURITIES. Convertible securities in which the Fund may invest,
including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than nonconvertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds and, in addition, fluctuates in relation to
the underlying common stock.
WARRANTS. The Fund may invest up to 10% of its total assets in warrants.
Warrants are securities that give the holder the right, but not the obligation,
to purchase equity issues of the company issuing the warrants, or a related
company, at a fixed price either on a date certain or during a set period.
RISK FACTORS AND SPECIAL CONSIDERATIONS
_________________________________________
Investing in common stocks and securities convertible into common stocks is
subject to the inherent risk of fluctuations in the prices of such securities.
For certain additional risks relating to the Fund's investments, see 'Portfolio
Investments' beginning at page 7 and 'Certain Investment Strategies' beginning
at page 12.
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EMERGING GROWTH AND SMALL COMPANIES. Investing in securities of emerging
growth and small-sized companies may involve greater risks since these
securities may have limited marketability and, thus, may be more volatile.
Because small- and medium-sized companies normally have fewer shares outstanding
than larger companies, it may be more difficult for the Fund to buy or sell
significant amounts of such shares without an unfavorable impact on prevailing
prices. In addition, small- and medium-sized companies are typically subject to
a greater degree of changes in earnings and business prospects than are larger,
more established companies. There is typically less publicly available
information concerning smaller companies than for larger, more established ones.
Securities of issuers in 'special situations' also may be more volatile, since
the market value of these securities may decline in value if the anticipated
benefits do not materialize. Companies in 'special situations' include, but are
not limited to, companies involved in an acquisition or consolidation;
reorganization; recapitalization; merger, liquidation or distribution of cash,
securities or other assets; a tender or exchange offer; a breakup or workout of
a holding company; or litigation which, if resolved favorably, would improve the
value of the companies' securities. Although investing in securities of emerging
growth companies or 'special situations' offers potential for above-average
returns if the companies are successful, the risk exists that the companies will
not succeed and the prices of the companies' shares could significantly decline
in value. Therefore, an investment in the Fund may involve a greater degree of
risk than an investment in other mutual funds that seek capital appreciation by
investing exclusively in better-known, larger companies.
NON-PUBLICLY TRADED SECURITIES; RULE 144A SECURITIES. The Fund may purchase
securities that are not registered under the Securities Act of 1933, as amended
(the 'Securities Act'), but that can be sold to 'qualified institutional buyers'
in accordance with Rule 144A under the Securities Act ('Rule 144A Securities').
An investment in Rule 144A Securities will be considered illiquid and therefore
subject to the Fund's limitation on the purchase of illiquid securities, unless
the Board determines on an ongoing basis that an adequate trading market exists
for the security. In addition to an adequate trading market, the Board will
consider factors such as trading activity, availability of reliable price
information and other relevant information in determining whether a Rule 144A
Security is liquid. This investment practice could have the effect of increasing
the level of illiquidity in the Fund to the extent that qualified institutional
buyers become uninterested for a time in purchasing Rule 144A Securities. The
Board will carefully monitor any investments by the Fund in Rule 144A
Securities. The Board may adopt guidelines and delegate to Counsellors the daily
function of determining and monitoring the liquidity of Rule 144A Securities,
although the Board will retain ultimate responsibility for any determination
regarding liquidity.
Non-publicly traded securities (including interests in Private Funds and Rule
144A Securities) may involve a high degree of business and financial
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risk and may result in substantial losses. These securities may be less liquid
than publicly traded securities, and the Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized on such sales could be less than those originally paid by the Fund.
Further, companies whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements applicable to
companies whose securities are publicly traded. The Fund's investment in
illiquid securities is subject to the risk that should the Fund desire to sell
any of these securities when a ready buyer is not available at a price that is
deemed to be representative of their value, the value of the Fund's net assets
could be adversely affected.
WARRANTS. At the time of issue, the cost of a warrant is substantially less
than the cost of the underlying security itself, and price movements in the
underlying security are generally magnified in the price movements of the
warrant. This effect enables the investor to gain exposure to the underlying
security with a relatively low capital investment but increases an investor's
risk in the event of a decline in the value of the underlying security and can
result in a complete loss of the amount invested in the warrant. In addition,
the price of a warrant tends to be more volatile than, and may not correlate
exactly to, the price of the underlying security. If the market price of the
underlying security is below the exercise price of the warrant on its expiration
date, the warrant will generally expire without value.
EMERGING MARKETS. The Fund may invest in securities of issuers located in
less developed countries considered to be 'emerging markets.' Investing in
securities of issuers located in emerging markets involves not only the risks
described below with respect to investing in foreign securities, but also other
risks, including exposure to economic structures that are generally less diverse
and mature than, and to political systems that can be expected to have less
stability than, those of developed countries. Other characteristics of emerging
markets that may affect investment there include certain national policies that
may restrict investment by foreigners in issuers or industries deemed sensitive
to relevant national interests and the absence of developed legal structures
governing private and foreign investments and private property. The typically
small size of the markets for securities of issuers located in emerging markets
and the possibility of a low or nonexistent volume of trading in those
securities may also result in a lack of liquidity and in price volatility of
those securities.
PORTFOLIO TRANSACTIONS AND TURNOVER RATE
________________________________________
The Fund will attempt to purchase securities with the intent of holding them
for investment but may purchase and sell portfolio securities whenever Warburg
believes it to be in the best interests of the Fund. The Fund will not consider
portfolio turnover rate a limiting factor in making investment decisions
consistent with its investment objective and policies. Higher portfolio turnover
rates (100% or more) may result in dealer mark ups or
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underwriting commissions as well as other transaction costs, including
correspondingly higher brokerage commissions. In addition, short-term gains
realized from portfolio turnover may be taxable to shareholders as ordinary
income. See 'Dividends, Distributions and Taxes -- Taxes' below and 'Investment
Policies -- Portfolio Transactions' in the Statement of Additional Information.
All orders for transactions in securities or options on behalf of the Fund
are placed by Warburg with broker-dealers that it selects, including Counsellors
Securities Inc., the Fund's distributor ('Counsellors Securities'). The Fund may
utilize Counsellors Securities in connection with a purchase or sale of
securities when Warburg believes that the charge for the transaction does not
exceed usual and customary levels and when doing so is consistent with
guidelines adopted by the Board.
CERTAIN INVESTMENT STRATEGIES
___________________________________________________
Although there is no intention of doing so during the coming year, the Fund
is authorized to engage in the following investment strategies: (i) purchasing
securities on a when-issued basis and purchasing or selling securities for
delayed-delivery, (ii) lending portfolio securities and (iii) entering into
reverse repurchase agreements and dollar rolls. Detailed information concerning
these strategies and their related risks is contained below and in the Statement
of Additional Information.
FOREIGN SECURITIES. There are certain risks involved in investing in
securities of companies and governments of foreign nations which are in addition
to the usual risks inherent in domestic investments. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers, the
lack of uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements that are often generally less rigorous
than those applied in the United States. Moreover, securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of securities
purchased or sold. In addition, with respect to certain foreign countries, there
is the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Fund,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that would reduce the net yield on such securities.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments positions. Investment in foreign securities will also result in higher
operating expenses
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due to the cost of converting foreign currency into U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, higher valuation and communications costs
and the expense of maintaining securities with foreign custodians.
OPTIONS, FUTURES AND CURRENCY TRANSACTIONS. At the discretion of Warburg, the
Fund may, but is not required to, engage in a number of strategies involving
options, futures and forward currency contracts. These strategies, commonly
referred to as 'derivatives,' may be used (i) for the purpose of hedging against
a decline in value of the Fund's current or anticipated portfolio holdings, (ii)
as a substitute for purchasing or selling portfolio securities or (iii) to seek
to generate income to offset expenses or increase return. TRANSACTIONS THAT ARE
NOT CONSIDERED HEDGING SHOULD BE CONSIDERED SPECULATIVE AND MAY SERVE TO
INCREASE THE FUND'S INVESTMENT RISK. Transaction costs and any premiums
associated with these strategies, and any losses incurred, will affect the
Fund's net asset value and performance. Therefore, an investment in the Fund may
involve a greater risk than an investment in other mutual funds that do not
utilize these strategies. The Fund's use of these strategies may be limited by
position and exercise limits established by securities and commodities exchanges
and the NASD and by the Internal Revenue Code of 1986, as amended (the 'Code').
Securities and Stock Index Options. The Fund may write covered call and put
options on up to 25% of the net asset value of the stock and debt securities in
its portfolio and will realize fees (referred to as 'premiums') for granting the
rights evidenced by the options. The Fund may utilize up to 10% of its assets to
purchase options on stocks and debt securities that are traded on U.S. and
foreign exchanges, as well as over-the-counter ('OTC') options. The purchaser of
a put option on a security has the right to compel the purchase by the writer of
the underlying security, while the purchaser of a call option on a security has
the right to purchase the underlying security from the writer. In addition to
purchasing and writing options on securities, the Fund may also utilize up to
10% of its total assets to purchase exchange-listed and OTC put and call options
on stock indexes, and may also write such options. A stock index measures the
movement of a certain group of stocks by assigning relative values to the common
stocks included in the index.
The potential loss associated with purchasing an option is limited to the
premium paid, and the premium would partially offset any gains achieved from its
use. However, for an option writer the exposure to adverse price movements in
the underlying security or index is potentially unlimited during the exercise
period. Writing securities options may result in substantial losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or at
less advantageous prices, limit the amount of appreciation the Fund could
realize on its investments or require the Fund to hold securities it would
otherwise sell.
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Futures Contracts and Related Options. The Fund may enter into foreign
currency, interest rate and stock index futures contracts and purchase and write
(sell) related options that are traded on an exchange designated by the
Commodity Futures Trading Commission (the 'CFTC') or, if consistent with CFTC
regulations, on foreign exchanges. These futures contracts are standardized
contracts for the future delivery of foreign currency or an interest rate
sensitive security or, in the case of stock index and certain other futures
contracts, are settled in cash with reference to a specified multiplier times
the change in the specified index, exchange rate or interest rate. An option on
a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract.
Aggregate initial margin and premiums required to establish positions other
than those considered by the CFTC to be 'bona fide hedging' will not exceed 5%
of the Fund's net asset value, after taking into account unrealized profits and
unrealized losses on any such contracts. Although the Fund is limited in the
amount of assets that may be invested in futures transactions, there is no
overall limit on the percentage of Fund assets that may be at risk with respect
to futures activities.
Currency Exchange Transactions. The Fund will conduct its currency exchange
transactions either (i) on a spot (i.e., cash) basis at the rate prevailing in
the currency exchange market, (ii) through entering into futures contracts or
options on futures contracts (as described above), (iii) through entering into
forward contracts to purchase or sell currency or (iv) by purchasing
exchange-traded currency options. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date at a price
set at the time of the contract. An option on a foreign currency operates
similarly to an option on a security. Risks associated with currency forward
contracts and purchasing currency options are similar to those described in this
Prospectus for futures contracts and securities and stock index options. In
addition, the use of currency transactions could result in losses from the
imposition of foreign exchange controls, suspension of settlement or other
governmental actions or unexpected events.
Hedging Considerations. The Fund may engage in options, futures and currency
transactions for, among other reasons, hedging purposes. A hedge is designed to
offset a loss on a portfolio position with a gain in the hedge position; at the
same time, however, a properly correlated hedge will result in a gain in the
portfolio position being offset by a loss in the hedge position. As a result,
the use of options, futures contracts and currency exchange transactions for
hedging purposes could limit any potential gain from an increase in value of the
position hedged. In addition, the movement in the portfolio position hedged may
not be of the same magnitude as movement in the hedge. The Fund will engage in
hedging transactions only when deemed advisable by Warburg, and successful use
of hedging transactions will depend on Warburg's ability to correctly predict
movements in the hedge and the hedged position and the correlation between them,
which could prove to
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be inaccurate. Even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or trends.
Additional Considerations. To the extent that the Fund engages in the
strategies described above, the Fund may experience losses greater than if these
strategies had not been utilized. In addition to the risks described above,
these instruments may be illiquid and/or subject to trading limits, and the Fund
may be unable to close out an option or futures position without incurring
substantial losses, if at all. The Fund is also subject to the risk of a default
by a counterparty to an off-exchange transaction.
Asset Coverage. The Fund will comply with applicable regulatory requirements
designed to eliminate any potential for leverage with respect to options written
by the Fund on securities and indexes; currency, interest rate and stock index
futures contracts and options on these futures contracts; and forward currency
contracts. The use of these strategies may require that the Fund maintain cash
or liquid securities in a segregated account with its custodian or a designated
sub-custodian to the extent the Fund's obligations with respect to these
strategies are not otherwise 'covered' through ownership of the underlying
security, financial instrument or currency or by other portfolio positions or by
other means consistent with applicable regulatory policies. Segregated assets
cannot be sold or transferred unless equivalent assets are substituted in their
place or it is no longer necessary to segregate them. As a result, there is a
possibility that segregation of a large percentage of the Fund's assets could
impede portfolio management or the Fund's ability to meet redemption requests or
other current obligations.
SHORT SELLING. The Fund may from time to time sell securities short. A short
sale is a transaction in which the Fund sells securities it does not own in
anticipation of a decline in the market price of the securities. The current
market value of the securities sold short (excluding short sales 'against the
box') will not exceed 10% of the Fund's assets.
To deliver the securities to the buyer, the Fund must arrange through a
broker to borrow the securities and, in so doing, the Fund becomes obligated to
replace the securities borrowed at their market price at the time of
replacement, whatever that price may be. The Fund will make a profit or incur a
loss as a result of a short sale depending on whether the price of the security
decreases or increases between the date of the short sale and the date on which
the Fund purchases the security to replace the borrowed securities that have
been sold. The amount of any loss would be increased (and any gain decreased) by
any premium or interest the Fund is required to pay in connection with a short
sale.
The Fund's obligation to replace the securities borrowed in connection with a
short sale will be secured by cash or liquid securities deposited as collateral
with the broker. In addition, the Fund will place in a segregated account with
its custodian or a qualified subcustodian an amount of cash or liquid securities
equal to the difference, if any, between (i) the market value of the securities
sold at the time they were sold short and (ii) any cash or liquid
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securities deposited as collateral with the broker in connection with the short
sale (not including the proceeds of the sort sale). Until it replaces the
borrowed securities, the Fund will maintain the segregated account daily at a
level so that (a) the amount deposited in the account plus the amount deposited
with the broker (not including the proceeds from the short sale) will equal the
current market value of the securities sold short and (b) the amount deposited
in the account plus the amount deposited with the broker (not including the
proceeds from the short sale) will not be less than the market value of the
securities at the time they were sold short.
Short Sales Against the Box. The Fund may, in addition to engaging in short
sales as described above, enter into a short sale of securities such that when
the short position is open the Fund owns an equal amount of the securities sold
short or owns preferred stocks or debt securities, convertible or exchangeable
without payment of further consideration, into an equal number of securities
sold short. This kind of short sale, which is referred to as one 'against the
box,' may be entered into by the Fund to, for example, lock in a sale price for
a security the Fund does not wish to sell immediately or to postpone a gain or
loss for federal income tax purposes. The Fund will deposit, in a segregated
account with its custodian or a qualified subcustodian, the securities sold
short or convertible or exchangeable preferred stocks or debt securities in
connection with short sales against the box. Not more than 10% of the Fund's net
assets (taken at current value) may be held as collateral for short sales
against the box at any one time.
The extent to which the Fund may make short sales may be limited by Code
requirements for qualification as a regulated investment company. See
'Dividends, Distributions and Taxes' for other tax considerations applicable to
short sales.
INVESTMENT GUIDELINES
___________________________________________________________
The Fund may invest up to 15% of its net assets in securities with
contractual or other restrictions on resale and other investments that are not
readily marketable, including (i) securities issued as part of a privately
negotiated transaction between an issuer and one or more purchasers, (ii)
repurchase agreements with maturities greater than seven days; (iii) time
deposits maturing in more than seven calendar days; and (iv) certain Rule 144A
Securities. The Fund may borrow from banks and enter into reverse repurchase
agreements for temporary or emergency purposes, such as meeting anticipated
redemption requests, provided that reverse repurchase agreements and any other
borrowing by the Fund may not exceed 30% of the Fund's total assets. The Fund
may pledge its assets to the extent necessary to secure permitted borrowings.
Whenever borrowings (including reverse repurchase agreements) exceed 5% of the
value of the Fund's net assets, the Fund will not make any investments
(including roll-overs). Except for the limitations on borrowing, the investment
guidelines set forth in this paragraph may be changed at any time without
shareholder consent by vote
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of the Board, subject to the limitations contained in the 1940 Act. A complete
list of investment restrictions that the Fund has adopted identifying additional
restrictions that cannot be changed without the approval of the majority of the
Fund's outstanding shares is contained in the Statement of Additional
Information.
MANAGEMENT OF THE FUND
__________________________________________________________
INVESTMENT ADVISERS. The Fund employs Warburg as investment adviser to the
Fund and Abbott as the sub-investment adviser to the Fund. Warburg, subject to
the control of the Fund's officers and the Board, manages the investment and
reinvestment of the assets of the Fund in accordance with its investment
objective and stated investment policies. Warburg makes investment decisions for
the Fund, places orders to purchase or sell securities on behalf of the Fund and
supervises the activities of Abbott. Warburg also employs a support staff of
management personnel to provide services to the Fund and furnishes the Fund with
office space, furnishings and equipment. Abbott, in accordance with the
investment objective and policies of the Fund, makes investment decisions for
the Fund regarding investments in Private Funds, effects transactions in Private
Funds on behalf of the Fund and assists in other administrative functions
relating to investments in Private Funds.
For the services provided by Warburg, the Fund pays Warburg a fee calculated
at an annual rate of 1.25% of the Fund's average daily net assets, out of which
Warburg pays Abbott for sub-advisory services. Warburg and the Fund's
co-administrators may voluntarily waive a portion of their fees from time to
time and temporarily limit the expenses to be borne by the Fund.
Warburg. Warburg is a professional investment counselling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of January 31,
1997, Warburg managed approximately $17.9 billion of assets, including
approximately $10.7 billion of investment company assets. Incorporated in 1970,
Warburg is a wholly owned subsidiary of Warburg, Pincus Counsellors G.P.
('Counsellors G.P.'), a New York general partnership, which itself is controlled
by Warburg, Pincus & Co. ('WP&Co.'), also a New York general partnership. Lionel
I. Pincus, the managing partner of WP&Co, may be deemed to control both WP&Co.
and Warburg. Counsellors G.P. has no business other than being a holding company
of Warburg and its subsidiaries. Warburg's address is 466 Lexington Avenue, New
York, New York 10017-3147.
Abbott. Abbott, which was founded in 1986, is an independent specialized
investment firm with assets under management of approximately $3.5 billion.
Abbott is a registered investment adviser which concentrates on venture capital,
buyout and special situations partnership investments. Abbott's management team
provides full-service private equity programs to clients. Abbott's principal
office is located at 50 Rowes Wharf, Suite 240, Boston, Massachusetts
02110-3328.
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For tax and other business purposes, the partners of Abbott plan to merge
Abbott with and into, or transfer all of the assets of Abbott to, a newly-formed
Delaware limited liability company ('Abbott LLC'), with Abbott LLC to survive
and assume all of the liabilities of Abbott as part of the transaction. This
transaction, which is expected to occur before May 31, 1997 and is subject to
certain contingencies, will not involve any material change in the management,
ownership, personnel, operations or activities of Abbott. The present partners
of Abbott will be members of Abbott LLC and will hold officerships and other
positions in Abbott LLC carrying responsibilities generally commensurate with
their present responsibilities. Pursuant to a new sub-advisory agreement, Abbott
LLC, as successor to Abbott, will perform the services then being performed by
Abbott. The new sub-advisory agreement will be substantially identical to the
current sub-advisory agreement among Warburg, the Fund and Abbott, except for
the change of the service provider from Abbott to Abbott LLC.
PORTFOLIO MANAGER. The portfolio manager of the Fund is Elizabeth B. Dater.
Ms. Dater is a senior managing director of Warburg and has been a portfolio
manager of Warburg since 1978.
Harold W. Ehrlich, Robert S. Janis and Christopher M. Nawn are associate
portfolio managers and research analysts for the Fund. Mr. Erhlich is a managing
director of Warburg and has been with Warburg since February 1995, before which
time he was a senior vice president, portfolio manager and analyst at Templeton
Investment Counsel Inc. Mr. Janis is a senior vice president of Warburg and has
been with Warburg since October 1994, before which time he was a vice president
and senior research analyst at U.S. Trust Company of New York. Mr. Nawn is also
a senior vice president of Warburg and has been with Warburg since September
1994, before which time he was a senior sector analyst and portfolio manager at
the Dreyfus Corporation.
Raymond L. Held and Gary H. Solomon, investment managers and general partners
of Abbott, manage the Fund's investments in Private Funds.
CO-ADMINISTRATORS. The Fund employs Counsellors Funds Service, Inc.
('Counsellors Service'), a wholly owned subsidiary of Warburg, as a co-
administrator. As co-administrator, Counsellors Service provides shareholder
liaison services to the Fund, including responding to shareholder inquiries and
providing information on shareholder investments. Counsellors Service also
performs a variety of other services, including furnishing certain executive and
administrative services, acting as liaison between the Fund and its various
service providers, furnishing corporate secretarial services, which include
preparing materials for meetings of the Board, preparing proxy statements and
annual, semiannual and quarterly reports, assisting in the preparation of tax
returns and monitoring and developing compliance procedures for the Fund. As
compensation, the Fund pays Counsellors Service a fee calculated at an annual
rate of .10% of the Fund's average daily net assets.
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The Fund employs PFPC, an indirect, wholly owned subsidiary of PNC Bank
Corp., as a co-administrator. As a co-administrator, PFPC calculates the Fund's
net asset value, provides all accounting services for the Fund and assists in
related aspects of the Fund's operations. As compensation the Fund pays PFPC a
fee calculated at an annual rate of .12% of the Fund's first $250 million in
average daily net assets, .10% of the next $250 million in average daily net
assets, .08% of the next $250 million in average daily net assets, and .05% of
average daily net assets over $750 million, exclusive of out-of-pocket expenses.
PFPC has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware
19809.
CUSTODIANS. PNC Bank, National Association ('PNC') serves as custodian of the
Fund's U.S. assets and Fiduciary Trust Company International ('Fiduciary')
serves as custodian of the Fund's non-U.S. assets. Like PFPC, PNC is a
subsidiary of PNC Bank Corp. and its principal business address is 1600 Market
Street, Philadelphia, Pennsylvania 19103. Fiduciary's principal business address
is Two World Trade Center, New York, New York 10048.
TRANSFER AGENT. State Street Bank and Trust Company ('State Street') also
serves as shareholder servicing agent, transfer agent and dividend disbursing
agent for the Fund. It has delegated to Boston Financial Data Services, Inc., a
50% owned subsidiary ('BFDS'), responsibility for most shareholder servicing
functions. State Street's principal business address is 225 Franklin Street,
Boston, Massachusetts 02110. BFDS's principal business address is 2 Heritage
Drive, North Quincy, Massachusetts 02171.
DISTRIBUTOR. Counsellors Securities serves as distributor of the shares of
the Fund. Counsellors Securities is a wholly owned subsidiary of Warburg and is
located at 466 Lexington Avenue, New York, New York 10017-3147. No compensation
is payable by the Advisor Shares to Counsellors Securities for distribution
services.
Warburg or its affiliates may, at their own expense, provide promotional
incentives to parties who support the sale of shares of the Fund, consisting of
securities dealers who have sold Fund shares or others, including banks and
other financial institutions, under special arrangements. In some instances,
these incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or expected sale of
significant amounts of Fund shares.
DIRECTORS AND OFFICERS. The officers of the Fund manage its day-to-day
operations and are directly responsible to the Board. The Board sets broad
policies for the Fund and chooses its officers. A list of the Directors and
officers of the Fund and a brief statement of their present positions and
principal occupations during the past five years is set forth in the Statement
of Additional Information.
HOW TO PURCHASE SHARES
__________________________________________________________
Individual investors may only purchase Warburg Pincus Advisor Fund shares
through Institutions. The Fund reserves the right to make Advisor Shares
available to other investors in the future. The Fund also reserves the
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right to suspend the offering of Advisor Shares for a period of time or to
reject any specific purchase order. References in this Prospectus to
shareholders or investors are generally to Institutions as the record holders of
the Advisor Shares.
Each Institution separately determines the rules applicable to its customers
investing in the Fund, including minimum initial and subsequent investment
requirements and the procedures to be followed to effect purchases, redemptions
and exchanges of Advisor Shares. There is no minimum amount of initial or
subsequent purchases of Advisor Shares imposed on Institutions, although the
Fund reserves the right to impose minimums in the future.
Orders for the purchase of Advisor Shares are placed with an Institution by
its customers. The Institution is responsible for the prompt transmission of the
order to the Fund or its agent.
Institutions may purchase Advisor Shares by telephoning the Fund and sending
payment by wire. After telephoning (800) 369-2728 for instructions, an
Institution should then wire federal funds to Counsellors Securities using the
following wire address:
State Street Bank and Trust Co.
225 Franklin St.
Boston, MA 02101
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
Warburg Pincus Advisor Global Post-Venture Capital Fund
DDA# 9904-649-2
[Shareowner name]
[Shareowner account number]
Orders by wire will not be accepted until a completed account application has
been received in proper form, and an account number has been established. If a
telephone order is received by the close of regular trading on the New York
Stock Exchange ('NYSE') (currently 4:00 p.m., Eastern time) and payment by wire
is received on the same day in proper form in accordance with instructions set
forth above, the shares will be priced according to the net asset value of the
Fund on that day and are entitled to dividends and distributions beginning on
that day. If payment by wire is received in proper form by the close of the NYSE
without a prior telephone order, the purchase will be priced according to the
net asset value of the Fund on that day and is entitled to dividends and
distributions beginning on that day. However, if a wire in proper form that is
not preceded by a telephone order is received after the close of regular trading
on the NYSE, the payment will be held uninvested until the order is effected at
the close of business on the next business day. Payment for orders that are not
accepted will be returned after prompt inquiry. Certain organizations or
Institutions that have entered into agreements with the Fund or its agent may
enter confirmed purchase orders on behalf of customers, with payment to follow
no later than the Fund's pricing on the following business day. If payment is
not received by such time, the organization could be held liable for resulting
fees or losses.
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After an investor has made his initial investment, additional shares may be
purchased at any time by mail or by wire in the manner outlined above. Wire
payments for initial and subsequent investments should be preceded by an order
placed with the Fund or its agent and should clearly indicate the investor's
account number. In the interest of economy and convenience, physical
certificates representing shares in the Fund are not normally issued.
The Fund understands that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals may impose certain conditions on their clients or customers that
invest in the Fund, which are in addition to or different than those described
in this Prospectus, and may charge their clients or customers direct fees.
Certain features of the Fund, such as the initial and subsequent investment
minimums, redemption fees and certain trading restrictions, may be modified or
waived in these programs, and administrative charges may be imposed for the
services rendered. Therefore, a client or customer should contact the
organization acting on his behalf concerning the fees (if any) charged in
connection with a purchase or redemption of Fund shares and should read this
Prospectus in light of the terms governing his account with the organization.
GENERAL. The Fund reserves the right to reject any specific purchase order.
The Fund may discontinue sales of its shares if management believes that a
substantial further increase in assets may adversely affect the Fund's ability
to achieve its investment objective. In such event, however, it is anticipated
that existing shareholders would be permitted to continue to authorize
investment in the Fund and to reinvest any dividends or capital gains
distributions.
HOW TO REDEEM AND EXCHANGE SHARES
_______________________________________________
REDEMPTION OF SHARES. An investor of the Fund may redeem (sell) shares on any
day that the Fund's net asset value is calculated (see 'Net Asset Value' below).
Requests for the redemption (or exchange) of Advisor Shares are placed with an
Institution by its customers, which is then responsible for the prompt
transmission of this request to the Fund or its agent.
Institutions may redeem Advisor Shares by calling Warburg Pincus Advisor
Funds at (800) 369-2728. An investor making a telephone withdrawal should state
(i) the name of the Fund, (ii) the account number of the Fund, (iii) the name of
the investor(s) appearing on the Fund's records, (iv) the amount to be withdrawn
and (v) the name of the person requesting the redemption.
After receipt of the redemption request the redemption proceeds will be wired
to the investor's bank as indicated in the account application previously filled
out by the investor. The Fund does not currently impose a service charge for
effecting wire transfers but reserves the right to do so in the future. During
periods of significant economic or market change, telephone redemptions may be
difficult to implement. If an investor is unable to contact Warburg Pincus
Advisor Funds by telephone, an investor may deliver the redemption request to
Warburg Pincus Advisor Funds by mail at Warburg Pincus Advisor Funds, P.O. Box
9030, Boston, Massachusetts 02205-9030.
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If a redemption order is received by the Fund or its agent prior to the close
of regular trading on the NYSE, the redemption order will be effected at the net
asset value per share as determined on that day. If a redemption order is
received after the close of regular trading on the NYSE, the redemption order
will be effected at the net asset value as next determined. Except as noted
above, redemption proceeds will normally be wired to an investor on the next
business day following the date a redemption order is effected. If, however, in
the judgment of Warburg, immediate payment would adversely affect the Fund, it
reserves the right to pay the redemption proceeds within seven days after the
redemption order is effected. Furthermore, the Fund may suspend the right of
redemption or postpone the date of payment upon redemption (as well as suspend
or postpone the recordation of an exchange of shares) for such periods as are
permitted under the 1940 Act.
The proceeds paid upon redemption may be more or less than the amount
invested depending upon a share's net asset value at the time of redemption. If
an investor redeems all the shares in his account, all dividends and
distributions declared up to and including the date of redemption are paid along
with the proceeds of the redemption.
EXCHANGE OF SHARES. An Institution may exchange Advisor Shares of the Fund
for Advisor Shares of the other Warburg Pincus Advisor Funds at their respective
net asset values. Exchanges may be effected in the manner described under
'Redemption of Shares' above. If an exchange request is received by Warburg
Pincus Advisor Funds or their agent prior to the close of regular trading on the
NYSE, the exchange will be made at each fund's net asset value determined at the
end of that business day. Exchanges may be effected without a sales charge. The
exchange privilege may be modified or terminated at any time upon 60 days'
notice to shareholders.
The exchange privilege is available to shareholders residing in any state in
which Advisor Shares being acquired may legally be sold. When an investor
effects an exchange of shares, the exchange is treated for federal income tax
purposes as a redemption. Therefore, the investor may realize a taxable gain or
loss in connection with the exchange. Investors wishing to exchange Advisor
Shares of the Fund for shares in another Warburg Pincus Advisor Fund should
review the prospectus of the other fund prior to making an exchange. For further
information regarding the exchange privilege or to obtain a current prospectus
for another Warburg Pincus Advisor Fund, an investor should contact Warburg
Pincus Advisor Funds at (800) 369-2728.
DIVIDENDS, DISTRIBUTIONS AND TAXES
______________________________________________
DIVIDENDS AND DISTRIBUTIONS. The Fund calculates its dividends from net
investment income. Net investment income includes interest accrued and dividends
earned on the Fund's portfolio securities for the applicable period less
applicable expenses. The Fund declares dividends from its net investment income
and net realized short-term and long-term capital gains annually and pays them
in the calendar year in which they are declared, generally in November or
December. Net investment income earned on weekends and
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when the NYSE is not open will be computed as of the next business day. Unless
an investor instructs the Fund to pay dividends or distributions in cash,
dividends and distributions will automatically be reinvested in additional
Advisor Shares of the Fund at net asset value. The election to receive dividends
in cash may be made on the account application or, subsequently, by writing to
Warburg Pincus Advisor Funds at the address set forth under 'How to Purchase
Shares' or by calling Warburg Pincus Advisor Funds at (800) 369-2728.
The Fund may be required to withhold for U.S. federal income taxes 31% of all
distributions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the U.S. Internal Revenue Service that they are
subject to backup withholding.
TAXES. The Fund intends to qualify each year as a 'regulated investment
company' within the meaning of the Code. The Fund, if it qualifies as a
regulated investment company, will be subject to a 4% non-deductible excise tax
measured with respect to certain undistributed amounts of ordinary income and
capital gain. The Fund expects to pay such additional dividends and to make such
additional distributions as are necessary to avoid the application of this tax.
Dividends paid from net investment income and distributions of net realized
short-term capital gains are taxable to investors as ordinary income, and
distributions derived from net realized long-term capital gains are taxable to
investors as long-term capital gains, in each case regardless of the length of
time shareholders have held the Advisor Shares or whether received in cash or
reinvested in additional Advisor Shares. As a general rule, an investor's gain
or loss on a sale or redemption of its Fund shares will be a long-term capital
gain or loss if it has held its shares for more than one year and will be a
short-term capital gain or loss if it has held its shares for one year or less.
However, any loss realized upon the sale or redemption of shares within six
months from the date of their purchase will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain during such six-month period with respect to such shares. Investors may be
proportionately liable for taxes on income and gains of the Fund, but investors
not subject to tax on their income will not be required to pay tax on amounts
distributed to them. The Fund's investment activities, including short sales of
securities, will not result in unrelated business taxable income to a tax-exempt
investor. A Fund's dividends may qualify for the dividends received deduction
for corporations to the extent they are derived from dividends attributable to
certain types of stock issued by U.S. domestic corporations.
Certain provisions of the Code may require that a gain recognized by the Fund
upon the closing of a short sale be treated as a short-term capital gain, and
that a loss recognized by the Fund upon the closing of a short sale be treated
as a long-term capital loss, regardless of the amount of time that the
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Fund held the securities used to close the short sale. The Fund's use of short
sales may also affect the holding periods of certain securities held by the Fund
if such securities are 'substantially identical' to securities used by the Fund
to close the short sale. The Fund's short selling activities will not result in
unrelated business taxable income to a tax-exempt investor.
Dividends and interest received by the Fund may be subject to withholding and
other taxes imposed by foreign countries. However, tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes. If the Fund
qualifies as a regulated investment company, if certain asset and distribution
requirements are satisfied and if more than 50% of the Fund's total assets at
the close of its fiscal year consist of stock or securities of foreign
corporations, the Fund may elect for U.S. income tax purposes to treat foreign
income taxes paid by it as paid by its shareholders. The Fund may qualify for
and make this election in some, but not necessarily all, of its taxable years.
If the Fund were to make an election, shareholders of the Fund would be required
to take into account an amount equal to their pro rata portions of such foreign
taxes in computing their taxable income and then treat an amount equal to those
foreign taxes as a U.S. federal income tax deduction or as a foreign tax credit
against their U.S. federal income taxes. Shortly after any year for which it
makes such an election, the Fund will report to its shareholders the amount per
share of such foreign tax that must be included in each shareholder's gross
income and the amount which will be available for the deduction or credit. No
deduction for foreign taxes may be claimed by a shareholder who does not itemize
deductions. Certain limitations will be imposed on the extent to which the
credit (but not the deduction) for foreign taxes may be claimed.
GENERAL. Statements as to the tax status of each investor's dividends and
distributions are mailed annually. Each investor will also receive, if
applicable, various written notices after the close of the Fund's prior taxable
year with respect to certain dividends and distributions which were received
from the Fund during the Fund's prior taxable year. Investors should consult
their own tax advisers with specific reference to their own tax situations,
including their state and local tax liabilities. Individuals investing in the
Fund through Institutions should consult those Institutions or their own tax
advisers regarding the tax consequences of investing in the Fund.
