<PAGE>
As filed with the Securities and Exchange Commission
on June 28, 1995
Securities Act File No. 2-94840
Investment Company Act File No. 811-4171
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. 12 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 13 [x]
(Check appropriate box or boxes)
Counsellors Cash Reserve 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 Cash Reserve Fund
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 10022-4669
Page 1 of Pages
Exhibit Index at Page
<PAGE>
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 February 28, 1995
was filed on April 28, 1995.
<PAGE>1
WARBURG, PINCUS CASH RESERVE FUND
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;
Performance
4. General Description of
Registrant................. Cover Page;
Investment Objectives
and Policies; Investment
Guidelines; General
Information
5. Management of the Fund...... Management of the Funds
6. Capital Stock and Other
Securities................. General Information
7. Purchase of Securities
Being Offered.............. How to Purchase Shares;
Management of the Funds;
Shareholder Servicing
8. Redemption or Repurchase.... How to Redeem and
Exchange Shares
9. Pending Legal Proceedings... Not applicable
<PAGE>4
Part B Statement of Additional
Item No. Information Heading
- -------- -----------------------
10. Cover Page.................. Cover Page
11. Table of Contents........... Contents
12. General Information and
History.................... Management of the Fund--
Organization of the
Fund; Notes to Financial
Statements; See
Prospectus--"General
Information"
13. Investment Objectives and
Policies................... Investment Objective
and Policies
14. Management of the Fund...... Management of the Fund
See Prospectus--
"Management of the Funds"
15. Control Persons and
Principal Holders of
Securities................. Management of the Fund;
Miscellaneous;
See Prospectus--
"Management of the Funds"
16. Investment Advisory and
Other Services............. Management of the Fund;
See Prospectus--
"Management of the Funds"
17. Brokerage Allocation
and Other Practices........ Investment Objective and
Policies--Portfolio
Transactions
18. Capital Stock and Other
Securities................. Management of the Fund--
Organization of the Fund
<PAGE>2
Part B Statement of Additional
Item No. Information Heading
- -------- -----------------------
19. Purchase, Redemption and
Pricing of Securities
Being Offered.............. Additional Purchase and
Redemption Information;
See Prospectus--
"How to Purchase Shares,"
"How to Redeem and
Exchange Shares"
and "Net Asset Value"
20. Tax Status.................. Additional Information
Concerning Taxes;
See Prospectus--
"Dividends, Distributions
and Taxes"
21. Underwriters................ See Prospectus--
"Management of the Funds"
22. Calculation
of Performance Data........ Determination of Yield
23. Financial Statements........ Report of Coopers & Lybrand
L.L.P., Independent Auditors;
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
amendment.
<PAGE>
[Logo]
PROSPECTUS
JUNE 29, 1995
[ ] WARBURG PINCUS CASH RESERVE FUND
[ ] WARBURG PINCUS NEW YORK TAX EXEMPT FUND
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 28, 1995
WARBURG PINCUS FUNDS
P.O. BOX 9030
BOSTON, MASSACHUSETTS 02205-9030
TELEPHONE NUMBER (800) 888-6878
PROSPECTUS June 29, 1995
Warburg Pincus Funds are a family of open-end mutual funds that offer investors
a variety of investment opportunities. Two money market funds are described in
this Prospectus:
WARBURG, PINCUS CASH RESERVE FUND is designed to provide investors with high
current income consistent with liquidity and stability of principal.
WARBURG, PINCUS NEW YORK TAX EXEMPT FUND is designed to provide investors with
as high a level of current income that is exempt from federal, New York State
and New York City personal income taxes as is consistent with preservation of
capital and liquidity.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. ALTHOUGH EACH FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF
$1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT IT CAN DO SO ON A CONTINUING
BASIS.
NO LOAD SHARES Fund shares are sold and redeemed at net asset value without the
imposition of a sales or redemption charge by the Fund. Each Fund offers a class
of shares that is 'no-load,' which means that there are no sales charges,
commissions, 12b-1 plan or other deferred sales charges applicable to the class.
LOW MINIMUM INVESTMENT The minimum initial investment in each Fund is $1,000
($500 for an IRA or Uniform Gift to Minors Act account in the case of the Cash
Reserve Fund) 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 and is available to investors without
charge by calling Warburg Pincus Funds at (800) 257-5614. Information regarding
the status of shareholder accounts may be obtained by calling Warburg Pincus
Funds at (800) 888-6878. The Statements of Additional Information bear the same
date as this Prospectus and are incorporated by reference in their entirety into
this Prospectus.
- --------------------------------------------------------------------------------
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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
- --------------------------------------------------------------------------------
THE FUNDS' EXPENSES
<TABLE>
<CAPTION>
CASH RESERVE TAX EXEMPT
FUND* 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) (after fee
waivers)
Management Fees................................................................. .36% .28%
12b-1 Fees...................................................................... 0 0
Other Expenses.................................................................. .19 .27
Total Fund Operating Expenses................................................... .55% .55%
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.............................................................................. $ 6 $ 6
3 Years............................................................................. $ 18 $ 18
5 Years............................................................................. $ 31 $ 31
10 Years............................................................................. $ 69 $ 69
</TABLE>
------------------------
The expense table shows the costs and expenses that an investor will bear
directly or indirectly as an investor in each Fund. Certain broker-dealers and
financial institutions also may charge their clients fees in connection with
investments in Fund shares, which fees are not reflected in the table. Absent
the waiver of certain fees payable to the Funds' investment adviser and
sub-investment adviser and administrator, the Management Fees for Warburg,
Pincus Cash Reserve Fund (the 'Cash Reserve Fund') and Warburg, Pincus Tax
Exempt Fund (the 'Tax Exempt Fund') would have equalled .50%, Other Expenses
would have equalled .24% and .32%, respectively, and the Total Fund Operating
Expenses would have equalled .74% and .82%, respectively, of average net assets
with respect to each Fund. 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%.
- ------------
* Each Fund's Board of Directors (the 'Board') has approved a Distribution
Plan and a Shareholder Services Plan pursuant to which the Fund is authorized to
pay each participating service organization a fee based on the value of the
average daily net assets of its customers invested in the Fund. See 'Shareholder
Servicing.'
2
<PAGE>
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each period)
The information regarding each Fund for the five fiscal years ending
February 28, 1995 has been derived from information audited by Coopers & Lybrand
L.L.P., independent auditors, whose report dated March 31, 1995 appears in the
relevant Fund's Statement of Additional Information. Further information is
contained in the Funds' annual report, dated February 28, 1995, copies of which
may be obtained without charge by calling Warburg Pincus Funds at (800)
257-5614.
CASH RESERVE FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------------------------------------------------------------
2/28/95 2/28/94 2/28/93 2/29/92 2/28/91 2/28/90 2/28/89 2/29/88
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations
Net Investment Income.......... .0426 .0273 .0322 .0542 .0760 .0870 .0747 .0651
Net Gains (Losses) on
Securities (both realized and
unrealized).................. 0 0 0 .0010 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations................... .0426 .0273 .0322 .0552 .0760 .0870 .0747 .0651
-------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends (from net investment
income)...................... (.0426) (.0273) (.0322) (.0542) (.0760) (.0870) (.0747) (.0651)
Distributions (from capital
gains)....................... 0 0 0 (.0010) 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total Distributions............ (.0426) (.0273) (.0322) (.0552) (.0760) (.0870) (.0747) (.0651)
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total Return....................... 4.35% 2.76% 3.27% 5.66% 7.87% 9.05% 7.73% 6.70%
Ratios/Supplemental Data
Net Assets, End of Period (000s)... $403,211 $277,557 $287,723 $426,479 $361,428 $365,008 $209,538 $259,398
Ratios to Average Daily Net Assets
Operating expenses............. .55% .54% .50% .50% .50% .50% .50% .46%
Net investment income.......... 4.41% 2.73% 3.22% 5.45% 7.59% 8.59% 7.51% 6.54%
Decrease reflected in above
expense ratios due to
waivers/reimbursements....... .19% .13% .17% .16% .13% .12% .16% .19%
<CAPTION>
FOR THE
PERIOD
4/16/85
(COMMENCEMENT
OF
OPERATIONS)
THROUGH
2/28/87 2/28/86
-------- -------------
<S> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 1.00 $ 1.00
-------- -------------
Income from Investment
Operations
Net Investment Income.......... .0614 .0662
Net Gains (Losses) on
Securities (both realized and
unrealized).................. 0 0
-------- -------------
Total from Investment
Operations................... .0614 .0662
-------- -------------
Less Distributions
Dividends (from net investment
income)...................... (.0614) (.0662)
Distributions (from capital
gains)....................... 0 0
-------- -------------
Total Distributions............ (.0614) (.0662)
-------- -------------
Net Asset Value, End of Period..... $ 1.00 $ 1.00
-------- -------------
-------- -------------
Total Return....................... 6.39% 6.82%*
Ratios/Supplemental Data
Net Assets, End of Period (000s)... $193,669 $ 78,228
Ratios to Average Daily Net Assets
Operating expenses............. .45% .36%*
Net investment income.......... 5.92% 7.59%*
Decrease reflected in above
expense ratios due to
waivers/reimbursements....... .19% .35%*
</TABLE>
- ------------
* Annualized.
3
<PAGE>
TAX EXEMPT FUND(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------------------------------------------------------------------------
2/28/95 2/28/94 2/28/93 2/29/92 2/28/91 2/28/90 2/28/89 2/29/88
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- -------
Total Income from Investment Operations
Net Investment Income.................. .0246 .0175 .0224 .0329 .0486 .0527 .0461 .0404
------- ------- ------- ------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment
income).............................. (.0246) (.0175) (.0224) (.0329) (.0486) (.0527) (.0461) (.0404)
------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------
Total Return............................... 2.48% 1.77% 2.26% 3.34% 4.97% 5.40% 4.70% 4.10%
Ratios/Supplemental Data
Net Assets, End of Period (000s)........... $77,111 $65,984 $76,995 $65,438 $85,783 $87,283 $58,112 $87,721
Ratios to Average Daily Net Assets
Operating expenses..................... .55% .54% .50% .50% .50% .50% .50% .46%
Net investment income.................. 2.46% 1.75% 2.23% 3.27% 4.84% 5.38% 4.57% 4.03%
Decrease reflected in above expense
ratios due to waivers/
reimbursements....................... .27% .19% .28% .23% .21% .21% .25% .23%
<CAPTION>
FOR THE
PERIOD
4/18/85
(COMMENCEMENT
OF
OPERATIONS)
THROUGH
2/28/87 2/28/86
-------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period....... $ 1.00 $ 1.00
-------- -------------
Total Income from Investment Operations
Net Investment Income.................. .0376 .0413
-------- -------------
Less Distributions
Dividends (from net investment
income).............................. (.0376) (.0413)
-------- -------------
Net Asset Value, End of Period............. $ 1.00 $ 1.00
-------- -------------
-------- -------------
Total Return............................... 3.83% 4.20%*
Ratios/Supplemental Data
Net Assets, End of Period (000s)........... $112,413 $69,583
Ratios to Average Daily Net Assets
Operating expenses..................... .45% .37%*
Net investment income.................. 3.72% 4.86%*
Decrease reflected in above expense
ratios due to waivers/
reimbursements....................... .20% .33%*
</TABLE>
- ------------
* Annualized.
(1) Although the annual report contains information for Series 2 Shares of the
Tax Exempt Fund, Financial Highlights have not been provided for this class
of shares, which ceased being offered on June 9, 1995.
4
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The CASH RESERVE FUND is a diversified money market mutual fund whose investment
objective is high current income consistent with liquidity and stability of
principal. The TAX EXEMPT FUND is a non-diversified money market mutual fund
whose objective is to provide investors with as high a level of current interest
income that is exempt from federal, New York State and New York City personal
income taxes as is consistent with preservation of capital and liquidity. Each
objective may be changed only with the approval of the investors in that Fund.
There can be, of course, no assurance that a Fund will achieve its investment
objective. Investors should be aware that the market value of the obligations in
each Fund's portfolio can be expected to vary inversely to changes in prevailing
interest rates. See 'Certain Investment Strategies' for descriptions of certain
types of investments the Funds may make.
CASH RESERVE FUND
The Cash Reserve Fund will attempt to achieve its investment objective by
investing in a portfolio of 'money market' instruments consisting of United
States Treasury Bills, other obligations issued or guaranteed by the United
States government, its agencies or instrumentalities ('Government Securities');
bank and bank holding company obligations such as certificates of deposit,
bankers' acceptances, time deposits, commercial paper and debt obligations;
commercial paper and notes of other corporate issuers, including those with
floating or variable rates of interest (including variable rate master demand
notes) and repurchase agreements with respect to the foregoing.
The Cash Reserve Fund will concentrate its investments in the banking
industry except during temporary defensive periods. Up to 25% of the assets of
the Cash Reserve Fund may be invested at any time in the debt obligations of
issuers conducting their principal business activities in any industry other
than banking. In addition, the Cash Reserve Fund may invest up to 25% of its
assets in the debt obligations of a single issuer for a period of up to three
business days. Securities issued by the United States or its agencies or
instrumentalities may be purchased without regard to these limits.
TAX EXEMPT FUND
At least 80% of the Tax Exempt Fund's assets will be invested in short-term
tax-exempt debt obligations issued by or on behalf of the State of New York and
other states, territories and possessions of the United States, the District of
Columbia and their respective authorities, agencies, instrumentalities and
political subdivisions ('Municipal Securities'). Dividends paid by the Tax
Exempt Fund which are derived from interest attributable to tax-exempt
obligations of the State of New York and its political subdivisions, as well as
of certain other governmental issuers such as Puerto Rico ('New York Municipal
Securities'), will be excluded from gross income for federal income tax purposes
and exempt from New York State and New York City personal income taxes.
Dividends derived from interest on tax-exempt obligations of other governmental
issuers will be excluded from gross income for federal income tax purposes, but
will be subject to New York State and New York City personal income taxes. The
Tax Exempt Fund expects that, except during temporary defensive periods or when
acceptable securities are unavailable for investment by the Fund, at least 65%
of the Tax Exempt Fund's assets will be invested in New York Municipal
Securities.
Municipal Securities in which the Tax Exempt Fund may invest include
commercial paper, notes and bonds. Interest on certain bonds issued after August
7, 1986 to finance certain non-governmental activities ('Alternative Minimum Tax
Securities') is a preference item for purposes of the federal individual and
corporate alternative minimum taxes, but is exempt from
5
<PAGE>
regular federal income tax. The Fund is authorized to invest up to 20% of its
assets in Alternative Minimum Tax Securities. The alternative minimum tax is
a special tax that applies to a limited number of taxpayers who have certain
adjustments or tax preference items. Available returns on Alternative Minimum
Tax Securities acquired by the Fund may be lower than those from newly issued
Municipal Securities acquired by the Fund due to the possibility of federal,
state and local alternative minimum or minimum income tax liability on interest
from Alternative Minimum Tax Securities.
The Tax Exempt Fund may for defensive or other purposes invest in certain
short-term taxable securities when the Fund's investment adviser believes that
it would be in the best interests of the Fund's investors. Taxable securities in
which the Fund may invest on a short-term basis are Government Securities,
including repurchase agreements with banks or securities dealers involving such
securities, time deposits maturing in not more than seven days, other debt
securities, commercial paper and certificates of deposit issued by United States
branches of United States banks with assets of $1 billion or more. At no time
will more than 20% of the Fund's total assets be invested in taxable short-term
securities unless the Fund's investment adviser has determined to temporarily
adopt a defensive investment policy in the face of an anticipated softening in
the market for Municipal Securities in general.
GENERAL
PRICE AND PORTFOLIO MATURITY. Each Fund invests only in securities which are
purchased with and payable in U.S. dollars and which have (or, pursuant to
regulations adopted by the Securities and Exchange Commission (the 'SEC'), are
deemed to have) remaining maturities of thirteen months or less at the date of
purchase by the Fund. For this purpose, variable rate master demand notes (as
described below), which are payable on demand, or, under certain conditions, at
specified periodic intervals not exceeding thirteen months, in either case on
not more than 30 days' notice, will be deemed to have remaining maturities of
thirteen months or less. Each Fund maintains a dollar-weighted average portfolio
maturity of 90 days or less. Each Fund follows these policies to maintain a
constant net asset value of $1.00 per share, although there is no assurance that
it can do so on a continuing basis.
PORTFOLIO QUALITY AND DIVERSIFICATION. Each Fund will limit its portfolio
investments to securities that its Board determines present minimal credit risks
and which are 'Eligible Securities' at the time of acquisition by the Fund. The
term Eligible Securities includes securities rated by the 'Requisite NRSROs' in
one of the two highest short-term rating categories, securities of issuers that
have received such ratings with respect to other short-term debt securities and
comparable unrated securities. 'Requisite NRSROs' means (i) any two nationally
recognized statistical rating organizations ('NRSROs') that have issued a rating
with respect to a security or class of debt obligations of an issuer, or (ii)
one NRSRO, if only one NRSRO has issued a rating with respect to such security
or issuer at the time that the Fund acquires the security. If the Cash Reserve
Fund acquires securities that are unrated or that have been rated by a single
NRSRO, the acquisition must be approved or ratified by the Board. The Tax Exempt
Fund may purchase securities that are unrated at the time of purchase that the
Fund's investment adviser and sub-investment adviser deem to be of comparable
quality to rated securities that the Fund may purchase. The NRSROs currently
designated as such by the SEC are Standard & Poor's Ratings Group ('S&P'),
Moody's Investors Service, Inc. ('Moody's'), Fitch Investors Services, Inc.,
Duff and Phelps, Inc. and IBCA Limited and its affiliate, IBCA, Inc. A
discussion of the ratings categories of the NRSROs is contained in the
6
<PAGE>
Appendix to each Fund's Statement of Additional Information.
Cash Reserve Fund. The Fund has adopted certain diversification
requirements under Rule 2a-7 under the Investment Company Act of 1940, as
amended (the '1940 Act'), as operating policies. Under these policies the Cash
Reserve Fund may not invest more than 5% of its total assets in Eligible
Securities that have not received the highest rating from the Requisite NRSROs
and comparable unrated securities ('Second Tier Securities') and may not invest
more than 1% of its total assets in the Second Tier Securities of any one
issuer. In addition, the Cash Reserve Fund may invest up to 5% of the
then-current value of the Fund's total assets in the securities of a single
issuer, provided that the Fund may invest more than 5% in an issuer for a period
of up to three business days, provided that (i) the securities either are rated
by the Requisite NRSROs in the highest short-term rating category or are
securities of issuers that have received such rating with respect to other
short-term debt securities or are comparable unrated securities, and (ii) the
Fund does not make more than one such investment at any one time. However, if
Rule 2a-7 is amended to permit it, the Fund may invest, with respect to 25% of
its assets, more than 5% of its assets in any one issuer.
PORTFOLIO INVESTMENTS
Set forth below are descriptions of investments the Funds may make. More
detailed information concerning these investments and their related risks is
contained in each Fund's Statement of Additional Information.
BANK OBLIGATIONS. The Cash Reserve Fund may purchase bank obligations, including
United States dollar-denominated instruments issued or supported by the credit
of the United States or foreign banks or savings institutions having total
assets at the time of purchase in excess of $1 billion. While the Cash Reserve
Fund will invest in obligations of foreign banks or foreign branches of United
States banks only if the Fund's investment adviser and sub-investment adviser
deem the instrument to present minimal credit risks, such investments may
nevertheless entail risks that are different from those of investments in
domestic obligations of United States banks due to differences in political,
regulatory and economic systems and conditions. Such risks include future
political and economic developments, the possible imposition of withholding
taxes on interest income, possible establishment of exchange controls or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. The Cash Reserve Fund
may also make interest-bearing savings deposits in commercial and savings banks
in amounts not in excess of 5% of its assets.
VARIABLE RATE MASTER DEMAND NOTES. Each Fund may also purchase variable rate
master demand notes, which are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Although the notes are not normally traded and there may be no
secondary market in the notes, the Fund may demand payment of principal and
accrued interest at any time and may resell the note at any time to a third
party. In the event an issuer of a variable rate master demand note defaulted on
its payment obligation, the Fund might be unable to dispose of the note because
of the absence of a secondary market and might, for this or other reasons,
suffer a loss to the extent of the default.
GOVERNMENT SECURITIES. Government Securities in which the Funds may invest
include Treasury Bills, Treasury Notes and Treasury Bonds; other obligations
that are supported by the full faith and credit of the United States Treasury,
such as Government National Mortgage Association pass-through certificates;
obligations that are supported by the right of the issuer to borrow
from the Treasury, such as securities of Federal Home Loan Banks; and
obligations that are
7
<PAGE>
supported only by the credit of the instrumentality, such as Federal National
Mortgage Association bonds.
REPURCHASE AGREEMENTS. Each Fund may agree to purchase money market instruments
from financial institutions such as banks and broker-dealers subject to the
seller's agreement to repurchase them at an agreed-upon date and price
('repurchase agreements'). The repurchase price generally equals the price paid
by the Fund plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the securities underlying the
repurchase agreement). Default by a seller, if the Fund is delayed or prevented
from exercising its rights to dispose of the collateral securities, could expose
the Fund to possible loss, including the risk of a possible decline in the value
of the underlying securities during the period while the Fund seeks to assert
its rights thereto. Repurchase agreements are considered to be loans by the Fund
under the 1940 Act.
WHEN-ISSUED SECURITIES. Each Fund may purchase portfolio securities on a
'when-issued' basis. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield. A Fund
will generally not pay for such securities or start earning interest on them
until they are received. Securities purchased on a when-issued basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. Each Fund expects that commitments to
purchase when-issued securities will not exceed 25% of the value of its total
assets absent unusual market conditions, and that a commitment by the Fund to
purchase when-issued securities will generally not exceed 45 days. The Funds do
not intend to purchase when-issued securities for speculative purposes but only
in furtherance of their investment objectives.
STAND-BY COMMITMENTS. The Tax Exempt Fund may acquire 'stand-by commitments'
with respect to Municipal Securities held in its portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at the Fund's option, specified
Municipal Securities at a specified price. The principal risk of a stand-by
commitment is that the writer of a commitment may default on its obligation to
repurchase the securities acquired by it. The Fund intends to enter into
stand-by commitments only with brokers, dealers and banks that, in the opinion
of the investment adviser, present minimal credit risks. In evaluating the
creditworthiness of the issuer of a stand-by commitment, the investment adviser
and sub-investment adviser will review periodically relevant financial
information concerning the issuer's assets, liabilities and contingent claims.
The Fund will acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes.
THIRD PARTY PUTS. The Tax Exempt Fund may purchase long-term fixed rate bonds
that have been coupled with an option granted by a third party financial
institution allowing the Fund at specified intervals to tender (or 'put') the
bonds to the institution and receive the face value thereof (plus accrued
interest). The Fund receives a short-term rate of interest (which is
periodically reset), and the interest rate differential between that rate and
the fixed rate on the bond is retained by the financial institution. The
financial institution does not provide credit enhancement, and in the event that
there is a default in the payment of principal or interest, or downgrading of a
bond to below investment grade, or a loss of the bond's tax-exempt status, the
put option will terminate automatically, the risk to the Fund will be that of
holding such a long-term bond and the dollar-weighted average maturity of the
Fund's portfolio would be adversely affected. See the Fund's Statement of
Additional Information, 'Investment Policies -- Additional Information and
Policies.'
SPECIAL CONSIDERATIONS AND RISK FACTORS RELATING TO THE TAX EXEMPT FUND. In
seeking to achieve its investment objective the Tax Exempt Fund may invest all
or any part of its assets in
8
<PAGE>
Municipal Securities which are industrial development bonds. Moreover, although
the Tax Exempt Fund does not currently intend to do so on a regular basis, it
may invest more than 25% of its assets in Municipal Securities the interest on
which is paid solely from revenues of economically related projects, if such
investment is deemed necessary or appropriate by the Fund's investment adviser
and sub-investment adviser. To the extent that the Fund's assets are
concentrated in Municipal Securities payable from revenues on economically
related projects and facilities, the Fund will be subject to the peculiar risks
presented by such projects to a greater extent than it would be if the Fund's
assets were not so concentrated.
As a non-diversified mutual fund, the Tax Exempt Fund may invest a greater
proportion of its assets in the obligations of a smaller number of issuers and,
as a result, will be subject to greater credit risk with respect to its
portfolio securities. In the opinion of the Fund's adviser, any risk to the Fund
should be limited by its intention to continue to conduct its operations so as
to qualify as a 'regulated investment company' for purposes of the Internal
Revenue Code of 1986, as amended (the 'Code'), and by its policies restricting
investments to obligations with short-term maturities and high quality credit
ratings.