NET ASSET VALUE
_________________________________________________________________
The Fund's net asset value per share is calculated as of the close of regular
trading on the NYSE (currently 4:00 p.m., Eastern time) on each business day,
Monday through Friday, except on days when the NYSE is closed. The NYSE is
currently scheduled to be closed on New Year's Day, Washington's Birthday, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day
and Christmas Day, and on the preceding Friday or subsequent Monday when one of
these holidays falls on a Saturday or Sunday, respectively. The net asset value
per share of the Fund generally changes each day.
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The net asset value per Advisor Share of the Fund is computed by adding the
Advisor Shares' pro rata share of the value of the Fund's assets, deducting the
Advisor Shares' pro rata share of the Fund's liabilities and the liabilities
specifically allocated to Advisor Shares and then dividing the result by the
total number of outstanding Advisor Shares.
Securities listed on a U.S. securities exchange (including securities traded
through the Nasdaq National Market System) or foreign securities exchange or
traded in an over-the-counter market will be valued at the most recent sale
price when the valuation is made. Options and futures contracts will be valued
similarly. Debt obligations that mature in 60 days or less from the valuation
date are valued on the basis of amortized cost, unless the Board determines that
using this valuation method would not reflect the investments' value.
Investments in Private Funds will be valued initially at cost and, thereafter,
in accordance with periodic reports received by Abbott from the Private Funds
(generally quarterly). Because the issuers of securities held by Private Funds
are generally not subject to the reporting requirements of the federal
securities laws, interim changes in value of investments in Private Funds will
not generally be reflected in the Fund's net asset value. However, Warburg will
report to the Board of Directors information about certain holdings of Private
Funds that, in its judgment, could have a material impact on the valuation of a
Private Fund. The Board of Directors will take these reports into account in
valuing Private Funds. Securities, options and futures contracts for which
market quotations are not readily available and other assets, including Private
Funds, will be valued at their fair value as determined in good faith pursuant
to consistently applied procedures established by the Board. Further information
regarding valuation policies is contained in the Statement of Additional
Information.
PERFORMANCE
_____________________________________________________________________
The Fund quotes the performance of Advisor Shares separately from Common
Shares. The net asset value of the Advisor Shares is listed in The Wall Street
Journal each business day under the heading Warburg Pincus Advisor Funds. From
time to time, the Fund may advertise the average annual total return of Advisor
Shares over various periods of time. These total return figures show the average
percentage change in value of an investment in the Advisor Shares from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Advisor Shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in Advisor Shares. Total return will be shown for recent
one-, five- and ten-year periods, and may be shown for other periods as well
(such as on a year-by-year, quarterly or current year-to-date basis).
When considering average total return figures for periods longer than one
year, it is important to note that the annual total return for one year in the
period might have been greater or less than the average for the entire period.
When considering total return figures for periods shorter than one year,
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investors should bear in mind that the Fund seeks long-term appreciation and
that such return may not be representative of the Fund's return over a longer
market cycle. The Fund may also advertise aggregate total return figures of
Advisor Shares for various periods, representing the cumulative change in value
of an investment in the Advisor Shares for the specific period (again reflecting
changes in share prices and assuming reinvestment of dividends and
distributions). Aggregate and average total returns may be shown by means of
schedules, charts or graphs and may indicate various components of total return
(i.e., change in value of initial investment, income dividends and capital gain
distributions).
Investors should note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Statement of
Additional Information describes the method used to determine total return.
Current total return figures may be obtained by calling Warburg Pincus Advisor
Funds at (800) 369-2728.
In reports or other communications to investors or in advertising material,
the Fund may describe general economic and market conditions affecting the Fund
and may compare its performance with (i) that of other mutual funds as listed in
the rankings prepared by Lipper Analytical Services, Inc. or similar investment
services that monitor the performance of mutual funds or as set forth in the
publications listed below; (ii) with the Venture Capital 100 Index (compiled by
Venture Capital Journal), the Russell 2000 Small Stock Index, the EAFE Index,
the Salomon Russell Global Equity Index and the FT-Actuaries World Indices
(jointly complied by The Financial Times, Ltd., Goldman, Sachs & Co. and NatWest
Securities Ltd.) and the S&P 500 Index, which are unmanaged indexes of common
stocks; or (iii) other appropriate indexes of investment securities or with data
developed by Warburg derived from such indexes. The Fund may also make
comparisons using data and indexes compiled by the National Venture Capital
Association, VentureOne and Private Equity Analysts Newsletter and similar
organizations and publications. The Fund may also include evaluations published
by nationally recognized ranking services and by financial publications that are
nationally recognized, such as Barron's, Business Week, Financial Times, Forbes,
Fortune, Inc., Institutional Investor, Investor's Business Daily, Money,
Morningstar, Inc., Mutual Fund Magazine, Smart Money and The Wall Street
Journal.
In reports or other communications to investors or in advertising, the Fund
may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. In addition, the Fund and its portfolio managers may render updates
of Fund activity, which may include a discussion of significant portfolio
holdings and analysis of holdings by industry, country, credit quality and other
characteristics. The Fund may also discuss measures of risk, the continuum of
risk and return relating to different investments and
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the potential impact of foreign stocks on a portfolio otherwise composed of
domestic securities. Morningstar, Inc. rates funds in broad categories based on
risk/reward analyses over various time periods. In addition, the Fund may from
time to time compare the expense ratio of Advisor Shares to that of investment
companies with similar objectives and policies, based on data generated by
Lipper Analytical Services, Inc. or similar investment services that monitor
mutual funds.
GENERAL INFORMATION
_____________________________________________________________
ORGANIZATION. The Fund was incorporated on July 16, 1996 under the laws of
the State of Maryland under the name 'Warburg, Pincus Global Post-Venture
Capital Fund, Inc.' The Fund's charter authorizes the Board to issue three
billion full and fractional shares of capital stock, $.001 par value per share,
of which two billion shares are designated Common Shares and one billion shares
are designated Advisor Shares. Under the Fund's charter documents, the Board has
the power to classify or reclassify any unissued shares of the Fund into one or
more additional classes by setting or changing in any one or more respects their
relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board may similarly
classify or reclassify any class of its shares into one or more series and,
without shareholder approval, may increase the number of authorized shares of
the Fund.
MULTI-CLASS STRUCTURE. The Fund offers a separate class of shares, the Common
Shares, directly to individuals pursuant to a separate prospectus. Shares of
each class represent equal pro rata interests in the Fund and accrue dividends
and calculate net asset value and performance quotations in the same manner,
except that Advisor Shares bear fees payable by the Fund to Institutions for
services they provide to the beneficial owners of such shares and enjoy certain
exclusive voting rights on matters relating to these fees. Because of the higher
fees paid by the Advisor Shares, the total return on such shares can be expected
to be lower than the total return on Common Shares. Investors may obtain
information concerning the Common Shares from their investment professional or
by calling Counsellors Securities at (800) 927-2874.
VOTING RIGHTS. Investors in the Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held. Shareholders of the
Fund will vote in the aggregate except where otherwise required by law and
except that each class will vote separately on certain matters pertaining to its
distribution and shareholder servicing arrangements. There will normally be no
meetings of investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding office have
been elected by investors. Any member of the Board may be removed from office
upon the vote of shareholders holding at least a majority of the Fund's
outstanding shares, at a meeting called for that purpose. A meeting will be
called for the purpose of voting on the removal of a Board member at the written
request of holders of 10% of the outstanding shares of
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the Fund. Lionel I. Pincus may be deemed to be a controlling person of the Fund
because he may be deemed to possess or share investment power over shares owned
by clients of Warburg.
SHAREHOLDER COMMUNICATIONS. Each investor will receive a quarterly statement
of its account, as well as a statement of its account after any transaction that
affects its share balance or share registration (other than the reinvestment of
dividends or distributions). The Fund will also send to its investors a
semiannual report and an audited annual report, each of which includes a list of
the investment securities held by the Fund and a statement of the performance of
the Fund. Periodic listings of the investment securities held by the Fund, as
well as certain statistical characteristics of the Fund, may be obtained by
calling Warburg Pincus Advisor Funds at (800) 369-2728. Each Institution that is
the record owner of Advisor Shares on behalf of its customers will send a
statement to those customers periodically showing their indirect interest in
Advisor Shares, as well as providing other information about the Fund. See
'Shareholder Servicing.'
The common share prospectuses of Warburg Pincus Post-Venture Capital Fund and
the Fund are combined in a Common Share Prospectus. Each Fund offers only its
own shares, yet it is possible that a Fund might become liable for a
misstatement, inaccuracy or omission in that Prospectus with regard to the other
Fund.
SHAREHOLDER SERVICING
___________________________________________________________
The Fund is authorized to offer Advisor Shares exclusively through
Institutions whose clients or customers (or participants in the case of
retirement plans) ('Customers') are owners of Advisor Shares. Either those
Institutions or companies providing certain services to Customers (together,
'Service Organizations') will enter into agreements ('Agreements') with the Fund
and/or Counsellors Securities pursuant to a Distribution Plan as described
below. Such entities may provide certain distribution, shareholder servicing,
administrative and/or accounting services for its Customers. Distribution
services would be marketing or other services in connection with the promotion
and sale of Advisor Shares. Shareholder services that may be provided include
responding to Customer inquiries, providing information on Customer investments
and providing other shareholder liaison services. Administrative and accounting
services related to the sale of Advisor Shares may include (i) aggregating and
processing purchase and redemption requests from Customers and placing net
purchase and redemption orders with the Fund's transfer agent, (ii) processing
dividend payments from the Fund on behalf of Customers and (iii) providing
sub-accounting related to the sale of Advisor Shares beneficially owned by
Customers or the information to the Fund necessary for sub-accounting. The Board
has approved a Distribution Plan (the 'Plan') pursuant to Rule 12b-1 under the
1940 Act under which each participating Service Organization will be paid, out
of the assets of the Fund (either directly or by Counsellors Securities on
behalf of the Fund), a negotiated fee on an annual basis not to exceed .75% (up
to a
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.25% annual shareholder services fee and a .50% annual distribution and/or
administrative services fee) of the value of the average daily net assets of its
Customers invested in Advisor Shares. The current 12b-1 fee is .50% per annum.
The Board evaluates the appropriateness of the Plan on a continuing basis and in
doing so considers all relevant factors.
To offset start-up costs and expenses associated with certain qualified
retirement plans making Advisor Shares available to plan participants,
Counsellors Securities may pay CIGNA Financial Advisors, Inc., a registered
broker-dealer which is the broker of record for Connecticut General Life
Insurance Company, a one-time fee of .25% of the average aggregate account
balances of plan participants during the first year of implementation.
Warburg, Counsellors Securities or their affiliates may, from time to time,
at their own expense, provide compensation to Service Organizations. To the
extent they do so, such compensation does not represent an additional expense to
the Fund or its shareholders. In addition, Warburg, Counsellors Securities or
their affiliates may, from time to time, at their own expense, pay certain Fund
transfer agent fees and expenses related to accounts of Customers. A Service
Organization may directly or indirectly pay a portion of the fees paid pursuant
to the Plan to the Fund's custodian or transfer agent for costs related to
accounts of its Customers.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION OR THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFERING OF SHARES OF THE FUND, AND IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF THE
ADVISOR SHARES IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY
NOT LAWFULLY BE MADE.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
The Fund's Expenses..................................................... 2
Financial Highlights.................................................... 3
Investment Objective and Policies....................................... 4
Portfolio Investments................................................... 7
Risk Factors and Special Considerations................................. 9
Portfolio Transactions and Turnover Rate................................ 11
Certain Investment Strategies........................................... 12
Investment Guidelines................................................... 16
Management of the Fund.................................................. 17
How to Purchase Shares.................................................. 19
How to Redeem and Exchange Shares....................................... 21
Dividends, Distributions and Taxes...................................... 22
Net Asset Value......................................................... 24
Performance............................................................. 25
General Information..................................................... 27
Shareholder Servicing................................................... 28
</TABLE>
- --------------------------------------------------------------------------------
[Logo]
P.O. BOX 9030, BOSTON, MA 02205-9030
800-369-2728
COUNSELLORS SECURITIES INC., DISTRIBUTOR. ADGPV-1-0297
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
--------------------------
February 21, 1997
WARBURG PINCUS POST-VENTURE CAPITAL FUND
WARBURG PINCUS GLOBAL POST-VENTURE CAPITAL FUND
P.O. Box 9030, Boston, Massachusetts 02205-9030
For information, call 800-WARBURG
--------------------------
CONTENTS
Page
----
Investment Objectives........................................................2
Investment Policies..........................................................2
Management of the Funds......................................................25
Additional Purchase and Redemption Information...............................35
Exchange Privilege...........................................................35
Additional Information Concerning Taxes......................................36
Determination of Performance.................................................39
Independent Accountants and Counsel..........................................41
Miscellaneous................................................................41
Financial Statements.........................................................43
Appendix Description of Ratings.............................................A-1
This Statement of Additional Information is meant to be read in
conjunction with the combined Prospectus for the Common Shares of Warburg Pincus
Post-Venture Capital Fund (the "Post-Venture Capital Fund") and Warburg Pincus
Global Post-Venture Capital Fund (the "Global Post-Venture Capital Fund")
(collectively, the "Funds") and with the Prospectus for the Advisor Shares of
each Fund, each dated February 21, 1997, as amended or supplemented from time to
time, and is incorporated by reference in its entirety into those Prospectuses.
Because this Statement of Additional Information is not itself a prospectus, no
investment in shares of a Fund should be made solely upon the information
contained herein. Copies of the Funds' Prospectuses and information regarding
each Fund's current performance may be obtained by calling the Fund at (800)
927-2874. Information regarding the status of shareholder accounts may also be
obtained by calling the Fund at the same number or by writing to the Fund, P.O.
Box 9030, Boston, Massachusetts 02205-9030.
<PAGE>
<PAGE>
INVESTMENT OBJECTIVES
The investment objective of the Post-Venture Capital Fund is
long-term growth of capital. The Fund will pursue its objective by investing
primarily in equity securities of issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy.
The investment objective of the Global Post-Venture Capital Fund
is long-term growth of capital. The Fund will pursue its objective by investing
primarily in equity securities of U.S. and foreign issuers in their post-venture
capital stage of development and pursues an aggressive investment strategy.
INVESTMENT POLICIES
The following policies supplement the descriptions of each Fund's
investment objective and policies in the Prospectuses.
Options, Futures and Currency Exchange Transactions
Securities Options. A Fund may write covered put and call options
on stock and debt securities and may purchase such options that are traded on
foreign and U.S. exchanges, as well as over-the-counter ("OTC").
A Fund realizes fees (referred to as "premiums") for granting the
rights evidenced by the options it has written. A put option embodies the right
of its purchaser to compel the writer of the option to purchase from the option
holder an underlying security at a specified price for a specified time period
or at a specified time. In contrast, a call option embodies the right of its
purchaser to compel the writer of the option to sell to the option holder an
underlying security at a specified price for a specified time period or at a
specified time.
The principal reason for writing covered options on a security is
to attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, a Fund as
the writer of a covered call option forfeits the right to any appreciation in
the value of the underlying security above the strike price for the life of the
option (or until a closing purchase transaction can be effected). Nevertheless,
the Fund as a put or call writer retains the risk of a decline in the price of
the underlying security. The size of the premiums that the Fund may receive may
be adversely affected as new or existing institutions, including other
investment companies, engage in or increase their option-writing activities.
If security prices rise, a put writer would generally expect to profit, although
its gain would be limited to the amount of the premium it received. If security
prices remain the same over
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time, it is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the put
writer would expect to suffer a loss. This loss should be less than the loss
from purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
In the case of options written by a Fund that are deemed covered
by virtue of the Fund's holding convertible or exchangeable preferred stock or
debt securities, the time required to convert or exchange and obtain physical
delivery of the underlying common stock with respect to which the Fund has
written options may exceed the time within which the Fund must make delivery in
accordance with an exercise notice. In these instances, the Fund may purchase or
temporarily borrow the underlying securities for purposes of physical delivery.
By so doing, the Fund will not bear any market risk, since the Fund will have
the absolute right to receive from the issuer of the underlying security an
equal number of shares to replace the borrowed securities, but the Fund may
incur additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Additional risks exist with respect to certain of the securities
for which the Fund may write covered call options. For example, if a Fund writes
covered call options on mortgage-backed securities, the mortgage-backed
securities that it holds as cover may, because of scheduled amortization or
unscheduled prepayments, cease to be sufficient cover. If this occurs, the Fund
will compensate for the decline in the value of the cover by purchasing an
appropriate additional amount of mortgage-backed securities.
Options written by a Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (i) in-the-money call
options when Warburg, Pincus Counsellors, Inc., the Fund's investment adviser
("Warburg"), expects that the price of the underlying security will remain flat
or decline moderately during the option period, (ii) at-the-money call options
when Warburg expects that the price of the underlying security will remain flat
or advance moderately during the option period and (iii) out-of-the-money call
options when Warburg expects that the premiums received from writing the call
option plus the appreciation in market price of the underlying security up to
the exercise price will be greater than the appreciation in the price of the
underlying security alone. In any of the preceding situations, if the market
price of the underlying security declines and the security is sold at this lower
price, the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put options
(the reverse of call options as to the relation of exercise price to market
price) may be used in the same market environments that such call options are
used in equivalent transactions. To secure its obligation to deliver the
underlying security when it writes a call option, the Fund will be required to
deposit in escrow the underlying security or other assets in accordance with the
rules of the Options Clearing
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Corporation (the "Clearing Corporation") and of the securities exchange on which
the option is written.
Prior to their expirations, put and call options may be sold in
closing sale or purchase transactions (sales or purchases by the Fund prior to
the exercise of options that it has purchased or written, respectively, of
options of the same series) in which a Fund may realize a profit or loss from
the sale. An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized securities
exchange or in the over-the-counter market. When the Fund has purchased an
option and engages in a closing sale transaction, whether the Fund realizes a
profit or loss will depend upon whether the amount received in the closing sale
transaction is more or less than the premium the Fund initially paid for the
original option plus the related transaction costs. Similarly, in cases where
the Fund has written an option, it will realize a profit if the cost of the
closing purchase transaction is less than the premium received upon writing the
original option and will incur a loss if the cost of the closing purchase
transaction exceeds the premium received upon writing the original option. The
Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security with respect to which it has written an option
from being called or put or, in the case of a call option, to unfreeze an
underlying security (thereby permitting its sale or the writing of a new option
on the security prior to the outstanding option's expiration). The obligation of
the Fund under an option it has written would be terminated by a closing
purchase transaction, but the Fund would not be deemed to own an option as a
result of the transaction. So long as the obligation of the Fund as the writer
of an option continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring the Fund to deliver
the underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. The Fund can no longer effect a closing purchase transaction with
respect to an option once it has been assigned an exercise notice.
There is no assurance that sufficient trading interest will exist
to create a liquid secondary market on a securities exchange for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow or other unforeseen events have at times rendered certain
of the facilities of the Clearing Corporation and various securities exchanges
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. Moreover, a Fund's ability to
terminate options positions established in the over-the-counter market may be
more limited than for exchange-traded options and may also involve the risk that
securities dealers participating in over-the-counter transactions would fail to
meet their obligations to the Fund. The Fund, however, intends to purchase
over-the-counter options only from dealers whose debt securities, as determined
by Warburg, are considered to be investment grade. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary
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market, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise. In either case,
the Fund would continue to be at market risk on the security and could face
higher transaction costs, including brokerage commissions.
Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class which may be held
or written, or exercised within certain time periods by an investor or group of
investors acting in concert (regardless of whether the options are written on
the same or different securities exchanges or are held, written or exercised in
one or more accounts or through one or more brokers). It is possible that a Fund
and other clients of Warburg and certain of its affiliates may be considered to
be such a group. A securities exchange may order the liquidation of positions
found to be in violation of these limits and it may impose certain other
sanctions. These limits may restrict the number of options the Fund will be able
to purchase on a particular security.
Stock Index Options. A Fund may purchase and write
exchange-listed and OTC put and call options on stock indexes. A stock index
measures the movement of a certain group of stocks by assigning relative values
to the common stocks included in the index, fluctuating with changes in the
market values of the stocks included in the index. Some stock index options are
based on a broad market index, such as the NYSE Composite Index, or a narrower
market index such as the Standard & Poor's 100. Indexes may also be based on a
particular industry or market segment.
Options on stock indexes are similar to options on stock except
that (i) the expiration cycles of stock index options are monthly, while those
of stock options are currently quarterly, and (ii) the delivery requirements are
different. Instead of giving the right to take or make delivery of stock at a
specified price, an option on a stock index gives the holder the right to
receive a cash "exercise settlement amount" equal to (a) the amount, if any, by
which the fixed exercise price of the option exceeds (in the case of a put) or
is less than (in the case of a call) the closing value of the underlying index
on the date of exercise, multiplied by (b) a fixed "index multiplier." Receipt
of this cash amount will depend upon the closing level of the stock index upon
which the option is based being greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the index and the exercise
price of the option times a specified multiple. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
Stock index options may be offset by entering into closing transactions as
described above for securities options.
OTC Options. A Fund may purchase OTC or dealer options or sell
covered OTC options. Unlike exchange-listed options where an intermediary or
clearing corporation, such as the Clearing Corporation, assures that all
transactions in such options are properly executed, the responsibility for
performing all transactions with respect to OTC options rests solely with the
writer and the holder of those options. A listed call option writer, for
example, is obligated to deliver the underlying stock to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If the Fund were
to purchase a dealer option, however, it would rely on the dealer from whom it
purchased the option to perform if the option were exercised. If the
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dealer fails to honor the exercise of the option by the Fund, the Fund would
lose the premium it paid for the option and the expected benefit of the
transaction.
Listed options generally have a continuous liquid market while
dealer options have none. Consequently, a Fund will generally be able to realize
the value of a dealer option it has purchased only by exercising it or reselling
it to the dealer who issued it. Similarly, when the Fund writes a dealer option,
it generally will be able to close out the option prior to its expiration only
by entering into a closing purchase transaction with the dealer to which the
Fund originally wrote the option. Although the Fund will seek to enter into
dealer options only with dealers who will agree to and that are expected to be
capable of entering into closing transactions with the Fund, there can be no
assurance that the Fund will be able to liquidate a dealer option at a favorable
price at any time prior to expiration. The inability to enter into a closing
transaction may result in material losses to the Fund. Until the Fund, as a
covered OTC call option writer, is able to effect a closing purchase
transaction, it will not be able to liquidate securities (or other assets) used
to cover the written option until the option expires or is exercised. This
requirement may impair the Fund's ability to sell portfolio securities or, with
respect to currency options, currencies at a time when such sale might be
advantageous. In the event of insolvency of the other party, the Fund may be
unable to liquidate a dealer option.
Futures Activities. A Fund may enter into foreign currency,
interest rate and stock index futures contracts and purchase and write (sell)
related options traded on exchanges designated by the Commodity Futures Trading
Commission (the "CFTC") or consistent with CFTC regulations on foreign
exchanges. These transactions may be entered into for "bona fide hedging"
purposes as defined in CFTC regulations and other permissible purposes including
hedging against changes in the value of portfolio securities due to anticipated
changes in currency values, interest rates and/or market conditions and
increasing return.
A Fund will not enter into futures contracts and related options
for which the aggregate initial margin and premiums (discussed below) required
to establish positions other than those considered to be "bona fide hedging" by
the CFTC exceed 5% of the Fund's net asset value after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into. The ability of the Fund to trade in futures contracts and options on
futures contracts may be limited by the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), applicable to a regulated investment
company.
Futures Contracts. A foreign currency futures contract provides
for the future sale by one party and the purchase by the other party of a
certain amount of a specified non-U.S. currency at a specified price, date, time
and place. An interest rate futures contract provides for the future sale by one
party and the purchase by the other party of a certain amount of a specific
interest rate sensitive financial instrument (debt security) at a specified
price, date, time and place. Stock indexes are capitalization weighted indexes
which reflect the market value of the stock listed on the indexes. A stock index
futures contract is an agreement to be settled by delivery of an amount of cash
equal to a specified multiplier times
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the difference between the value of the index at the close of the last trading
day on the contract and the price at which the agreement is made.
No consideration is paid or received by a Fund upon entering into
a futures contract. Instead, the Fund is required to deposit in a segregated
account with its custodian an amount of cash or liquid securities acceptable to
the broker equal to approximately 1% to 10% of the contract amount (this amount
is subject to change by the exchange on which the contract is traded, and
brokers may charge a higher amount). This amount is known as "initial margin"
and is in the nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied. The broker will have access to
amounts in the margin account if the Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from the
broker, will be made daily as the currency, financial instrument or stock index
underlying the futures contract fluctuates, making the long and short positions
in the futures contract more or less valuable, a process known as
"marking-to-market." The Fund will also incur brokerage costs in connection with
entering into futures transactions.
At any time prior to the expiration of a futures contract, a Fund
may elect to close the position by taking an opposite position, which will
operate to terminate the Fund's existing position in the contract. Positions in
futures contracts and options on futures contracts (described below) may be
closed out only on the exchange on which they were entered into (or through a
linked exchange). No secondary market for such contracts exists. Although the
Fund intends to enter into futures contracts only if there is an active market
for such contracts, there is no assurance that an active market will exist at
any particular time. Most futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the day. It is possible that futures contract prices could move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions at an advantageous
price and subjecting the Fund to substantial losses. In such event, and in the
event of adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such situations, if the fund had insufficient
cash, it might have to sell securities to meet daily variation margin
requirements at a time when it would be disadvantageous to do so. In addition,
if the transaction is entered into for hedging purposes, in such circumstances
the Fund may realize a loss on a futures contract or option that is not offset
by an increase in the value of the hedged position. Losses incurred in futures
transactions and the costs of these transactions will affect the Fund's
performance.
Options on Futures Contracts. A Fund may purchase and write put
and call options on foreign currency, interest rate and stock index futures
contracts and may enter into closing transactions with respect to such options
to terminate existing positions. There is no guarantee that such closing
transactions can be effected; the ability to establish and close out positions
on such options will be subject to the existence of a liquid market.
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An option on a currency, interest rate or stock index futures
contract, as contrasted with the direct investment in such a contract, gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time prior to the
expiration date of the option. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put). Upon exercise of
an option, the delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the point of
sale, there are no daily cash payments by the purchaser to reflect changes in
the value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of the
Fund.
Currency Exchange Transactions. The value in U.S. dollars of the
assets of a Fund that are invested in foreign securities may be affected
favorably or unfavorably by changes in exchange control regulations, and the
Fund may incur costs in connection with conversion between various currencies.
Currency exchange transactions may be from any non-U.S. currency into U.S.
dollars or into other appropriate currencies. The Fund will conduct its currency
exchange transactions (i) on a spot (i.e., cash) basis at the rate prevailing in
the currency exchange market, (ii) through entering into futures contracts or
options on such contracts (as described above), (iii) through entering into
forward contracts to purchase or sell currency or (iv) by purchasing
exchange-traded currency options.
Forward Currency Contracts. A forward currency contract involves
an obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract as agreed upon by
the parties, at a price set at the time of the contract. These contracts are
entered into in the interbank market conducted directly between currency traders
(usually large commercial banks and brokers) and their customers. Forward
currency contracts are similar to currency futures contracts, except that
futures contracts are traded on commodities exchanges and are standardized as to
contract size and delivery date.
At or before the maturity of a forward contract, a Fund may
either sell a portfolio security and make delivery of the currency, or retain
the security and fully or partially offset its contractual obligation to deliver
the currency by negotiating with its trading partner to purchase a second,
offsetting contract. If the Fund retains the portfolio security and engages in
an offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss to the extent that movement has
occurred in forward contract prices.
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Currency Options. A Fund may purchase exchange-traded put and
call options on foreign currencies. Put options convey the right to sell the
underlying currency at a price which is anticipated to be higher than the spot
price of the currency at the time the option is exercised. Call options convey
the right to buy the underlying currency at a price which is expected to be
lower than the spot price of the currency at the time the option is exercised.
Currency Hedging. A Fund's currency hedging will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of forward currency with respect to
specific receivables or payables of the Fund generally accruing in connection
with the purchase or sale of its portfolio securities. Position hedging is the
sale of forward currency with respect to portfolio security positions. The Fund
may not position hedge to an extent greater than the aggregate market value (at
the time of entering into the hedge) of the hedged securities.
A decline in the U.S. dollar value of a foreign currency in which
a Fund's securities are denominated will reduce the U.S. dollar value of the
securities, even if their value in the foreign currency remains constant. The
use of currency hedges does not eliminate fluctuations in the underlying prices
of the securities, but it does establish a rate of exchange that can be achieved
in the future. For example, in order to protect against diminutions in the U.S.
dollar value of securities it holds, the Fund may purchase currency put options.
If the value of the currency does decline, the Fund will have the right to sell
the currency for a fixed amount in dollars and will thereby offset, in whole or
in part, the adverse effect on the U.S. dollar value of its securities that
otherwise would have resulted. Conversely, if a rise in the U.S. dollar value of
a currency in which securities to be acquired are denominated is projected,
thereby potentially increasing the cost of the securities, the Fund may purchase
call options on the particular currency. The purchase of these options could
offset, at least partially, the effects of the adverse movements in exchange
rates. The benefit to the Fund derived from purchases of currency options, like
the benefit derived from other types of options, will be reduced by premiums and
other transaction costs. Because transactions in currency exchange are generally
conducted on a principal basis, no fees or commissions are generally involved.
Currency hedging involves some of the same risks and considerations as other
transactions with similar instruments. Although currency hedges limit the risk
of loss due to a decline in the value of a hedged currency, at the same time,
they also limit any potential gain that might result should the value of the
currency increase. If a devaluation is generally anticipated, the Fund may not
be able to contract to sell a currency at a price above the devaluation level it
anticipates.
While the values of currency futures and options on futures,
forward currency contracts and currency options may be expected to correlate
with exchange rates, they will not reflect other factors that may affect the
value of the Fund's investments and a currency hedge may not be entirely
successful in mitigating changes in the value of the Fund's investments
denominated in that currency. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect the Fund
against a price decline if the issuer's creditworthiness deteriorates.
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Hedging. In addition to entering into options, futures and
currency exchange transactions for other purposes, including generating current
income to offset expenses or increase return, a Fund may enter into these
transactions as hedges to reduce investment risk, generally by making an
investment expected to move in the opposite direction of a portfolio position. A
hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of options, futures contracts and currency
exchange transactions for hedging purposes could limit any potential gain from
an increase in the value of the position hedged. In addition, the movement in
the portfolio position hedged may not be of the same magnitude as movement in
the hedge. With respect to futures contracts, since the value of portfolio
securities will far exceed the value of the futures contracts sold by the Fund,
an increase in the value of the futures contracts could only mitigate, but not
totally offset, the decline in the value of the Fund's assets.
In hedging transactions based on an index, whether a Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. The risk of imperfect
correlation increases as the composition of the Fund's portfolio varies from the
composition of the index. In an effort to compensate for imperfect correlation
of relative movements in the hedged position and the hedge, the Fund's hedge
positions may be in a greater or lesser dollar amount than the dollar amount of
the hedged position. Such "over hedging" or "under hedging" may adversely affect
the Fund's net investment results if market movements are not as anticipated
when the hedge is established. Stock index futures transactions may be subject
to additional correlation risks. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions which would distort the normal relationship
between the stock index and futures markets. Secondly, from the point of view of
speculators, the deposit requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market also may cause temporary
price distortions. Because of the possibility of price distortions in the
futures market and the imperfect correlation between movements in the stock
index and movements in the price of stock index futures, a correct forecast of
general market trends by Warburg still may not result in a successful hedging
transaction.
A Fund will engage in hedging transactions only when deemed
advisable by Warburg, and successful use by the Fund of hedging transactions
will be subject to Warburg's ability to predict trends in currency, interest
rates or securities markets, as the case may be, and to correctly predict
movements in the directions of the hedge and the hedged position and the
correlation between them, which predictions could prove to be inaccurate. This
requires different skills and techniques than predicting changes in the price of
individual securities, and there can be no assurance that the use of these
strategies will be successful. Even a well-conceived hedge may be unsuccessful
to some degree because of unexpected market behavior
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or trends. Losses incurred in hedging transactions and the costs of these
transactions will affect the Fund's performance.
Asset Coverage for Forward Contracts, Options, Futures and
Options on Futures. As described in the Prospectuses, a Fund will comply with
guidelines established by the Securities and Exchange Commission (the "SEC")
with respect to coverage of forward currency contracts; options written by the
Fund on securities and indexes; and currency, interest rate and index futures
contracts and options on these futures contracts. These guidelines may, in
certain instances, require segregation by the Fund of cash or liquid securities
that are acceptable as collateral to the appropriate regulatory authority.
For example, a call option written by a Fund on securities may
require the Fund to hold the securities subject to the call (or securities
convertible into the securities without additional consideration) or to
segregate assets (as described above) sufficient to purchase and deliver the
securities if the call is exercised. A call option written by the Fund on an
index may require the Fund to own portfolio securities that correlate with the
index or to segregate assets (as described above) equal to the excess of the
index value over the exercise price on a current basis. A put option written by
the Fund may require the Fund to segregate assets (as described above) equal to
the exercise price. The Fund could purchase a put option if the strike price of
that option is the same or higher than the strike price of a put option sold by
the Fund. If the Fund holds a futures or forward contract, the Fund could
purchase a put option on the same futures or forward contract with a strike
price as high or higher than the price of the contract held. The Fund may enter
into fully or partially offsetting transactions so that its net position,
coupled with any segregated assets (equal to any remaining obligation), equals
its net obligation. Asset coverage may be achieved by other means when
consistent with applicable regulatory policies.
Additional Information on Other Investment Practices
Foreign Investments. Investors should recognize that investing in
foreign companies involves certain risks, including those discussed below, which
are not typically associated with investing in U.S. issuers. Since a Fund may
invest in securities denominated in currencies other than the U.S. dollar, and
since the Fund may temporarily hold funds in bank deposits or other money market
investments denominated in foreign currencies, the Fund may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. A change in the value of a
foreign currency relative to the U.S. dollar will result in a corresponding
change in the dollar value of the Fund's assets denominated in that foreign
currency. Changes in foreign currency exchange rates may also affect the value
of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by the Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. Changes in the exchange rate may result over time from the
interaction of many factors directly or indirectly affecting economic and
political conditions in the United States and a particular foreign country,
including economic and political developments in other countries.
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Of particular importance are rates of inflation, interest rate levels, the
balance of payments and the extent of government surpluses or deficits in the
United States and the particular foreign country, all of which are in turn
sensitive to the monetary, fiscal and trade policies pursued by the governments
of the United States and foreign countries important to international trade and
finance. Governmental intervention may also play a significant role. National
governments rarely voluntarily allow their currencies to float freely in
response to economic forces. Sovereign governments use a variety of techniques,
such as intervention by a country's central bank or imposition of regulatory
controls or taxes, to affect the exchange rates of their currencies. The Fund
may use hedging techniques with the objective of protecting against loss through
the fluctuation of the value of foreign currencies against the U.S. dollar,
particularly the forward market in foreign exchange, currency options and
currency futures. See "Currency Transactions" and "Futures Activities" above.
Many of the foreign securities held by a Fund will not be
registered with, nor the issuers thereof be subject to reporting requirements
of, the SEC. Accordingly, there may be less publicly available information about
the securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Foreign companies are
generally not subject to uniform financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. In addition, with
respect to some foreign countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of
the Fund, political or social instability, or domestic developments which could
affect U.S. investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments positions. The
Fund may invest in securities of foreign governments (or agencies or
instrumentalities thereof), and many, if not all, of the foregoing
considerations apply to such investments as well.
Securities of some foreign companies are less liquid and their
prices are more volatile than securities of comparable U.S. companies. Certain
foreign countries are known to experience long delays between the trade and
settlement dates of securities purchased or sold. Due to the increased exposure
of a Fund to market and foreign exchange fluctuations brought about by such
delays, and due to the corresponding negative impact on Fund liquidity, the Fund
will avoid investing in countries which are known to experience settlement
delays which may expose the Fund to unreasonable risk of loss.
U.S. Government Securities. A Fund may invest in debt obligations
of varying maturities issued or guaranteed by the United States government, its
agencies or instrumentalities ("U.S. Government Securities"). Direct obligations
of the U.S. Treasury include a variety of securities that differ in their
interest rates, maturities and dates of issuance. U.S. Government Securities
also include securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Loan Administration, Export-Import Bank of the
United States, Small Business Administration, Government National Mortgage
Association ("GNMA"), General Services Administration, Central Bank for
Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation
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("FHLMC"), Federal Intermediate Credit Banks, Federal Land Banks, Federal
National Mortgage Association ("FNMA"), Maritime Administration, Tennessee
Valley Authority, District of Columbia Armory Board and Student Loan Marketing
Association. The Fund may also invest in instruments that are supported by the
right of the issuer to borrow from the U.S. Treasury and instruments that are
supported by the credit of the instrumentality. Because the U.S. government is
not obligated by law to provide support to an instrumentality it sponsors, the
Fund will invest in obligations issued by such an instrumentality only if
Warburg determines that the credit risk with respect to the instrumentality does
not make its securities unsuitable for investment by the Fund.
Special Situation Companies. A Fund may invest up to 10% of its
assets, directly or indirectly, in the securities of "special situation
companies" involved in an actual or prospective acquisition or consolidation;
reorganization; recapitalization; merger, liquidation or distribution of cash,
securities or other assets; a tender or exchange offer; a breakup or workout of
a holding company; or litigation which, if resolved favorably, would improve the
value of the company's stock. If the actual or prospective situation does not
materialize as anticipated, the market price of the securities of a "special
situation company" may decline significantly. The Fund believes, however, that
if "special situation companies" are analyzed carefully and invested in at the
appropriate time, the Fund may achieve capital growth. There can be no
assurance, however, that a special situation that exists at the time the Fund
makes its investment will be consummated under the terms and within the time
period contemplated.
Securities of Other Investment Companies. A Fund may invest in
securities of other investment companies and partnerships and other investment
vehicles deemed to be investment companies under the Investment Company Act of
1940, as amended (the "1940 Act"), to the extent permitted under that Act.
Presently, under the 1940 Act, the Fund may hold securities of another
investment company in amounts which (i) do not exceed 3% of the total
outstanding voting stock of such company, (ii) do not exceed 5% of the value of
the Fund's total assets and (iii) when added to all other investment company
securities held by the Fund, do not exceed 10% of the value of the Fund's total
assets.
Lending of Portfolio Securities. A Fund may lend portfolio
securities to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria established by the
Fund's Board of Directors (the "Board"). These loans, if and when made, may not
exceed 20% of the Fund's total assets taken at value. The Fund will not lend
portfolio securities to affiliates of Warburg unless it has applied for and
received specific authority to do so from the SEC. Loans of portfolio securities
will be collateralized by cash, letters of credit or U.S. Government Securities,
which are maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would be for the account of the Fund. From time to time, the Fund may return a
part of the interest earned from the investment of collateral received for
securities loaned to the borrower and/or a third party that is unaffiliated with
the Fund and that is acting as a "finder."
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By lending its securities, a Fund can increase its income by
continuing to receive interest and any dividends on the loaned securities as
well as by either investing the collateral received for securities loaned in
short-term instruments or obtaining yield in the form of interest paid by the
borrower when U.S. Government Securities are used as collateral. Although the
generation of income is not an investment objective of the Fund, income received
could be used to pay the Fund's expenses and would increase an investor's total
return. The Fund will adhere to the following conditions whenever its portfolio
securities are loaned: (i) the Fund must receive at least 100% cash collateral
or equivalent securities of the type discussed in the preceding paragraph from
the borrower; (ii) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral; (iii)
the Fund must be able to terminate the loan at any time; (iv) the Fund must
receive reasonable interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities and any increase in market value;
(v) the Fund may pay only reasonable custodian fees in connection with the loan;
and (vi) voting rights on the loaned securities may pass to the borrower,
provided, however, that if a material event adversely affecting the investment
occurs, the Board must terminate the loan and regain the right to vote the
securities. Loan agreements involve certain risks in the event of default or
insolvency of the other party including possible delays or restrictions upon the
Fund's ability to recover the loaned securities or dispose of the collateral for
the loan.
When-Issued Securities and Delayed-Delivery Transactions. A Fund
may utilize up to 20% of its total assets to purchase securities on a
"when-issued" basis or purchase or sell securities for delayed delivery (i.e.,
payment or delivery occur beyond the normal settlement date at a stated price
and yield). When-issued transactions normally settle within 30-45 days. The Fund
will enter into a when-issued transaction for the purpose of acquiring portfolio
securities and not for the purpose of leverage, but may sell the securities
before the settlement date if Warburg deems it advantageous to do so. The
payment obligation and the interest rate that will be received on when-issued
securities are fixed at the time the buyer enters into the commitment. Due to
fluctuations in the value of securities purchased or sold on a when-issued or
delayed-delivery basis, the yields obtained on such securities may be higher or
lower than the yields available in the market on the dates when the investments
are actually delivered to the buyers.
When a Fund agrees to purchase when-issued or delayed-delivery
securities, its custodian will set aside cash, U.S. Government Securities or
other liquid high-grade debt obligations or other securities that are acceptable
as collateral to the appropriate regulatory authority equal to the amount of the
commitment in a segregated account. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case the
Fund may be required subsequently to place additional assets in the segregated
account in order to ensure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash. When the Fund
engages in when-issued or delayed-delivery transactions, it relies on the other
party to consummate the trade. Failure of the seller to do so may result in
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the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
Securities of Smaller Companies. A Fund's investments involves
considerations that are not applicable to investing in securities of
established, larger-capitalization issuers, including reduced and less reliable
information about issuers and markets, less stringent accounting standards,
illiquidity of securities and markets, higher brokerage commissions and fees and
greater market risk in general. In addition, securities of smaller companies may
involve greater risks since these securities may have limited marketability and,
thus, may be more volatile.
American, European and Continental Depositary Receipts. The
assets of a Fund may be invested in the securities of foreign issuers in the
form of American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a U.S. bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. EDRs, which are sometimes
referred to as Continental Depositary Receipts ("CDRs"), are receipts issued in
Europe typically by non-U.S. banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in U.S. securities markets and EDRs and CDRs in bearer form are
designed for use in European securities markets.
Warrants. A Fund may purchase warrants issued by domestic and
foreign companies to purchase equity securities consisting of common and
preferred stock. The equity security underlying a warrant is authorized at the
time the warrant is issued or is issued together with the warrant.
Investing in warrants can provide a greater potential for profit
or loss than an equivalent investment in the underlying security, and, thus, can
be a speculative investment. The value of a warrant may decline because of a
decline in the value of the underlying security, the passage of time, changes in
interest rates or in the dividend or other policies of the company whose equity
underlies the warrant or a change in the perception as to the future price of
the underlying security, or any combination thereof. Warrants generally pay no
dividends and confer no voting or other rights other than to purchase the
underlying security.
Reverse Repurchase Agreements and Dollar Rolls. A Fund may enter
into reverse repurchase agreements with the same parties with whom it may enter
into repurchase agreements. Reverse repurchase agreements involve the sale of
securities held by the Fund pursuant to its agreement to repurchase them at a
mutually agreed upon date, price and rate of interest. At the time the Fund
enters into a reverse repurchase agreement, it will establish and maintain a
segregated account with an approved custodian containing cash or certain liquid
securities having a value not less than the repurchase price (including accrued
interest). The assets contained in the segregated account will be
marked-to-market daily and additional assets will be placed in such account on
any day in which the assets fall below the repurchase price
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(plus accrued interest). The Fund's liquidity and ability to manage its assets
might be affected when it sets aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale may decline below the price of
the securities the Fund has sold but is obligated to repurchase. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Fund's
obligation to repurchase the securities, and the Fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision.
A Fund also may enter into "dollar rolls," in which the Fund
sells fixed-income securities for delivery in the current month and
simultaneously contracts to repurchase similar but not identical (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Fund would forego principal and interest paid on such securities.
The Fund would be compensated by the difference between the current sales price
and the forward price for the future purchase, as well as by the interest earned
on the cash proceeds of the initial sale. At the time the Fund enters into a
dollar roll transaction, it will place in a segregated account maintained with
an approved custodian cash or other liquid obligations having a value not less
than the repurchase price (including accrued interest) and will subsequently
monitor the account to ensure that its value is maintained. Reverse repurchase
agreements and dollar rolls that are accounted for as financings are considered
to be borrowings under the 1940 Act.
Non-Publicly Traded and Illiquid Securities. A Fund may not
invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily available
market, time deposits maturing in more than seven days, Private Funds (as
defined in the Prospectuses), certain Rule 144A Securities (as defined below)
and repurchase agreements which have a maturity of longer than seven days.
Securities that have legal or contractual restrictions on resale but have a
readily available market are not considered illiquid for purposes of this
limitation. Repurchase agreements subject to demand are deemed to have a
maturity equal to the notice period.
Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Limitations on resale may have an adverse effect on
the marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days without borrowing. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
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In recent years, however, a large institutional market has
developed for certain securities that are not registered under the Securities
Act including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for repayment.
The fact that there are contractual or legal restrictions on resale to the
general public or to certain institutions may not be indicative of the liquidity
of such investments.
Rule 144A Securities. Rule 144A under the Securities Act adopted
by the SEC allows for a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of the Securities
Act for resales of certain securities to qualified institutional buyers. Warburg
anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this
regulation and use of automated systems for the trading, clearance and
settlement of unregistered securities of domestic and foreign issuers, such as
the PORTAL System sponsored by the National Association of Securities Dealers,
Inc.
An investment in Rule 144A Securities will be considered illiquid
and therefore subject to a Fund's 15% limit on the purchase of illiquid
securities unless the Board or its delegates determines that the Rule 144A
Securities are liquid. In reaching liquidity decisions, the Board and its
delegates may consider, inter alia, the following factors: (i) the unregistered
nature of the security; (ii) the frequency of trades and quotes for the
security; (iii) the number of dealers wishing to purchase or sell the security
and the number of other potential purchasers; (iv) dealer undertakings to make a
market in the security and (v) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the transfer).
Private Funds. Although investments in Private Funds offer the
opportunity for significant capital gains, these investments involve a high
degree of business and financial risk that can result in substantial losses in
the portion of a Fund's portfolio invested in these investments. Among these are
the risks associated with investment in companies in an early stage of
development or with little or no operating history, companies operating at a
loss or with substantial variation in operation results from period to period,
companies with the need for substantial additional capital to support expansion
or to maintain a competitive position, or companies with significant financial
leverage. Such companies may also face intense competition from others including
those with greater financial resources or more extensive development,
manufacturing, distribution or other attributes, over which the Fund will have
no control.
Interests in the Private Funds in which a Fund may invest will be
subject to substantial restrictions on transfer and, in some instances, may be
non-transferable for a period of years. Private Funds may participate in only a
limited number of investments and, as a consequence, the return of a particular
Private Fund may be substantially adversely affected by the unfavorable
performance of even a single investment. Certain of the Private
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Funds in which the Fund may invest may pay their investment managers a fee based
on the performance of the Fund, which may create an incentive for the manager to
make investments that are riskier or more speculative than would be the case if
the manager was paid a fixed fee. Private Funds are not registered under the
1940 Act and, consequently, are not subject to the restrictions on affiliated
transactions and other protections applicable to regulated investment companies.
The valuation of companies held by Private Funds, the securities of which are
generally unlisted and illiquid, may be very difficult and will often depend on
the subjective valuation of the managers of the Private Funds, which may prove
to be inaccurate. Inaccurate valuations of a Private Fund's portfolio holdings
may affect the Fund's net asset value calculations. Private Funds in which the
Fund invests will not borrow to increase the amount of assets available for
investment or otherwise engage in leverage.
Below Investment Grade Securities. Although a Fund may directly
invest only in investment grade debt securities (as described in the
Prospectuses), securities held by Private Funds may be rated below investment
grade. In addition, the Fund may invest in below investment grade convertible
debt and preferred securities and it is not required to dispose of securities
downgraded below investment grade subsequent to acquisition by the Fund. While
the market values of medium- and lower-rated securities and unrated securities
of comparable quality tend to react less to fluctuations in interest rate levels
than do those of higher-rated securities, the market values of certain of these
securities also tend to be more sensitive to individual corporate developments
and changes in economic conditions than higher-quality securities. In addition,
medium- and lower-rated securities and comparable unrated securities generally
present a higher degree of credit risk. Issuers of medium- and lower-rated
securities and unrated securities are often highly leveraged and may not have
more traditional methods of financing available to them so that their ability to
service their obligations during an economic downturn or during sustained
periods of rising interest rates may be impaired. The risk of loss due to
default by such issuers is significantly greater because medium- and lower-rated
securities and unrated securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness.
The market for medium- and lower-rated and unrated securities is
relatively new and has not weathered a major economic recession. Any such
recession could disrupt severely the market for such securities and may
adversely affect the value of such securities and the ability of the issuers of
such securities to repay principal and pay interest thereon.
Certain of these securities may be difficult to dispose of
because there may be a thin trading market. Because there is no established
retail secondary market for many of these securities, it is anticipated that
these securities could be sold only to a limited number of dealers or
institutional investors. To the extent a secondary trading market for these
securities does exist, it generally is not as liquid as the secondary market for
higher-rated securities. The lack of a liquid secondary market, as well as
adverse publicity and investor perception with respect to these securities, may
have an adverse impact on market price and the ability to dispose of particular
issues when necessary to meet liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the issuer.
The lack of a
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liquid secondary market for certain securities also may make it more difficult
to obtain accurate market quotations for purposes of valuation and calculation
of net asset value.
The market value of securities in medium- and lower-rated
categories is more volatile than that of higher quality securities. Factors
adversely impacting the market value of these securities will adversely impact a
Fund's net asset value. Normally, medium- and lower-rated and comparable unrated
securities are not intended for short-term investment. Additional expenses may
be incurred, to the extent required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings of such securities.
Recent adverse publicity regarding lower-rated securities may have depressed the
prices for such securities to some extent. Whether investor perceptions will
continue to have a negative effect on the price of such securities is uncertain.
Borrowing. A Fund may borrow up to 30% of its total assets for
temporary or emergency purposes, including to meet portfolio redemption requests
so as to permit the orderly disposition of portfolio securities or to facilitate
settlement transactions on portfolio securities. Additional investments
(including roll-overs) will not be made when borrowings exceed 5% of the Fund's
net assets. Although the principal of such borrowings will be fixed, the Fund's
assets may change in value during the time the borrowing is outstanding. The
Fund expects that some of its borrowings may be made on a secured basis. In such
situations, either the custodian will segregate the pledged assets for the
benefit of the lender or arrangements will be made with a suitable subcustodian,
which may include the lender.
Other Investment Limitations
The investment limitations numbered 1 through 9 may not be
changed without the affirmative vote of the holders of a majority of each of the
Post-Venture Capital and Global Post-Venture Capital Fund's outstanding shares.
Such majority is defined as the lesser of (i) 67% or more of the shares present
at the meeting, if the holders of more than 50% of the outstanding shares of a
Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares. Investment limitations 10 through 13 may be changed by a
vote of the Board at any time.
A Fund may not:
1. Borrow money except that the Fund may (a) borrow from banks
for temporary or emergency purposes and (b) enter into reverse repurchase
agreements; provided that reverse repurchase agreements, dollar roll
transactions that are accounted for as financings and any other transactions
constituting borrowing by the Fund may not exceed 30% of the value of the Fund's
total assets at the time of such borrowing. For purposes of this restriction,
short sales, the entry into currency transactions, options, futures contracts,
options on futures contracts, forward commitment transactions and dollar roll
transactions that are not accounted for as financings (and the segregation of
assets in connection with any of the foregoing) shall not constitute borrowing.
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2. Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the same
industry; provided that there shall be no limit on the purchase of U.S.
Government Securities.
3. Purchase the securities of any issuer if as a result more than
5% of the value of the Fund's total assets would be invested in the securities
of such issuer, except that this 5% limitation does not apply to U.S. Government
Securities and except that up to 25% of the value of the Fund's total assets may
be invested without regard to this 5% limitation.
4. Make loans, except that the Fund may purchase or hold
fixed-income securities, including loan participations, assignments and
structured securities, lend portfolio securities and enter into repurchase
agreements.
5. Underwrite any securities issued by others except to the
extent that the investment in restricted securities and the sale of securities
in accordance with the Fund's investment objective, policies and limitations may
be deemed to be underwriting.
6. Purchase or sell real estate or invest in oil, gas or mineral
exploration or development programs, except that the Fund may invest in (a)
securities secured by real estate, mortgages or interests therein and (b)
securities of companies that invest in or sponsor oil, gas or mineral
exploration or development programs.
7. Purchase securities on margin, except that the Fund may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with transactions in currencies, options,
futures contracts or related options will not be deemed to be a purchase of
securities on margin.
8. Invest in commodities, except that the Fund may purchase and
sell futures contracts, including those relating to securities, currencies and
indexes, and options on futures contracts, securities, currencies or indexes,
purchase and sell currencies on a forward commitment or delayed-delivery basis
and enter into stand-by commitments.
9. Issue any senior security except as permitted in the Fund's
investment limitations.
10. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, reorganization or offer of
exchange, or as otherwise permitted under the 1940 Act.
11. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with the purchase of securities on a
forward commitment or delayed-delivery basis
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and collateral and initial or variation margin arrangements with respect to
currency transactions, options, futures contracts, and options on futures
contracts.
12. Invest more than 15% of the Fund's net assets in securities
which may be illiquid because of legal or contractual restrictions on resale or
securities for which there are no readily available market quotations. For
purposes of this limitation, repurchase agreements with maturities greater than
seven days shall be considered illiquid securities.
13. Make additional investments (including roll-overs) if the
Fund's borrowings exceed 5% of its net assets.
If a percentage restriction (other than the percentage limitation
set forth in No. 1 above) is adhered to at the time of an investment, a later
increase or decrease in the percentage of assets resulting from a change in the
values of portfolio securities or in the amount of a Fund's assets will not
constitute a violation of such restriction.
Portfolio Valuation
The Prospectuses discuss the time at which the net asset value of
a Fund is determined for purposes of sales and redemptions. The following is a
description of the procedures used by the Fund in valuing its assets.
Securities listed on a U.S. securities exchange (including
securities traded through the Nasdaq National Market System) or foreign
securities exchange or traded in an over-the-counter market will be valued at
the most recent sale as of the time the valuation is made or, in the absence of
sales, at the mean between the bid and asked quotations. If there are no such
quotations, the value of the securities will be taken to be the highest bid
quotation on the exchange or market. Options and futures contracts will be
valued similarly. A security which is listed or traded on more than one exchange
is valued at the quotation on the exchange determined to be the primary market
for such security. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as determined by the
Board. Amortized cost involves valuing a portfolio instrument at its initial
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. The amortized cost method of valuation may also be used
with respect to other debt obligations with 60 days or less remaining to
maturity. In determining the market value of portfolio investments, the Fund may
employ outside organizations (a "Pricing Service") which may use a matrix,
formula or other objective method that takes into consideration market indexes,
matrices, yield curves and other specific adjustments. The procedures of Pricing
Services are reviewed periodically by the officers of the Fund under the general
supervision and responsibility of the Board, which may replace a Pricing Service
at any time. Securities, options and futures contracts for which market
quotations are not available and other assets of the Fund will be valued at
their fair value as determined in good faith pursuant to consistently applied
procedures established by the Board. In addition, the Board or its delegates
may value
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a security at fair value if it determines that such security's value
determined by the methodology set forth above does not reflect its fair value.
Trading in securities in certain foreign countries is completed
at various times prior to the close of business on each business day in New York
(i.e., a day on which the NYSE is open for trading). In addition, securities
trading in a particular country or countries may not take place on all business
days in New York. Furthermore, trading takes place in various foreign markets on
days which are not business days in New York and days on which a Fund's net
asset value is not calculated. As a result, calculation of the Fund's net asset
value may not take place contemporaneously with the determination of the prices
of certain portfolio securities used in such calculation. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Fund's calculation of net asset value unless the Board or its delegates
deems that the particular event would materially affect net asset value, in
which case an adjustment may be made. All assets and liabilities initially
expressed in foreign currency values will be converted into U.S. dollar values
at the prevailing rate as quoted by a Pricing Service. If such quotations are
not available, the rate of exchange will be determined in good faith pursuant to
consistently applied procedures established by the Board.
Portfolio Transactions
Warburg is responsible for establishing, reviewing and, where
necessary, modifying a Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are usually
principal transactions without brokerage commissions effected directly with the
issuer or with an underwriter acting as principal. Private Funds may be
purchased directly from the issuer or may involve a broker or placement agent.
Other purchases and sales may be effected on a securities exchange or
over-the-counter, depending on where it appears that the best price or execution
will be obtained. The purchase price paid by the Fund to underwriters of newly
issued securities usually includes a concession paid by the issuer to the
underwriter, and purchases of securities from dealers, acting as either
principals or agents in the after market, are normally executed at a price
between the bid and asked price, which includes a dealer's mark-up or mark-down.
Transactions on U.S. stock exchanges and some foreign stock exchanges involve
the payment of negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary among different
brokers. On most foreign exchanges, commissions are generally fixed. Purchases
of Private Funds through a broker or placement agent will also involve a
commission or other fee. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. government securities are generally purchased from
underwriters or dealers, although certain newly issued U.S. Government
Securities may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality.
Except for Private Funds managed by Abbott Capital Management,
L.P., each Fund's sub-investment adviser with respect to Private Funds
("Abbott"), Warburg will select
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specific portfolio investments and effect transactions for a Fund and in doing
so seeks to obtain the overall best execution of portfolio transactions. In
evaluating prices and executions, Warburg will consider the factors it deems
relevant, which may include the breadth of the market in the security, the price
of the security, the financial condition and execution capability of a broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. Warburg may, in its discretion, effect
transactions in portfolio securities with dealers who provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Fund and/or other accounts over which Warburg
exercises investment discretion. Warburg may place portfolio transactions with a
broker or dealer with whom it has negotiated a commission that is in excess of
the commission another broker or dealer would have charged for effecting the
transaction if Warburg determines in good faith that such amount of commission
was reasonable in relation to the value of such brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Warburg. Research and other
services received may be useful to Warburg in serving both the Fund and its
other clients and, conversely, research or other services obtained by the
placement of business of other clients may be useful to Warburg in carrying out
its obligations to the Fund. Research may include furnishing advice, either
directly or through publications or writings, as to the value of securities, the
advisability of purchasing or selling specific securities and the availability
of securities or purchasers or sellers of securities; furnishing seminars,
information, analyses and reports concerning issuers, industries, securities,
trading markets and methods, legislative developments, changes in accounting
practices, economic factors and trends and portfolio strategy; access to
research analysts, corporate management personnel, industry experts, economists
and government officials; comparative performance evaluation and technical
measurement services and quotation services; and products and other services
(such as third party publications, reports and analyses, and computer and
electronic access, equipment, software, information and accessories that
deliver, process or otherwise utilize information, including the research
described above) that assist Warburg in carrying out its responsibilities.
Research received from brokers or dealers is supplemental to Warburg's own
research program. The fees to Warburg under its advisory agreement with a Fund
are not reduced by reason of its receiving any brokerage and research services.
During the fiscal period or year ended October 31, 1995 and
October 31, 1996, the Post-Venture Capital Fund paid an aggregate of
approximately $2,616 and $200,468, respectively, in commissions to
broker-dealers for execution of portfolio transactions. The increase in
brokerage commissions paid in the most recent fiscal year was due to an increase
in overall assets of the Fund and increased equity investments.
During the fiscal period ended October 31, 1996, the Global
Post-Venture Capital Fund paid an aggregate of approximately $3,819 in
commissions to broker-dealers for execution of portfolio transactions.
Investment decisions for a Fund concerning specific portfolio
securities are made independently from those for other clients advised by
Warburg or Abbott. Such other
23
<PAGE>
<PAGE>
investment clients may invest in the same securities as the Fund. When purchases
or sales of the same security are made at substantially the same time on behalf
of such other clients, transactions are averaged as to price and available
investments allocated as to amount, in a manner which Warburg or Abbott, as the
case may be, believes to be equitable to each client, including the Fund. In
some instances, this investment procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or sold for the Fund.
To the extent permitted by law, securities to be sold or purchased for the Fund
may be aggregated with those to be sold or purchased for such other investment
clients in order to obtain best execution.
Any portfolio transaction for a Fund may be executed through
Counsellors Securities Inc., the Fund's distributor ("Counsellors Securities"),
if, in Warburg's judgment, the use of Counsellors Securities is likely to result
in price and execution at least as favorable as those of other qualified
brokers, and if, in the transaction, Counsellors Securities charges the Fund a
commission rate consistent with those charged by Counsellors Securities to
comparable unaffiliated customers in similar transactions. All transactions with
affiliated brokers will comply with Rule 17e-1 under the 1940 Act. No portfolio
transactions have been executed through Counsellors Securities since the
commencement of each Fund's operations.
In no instance will portfolio securities be purchased from or
sold to Warburg, Abbott or Counsellors Securities or any affiliated person of
such companies. In addition, a Fund will not give preference to any institutions
with whom the Fund enters into distribution or shareholder servicing agreements
concerning the provision of distribution services or support services.
Transactions for a Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.
A Fund may participate, if and when practicable, in bidding for
the purchase of securities for the Fund's portfolio directly from an issuer in
order to take advantage of the lower purchase price available to members of such
a group. The Fund will engage in this practice, however, only when Warburg, in
its sole discretion, believes such practice to be otherwise in the Fund's
interest.
24
<PAGE>
<PAGE>
Portfolio Turnover
The Funds do not intend to seek profits through short-term
trading, but the rate of turnover will not be a limiting factor when a Fund
deems it desirable to sell or purchase securities. The Fund's portfolio turnover
rate is calculated by dividing the lesser of purchases or sales of its portfolio
securities for the year by the monthly average value of the portfolio
securities. Securities with remaining maturities of one year or less at the date
of acquisition are excluded from the calculation.
Certain practices that may be employed by a Fund could result in
high portfolio turnover. For example, options on securities may be sold in
anticipation of a decline in the price of the underlying security (market
decline) or purchased in anticipation of a rise in the price of the underlying
security (market rise) and later sold. The Fund's investment in special
situation companies could result in high portfolio turnover. To the extent that
its portfolio is traded for the short-term, the Fund will be engaged essentially
in trading activities based on short-term considerations affecting the value of
an issuer's stock instead of long-term investments based on fundamental
valuation of securities. Because of this policy, portfolio securities may be
sold without regard to the length of time for which they have been held.
Consequently, the annual portfolio turnover rate of the Fund may be higher than
mutual funds having a similar objective that do not invest in special situation
companies.
MANAGEMENT OF THE FUNDS
Officers and Board of Directors
The names (and ages) of each Fund's Directors and officers, their
addresses, present positions and principal occupations during the past five
years and other affiliations are set forth below.
<TABLE>
<S> <C>
Richard N. Cooper (62) Director
Harvard University Professor at Harvard University; National
1737 Cambridge Street Intelligence Counsel from June 1995 until
Cambridge, Massachusetts 02138 January 1997; Director or Trustee of
CircuitCity Stores, Inc. (retail
electronics and appliances) and Phoenix
Home Life Mutual Insurance Company.
Donald J. Donahue (72) Director
27 Signal Rd. Chairman of Magma Copper from December 1987
Stamford, Connecticut 06902 until December 1995; Director of Chase
Brass Industries, Inc. Since December 1994;
Director of Pioneer Companies, Inc.
(chlor-alkali chemicals) and predecessor
companies since 1990 and Vice Chairman
since December 1995.
</TABLE>
25
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Jack W. Fritz (69) Director
2425 North Fish Creek Road Private investor; Consultant and Director
P.O. Box 483 of Fritz Broadcasting, Inc. and Fritz
Wilson, Wyoming 83014 Communications (developers and operators of
radio stations); Director of Advo, Inc.
(direct mail advertising).
John L. Furth* (66) Director and Chief Executive Officer
466 Lexington Avenue Vice Chairman and Director of Warburg;
New York, New York 10017-3147 Associated with Warburg since 1970;
Chairman of the Board and
officer of other investment
companies advised by Warburg.
Thomas A. Melfe (64) Director
30 Rockefeller Plaza Partner in the law firm of Donovan Leisure
New York, New York 10112 Newton & Irvine; Chairman of the Board,
Municipal Fund for New York Investors, Inc.
Arnold M. Reichman* (48) Director and President
466 Lexington Avenue Managing Director and Assistant Secretary
New York, New York 10017-3147 of Warburg; Associated with Warburg since
1984; Senior Vice President, Secretary and
Chief Operating Officer of Counsellors
Securities; Officer of other investment
companies advised by Warburg.
Alexander B. Trowbridge (67) Director
1317 F Street, N.W., 5th Floor President of Trowbridge Partners, Inc.
Washington, DC 20004 (business consulting) from January 1990-
November 1996; President of the National
Association of Manufacturers from
1980-1990; Director or Trustee of New
England Mutual Life Insurance Co., ICOS
Corporation (biopharmaceuticals), WMX
Technologies Inc. (solid and hazardous
waste collection and disposal), The Rouse
Company (real estate development), Harris
Corp. (electronics and communications
equipment), The Gillette Co. (personal care
products) and Sun Company Inc. (petroleum
refining and marketing).
</TABLE>
- --------------------
* Indicates a Director who is an "interested person" of the Fund as defined
in the 1940 Act.
26
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Eugene L. Podsiadlo (40) Senior Vice President
466 Lexington Avenue Managing Director of Warburg; Associated
New York, New York 10017-3147 with Warburg since 1991; Vice President of
Citibank, N.A. from 1987-1991;
Senior Vice President of
Counsellors Securities and
officer of other investment
companies advised by Warburg.
Stephen Distler (43) Vice President and Chief Financial Officer
466 Lexington Avenue Managing Director, Controller and Assistant
New York, New York 10017-3147 Secretary of Warburg; Associated with
Warburg since 1984; Treasurer of
Counsellors Securities; Vice
President, Treasurer and Chief
Accounting Officer or Vice
President and Chief Financial
Officer of other investment
companies advised by Warburg.
Eugene P. Grace (45) Vice President and Secretary
466 Lexington Avenue Associated with Warburg since April 1994;
New York, New York 10017-3147 Attorney-at-law from September 1989-April
1994; life insurance agent, New
York Life Insurance Company from
1993-1994; General Counsel and
Secretary, Home Unity Savings
Bank from 1991-1992; Vice
President and Chief Compliance
Officer and Assistant Secretary
of Counsellors Securities; Vice
President and Secretary of other
investment companies advised by
Warburg.
Howard Conroy (42) Vice President
466 Lexington Avenue Associated with Warburg since 1992;
New York, New York 10017-3147 Associated with Martin Geller, C.P.A. from
1990-1992; Vice President, Finance with
Gabelli/Rosenthal & Partners, L.P. until
1990; Vice President, Treasurer and Chief
Accounting Officer of other investment
companies advised by Warburg.
</TABLE>
27
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Daniel S. Madden, CPA (31) Treasurer and Chief Accounting Officer
466 Lexington Avenue Associated with Warburg since 1995;
New York, New York 10017-3147 Associated with BlackRock Financial
Management, Inc. from September
1994 to October 1995; Associated
with BEA Associates from April
1993 to September 1994;
Associated with Ernst & Young
LLP from 1990 to 1993; Treasurer
and Chief Accounting Officer of
other investment companies
advised by Warburg.
Janna Manes, Esq. (29) Assistant Secretary
466 Lexington Avenue Associated with Warburg since 1996;
New York, New York 10017-3147 Associated with the law firm of Willkie
Farr & Gallagher from 1993-1996;
Assistant Secretary of other
investment companies advised by
Warburg.
</TABLE>
No employee of Warburg or PFPC Inc., the Fund's co-administrator
("PFPC"), or any of their affiliates receives any compensation from the Fund for
acting as an officer or director of the Fund. Each Director who is not a
director, trustee, officer or employee of Warburg, PFPC or any of their
affiliates receives an annual fee of $500, and $250 for each meeting of the
Board attended by him for his services as Director and is reimbursed for
expenses incurred in connection with his attendance at Board meetings.
Directors' Compensation
<TABLE>
<CAPTION>
Total Total Compensation from
Compensation from all Investment Companies
Name of Director the Fund`D' Managed by Warburg*
- ------------------------- -------------------- ---------------------------
<S> <C> <C>
John L. Furth None** None**
Arnold M. Reichman None** None**
Richard N. Cooper $1,500 $42,916
Donald J. Donahue $1,500 $42,916
Jack W. Fritz $1,500 $42,916
Thomas A. Melfe $1,500 $42,916
Alexander B. Trowbridge $1,500 $42,916
</TABLE>
28
<PAGE>
<PAGE>
- -----------------------
`D' Amounts shown are estimates of future payments to be made in the fiscal
year ending October 31, 1997 pursuant to existing arrangements.
* Each Director also serves as a Director or Trustee of 23 other
investment companies advised by Warburg.
** Mr. Furth and Mr. Reichman are considered to be interested persons of
the Fund and Warburg, as defined under Section 2(a)(19) of the 1940 Act,
and, accordingly, receive no compensation from the Fund or any other
investment company managed by Warburg.
As of February 4, 1997, none of the Directors and officers of the
Post-Venture Capital and Global Post-Venture Capital Funds as a group owned of
record any shares of the relevant Fund's outstanding Common Shares or Advisor
Shares.
Ms. Elizabeth B. Dater, portfolio manager of the Funds, is also
co-portfolio manager of Warburg Pincus Emerging Growth Fund and the Small
Company Growth Portfolio of Warburg Pincus Trust. Ms. Dater also manages an
institutional post-venture capital fund and is the former Director of Research
for Warburg's investment management activities. Prior to joining Warburg in
1978, she was a vice president of research at Fiduciary Trust Company of New
York and an institutional sales assistant at Lehman Brothers. Ms. Dater has been
a regular panelist on Maryland Public Television's Wall Street Week with Louis
Rukeyser since 1976. Ms. Dater earned a B.A. degree from Boston University in
Massachusetts.
Mr. Stephen J. Lurito, co-portfolio manager of the Post-Venture
Capital Fund, is also co-portfolio manager of Warburg Pincus Emerging Growth
Fund and the Small Company Growth Portfolio of Warburg Pincus Trust. Mr. Lurito,
also the research coordinator and a portfolio manager for micro-cap equity and
post-venture products, has been with Warburg since 1987. Prior to that he was a
research analyst at Sanford C. Bernstein & Company, Inc. Mr. Lurito earned a
B.A. degree from the University of Virginia and an M.B.A. from The Wharton
School, University of Pennsylvania.