The Fund's ability to achieve its investment objective is dependent upon
the ability of the issuers of New York Municipal Securities to meet their
continuing obligations for the payment of principal and interest. New York State
and New York City face long-term economic problems that could seriously affect
their ability and that of other issuers of New York Municipal Securities to meet
their financial obligations.
Certain substantial issuers of New York Municipal Securities (including
issuers whose obligations may be acquired by the Fund) have experienced serious
financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowing abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowings and fewer markets for their outstanding debt obligations. In recent
years, several different issues of municipal securities of New York State and
its agencies and instrumentalities and of New York City have been down-
graded by S&P and Moody's. On the other hand, strong demand for New York
Municipal Securities has more recently had the effect of permitting New York
Municipal Securities to be issued with yields relatively lower, and after
issuance, to trade in the market at prices relatively higher, than comparably
rated municipal obligations issued by other jurisdictions. A recurrence of the
financial difficulties previously experienced by certain issuers of New York
Municipal Securities could result in defaults or declines in the market values
of those issuers' existing obligations and, possibly, in the obligations of
other issuers of New York Municipal Securities. Although as of the date of this
Prospectus, no issuers of New York Municipal Securities are in default with
respect to the payment of their municipal obligations, the occurrence of any
such default could affect adversely the market values and marketability of all
New York Municipal Securities and, consequently, the net asset value of the
Fund's portfolio.
Other considerations and risk factors affecting the Fund's investments in
New York Municipal Securities are summarized in the Statement of Additional
Information of the Tax Exempt Fund. See in the Statement of Additional
Information 'Special Considerations Relating to New York Municipal Securities'.
INVESTMENT GUIDELINES
Each Fund may invest up to an aggregate of 10% of its total assets in
illiquid securities with contractual or other restrictions on resale and other
instruments which are not readily marketable. Each Fund is also authorized
to borrow and to enter into reverse repurchase agreements in
9
<PAGE>
an amount of up to 10% of its total assets for temporary or emergency
purposes, but not for leverage, and to pledge its assets to the same
extent in connection with such borrowings. Whenever borrowings exceed
5% of the value of a Fund's total assets, the Fund will not make any
additional investments (including roll-overs). A more detailed description of
these policies, together with an enumeration of additional investment
restrictions that each Fund has adopted and that cannot be changed without the
approval of the holders of a majority of the Fund's outstanding shares, is
contained in each Fund's Statement of Additional Information.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER. Each Fund employs Warburg, Pincus Counsellors, Inc.
('Counsellors') as investment adviser to the Fund. Counsellors 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 May 31, 1995, Counsellors had more than
$10.5 billion of assets under management and provided investment advice to
nineteen investment companies which had total assets of approximately $4.9
billion. Incorporated in 1970, Counsellors is a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ('EMW') controls Counsellors
through its ownership of a class of voting preferred stock of Counsellors G.P.
Counsellors G.P. has no business other than being a holding company of
Counsellors and its subsidiaries. Counsellors' address is 466 Lexington Avenue,
New York, New York 10017-3147.
In its Advisory Agreement with each Fund, Counsellors has agreed to be
responsible, subject to the supervision and direction of the Board, for the
Fund's investment program, including decisions concerning: (i) the specific
types of securities to be held by the Fund and the proportion of the Fund's
assets that should be allocated to such investments during particular market
cycles, (ii) the specific issuers whose securities will be purchased or sold by
the Fund, (iii) the maximum maturity (under one year) of its portfolio
investments, (iv) the appropriate average weighted maturity of its portfolio in
light of current market conditions and, with respect to the Tax Exempt Fund, (v)
the extent to which taxable securities will be purchased for and held by the Tax
Exempt Fund and (vi) the extent to which securities other than New York
Municipal Securities will be purchased for and held by the Tax Exempt Fund. In
addition, Counsellors has agreed to supervise the performance by the sub-
investment adviser of the functions described below. For the services provided
pursuant to the Advisory Agreement, Counsellors is entitled to receive a fee,
computed daily and payable monthly, at the annual rate of .25 of 1.00% of the
value of each Fund's average daily net assets. For the year ended February 28,
1995, the Cash Reserve Fund and the Tax Exempt Fund paid Counsellors a fee after
waivers at the rate of .23% and .19%, respectively, of each Fund's net assets.
SUB-INVESTMENT ADVISER AND ADMINISTRATOR. PNC Institutional Management
Corporation ('PIMC'), a wholly owned subsidiary of PNC Bank, National
Association ('PNC'), serves as each Fund's sub-investment adviser and
administrator. PIMC was organized in 1977 by PNC to perform advisory services
for investment companies and has its principal offices at 400 Bellevue Parkway,
Wilmington, Delaware 19809. As of May 31, 1995, PIMC served as investment
adviser to 52 mutual fund portfolios and as sub-investment adviser to 7 mutual
funds, having total assets exceeding $26.2 billion.
As sub-investment adviser and administrator, PIMC has agreed to implement
each Fund's investment program as determined by the Board
and Counsellors. PIMC will supervise the day-to-day operations of the Fund and
perform the
10
<PAGE>
following services: (i) providing investment research and credit analysis
concerning the Fund's investments, (ii) placing orders for all
purchases and sales of the Fund's portfolio investments and (iii) maintaining
the books and records required to support the Fund's operations. As compensation
therefor, each Fund has agreed to pay PIMC a fee computed daily and payable
monthly at an annual rate of .25 of 1.00% of the value of each Fund's average
daily net assets. For the year ended February 28, 1995, the Cash Reserve Fund
and the Tax Exempt Fund paid PIMC a fee after waivers at the rate of .13% and
.09%, respectively, of each Fund's net assets.
CO-ADMINISTRATOR. The Funds employ Counsellors Funds Service, Inc. ('Counsellors
Service'), a wholly owned subsidiary of Counsellors, 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 supplying office facilities and furnishing
certain executive and administrative services, acting as liaison between the
Funds and their 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
other regulatory filings as necessary and monitoring and developing compliance
procedures for the Funds. As compensation, each Fund pays to Counsellors Service
a fee calculated at an annual rate of .10% of that Fund's average daily net
assets.
Counsellors may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the Funds. Qualified
recipients are 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.
DISTRIBUTOR. Counsellors Securities Inc. ('Counsellors Securities') acts as
distributor of each Fund's shares. Counsellors Securities is a wholly owned
subsidiary of Counsellors. Counsellors Securities' address is 466 Lexington
Avenue, New York, New York 10017-3147. No compensation is payable by each Fund
to Counsellors Securities for its distribution services.
TRANSFER AGENT. State Street Bank and Trust Company ('State Street') 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.
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.
CUSTODIAN. PNC serves as the custodian of each Fund's assets. PNC and its
predecessors have been in the business of managing the investments of fiduciary
and other accounts in the Philadelphia area since 1847. PNC is a subsidiary of
PNC Bank Corp. and its principal business address is Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19101. PNC Bank Corp. is a multi-bank holding company
with its principal offices in Pittsburgh, Pennsylvania.
DIRECTORS AND OFFICERS. The officers of each Fund manage its day-to-day
operations and are directly responsible to the Board. The Directors set broad
policies for each Fund and choose its 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.
11
<PAGE>
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) 257-5614. 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 UGMA ACCOUNTS. For information about investing in the Cash
Reserve Fund through a tax-deferred retirement plan, such as an IRA or a
Simplified Employee Pension IRA ('SEP-IRA'), or about opening a Uniform Gifts to
Minors Act or Uniform Transfers to Minors Act ('UGMA') account, an investor
should telephone Warburg Pincus Funds at (800) 888-6878 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.
CHANGES TO ACCOUNT. For information on how to make changes to an account, an
investor should telephone Warburg Pincus Funds at (800) 888-6878.
HOW TO PURCHASE SHARES
Shares of each Fund may be purchased either by mail or, with special
advance instructions, by wire.
BY MAIL. If the investor desires to purchase 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 Inc., 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 before 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 4:00 p.m., the purchase will be effected
at the Fund's net asset value next determined 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.'
BY WIRE. Investors may also purchase shares in a Fund by wiring funds from their
banks. Telephone orders 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) 888-6878. Federal funds may be wired to Counsellors
Securities Inc. 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.
[Insert Warburg Pincus fund name(s) here]
DDA #9904-649-2
[Shareowner name]
[Shareowner account number]
12
<PAGE>
If a telephone order is received before 12:00 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 purchase will be executed at noon, and shares
are entitled to dividends and distributions beginning on that day. Payments by
wire received in proper form before 12:00 p.m. without a prior telephone order,
and any telphone orders placed after 12:00 p.m. for which payment by wire is
received on the same day in proper form, will be executed at 4:00 p.m. and will
be entitled to dividends and distributions beginning the next business day. 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. Wires received that are not accepted will be returned to the
investor after prompt inquiry.
The minimum initial investment in each Fund is $1,000, 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 in the next
section. With respect to the Cash Reserve Fund, for a tax-deferred retirement
plan, such as an IRA or UGMA account, the minimum initial and subsequent
investment is $500. Each 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 EMW or its
affiliates or persons with whom Counsellors has entered into an investment
advisory agreement. Existing 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 telephone in the manner outlined above. 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. In the interest of
economy and convenience, physical certificates representing shares in the Funds
are not normally issued.
The Funds understand that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals may impose certain conditions on their clients which are in
addition to or different than those described in this Prospectus, and, to the
extent permitted by applicable regulatory authority, may charge their clients
direct fees. Certain features of the Funds, such as the minimum initial and
subsequent investments, may be modified 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 accounts
with the organization. These organizations will be responsible for promptly
transmitting client or customer purchase and redemption orders to the Funds in
accordance with their agreements with clients or customers. Certain
organizations that have entered into agreements with a 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.
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 application and include a voided,
unsigned check
13
<PAGE>
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) 888-6878 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.
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).
Shares of the Funds may either be redeemed by mail, by telephone or by
check. 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 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) 888-6878 between 9:00 a.m. and
4:00 p.m. (Eastern time) on any business day. 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. No Fund
currently imposes 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 before the check clears, payments of the
redemption proceeds will be delayed until such check has cleared, which may take
up to 15 days from the purchase date. Investors should consider purchasing
shares using a certified or bank check or money order if they anticipate an
immediate need for a redemption.
Shares are redeemed at the net asset value per share next determined after
receipt of a redemption order by Warburg Pincus Funds and, if the shares to be
redeemed are represented by share certificates, upon receipt of all such
certificates in proper form by Warburg Pincus Funds at its principal office. All
such certificates must be endorsed by the redeeming investor or accompanied by a
signed stock power, in each instance with the signature guaranteed by a
commercial
14
<PAGE>
bank or a member of a major stock exchange, unless other arrangements
satisfactory to the Fund have previously been made. Each Fund may require any
additional information reasonably necessary to evidence that a redemption has
been duly authorized. Payment for redeemed shares for which a redemption order
(and any supporting documentation required) is received prior to noon (Eastern
time) on a day that State Street is open for business is normally made on the
same business day. Payment for redeemed shares for which a redemption order is
received after noon (Eastern time) on such a business day or on a day that State
Street is closed is normally made on the next business day that State Street is
open. Each Fund reserves the right to pay redemption proceeds within seven days
after receiving the redemption order in proper form if, in the judgment of the
Fund's sub-investment adviser and administrator, an earlier payment could
adversely affect the Fund. Furthermore, each 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.
Although each Fund intends to use its best efforts to maintain its net
asset value per share at $1.00, 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 $750 ($250 in the case of an IRA or UGMA 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.
Redemption By Check. An individual investor who is the record owner of Fund
shares may request a supply of checks by making the appropriate election on his
account application. Checks may be made payable to the order of any person in
any amount not less than $500. When a check is presented to State Street for
payment, State Street, as agent for the investor, causes the Fund to redeem a
sufficient number of shares in the investor's account to cover the amount of the
check.
Investors are entitled to receive dividends on the shares to be redeemed
through the day the check is presented to State Street for payment. If an
investor owns insufficient shares to cover a check, the check will be returned
to the investor marked 'insufficient funds.' Cancelled checks will be returned
to the investor. The Fund reserves the right to terminate or modify the check
redemption procedure at any time, to impose a service charge or to charge for
checks. Each Fund may also charge an investor's account for returned checks and
for effecting stop orders.
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 a
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 each 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.
15
<PAGE>
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)
888-6878.