Mr. Harold W. Ehrlich is an associate portfolio manager and
research analyst of the Global Post-Venture Capital Fund. Mr. Robert S. Janis
and Christopher M. Nawn are associate portfolio managers and research analysts
of each Fund and of other Warburg Pincus Funds. Prior to joining Warburg in
February 1995, Mr. Ehrlich was a senior vice president, portfolio manager and
analyst at Templeton Investment Counsel Inc. from 1987 to 1995. He earned a
B.S.B.A. degree from the University of Florida and earned his Chartered
Financial Analyst designation in 1990. Prior to joining Warburg in October 1994,
Mr. Janis was a vice president and senior research analyst at U.S. Trust Company
of New York. He earned B.A. and M.B.A. degrees from the University of
Pennsylvania. Prior to joining Warburg in
29
<PAGE>
<PAGE>
September 1994, Mr. Nawn was a senior sector analyst and portfolio manager at
the Dreyfus Corporation. He earned a B.A. degree from the Colorado College and
an M.B.A. degree from the University of Texas.
Investment Advisers and Co-Administrators
Warburg serves as investment adviser to a Fund, Abbott serves as
sub-investment adviser to a Fund, Counsellors Funds Service, Inc. ("Counsellors
Service") serves as a co-administrator to a Fund and PFPC serves as a
co-administrator to a Fund pursuant to separate written agreements (the
"Advisory Agreement," the "Sub-Advisory Agreement," the "Counsellors Service
Co-Administration Agreement" and the "PFPC Co-Administration Agreement,"
respectively). The services provided by, and the fees payable by each Fund to
Warburg under the Advisory Agreement, Abbott under the Sub-Advisory Agreement,
Counsellors Service under the Counsellors Service Co-Administration Agreement
and PFPC under the PFPC Co-Administration Agreement are described in the
Prospectuses. Each class of shares of a Fund bears its proportionate share of
fees payable to Warburg, Counsellors Service and PFPC in the proportion that its
assets bear to the aggregate assets of the Fund at the time of calculation.
These fees are calculated at an annual rate based on a percentage of the Fund's
average daily net assets. See the Prospectuses, "Management of the Funds."
Post-Venture Capital Fund
Advisory Fees earned by Warburg
(portions of fees waived, if any, are noted
in parenthesis next to the amount earned)
<TABLE>
<CAPTION>
Fiscal period ended Fiscal year ended
October 31, 1995* October 31, 1996
----------------- ----------------
<S> <C>
$1,756 ($1,756) $1,253,423 ($634,122)
</TABLE>
* Warburg also reimbursed the Fund $31,458 during the fiscal period ended
October 31, 1995.
Co-Administration Fees earned by PFPC
(portions of fees waived, if any, are noted
in parenthesis next to the amount earned)
<TABLE>
<CAPTION>
Fiscal period ended Fiscal year ended
October 31, 1995 October 31, 1996
---------------- ----------------
<S> <C>
$140 ($140) $100,274 ($32,617)
</TABLE>
30
<PAGE>
<PAGE>
Co-Administration Fees earned by Counsellors Service
<TABLE>
<CAPTION>
Fiscal period ended Fiscal year ended
October 31, 1995 October 31, 1996
---------------- ----------------
<S> <C>
$140 $100,274
</TABLE>
Global Post-Venture Capital Fund
Advisory Fees earned by Warburg
(portions of fees waived, if any, are noted
in parenthesis next to the amount earned)
<TABLE>
<CAPTION>
Fiscal period ended
October 31, 1996*
-----------------
<S> <C>
$2,470 ($2,470)
</TABLE>
* Warburg also reimbursed the Fund $40,206 for the fiscal period ending
October 31, 1995
Co-Administration Fees earned by PFPC
(portions of fees waived, if any, are noted
in parenthesis next to the amount earned)
<TABLE>
<CAPTION>
Fiscal period ended
October 31, 1996
----------------
<S> <C>
$237 ($237)
</TABLE>
Co-Administration Fees earned by Counsellors Service
<TABLE>
<CAPTION>
Fiscal period ended
October 31, 1996
----------------
<S> <C>
$198
</TABLE>
Custodians and Transfer Agent
31
<PAGE>
<PAGE>
PNC Bank, National Association ("PNC") and State Street Bank and
Trust Company ("State Street") serve as custodians of the Post-Venture Capital
Fund's U.S. and foreign assets, respectively, pursuant to separate custodian
agreements. PNC and Fiduciary Trust Company International ("Fiduciary") serve as
custodians of the Global Post-Venture Capital Fund's U.S. and foreign assets,
respectively, pursuant to separate custodian agreements (collectively, the
"Custodian Agreements"). Under the Custodian Agreements, PNC and State Street or
Fiduciary, as the case may be, each (i) maintains a separate account or accounts
in the name of the Fund, (ii) holds and transfers portfolio securities on
account of the Fund, (iii) makes receipts and disbursements of money on behalf
of the Fund, (iv) collects and receives all income and other payments and
distributions for the account of the Fund's portfolio securities held by it and
(v) makes periodic reports to the Board concerning the Fund's custodial
arrangements. PNC may delegate its duties under its Custodian Agreement with a
Fund to a wholly owned direct or indirect subsidiary of PNC or PNC Bank Corp.
upon notice to the Fund and upon the satisfaction of certain other conditions.
With the approval of the Board, State Street or Fiduciary, as the case may be,
is authorized to select one or more foreign banking institutions and foreign
securities depositories to serve as sub-custodian on behalf of the Fund. PNC is
an indirect, wholly owned subsidiary of PNC Bank Corp., and its principal
business address is 1600 Market Street, Philadelphia, Pennsylvania 19103. The
principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110. The principal business address of Fiduciary is Two World
Trade Center, New York, New York 10048.
State Street Bank also acts as the shareholder servicing,
transfer and dividend disbursing agent of each Fund pursuant to a Transfer
Agency and Service Agreement, under which State Street (i) issues and redeems
shares of the Fund, (ii) addresses and mails all communications by the Fund to
record owners of Fund shares, including reports to shareholders, dividend and
distribution notices and proxy material for its meetings of shareholders, (iii)
maintains shareholder accounts and, if requested, sub-accounts and (iv) makes
periodic reports to the Board concerning the transfer agent's operations with
respect to the Fund. State Street has delegated to Boston Financial Data
Services, Inc., a 50% owned subsidiary ("BFDS"), responsibility for most
shareholder servicing functions. BFDS' principal business address is 2 Heritage
Drive, Boston, Massachusetts 02171.
Organization of the Funds
The Post-Venture Capital Fund's charter authorizes the Board to
issue three billion full and fractional shares of common stock, $.001 par value
per share ("Common Stock"), of which one billion shares are designated Common
Shares and two billion shares are designated Advisor Shares. The Global
Post-Venture Capital Fund's charter authorizes the Board to issue three billion
full and fractional shares of common stock, $.001 par value per share, of which
two billion shares are designated Common Shares and one billion shares are
designated Advisor Shares.
All shareholders of a Fund in each class, upon liquidation, will
participate ratably in the Fund's net assets. Shares do not have cumulative
voting rights, which means
32
<PAGE>
<PAGE>
that holders of more than 50% of the shares voting for the election of Directors
can elect all Directors. Shares are transferable but have no preemptive,
conversion or subscription rights.
Distribution and Shareholder Servicing
Common Shares. The Funds have entered into a Shareholder
Servicing and Distribution Plan (the "12b-1 Plan"), pursuant to Rule 12b-1 under
the 1940 Act, pursuant to which a Fund will pay Counsellors Securities, in
consideration for Services (as defined below), a fee calculated at an annual
rate of .25% of the average daily net assets of the Common Shares of the Fund.
Services performed by Counsellors Securities include (i) the sale of the Common
Shares, as set forth in the 12b-1 Plan ("Selling Services"), (ii) ongoing
servicing and/or maintenance of the accounts of Common Shareholders of the Fund,
as set forth in the 12b-1 Plan ("Shareholder Services"), and (iii) sub-transfer
agency services, subaccounting services or administrative services related to
the sale of the Common Shares, as set forth in the 12b-1 Plan ("Administrative
Services" and collectively with Selling Services and Administrative Services,
"Services") including, without limitation, (a) payments reflecting an allocation
of overhead and other office expenses of Counsellors Securities related to
providing Services; (b) payments made to, and reimbursement of expenses of,
persons who provide support services in connection with the distribution of the
Common Shares including, but not limited to, office space and equipment,
telephone facilities, answering routine inquiries regarding the Fund, and
providing any other Shareholder Services; (c) payments made to compensate
selected dealers or other authorized persons for providing any Services; (d)
costs relating to the formulation and implementation of marketing and
promotional activities for the Common Shares, including, but not limited to,
direct mail promotions and television, radio, newspaper, magazine and other mass
media advertising, and related travel and entertainment expenses; (e) costs of
printing and distributing prospectuses, statements of additional information and
reports of the Fund to prospective shareholders of the Fund; and (f) costs
involved in obtaining whatever information, analyses and reports with respect to
marketing and promotional activities that the Fund may, from time to time, deem
advisable. During the fiscal year ended October 31, 1996, the Post-Venture
Capital Fund paid $250,579 in 12b-1 fees in connection with its Common Shares,
all of which was spent on advertising and marketing communications. During the
period commenced September 30, 1996 (commencement of operations) to October 31,
1996, the Global Post-Venture Capital Fund paid $494 in 12b-1 fees in connection
with its Common Shares, all of which was payment on advertising and marketing
communications.
Pursuant to the 12b-1 Plan, Counsellors Securities provides the
Board with periodic reports of amounts expended under the 12b-1 Plan and the
purpose for which the expenditures were made.
Advisor Shares. The Post-Venture Capital Fund has entered and the
Global Post-Venture Capital Fund may, in the future, enter into agreements
("Agreements") with institutional shareholders of record, broker-dealers,
financial institutions, depository institutions, retirement plans and financial
intermediaries ("Institutions") to provide certain distribution, shareholder
servicing, administrative and/or accounting services for their clients
33
<PAGE>
<PAGE>
or customers (or participants in the case of retirement plans) ("Customers") who
are beneficial owners of Advisor Shares. See the Advisor Prospectus,
"Shareholder Servicing." Agreements will be governed by a distribution plan (the
"Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act, pursuant to
which the Fund will pay in consideration for services, a fee calculated at an
annual rate of .50% of the average daily net assets of the Advisor Shares of the
Fund. The Distribution Plan requires the Board, at least quarterly, to receive
and review written reports of amounts expended under the Distribution Plan and
the purposes for which such expenditures were made. During the fiscal year ended
October 31, 1996, the Post-Venture Capital Fund paid $211 in 12b-1 fees in
connection with its Advisor Shares, all of which was paid to Institutions.
An Institution with which a Fund has entered into an Agreement
with respect to its Advisor Shares may charge a Customer one or more of the
following types of fees, as agreed upon by the Institution and the Customer,
with respect to the cash management or other services provided by the
Institution: (i) account fees (a fixed amount per month or per year); (ii)
transaction fees (a fixed amount per transaction processed); (iii) compensation
balance requirements (a minimum dollar amount a Customer must maintain in order
to obtain the services offered); or (iv) account maintenance fees (a periodic
charge based upon the percentage of assets in the account or of the dividend
paid on those assets). Services provided by an Institution to Customers are in
addition to, and not duplicative of, the services to be provided under each
Fund's co-administration and distribution and shareholder servicing
arrangements. A Customer of an Institution should read the relevant Prospectus
and this Statement of Additional Information in conjunction with the Agreement
and other literature describing the services and related fees that would be
provided by the Institution to its Customers prior to any purchase of Fund
shares. Prospectuses are available from the Fund's distributor upon request. No
preference will be shown in the selection of Fund portfolio investments for the
instruments of Institutions.
General. The Distribution Plan and the 12b-1 Plan will continue
in effect for so long as their continuance is specifically approved at least
annually by a Board, including a majority of the Directors who are not
interested persons of a Fund and who have no direct or indirect financial
interest in the operation of the Distribution Plan or the 12b-1 Plan, as the
case may be ("Independent Directors"). Any material amendment of the
Distribution Plan or the 12b-1 Plan would require the approval of the Board in
the manner described above. The Distribution Plan or the 12b-1 Plan may not be
amended to increase materially the amount to be spent thereunder without
shareholder approval of the Advisor Shares or the Common Shares, as the case may
be. The Distribution Plan or the 12b-1 Plan may be terminated at any time,
without penalty, by vote of a majority of the Independent Directors or by a vote
of a majority of the outstanding voting securities of the Advisor Shares or the
Common Shares, as the case may be.
34
<PAGE>
<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The offering price of a Fund's shares is equal to the per share
net asset value of the relevant class of shares of the Fund. Information on how
to purchase and redeem Fund shares and how such shares are priced is included in
the Prospectuses under "Net Asset Value."
Under the 1940 Act, a Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed, other than customary weekend and holiday closings, or during
which trading on the NYSE is restricted, or during which (as determined by the
SEC) an emergency exists as a result of which disposal or fair valuation of
portfolio securities is not reasonably practicable, or for such other periods as
the SEC may permit. (The Fund may also suspend or postpone the recordation of an
exchange of its shares upon the occurrence of any of the foregoing conditions.)
If a Board determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable, the Fund may make
payment wholly or partly in securities or other investment instruments which may
not constitute securities as such term is defined in the applicable securities
laws. If a redemption is paid wholly or partly in securities or other property,
a shareholder would incur transaction costs in disposing of the redemption
proceeds. The Fund will comply with Rule 18f-1 promulgated under the 1940 Act
with respect to redemptions in kind.
Automatic Cash Withdrawal Plan. An automatic cash withdrawal plan
(the "Plan") is available to shareholders who wish to receive specific amounts
of cash periodically. Withdrawals may be made under the Plan by redeeming as
many shares of the relevant Fund as may be necessary to cover the stipulated
withdrawal payment. To the extent that withdrawals exceed dividends,
distributions and appreciation of a shareholder's investment in the Fund, there
will be a reduction in the value of the shareholder's investment and continued
withdrawal payments may reduce the shareholder's investment and ultimately
exhaust it. Withdrawal payments should not be considered as income from
investment in the Fund. All dividends and distributions on shares in the Plan
are automatically reinvested at net asset value in additional shares of the
Fund.
EXCHANGE PRIVILEGE
An exchange privilege with certain other funds advised by Warburg
is available to investors in a Fund. The funds into which exchanges of Common
Shares currently can be made are listed in the Common Share Prospectus.
Exchanges may also be made between certain Warburg Pincus Advisor Funds.
The exchange privilege enables shareholders to acquire shares in
a fund with a different investment objective when they believe that a shift
between funds is an appropriate
35
<PAGE>
<PAGE>
investment decision. This privilege is available to shareholders residing in any
state in which the Common Shares or Advisor Shares being acquired, as relevant,
may legally be sold. Prior to any exchange, the investor should obtain and
review a copy of the current prospectus of the relevant class of each fund into
which an exchange is being considered. Shareholders may obtain a prospectus of
the relevant class of the fund into which they are contemplating an exchange
from Counsellors Securities.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current net
asset value of the relevant class and the proceeds are invested on the same day,
at a price as described above, in shares of the relevant class of the fund being
acquired. Warburg reserves the right to reject more than three exchange requests
by a shareholder in any 30-day period. The exchange privilege may be modified or
terminated at any time upon 60 days' notice to shareholders.
ADDITIONAL INFORMATION CONCERNING TAXES
The discussion set out below of tax considerations generally
affecting a Fund and its shareholders is intended to be only a summary and is
not intended as a substitute for careful tax planning by prospective
shareholders. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.
A Fund intends to qualify each year as a "regulated investment
company" under Subchapter M of the Code. If it qualifies as a regulated
investment company, the Fund will pay no federal income taxes on its taxable net
investment income (that is, taxable income other than net realized capital
gains) and its net realized capital gains that are distributed to shareholders.
To qualify under Subchapter M, the Fund must, among other things: (i) distribute
to its shareholders at least the sum of 90% of its taxable net investment income
(for this purpose consisting of taxable net investment income and net realized
short-term capital gains) plus 90% of its net tax-exempt interest income; (ii)
derive at least 90% of its gross income from dividends, interest, payments with
respect to loans of securities, gains from the sale or other disposition of
securities, or other income (including, but not limited to, gains from options,
futures, and forward contracts) derived with respect to the Fund's business of
investing in securities; (iii) derive less than 30% of its annual gross income
from the sale or other disposition of securities, options, futures, forward
contracts and certain other assets held for less than three months; and (iv)
diversify its holdings so that, at the end of each fiscal quarter of the Fund
(a) at least 50% of the market value of the Fund's assets is represented by
cash, U.S. Government Securities and other securities, with those other
securities limited, with respect to any one issuer, to an amount no greater in
value than 5% of the Fund's total assets and to not more than 10% of the
outstanding voting securities of the issuer, and (b) not more than 25% of the
market value of the Fund's assets is invested in the securities of any one
issuer (other than U.S. Government Securities or securities of other regulated
investment companies) or of two or more issuers that the Fund controls and that
are determined to be in the same or similar trades or businesses or related
trades or businesses. In meeting these
36
<PAGE>
<PAGE>
requirements, the Fund may be restricted in the selling of securities held by
the Fund for less than three months and in the utilization of certain of the
investment techniques described above and in the Fund's Prospectus. As a
regulated investment company, the Fund will be subject to a 4% non-deductible
excise tax measured with respect to certain undistributed amounts of ordinary
income and capital gain required to be but not distributed under a prescribed
formula. The formula requires payment to shareholders during a calendar year of
distributions representing at least 98% of the Fund's taxable ordinary income
for the calendar year and at least 98% of the excess of its capital gains over
capital losses realized during the one-year period ending October 31 during such
year, together with any undistributed, untaxed amounts of ordinary income and
capital gains from the previous calendar year. The Fund expects to pay the
dividends and make the distributions necessary to avoid the application of this
excise tax.
A Fund's transactions, if any, in foreign currencies, forward
contracts, options and futures contracts (including options and forward
contracts on foreign currencies) will be subject to special provisions of the
Code that, among other things, may affect the character of gains and losses
recognized by the Fund (i.e., may affect whether gains or losses are ordinary or
capital), accelerate recognition of income to the Fund, defer Fund losses and
cause the Fund to be subject to hyperinflationary currency rules. These rules
could therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (i) will require the Fund to mark-to-market
certain types of its positions (i.e., treat them as if they were closed out) and
(ii) may cause the Fund to recognize income without receiving cash with which to
pay dividends or make distributions in amounts necessary to satisfy the
distribution requirements for avoiding income and excise taxes. The Fund will
monitor its transactions, will make the appropriate tax elections and will make
the appropriate entries in its books and records when it acquires any foreign
currency, forward contract, option, futures contract or hedged investment so
that (a) neither the Fund nor its shareholders will be treated as receiving a
materially greater amount of capital gains or distributions than actually
realized or received, (b) the Fund will be able to use substantially all of its
losses for the fiscal years in which the losses actually occur and (c) the Fund
will continue to qualify as a regulated investment company.
Upon the sale or exchange of shares, a shareholder will realize a
taxable gain or loss depending upon the amount realized and the basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands, and, as described in the
Prospectus, will be long-term or short-term depending upon the shareholder's
holding period for the shares. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced, including
replacement through the reinvestment of dividends and capital gains
distributions in a Fund, within a period of 61 days beginning 30 days before and
ending 30 days after the disposition of the shares. In such a case, the basis of
the shares acquired will be increased to reflect the disallowed loss.
A shareholder of a Fund receiving dividends or distributions in
additional shares should be treated for federal income tax purposes as receiving
a distribution in an amount equal to the amount of money that a shareholder
receiving cash dividends or distributions
37
<PAGE>
<PAGE>
receives, and should have a cost basis in the shares received equal to that
amount. Investors considering buying shares just prior to a dividend or capital
gain distribution should be aware that, although the price of shares purchased
at that time may reflect the amount of the forthcoming distribution, those who
purchase just prior to a distribution will receive a distribution that will
nevertheless be taxable to them.
Each shareholder will receive an annual statement as to the
federal income tax status of his dividends and distributions from the Fund for
the prior calendar year. Furthermore, shareholders will also receive, if
appropriate, various written notices after the close of a Fund's taxable year
regarding the federal income tax status of certain dividends and distributions
that were paid (or that are treated as having been paid) by the Fund to its
shareholders during the preceding year.
If a shareholder fails to furnish a correct taxpayer
identification number, fails to report fully dividend or interest income, or
fails to certify that he has provided a correct taxpayer identification number
and that he is not subject to "backup withholding," the shareholder may be
subject to a 31% "backup withholding" tax with respect to (i) taxable dividends
and distributions and (ii) the proceeds of any sales or repurchases of shares of
the Fund. An individual's taxpayer identification number is his social security
number. Corporate shareholders and other shareholders specified in the Code are
or may be exempt from backup withholding. The backup withholding tax is not an
additional tax and may be credited against a taxpayer's federal income tax
liability. Dividends and distributions also may be subject to state and local
taxes depending on each shareholder's particular situation.
Investment in Passive Foreign Investment Companies
If a Fund purchases shares in certain foreign entities classified
under the Code as "passive foreign investment companies" ("PFICs"), the Fund may
be subject to federal income tax on a portion of an "excess distribution" or
gain from the disposition of the shares, even though the income may have to be
distributed as a taxable dividend by the Fund to its shareholders. In addition,
gain on the disposition of shares in a PFIC generally is treated as ordinary
income even though the shares are capital assets in the hands of the Fund.
Certain interest charges may be imposed on either the Fund or its shareholders
with respect to any taxes arising from excess distributions or gains on the
disposition of shares in a PFIC.
A Fund may be eligible to elect to include in its gross income
its share of earnings of a PFIC on a current basis. Generally, the election
would eliminate the interest charge and the ordinary income treatment on the
disposition of stock, but such an election may have the effect of accelerating
the recognition of income and gains by the Fund compared to a fund that did not
make the election. In addition, information required to make such an election
may not be available to the Fund.
On April 1, 1992 proposed regulations of the Internal Revenue
Service (the "IRS") were published providing a mark-to-market election for
regulated investment companies. The IRS subsequently issued a notice indicating
that final regulations will provide
38
<PAGE>
<PAGE>
that regulated investment companies may elect the mark-to-market election for
tax years ending after March 31, 1992 and before April 1, 1993. Whether and to
what extent the notice will apply to taxable years of the Fund is unclear. If a
Fund is not able to make the foregoing election, it may be able to avoid the
interest charge (but not the ordinary income treatment) on disposition of the
stock by electing, under proposed regulations, each year to mark-to-market the
stock (that is, treat it as if it were sold for fair market value). Such an
election could result in acceleration of income to the Fund. Recently proposed
legislation would codify the mark-to-market election for regulated investment
companies.
DETERMINATION OF PERFORMANCE
From time to time, a Fund may quote the total return of its
Common Shares and/or Advisor Shares in advertisements or in reports and other
communications to shareholders.
Post-Venture Capital Fund
(performance figures calculated without the waiver of fees
by the Fund's service provider(s), if any, are noted in parenthesis)
<TABLE>
<CAPTION>
Period from the
One-year period commencement of
ended October 31, operations and ended
1996 October 31, 1996
---------------- ----------------
<S> <C> <C>
Common Shares 49.95%(49.30%) 53.98% (53.37%)
Advisor Shares 49.16%(48.97%) 53.10% (52.84%)
</TABLE>
These figures constitute the annual average total return for the relevant period
listed. (The Fund commenced operations on September 29, 1995.)
Global Post-Venture Capital Fund
(performance figures calculated without the waiver of fees
by the Fund's service provider(s), if any, are noted in parenthesis)
<TABLE>
<CAPTION>
Period from the
commencement of
operations and ended
October 31, 1996
---------------------
<S> <C>
Common Shares -1.40% (-27.67%*)
</TABLE>
39
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Advisor Shares -1.50% (-27.67%*)
</TABLE>
*Annualized.
(The Fund commenced operations on September 30, 1996.)
These figures are calculated by finding the average annual
compounded rates of return for the one-, five- and ten- (or such shorter period
as the relevant class of shares has been offered) year periods that would equate
the initial amount invested to the ending redeemable value according to the
following formula: P (1 + T)'pp'n = ERV. For purposes of this formula, "P" is a
hypothetical investment of $1,000; "T" is average annual total return; "n" is
number of years; and "ERV" is the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the one-, five- or ten-year periods (or
fractional portion thereof). Total return or "T" is computed by finding the
average annual change in the value of an initial $1,000 investment over the
period and assumes that all dividends and distributions are reinvested during
the period. Investors should note that this performance may not be
representative of the Fund's total return over longer market cycles.
A Fund may advertise, from time to time, comparisons of the
performance of its Common Shares and/or Advisor Shares with that of one or more
other mutual funds with similar investment objectives. The Fund may advertise
average annual calendar-year-to-date and calendar quarter returns, which are
calculated according to the formula set forth in the preceding paragraph, except
that the relevant measuring period would be the number of months that have
elapsed in the current calendar year or most recent three months, as the case
may be.
The performance of a class of Fund shares will vary from time to
time depending upon market conditions, the composition of the Fund's portfolio
and operating expenses allocable to it. As described above, total return is
based on historical earnings and is not intended to indicate future performance.
Consequently, any given performance quotation should not be considered as
representative of performance for any specified period in the future.
Performance information may be useful as a basis for comparison with other
investment alternatives. However, the Fund's performance will fluctuate, unlike
certain bank deposits or other investments which pay a fixed yield for a stated
period of time. Any fees charged by Institutions or other institutional
investors directly to their customers in connection with investments in Fund
shares are not reflected in the Fund's total return, and such fees, if charged,
will reduce the actual return received by customers on their investments.
The Global Post-Venture Capital Fund intends to diversify its
assets among countries, and in doing so, would expect to be able to reduce the
risk arising from economic problems affecting a single country. Warburg thus
believes that, by spreading risk throughout many diverse markets outside the
United States, the Fund will reduce its exposure to country-specific economic
problems. Warburg also believes that a diversified portfolio of international
equity securities, when combined with a similarly diversified portfolio of
domestic equity securities, tends to have a lower volatility than a portfolio
composed entirely of domestic securities. Furthermore, international equities
have been shown to reduce volatility in single
40
<PAGE>
<PAGE>
asset portfolios regardless of whether the investments are in all domestic
equities or all domestic fixed-income instruments, and research indicates that
volatility can be significantly decreased when international equities are added.
Reference may be made in advertising a class of Fund shares to
opinions of Wall Street economists and analysts regarding economic cycles and
their effects historically on the performance of small companies, both as a
class and relative to other investments. A Fund may also discuss its beta, or
volatility relative to the market, and make reference to its relative
performance in various market cycles in the United States.
INDEPENDENT ACCOUNTANTS AND COUNSEL
Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), with principal
offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves as
independent accountants for each Fund. A Fund's financial statement for the
fiscal period or year ended October 31, 1996 that is incorporated by reference
in this Statement of Additional Information has been audited by Coopers &
Lybrand, whose report thereon appears elsewhere herein and has been included
herein in reliance upon the report of such firm of independent accountants given
upon their authority as experts in accounting and auditing.
Willkie Farr & Gallagher serves as counsel for the Funds as well
as counsel to Warburg, Counsellors Service and Counsellors Securities.
MISCELLANEOUS
As of December 31, 1996, the name, address and percentage of
ownership of each person that owns of record 5% or more of the Fund's
outstanding shares where as follows:
<TABLE>
<CAPTION>
Post-Venture Capital Fund Common Shares Advisor Shares
- ------------------------- ------------- --------------
<S> <C> <C>
Charles Schwab & Co. Inc. 24.77%
Reinvest Account
Attn.: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Donaldson Lufkin & Jenrette 5.25%
Securities
P.O. Box 2052
Jersey City, NJ 07303-2052
Nat'l Financial Svcs Corp. 12.62%
FBO Customers
P.O. Box 3908
</TABLE>
41
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
Church Street Station
New York, NY 10008-3908
Donald J. Smith 16.31%
Robert J. Smith Trustees
EM Smith Jewelers Inc.
P/S Pension Fund Trust
1334 Bridge Street
Chillicothe, OH 45601
Donald J. Smith 8.56%
Robert J. Smith
David E. Smith Trustees
Eugene M. Smith Revocable
Trust
UAD 4/8/80
17 Briarcliff Drive
Chillicothe, OH 45601-1913
State Street Bank & Trust 40.67%
Company
Custodian for the IRA of
Barton B. Antista
2622 Katherine Street
El Cajon, CA 92020-2036
</TABLE>
The Post-Venture Capital Fund believes these entities are not the
beneficial owners of shares held of record by them. Mr. Lionel I. Pincus,
Chairman of the Board and Chief Executive Officer of Warburg, may be deemed to
have beneficially owned 20.35% of the Common Shares outstanding, including
shares owned by clients for which Warburg has investment discretion and by
companies that Warburg may be deemed to control. Mr. Pincus disclaims ownership
of these shares and does not intend to exercise voting rights with respect to
these shares.
<TABLE>
<CAPTION>
Global Post-Venture
Capital Fund Common Shares Advisor Shares
- ------------------- ------------- --------------
<S> <C> <C>
Warburg, Pincus Counsellors, 23.13% 87.19%
Inc.
Attn.: Stephen Distler
466 Lexington Avenue, 10th Fl
New York, NY 10017-3140
The American Numismatic 12.01%
Society
155th Street Broadway
New York, NY 10032
</TABLE>
42
<PAGE>
<PAGE>
The Global Post-Venture Capital Fund believes these entities are
not the beneficial owners of shares held of record by them. Warburg holds these
shares as a result of limited distribution activities of the Common and Advisor
Shares since commencement of the Fund's operations. Mr. Lionel I. Pincus,
Chairman of the Board and Chief Executive Officer of Warburg, may be deemed to
have beneficially owned 26.37% of the Common and Advisor Shares outstanding,
including shares owned by clients for which Warburg has investment discretion
and by companies that Warburg may be deemed to control. Mr. Pincus disclaims
ownership of these shares and does not intend to exercise voting rights with
respect to these shares.
FINANCIAL STATEMENTS
Each Fund's audited annual report dated October 31, 1996, which
either accompanies this Statement of Additional Information or has previously
been provided to the investor to whom this Statement of Additional Information
is being sent, is incorporated herein by reference. A Fund will furnish without
charge a copy of its annual report upon request by calling Warburg Pincus Funds
at (800) 927-2874.
43
<PAGE>
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
Commercial Paper Ratings
Commercial paper rated A-1 by Standard and Poor's Ratings
Services ("S&P") indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign designation. Capacity for timely
payment on commercial paper rated A-2 is satisfactory, but the relative degree
of safety is not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's Investor Services, Inc. ("Moody's"). Issuers rated Prime-1
(or related supporting institutions) are considered to have a superior capacity
for repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) are considered to have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is maintained.
Corporate Bond Ratings
The following summarizes the ratings used by S&P for corporate
bonds:
AAA - This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.
BBB - This is the lowest investment grade. Debt rated BBB is
regarded as having an adequate capacity to pay interest and repay principal.
Although it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this category than for
bonds in higher rated categories.
BB, B, CCC, CC and C - Debt rated BB and B are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
represents a lower degree of speculation than
A-1
<PAGE>
<PAGE>
B, and CCC the highest degree of speculation. While such bonds will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default
than other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions, which could
lead to inadequate capacity to meet timely interest and principal payments. The
BB rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B - Debt rated B has a greater vulnerability to default but
currently have the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability
to default and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC - This rating is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating.
C - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
Additionally, the rating CI is reserved for income bonds on which
no interest is being paid. Such debt is rated between debt rated C and debt
rated D.
To provide more detailed indications of credit quality, the
ratings may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.
D - Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
A-2
<PAGE>
<PAGE>
The following summarizes the ratings used by Moody's for
corporate bonds:
Aaa - Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Moody's applies numerical modifiers (1, 2 and 3) with respect to
the bonds rated "Aa" through "B." The modifier 1 indicates that the bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the bond ranks
in the lower end of its generic rating category.
Caa - Bonds that are rated Caa are of poor standing. These issues
may be in default or present elements of danger may exist with respect to
principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
A-3
<PAGE>
<PAGE>
C - Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
A-4
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements --
(1) Financial Statements included in Part A:
(a) Financial Highlights
(2) Financial Statements included in Part B (incorporated by
reference to the Fund's Annual Report dated October 31,
1996):
(a) Report of Coopers & Lybrand L.L.P., Independent
Accountants
(b) Schedule of Investments
(c) Statement of Net Assets and Liabilities
(d) Statement of Operations
(e) Statement of Changes in Net Assets
(f) Financial Highlights
(g) Notes to Financial Statements
(b) Exhibits:
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(a) Articles of Incorporation.(1)
(b) Articles Supplementary
(c) Articles of Amendment
2 By-Laws.(1)
3 Not applicable.
4 Registrant's Forms of Stock Certificates.(1)
5(a) Form of Investment Advisory Agreement
with Warburg, Pincus Counsellors, Inc.(1)
(b) Form of Sub-Investment Advisory Agreement
with Abbott Capital Management, L.P.
(c) Form of Sub-Investment Advisory Agreement with
Abbott Capital Management, L.L.C.
6 Form of Distribution Agreement.
7 Not applicable.
- ------------------
(1) Incorporated by reference to Registrant's Registration Statement on
Form N-1A filed on July 19, 1996 (Securities Act file No. 33-08459).
4
<PAGE>
<PAGE>
8(a) Form of Custodian Agreement with PNC Bank, National
Association.(2)
(b) Form of Custodian Agreement with Fiduciary Trust
Company International.(3)
9(a) Form of Transfer Agency and Service Agreement with
State Street Bank & Trust Company.(2)
(b) Form of Co-Administration Agreement with Counsellors
Funds Service, Inc.(1)
(c) Form of Co-Administration Agreement with PFPC Inc.(1)
(d) Forms of Services Agreements.
10(a) Opinion and Consent of Willkie Farr & Gallagher,
counsel to the Fund.(4)
(b) Consent of Willkie Farr & Gallagher, counsel to the
Fund.
(c) Opinion and Consent of Venable, Baetjer and
Howard, LLP, Maryland counsel to the Fund.(3)
11 Consent of Coopers & Lybrand L.L.P.,
Independent Accountants.
12 Not applicable.
13 Form of Purchase Agreement.(1)
14 Not applicable
15(a) Form of Shareholder Servicing and Distribution Plan.
(b) Form of Shareholder Services Plan.(1)
(c) Form of Distribution Plan.
16 Schedule for Computation of Total Return Performance
Quotation.
17(a) Financial Data Schedule -- Common Shares.
(b) Financial Data Schedule -- Advisor Shaers.
18 Form of Rule 18f-3 Plan.
Item 25. Persons Controlled by or Under Common Control
with Registrant
From time to time, Counsellors may be deemed to control the Fund
and other registered investment companies it advises through its beneficial
ownership of more than 25% of the
- ------------
(2) Incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
of Warburg, Pincus Trust filed on June 14, 1995 (Securities Act File No.
33-58125).
(3) Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities and Exchange
Commission on September 20, 1996.
(4) Incorporated by reference to Opinion of Willkie Farr & Gallagher filed
with Registrant's Rule 24f-2 Notice, filed on December 27, 1996.
5
<PAGE>
<PAGE>
relevant fund's shares on behalf of discretionary advisory clients. Counsellors
has four wholly-owned subsidiaries: Counsellors Securities Inc., a New York
Corporation; Counsellors Funds Service Inc., a New York corporation; Counsellors
Agency Inc., a New York corporation; and Warburg, Pincus Investments
International (Bermuda), Ltd., a Bermuda corporation.
Item 26. Number of Holders of Securities
Title of Class Number of Record Holders
-------------- as of December 31, 1996
------------------------
Shares of common stock, par value $.001
per share -- Common Shares 181
Shares of common stock, par value $.001
share - Advisor Shares 1
Item 27. Indemnification
Registrant, officers and directors of Counsellors, of Counsellors Securities
Inc. ("Counsellors Securities") and of Registrant are covered by insurance
policies indemnifying them for liability incurred in connection with the
operation of Registrant. These policies provide insurance for any "Wrongful Act"
of an officer, director or trustee. Wrongful Act is defined as breach of duty,
neglect, error, misstatement, misleading statement, omission or other act done
or wrongfully attempted by an officer, director or trustee in connection with
the operation of Registrant. Insurance coverage does not extend to (a) conflicts
of interest or gain in fact any profit or advantage to which one is not legally
entitled, (b) intentional non-compliance with any statute or regulation or (c)
commission of dishonest, fraudulent acts or omissions. Insofar as it related to
Registrant, the coverage is limited in amount and, in certain circumstances, is
subject to a deductible.
Under Article VIII of the Articles of Incorporation (the "Articles"),
the Directors and officers of Registrant shall not have any liability to
Registrant or its stockholders for money damages, to the fullest extent
permitted by Maryland law. This limitation on liability applies to events
occurring at the time a person serves as a Director or officer of Registrant
whether or not such person is a Director or officer at the time of any
proceeding in which liability is asserted. No provision of Article VIII shall
protect or purport to protect any Director or officer of Registrant against any
liability to Registrant or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Registrant shall indemnify and advance expenses to its currently acting and its
former Director to the fullest extent that
6
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indemnification of Directors and advancement of expenses to Directors is
permitted by the Maryland General Corporation Law.
Registrant shall indemnify and advance expenses to its officers to the
same extent as its Directors and to such further extent as is consistent with
such law. The Board of Directors may, through a by-law, resolution or agreement,
make further provisions for indemnification of directors, officers, employees
and agents to the fullest extent permitted by the Maryland General Corporation
Law.
Article V of the By-Laws further limits the liability of the Directors
by providing that any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of Registrant, or is
or was serving while a director or officer of Registrant at the request of
Registrant as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by Registrant against judgments,
penalties, fines, excise taxes, settlements and reasonable expenses (including
attorneys' fees) actually incurred by such person in connection with such
action, suit or proceeding to the full extent permissible under the Maryland
General Corporation Law, the 1993 Act and the 1940 Act, as such statutes are now
or hereafter in force, except that such indemnity shall not protect any such
person against any liability to Registrant or any stockholder thereof to which
such person would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of this office.
Item 28. Business and Other Connections of Investment Adviser
Warburg, a wholly owned subsidiary of Warburg, Pincus, Counsellors
G.P., acts as investment adviser to the Registrant. Warburg renders investment
advice to a wide variety of individual and institutional clients. The list
required by this Item 28 of officers and directors of Warburg, together with
information as to their other business, profession, vocation or employment of a
substantial nature during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by Warburg (SEC File No. 801-07321).
Abbott Capital Management, L.P. ("Abbott") act as sub-investment
adviser for the Registrant. Abbott renders investment advice and provides
full-service private equity programs to clients. The list required by this Item
28 of officers and partners of Abbott, together with information as to their
other business, profession, vocation or employment of a substantial nature
during the past two years, is
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incorporated by reference to schedules A and D of Form ADV filed by Abbott
(SEC File No. 801-27914).
Item 29. Principal Underwriter
(a) Counsellors Securities will act as distributor for Registrant.
Counsellors Securities currently acts as distributor for The RBB Fund, Inc.,
Warburg Pincus Balanced Fund; Warburg Pincus Capital Appreciation Fund; Warburg
Pincus Cash Reserve Fund; Warburg Pincus Emerging Growth Fund; Warburg Pincus
Emerging Markets Fund; Warburg Pincus Fixed Income Fund; Warburg Pincus Global
Fixed Income Fund; Warburg Pincus Global Post-Venture Capital Fund; Warburg
Pincus Growth & Income Fund; Warburg Pincus Health Sciences Fund; Warburg Pincus
Institutional Fund, Inc.; Warburg Pincus Intermediate Maturity Government Fund;
Warburg Pincus International Equity Fund; Warburg Pincus Japan Growth Fund;
Warburg Pincus Japan OTC Fund; Warburg Pincus New York Intermediate Municipal
Fund; Warburg Pincus New York Tax Exempt Fund; Warburg Pincus Post-Venture
Capital Fund; Warburg, Pincus Small Company Growth Fund; Warburg Pincus Small
Company Value Fund; Warburg Pincus Strategic Value Fund; Warburg Pincus Tax Free
Fund; Warburg Pincus Trust; and Warburg Pincus Trust II.
(b) For information relating to each director, officer or partner of
Counsellors Securities, reference is made to Form BD (SEC File No. 8-32482)
filed by Counsellors Securities under the Securities Exchange Act of 1934.
(c) None.
8
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Item 30. Location of Accounts and Records
(1) Warburg, Pincus Global Post-Venture Capital Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(Fund's Articles of Incorporation, By-Laws and minute books)
(2) Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as investment adviser)
3) PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as Co-administrator)
(4) Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as Co-administrator)
(5) Fiduciary Trust Company International
Two World Trade Center
New York, New York 10048
(records relating to its functions as custodian)
(6) State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(records relating to its functions as transfer agent and
dividend disbursing agent)
(7) Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
(records relating to its functions as transfer agent and
dividend disbursing agent)
(8) PNC Bank, National Association
1600 Market Street
Philadelphia, Pennsylvania 19103
(records relating to its functions as custodian)
(9) Counsellors Securities Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as distributor)
9
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Item 31. Management Services
Not applicable.
Item 32. Undertakings.
(a) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the latest annual report to shareholders
for the relevant Portfolio, upon request and without charge.
(b) Registrant hereby undertakes to call a meeting of its shareholders
for the purpose of voting upon the question of removal of a director or
directors of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares. Registrant undertakes further, in
connection with the meeting, to comply with the provisions of Section 16(c) of
the 1940 Act relating to communications with the shareholders of certain
common-law trusts.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933,
as amended, and has duly caused this Amendment to be signed on its behalf by the
undersigned, thereun to duly authorized, in the City of New York and the State
of New York, on the 21st day of February, 1997.
WARBURG, PINCUS GLOBAL POST-VENTURE
CAPITAL FUND, INC.
By:/s/Arnold M. Reichman
------------------------------------
Arnold M. Reichman
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment has been signed below by the following persons in the capacities
and on the date indicated:
Signature Title Date
- --------- ----- ----
/s/John L. Furth Chief Executive February 21, 1997
- ---------------------------- Officer and Director
John L. Furth
/s/Arnold M. Reichman President and February 21, 1997
- ---------------------------- Director
Arnold M. Reichman
/s/Howard Conroy Vice President and February 21, 1997
- ---------------------------- Chief Financial Officer
Howard Conroy
/s/Daniel S. Madden Treasurer and Chief February 21, 1997
- ---------------------------- Accounting Officer
Daniel S. Madden
/s/Richard N. Cooper Director February 21, 1997
- ----------------------------
Richard N. Cooper
/s/Donald J. Donahue Director February 21, 1997
- ----------------------------
Donald J. Donahue
/s/Jack W. Fritz Director February 21, 1997
- ----------------------------
Jack W. Fritz
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/s/Thomas A. Melfe Director February 21, 1997
- ----------------------------
Thomas A. Melfe
/s/Alexander B. Trowbridge Director February 21, 1997
- ----------------------------
Alexander B. Trowbridge
12
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(b) Articles Supplementary.
(c) Articles of Amendment.
5(b) Form of Sub-Investment Advisory Agreement with
Abbott Capital Management, L.P.
(c) Form of Sub-Investment Advisory Agreement with
Abbott Capital Management, L.L.C.
6 Form of Distribution Agreement.
9(d) Forms of Services Agreements.
10(b) Consent of Willkie Farr & Gallagher, counsel to the Fund.
11 Consent of Coopers & Lybrand L.L.P., Independent
Accountants.
15(a) Form of Shareholder Servicing and Distribution Plan.
(c) Form of Distribution Plan.
16 Schedule for Computation of Total Return
Performance Quotation.
17(a) Financial Data Schedule -- Common Shares.
(b) Financial Data Schedule -- Advisor Shares.
18 Form of Rule 18f-3 Plan.
13
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as.................................. 'D'
Characters normally expressed as superscript shall be preceded by........ 'pp'
<PAGE>
<PAGE>
WARBURG, PINCUS GLOBAL POST-VENTURE CAPITAL FUND, INC.
ARTICLES SUPPLEMENTARY
Warburg, Pincus Global Post-Venture Capital Fund, Inc., a
Maryland corporation having its principal office in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority of the Board of Directors
contained in the Charter of the Corporation, one billion (1,000,000,000) shares
of authorized but unissued shares of the Corporation's Series of Common Stock
designated Common Stock-Series 1 have been duly reclassified by the Board of
Directors of the Corporation as authorized but unissued shares of the
Corporation's Series of Common Stock designated Common Stock-Series 2 ("Series 2
Shares").
SECOND: The reclassified shares shall have the preferences,
conversions or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms and conditions of redemption of the Series 2
Shares as currently set forth in the Charter. A description of the Series 2
Shares is contained in Articles of Incorporation filed with the Department of
Assessments and Taxation of Maryland on July 16, 1996.
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<PAGE>
THIRD: The reclassification of authorized but unissued shares as
set forth in these Articles Supplementary does not increase the authorized
capital of the Corporation or the aggregate par value thereof.
IN WITNESS WHEREOF, the Corporation has caused these Articles to
be signed in its name and on its behalf by its Vice President and its corporate
seal to be hereunto affixed and attested by its Assistant Secretary this 12th
day of November, 1996. The undersigned officers acknowledge that these Articles
Supplementary are the act of the Corporation, that to the best of their
knowledge, information and belief all matters and facts set forth herein
relating to the authorization and approval of these Articles are true in all
material respects, and that this statement is made under the penalties of
perjury.
WARBURG, PINCUS GLOBAL POST-VENTURE
CAPITAL FUND, INC.
/s/Eugene P. Grace
-----------------------------------
Eugene P. Grace
Vice President
ATTEST:
/s/Janna Manes
- -----------------------------
Janna Manes
Assistant Secretary
-2-
<PAGE>
<PAGE>
WARBURG, PINCUS GLOBAL POST-VENTURE CAPITAL FUND, INC.
ARTICLES OF AMENDMENT
Warburg, Pincus Global Post-Venture Capital Fund, Inc., a
Maryland corporation having its principal office in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is amended by redesignating
all of the currently issued and unissued shares of the Corporation's Series of
Common Stock designated Common Stock-Series 2, of which two billion
(2,000,000,000) shares are presently allocated, as Advisor Shares of Common
Stock.
SECOND: The foregoing amendments to the Articles of Incorporation
of the Corporation were approved by a majority of the entire Board of Directors
of the Corporation and the amendments to the Articles of Incorporation are
limited to changes expressly permitted by Section 2-605 of Subtitle 6 of Title 2
of the Maryland General Corporation Law to be made without action by
stockholders.
THIRD: The Corporation is registered as an open-end company under
the Investment Company Act of 1940, as amended.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Warburg, Pincus Global Post-Venture Capital
Fund, Inc. has caused these presents to be signed in its name and on its behalf
of the 12th day of November, 1996 by its duly authorized officers, who
acknowledge that these Articles of Amendment are the act of the Corporation and
that to the best of their knowledge, information and belief, all matters and
facts set forth herein relating to the authorization and approval of these
Articles are true in all material respects and that this statement is made under
the penalties of perjury.
WARBURG, PINCUS GLOBAL POST-VENTURE
CAPITAL FUND, INC.
By: /s/Eugene P. Grace
-----------------------------
Eugene P. Grace
Vice President
WITNESS:
/s/Janna Manes
- -----------------------------
Janna Manes
Assistant Secretary
<PAGE>
<PAGE>
SUB-INVESTMENT ADVISORY AGREEMENT
______ __, 1997
Abbott Capital Management, L.P.
50 Rowes Wharf
Boston, MA 02110
Dear Sirs:
Warburg, Pincus Global Post-Venture Capital Fund, Inc. (the
"Fund"), a corporation organized and existing under the laws of the State of
Maryland, and Warburg, Pincus Counsellors, Inc., as its investment adviser
("Warburg"), herewith confirms their agreement with Abbott Capital Management,
L.P. (the "Sub-Adviser") as follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Fund by investing
and reinvesting in securities of the kind and in accordance with the limitations
specified in the Fund's Articles of Incorporation, as may be amended from time
to time (the "Articles of Incorporation"), and in the Prospectus and Statement
of Additional Information, as from time to time in effect (the "Prospectus" and
"SAI," respectively), and in such manner and to such extent as may from time to
time be approved by the Board of Directors of the Fund. Copies of the
Prospectus, SAI and Articles of Incorporation have been or will be submitted to
the Sub-Adviser. The Fund agrees to provide the Sub-Advisor copies of all
amendments to the Prospectus and SAI on an on-going basis. The Fund employs
Warburg as its investment adviser. Warburg desires to employ and hereby appoints
the Sub-Adviser to act as its sub-investment adviser upon the terms set forth in
this Agreement. The Sub-Adviser accepts the appointment and agrees to furnish
the services set forth below for the compensation provided for herein.
2. Services as Sub-Investment Adviser
(a) Subject to the supervision and direction of Warburg, the
Sub-Adviser will provide investment advisory assistance and portfolio management
advice to the Fund in accordance with (a) the Articles of Incorporation, (b) the
Investment Company Act of 1940, as amended (the "1940 Act") and the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and all applicable Rules
and Regulations of the Securities and Exchange Commission (the "SEC") and all
other applicable laws and regulations and (c) the Fund's investment objective
and
1
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policies as stated in the Prospectus and SAI and investment parameters provided
by Warburg from time to time. In connection therewith, the Sub-Adviser will:
(i) determine whether to purchase, retain or sell
interests in United States or foreign private investment vehicles that
themselves invest in debt and equity securities of companies in the
venture capital and post-venture capital stages of development or
companies engaged in special situations or changes in corporate control,
including buyouts ("Investments"). The Sub-Adviser is hereby authorized
to execute, or place orders for the execution of, all Investments on
behalf of the Fund;
(ii) assist the custodian and accounting agent for the
Fund in determining or confirming, consistent with the procedures and
policies stated in the Prospectus and SAI, the value of any Investments
for which the custodian and accounting agent seek assistance from or
identify for review by the Sub-Adviser;
(iii) monitor the execution of orders for the purchase or
sale of Investments and the settlement and clearance of those orders;
(iv) exercise voting rights in respect of Investments; and
(v) provide reports to the Fund's Board of Directors for
consideration at quarterly meetings of the Board on the Investments and
furnish Warburg and the Fund's Board of Directors with such periodic and
special reports as the Fund or Warburg may reasonably request.
(b) In connection with the performance of the services of the
Sub-Adviser provided for herein, the Sub-Adviser may contract at its own expense
with third parties for the acquisition of research, clerical services and other
administrative services that would not require such parties to be required to
register as an investment adviser under the Advisers Act; provided that the
Sub-Adviser shall remain liable for the performance of its duties hereunder.
3. Execution of Transactions
(a) The Sub-Adviser will not effect orders for the purchase or
sale of securities on behalf of the Fund through brokers or dealers as agents.
(b) It is understood that the services of the Sub-Adviser are not
exclusive, and nothing in this Agreement shall
2
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<PAGE>
prevent the Sub-Adviser from providing similar services to other investment
companies or from engaging in other activities, provided that those activities
do not adversely affect the ability of the Sub-Adviser to perform its services
under this Agreement. The Fund and Warburg further understand and acknowledge
that the persons employed by the Sub-Adviser to assist in the performance of its
duties under this Agreement will not devote their full time to that service.
Nothing contained in this Agreement will be deemed to limit or restrict the
right of the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature, provided that doing so does not adversely affect the ability of
the Sub-Adviser to perform its services under this Agreement.
(c) On occasions when the Sub-Adviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as of other
investment advisory clients of the Sub-Adviser, the Sub-Adviser may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased with those of its other
clients. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the
Sub-Adviser in a manner that is fair and equitable, in the judgment of the
Sub-Adviser, in the exercise of its fiduciary obligations to the Fund and to
such other clients. The Sub-Adviser shall provide to Warburg and the Fund all
information reasonably requested by Warburg and the Fund relating to the
decisions made by the Sub-Adviser regarding allocation of securities purchased
or sold, as well as the expenses incurred in a transaction, among the Fund and
the Sub-Adviser's other investment advisory clients.
(d) In connection with the purchase and sale of securities for
the Fund, the Sub-Adviser will provide such information as may be reasonably
necessary to enable the custodian and co-administrators to perform their
administrative and recordkeeping responsibilities with respect to the Fund.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the
Sub-Adviser contained in the Fund's registration statement and represents and
warrants that, with respect to such disclosure about the Sub-Adviser or
information related, directly or indirectly, to the Sub-Adviser, such
registration statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material fact which is
required to be stated therein or necessary to make the statements contained
therein not misleading.
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(b) The Sub-Adviser agrees to notify Warburg and the Fund
promptly of any (i) statement about the Sub-Adviser contained in the Fund's
registration statement that becomes untrue in any material respect or (ii)
omission of a material fact about the Sub-Adviser in the Fund's registration
statement which is required to be stated therein or necessary to make the
statements contained therein not misleading or (iii) any reorganization or
change in the Sub-Adviser, including any change in its ownership or key
employees.
(c) Prior to the Fund or Warburg or any affiliated person (as
defined in the 1940 Act, an "Affiliate") of either using or distributing sales
literature or other promotional material referring to the Sub-Adviser, the
Sub-Adviser shall have the right to approve the general advertising or
promotional plan pursuant to which such literature or material is being utilized
or distributed; provided that the Sub-Adviser shall be deemed to have approved
such advertising or plan if it has not objected to its use within ten (10)
business days after such material has been sent to it. The Fund or Warburg will
use all reasonable efforts to ensure that all advertising, sales and promotional
material used or distributed by or on behalf of the Fund or Warburg that refers
to the Sub-Adviser will comply with the requirements of the Advisers Act, the
1940 Act and the rules and regulations promulgated thereunder.
(d) The Sub-Adviser has supplied Warburg and the Fund copies of
its Form ADV with all exhibits and attachments thereto and will hereinafter
supply Warburg, promptly upon preparation thereof, copies of all amendments or
restatements of such document.
5. Certain Representations and
Warranties of the Sub-Adviser
(a) The Sub-Adviser represents and warrants that it is a duly
registered investment adviser under the Advisers Act, a duly registered
investment adviser in any and all states of the United States in which the
Sub-Adviser is required to be so registered and has obtained all necessary
licenses and approvals in order to perform the services provided in this
Agreement. The Sub-Adviser covenants to maintain all necessary registrations,
licenses and approvals in effect during the term of this Agreement.
(b) The Sub-Adviser represents that it has read and understands
the Prospectus and SAI and warrants that in investing the Fund's assets it will
use all reasonable efforts to adhere to the Fund's investment objectives,
policies and restrictions contained therein.
4
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6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify Warburg
and the Fund (i) in the event that the SEC or any other regulatory authority has
censured its activities, functions or operations; suspended or revoked its
registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (ii) in the event that
there is a change in the Sub-Adviser, financial or otherwise, that adversely
affects its ability to perform services under this Agreement or (iii) upon
having a reasonable basis for believing that, as a result of the Sub-Adviser's
investing the Fund's assets, the Fund's investment portfolio has ceased to
adhere to the Fund's investment objectives, policies and restrictions as stated
in the Prospectus or SAI or is otherwise in violation of applicable law.
(b) Warburg agrees that it shall promptly notify the Sub-Adviser
in the event that the SEC has censured Warburg or the Fund; placed limitations
upon any of their activities, functions or operations; suspended or revoked
Warburg's registration as an investment adviser; or has commenced proceedings or
an investigation that may result in any of these actions.
(c) The Fund and Warburg shall be given access to the records of
the Sub-Adviser at reasonable times solely for the purpose of monitoring
compliance with the terms of this Agreement and the rules and regulations
applicable to the Sub-Adviser relating to its providing investment advisory
services to the Fund, including without limitation records relating to trading
by employees of the Sub-Adviser for their own accounts and on behalf of other
clients. The Sub-Adviser agrees to cooperate with the Fund and Warburg and their
representatives in connection with any such monitoring efforts.
7. Books and Records
(a) In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for
the Fund are the property of the Fund and further agrees to surrender promptly
to either Warburg or the Fund any of such records upon the request of either of
them. The Sub-Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act and to preserve the records required by Rule 204-2
under the Advisers Act for the period specified therein.
(b) The Sub-Adviser hereby agrees to furnish to regulatory
authorities having the requisite authority any information or reports in
connection with services that the Sub-
5
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Adviser renders pursuant to this Agreement which may be requested in order to
ascertain whether the operations of the Fund are being conducted in a manner
consistent with applicable laws and regulations.
8. Provision of Information;
Proprietary and Confidential Information
(a) Warburg agrees that it will furnish to the Sub-Adviser
information related to or concerning the Fund that the Sub-Adviser may
reasonably request.
(b) The Sub-Adviser agrees on behalf of itself and its employees
to treat confidentially and as proprietary information of the Fund all records
and other information relative to the Fund, Warburg and prior, present or
potential shareholders and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder
except after prior notification to and approval in writing of the Fund, which
approval shall not be unreasonably withheld and may not be withheld where the
Sub-Adviser may be exposed to civil or criminal contempt proceedings for failure
to comply or when requested to divulge such information by duly constituted
authorities.
(c) The Sub-Adviser represents and warrants that neither it nor
any affiliate will use the name of the Fund, Warburg or any of their affiliates
in any prospectus, sales literature or other material in any manner without the
prior written approval of the Fund or Warburg, as applicable.
9. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering the
services described herein. The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or Warburg in
connection with the matters to which this Agreement relates, except that the
Sub-Adviser shall be liable for a loss resulting from a breach of fiduciary duty
by the Sub-Adviser with respect to the receipt of compensation for services;
provided that nothing herein shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Fund or Warburg or to shareholders
of the Fund to which the Sub-Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Adviser's reckless disregard
of its obligations and duties under this Agreement. The Fund and Warburg
understand and agree that the Sub-Adviser may rely upon information furnished to
it reasonably believed by the Sub-Adviser to be accurate and reliable and,
except as herein provided, the Sub-Adviser shall
6
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<PAGE>
not be accountable for loss suffered by the Fund by reason of such reliance of
the Sub-Adviser.
10. Indemnification
(a) The Sub-Adviser agrees to indemnify and hold harmless the
Fund, Warburg, any affiliate thereof, and each person, if any, who, within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "1933
Act"), controls ("controlling person") any or all of the Fund and Warburg (all
of such persons being referred to as "Fund Indemnified Persons") against any and
all losses, claims, damages, liabilities or litigation (including legal and
other expenses) to which any Fund Indemnified Person may become subject under
the 1933 Act, the 1940 Act, the Advisers Act, the Internal Revenue Code of 1986,
as amended (the "Code"), or under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser to the Fund
which (i) may be based upon any misfeasance, malfeasance or nonfeasance by the
Sub-Adviser, or any of its employees or representatives, or any affiliate of or
any person acting on behalf of the Sub-Adviser, (ii) may be based upon a failure
to comply with paragraph 5(b) of this Agreement, or (iii) may be based upon any
untrue statement or alleged untrue statement of a material fact about the
Sub-Adviser contained in the registration statement covering the shares of the
Fund, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact about the Sub-Adviser known or which
should have been known to the Sub-Adviser and was required to be stated therein
or necessary to make the statements therein not misleading, if such a statement
or omission was made in reliance upon information furnished to Warburg, the Fund
or any affiliate thereof by the Sub-Adviser or any affiliate of the Sub-Adviser;
provided that in no case shall the indemnity in favor of any Fund Indemnified
Person be deemed to protect such persons against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(b) The Fund agrees to indemnify and hold harmless the
Sub-Adviser, any of its affiliates, and each controlling person, if any, of the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses) to which any Sub-Adviser Indemnified Person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, the Code
or under any other statute, at common law or otherwise, which (i) may be based
upon any misfeasance, malfeasance or nonfeasance by the Fund or Warburg, or any
of their respective employees or representatives, or any affiliate
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of or any person acting on behalf of the Fund or Warburg, (ii) may be based upon
a failure by the Fund or Warburg to comply with this Agreement, or (iii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement covering the shares of the Fund, or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to the Fund and
was required to be stated therein or necessary to make the statements therein
not misleading, unless such a statement or omission was made in reliance upon
information furnished to Warburg, the Fund or any affiliate thereof by the
Sub-Adviser or any affiliate of the Sub-Adviser; provided that in no case shall
the indemnity in favor of any Sub-Adviser Indemnified Person be deemed to
protect such persons against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(c) A party (the "Indemnifying Person") shall not be liable under
paragraphs 10(a) or 10(b) herein with respect to any claim made against any Fund
Indemnified Person or Sub-Adviser Indemnified Person, as applicable (a Fund
Indemnified Person and a Sub-Adviser Indemnified Person may be referred to in
this paragraph 10(c) as an "Indemnified Person"), unless such Indemnified Person
shall have notified the Indemnifying Person in writing within a reasonable time
after the summons, notice or other first legal process or notice giving
information of the nature of the claim shall have been served upon such
Indemnified Person (or after such Indemnified Person shall have received notice
of such service on any designated agent), but failure to notify the Indemnifying
Person of any such claim shall not relieve the Indemnifying Person from any
liability which it may have to any Indemnified Person against whom such action
is brought otherwise than on account of this paragraph 10. In case any such
action is brought against any Indemnified Person, the Indemnifying Person will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Indemnified Person. If the Indemnifying Person assumes the
defense of any such action and the selection of counsel by the Indemnifying
Person to represent the Indemnifying Person and the Indemnified Person would
result in a conflict of interests and therefore would not, in the reasonable
judgment of the Indemnified Person, adequately represent the interests of the
Indemnified Person, the Indemnifying Person will, at its own expense, assume the
defense with counsel to the Indemnifying Person and, also at its own expense,
with separate counsel to the Indemnified Person which counsel shall be
satisfactory to the Indemnifying Person and to the Indemnified
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Person. The Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Indemnifying Person shall not be
liable to the Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnifying Person shall not have the right to compromise on
or settle the litigation without the prior written consent of the Indemnified
Person if such compromise or settlement results, or may result, in a finding of
wrongdoing on the part of the Indemnified Person.
11. Compensation
In consideration of the services rendered pursuant to this
Agreement, Warburg will pay the Sub-Adviser a quarterly fee calculated at an
annual rate of 1.00% of the net asset value of the Investments as of the last
day of each calendar quarter. The fee for the period from the date of this
Agreement to the end of the quarter during which this Agreement commenced shall
be prorated according to the proportion that such period bears to the full
quarterly period. Such fee shall be paid by Warburg to the Sub-Adviser within
ten (10) business days after the last day of each quarter or, upon termination
of this Agreement before the end of a quarter, within ten (10) business days
after the effective date of such termination. Upon any termination of this
Agreement before the end of a quarter, the fee for such part of that quarter
shall be prorated according to the proportion that such period bears to the full
quarterly period. For the purpose of determining fees payable to the
Sub-Adviser, the value of the Investments shall be computed in the manner
specified in the Prospectus or SAI. The Sub-Adviser shall have no right to
obtain compensation directly from the Fund for services provided hereunder and
agrees to look solely to Warburg for payment of fees due.
12. Expenses
(a) The Sub-Adviser will bear all expenses in connection with the
performance of its services under this Agreement, which shall not include the
Fund's expenses listed in paragraph 12(b).
(b) The Fund will bear certain other expenses to be incurred in
its operation, including: investment advisory and administration fees; taxes,
interest, brokerage fees and commissions, if any; fees of Directors of the Fund
who are not officers, directors, or employees of the Fund, Warburg or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Fund; SEC fees, state Blue Sky qualification fees and any
foreign qualification fees;
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charges of custodians and transfer and dividend disbursing agents; the Fund's
proportionate share of insurance premiums; outside auditing and legal expenses;
costs of maintenance of the Fund's existence; costs attributable to investor
services, including, without limitation, telephone and personnel expenses; costs
of preparing and printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers or Board of Directors of the Fund; and any extraordinary expenses.
13. Term of Agreement
This Agreement shall commence on the date first written above and
shall continue until April 17, 1998, and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually by (a) the Board of Directors of the Fund or (b) a
vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Directors who are not "interested
persons" (as defined the 1940 Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, (i) by Warburg on 60 (sixty) days'
written notice to the Fund and the Sub-Adviser, (ii) by the Board of Directors
of the Fund or by vote of holders of a majority of the Fund's shares on 60
(sixty) days' written notice to Warburg and the Sub-Adviser, or (iii) by the
Sub-Adviser upon 60 (sixty) days' written notice to the Fund and Warburg. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act) by any party hereto. In the event of termination of
this Agreement for any reason, all records relating to the Fund kept by the
Sub-Adviser shall promptly be returned to Warburg or the Fund, free from any
claim or retention of rights in such records by the Sub-Adviser. In the event
this Agreement is terminated or is not approved in the foregoing manner, the
provisions contained in paragraph numbers 4(c), 7, 8, 9 and 10 shall remain in
effect.
14. Amendments
No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of (a) the holders of a majority of the outstanding voting
securities of the Fund and (b) the Board of Directors of the Fund, including a
majority of Directors who are
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not "interested persons" (as defined in the 1940 Act) of the Fund or of either
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required by applicable
law.
15. Notices
All communications hereunder shall be given (a) if to the
Sub-Adviser, to Abbott Capital Management, L.P., 1330 Avenue of the Americas,
Suite 2800, New York, New York 10019 (Attention: Raymond L. Held), telephone:
(212) 757-2700, telecopy: (212) 757-0835, (b) if to Warburg, to Warburg, Pincus
Counsellors, Inc., 466 Lexington Avenue, New York, New York 10017-3147
(Attention: Eugene P. Grace), telephone: (212) 878-0600, telecopy: (212)
878-9351, and (c) if to the Fund, c/o Warburg Pincus Funds, 466 Lexington
Avenue, New York, New York 10017-3147, telephone: (212) 878-0600, telecopy:
(212) 878-9351 (Attention: President).
16. Choice of Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York in the United States, including choice
of law principles; provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or any applicable rules,
regulations or orders of the SEC.
17. Miscellaneous
(a) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions herein or otherwise
affect their construction or effect.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, by statute or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(c) Nothing herein shall be construed to make the Sub-Adviser an
agent of Warburg or the Fund.
(d) This Agreement may be executed in counterparts, with the same
effect as if the signatures were upon the same instrument.
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
WARBURG, PINCUS COUNSELLORS, INC.
By: ________________________________
Name:
Title:
WARBURG PINCUS GLOBAL
POST-VENTURE CAPITAL FUND, INC.
By: ________________________________
Name:
Title:
Accepted:
ABBOTT CAPITAL MANAGEMENT, L.P.
By: _______________________________
Name:
Title:
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SUB-INVESTMENT ADVISORY AGREEMENT
________ __, 1997
Abbott Capital Management, L.L.C.
50 Rowes Wharf
Boston, MA 02110
Dear Sirs:
Warburg, Pincus Global Post-Venture Capital Fund, Inc. (the
"Fund"), a corporation organized and existing under the laws of the State of
Maryland, and Warburg, Pincus Counsellors, Inc., as its investment adviser
("Warburg"), herewith confirms their agreement with Abbott Capital Management,
L.L.C. (the "Sub-Adviser") as follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Fund by investing
and reinvesting in securities of the kind and in accordance with the limitations
specified in the Fund's Articles of Incorporation, as may be amended from time
to time (the "Articles of Incorporation"), and in the Prospectus and Statement
of Additional Information, as from time to time in effect (the "Prospectus" and
"SAI," respectively), and in such manner and to such extent as may from time to
time be approved by the Board of Directors of the Fund. Copies of the
Prospectus, SAI and Articles of Incorporation have been or will be submitted to
the Sub-Adviser. The Fund agrees to provide the Sub-Adviser copies of all
amendments to the Prospectus and SAI on an on-going basis. The Fund employs
Warburg as its investment adviser. Warburg desires to employ and hereby appoints
the Sub-Adviser to act as its sub-investment adviser upon the terms set forth in
this Agreement. The Sub-Adviser accepts the appointment and agrees to furnish
the services set forth below for the compensation provided for herein.
2. Services as Sub-Investment Adviser
(a) Subject to the supervision and direction of Warburg, the
Sub-Adviser will provide investment advisory assistance and portfolio management
advice to the Fund in accordance with (a) the Articles of Incorporation, (b) the
Investment Company Act of 1940, as amended (the "1940 Act"), and
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the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and all
applicable Rules and Regulations of the Securities and Exchange Commission (the
"SEC") and all other applicable laws and regulations and (c) the Fund's
investment objective and policies as stated in the Prospectus and SAI and
investment parameters provided by Warburg from time to time. In connection
therewith, the Sub-Adviser will:
(i) determine whether to purchase, retain or sell
interests in United States or foreign private investment vehicles that
themselves invest in debt and equity securities of companies in the
venture capital and post-venture capital stages of development or
companies engaged in special situations or changes in corporate control,
including buyouts ("Investments"). The Sub-Adviser is hereby authorized
to execute, or place orders for the execution of, all Investments on
behalf of the Fund;
(ii) assist the custodian and accounting agent for the
Fund in determining or confirming, consistent with the procedures and
policies stated in the Prospectus and SAI, the value of any Investments
for which the custodian and accounting agent seek assistance from or
identify for review by the Sub-Adviser;
(iii) monitor the execution of orders for the purchase or
sale of Investments and the settlement and clearance of those orders;
(iv) exercise voting rights in respect of Investments;
and
(v) provide reports to the Fund's Board of Directors
for consideration at quarterly meetings of the Board on the Investments
and furnish Warburg and the Fund's Board of Directors with such
periodic and special reports as the Fund or Warburg may reasonably
request.
(b) In connection with the performance of the services of the
Sub-Adviser provided for herein, the Sub-Adviser may contract at its own expense
with third parties for the acquisition of research, clerical services and other
administrative services that would not require such parties to be required to
register as an investment adviser under the Advisers Act; provided that the
Sub-Adviser shall remain liable for the performance of its duties hereunder.
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3. Execution of Transactions
(a) The Sub-Adviser will not effect orders for the purchase or
sale of securities on behalf of the Fund through brokers or dealers as agents.
(b) It is understood that the services of the Sub-Adviser are not
exclusive, and nothing in this Agreement shall prevent the Sub-Adviser from
providing similar services to other investment companies or from engaging in
other activities, provided that those activities do not adversely affect the
ability of the Sub-Adviser to perform its services under this Agreement. The
Fund and Warburg further understand and acknowledge that the persons employed by
the Sub-Adviser to assist in the performance of its duties under this Agreement
will not devote their full time to that service. Nothing contained in this
Agreement will be deemed to limit or restrict the right of the Sub-Adviser or
any affiliate of the Sub-Adviser to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature, provided that
doing so does not adversely affect the ability of the Sub-Adviser to perform its
services under this Agreement.