EXCHANGE OF SHARES. An investor may exchange shares of a Fund for shares of
another Fund or for shares of the other mutual funds advised by Counsellors at
their respective net asset values. Exchanges may be effected by mail or by
telephone in the manner described under 'Specific Redemption Procedures' above.
If an exchange request is received by Warburg Pincus Funds prior to 4:00 p.m.
(Eastern time) 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 offer 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. Currently, exchanges may be made
between the Funds and with the following other funds:
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 investing in a diversified
portfolio of fixed-income securities;
WARBURG, PINCUS SHORT-TERM TAX-ADVANTAGED BOND FUND -- a bond fund seeking
maximum income after the effect of federal income taxes as a primary
objective and capital appreciation as a secondary objective;
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 CAPITAL APPRECIATION FUND -- an equity fund seeking
long-term capital appreciation by investing in equity securities of
financially strong domestic companies;
WARBURG PINCUS EMERGING GROWTH FUND -- an equity fund seeking maximum
capital appreciation by investing in emerging growth companies;
WARBURG PINCUS INTERNATIONAL EQUITY FUND -- an international equity fund
seeking long-term capital appreciation;
WARBURG PINCUS GROWTH & INCOME FUND -- an equity fund seeking long-term
16
<PAGE>
growth of capital and income and a reasonable current return;
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; 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 fund 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 shares of a
Fund for shares in another Warburg Pincus Fund should review the prospectus of
the other fund prior to making an exchange. For 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) 257-5614.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Each Fund calculates its dividends from net
investment income. Each Fund's net investment income is declared daily and paid
monthly. Net investment income earned on weekends and when the New York Stock
Exchange (the 'NYSE') is not open will be computed as of the next business day.
Distributions of long-term capital gains, if any, generally are declared and
paid annually at the end of the Fund's fiscal year in which they are earned.
Distributions of short-term capital gains, if any, are declared and paid
annually, at the end of the fiscal year in the case of the Tax Exempt Fund, and
periodically, as the Board determines, in the case of the Cash Reserve Fund.
Unless an investor instructs the Fund to pay dividends or capital gains
distributions in cash, dividends and distributions will automatically be
reinvested in additional 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) 888-6878.
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, or
who have been notified by U.S. Internal Revenue Service that they are subject to
backup withholding.
TAXES. Each Fund intends to continue to qualify each year as a 'regulated
investment company' within the meaning of the Code. Each 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. Each Fund expects to pay any additional dividends and
distributions as are necessary to avoid the application of this tax. As long as
the Tax Exempt Fund qualifies as a regulated investment company and meets
certain other Code requirements (including the requirement that at least 50%
of its assets are invested in tax-exempt obligations at the close of each
quarter of its taxable year), distributions of tax-exempt interest income will
be excluded from an investor's income for federal income tax purposes.
Such exempt interest dividends paid by the Tax Exempt Fund may be excluded
by investors from their gross incomes for federal income tax purposes, although
(i) such exempt interest dividends will be a tax preference item for purposes of
the federal individual and corporate
17
<PAGE>
alternative minimum taxes to the extent they are derived from Alternative
Minimum Tax Securities and (ii) all exempt interest dividends will be a
component of the 'current earnings' adjustment item for purposes of the federal
corporate alternative minimum tax. In addition, corporate investors may incur
a greater federal environmental tax liability through the receipt of Fund
dividends and distributions. Investors who are 'substantial users' (or
'related persons' of substantial users) within the meaning of the Code of
facilities financed by Alternative Minimum Tax Securities should consult their
tax advisers as to whether the Tax Exempt Fund is a desirable investment.
Dividends paid by a Fund from its taxable net investment income (if any, in
the case of the Tax Exempt Fund) and distributions of any net short-term capital
gains (whether from tax-exempt or taxable obligations) are taxable to investors
as ordinary income, whether received in cash or reinvested in additional shares
of the Fund. Each Fund does not expect to realize long-term capital gains and,
therefore, it is unlikely that any portion of the dividends or distributions
paid by a Fund will be taxable to investors as long-term capital gains. 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
one year or less. An investor in the Tax Exempt Fund who redeems his Fund shares
prior to the declaration of a dividend may lose tax-exempt status on accrued
income attributable to tax-exempt Municipal Securities. Investors may be
proportionately liable for taxes on income and gains of the Funds, but investors
not subject to tax on their income will not be required to pay tax on amounts
distributed to them. Each Fund's dividends and distributions will not qualify
for the dividends-received deduction allowed to corporations.
Exempt interest dividends derived from interest on qualifying New York
Municipal Securities will also be exempt from New York State and New York City
personal (but not corporate franchise) income taxes.
The exclusion or exemption of interest income for federal income tax
purposes, or New York State or New York City personal income tax purposes, in
most cases does not result in an exemption under the tax laws of any other state
or local authority. Investors who are subject to tax in other states or
localities should consult their own tax advisers about the taxation of dividends
and distributions from the Tax Exempt Fund by such states and localities.
GENERAL. Statements as to the tax status of each investor's dividends and
distributions will be mailed annually by Warburg Pincus Funds. These statements,
in the case of investments in the Tax Exempt Fund, will set forth or indicate
the dollar amounts of income excluded from federal income taxes and exempt from
New York State and New York City personal income taxes, and the amounts, if any,
subject to such taxes. Moreover, these statements will also designate the amount
of exempt interest dividends which are a tax preference item for purposes of the
federal individual and corporate alternative minimum taxes.
Each investor in the Cash Reserve Fund will also receive, if appropriate,
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 tax
advisers about any state and local taxes that may apply to dividends and
distributions received from the Cash Reserve Fund. In this regard, investors
should be aware that if a portion of any dividend is derived from interest on
United States government obligations, that portion may be subject to tax by
certain states, even though such interest, if received directly by an investor,
would be exempt from state income tax.
18
<PAGE>
NET ASSET VALUE
Each Fund's net asset value per share is calculated at noon and 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 is computed by adding the value
of all the Fund's assets, deducting liabilities and dividing the result by the
number of shares outstanding. Portfolio securities are valued on the basis of
amortized cost, which involves valuing a portfolio instrument at its cost
initially 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.
PERFORMANCE
From time to time, a Fund may advertise its yield and effective yield and,
in the case of the Tax Exempt Fund, its tax equivalent yield. The yield of the
Fund refers to the income generated by an investment in the Fund over a
seven-day period. This income is then annualized. That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
effective yield is calculated similarly but, when annualized, assumes that
income earned by an investment in the Fund is reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. The tax equivalent yield shows the taxable yield an
investor in the highest applicable tax bracket would have to earn to equal the
Tax Exempt Fund's tax-free yield after the imposition of federal, New York State
and New York City personal income taxes. The Tax Exempt Fund's tax equivalent
yield is calculated by dividing the Fund's tax-exempt yield by one minus the
highest level of the combined federal, New York State and New York City tax
rates. Yield, effective yield and tax equivalent yield may be shown by means of
schedules, charts or graphs.
Investors should note that yield, effective yield and tax equivalent yield
figures are based on historical earnings and are not intended to indicate future
performance. Each Fund's Statement of Additional Information describes the
method used to determine the Fund's yield. Current yield figures may be obtained
by calling Warburg Pincus Funds at (800) 257-5614.
In reports or other communications to investors or in advertising material,
a Fund may describe general economic and market conditions affecting the Fund.
The 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 (ii) in the
case of the Tax Exempt Fund, an average of the yields of similar New York
tax-exempt money market funds based on information contained in Donoghue's Money
Market Fund Report, which is published weekly by the Donoghue Organization or
(iii) in the case of the Cash Reserve Fund, the Donoghue's Money Market Fund
Average, which is an average of all major taxable money market fund yields
published weekly by the Donoghue Organization or (iv) in each case, other
appropriate indexes of investment securities. Each Fund may also include
evaluations of the Fund published by nationally recognized ranking services
and by financial publications that are nationally recognized, such as The
Wall Street Journal, Investor's Daily, Money, Inc., Institutional Investor,
Barron's, Fortune, Forbes, Morningstar, Inc. and Business Week. In addition,
each Fund may from time to time compare its expense ratio to
19
<PAGE>
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
Each Fund was incorporated on November 15, 1984 under the laws of the State
of Maryland. Although the Funds' names as set forth in their respective charters
are 'Counsellors Cash Reserve Fund, Inc.' and 'Counsellors New York Tax Exempt
Fund, Inc.', they do business under the name 'Warburg, Pincus Cash Reserve Fund'
and 'Warburg, Pincus New York Tax Exempt Fund', respectively. Each Fund's
charter 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 Series 2 Shares. 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 may similarly
classify or reclassify any class of shares into one or more series. Since no
Series 2 Shares are outstanding for either of the Funds, references to 'shares'
in this prospectus refer solely to the common shares of a Fund (the 'Common
Shares'), unless the context otherwise requires.
Investors 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 until 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. 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% or more of the outstanding shares of a Fund.
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 of
distributions). 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. John
L. Furth, a Director of the Funds, and Lionel I. Pincus may be deemed to be
controlling persons of each Fund as of May 31, 1995 because they may be deemed
to possess or share investment power over shares owned by clients of Counsellors
and certain other entities.
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 the
other Fund.
SHAREHOLDER SERVICING
Each Fund is authorized to offer Series 2 Shares exclusively to financial
institutions and retirement plans or companies providing certain services to
them ('Service Organizations') that enter into account servicing agreements
('Agreements') with the Fund described below. Pursuant to the terms of an
Agreement, the Service Organization agrees to perform certain distribution,
shareholder servicing, administrative and/or accounting services for its
clients and customers (or participants, in the case of retirements plans)
('Customers') who are beneficial owners of Series 2 Shares. Series 2 Shares may
not be purchased by individuals directly but financial institutions and
retirement plans may purchase
20
<PAGE>
Series 2 Shares for individuals. The governing Board has approved a Distribution
Plan (the 'Plan') pursuant to Rule 12b-1 under the 1940 Act under which the Fund
will pay each participating Service Organization a negotiated fee on an annual
basis not to exceed .75% of the value of the average daily net assets of its
Customers invested in Series 2 Shares.
Common Shares may be sold to or through institutions that will not be paid
by the Fund a distribution fee pursuant to Rule 12b-1 under the 1940 Act for
services to their clients or customers who are beneficial owners of Common
Shares. These institutions may by paid a fee by the Fund for transfer agency,
administrative or other services provided to their customers that invest in the
Fund's Common Shares. These services include maintaining account records,
processing orders to purchase, redeeming and exchanging Common Shares and
responding to certain customer inquiries. Counsellors and Counsellors Securities
may, from time to time, at their own expense, also provide compensation to these
institutions. To the extent they do so, such compensation will not represent an
additional expense to the Fund or its shareholders, since it will be paid from
the assets of Counsellors, Counsellors Service or their affiliates.
------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, EACH FUND'S
STATEMENT OF ADDITIONAL INFORMATION OR EACH FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFERING OF THE FUND'S SHARES, AND IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY A FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE
IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
21
<PAGE>
TABLE OF CONTENTS
THE FUNDS' EXPENSES ...................................................... 2
FINANCIAL HIGHLIGHTS ..................................................... 3
INVESTMENT OBJECTIVES AND POLICIES ....................................... 5
GENERAL .................................................................. 6
PORTFOLIO INVESTMENTS .................................................... 7
INVESTMENT GUIDELINES .................................................... 9
MANAGEMENT OF THE FUNDS ................................................. 10
HOW TO OPEN AN ACCOUNT .................................................. 12
HOW TO PURCHASE SHARES .................................................. 12
HOW TO REDEEM AND EXCHANGE SHARES ....................................... 14
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 17
NET ASSET VALUE ......................................................... 19
PERFORMANCE ............................................................. 19
GENERAL INFORMATION ..................................................... 20
SHAREHOLDER SERVICING ................................................... 20
WPCRNY-1-0695
[LOGO]
[ ] WARBURG PINCUS
CASH RESERVE FUND
[ ] WARBURG PINCUS
NEW YORK TAX EXEMPT FUND
PROSPECTUS
JUNE 29, 1995
<PAGE>1
SUBJECT TO COMPLETION, DATED JUNE 28, 1995
STATEMENT OF ADDITIONAL INFORMATION
June 29, 1995
---------------------
WARBURG, PINCUS CASH RESERVE FUND
P.O. Box 9030, Boston, Massachusetts 02205-9030
For information call: (800) 888-6878
---------------------
Contents
Page
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . 2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . 7
Additional Purchase and Redemption Information . . . . . . . . . . . . . 14
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Additional Information Concerning Taxes . . . . . . . . . . . . . . . . . 16
Determination of Yield . . . . . . . . . . . . . . . . . . . . . . . . . 18
Auditors and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Appendix - Description of Commercial Paper Ratings . . . . . . . . . . . A-1
Report of Coopers & Lybrand L.L.P., Independent Auditors . . . . . . . . A-2
This Statement of Additional Information is meant to be read in
conjunction with the Prospectus of Warburg, Pincus Cash Reserve Fund (the
"Fund") and Warburg, Pincus New York Tax Exempt Fund dated June 28, 1995 and
is incorporated by reference in its entirety into that Prospectus. Because
this Statement of Additional Information is not itself a prospectus, no
investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectus and information regarding
the Fund's current yield may be obtained by calling Warburg Pincus Funds at
(800) 257-5614. Information regarding the status of shareholder accounts may
be obtained by calling Warburg Pincus Funds at (800) 888-6878 or by writing to
Warburg Pincus Funds, P.O. Box 9030, Boston, Massachusetts 02205-9030.