(c) On occasions when the Sub-Adviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as of other
investment advisory clients of the Sub-Adviser, the Sub-Adviser may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased with those of its other
clients. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the
Sub-Adviser in a manner that is fair and equitable, in the judgment of the
Sub-Adviser, in the exercise of its fiduciary obligations to the Fund and to
such other clients. The Sub-Adviser shall provide to Warburg and the Fund all
information reasonably requested by Warburg and the Fund relating to the
decisions made by the Sub-Adviser regarding allocation of securities purchased
or sold, as well as the expenses incurred in a transaction, among the Fund and
the Sub-Adviser's other investment advisory clients.
(d) In connection with the purchase and sale of securities for
the Fund, the Sub-Adviser will provide such information as may be reasonably
necessary to enable the custodian and co-administrators to perform their
administrative and recordkeeping responsibilities with respect to the Fund.
4. Disclosure Regarding the Sub-Adviser
(a) The Sub-Adviser has reviewed the disclosure about the
Sub-Adviser contained in the Fund's registration statement
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and represents and warrants that, with respect to such disclosure about the
Sub-Adviser or information related, directly or indirectly, to the Sub-Adviser,
such registration statement contains, as of the date hereof, no untrue statement
of any material fact and does not omit any statement of a material fact which is
required to be stated therein or necessary to make the statements contained
therein not misleading.
(b) The Sub-Adviser agrees to notify Warburg and the Fund
promptly of any (i) statement about the Sub-Adviser contained in the Fund's
registration statement that becomes untrue in any material respect or (ii)
omission of a material fact about the Sub-Adviser in the Fund's registration
statement which is required to be stated therein or necessary to make the
statements contained therein not misleading or (iii) any reorganization or
change in the Sub-Adviser, including any change in its ownership or key
employees.
(c) Prior to the Fund or Warburg or any affiliated person (as
defined in the 1940 Act, an "Affiliate") of either using or distributing sales
literature or other promotional material referring to the Sub-Adviser, the
Sub-Adviser shall have the right to approve the general advertising or
promotional plan pursuant to which such literature or material is being utilized
or distributed; provided that the Sub-Adviser shall be deemed to have approved
such advertising or plan if it has not objected to its use within ten (10)
business days after such material has been sent to it. The Fund or Warburg will
use all reasonable efforts to ensure that all advertising, sales and promotional
material used or distributed by or on behalf of the Fund or Warburg that refers
to the Sub-Adviser will comply with the requirements of the Advisers Act, the
1940 Act and the rules and regulations promulgated thereunder.
(d) The Sub-Adviser has supplied Warburg and the Fund copies of
its Form ADV with all exhibits and attachments thereto and will hereinafter
supply Warburg, promptly upon preparation thereof, copies of all amendments or
restatements of such document.
5. Certain Representations and
Warranties of the Sub-Adviser
(a) The Sub-Adviser represents and warrants that it is a duly
registered investment adviser under the Advisers Act, a duly registered
investment adviser in any and all states of the United States in which the
Sub-Adviser is required to be so registered and has obtained all necessary
licenses and approvals in order to perform the services provided in this
Agreement. The Sub-Adviser covenants to maintain all necessary registrations,
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licenses and approvals in effect during the term of this Agreement.
(b) The Sub-Adviser represents that it has read and understands
the Prospectus and SAI and warrants that in investing the Fund's assets it will
use all reasonable efforts to adhere to the Fund's investment objectives,
policies and restrictions contained therein.
6. Compliance
(a) The Sub-Adviser agrees that it shall promptly notify Warburg
and the Fund (i) in the event that the SEC or any other regulatory authority has
censured its activities, functions or operations; suspended or revoked its
registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (ii) in the event that
there is a change in the Sub-Adviser, financial or otherwise, that adversely
affects its ability to perform services under this Agreement or (iii) upon
having a reasonable basis for believing that, as a result of the Sub-Adviser's
investing the Fund's assets, the Fund's investment portfolio has ceased to
adhere to the Fund's investment objectives, policies and restrictions as stated
in the Prospectus or SAI or is otherwise in violation of applicable law.
(b) Warburg agrees that it shall promptly notify the Sub-Adviser
in the event that the SEC has censured Warburg or the Fund; placed limitations
upon any of their activities, functions or operations; suspended or revoked
Warburg's registration as an investment adviser; or has commenced proceedings or
an investigation that may result in any of these actions.
(c) The Fund and Warburg shall be given access to the records of
the Sub-Adviser at reasonable times solely for the purpose of monitoring
compliance with the terms of this Agreement and the rules and regulations
applicable to the Sub-Adviser relating to its providing investment advisory
services to the Fund, including without limitation records relating to trading
by employees of the Sub-Adviser for their own accounts and on behalf of other
clients. The Sub-Adviser agrees to cooperate with the Fund and Warburg and their
representatives in connection with any such monitoring efforts.
7. Books and Records
(a) In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for
the Fund are the property of the Fund and further agrees to surrender promptly
to either Warburg or the Fund any of such records upon the request of either of
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them. The Sub-Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act and to preserve the records required by Rule 204-2
under the Advisers Act for the period specified therein.
(b) The Sub-Adviser hereby agrees to furnish to regulatory
authorities having the requisite authority any information or reports in
connection with services that the Sub-Adviser renders pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Fund
are being conducted in a manner consistent with applicable laws and regulations.
8. Provision of Information;
Proprietary and Confidential Information
(a) Warburg agrees that it will furnish to the Sub-Adviser
information related to or concerning the Fund that the Sub-Adviser may
reasonably request.
(b) The Sub-Adviser agrees on behalf of itself and its employees
to treat confidentially and as proprietary information of the Fund all records
and other information relative to the Fund, Warburg and prior, present or
potential shareholders and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder
except after prior notification to and approval in writing of the Fund, which
approval shall not be unreasonably withheld and may not be withheld where the
Sub-Adviser may be exposed to civil or criminal contempt proceedings for failure
to comply or when requested to divulge such information by duly constituted
authorities.
(c) The Sub-Adviser represents and warrants that neither it nor
any affiliate will use the name of the Fund, Warburg or any of their affiliates
in any prospectus, sales literature or other material in any manner without the
prior written approval of the Fund or Warburg, as applicable.
9. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering the
services described herein. The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or Warburg in
connection with the matters to which this Agreement relates, except that the
Sub-Adviser shall be liable for a loss resulting from a breach of fiduciary duty
by the Sub-Adviser with respect to the receipt of compensation for services;
provided that nothing herein shall be deemed to protect or purport to protect
the Sub-Adviser against
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any liability to the Fund or Warburg or to shareholders of the Fund to which the
Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Sub-Adviser's reckless disregard of its obligations and duties
under this Agreement. The Fund and Warburg understand and agree that the
Sub-Adviser may rely upon information furnished to it reasonably believed by the
Sub-Adviser to be accurate and reliable and, except as herein provided, the
Sub-Adviser shall not be accountable for loss suffered by the Fund by reason of
such reliance of the Sub-Adviser.
10. Indemnification
(a) The Sub-Adviser agrees to indemnify and hold harmless the
Fund, Warburg, any affiliate thereof, and each person, if any, who, within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "1933
Act"), controls ("controlling person") any or all of the Fund and Warburg (all
of such persons being referred to as "Fund Indemnified Persons") against any and
all losses, claims, damages, liabilities or litigation (including legal and
other expenses) to which any Fund Indemnified Person may become subject under
the 1933 Act, the 1940 Act, the Advisers Act, the Internal Revenue Code of 1986,
as amended (the "Code"), or under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser to the Fund
which (i) may be based upon any misfeasance, malfeasance or nonfeasance by the
Sub-Adviser, or any of its employees or representatives, or any affiliate of or
any person acting on behalf of the Sub-Adviser, (ii) may be based upon a failure
to comply with paragraph 5(b) of this Agreement, or (iii) may be based upon any
untrue statement or alleged untrue statement of a material fact about the
Sub-Adviser contained in the registration statement covering the shares of the
Fund, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact about the Sub-Adviser known or which
should have been known to the Sub-Adviser and was required to be stated therein
or necessary to make the statements therein not misleading, if such a statement
or omission was made in reliance upon information furnished to Warburg, the Fund
or any affiliate thereof by the Sub-Adviser or any affiliate of the Sub-Adviser;
provided that in no case shall the indemnity in favor of any Fund Indemnified
Person be deemed to protect such persons against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(b) The Fund agrees to indemnify and hold harmless the
Sub-Adviser, any of its affiliates, and each controlling person,
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if any, of the Sub-Adviser (all of such persons being referred to as
"Sub-Adviser Indemnified Persons") against any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses) to which any
Sub-Adviser Indemnified Person may become subject under the 1933 Act, the 1940
Act, the Advisers Act, the Code or under any other statute, at common law or
otherwise, which (i) may be based upon any misfeasance, malfeasance or
nonfeasance by the Fund or Warburg, or any of their respective employees or
representatives, or any affiliate of or any person acting on behalf of the Fund
or Warburg, (ii) may be based upon a failure by the Fund or Warburg to comply
with this Agreement, or (iii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration statement
covering the shares of the Fund, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact known or which
should have been known to the Fund and was required to be stated therein or
necessary to make the statements therein not misleading, unless such a statement
or omission was made in reliance upon information furnished to Warburg, the Fund
or any affiliate thereof by the Sub-Adviser or any affiliate of the Sub-Adviser;
provided that in no case shall the indemnity in favor of any Sub-Adviser
Indemnified Person be deemed to protect such persons against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) A party (the "Indemnifying Person") shall not be liable under
paragraphs 10(a) or 10(b) herein with respect to any claim made against any Fund
Indemnified Person or Sub-Adviser Indemnified Person, as applicable (a Fund
Indemnified Person and a Sub-Adviser Indemnified Person may be referred to in
this paragraph 10(c) as an "Indemnified Person"), unless such Indemnified Person
shall have notified the Indemnifying Person in writing within a reasonable time
after the summons, notice or other first legal process or notice giving
information of the nature of the claim shall have been served upon such
Indemnified Person (or after such Indemnified Person shall have received notice
of such service on any designated agent), but failure to notify the Indemnifying
Person of any such claim shall not relieve the Indemnifying Person from any
liability which it may have to any Indemnified Person against whom such action
is brought otherwise than on account of this paragraph 10. In case any such
action is brought against any Indemnified Person, the Indemnifying Person will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Indemnified Person. If the Indemnifying Person assumes the
defense of any such action and the selection
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of counsel by the Indemnifying Person to represent the Indemnifying Person and
the Indemnified Person would result in a conflict of interests and therefore
would not, in the reasonable judgment of the Indemnified Person, adequately
represent the interests of the Indemnified Person, the Indemnifying Person will,
at its own expense, assume the defense with counsel to the Indemnifying Person
and, also at its own expense, with separate counsel to the Indemnified Person
which counsel shall be satisfactory to the Indemnifying Person and to the
Indemnified Person. The Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Indemnifying Person shall not be
liable to the Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnifying Person shall not have the right to compromise on
or settle the litigation without the prior written consent of the Indemnified
Person if such compromise or settlement results, or may result, in a finding of
wrongdoing on the part of the Indemnified Person.
11. Compensation
In consideration of the services rendered pursuant to this
Agreement, Warburg will pay the Sub-Adviser a quarterly fee calculated at an
annual rate of 1.00% of the net asset value of the Investments as of the last
day of each calendar quarter. The fee for the period from the date of this
Agreement to the end of the quarter during which this Agreement commenced shall
be prorated according to the proportion that such period bears to the full
quarterly period. Such fee shall be paid by Warburg to the Sub-Adviser within
ten (10) business days after the last day of each quarter or, upon termination
of this Agreement before the end of a quarter, within ten (10) business days
after the effective date of such termination. Upon any termination of this
Agreement before the end of a quarter, the fee for such part of that quarter
shall be prorated according to the proportion that such period bears to the full
quarterly period. For the purpose of determining fees payable to the
Sub-Adviser, the value of the Investments shall be computed in the manner
specified in the Prospectus or SAI. The Sub-Adviser shall have no right to
obtain compensation directly from the Fund for services provided hereunder and
agrees to look solely to Warburg for payment of fees due.
12. Expenses
(a) The Sub-Adviser will bear all expenses in connection with the
performance of its services under this Agreement, which shall not include the
Fund's expenses listed in paragraph 12(b).
9
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(b) The Fund will bear certain other expenses to be incurred in
its operation, including: investment advisory and administration fees; taxes,
interest, brokerage fees and commissions, if any; fees of Directors of the Fund
who are not officers, directors, or employees of the Fund, Warburg or the
Sub-Adviser or affiliates of any of them; fees of any pricing service employed
to value shares of the Fund; SEC fees, state Blue Sky qualification fees and any
foreign qualification fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's proportionate share of insurance premiums; outside
auditing and legal expenses; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Fund and of the officers or Board of Directors of the Fund;
and any extraordinary expenses.
13. Term of Agreement
This Agreement shall commence on the date first written above and
shall continue until April 17, 1998, and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually by (a) the Board of Directors of the Fund or (b) a
vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Directors who are not "interested
persons" (as defined the 1940 Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, (i) by Warburg on 60 (sixty) days'
written notice to the Fund and the Sub-Adviser, (ii) by the Board of Directors
of the Fund or by vote of holders of a majority of the Fund's shares on 60
(sixty) days' written notice to Warburg and the Sub-Adviser, or (iii) by the
Sub-Adviser upon 60 (sixty) days' written notice to the Fund and Warburg. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act) by any party hereto. In the event of termination of
this Agreement for any reason, all records relating to the Fund kept by the
Sub-Adviser shall promptly be returned to Warburg or the Fund, free from any
claim or retention of rights in such records by the Sub-Adviser. In the event
this Agreement is terminated or is not approved in the foregoing manner, the
provisions contained in paragraph numbers 4(c), 7, 8, 9 and 10 shall remain in
effect.
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14. Amendments
No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of (a) the holders of a majority of the outstanding voting
securities of the Fund and (b) the Board of Directors of the Fund, including a
majority of Directors who are not "interested persons" (as defined in the 1940
Act) of the Fund or of either party to this Agreement, by vote cast in person at
a meeting called for the purpose of voting on such approval, if such approval is
required by applicable law.
15. Notices
All communications hereunder shall be given (a) if to the
Sub-Adviser, to Abbott Capital Management, L.L.C., 1330 Avenue of the Americas,
Suite 2800, New York, New York 10019 (Attention: Raymond L. Held), telephone:
(212) 757-2700, telecopy: (212) 757-0835, (b) if to Warburg, to Warburg, Pincus
Counsellors, Inc., 466 Lexington Avenue, New York, New York 10017-3147
(Attention: Eugene P. Grace), telephone: (212) 878-0600, telecopy: (212)
878-9351, and (c) if to the Fund, c/o Warburg Pincus Funds, 466 Lexington
Avenue, New York, New York 10017-3147, telephone: (212) 878-0600, telecopy:
(212) 878-9351 (Attention: President).
16. Choice of Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York in the United States, including choice
of law principles; provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or any applicable rules,
regulations or orders of the SEC.
17. Miscellaneous
(a) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions herein or otherwise
affect their construction or effect.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, by statute or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
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(c) Nothing herein shall be construed to make the Sub-Adviser an
agent of Warburg or the Fund.
(d) This Agreement may be executed in counterparts, with the same
effect as if the signatures were upon the same instrument.
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
WARBURG, PINCUS COUNSELLORS, INC.
By: ________________________________
Name:
Title:
WARBURG PINCUS GLOBAL
POST-VENTURE CAPITAL FUND, INC.
By: ________________________________
Name:
Title:
ABBOTT CAPITAL MANAGEMENT, L.L.C.
By: _______________________________
Name:
Title:
12
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DISTRIBUTION AGREEMENT
December 31, 1996
Counsellors Securities Inc.
466 Lexington Avenue
New York, New York 10017-3147
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Warburg Pincus Funds (the "Fund") has
agreed that Counsellors Securities Inc. ("Counsellors Securities") shall be, for
the period of this Agreement, the distributor of shares of common stock of the
Fund, par value $.001 per share. The common stock not designated Advisor Shares
shall be referred to as the "Common Shares"."
1. Services as Distributor
1.1 Counsellors Securities will act as agent for the distribution
of the Common Shares and Advisor Shares covered by the Fund's registration
statement on Form N-1A, under the Securities Act of 1933, as amended (the "1933
Act"), and the Investment Company Act of 1940, as amended (the "1940 Act") (the
registration statement, together with the prospectuses (the "prospectus") and
statement of additional information (the "statement of additional information")
included as part of the registration statement, any amendments to the
registration statement, and any supplements to, or material incorporated by
reference into the prospectus or statement of additional information, being
referred to collectively in this Agreement as the "registration statement").
1.2 Counsellors Securities agrees to use appropriate efforts to
solicit orders for the sale of the Common Shares and Advisor Shares at such
prices and on the terms and conditions set forth in the registration statement
and will undertake such advertising and promotion as it believes is reasonable
in connection with such solicitation.
1.3 All activities by Counsellors Securities as distributor of
the Common Shares and Advisor Shares shall comply with all applicable laws,
rules and regulations, including, without limitation, all rules and regulations
made or adopted by the Securities and Exchange Commission (the "SEC") or by any
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securities association registered under the Securities Exchange Act of 1934, as
amended.
1.4 Counsellors Securities agrees to (a) provide one or more
persons during normal business hours to respond to telephone questions
concerning the Fund and its performance, (b) provide prospectuses of other funds
advised by Warburg, Pincus Counsellors, Inc. to shareholders considering
exercising the exchange privilege and (c) perform such other services as are
described in the registration statement and in the Shareholder Servicing and
Distribution Plan (with respect to Common Shares, the "12b-1 Plan") and in the
Distribution Plan (with respect to Advisor Shares, the "Distribution Plan"),
each adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1") to be performed by Counsellors Securities, without limitation,
distributing and receiving subscription order forms and receiving written
redemption requests.
1.5 Pursuant to the 12b-1 Plan, the Fund will pay Counsellors
Securities on the first business day of each quarter a fee for the previous
quarter calculated at an annual rate of .25% of the average daily net assets of
the Common Shares of the Fund as compensation for the services provided by
Counsellors Securities to the Common Shares pursuant to this Agreement.
Counsellors Securities serves without compensation as distributor for the
Advisor Shares pursuant to this Agreement. Amounts paid to Counsellors
Securities under the 12b-1 Plan may be used by Counsellors Securities to cover
expenses that are primarily intended to result in, or that are primarily
attributable to, (a) the sale of the Common Shares, as set forth in the 12b-1
Plan ("Selling Services"), (b) ongoing servicing and/or maintenance of the
accounts of holders of Common Shares, as set forth in the 12b-1 Plan
("Shareholder Services"), and/or (c) sub-transfer agency services, subaccounting
services or administrative services with respect to the Common Shares, as set
forth in the 12b-1 Plan ("Administrative Services" and collectively with Selling
Services and Administrative Services, "Services") including, without limitation,
(i) payments reflecting an allocation of overhead and other office expenses of
Counsellors Securities related to providing Services; (ii) payments made to, and
reimbursement of expenses of, persons who provide support services in connection
with the distribution of the Common Shares including, but not limited to, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, and providing any other Shareholder Services; (iii) payments made to
compensate selected dealers or other authorized persons for providing any
Services; (iv) costs relating to the formulation and implementation of marketing
and promotional activities for the Common Shares, including, but not limited to,
direct mail promotions and television, radio, newspaper, magazine and other mass
media advertising, and related travel and entertainment expenses; (v) costs of
printing and distributing prospectuses, statements of additional information and
reports of the Fund to prospective holders of Common Shares; and (vi) costs
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involved in obtaining whatever information, analyses and reports with respect to
marketing and promotional activities for the Common Shares that the Fund may,
from time to time, deem advisable.
1.6 Counsellors Securities acknowledges that, whenever in the
judgment of the Fund's officers such action is warranted for any reason,
including, without limitation, market, economic or political conditions, those
officers may decline to accept any orders for, or make any sales of, the Common
Shares or Advisor Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Counsellors Securities will act only on its own behalf as
principal should it choose to enter into selling agreements with selected
dealers or others.
1.8 Counsellors Securities will transmit any orders received by
it for purchase or redemption of the Common Shares and Advisor Shares to State
Street Bank and Trust Company ("State Street"), the Fund's transfer and dividend
disbursing agent, or its successor of which Counsellors Securities is notified
in writing. The Fund will promptly advise Counsellors Securities of the
determination to cease accepting orders or selling Common Shares or Advisor
Shares or to recommence accepting orders or selling Common Shares or Advisor
Shares. The Fund (or its agent) will confirm orders for Common Shares and
Advisor Shares placed through Counsellors Securities upon their receipt, or in
accordance with any exemptive order of the SEC, and will make appropriate book
entries pursuant to the instructions of Counsellors Securities. Counsellors
Securities agrees to cause payment for Common Shares and Advisor Shares and
instructions as to book entries to be delivered promptly to the Fund (or its
agent).
1.9 The outstanding Common Shares and Advisor Shares are subject
to redemption as set forth in the prospectus. The price to be paid to redeem the
Common Shares and Advisor Shares will be determined as set forth in the
prospectus.
1.10 Counsellors Securities will prepare and deliver reports to
the Treasurer of the Fund on a regular, at least quarterly, basis, showing the
distribution expenses incurred pursuant to this Agreement, the 12b-1 Plan and
the Distribution Plan adopted by the Fund pursuant to Rule 12b-1 and the
purposes therefor, as well as any supplemental reports as the Directors from
time to time may reasonably request.
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2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions that
may be reasonably necessary in connection with the sale of Common Shares and
Advisor Shares in those states that Counsellors Securities may designate.
2.2 The Fund shall furnish from time to time, for use in
connection with the sale of the Common Shares and Advisor Shares, such
informational reports with respect to the Fund and the Common Shares and Advisor
Shares as Counsellors Securities may reasonably request, all of which shall be
signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such reports, when so signed by
one or more of the Fund's officers, shall be true and correct. The Fund shall
also furnish Counsellors Securities upon request with: (a) annual audits of the
Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) semiannual unaudited financial statements pertaining
to the Fund, (c) quarterly earnings statements prepared by the Fund, (d) a
monthly itemized list of the securities held by the Fund, (e) monthly balance
sheets as soon as practicable after the end of each month and (f) from time to
time such additional information regarding the Fund's financial condition as
Counsellors Securities may reasonably request.
3. Representations and Warranties
The Fund represents to Counsellors Securities that all
registration statements, prospectuses and statements of additional information
filed by the Fund with the SEC under the 1933 Act and the 1940 Act with respect
to the Common Shares and/or Advisor Shares have been carefully prepared in
conformity with the requirements of the 1933 Act, the 1940 Act and the rules and
regulations of the SEC thereunder. As used in this Agreement the terms
"registration statement", "prospectus" and "statement of additional information"
shall mean any registration statement, prospectus and statement of additional
information filed by the Fund with respect to the Common Shares and/or Advisor
Shares with the SEC and any amendments and supplements thereto which at any time
shall have been filed with the SEC. The Fund represents and warrants to
Counsellors Securities that any registration statement with respect to the
Common Shares and/or Advisor Shares, or prospectus and statement of additional
information contained therein, when such registration statement becomes
effective, will include all statements required to be contained therein in
conformity with the 1933 Act, the 1940 Act and the rules and regulations of the
SEC; that all statements of fact contained in any registration statement with
respect to the Common Shares and/or Advisor Shares, prospectus or statement of
additional information will be true and correct when such
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<PAGE>
registration statement becomes effective; and that neither any registration
statement nor any prospectus or statement of additional information with respect
to the Common Shares and/or Advisor Shares when such registration statement
becomes effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Common Shares and/or
Advisor Shares. Counsellors Securities may, but shall not be obligated to,
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus or statement of
additional information as, in the light of future developments, may, in the
opinion of Counsellors Securities' counsel, be necessary or advisable. If the
Fund shall not propose such amendment or amendments and/or supplement or
supplements within fifteen (15) days after receipt by the Fund of a written
request from Counsellors Securities to do so, Counsellors Securities may, at its
option, terminate this Agreement. The Fund shall not file any amendment to any
registration statement or supplement to any prospectus or statement of
additional information without giving Counsellors Securities reasonable notice
thereof in advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Fund's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus or statement of
additional information with respect to the Common Shares and/or Advisor Shares,
of whatever character, as the Fund may deem advisable, such right being in all
respects absolute and unconditional.
4. Indemnification
4.1 The Fund agrees to indemnify, defend and hold Counsellors
Securities, its several officers and directors, and any person who controls
Counsellors Securities within the meaning of Section 15 of the 1933 Act, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which
Counsellors Securities, its officers and directors, or any such controlling
person, may incur under the 1933 Act, the 1940 Act or common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement, any prospectus or any
statement of additional information with respect to the Common Shares and/or
Advisor Shares, or arising out of or based upon any omission or alleged omission
to state a material fact required to be stated in any registration statement,
any prospectus or any statement of additional information with respect to the
Common Shares and/or Advisor Shares, or necessary to make the statements in any
of them not misleading; provided, however, that the Fund's agreement to
indemnify Counsellors Securities, its officers or directors, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses arising out of or based
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upon any statements or representations made by Counsellors Securities or its
representatives or agents other than such statements and representations as are
contained in any registration statement, prospectus or statement of additional
information with respect to the Common Shares and/or Advisor Shares and in such
financial and other statements as are furnished to Counsellors Securities
pursuant to paragraph 2.2 hereof; and further provided that the Fund's agreement
to indemnify Counsellors Securities and the Fund's representations and
warranties hereinbefore set forth in paragraph 3 shall not be deemed to cover
any liability to the Fund or its shareholders to which Counsellors Securities
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of Counsellors
Securities' reckless disregard of its obligations and duties under this
Agreement. The Fund's agreement to indemnify Counsellors Securities, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Fund's being notified of any action brought
against Counsellors Securities, its officers or directors, or any such
controlling person, such notification to be given by letter or by telegram
addressed to the Fund at its principal office in New York, New York and sent to
the Fund by the person against whom such action is brought, within ten (10) days
after the summons or other first legal process shall have been served. The
failure to so notify the Fund of any such action shall not relieve the Fund from
any liability that the Fund may have to the person against whom such action is
brought by reason of any such untrue or alleged untrue statement or omission or
alleged omission otherwise than on account of the Fund's indemnity agreement
contained in this paragraph 4.1. The Fund's indemnification agreement contained
in this paragraph 4.1 and the Fund's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Counsellors Securities, its officers and
directors, or any controlling person, and shall survive the delivery of any of
the Fund's shares. This agreement of indemnity will inure exclusively to
Counsellors Securities' benefit, to the benefit of its several officers and
directors, and their respective estates, and to the benefit of the controlling
persons and their successors. The Fund agrees to notify Counsellors Securities
promptly of the commencement of any litigation or proceedings against the Fund
or any of its officers or directors in connection with the issuance and sale of
any of the Common Shares and/or Advisor Shares.
4.2 Counsellors Securities agrees to indemnify, defend and hold
the Fund, its several officers and directors, and any person who controls the
Fund within the meaning of Section 15 of the 1933 Act, free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the Fund, its officers or
directors or any such controlling person
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may incur under the 1933 Act, the 1940 Act or common law or otherwise, but only
to the extent that such liability or expense incurred by the Fund, its officers
or directors or such controlling person resulting from such claims or demands
shall arise out of or be based upon (a) any unauthorized sales literature,
advertisements, information, statements or representations or (b) any untrue or
alleged untrue statement of a material fact contained in information furnished
in writing by Counsellors Securities to the Fund specifically for use in the
registration statement and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the prospectus
or statement of additional information, or shall arise out of or be based upon
any omission or alleged omission to state a material fact in connection with
such information furnished in writing by Counsellors Securities to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Counsellors Securities' agreement to indemnify the Fund, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon Counsellors Securities' being notified of any action
brought against the Fund, its officers or directors, or any such controlling
person, such notification to be given by letter or telegram addressed to
Counsellors Securities at its principal office in New York, New York and sent to
Counsellors Securities by the person against whom such action is brought, within
ten (10) days after the summons or other first legal process shall have been
served. The failure to so notify Counsellors Securities of any such action shall
not relieve Counsellors Securities from any liability that Counsellors
Securities may have to the Fund, its officers or directors, or to such
controlling person by reason of any such untrue or alleged untrue statement or
omission or alleged omission otherwise than on account of Counsellors
Securities' indemnity agreement contained in this paragraph 4.2. Counsellors
Securities agrees to notify the Fund promptly of the commencement of any
litigation or proceedings against Counsellors Securities or any of its officers
or directors in connection with the issuance and sale of any of the Common
Shares and/or Advisor Shares.
4.3 In case any action shall be brought against any indemnified
party under paragraph 4.1 or 4.2, and it shall timely notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish to do so, to assume the
defense thereof with counsel satisfactory to such indemnified party. If the
indemnifying party opts to assume the defense of such action, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than (a) reasonable costs of investigation or the
furnishing of documents or witnesses and (b) all reasonable fees and expenses of
separate counsel to such indemnified party if (i) the indemnifying party and the
indemnified party shall have agreed to the retention of such counsel or (ii) the
indemnified
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party shall have concluded reasonably that representation of the indemnifying
party and the indemnified party by the same counsel would be inappropriate due
to actual or potential differing interests between them in the conduct of the
defense of such action.
5. Effectiveness of Registration
None of the Common Shares or Advisor Shares shall be offered by
either Counsellors Securities or the Fund under any of the provisions of this
Agreement and no orders for the purchase or sale of the Common Shares or Advisor
Shares shall be accepted by the Fund if and so long as the effectiveness of the
registration statement shall be suspended under any of the provisions of the
1933 Act or if and so long as the prospectus is not on file with the SEC;
provided, however, that nothing contained in this paragraph 5 shall in any way
restrict or have an application to or bearing upon the Fund's obligation to
repurchase its shares from any shareholder in accordance with the provisions of
the prospectus or statement of additional information.
6. Notice to Counsellors Securities
The Fund agrees to advise Counsellors Securities immediately in
writing:
(a) of any request by the SEC for amendments to the
registration statement, prospectus or statement of additional
information then in effect with respect to the Common Shares and/or
Advisor Shares or for additional information;
(b) in the event of the issuance by the SEC of any stop
order suspending the effectiveness of the registration statement,
prospectus or statement of additional information then in effect with
respect to the Common Shares and/or Advisor Shares or the initiation of
any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement,
prospectus or statement of additional information then in effect with
respect to the Common Shares and/or Advisor Shares or that requires the
making of a change in such registration statement, prospectus or
statement of additional information in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with respect to any
amendment to any registration statement, prospectus or statement of
additional information with respect to the Common Shares or Advisor
Shares which may from time to time be filed with the SEC.
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7. Term of Agreement
This Agreement shall continue until April 17, 1998 with respect
to each of the Common Shares and Advisor Shares, and thereafter shall continue
automatically for successive annual periods ending on April 17th of each year,
provided such continuance is specifically approved at least annually by (a) a
vote of a majority of the Fund's Board of Directors or (b) a vote of a majority
(as defined in the 1940 Act) of each of the outstanding Common Shares and
Advisor Shares, respectively, provided that the continuance is also approved by
a vote of a majority of the Fund's Directors who are not interested persons (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the operation of the 12b-1 Plan or the Distribution Plan,
in this Agreement or in any agreement related to the 12b-1 Plan or Distribution
Plan ("Qualified Directors"), by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable with respect to
the Common Shares or the Advisor Shares without penalty (a) on sixty (60) days'
written notice, by a vote of a majority of the Fund's Qualified Directors or by
vote of a majority (as defined in the 1940 Act) of the outstanding Common Shares
or Advisor Shares, as applicable, or (b) on ninety (90) days' written notice by
Counsellors Securities. This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).
8. Amendments
This Agreement may not be amended to increase materially the
amount of the fee with respect to the Common Shares described in Section 1.5
above without approval of at least a majority (as defined in the 1940 Act) of
the outstanding Common Shares. In addition, all material amendments to this
Agreement must be approved by vote of the Fund's Board of Directors, and by a
vote of a majority of the Qualified Directors, cast in person at a meeting
called for the purpose of voting on the approval.
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
By:
-------------------------------------
Name:
Title:
Accepted:
COUNSELLORS SECURITIES INC.
By:
----------------------------
Name:
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SERVICES AGREEMENT
Ladies and Gentlemen:
We have an agreement (the "Distribution Agreement") with each of several
open-end investment companies, or series thereof, for which Warburg, Pincus
Counsellors, Inc. ("Counsellors") provides investment advisory services
(together with such other open-end investment companies, or series thereof, for
which Counsellors provides advisory services in the future, the
"Counsellors-advisor Funds"). Pursuant to the Distribution Agreements, we,
Counsellors Securities Inc. ("CSI"), act as the distributor of shares of common
stock of the Funds designated "Common Shares" (collectively, the "Shares"). You
provide recordkeeping and administrative services to certain employee benefit
plans and retirement plans (together, the "Plans") that include or propose to
include certain of the Counsellors-advisor Funds (as modified from time to time,
the "Funds") as an investment alternative or to other customers of yours who
from time to time beneficially own Shares (together with Plan participants,
"Customers"). We may enter into other similar agreements with any other person
or persons without your consent or notice to you.
As used herein, unless the context otherwise requires, "we," "our"
and/or "us" refer to CSI and "you," "your" and "yours" refer to the company that
is the counterparty to this Agreement (the "Service Organization"). The terms
"Prospectus" and "Statement" as used herein refer respectively to the then
current prospectus and statement of additional information relating to the
Shares forming parts of the Registration Statement on Form N-1A of a Fund under
the Securities Act of 1933, as amended (the "1933 Act").
1. Services. As applicable, you agree to provide the administrative,
shareholder and/or other services set forth on Schedule A hereto, as amended
from time to time. In providing such services, you shall not, except as
specifically provided herein, have any authority to act as agent for us or any
Fund, but shall act only as agent of the Plans and Customers who from time to
time beneficially own Shares of one or more Funds and as an independent
contractor and not as an employee or agent of the Funds, Counsellors or us.
You will maintain all records required by law, including records
detailing the services you provide in return for the fees to which you are
entitled under this Agreement. Such records shall be preserved, maintained and
made available to the extent required and in accordance with the Investment
Company Act of 1940, as amended (the "1940 Act"), and the Securities Exchange
Act of 1934 (the "1934 Act")
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and the respective rules thereunder. Upon request by a Fund or us, you agree to
promptly make copies or, if required, originals of such of these records
available to the Fund or us, as the case may be. You also agree to promptly
notify the Fund or us if you experience any difficulty in maintaining the
records described in the foregoing in an accurate and complete manner. This
provision shall survive the termination of this Agreement.
You agree to furnish the Funds, Counsellors and us with such occasional
and periodic reports as we shall reasonably request from time to time to enable
the Funds or us to comply with applicable laws and regulations (including,
without limitation, providing reports relating to blue sky and other state
securities laws and regulations) and with such other information as we may
reasonably request (including, without limitation, periodic certifications
confirming the provision to Plans (and Customers of the services described
herein). Moreover, you agree to provide to the Funds, Counsellors and us access
to you and your personnel at our reasonable request during normal business hours
to confirm compliance with the provisions of this Agreement and applicable law.