<PAGE>2
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide investors with
high current income consistent with liquidity and stability of principal.
The following policies supplement the descriptions of the Fund's
investment objective and policies in the Prospectus. A discussion of the
rating categories of statistical rating agencies that rate instruments in
which the Fund may invest is contained in the Appendix to this Statement of
Additional Information.
Examples of the types of United States government obligations that
may be held by the Fund include, in addition to United States Treasury Bills,
the obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal
Land Banks, Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Small Business Administration,
Government National Mortgage Association, General Services Administration,
Central Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks and the Maritime Administration.
For purposes of the Fund's investment policies with respect to bank
obligations, the assets of a bank or savings institution will be deemed to
include the assets of its domestic and foreign branches. Obligations of
foreign branches of United States banks and of foreign banks may be general
obligations of the parent bank in addition to the issuing bank, or may be
limited by the terms of a specific obligation and by government regulation.
The Fund's investments in the obligations of foreign branches of United States
banks and of foreign banks may subject the Fund to investment risks that are
different in some respects from those of investments in obligations of United
States domestic issuers. Such risks include future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income, possible seizure or nationalization of foreign deposits, the possible
establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. In addition, foreign branches of
United States banks and foreign banks may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and
recordkeeping standards than those applicable to domestic branches of United
States banks. The Fund will acquire securities issued by foreign branches of
United States banks or foreign banks only when the Fund's investment adviser
and sub-investment adviser believe that the risks associated with such
investments are minimal.
When purchasing variable rate master demand notes, the Fund's
investment adviser and sub-investment adviser will consider the assets, credit
support, earning power, cash flows and other liquidity ratios of the issuers
of such notes and will continuously monitor their financial status to meet
payment on demand. In the event an issuer of a variable rate master demand
note defaults on its payment obligation, the Fund might be unable to dispose
of the note because of the absence of a secondary market and might, for this
or other reasons, suffer a loss to the extent of the default. However, the
Fund will
<PAGE>3
invest in such instruments only where its investment adviser and
sub-investment adviser believe that the risk of such loss is minimal. In
determining average weighted portfolio maturity, a variable rate master demand
note will be deemed to have a maturity equal to the longer of the period
remaining to the next interest rate adjustment or the demand note period.
The seller under a repurchase agreement will be required to maintain
the value of the securities subject to the agreement at not less than the
repurchase price (including accrued interest). Securities subject to
repurchase agreements will be held by the Fund's custodian or in the Federal
Reserve/Treasury book-entry system or another authorized securities
depository.
The Fund may borrow funds for temporary purposes and not for
leverage by agreeing to sell portfolio securities to financial institutions
such as banks and broker-dealers and to repurchase them at a mutually agreed-
upon date and price. At the time the Fund enters into such an arrangement (a
"reverse repurchase agreement"), it will place in a segregated custodial
account cash, United States government securities or other high-grade debt
obligations having a value equal to the repurchase price (including accrued
interest) and will subsequently monitor the account to ensure that such
equivalent value is maintained. Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline
below the repurchase price of those securities. Reverse repurchase agreements
are considered to be borrowings by the Fund under the Investment Company Act
of 1940, as amended (the "1940 Act").
As stated in the Prospectus, the Fund may purchase portfolio
securities on a "when-issued" basis (i.e., for delivery beyond the normal
settlement date at a stated price and yield). When the Fund agrees to
purchase when-issued securities, its custodian will set aside cash or certain
liquid, high-grade debt obligations in a segregated account equal to the
amount of the commitment. 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. Because the Fund will
set aside cash and liquid assets to satisfy its purchase commitments in the
manner described, the Fund's liquidity and ability to manage its portfolio
might be affected in the event its commitments to purchase when-issued
securities ever exceeded 25% of the value of its assets.
When the Fund engages in when-issued transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in
the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
<PAGE>4
Other Investment Limitations
The investment limitations numbered 1 through 10 may not be changed
without the affirmative vote of the holders of a majority of the Fund's
outstanding shares. Such majority is defined as the lesser of (i) 67% or more
of the shares present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding shares. Investment limitations 11, 12 and 13
may be changed by a vote of the Fund's Board of Directors (the "Board") at any
time.
The Fund may not:
1. Invest in common stocks, preferred stocks, warrants, other
equity securities, corporate bonds or indentures, state bonds, municipal bonds
or industrial revenue bonds.
2. Purchase the securities of any issuer if as a result more than
5% of the value of the Fund's assets would be invested in the securities of
such issuer, except that this 5% limitation does not apply to securities
issued or guaranteed by the United States government, its agencies or
instrumentalities, and except that up to 25% of the value of the Fund's assets
may be invested without regard to this 5% limitation.
3. Borrow money, issue senior securities or enter into reverse
repurchase agreements except for temporary or emergency purposes and not for
leveraging, and then in amounts not in excess of 10% of the value of the
Fund's assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of
the value of the Fund's assets at the time of such borrowing. The Fund does
not currently intend to enter into reverse repurchase agreements in amounts in
excess of 5% of its assets at the time the agreement is entered into.
Whenever borrowings exceed 5% of the value of the Fund's total assets, the
Fund will not make any additional investments.
4. Purchase any securities which would cause more than 25% 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
obligations issued or guaranteed by the United States, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political sub-divisions or
certificates of deposit, time deposits, savings deposits and bankers'
acceptances.
5. Make loans except that the Fund may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations and enter into repurchase agreements.
<PAGE>5
6. Underwrite any issue of securities except to the extent that
the purchase of debt obligations directly from the issuer thereof in
accordance with the Fund's investment objective, policies and limitations may
be deemed to be underwriting.
7. Purchase securities on margin, make short sales of securities
or maintain a short position.
8. Write or sell puts, calls, straddles, spreads or combinations
thereof.
9. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or invest in oil, gas or
mineral exploration or development programs, except that the Fund may purchase
commercial paper issued by companies that invest in real estate or interests
therein.
10. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition or reorganization.
11. Invest more than 5% of the value of its total assets in the
securities of issuers having a record, including predecessors, of fewer than
three years of continual operations, except obligations issued or guaranteed
by the United States government, its agencies or instrumentalities.
12. Invest more than 10% of the value of the Fund's total 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 providing
for settlement in more than seven days after notice by the Fund, variable rate
master demand notes providing for settlement upon maturities longer than seven
days and savings accounts which require more than seven days' notice prior to
withdrawal shall be considered illiquid securities.
13. Invest in oil, gas or mineral leases.
The Fund has agreed, for purposes of compliance with certain state
securities regulations, that so long as its shares are registered and are
being offered in such states, it will not (i) purchase commercial paper,
including variable rate amount master demand notes, of any one issuer if
immediately after such purchase more than 5% of the value of its total assets
would be invested in the commercial paper of such issuer or (ii) invest more
than 5% of the value of its total assets in securities which may be illiquid
or for which there are no readily available market quotations. These policies
are subject to change without the affirmative vote of the holders of a
majority of the Fund's outstanding shares.
<PAGE>6
Portfolio Valuation
The Fund's portfolio securities are valued on the basis of amortized
cost. Under this method, the Fund values a portfolio security at cost on the
date of purchase and thereafter assumes a constant value of the security for
purposes of determining net asset value, which normally does not change in
response to fluctuating interest rates. Although the amortized cost method
seems to provide certainty in portfolio valuation, it may result in periods
during which values, as determined by amortized cost, are higher or lower than
the amount the Fund would receive if it sold the securities. In connection
with amortized cost valuation, the Board has established procedures that are
intended to stabilize the Fund's net asset value per share for purposes of
sales and redemptions at $1.00. These procedures include review by the Board,
at such intervals as it deems appropriate, to determine the extent, if any, to
which the Fund's net asset value per share calculated by using available
market quotations deviates from $1.00 per share. In the event such deviation
exceeds 1/2 of 1%, the Board will promptly consider what action, if any,
should be initiated. If the Board believes that the amount of any deviations
from the Fund's $1.00 amortized cost price per share may result in material
dilution or other unfair results to investors or existing shareholders, it
will take such steps as it considers appropriate to eliminate or reduce to the
extent reasonably practicable any such dilution or unfair results. These
steps may include selling portfolio instruments prior to maturity; shortening
the Fund's average portfolio maturity; withholding or reducing dividends;
redeeming shares in kind; reducing the number of the Fund's outstanding shares
without monetary consideration; or utilizing a net asset value per share
determined by using available market quotations.
Portfolio Transactions
Warburg, Pincus Counsellors, Inc. ("Counsellors") is responsible for
establishing, reviewing, and, where necessary, modifying the Fund's investment
program to achieve its investment objective. PNC Institutional Management
Corporation ("PIMC") generally will select specific portfolio investments and
effect transactions for the Fund. Purchases and sales of portfolio securities
are usually principal transactions without brokerage commissions effected
directly with the issuer or with dealers who specialize in money market
instruments. PIMC seeks to obtain the best net price and the most favorable
execution of orders. To the extent that the execution and price offered by
more than one dealer are comparable, PIMC may, in its discretion, effect
transactions in portfolio securities with dealers who provide the Fund with
research advice or other services.
Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by
PIMC. Such other 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
PIMC 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
<PAGE>7
size of the position obtained or sold for the Fund. To the extent permitted
by law, PIMC may aggregate the securities to be sold or purchased for the Fund
with those to be sold or purchased for such other investment clients in order
to obtain best execution.
In no instance will portfolio securities be purchased from or sold
to Counsellors, PIMC, PNC Bank, National Association ("PNC") or Counsellors
Securities Inc. ("Counsellors Securities") or any affiliated person of such
companies, except pursuant to an exemption received from the Securities and
Exchange Commission (the "SEC").
The Fund does not intend to seek profits through short-term trading.
The Fund's annual portfolio turnover will be relatively high but the Fund's
portfolio turnover is not expected to have a material effect on its net
income. The Fund's portfolio turnover is expected to be zero for regulatory
reporting purposes.
MANAGEMENT OF THE FUND
Officers and Board of Directors
The names (and ages) of the Fund's Directors and officers, their
addresses, present positions and principal occupations during the past five
years and other affiliations are set forth below.
Richard N. Cooper* **(60) . . . Director
Harvard University Professor at Harvard University;
1737 Cambridge Street Director or Trustee of CNA Financial
Cambridge, Massachusetts 02138 Corporation, Circuit City Stores, Inc.
(retail electronics and appliances) and
Phoenix Home Life Insurance Co.
Donald J. Donahue (70) . . . . Director
99 Indian Field Road Chairman of Magma Copper Company
Greenwich, Connecticut 06830 since January 1987; Director or Trustee of
Northeast Utilities, GEV Corporation and
Signet Star Reinsurance Company; Chairman
- ---------------------------
* Indicates a Director who is an "interested person" of the Fund as defined
in the 1940 Act.
** Mr. Cooper has consulting arrangements with Counsellors and an affiliate
of Counsellors. Although these relationships do not appear to require
designation of Mr. Cooper as an interested person, the Fund is currently
making such a designation in order to avoid the possibility that Mr.
Cooper's independence would be questioned.
<PAGE>8
and Director of NAC Holdings from September
1990-June 1993.
Jack W. Fritz (68) . . . . . . Director
2425 North Fish Creek Road Private investor; Consultant and
P.O. Box 483 Director of Fritz Broadcasting, Inc. and
Wilson, Wyoming 83014 Fritz Communications (developers and
operators of radio stations); Director of
Advo, Inc. (direct mail advertising).
John L. Furth* (64) . . . . . . Director
466 Lexington Avenue Vice Chairman and Director of E.M.
New York, New York 10017-3147 Warburg, Pincus & Co., Inc. ("EMW");
Associated with EMW since 1970; Chief
Executive Officer of 13 other investment
companies advised by Counsellors.
Thomas A. Melfe (63) . . . . . Director
30 Rockefeller Plaza Partner in the law firm of Donovan
New York, New York 10112 Leisure Newton & Irvine; Director of
Municipal Fund for New York Investors, Inc.
Alexander B. Trowbridge (65) . Director
1155 Connecticut Avenue, N.W. President of Trowbridge Partners, Inc.
Suite 700 (business consulting) from January 1990-
Washington, DC 20036 January 1994; President of the National
Association of Manufacturers from 1980-1990;
Director or Trustee of New England Mutual
Life Insurance Co., ICOS Corporation
(biopharmaceuticals), P.H.H. Corporation
(fleet auto management; housing and plant
relocation service), WMX Technologies Inc.
(solid and hazardous waste collection and
disposal), The Rouse Company (real estate
development), SunResorts International Ltd.
(hotel and real estate management), Harris
Corp. (electronics and communications
equipment), The Gillette Co. (personal care
products) and Sun Company Inc. (petroleum
refining and marketing).
- ---------------------------
* Indicates a Director who is an "interested person" of the Fund as defined
in the 1940 Act.
<PAGE>9
Dale C. Christensen (48) . . . President
466 Lexington Avenue Co-Portfolio Manager of other Warburg
New York, New York 10017-3147 Pincus Funds; Managing Director of EMW;
Associated with EMW since 1989; Vice
President at Citibank, N.A. from 1985-1989;
Vice President of Counsellors Securities;
President of 6 other investment companies
advised by Counsellors.
Arnold M. Reichman (47) . . . . Executive Vice President
466 Lexington Avenue Managing Director and Assistant
New York, New York 10017-3147 Secretary of EMW; Associated with EMW since
1984; Senior Vice President, Secretary and
Chief Operating Officer of Counsellors
Securities; President or Executive Vice
President of 14 other investment companies
advised by Counsellors.
Eugene L. Podsiadlo (38) . . . Senior Vice President
466 Lexington Avenue Managing Director of EMW;
New York, New York 10017-3147 Associated with EMW since 1991; Vice
President of Citibank, N.A. from 1987-1991;
Senior Vice President of Counsellors
Securities and 14 other investment companies
advised by Counsellors.
Eugene P. Grace (43) . . . . . Vice President and Secretary
466 Lexington Avenue Associated with EMW 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 of Counsellors Securities;
Vice President and Secretary of 14 other
investment companies advised by Counsellors.
<PAGE>10
Stephen Distler (41) . . . . . Vice President and Chief Financial
466 Lexington Avenue Officer
New York, New York 10017-3147 Managing Director, Controller and Assistant
Secretary of EMW; Associated with EMW since
1984; Treasurer of Counsellors Securities;
Vice President, Treasurer and Chief
Accounting Officer or Treasurer and Chief
Financial Officer of 14 other investment
companies advised by Counsellors.
Howard Conroy (41) . . . . . . Vice President, Treasurer and Chief
466 Lexington Avenue Accounting Officer
New York, New York 10017-3147 Associated with EMW since 1992; 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 13 other investment
companies advised by Counsellors.
Karen Amato (31) . . . . . . . Assistant Secretary
466 Lexington Avenue Associated with EMW since 1987;
New York, New York 10017-3147 Assistant Secretary of 14 other investment
companies advised by Counsellors.
No employee of Counsellors, PIMC, PNC or PFPC Inc. ("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, officer
or employee of Counsellors, PFPC or any of their affiliates receives an annual
fee of $2,000, and $500 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.
<PAGE>11
Directors' Compensation
<TABLE>
<CAPTION>
Total Total Annual Compensation from
Compensation from all Investment Companies
Fund Managed by Counsellors
Name of Director*
----------------- ----------------- ------------------------------
<S> <C> <C>
John L. Furth None** None**
Richard N. Cooper $4,000 $39,500
Donald J. Donahue $4,000 $39,500
Jack W. Fritz $4,000 $39,500
Thomas A. Melfe $4,000 $39,500
Alexander B. Trowbridge $4,000 $39,500
</TABLE>
____________________
* Each Director also serves as a Director or Trustee of 14 other investment
companies advised by Counsellors.
** Mr. Furth is considered to be an interested person of the Fund and
Counsellors, as defined under Section 2(a)(19) of the 1940 Act, and
receives no compensation from the Fund or any other investment company
managed by Counsellors.
As of May 31, 1995, Directors and officers of the Fund as a group
owned of record 113,473 shares of the Fund's outstanding common stock. As of
the same date, Mr. Furth may be deemed to have beneficially owned 49.69% of
Fund shares outstanding, including shares owned by clients for which
Counsellors has investment discretion. Mr. Furth disclaims ownership of these
shares and does not intend to exercise voting rights with respect to these
shares.
Investment Adviser, Sub-Investment Adviser and Administrator and Co-
Administrator
Counsellors serves as investment adviser to the Fund, PIMC serves as
sub-investment adviser and administrator to the Fund and Counsellors Funds
Service, Inc. ("Counsellors Service") serves as co-administrator to the Fund
pursuant to written agreements (the "Advisory Agreement," the "Sub-Advisory
Agreement" and the "Co-Administration Agreement," respectively, and,
collectively, the "Agreements"). The services provided by and the fees
payable by the Fund to Counsellors, PIMC and Counsellors Service under the
respective Agreements are described in the Prospectus. Prior to June 29,
1994, Counsellors Service served as administrative services agent to the Fund
pursuant to a written agreement (the "Administrative Services Agreement").
<PAGE>12
Counsellors and PIMC have agreed that if, in any fiscal year, the
expenses borne by the Fund exceed the applicable expense limitations imposed
by the securities regulations of any state in which shares of the Fund are
registered or qualified for sale to the public, they will each reimburse the
Fund for one-half of any excess to the extent required by such regulations.
Unless otherwise required by law, such reimbursement would be accrued and paid
on a monthly basis. The most stringent state expense limitation applicable to
the Fund currently requires reimbursement of expenses in any year that such
expenses exceed the lesser of 2.5% of the first $30 million of average net
assets, 2% of the next $70 million and 1.5% of the remaining average net
assets.
During the fiscal years ended February 28, 1993, February 28, 1994
and February 28, 1995, the Fund incurred $778,392, $733,302 and $795,255,
respectively, in fees to each of Counsellors and PIMC for services under the
Advisory Agreement and Sub-Advisory Agreement, respectively. For the same
periods, Counsellors and PIMC voluntarily waived fees aggregating $542,815,
$357,204 and $438,940, respectively, of which Counsellors voluntarily waived
$217,126, $66,705 and $73,215, respectively, and PIMC voluntarily waived
$325,689, $290,499 and $365,725, respectively. Under the Administrative
Services Agreement or the Co-Administration Agreement, as the case may be,
$163,157, $39,214, and $316,605 was payable to Counsellors Service during the
fiscal years ended February 28, 1993, February 28, 1994 and February 28, 1995,
respectively, of which $159,051 was waived by them in 1995.
Banking Laws
Banking laws and regulations presently (i) prohibit a bank holding
company registered under the Federal Bank Holding Company Act of 1956 (the
"Holding Company Act") or any bank or non-bank affiliate thereof from
sponsoring, organizing, controlling or distributing the shares of a
registered, open-end investment company continuously engaged in the issuance
of its shares, but (ii) do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent or custodian to such an
investment company. PNC and PIMC are subject to such banking laws and
regulations.
PIMC, PNC and the Fund have been advised by Messrs. Ballard, Spahr,
Andrews & Ingersoll that PIMC and PNC may perform the services for the Fund
contemplated by their respective agreements with the Fund and the Prospectus
without violation of applicable banking laws or regulations. Such counsel
have pointed out, however, that future changes in legal requirements relating
to the permissible activities of banks and their affiliates, as well as future
interpretations of present requirements, could prevent one or more of them
from continuing to perform services for the Fund. If PIMC or PNC were
prohibited from providing services to the Fund, the Board would select another
qualified firm. Any new sub-investment advisory agreement would be subject to
shareholder approval.
<PAGE>13
Custodian and Transfer Agent
PNC is custodian of the Fund's assets pursuant to a custodian
agreement (the "Custodian Agreement"). Under the Custodian Agreement, PNC (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 on account of the
Fund's portfolio securities and (v) makes periodic reports to the Board
concerning the Fund's operations. PNC is authorized to select one or more
banks or trust companies to serve as sub-custodian on behalf of the Fund,
provided that PNC remains responsible for the performance of all its duties
under the Custodian Agreement and holds the Fund harmless from the acts and
omissions of any sub-custodian. PNC is an indirect wholly owned subsidiary of
PNC Bank Corp., and its principal business address is Broad and Chestnut
Streets, Philadelphia, Pennsylvania 19101.
State Street Bank and Trust Company ("State Street") has agreed to
serve as the Fund's shareholder servicing, transfer and dividend disbursing
agent 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 the 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.
The principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110. BFDS's principal business address is 2 Heritage Drive,
Boston, Massachusetts 02171.
Distribution and Shareholder Servicing
The Fund may in the future enter into agreements ("Agreements") with
institutions ("Institutions") to perform certain distribution, shareholder
servicing, administrative and accounting services would be provided to the
holders ("Customers") who are beneficial owners of the Fund's Series 2 class
of shares (the "Series 2 Shares"). See the Prospectus, "Shareholder
Servicing." The Fund's agreements with Institutions with respect to Series 2
Shares will be governed by a Distribution Plan. The Distribution Plan would
require 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.
An Institution with which the Fund has entered into an Agreement
with respect to either its Common Shares or Series 2 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 Service Organization: (i) account fees
<PAGE>14
(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 the Fund's co-administration
and distribution and shareholder servicing arrangements. A Customer of an
Institution should read the Prospectus and Statement of Additional Information
in conjunction with the Agreement and other literature describing the services
and related fees that would be provided by the an 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.
The Distribution Plan and 12b-1 Plan will continue in effect for so
long as their continuance is specifically approved at least annually by the
Board, including a majority of the Directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the
operation of the Service Plans ("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
may be amended to increase materially the amount to be spent under the Plan
without shareholder approval of the relevant class of shares. 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 relevant class of shares
of the Fund.
Organization of the Fund
The Fund is incorporated in Maryland. See the Prospectus, "General
Information." All shareholders of the Fund, upon liquidation, will
participate ratably in the Fund's net assets. Shares do not have cumulative
voting rights, which means 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.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Information on how to purchase and redeem Fund shares and how such
shares are priced is included in the Prospectus.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
New York Stock Exchange (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 by rule or regulation) an emergency
exists as a result of which disposal or fair valuation
<PAGE>15
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 the 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 property. 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
intends to comply with Rule 18f-1 promulgated under the 1940 Act with respect
to redemptions in kind. In certain instances, the Fund may redeem shares pro
rata from each shareholder of record without payment of monetary
consideration. See Statement of Additional Information -- "Investment
Objective and Policies - Portfolio Valuation" for an example of when such
redemption or form of payment might be appropriate.
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 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
Counsellors is available to investors in the Fund. The funds into which
exchanges can be made currently are the common shares of Warburg Pincus New
York Tax Exempt Fund, Warburg, Pincus Tax-Free Fund, Warburg Pincus New York
Intermediate Municipal Fund, Warburg Pincus Intermediate Maturity Government
Fund, Warburg Pincus Fixed Income Fund, Warburg, Pincus Short-Term Tax-
Advantaged Bond Fund, Warburg Pincus Global Fixed Income Fund, Warburg Pincus
Balanced Fund, Warburg Pincus Growth & Income Fund, Warburg Pincus Capital
Appreciation Fund, Warburg Pincus Emerging Growth Fund, Warburg Pincus
International Equity Fund, Warburg Pincus Emerging Markets Fund and Warburg
Pincus Japan OTC Fund. Shareholders of the Fund may exchange all or part of
their shares for shares of these funds or other mutual funds organized by
Counsellors in the future on the basis of their relative net asset values per
share at the time of exchange.