You shall take all steps necessary to ensure that the arrangements
provided for in this Agreement are properly disclosed to the Plans. You agree to
inform Plans and Customers that they are transacting business with you and not
with the Funds, Counsellors or us, and that they may look only to you for
resolution of problems or discrepancies in their accounts or between those
accounts and your omnibus accounts (the "Accounts") at the Funds.
Neither any Fund, Counsellors nor we assume any responsibility or
obligation as to your right to sell Shares in any state or jurisdiction. We have
full authority to take such action as we may deem advisable in respect of all
matters pertaining to the continuous offering of Shares. We reserve the right in
our sole discretion and without prior notice to you to suspend sales or withdraw
the offering of Shares of any or all Funds. You agree that you will not offer or
sell any Shares except in compliance with applicable federal and state
securities laws. You agree that you will not offer or sell any Shares to Plans,
Customers or other persons (i) in any state or jurisdiction in which such Shares
are not qualified for sale or exempt from the requirements of the relevant
securities laws or in which you are not properly licensed or authorized to make
such offers or sales, (ii) with respect to whom such investment would not be
suitable or otherwise appropriate, or (iii) at any time after CSI or any Fund
has provided you with written notice that any Fund is not then currently
offering Shares to the public.
You shall maintain at all times general liability and other insurance
coverage, including errors and omissions coverage, that is reasonable and
customary in light of your duties hereunder, with limits of not less than $5
million. Such insurance coverage shall be issued by a qualified insurance
carrier with a Best's rating of at least "A" or with the highest rating of a
nationally recognized statistical rating organization. In
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addition, you shall promptly deliver to us such financial statements as we
reasonably request concerning your financial condition; such statements shall
fairly represent your financial condition as of the date thereof. You shall
inform us of any subsequent material change in your financial condition that
would cause such statements to no longer fairly represent your financial
condition.
2. Orders for Shares. Orders received from you for Shares of a Fund will
be accepted by us only at the public offering price applicable to each order, as
set forth in the relevant Prospectus and Statement. All orders by you for a
Fund's Shares will be held through the Accounts with the Fund, and you agree to
make available to the Funds on a monthly basis records necessary to determine
the number of Plans or Customers in each Account (indicating the number of new
Customer accounts opened during the month, as well as the number of ongoing
Customer accounts) and, if requested by us, the times of receipt of Customer
orders. You agree to use your best efforts to assist us in identifying "market
timers" or investors who engage in a pattern of short-term trading.
On each day on which a Fund calculates its net asset value (a "Business
Day"), you shall aggregate and calculate the net purchase and redemption orders
for each Account. Net orders shall only reflect Customer orders that you have
received prior to the close of regular trading on the New York Stock Exchange,
Inc. (the "NYSE") (currently 4:00 p.m., Eastern time) on that Business Day.
Orders that you have received after the close of regular trading on the NYSE
shall be treated as though received on the next Business Day. Each communication
of orders by you shall constitute a representation that such orders were
received by you prior to the close of regular trading on the NYSE on the
Business Day on which the purchase or redemption order is priced in accordance
with Rule 22c-1 under the 1940 Act. Other procedures relating to the Funds,
including the timing and manner of payment for Shares, shall be in accordance
with Schedule B, as amended from time to time, as well as with the Prospectus
and Statement of the relevant Fund and with oral or written instructions that we
or the relevant Fund shall forward to you from time to time.
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE PROCEDURES
REFERRED TO IN THE PRECEDING PARAGRAPH, YOU ARE HEREBY APPOINTED TO ACT, AND YOU
HEREBY AGREE TO ACT, AS AGENT OF EACH FUND FOR THE PURPOSE SPECIFICALLY SET
FORTH IN THIS PARAGRAPH. Provided that you comply with the procedures referred
to in the preceding paragraph, you shall be deemed to be an agent of each Fund
for the sole purpose of receiving instructions from Customers for the purchase
and redemption of Shares of the Fund prior to the close of regular trading on
the NYSE each Business Day and communicating orders based on such instructions
to us or the Fund's transfer agent, all as specified herein. The Business Day on
which you receive such instructions prior to the close of regular trading on the
NYSE shall be the Business Day on which such
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orders will be deemed to be received by us or the Fund's transfer agent as a
result of such instructions.
You shall not withhold placing orders for the Shares received from
Customers so as to profit yourself as a result of such withholding. You shall
not place orders for Shares unless you have already received purchase orders for
Shares at the applicable public offering price and subject to the terms hereof.
All orders are subject to acceptance or rejection by us or the relevant Fund in
the sole discretion of either, or by the relevant Fund's transfer agent acting
on our behalf, and orders shall be effective only upon receipt in proper form.
The Funds may, if necessary, delay redemption of Shares to the extent permitted
by the 1940 Act.
3. Fees. For the services and facilities provided by you hereunder, we
agree to pay you beginning on the effective date indicated next to our signature
below an amount calculated at the rate and in the manner set forth in Schedule
C, as amended from time to time.
You agree that during the term of this Agreement, you will not assess
against or collect from Plans or Customers any transaction fee upon the purchase
or redemption of any Fund's Shares that are considered in calculating the fee
due pursuant to this Agreement.
4. CSI's Responsibilities; Limitation of Liability for Claims. Any
printed information that we furnish to you other than the Prospectus, the
Statement, information supplemental to the Prospectus and the Statement,
periodic reports and proxy solicitation materials are our sole responsibility
and not the responsibility of any Fund, and you agree that the Funds, the
shareholders of the Funds and the officers and governing Boards of the Funds
shall have no liability or responsibility to you in these respects. You also
agree that the payment of compensation to you under this Agreement is solely our
responsibility and not that of any Fund, and you agree that the Funds, the
shareholders of the Funds and the officers and governing Boards of the Funds
shall have no liability or responsibility to you with respect to any
indebtedness, liability or obligation hereunder. Further, it is understood, in
the case of each Fund that is organized as a Massachusetts business trust or
series thereof, that the declarations of trust for each trust refers to the
trustees collectively as trustees and not as individuals personally, and that
the declaration of trust provides that no shareholder, officer, trustee,
employee or agent of the trust shall be subject to claims against or obligations
of the trust to any extent whatsoever, but that the trust estate only shall be
liable. No Fund or series of a Fund shall be liable for the obligations or
liabilities of any other Fund or series of a Fund.
5. Pricing Errors. In the event adjustments are required to correct any
error in the computation of the net asset value of a Fund's Shares, the Fund or
we shall notify you as soon as practicable after discovering the need for those
adjustments that result
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in an aggregate reimbursement of $150 or more to the Accounts. Any such notice
shall state for each day for which an error was in effect the incorrect price,
the correct price and, to the extent communicated to the Fund's shareholders,
the reason for the price change. You may send this notice or a derivation
thereof (so long as such derivation is approved in advance by Counsellors or us)
to Customers whose accounts are affected by the price change.
If an adjustment is to be made in accordance with the preceding
paragraph, the relevant Fund shall make all necessary adjustments (within the
parameters specified therein) to the number of Shares owned in the Accounts and
distribute to you the amount of such underpayment for credit to Customers'
accounts.
If the Accounts received amounts in excess of the amounts to which they
otherwise would have been entitled, you, at our request, will make a good faith
attempt to collect such excess amounts from Customers. In no event, however,
shall you be liable to the Funds or us for any such amounts.
6. Termination; Assignment. This Agreement shall be terminable without
penalty upon 30 days' written notice to us by you and upon 10 days' written
notice to you by us; provided, however, that any termination of this Agreement
shall not affect any unpaid obligations under this Agreement and you shall be
entitled to receive all fees earned up to and including the effective date of
termination.
This Agreement shall not be assignable by either us or you without the
prior written consent of the Funds. Nothing in this Agreement is intended to
confer upon any person other than the parties hereto and their permitted assigns
and successors any rights or remedies under or by reason of this Agreement.
7. Fund Information. You agree that you will not offer or sell any
Shares except in compliance with applicable federal and state securities laws
and that in connection with sales and offers to sell Shares you will furnish to
each person to whom any such sale or offer is made, at or prior to the time of
offering or sale, a copy of the relevant Prospectus and, if requested, the
corresponding Statement (each as then amended or supplemented) and will not
furnish to any person any information relating to a Fund that is inconsistent in
any respect with the information contained in the Prospectus and Statement (each
as then amended or supplemented). You shall not make any representations
concerning the Shares or a Fund except those contained in the relevant
Prospectus or Statement or in such printed material issued by us or a Fund as
information supplemental to the Prospectus and Statement.
CSI will provide you on a timely basis with investment performance
information for each Fund, including total return for the preceding calendar
month and calendar quarter, the calendar year to date and the prior one-year,
five-year and ten-year (or life of the Fund) periods. You may, based on the
Securities and Exchange Commission-
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mandated information supplied by CSI, prepare communications for Customers
("Customer Materials"). You shall provide copies of all Participant Materials to
CSI concurrently with their first use for CSI's internal recordkeeping purposes;
however, it is understood that neither CSI nor any Fund shall be responsible for
errors or omissions in, or the content of, Customer Materials.
8. Standard of Care; Indemnification. In carrying out your and our
obligations under this Agreement, you and we each agree to act in good faith and
without negligence.
You agree to and do release, indemnify and hold each Fund, Counsellors,
CSI and their and our respective employees, agents, trustees, directors,
officers and controlling persons harmless from and against any and all direct or
indirect claims, liabilities, expenses or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder. Without limiting the
generality of the foregoing, you agree that this provision will apply to claims,
liabilities, expenses or losses arising out of (a) your making any statement or
representation concerning the Shares or a Fund that is not contained in the
relevant Prospectus or Statement or in such printed material issued by us or a
Fund as information supplemental to the Prospectus and Statement (including,
without limitation, any statement, representation or omission contained in
Customer Materials) and (b) an offering or sale of Shares (i) in any state or
jurisdiction in which such Shares are not qualified for sale or exempt from the
requirements of the relevant securities laws or in which you are not properly
licensed or authorized to make such offers or sales, (ii) which is unsuitable or
otherwise inappropriate to any Plan or Customer or (iii) at any time after CSI
or any Fund has provided you with written notice that any Fund is not then
currently offering Shares to the public. The Funds and CSI, in each case solely
to the extent of such parties' responsibilities hereunder, agree to and do
release, indemnify and hold you and your officers, directors and controlling
persons harmless from and against any and all direct or indirect claims,
liabilities, expenses or losses resulting from requests, directions, actions or
inactions of or by any Fund, CSI or its or our respective officers, employees or
agents regarding our responsibilities hereunder.
This provision shall survive the termination of this Agreement.
9. Representations and Warranties. Each party hereby represents and
warrants to each other party that it is duly authorized by all necessary action,
approval or authorization to enter into this Agreement and that it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
You further represent, warrant and agree that:
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(i) you are fully authorized by applicable law and
regulation and by any agreement you may have with any Plan, Customer or
other client for whom you may act pursuant to this Agreement to perform
the services and receive the compensation therefor described in this
Agreement;
(ii) in performing the services described in this
Agreement, you will comply with all applicable laws, rules and
regulations and with the relevant Prospectus and Statement;
(iii) if you are not duly registered as a broker-dealer
under Section 15 of the 1934 Act or as a transfer agent under Section
17A of the 1934 Act and, in either case, applicable state securities
laws and regulations, you are not required to be so registered and will
not be required to be so registered in order to perform the services and
receive the compensation therefor described in this Agreement;
(iv) neither you nor any of your "affiliates" (as such
term is defined in 29 C.F.R. Section 2510.3-21(e)) is a "fiduciary" of
any Plan as such term is defined in section 3(21) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), and
section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
(v) the receipt of fees hereunder will not constitute a
"prohibited transaction" as such term is defined in section 406 of ERISA
and section 4975 of the Code.
10. Transactions Subject to Fund/SERV. Upon the execution of the
Fund/SERV Amendment to this Agreement, trades may be made through Fund/SERV.
11. Governing Law; Complete Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to conflicts of laws principles.
This Agreement contains the full and complete understanding of the
parties and supersedes all prior representations, promises, statements,
arrangements, agreements, warranties and understandings between the parties with
respect to the subject matter hereof, whether oral or written, express or
implied.
12. Amendment. This Agreement, including the Schedules thereto, may be
modified or amended and the terms of this Agreement may be waived only by
writings signed by each of the parties.
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13. Notices. All notices and communications shall be mailed or telecopied to you
to the address set forth below and to us at 466 Lexington Avenue, New York, New
York 10017, Attention: Eugene P. Grace (Fax No.: 212-878-9351), or in any case
to such other address as a party may request by giving written notice to the
other.
COUNSELLORS SECURITIES INC.
Date:_____________ __, 199_ By:_________________________________________
Name:
Title:
Effective as of: _________, 199_
WARBURG PINCUS _______ _________ FUND
By:_________________________________________
Name:
Title:
Please indicate your confirmation and acceptance of this Agreement as of
the date written above by signing below and returning one copy of this Agreement
to Counsellors Securities Inc., 466 Lexington Avenue, New York, New York 10017,
Attention: Eugene P. Grace.
Accepted and Agreed:
By:_________________________________
Name (Print):
Title:______________________________
Address:
Telephone No.:
Fax No.:
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<PAGE>
CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED SHALL
HAVE THE MEANING SET FORTH IN THE BODY OF THE SERVICES AGREEMENT.
SCHEDULE A
Administrative Services
(i) providing Customers with a service that invests the assets of their
accounts in Shares;
(ii) receiving from the Plans and Customers, in accordance with the
Services Agreement, instructions for the purchase and redemption of Shares;
aggregating and processing purchase and redemption requests for Shares from
Customers and placing net purchase and redemption orders for each Account with
CSI or its designee, communicating such orders in a timely manner to CSI or its
designee in accordance with Schedule D to the Services Agreement; promptly
delivering, or instructing the Plans to deliver, appropriate documentation to
CSI or its designee; and settling purchase and redemption orders in accordance
with the Services Agreement and the relevant Prospectus and Statement;
(iii) arranging for bank wires;
(iv) providing sub-accounting with respect to Shares beneficially owned
by Plans and Customers;
(v) to the extent required by law, at your expense, forwarding
shareholder communications from the relevant Fund (such as the Prospectus, the
Statement, information supplemental to the Prospectus and Statement, periodic
reports, proxy solicitation materials and dividend, distribution and tax
notices) to Plans and Customers, with such material to be provided to you by CSI
to the extent reasonably practicable upon 10 Business Days' notice;
(vi) withholding taxes on non-resident alien accounts and otherwise as
required by law;
(vii) maintaining records of dividends and other distributions; including
dates and prices for all transactions, reinvesting or disbursing in cash such
dividends and distributions in the relevant Fund for Plans and Customers;
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(viii) preparing and delivering to Plans and Customers and state and
federal regulatory authorities, including the U.S. Internal Revenue Service,
such information respecting dividends and distributions paid by the relevant
Fund as may be required by law;
(ix) maintaining adequate records for each Plan and Customer, including
daily and monthly summaries, reflecting Shares purchased and redeemed, including
dates and prices for all transactions and Share balances; and
(x) preparing and delivering to Plans and Customers periodic account
statements showing for each Plan and Customer, respectively, the total number of
Shares of a Fund held as of the statement closing date, purchases and
redemptions of Shares during the statement period and dividends and other
distributions paid during the statement period including dates and prices for
all transactions.
A-2
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Shareholder Services
(i) responding to Plan and Customer inquiries; providing information on
Plan and Customer investments; and providing other shareholder liaison services;
(ii) providing office space and equipment, telephone facilities and
personnel (which may be any part of the space, equipment and facilities
currently used in your business, or any personnel already employed by you) as
may be reasonably necessary or beneficial in order to provide services to Plans
and Customers under this Agreement;
(iii) sending confirmations of orders to the Plans and Customers to the
extent required by law and paying any expenses in connection therewith;
(iv) using all reasonable efforts to ensure that taxpayer identification
numbers provided by you on behalf of the Plans and Customers are correct; and
(v) providing the Plans and Customers a confirming Prospectus following
an acquisition of Shares to the extent required by law.
Other Services
(i) providing all other services as may be incidental to the
Administrative Services and Shareholder Services enumerated above;
(ii) providing such other services as may be normal or customary for
service providers performing substantially similar services; and
(iii) providing such other services as may be mutually agreed by the
parties to the extent permitted under applicable law.
A-3
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SCHEDULE B
Operating Procedures
(i) Each Fund will make available its net asset value per Share each
Business Day as soon as reasonably practicable after calculation. The Fund will
use its best efforts to make such determination available by 6:00 p.m., Eastern
time, but in no event later than 7:00 p.m., Eastern time.
(ii) For orders placed with a Fund for investment at the prior Business
Day's net asset value per Share (the Business day of the order being referred to
as "T+1"):
(a) orders must be communicated to us or the Fund's transfer
agent by 9:00 a.m., Eastern time, on T + 1, and
(b) payment for such orders must be in federal funds transmitted
by wire initiated by 12:00 p.m., Eastern time, on T + 1 by either you or us, as
applicable.
(iii) Issuance and transfer of Shares will be by book entry only. Share
certificates will not be issued by the Funds unless specifically requested by
you and agreed to by the relevant Fund.
(iv) CSI will make available reports as to the states and jurisdictions
in which we believe Shares of the Funds are qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such states
and jurisdictions. These reports will be updated periodically.
(v) The Funds will make available confirmation of executed orders the
next Business Day following receipt of the order from you. Confirmation may be
in written or verbal form. You must promptly inform CSI of any discrepancies;
silence will be deemed to indicate agreement.
(vi) Each Fund will furnish notice of the declaration of any dividends
or other distributions payable by it. This information will include the ex,
record and payable dates along with the Shares' reinvestment price. Typically,
this notice will be given by fax transmission, but may be given by other means
as may be reasonable under the circumstances.
(vii) Dividends and distributions of a Fund will be automatically
reinvested, unless otherwise indicated in writing by you, at net asset value per
Share of the Fund in accordance with the Fund's Prospectus.
(viii) The Funds will prepare Account statements on a calendar quarter
basis.
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SCHEDULE C
FEES
Total Annual Fee as % of
Average Daily Net Assets of
Name of Fund Customers held:
- ---------------------------------------------- -------------------------------
Warburg Pincus
Service Provider:_____________________
Approved By:_____________________
Name:_____________________
Title:_____________________
Date:_____________________
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Fees will be computed by CSI and paid quarterly. CSI or another of the
Funds' designees shall pay the Fee to you, and shall be reimbursed by each Fund
for a portion of the Fee due with respect to that Fund to be determined from
time to time ("Fund Portion"). The difference between the Fee due minus the Fund
Portion shall not be reimbursed by the Funds, but shall be borne by CSI or
another of the Funds' designees.
For purposes of determining the Fees payable hereunder, the average net
assets of the Plans' and Customers' Shares will be computed in the manner
specified in the relevant Fund's registration statement (as the same is in
effect from time to time) in connection with the computation of the net asset
value of Shares for purposes of purchases and redemptions. Fees payable
hereunder shall only be paid with respect to assets serviced by you and not by
any other financial institution and/or any of your affiliates. You will not at
any time include or permit to be included in the calculation of Customers' or
Plans' Shares or fees due from CSI or any affiliate thereof pursuant to this
Agreement, Shares with respect to which a fee is being paid by CSI to a party
other than you or which are otherwise the subject of a similar agreement,
whether such agreement is in place on the date hereof or entered into at some
future date.
In computing your fee, the applicable fee rate set forth above
(multiplied by the actual number of days elapsed during the period and divided
by 365) shall be applied to the average aggregate quarterly net asset value of
Shares of the applicable Funds in accounts for which you provide services for
the period in question. Each quarterly fee shall be determined independently of
every other quarterly fee. For the quarter in which this Agreement becomes
effective or terminates, there shall be an appropriate proration on the basis of
the number of days that the Agreement is in effect during such quarter. In
addition, if in any period the aggregate amount payable to you is less than
$200, we may, in our discretion, defer the payment of such amount until it,
together with a subsequent payment or payments, exceeds $200.
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WARBURG PINCUS ADVISOR FUNDS SERVICES AGREEMENT
Gentlemen:
We, Counsellors Securities Inc. ("CSI"), have an agreement (the
"Distribution Agreement") with the several open-end management investment
companies, or series thereof, for which Warburg, Pincus Counsellors, Inc.
("Counsellors") provides investment advisory services which are listed on
Appendix A hereto, as amended from time to time (the "Funds"). Pursuant to the
Distribution Agreements, we act as the distributor of shares of each Fund's
common stock or beneficial interest, as the case may be, par value $.001 per
share, designated Series 2 Shares or Advisor Shares (collectively, "Advisor
Shares"). This is to confirm that, in consideration of the agreements
hereinafter contained, we have agreed that the company that is the counterparty
to this Agreement (the "Service Organization") shall provide certain services in
connection with the Advisor Shares. We acknowledge that Advisor Shares may be
sold directly to certain employee benefit and retirement plans ("Plans") that
include or propose to include one or more Funds as an investment alternative.
The terms "Prospectus" and "Statement" as used herein refer respectively to the
then current prospectus and statement of additional information relating to the
Advisor Shares forming parts of the Registration Statement on Form N-1A of a
Fund under the Securities Act of 1933, as amended (the "1933 Act").
1. Services. Service Organization agrees to provide to investors in the
Funds ("Customers"), Plans and Plan participants the administrative, shareholder
and/or other services set forth on Schedule A hereto, as amended from time to
time. If Service Organization is not a banking organization that is prohibited
from performing such services (a "Bank"), Service Organization also agrees to
provide the distribution and marketing services set forth on Schedule A hereto.
In providing such services, Service Organization shall not, except as
specifically provided herein, have any authority to act as agent for CSI or any
Fund, but shall act only as agent of the Plans, Plan participants and Customers
who from time to time beneficially own Advisor Shares and as an independent
contractor and not as an employee or agent of the Funds, Counsellors or CSI.
Service Organization will maintain all records required by law,
including records detailing the services it provides in return for the fees to
which it is entitled under this Agreement. Such records shall be preserved,
maintained and made available to the extent required by law and in accordance
with the Investment Company Act of 1940, as amended (the "1940 Act"), the
Securities Exchange Act of 1934 (the "1934 Act") and the rules thereunder. Upon
request by a Fund or CSI, Service Organization agrees to
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promptly make copies or, if required, originals of such of these records
available to the Fund or CSI, as the case may be. Service Organization also
agrees to promptly notify the Fund or CSI if it experiences any difficulty in
maintaining these records in an accurate and complete manner. This provision
shall survive the termination of this Agreement.
Service Organization agrees to furnish the Funds, Counsellors and CSI
with such occasional and periodic reports as we shall reasonably request from
time to time to enable us or the Funds to comply with applicable laws and
regulations (including, without limitation, providing reports relating to blue
sky and other state securities laws and regulations) and with such other
information as they may reasonably request (including, without limitation,
periodic certifications confirming the provision to Plans, Plan participants and
Customers of the services described herein). Moreover, Service Organization
agrees to provide to the Funds, Counsellors and CSI access to it, and its
personnel at their reasonable request during normal business hours to confirm
compliance with the provisions of this Agreement and applicable law. In
performing services hereunder, Service Organization agrees that it will not
engage in any activities set forth in Schedule B.
Service Organization shall take all steps necessary to ensure that the
arrangements provided for in this Agreement are properly disclosed to the Plans
and Customers. Service Organization agrees to inform Plans and Customers that
they are transacting business with Service Organization and not with CSI,
Counsellors or the Funds, and that they and Plan participants may look only to
Service Organization for resolution of problems or discrepancies in their
accounts or between those accounts and Service Organization's omnibus accounts
(the "Accounts") at the Funds.
In the case of Service Organizations that are not banks, neither CSI,
Counsellors nor any Fund assumes any responsibility or obligation as to Service
Organization's right to sell Advisor Shares in any state or jurisdiction. Any
such Service Organization agrees that it will not offer or sell any Advisor
Shares to Plans, Customers or persons (i) in any jurisdiction in which Service
Organization is not properly licensed and authorized to make such offers or
sales, or in which Advisor Shares are not qualified for sale, (ii) with respect
to whom such investment would not be suitable or appropriate under applicable
law or (iii) at any time after CSI or any Fund has provided you with written
notice that any Fund is not then currently offering Advisor Shares to the
public. CSI has full authority to take such action as it may deem advisable in
respect of all matters pertaining to the continuous offering of Advisor Shares.
CSI reserves the right in its sole discretion and without prior notice to
Service Organization to suspend sales or withdraw the offering of Advisor Shares
of each Fund.
Service Organization shall maintain at all times general liability and
other insurance coverage, including errors and omissions coverage, that is
reasonable and
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customary in light of its duties hereunder, with limits of not less than $5
million. Such insurance coverage shall be issued by a qualified insurance
carrier with a Best's rating of at least "A" or with the highest rating of a
nationally recognized statistical rating organization. In addition, Service
Organization shall promptly deliver to CSI such financial statements as CSI may
reasonably request concerning Service Organization's financial condition; such
statements shall fairly represent Service Organization's financial condition as
of the date thereof.
Each Fund and CSI may enter into other similar agreements with any other
person or persons without Service Organization's consent.
2. Orders for Advisor Shares. Orders received from Service Organization
for Advisor Shares will be accepted by CSI only at the public offering price
applicable to each order, as set forth in the relevant Prospectus and Statement.
All orders by Service Organization for Advisor Shares will be held through the
Accounts with the Funds; and Service Organization agrees to make available on a
monthly basis to CSI records necessary to determine the number of Plans, Plan
participants and/or Customers in each Account and the times of receipt of Plan
participant and Customer orders. Service Organization agrees to use its best
efforts to assist CSI in identifying "market timers" or investors who engage in
a pattern of short-term trading.
On each day on which a Fund calculates its net asset value (a "Business
Day"), Service Organization shall aggregate and calculate the net purchase and
redemption orders for each Account maintained by the Fund in which Plan
participant and Customer assets are invested. Net orders shall only reflect Plan
participant and Customer orders that Service Organization has received prior to
the close of regular trading on the New York Stock Exchange, Inc. (the "NYSE")
(currently 4:00 p.m., Eastern time) on that Business Day. Orders that Service
Organization has received after the close of regular trading on the NYSE shall
be treated as though received on the next Business Day. Each communication of
orders by Service Organization shall constitute a representation that such
orders were received by it prior to the close of regular trading on the NYSE on
the Business Day on which the purchase or redemption order is priced in
accordance with Rule 22c-1 under the 1940 Act. Other procedures relating to the
Funds shall be in accordance with Schedule C, as amended from time to time, as
well as with the Prospectus and Statement of the relevant Fund and with oral or
written instructions that CSI or a Fund shall forward to Service Organization
from time to time.
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE PROCEDURES
REFERRED TO ABOVE, SERVICE ORGANIZATION HEREBY IS APPOINTED TO ACT, AND SERVICE
ORGANIZATION HEREBY AGREES TO ACT AS AGENT OF CSI FOR THE PURPOSE SPECIFICALLY
SET FORTH IN THIS
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<PAGE>
PARAGRAPH. Provided that Service Organization complies with the foregoing, it
shall be deemed to be an agent of CSI for the sole purpose of receiving
instructions as Plan and Customer agent for the purchase and redemption of
Advisor Shares of that Fund prior to the close of regular trading each Business
Day and communicating orders based on such instructions to the Fund's transfer
agent, all as specified herein. The Business Day on which Service Organization
receives such instructions prior to the close of regular trading on the NYSE
shall be the Business Day on which such orders will be deemed to be received by
CSI or the Fund's transfer agent as a result of such instructions.
Dividends and capital gains distributions will be automatically
reinvested at net asset value in accordance with the Fund's Prospectus.
Payment for Advisor Shares must be received at the time, and in the
manner, set forth in Schedule C, as amended from time to time. All orders are
subject to acceptance or rejection by CSI or the relevant Fund in the sole
discretion of either, or by the Fund's transfer agent acting on its behalf, and
orders shall be effective only upon receipt in proper form. Each Fund may, if
necessary, delay redemption of Advisor Shares to the extent permitted by the
1940 Act.
3. Fees. (a) Each Fund has adopted a plan pursuant to Rule 12b-1
under the 1940 Act providing for paymnet of 12b-1 fee of up to .75% of the value
of the average daily net assets of the Advisor Shares held of record by the
Service Organization from time to time on behalf of Plan participants and
Customers (the "Customers' Advisor Shares"). In consideration of the services
and facilities provided by the Service Organization, CSI, on behalf of each
Fund, may pay to the Service Organization, and the Service Organization will
accept as full payment therefor, a fee in an amount obtained by multiplying the
applicable percentages set forth on Appendix A by the average daily net assets
of the Customers' Advisor Shares, which fee will be computed daily and payable
quarterly. The fee set forth above may include a service fee in the amount of
.25% of the average daily net assets of the Customers' Advisor Shares, which fee
will be computed daily and payable quarterly. Any such service fee shall be paid
to Service Organization solely for personal service and/or the maintenance of
shareholder accounts.
(b) For purposes of determining the fees payable under this
Section 3, the average daily net assets of the Customers' Advisor Shares will be
computed in the manner specified in the relevant Fund's registration statement
(as the same is in effect from time to time) in connection with the computation
of the net asset value of Advisor Shares for purposes of purchases and
redemptions. If in any period the aggregate amount payable to Service
Organization is less than $200, CSI may, in its discretion, defer the payment of
such amount until it, together with a subsequent payment or payments, exceeds
$200.
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(c) Service Organization will provide to Plans, Plan participants
and Customers a schedule of fees showing the compensation payable to the Service
Organization hereunder, along with any other fees charged by it to Plans, Plan
participants and Customers relating to their assets that are invested in Advisor
Shares.
(d) The fees paid pursuant to this Agreement shall be payable
only after, for so long as and to the extent that CSI has received an amount
equal to the fees payable to Service Organization from each Fund pursuant to
such Fund's Distribution Plan, as amended from time to time, adopted pursuant to
Rule 12b-1 under the 1940 Act.
4. Counsellors Securities' Responsibilities; Limitation of Liability for
Claims. Any printed information that is furnished to Service Organization other
than each Fund's Prospectus, Statement, information supplemental to the
Prospectus and the Statement, periodic reports and proxy solicitation materials
is CSI's sole responsibility, and not the responsibility of any Fund, and
Service Organization agrees that the Funds, the shareholders of the Funds and
the officers and governing Boards of the Funds shall have no liability or
responsibility to Service Organization in these respects. Further, it is
understood, in the case of each Fund that is organized as a Massachusetts
business trust or series thereof, that the declarations of trust for each trust
refers to the trustees collectively as trustees and not as individuals
personally, and that the declaration of trust provides that no shareholder,
trustee, officer, employee or agent of the trust shall be subject to claims
against or obligations of the trust to any extent whatsoever, but that the trust
estate only shall be liable. No Fund shall be liable for the obligations or
liabilities of any other Fund. No series of any Fund, if any, shall be liable
for obligations of any other series.
5. Pricing Errors. In the event adjustments are required to correct any
error in the computation of the net asset value of a Fund's Advisor Shares, the
Fund or CSI shall notify Service Organization as soon as practicable after
discovering the need for those adjustments that result in an aggregate
reimbursement of $150 or more to any one Account. Any such notice shall state
for each day for which an error occurred the incorrect price, the correct price
and, to the extent communicated to the Fund's shareholders, the reason for the
price change. Service Organization may send this notice or a derivation thereof
(so long as such derivation is approved in advance by CSI or Counsellors) to
Plan participants and Customers whose accounts are affected by the price change.
If an Account received amounts in excess of the amounts to which it
otherwise would have been entitled prior to an adjustment for an error, Service
Organization, at the Fund's request, will make a good faith attempt to collect
such excess amounts from
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<PAGE>
Plan participants and Customers. In no event, however, shall Service
Organization be liable to a Fund or CSI for any such amounts.
If an adjustment is to be made in accordance with the first paragraph of
this Section 5, the relevant Fund shall make all necessary adjustments (within
the parameters specified in that first paragraph) to the number of Advisor
Shares owned in the Accounts and distribute to Service Organization the amount
of such underpayment for credit to Plan participants' and Customers' accounts.
6. Publicity. CSI will provide Service Organization on a timely basis
with investment performance information for each Fund in which Service
Organization maintains an Account, including total return for the preceding
calendar month and calendar quarter, the calendar year to date, and the prior
one-year, five-year, and ten-year (or life of the Fund) periods. Service
Organization may, based on the Securities and Exchange Commission-mandated
information supplied by CSI, prepare communications for Plan participants and
Customers ("Participant Materials"). Service Organization shall provide copies
of all Participant Materials to CSI concurrently with their first use for CSI's
internal recordkeeping purposes. It is understood that neither CSI nor any Fund
shall be responsible for errors or omissions in, or the content of, Participant
Materials.
7. Standard of Care; Indemnification. In carrying out Service
Organization's and CSI's obligations under this Agreement, Service Organization
and CSI each agree to act in good faith and without negligence.
Service Organization agrees to and does release, indemnify and hold each
Fund, its investment adviser(s), CSI and their respective officers, trustees,
directors, employees, agents and controlling persons harmless from and against
any and all direct or indirect claims, liabilities, expenses or losses resulting
from requests, directions, actions or inactions of or by Service Organization or
its or their officers, employees or agents regarding Service Organization's
responsibilities hereunder. Without limiting the generality of the foregoing,
Service Organization agrees that this provision will apply to claims,
liabilities, expenses or losses arising out of (a) Service Organization making
any statement or representation concerning the Advisor Shares that is not
contained in the relevant Prospectus or Statement or in such printed material
issued by CSI or a Fund as information supplemental to the Prospectus and
Statement (including, without limitation, any statement, representation or
omission contained in Participant Materials), (b) a sale or offering of Advisor
Shares (i) in any state or jurisdiction in which such Advisor Shares are not
qualified for sale or exempt from the requirements of the relevant securities
laws or in which Service Organization is not properly licensed or authorized to
make offers or sales, (ii) which is unsuited or otherwise inappropriate for any
Plan, Plan participant or Customer or (iii) at any time after CSI or any Fund
provides written notice that any Fund is not then currently offering Advisor
Shares to
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<PAGE>
the public. CSI agrees to and does release, indemnify and hold Service
Organization and its officers, directors and controlling persons harmless from
and against any and all direct or indirect claims, liabilities, expenses or
losses resulting from requests, directions, actions or inactions of or by CSI or
its respective officers, trustees, directors, employees, agents or controlling
persons.
This provision shall survive the termination of this Agreement.
8. Representations and Warranties. Each party hereby represents and
warrants to the other that it is duly authorized by all necessary action,
approval or authorization to enter into this Agreement and that it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
Service Organization further represents, warrants and agrees that:
(i) Service Organization is and, during the term of this
Agreement, will be fully authorized by applicable law and regulation and
by any agreement it may have with any Plan, Customer or client for whom
it may act in a manner covered by this Agreement to perform the services
and receive the compensation therefor described in this Agreement;
(ii) in performing the services and receiving the
compensation described in this Agreement, Service Organization will
comply with all applicable laws, rules and regulations;
(iii) Service Organization is duly registered as a
broker-dealer under Section 15 of the 1934 Act and a transfer agent
under Section 17A of the 1934 Act and, in each case, applicable state
securities laws and regulations, and all such registrations are in full
force and effect and will remain in effect during the term of this
Agreement; if Service Organization is not so registered, it is not
required to be so registered and will not be required to be so
registered in order to perform the services described in this Agreement;
(iv) neither Service Organization, nor any of its
"affiliates" (as such term is defined in 29 C.F.R. Section 2510.3-21(e))
is or, during term of this Agreement, will become a "fiduciary" of any
Plan as such term is defined in section 3(21) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), and
section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code");
(v) the receipt of fees hereunder will not constitute a
"prohibited transaction" as such term is defined in section 406 of ERISA
and section 4975 of the Code; and
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(vi) the compensation payable to Service Organization
hereunder, together with any other compensation it receives from Plans,
Plan participants and Customers for services contemplated by this
Agreement, will not be excessive or unreasonable under the laws and
instruments governing its relationships with Plans, Plan participants
and Customers.