The exchange privilege enables shareholders in certain funds advised
by Counsellors to acquire shares in a fund with a different investment
objective when they
<PAGE>16
believe that a shift between funds is an appropriate investment decision.
This privilege is available to shareholders residing in any state in which the
fund shares being acquired may legally be sold. Prior to any exchange, the
investor should obtain and review a copy of the current prospectus of each
fund into which an exchange is being considered. Shareholders may obtain a
prospectus 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 and the proceeds are invested on the same day, at a price as
described above, in shares of the fund being acquired. Counsellors 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 the 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.
The Fund has qualified and intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (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 90% of its taxable net
investment income (for this purpose consisting of taxable net investment
income and net realized short-term capital gains); (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 or forward contracts
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
<PAGE>17
controls and that are determined to be in the same or similar trades or
businesses or related trades or businesses. In meeting these 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 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.
Although the Fund expects to be relieved of all or substantially all
federal income taxes, depending upon the extent of its activities in states
and localities in which its offices are maintained, in which its agents or
independent contractors are located or in which it is otherwise deemed to be
conducting business, that portion of the Fund's income which is treated as
earned in any such state or locality could be subject to state and local tax.
Any taxes paid by the Fund would reduce the amount of income and gains
available for distribution to shareholders.
Investors should be aware that it is possible that some portion of
the Fund's income from investment in obligations of foreign banks could become
subject to foreign taxes.
While the Fund does not expect to realize net long-term capital
gains, any such realized gains will be distributed as described in the
Prospectus. Such distributions ("capital gain dividends") will be taxable to
shareholders as long-term capital gains, regardless of how long a shareholder
has held Fund shares, and will be designated as capital gain dividends in a
written notice mailed by the Fund to shareholders after the close of the
Fund's taxable year. Gain or loss, if any, recognized on the sale or other
disposition of shares of the Fund will be taxed as capital gain or loss if the
shares are capital assets in the shareholder's hands. Generally, a
shareholder's gain or loss will be a long-term gain or loss if the shares have
been held for more than one year. If a shareholder sells or otherwise
disposes of a share of the Fund before holding it for more than six months,
any loss on the sale or other disposition of such share shall be treated as a
long-term capital loss to the extent of any capital gain dividends received by
the shareholder with respect to such share.
A shareholder of the 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 receives, and should
have a cost basis in the shares received equal to that amount. Any loss
realized on a sale or exchange of a shareholder's shares will be disallowed
<PAGE>18
to the extent the shares disposed of are replaced, including replacement
through the reinvesting of dividends and capital gains distributions in the
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.
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 the 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 withholding, then the shareholder may be subject to a 31%
"backup withholding" tax with respect to (i) dividends and distributions and
(ii) the proceeds of any redemptions of Fund shares. 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.
DETERMINATION OF YIELD
From time to time, the Fund may quote its yield and effective yield
in advertisements or in reports and other communications to shareholders. The
Fund's yield and effective yield for the seven-day periods ended on February
28, 1995 were 5.65% and 5.81%, respectively. In the absence of waivers these
yields would have been 5.49% and 5.64%, respectively. The Fund's seven-day
yield is calculated by (i) determining the net change in the value of a
hypothetical pre-existing account in the Fund having a balance of one share
at the beginning of a seven calendar day period for which yield is to be
quoted, (ii) dividing the net change by the value of the account at the
beginning of the period to obtain the base period return and (iii) annualizing
the results (i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of additional shares
purchased with dividends declared on the original share and any such
additional shares, but does not include realized gains and losses or unrealized
appreciation and depreciation. The Fund's seven-day compound effective
annualized yield is calculated by adding 1 to the base period return
(calculated as described above), raising the sum to a power equal to 365/7 and
subtracting 1.
The Fund's yield will vary from time to time depending upon market
conditions, the composition of the Fund's portfolio and its operating
expenses. Yield information may be useful in reviewing the Fund's performance
and for providing a basis for comparison with other investment alternatives.
However, the Fund's yield will fluctuate,
<PAGE>19
unlike certain bank deposits or other investments which pay a fixed yield for
a stated period of time. In comparing the Fund's yield with that of other
money market funds, investors should give consideration to the quality and
maturity of the portfolio securities of the respective funds.
AUDITORS AND COUNSEL
Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), with principal
offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves
as independent auditors for the Fund. The financial statements that appear in
this Statement of Additional Information have been audited by Coopers &
Lybrand, whose report thereon appears elsewhere herein, and have been included
herein in reliance upon the report of such firm of independent auditors given
upon their authority as experts in accounting and auditing.
Willkie Farr & Gallagher serves as counsel for the Fund as well as
counsel to Counsellors, Counsellors Service and Counsellors Securities.
MISCELLANEOUS
As of May 31, 1995, the name, address and percentage of ownership of
other persons (other than Mr. Furth, see "Management of the Fund") that
control the Fund (within the meaning of the rules and regulations under the
1940 Act) or own of record 5% or more of the Fund's outstanding shares were as
follows: Fiduciary Trust Company International, P.O. Box 3199, New York, NY
10008-3199 -- 28.54% and Neuberger and Berman, 11 Broadway, New York, NY
10004 -- 21.61%. To the knowledge of the Fund, these entities are not the
beneficial owners of a majority of the shares held by them of record. Mr.
Lionel I. Pincus may be deemed to have beneficially owned 50.09% of Fund
shares outstanding, including shares owned by clients for which Counsellors
has investment discretion and by companies that EMW 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
The Fund's financial statements for the fiscal year ended February
28, 1995 follow the Report of Independent Auditors.
<PAGE>A-1
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Commercial paper rated A-1 by Standard and Poor's Ratings Group
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 Investors Services, Inc. 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.
Short term obligations, including commercial paper, rated A1 + by
IBCA are obligations supported by the highest capacity for timely repayment.
Obligations rated A1 have a very strong capacity for timely repayment.
Obligations rated A2 have a strong capacity for timely repayment, although
such capacity may be susceptible to adverse changes in business, economic or
financial conditions.
Fitch Investors Services, Inc. employs the rating F-1+ to indicate
issues regarded as having the strongest degree of assurance for timely
payment. The rating F-1 reflects an assurance of timely payment only slightly
less in degree than issues rated F-1+, while the rating F-2 indicates a
satisfactory degree of assurance for timely payment, although the margin of
safety is not as great as indicated by the F-1+ and F-1 categories.
Duff & Phelps, Inc. employs the designation of Duff 1 with respect
to top grade commercial paper and bank money instruments. Duff 1+ indicates
the highest certainty of timely payment: short-term liquidity is clearly
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment: liquidity factors and company
fundamentals are sound.
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
WARBURG PINCUS MONEY MARKET FUNDS:
We have audited the accompanying statements of net assets of Warburg Pincus Cash
Reserve Fund and Warburg Pincus New York Tax Exempt Fund as of February 28,
1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1995. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Warburg Pincus Cash Reserve Fund and Warburg Pincus New York Tax Exempt Fund as
of February 28, 1995, and the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 31, 1995
25
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR SECURITY DESCRIPTION MATURITY RATE VALUE
------------ ---------------------------------------- --------- ----- ------------
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS (25.3%)
Federal Farm Credit Bank (6.2%)
$ 5,000,000 Federal Farm Credit Bank 03/20/95 5.280% $ 4,986,067
5,000,000 Federal Farm Credit Bank 05/01/95 6.200 5,000,000
10,000,000 Federal Farm Credit Bank 06/01/95 6.050 10,000,000
5,000,000 Federal Farm Credit Bank 08/01/95 6.650 5,000,000
------------
Total Federal Farm Credit Bank (Cost $24,986,067) 24,986,067
------------
Federal National Mortgage Association (2.0%)
3,000,000 Federal National Mortgage Association
Discount Note 03/22/95 5.370 2,990,603
5,000,000 Federal National Mortgage Association
Discount Note 03/22/95 5.400 4,984,250
------------
Total Federal National Mortgage Association (Cost $7,974,853) 7,974,853
------------
Student Loan Marketing Association (17.1%)
15,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.090 15,000,000
10,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.210 10,002,482
5,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.260 5,002,349
5,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.260 5,013,472
10,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.260 10,004,689
10,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.260 10,006,283
14,000,000 Student Loan Marketing Association
Floating Rate Note + 03/07/95 6.260 14,015,346
------------
Total Student Loan Marketing Association (Cost $69,044,621) 69,044,621
------------
TOTAL AGENCY OBLIGATIONS (Cost $102,005,541) 102,005,541
------------
</TABLE>
See Accompanying Notes to Financial Statements.
3
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
------------ -------------------------------------- -------------- --------- ----- ------------
<S> <C> <C> <C> <C> <C>
BANKERS' ACCEPTANCES (29.7%)
Domestic Bankers' Acceptances (7.7%)
$1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 03/17/95 6.000% $ 997,333
1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 03/21/95 6.000 996,667
1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 03/22/95 5.980 996,512
1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 03/27/95 6.000 995,667
1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 03/30/95 6.000 995,167
2,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 05/02/95 6.160 1,978,782
1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 07/05/95 6.510 977,215
1,000,000 Bank of America National Trust &
Savings Association (P-1/A-1) 07/10/95 6.280 977,148
1,000,000 Barclays Bank PLC (NR/A-1+) 03/14/95 5.200 998,122
500,000 Barclays Bank PLC (NR/A-1+) 05/18/95 6.200 493,283
550,000 Barclays Bank PLC (NR/A-1+) 07/25/95 6.400 535,724
3,051,000 CoreStates Bank NA (P-1/A-1) 03/31/95 6.070 3,035,567
2,000,000 CoreStates Bank NA (P-1/A-1) 04/25/95 5.850 1,982,125
1,000,000 CoreStates Bank NA (P-1/A-1) 07/26/95 6.400 973,867
2,000,000 CoreStates Bank NA (P-1/A-1) 08/03/95 6.450 1,944,458
1,000,000 First Chicago Corp. (P-1/A-1) 05/18/95 6.200 986,567
1,500,000 First Chicago Corp. (P-1/A-1) 05/19/95 6.200 1,479,592
2,500,000 First Chicago Corp. (P-1/A-1) 05/26/95 6.150 2,463,271
500,000 First Chicago Corp. (P-1/A-1) 06/05/95 6.130 491,827
1,000,000 First Chicago Corp. (P-1/A-1) 06/12/95 6.130 982,461
2,500,000 First Chicago Corp. (P-1/A-1) 06/19/95 6.270 2,452,104
1,000,000 First Chicago Corp. (P-1/A-1) 07/05/95 6.430 977,495
500,000 First Chicago Corp. (P-1/A-1) 07/25/95 6.310 487,205
2,000,000 First Fidelity Bank (P-1/A-1) 05/22/95 6.050 1,972,439
------------
Total Domestic Bankers' Acceptances (Cost $31,170,598) 31,170,598
------------
</TABLE>
See Accompanying Notes to Financial Statements.