9. Reports. Service Organization will furnish CSI, each Fund or its
designees with such information as it or they may reasonably request (including,
without limitation, periodic certifications confirming the provision to Plans,
Plan participants and Customers of the services described herein), and will
otherwise cooperate with CSI, each Fund and its designees (including, without
limitation, any auditors designated by each Fund), in connection with the
preparation of reports to the Fund's governing Board concerning this Agreement
and the monies paid or payable by CSI, on behalf of the Fund, pursuant hereto,
as well as any other reports or filings that may be required by law. Service
Organization will promptly notify the Fund and CSI in the event it is no longer
able to make the representations and warranties set forth above.
10. Term. This Agreement will become effective on the date set forth
below. Unless sooner terminated, this Agreement will continue until one year
from the date hereof, and thereafter will continue automatically for successive
annual periods provided such continuance is specifically approved at least
annually by the Fund in the manner set forth in the next paragraph. This
Agreement is terminable with respect to each Fund, with or without cause,
without penalty (i) at any time by the Fund, which termination may be by vote of
a majority of (a) the Disinterested Trustees/Directors (as defined below) or (b)
the outstanding Advisor Shares of the Fund, or (ii) by CSI or Service
Organization upon 30 days' notice to the other party hereto.
Anything in this Agreement to the contrary notwithstanding, no
compensation may be paid under this Agreement with respect to any Fund until
this Agreement has been approved by vote of a majority of (i) the Fund's
governing Board and (ii) those Trustees/Directors who are not "interested
persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Distribution Plan adopted by the Fund
regarding the provision of distribution and support services to the beneficial
owners of the Advisor Shares or in any agreements related thereto
("Disinterested Trustees/Directors"), cast in person at a meeting for the
purpose of voting on such approval.
11. Transactions Subject to Fund/SERV. Upon the execution of a Fund/SERV
Amendment to this Agreement, transactions in Fund shares may be affected through
Fund/SERV.
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12. Governing Law; Complete Agreement; Assignment. This Agreement shall
be governed by and construed in accordance with the laws (except the conflict of
law rules) of the State of New York.
This Agreement contains the full and complete understanding of the
parties and supersedes all prior representations, promises, statements,
arrangements, agreements, warranties and understandings between the parties with
respect to the subject matter hereof, whether oral or written, express or
implied.
This Agreement is non-assignable by the parties hereto and will
terminate automatically in the event of its assignment (as such term is defined
in the 1940 Act). Nothing in this Agreement is intended to confer upon any
person other than the Fund and the parties hereto and their permitted assigns
and successors any rights or remedies under or by reason of this Agreement.
13. Amendment. This Agreement, including the Schedules thereto, may be
modified or amended and the terms of this Agreement may be waived only by
writings signed by each of the parties.
14. Notices. All notices and communications shall be mailed or
telecopied to Service Organization to the address set forth below and to the
Fund or CSI at 466 Lexington Avenue, New York, New York 10017, Attention: Eugene
P. Grace (Fax No.: 212-878-9351), or in any case to such other address as a
party may request by giving written notice to the other.
COUNSELLORS SECURITIES INC.
Date:_____________ __, 199_ By:________________________________
Name:
Title:
Effective as of:______________
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Please indicate Service Organization's confirmation and acceptance of this
Agreement as of the date written above by signing below and returning one copy
of this Agreement to Counsellors Securities Inc., 466 Lexington Avenue, New
York, New York 10017, Attention:
Eugene P. Grace.
Accepted and Agreed:
___________________________________
By:____________________________
Name (Print):__________________
Title:_________________________
Address: ______________________
Telephone No.:_________________
Fax No.:
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<PAGE>
CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE MEANING
SET FORTH IN THE BODY OF THE ADVISOR FUNDS SERVICES AGREEMENT.
APPENDIX A
Funds Fee Rate
Warburg Pincus Balanced Fund .50%
Warburg Pincus Capital Appreciation Fund .50%
Warburg Pincus Emerging Growth Fund .50%
Warburg Pincus Emerging Markets Fund .50%
Warburg Pincus Fixed Income Fund .25%
Warburg Pincus Health Sciences Fund .50%
Warburg Pincus Global Fixed Income Fund .50%
Warburg Pincus Growth & Income Fund .50%
Warburg Pincus Intermediate Maturity Government Fund .25%
Warburg Pincus International Equity Fund .50%
Warburg Pincus Japan Growth Fund .50%
Warburg Pincus Japan OTC Fund .50%
Warburg Pincus New York Intermediate Municipal Fund .25%
Warburg Pincus Post-Venture Capital Fund .50%
Warburg Pincus Small Comany Growth Fund .50%
Warburg Pincus Small Company Value Fund .50%
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SCHEDULE A
Distribution and Marketing Services
(i) formulation and implementation of marketing and promotional
activities including, but not limited to, direct mail promotions and other
advertising, if appropriate;
(ii) distributing Prospectuses, Statements and reports of the Fund to
prospective Plans, Plan sponsors and Customers;
(iii) preparing, printing and distributing sales literature pertaining
to the Fund; and
(iv) obtaining information, analyses and reports with respect to
marketing and promotional activities relating to the Fund.
Administrative Services
(i) receiving from the Plans, Plan participants and Customers, by the
close of regular trading on the New York Stock Exchange (currently 4:00 p.m.,
Eastern time) on any business day (i.e., a day on which the New York Stock
Exchange is open for trading), instructions for the purchase and redemption of
shares; aggregating and processing purchase and redemption requests for Advisor
Shares from Plan participants and Customers and placing net purchase and
redemption orders with CSI or its designee; payment for net purchase orders must
be received at the time the order is placed; communicating orders in a timely
manner to CSI or its designee and promptly delivering, or instructing the Plans
to deliver, appropriate documentation to CSI or its designee;
(ii) providing Plan participants and Customers with a service that
invests the assets of their accounts in Advisor Shares;
(iii) providing information periodically to Plans, Plan participants and
Customers showing their positions in Advisor Shares;
(iv) arranging for bank wires;
(v) providing sub-accounting with respect to Advisor Shares beneficially
owned by Plans, Plan participants and Customers;
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(vi) if required by law, forwarding shareholder communications from the
relevant Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to Plans, Plan
participants and Customers at Service Organization's expense, with such material
to be provided to it by CSI to the extent reasonably practicable upon ten
Business Days' notice;
(vii) withholding taxes on non-resident alien accounts and otherwise as
appropriate;
(viii) maintaining records of dividends and distributions; and
disbursing dividends and distributions and reinvesting such in the relevant Fund
for Plans and Plan participants;
(ix) preparing and delivering to Plans, Plan participants and Customers
and state and federal regulatory authorities, including the U.S. Internal
Revenue Service, such information respecting dividends and distributions paid by
the relevant Fund as may be required by law;
(x) maintaining adequate records for each Plan and Customer reflecting
Advisor Shares purchased and redeemed, including dates and prices for all
transactions, and Share balances;
(xi) preparing and delivering to Plans and Customers periodic account
statements showing for each Plan and Customer, respectively, the total number of
Advisor Shares held as of the statement closing date, purchases and redemptions
of Advisor Shares during the statement period, and dividends and other
distributions paid during the statement period (whether paid in cash or
reinvested in Advisor Shares), including dates and prices for all transactions;
(xii) on behalf of and to the extent instructed by each Plan and Customer
and as required by law, at Service Organization's expense, delivering to Plan
participants (or delivering to the Plans for distribution to Plan participants)
and Customers Prospectuses, Statements and other materials provided to it by CSI
to the extent reasonably practicable upon ten Business Days' notice;
(xiii) maintain daily and monthly purchase summaries (expressed in both
Share and dollar amounts) for each Plan and Customer; and
(xiv) settle orders in accordance with the terms of the Prospectus and
Statement of the Fund.
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Shareholder Services
(i) responding to Plans, Plan participant and Customer inquiries;
(ii) providing information on Plan, Plan participant and Customer
investments;
(iii) providing other shareholder liaison services;
(iv) providing office space and equipment, telephone facilities and
personnel (which may be any part of the space, equipment and facilities
currently used in Service Organization's business, or any personnel employed by
Service Organization) as may be reasonably necessary or beneficial in order to
provide services to Plans and Customers under this Agreement;
(v) sending confirmations of orders to the Plans and Plan participants
and Customers to the extent required by law and paying any costs in connection
therewith;
(vi) using all reasonable efforts to ensure that taxpayer identification
numbers provided by Service Organization on behalf of the Plans, Plan
participants and Customers are correct; and
(vii) providing the Plans, Plan participants and Customers a confirming
Prospectus following an acquisition of Advisor Shares to the extent required by
law.
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Other Services
(i) providing all other services as may be incidental to the
Distribution and Marketing Services, Administrative Services and Shareholder
Services enumerated above;
(ii) providing such other services as may be normal or customary for
service providers performing substantially similar services; and
(iii) providing such other services as may be mutually agreed by the
parties to the extent permitted under applicable statutes, rules and
regulations.
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<PAGE>
SCHEDULE B
Prohibited Activities
(i) Service Organization shall not withhold placing orders for the
Advisor Shares received from Plan participants and Customers so as to profit as
a result of such withholding.
(ii) Service Organization shall not place orders for Advisor Shares
unless it has already received purchase orders for Advisor Shares at the
applicable public offering price and subject to the terms hereof.
(iii) Service Organization agrees that it will not offer or sell any
Advisor Shares except under circumstances that will result in compliance with
applicable federal and state securities laws and that in connection with sales
and offers to sell Advisor Shares Service Organization will furnish to each
person to whom any such sale or offer is made, at or prior to the time of
offering or sale, a copy of the relevant Prospectus and, if requested, the
corresponding Statement (each as then amended or supplemented) and will not
furnish to any person any information relating to a Fund that is inconsistent in
any respect with the information contained in the Prospectus and Statement (each
as then amended or supplemented).
(iv) Service Organization shall not make any representations concerning
the Advisor Shares except those contained in the relevant Prospectus and
Statement and in such printed information subsequently issued by CSI or a Fund
as information supplemental to the Prospectus and Statement.
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SCHEDULE C
Operating Procedures
1. Each Fund will make available its net asset value per share on a
daily basis as soon as reasonably practicable after the net asset value is
calculated. The Fund will use its best efforts to make such determination
available by 6:00 p.m., Eastern time, but in no event later than 7:00 p.m.,
Eastern time, each Business Day.
2. Each Fund will furnish notice of the declaration of any income,
dividends or capital gains distributions payable by it. This information will
include the ex, record and payable dates along with the Fund's reinvestment
price. Typically, this notice will be given by fax transmission, but may be
given by other means as may be reasonable under the circumstances.
3. Dividends and capital gains distributions will be automatically
reinvested at net asset value in accordance with the Fund's Prospectus.
4. For trades placed with a Fund the Business Day after a trade date
("T+1") for investment at the prior Business Day's net asset value:
(i) trade orders must be received before 4:00 p.m., Eastern time, by the
Service Organization on the trade date ("T"):
(ii) trade orders must be communicated to the relevant Fund by 10:00
a.m., Eastern time on T + 1, and
(iii) payment for such orders must be in federal funds transmitted by
wire. This wire must be initiated by 12:00 p.m., Eastern time on T + 1 by either
the Service Organization or CSI, as the case may be.
5. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued by the Funds unless specifically
requested by the Service Organization and agreed to by the relevant Fund.
6. CSI will make available reports as to the states and jurisdictions in
which we believe the Funds are qualified for sale under, or are exempt from the
requirements of, the respective securities laws of such states and
jurisdictions. These reports will be updated periodically as changes arise.
7. The Funds will make available confirmation of executed trades the
next Business Day following receipt of the trade from the Service Organization.
Confirmation may be in written or verbal form. If verbal, Service Organization
must promptly inform CSI of any discrepancies; silence will be deemed to
indicate agreement.
8. The Funds will make available account statements on a calendar
quarter basis.
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CONSENT OF COUNSEL
Warburg, Pincus Global Post-Venture Capital Fund, Inc.
We hereby consent to being named in the Statement of Additional
Information included in Post-Effective Amendment No. 1 (the "Amendment") to the
Registration Statement on Form N-1A (Securities Act File No. 33-08459,
Investment Company Act File No. 811-07715) of Warburg, Pincus Global
Post-Venture Capital Fund, Inc. (the "Fund") under the caption "Independent
Accountants and Counsel" and to the Fund's filing a copy of this Consent as an
exhibit to the Amendment.
/s/ Willkie Farr & Gallagher
----------------------------
Willkie Farr & Gallagher
February 21, 1997
New York, New York
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to the Registration Statement under the Securities Act of 1933 on Form
N-1A (File No. 33-08459) of our report dated December 18, 1996 on our audit of
the financial statements and financial highlights of Warburg, Pincus Global
Post-Venture Capital Fund, Inc. We also consent to the reference to our Firm
under the heading "Financial Highlights" in the Prospectus and under the heading
"Independent Accountants and Counsel" in the Statement of Additional
Information.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 21, 1997
<PAGE>
<PAGE>
WARBURG PINCUS FUNDS
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
This Shareholder Servicing and Distribution Plan ("Plan") is
adopted by each of the Warburg Pincus Funds (the "Fund"), with respect to the
common stock, par value $.001 per share, of the Fund other than those designated
Advisor Shares (the "Shares") pursuant to Rule 12b-1 (the "Rule") under the
Investment Company Act of 1940, as amended (the "1940 Act"), subject to the
following terms and conditions:
SECTION 1. AMOUNT OF PAYMENTS.
The Fund will pay Counsellors Securities Inc. ("Counsellors
Securities"), a corporation organized under the laws of the State of New York,
for shareholder servicing and distribution services provided to the Shares, an
annual fee of up to .25% of the value of the average daily net assets of the
Shares. Fees to be paid with respect to the Fund under this Plan will be
calculated monthly and paid quarterly by the Fund.
SECTION 2. SERVICES PAYABLE UNDER THE PLAN.
(a) The annual fees described above payable with respect to the
Fund are intended to compensate Counsellors Securities, or enable Counsellors
Securities to compensate other persons ("Service Providers"), including any
other distributor of Shares, for providing (i) ongoing servicing and/or
maintenance of the accounts of holders of Shares ("Shareholder Services"); (ii)
services that are primarily intended to result in, or that are primarily
attributable to, the sale of Shares ("Selling Services"); and/or (iii)
subtransfer agency services, subaccounting services or administrative services
with respect to Shares ("Administrative Services"). Shareholder Services may
include, among other things, responding to inquiries of prospective investors
regarding the Fund and services to shareholders not otherwise required to be
provided by the Fund's custodian or any co-administrator. Selling Services may
include, but are not limited to: the printing and distribution to prospective
investors in Shares of prospectuses and statements of additional information
describing the Fund; the preparation, including printing, and distribution of
sales literature, reports and media advertisements relating to the Shares;
providing telephone services relating to the Fund; distributing Shares; costs
relating to the formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, and
related travel and entertainment expenses; and costs involved in obtaining
whatever information, analyses and reports with respect to marketing and
promotional activities that the Fund may, from time to time, deem
<PAGE>
<PAGE>
advisable. In providing compensation for Selling Services in accordance with
this Plan, Counsellors Securities is expressly authorized (i) to make, or cause
to be made, payments reflecting an allocation of overhead and other office
expenses related to providing Services; (ii) to make, or cause to be made,
payments, or to provide for the reimbursement of expenses of, persons who
provide support services in connection with the distribution of Shares
including, but not limited to, office space and equipment, telephone facilities,
answering routine inquiries regarding the Fund, and providing any other Service;
and (iii) to make, or cause to be made, payments to compensate selected dealers
or other authorized persons for providing any Services. Administrative Services
may include, but are not limited to, establishing and maintaining accounts and
records on behalf of Fund shareholders; processing purchase, redemption and
exchange transactions in Shares; and other similar services not otherwise
required to be provided by the Fund's transfer agent or any co-administrator.
(b) Payments under this Plan are not tied exclusively to the
expenses for shareholder servicing, administration and distribution expenses
actually incurred by Counsellors Securities or any Service Provider, and the
payments may exceed expenses actually incurred by Counsellors Securities and/or
a Service Provider. Furthermore, any portion of any fee paid to Counsellors
Securities or to any of its affiliates by the Fund or any of their past profits
or other revenue may be used in their sole discretion to provide services to
shareholders of the Fund or to foster distribution of Shares.
SECTION 3. APPROVAL OF PLAN.
Neither this Plan nor any related agreements will take effect
until approved by a majority of (a) the outstanding voting Shares, (b) the full
Board of Directors/Trustees (the "Board" and "Board Members") of the Fund and
(c) those Board Members who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of this Plan or in any
agreements related to it (the "Independent Board Members"), cast in person at a
meeting called for the purpose of voting on this Plan and the related
agreements.
SECTION 4. CONTINUANCE OF PLAN.
This Plan will continue in effect with respect to the Shares from
year to year so long as its continuance is specifically approved annually by
vote of the Fund's Board in the manner described in Section 3(b) and 3(c) above.
The Fund's Board will evaluate the appropriateness of this Plan and its payment
terms on a continuing basis and in doing so will consider all relevant factors,
including the types and extent of Shareholder Services, Selling Services and
Administrative Services provided by Counsellors Securities and/or Service
<PAGE>
<PAGE>
Providers and amounts Counsellors Securities and/or Service Providers receive
under this Plan.
SECTION 5. TERMINATION.
This Plan may be terminated at any time with respect to the
Shares by vote of a majority of the Independent Board Members or by a vote of a
majority of the outstanding voting Shares.
SECTION 6. AMENDMENTS.
This Plan may not be amended to increase materially the amount of
the fees described in Section 1 above with respect to the Shares without
approval of at least a majority of the outstanding voting Shares. In addition,
all material amendments to this Plan must be approved in the manner described in
Section 3(b) and 3(c) above.
SECTION 7. SELECTION OF CERTAIN BOARD MEMBERS.
While this Plan is in effect with respect to the Fund, the
selection and nomination of the Fund's Board Members who are not interested
persons of the Fund will be committed to the discretion of the Board Members
then in office who are not interested persons of the Fund.
SECTION 8. WRITTEN REPORTS.
In each year during which this Plan remains in effect with
respect to the Fund, any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to the Plan or any related agreement will
prepare and furnish to the Fund's Board, and the Board will review, at least
quarterly, written reports, complying with the requirements of the Rule, which
set out the amounts expended under this Plan and the purposes for which those
expenditures were made.
SECTION 9. PRESERVATION OF MATERIALS.
The Fund will preserve copies of this Plan, any agreement
relating to this Plan and any report made pursuant to Section 8 above, for a
period of not less than six years (the first two years in an easily accessible
place) from the date of this Plan, the agreement or the report.
SECTION 10. MEANING OF CERTAIN TERMS.
As used in this Plan, the terms "interested person" and "majority
of the outstanding voting securities" will be deemed to have the same meanings
that those terms have under the 1940 Act and the rules and regulations under the
1940 Act, subject to any exemption that may be granted to the Fund under the
1940 Act by the Securities and Exchange Commission.
<PAGE>
<PAGE>
SECTION 11. DATE OF EFFECTIVENESS.
This Plan will become effective as of the date the Fund first
commences its investment operations.
IN WITNESS WHEREOF, the Fund has executed this Plan as of the
_____ day of_______, 199_.
By:
----------------------------------
Name:
Title:
<PAGE>
<PAGE>
WARBURG PINCUS FUNDS
DISTRIBUTION PLAN
This Distribution Plan (the "Plan") is adopted in accordance with
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), by each of the Warburg Pincus Funds (the "Fund"), subject to the
following terms and conditions:
Section 1. Distribution Agreements; Annual Fee.
Any officer of the Fund or Counsellors Securities Inc., the
Fund's distributor ("Counsellors Securities"), is authorized to execute and
deliver written agreements (the "Agreements") in any form duly approved by the
Board of Directors/Trustees of the Fund (the "Board") with institutional
shareholders of record, broker-dealers, financial institutions, depository
institutions, retirement plans and other financial intermediaries ("Service
Organizations") relating to shares of the Fund's common stock, par value $.001
per share, designated Advisor Shares (the "Advisor Shares"). Pursuant to an
Agreement, Service Organizations will be paid an annual fee out of the assets of
the Fund by the Fund directly or by Counsellors Securities on behalf of the Fund
for providing (a) services primarily intended to result in the sale of Advisor
Shares ("Distribution Services"), (b) shareholder servicing to their customers
or clients who are the record and/or the beneficial owners of Advisor Shares
("Customers") ("Shareholder Services") and/or (c) administrative and accounting
services to Customers ("Administrative Services"). A Service Organization will
be paid an annual fee under the Plan calculated daily and paid monthly at an
annual rate of up to .50% of the average daily net assets of the Advisor Shares
held by or on behalf of its Customers ("Customers' Shares") with respect to
Distribution Services and/or Administrative Services and may be paid an annual
fee of up to .25% of the average daily net assets of Customers' Shares with
respect to Shareholder Services.
Section 2. Services.
The annual fee paid to Service Organizations under Section 1 of
the Plan with respect to Distribution Services, if any, will compensate Service
Organizations to cover certain expenses primarily intended to result in the sale
of Advisor Shares, including, but not limited to: (a) costs of payments made to
employees that engage in the distribution of Advisor Shares; (b) payments made
to, and expenses of, persons who provide support services in connection with the
distribution of Advisor Shares, including, but not limited to, office space and
equipment, telephone facilities, processing shareholder transactions and
providing any other shareholder services not otherwise provided by the Fund's
transfer agent; (c) costs relating to the formulation and implementation of
marketing and
<PAGE>
<PAGE>
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
costs of printing and distributing prospectuses, statements of additional
information and reports of the Fund to prospective holders of Advisor Shares;
(e) costs involved in preparing, printing and distributing sales literature
pertaining to the Fund and (f) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional activities that
the Fund may, from time to time, deem advisable.
The annual fee paid to Service Organizations under Section 1 of
the Plan with respect to Shareholder Services, if any, will compensate Service
Organizations for personal service and/or the maintenance of Customer accounts,
including but not limited to (a) responding to Customer inquiries, (b) providing
information on Customer investments and (c) providing other shareholder liaison
services.
The annual fee paid to Service Organizations under Section 1 of
the Plan with respect to Administrative Services, if any, will compensate
Service Organizations for administrative and accounting services to their
Customers, including, but not limited to: (a) aggregating and processing
purchase and redemption requests from Customers and placing net purchase and
redemption orders with the Fund's distributor or transfer agent; (b) providing
Customers with a service that invests the assets of their accounts in Advisor
Shares; (c) processing dividend payments from the Fund on behalf of Customers;
(d) providing information periodically to Customers showing their positions in
Advisor Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Advisor Shares beneficially owned by Customers or the information to
the Fund necessary for sub-accounting; (g) forwarding shareholder communications
from the Fund (for example, proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to Customers,
if required by law and (h) providing other similar services to the extent
permitted under applicable statutes, rules and regulations.
Payments under this Plan are not tied exclusively to the expenses
for shareholder servicing, administration and distribution expenses actually
incurred by any Service Organization, and the payments may exceed expenses
actually incurred by any Service Organization.
Section 3. Additional Payments.
Counsellors Securities, Warburg, Pincus Counsellors, Inc., the
Fund's investment adviser ("Warburg"), Counsellors Funds Service, Inc., the
Fund's co-administrator ("Counsellors Service"), or any affiliate of any of the
foregoing may, from time to time, make payments to Service Organizations for
providing distribution, administrative, accounting and/or other
<PAGE>
<PAGE>
services with respect to holders of Advisor Shares. Counsellors Securities,
Warburg, Counsellors Service or any affiliate thereof may, from time to time, at
their own expense, pay certain Fund transfer agent fees and expenses related to
accounts of Customers of Service Organizations that have entered into
Agreements. A Service Organization may use a portion of the fees paid pursuant
to the Plan to compensate the Fund's custodian or transfer agent for costs
related to accounts of Customers of the Service Organization that hold Advisor
Shares. Payments by the Fund under this Plan shall not be made to a Service
Organization with respect to services for which the Service Organization is
otherwise compensated by Counsellors Securities, Warburg, Counsellors Service or
any affiliate thereof.
Payments may be made to Service Organizations by Counsellors
Securities, Warburg, Counsellors Service or any affiliate thereof from any such
entity's own resources, which may include a fee it receives from the Fund.
Section 4. Monitoring.
Counsellors Securities shall monitor the arrangements pertaining
to the Fund's Agreements with Service Organizations.
Section 5. Approval by Shareholders.
The Plan is effective, and fees are payable in accordance with
Section 1 of the Plan pursuant to the approval of the Plan by a vote of at least
a majority of the outstanding voting Advisor Shares.
Section 6. Approval by Board Members.
The Plan is effective, and payments under any related agreement
may be made pursuant to the approval of the Plan and such agreement by a
majority vote of both (a) the full Board of the Fund and (b) those
Directors/Trustees ("Board Members") who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to it (the "Qualified Board Members"), cast in
person at a meeting called for the purpose of voting on the Plan and the related
agreements.
Section 7. Continuance of the Plan.
The Plan will continue in effect for so long as its continuance
is specifically approved at least annually by the Fund's Board in the manner
described in Section 5 above.
Section 8. Termination.
The Plan may be terminated at any time by a majority vote of the
Qualified Board Members or by a majority of the outstanding voting Advisor
Shares.
<PAGE>
<PAGE>
Section 9. Amendments.
The Plan may not be amended to increase materially the amount of
the fees described in Section 1 above with respect to the Advisor Shares without
approval of at least a majority of the outstanding voting Advisor Shares. In
addition, all material amendments to the Plan must be approved by the Fund's
Board in the manner described in Section 6 above.
Section 10. Selection of Certain Board Members.
While the Plan is in effect, the selection and nomination of the
Fund's Board Members who are not interested persons of the Fund will be
committed to the discretion of the Board Members then in office who are not
interested persons of the Fund.
Section 11. Written Reports.
In each year during which the Plan remains in effect, Counsellors
Securities will furnish to the Fund's Board, and the Board will review, at least
quarterly, written reports, which set out the amounts expended under the Plan
and the purposes for which those expenditures were made.
Section 12. Preservation of Materials.
The Fund will preserve copies of the Plan, any agreement relating
to the Plan and any report made pursuant to Section 11 above, for a period of
not less than six years (the first two years in an easily accessible place) from
the date of the Plan, agreement or report.
Section 13. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority
of the outstanding voting securities" will be deemed to have the same meanings
that those terms have under the 1940 Act and the rules and regulations
thereunder, subject to any exemption that may be granted to the Fund under the
1940 Act by the Securities and Exchange Commission.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Fund has executed the Plan as
of ____________ __, 199_.
By:________________________________
Name:
Title:
Acknowledged this
______ day of ________, 199_
COUNSELLORS SECURITIES INC.
By:_____________________________
Name:
Title:
<PAGE>
<PAGE>
Warburg Pincus Global Post Venture Fund
<TABLE>
<S> <C> <C>
Common Shares
One Year ((00,000.00/10,000)'pp'1/1 -1) = 0.00%
Three Year ((00,000.00/10,000)'pp'1/3 -1) = 0.00%
Five Year ((00,000.00/10,000)'pp'1/5 -1) = 0.00%
From Inception ((09,720.00/10,000)'pp'1/.08767 -1) = 27.67%
Series 2 Shares
One Year ((00,000.00/10,000)'pp'1/1 -1) = 0.00%
Three Year ((00,000.00/10,000)'pp'1/3 -1) = 0.00%
Five Year ((00,000.00/10,000)'pp'1/5 -1) = 0.00%
From Inception ((09,720.00/10,000)'pp'1/.08767 -1) = 27.67%
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001019061
<NAME> WARBURG PINCUS GLOBAL POST VENTURE
<SERIES>
<NUMBER> 001
<NAME> COMMON SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 3064618
<INVESTMENTS-AT-VALUE> 3029285
<RECEIVABLES> 34610
<ASSETS-OTHER> 114001
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3177896
<PAYABLE-FOR-SECURITIES> 96204
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 67777
<TOTAL-LIABILITIES> 163981
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3064642
<SHARES-COMMON-STOCK> 305717
<SHARES-COMMON-PRIOR> 10000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15394)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (35333)
<NET-ASSETS> 3013915
<DIVIDEND-INCOME> 517
<INTEREST-INCOME> 2343
<OTHER-INCOME> 0
<EXPENSES-NET> 3261
<NET-INVESTMENT-INCOME> (401)
<REALIZED-GAINS-CURRENT> (15815)
<APPREC-INCREASE-CURRENT> (35333)
<NET-CHANGE-FROM-OPS> (51549)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2972288
<NUMBER-OF-SHARES-REDEEMED> 6824
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2913915
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2470
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 46174
<AVERAGE-NET-ASSETS> 2324344
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (.14)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.86
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001019061
<NAME> WARBURG PINCUS GLOBAL POST VENTURE
<SERIES>
<NUMBER> 002
<NAME> ADVISOR SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 3064618
<INVESTMENTS-AT-VALUE> 3029285
<RECEIVABLES> 34610
<ASSETS-OTHER> 114001
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3177896
<PAYABLE-FOR-SECURITIES> 96204
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 67777
<TOTAL-LIABILITIES> 163981
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3064642
<SHARES-COMMON-STOCK> 305717
<SHARES-COMMON-PRIOR> 10000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15394)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (35333)
<NET-ASSETS> 3013915
<DIVIDEND-INCOME> 517
<INTEREST-INCOME> 2343
<OTHER-INCOME> 0
<EXPENSES-NET> 3261
<NET-INVESTMENT-INCOME> (401)
<REALIZED-GAINS-CURRENT> (15815)
<APPREC-INCREASE-CURRENT> (35333)
<NET-CHANGE-FROM-OPS> (51549)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2972288
<NUMBER-OF-SHARES-REDEEMED> 6824
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2913915
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2470
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 46174
<AVERAGE-NET-ASSETS> 2612
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (.15)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<PAGE>
WARBURG PINCUS FUNDS
RULE 18f-3 PLAN
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), requires that the Board of an investment company
desiring to offer multiple classes pursuant to the Rule adopt a plan setting
forth the separate arrangement and expense allocation of each class (a "Class"),
and any related conversion features or exchange privileges. The differences in
distribution arrangements and expenses among these classes of shares, and the
exchange features of each class, are set forth below in this Plan, which is
subject to change, to the extent permitted by law and by the governing documents
of each fund that adopts this Plan (the "Fund" and together the "Funds"), by
action of the governing Board of the Fund.
The governing Board, including a majority of the non-interested Board
members, of each Fund, or series thereof, which desires to offer multiple
classes has determined that the following Plan is in the best interests of each
class individually and the Fund as a whole:
1. Class Designation. Shares of a Fund or series of a Fund shall
be divided into Common Shares and Advisor Shares.
2. Differences in Services. Counsellors Securities Inc. ("CSI")
will provide shareholder servicing and distribution services to holders of
Common Shares and Advisor Shares. Institutional shareholders of record may also
provide distribution services, shareholder services and/or administrative and
accounting services to or on behalf of their clients or customers who
beneficially own Advisor Shares.
3. Differences in Distribution Arrangements.
Common Shares. Common Shares are sold to the general public and are not
subject to any annual distribution fee, except for Funds that have adopted a
Shareholder Servicing and Distribution Plan adopted pursuant to Rule 12b-1 under
the 1940 Act, which Funds pay CSI .25% per annum for services under that Plan.
Specified minimum initial and subsequent purchase amounts are applicable to the
Common Shares. Common Shares are available through certain organizations that
may or may not charge their customers administrative charges or other direct
fees in connection with investing in Common Shares. CSI may pay certain
financial institutions, broker-dealers and recordkeeping organizations a fee
based on the value of accounts maintained by such organizations in Common Shares
of a Fund.
<PAGE>
<PAGE>
Advisor Shares. Advisor Shares are available for purchase by financial
institutions, retirement plans, broker-dealers, depository institutions and
other financial intermediaries (collectively, "Institutions"). Advisor Shares
may be charged a shareholder service fee (the "Shareholder Service Fee") payable
at an annual rate of up to .25%, and a distribution fee (the "Distribution
Service Fee") payable at an annual rate of up to .50%, of the average daily net
assets of such Class under a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. Payments may be made directly out of the assets of the Fund
or by CSI on its behalf. Additional payments may be made by CSI or an affiliate
thereof from time to time to Institutions for providing distribution,
administrative, accounting and/or other services with respect to Advisor Shares.
Payments by the Fund shall not be made to an Institution pursuant to the Plan
with respect to services for which Institutions are otherwise compensated by CSI
or an affiliate thereof. There is no minimum amount of initial or subsequent
purchases of Advisor Shares imposed on Institutions.
General. CSI or an affiliate thereof may pay certain Fund transfer agent
fees and expenses related to accounts of customers of organizations that have
entered into agreements with CSI or the Fund. An organization may use a portion
of the fees paid pursuant to the Plan to compensate the Fund's custodian or
transfer agent for costs related to accounts of customers of the organization
that hold Common Shares or Advisor Shares.
Payments may be made to organizations the customers or clients of which
invest in a Fund's Common Shares or Advisor Shares by CSI or an affiliate
thereof from such entity's own resources, which may include a fee it receives
from the Fund.
4. Expense Allocation. The following expenses shall be allocated, to the
extent practicable, on a Class-by-Class basis: (a) fees under the Shareholder
Servicing and Distribution Plan or Distribution Plan, as applicable; (b)
transfer agent fees identified by the Fund's transfer agent as being
attributable to a specific Class; and (c) expenses incurred in connection with
shareholders' meetings as a result of issues relating to a specific Class.
The distribution, administrative and shareholder servicing fees and
other expenses listed above which are attributable to a particular Class are
charged directly to the net assets of the particular Class and, thus, are borne
on a pro rata basis by the outstanding shares of that Class; provided, however,
that money market funds and other funds making daily distributions of their net
investment income may allocate these items to each share regardless of class or
on the basis of relative net assets (settled shares), applied in each case
consistently.
<PAGE>
<PAGE>
5. Conversion Features. No Class shall be subject to any automatic
conversion feature.
6. Exchange Privileges. Shares of a Class shall be exchangeable only for
(a) shares of the same Class of other investment companies advised by Warburg,
Pincus Counsellors, Inc. that are part of the same group of investment companies
and (b) shares of certain other investment companies specified from time to
time.
7. Additional Information. This Plan is qualified by and subject to the
terms of the then current prospectus for the applicable Class; provided,
however, that none of the terms set forth in any such prospectus shall be
inconsistent with the terms of the Classes contained in this Plan. The
prospectus for each Class contains additional information about that Class and
the applicable Fund's multiple class structure.
Dated: November 4, 1996
<PAGE>