4
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
------------ -------------------------------------- -------------- --------- ----- ------------
<S> <C> <C> <C> <C> <C>
BANKERS' ACCEPTANCES (CONT'D)
Yankee Bankers' Acceptances (22.0%)
$1,000,000 Bank of Tokyo (P-1/A-1) 03/14/95 5.900% $ 997,869
5,000,000 Bank of Tokyo (P-1/A-1) 03/20/95 6.000 4,984,167
3,000,000 Bank of Tokyo (P-1/A-1) 03/28/95 6.020 2,986,455
3,000,000 Bank of Tokyo (P-1/A-1) 04/21/95 6.130 2,973,948
2,000,000 Bank of Tokyo (P-1/A-1) 05/03/95 6.070 1,978,755
1,900,000 Dai-Ichi Kangyo Bank (P-1/A-1) 03/01/95 6.030 1,900,000
1,000,000 Dai-Ichi Kangyo Bank (P-1/A-1) 03/08/95 6.010 998,831
1,300,000 Dai-Ichi Kangyo Bank (P-1/A-1) 03/09/95 6.030 1,298,258
3,000,000 Dai-Ichi Kangyo Bank (P-1/A-1) 03/17/95 6.050 2,991,933
1,400,000 Dai-Ichi Kangyo Bank (P-1/A-1) 03/24/95 6.040 1,394,598
1,700,000 Dai-Ichi Kangyo Bank (P-1/A-1) 04/21/95 6.000 1,685,550
5,000,000 Dai-Ichi Kangyo Bank (P-1/A-1) 04/24/95 6.000 4,955,000
4,900,000 Fuji Bank (P-1/A-1) 03/31/95 6.070 4,875,214
3,000,000 Industrial Bank of Japan (P-1/A-1) 03/15/95 6.080 2,992,907
1,750,000 Mitsubishi Bank (P-1/A-1+) 03/20/95 6.000 1,744,458
1,950,000 Mitsubishi Bank (P-1/A-1+) 03/22/95 6.000 1,943,175
5,000,000 Mitsubishi Bank (P-1/A-1+) 03/23/95 6.050 4,981,514
2,350,000 Mitsubishi Bank (P-1/A-1+) 03/27/95 6.280 2,339,341
2,000,000 Mitsubishi Bank (P-1/A-1+) 03/29/95 6.000 1,990,667
2,250,000 Mitsubishi Bank (P-1/A-1+) 03/30/95 6.230 2,238,708
1,300,000 Mitsubishi Bank (P-1/A-1+) 05/08/95 6.160 1,284,874
950,000 Mitsubishi Bank (P-1/A-1+) 05/15/95 6.300 937,531
1,250,000 Mitsubishi Bank (P-1/A-1+) 05/26/95 6.160 1,231,606
1,500,000 Sanwa Bank (P-1/A-1+) 03/09/95 6.050 1,497,983
5,800,000 Sanwa Bank (P-1/A-1+) 03/27/95 6.030 5,774,741
3,350,000 Sanwa Bank (P-1/A-1+) 03/27/95 6.040 3,335,387
2,450,000 Sanwa Bank (P-1/A-1+) 04/03/95 6.020 2,436,480
1,250,000 Sanwa Bank (P-1/A-1+) 04/06/95 6.000 1,242,500
5,000,000 Sanwa Bank (P-1/A-1+) 05/15/95 6.100 4,936,458
761,000 Societe Generale (P-1/A-1+) 03/31/95 6.200 757,068
1,672,000 Societe Generale (P-1/A-1+) 04/20/95 6.170 1,657,672
1,799,000 Societe Generale (P-1/A-1+) 05/25/95 6.130 1,772,962
3,100,000 Societe Generale (P-1/A-1+) 05/30/95 6.490 3,049,703
1,000,000 Societe Generale (P-1/A-1+) 06/02/95 6.480 983,260
2,390,000 Societe Generale (P-1/A-1+) 06/27/95 6.120 2,342,057
1,300,000 Societe Generale (P-1/A-1+) 07/24/95 6.200 1,267,536
2,000,000 Sumitomo Bank (P-1/A-1) 05/10/95 6.030 1,976,550
------------
Total Yankee Bankers' Acceptances (Cost $88,735,716) 88,735,716
------------
TOTAL BANKERS' ACCEPTANCES (Cost $119,906,314) 119,906,314
------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
------------ -------------------------------------- -------------- --------- ----- ------------
<S> <C> <C> <C> <C> <C>
BANK NOTES (8.1%)
$5,000,000 Banc One, Columbus N.A. + (P-1/A-1+) 03/07/95 6.010% $ 5,000,000
3,000,000 Bank of New York (Delaware) + (P-1/A-1) 03/01/95 6.140 2,999,561
4,625,000 Boatmen's National Bank St. Louis + (P-1/A-1+) 03/01/95 6.180 4,624,696
10,000,000 Comerica Bank (Detroit) + (P-1/A-1) 03/07/95 6.010 9,993,812
10,000,000 Huntington National Bank of Ohio + (P-1/A-1) 03/01/95 6.150 9,996,865
------------
TOTAL BANK NOTES (Cost $32,614,934) 32,614,934
------------
CERTIFICATES OF DEPOSIT (7.4%)
Yankee Certificates of Deposit (7.4%)
5,000,000 Bank of Nova Scotia (P-1/A-1+) 04/20/95 5.650 5,000,000
5,000,000 Canadian Imperial Bank of Commerce (P-1/A-1+) 03/03/95 6.030 5,000,000
5,000,000 Canadian Imperial Bank of Commerce (P-1/A-1+) 09/12/95 7.000 5,000,000
5,000,000 Commerzbank (P-1/A-1+) 02/09/96 7.120 5,000,447
5,000,000 Industrial Bank of Japan (P-1/A-1+) 04/28/95 6.250 5,000,000
5,000,000 Rabobank Nederland (P-1/A-1+) 04/18/95 5.670 5,000,047
------------
TOTAL CERTIFICATES OF DEPOSIT (Cost $30,000,494) 30,000,494
------------
COMMERCIAL PAPER (19.2%)
5,000,000 Abbey National North America Corp. (P-1/A-1+) 03/06/95 5.070 4,996,479
3,000,000 Abbey National North America Corp. (P-1/A-1+) 05/09/95 5.840 2,966,420
5,000,000 BankAmerica Corp. (P-1/A-1) 07/10/95 6.600 4,879,917
5,000,000 BankAmerica Corp. (P-1/A-1) 07/11/95 6.480 4,881,200
5,000,000 Dresdner U.S. Finance Inc. (P-1/A-1+) 03/21/95 5.250 4,985,417
1,500,000 National City Corp. (P-1/NR) 03/23/95 6.050 1,494,454
2,000,000 National City Corp. (P-1/NR) 03/30/95 6.140 1,990,108
1,000,000 National City Corp. (P-1/NR) 04/11/95 5.600 993,622
2,000,000 National City Corp. (P-1/NR) 05/18/95 6.250 1,972,917
</TABLE>
See Accompanying Notes to Financial Statements.
6
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS=
PAR SECURITY DESCRIPTION (MOODY'S/S&P) MATURITY RATE VALUE
------------ -------------------------------------- -------------- --------- ----- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER (CONT'D)
$1,000,000 National City Corp. (P-1/NR) 05/19/95 6.250% $ 986,285
2,000,000 National City Corp. (P-1/NR) 06/27/95 6.650 1,956,406
3,000,000 National City Corp. (P-1/NR) 06/28/95 6.640 2,934,153
2,000,000 National City Corp. (P-1/NR) 08/07/95 6.250 1,944,792
2,000,000 National City Corp. (P-1/NR) 10/23/95 6.550 1,914,122
5,000,000 NationsBank Corp. (P-1/A-1) 04/10/95 6.260 4,965,222
5,000,000 NationsBank Corp. (P-1/A-1) 04/17/95 5.550 4,963,771
5,000,000 NationsBank Corp. (P-1/A-1) 05/08/95 6.170 4,941,728
3,000,000 Republic National Bank NY (P-1/A-1+) 03/21/95 5.360 2,991,067
2,000,000 Republic National Bank NY (P-1/A-1+) 03/24/95 6.000 1,992,333
900,000 Republic National Bank NY (P-1/A-1+) 05/30/95 6.100 886,275
5,000,000 Republic National Bank NY (P-1/A-1+) 06/02/95 6.520 4,915,783
5,000,000 Republic National Bank NY (P-1/A-1+) 06/05/95 6.480 4,913,600
3,000,000 Toronto Dominion Holdings Corp. (P-1/A-1+) 05/02/95 5.730 2,970,395
5,000,000 Toronto Dominion Holdings Corp. (P-1/A-1+) 06/30/95 6.650 4,888,243
------------
TOTAL COMMERCIAL PAPER (Cost $77,324,709) 77,324,709
------------
TIME DEPOSITS (7.2%)
10,000,000 Fuji Bank (P-1/A-1) 03/27/95 6.031 10,000,000
5,000,000 Harris Trust & Savings Bank (P-1/A-1) 03/13/95 6.000 5,000,000
1,800,000 Sumitomo Bank (P-1/A-1) 03/06/95 6.000 1,800,000
7,000,000 Sumitomo Bank (P-1/A-1) 03/20/95 6.031 7,000,000
5,000,000 Sumitomo Bank (P-1/A-1) 03/30/95 6.030 5,000,000
------------
TOTAL TIME DEPOSITS (Cost $28,800,000) 28,800,000
------------
REPURCHASE AGREEMENTS (5.2%)
Repurchase agreement with J. P. Morgan Securities dated 02/28/95 at 6.20% to
be repurchased at $10,001,722 on 03/01/95. (Collateralized by $10,188,000
10,000,000 U.S. Treasury Note 6.875%, due 02/28/97, with a market value of
$10,200,375.) 10,000,000
Repurchase agreement with J. P. Morgan Securities dated 02/28/95 at 6.20% to
be repurchased at $10,883,874 on 03/01/95. (Collateralized by $9,876,000
10,882,000 U.S. Treasury Note 8.875%, due 08/15/17, with a market value of
$11,209,260.) 10,882,000
------------
TOTAL REPURCHASE AGREEMENTS (Cost $20,882,000) 20,882,000
------------
</TABLE>
See Accompanying Notes to Financial Statements.
7
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
STATEMENT OF NET ASSETS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
------------
<S> <C>
TOTAL INVESTMENTS AT VALUE (102.1%) (Cost $411,533,992*) $411,533,992
LIABILITIES IN EXCESS OF OTHER ASSETS (2.1%) (8,323,210)
------------
NET ASSETS (100.0%) (applicable to 403,205,588 shares) $403,210,782
------------
------------
NET ASSETS VALUE, offering and redemption price per share ($403,210,782[div]403,205,588)
$1.00
-----
-----
</TABLE>
= Credit ratings given by Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group are unaudited.
+ The interest rate shown is the rate as of February 28, 1995 and the maturity
date shown is the next interest readjustment date.
* Also cost for Federal income tax purposes.
See Accompanying Notes to Financial Statements.
8
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
MATURITY SCHEDULE OF PORTFOLIO
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY SCHEDULE
(DAYS) PAR AMOUNT PERCENTAGE OF PORTFOLIO
- ------------------ ------------ -----------------------------
(CUMULATIVE)
<S> <C> <C> <C>
1-7 $136,207,000 32.9% 32.9%
8-14 10,800,000 2.6 35.5
15-30 93,350,000 22.6 58.1
31-60 51,784,000 12.5 70.6
61-90 42,799,000 10.3 80.9
91-120 36,390,000 8.8 89.7
121-150 21,350,000 5.2 94.9
Over 150 21,000,000 5.1 100.0
</TABLE>
Average Weighted Maturity -- 47 Days
See Accompanying Notes to Financial Statements.
9
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Cash Reserve New York Tax
Fund Exempt Fund
-------------- --------------
<S> <C> <C>
INTEREST INCOME $ 15,767,758 $2,667,309
-------------- --------------
EXPENSES:
Investment advisory 795,255 221,553
Sub-investment advisory and administration 795,255 221,553
Administrative services 316,605 88,871
Audit 27,030 25,000
Custodian 79,904 21,869
Directors' 20,000 20,000
Distribution 0 41,225
Insurance 22,196 6,310
Legal 26,469 22,386
Printing 25,251 25,134
Registration 83,158 14,513
Transfer agent 120,268 38,284
Miscellaneous 36,161 25,281
-------------- --------------
2,347,552 771,979
Less: fees waived (597,991) (243,337)
-------------- --------------
Total expenses 1,749,561 528,642
-------------- --------------
Net investment income 14,018,197 2,138,667
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
Net realized gain (loss) from security transactions 9,641 (189)
Net decrease in unrealized market discount 0 (6)
-------------- --------------
Net realized and unrealized gain (loss) from investments 9,641 (195)
-------------- --------------
Net increase in net assets from operations $ 14,027,838 $2,138,472
-------------- --------------
-------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warburg Pincus Warburg Pincus
Cash Reserve New York Tax
Fund Exempt Fund
---------------------------------- ------------------------------
For the Year Ended February 28, For the Year Ended February 28,
1995 1994 1995 1994*
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 14,018,197 $ 8,008,712 $ 2,138,667 $ 1,325,773
Net realized gain (loss) from
security transactions 9,641 15,446 (189) 165
Net decrease in unrealized market
discount 0 0 (6) (25)
--------------- --------------- ------------- -------------
Net increase in net
assets resulting from
operations 14,027,838 8,024,158 2,138,472 1,325,913
--------------- --------------- ------------- -------------
FROM DISTRIBUTIONS:
Dividends from net investment
income:
Common shares (14,018,197) (8,008,712) (1,892,371) (1,180,991)
Series 2 shares 0 0 (246,296) (144,782)
--------------- --------------- ------------- -------------
Net decrease from
distributions (14,018,197) (8,008,712) (2,138,667) (1,325,773)
--------------- --------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(AT $1 PER SHARE):
Proceeds from sale of shares 1,886,500,990 1,649,948,337 246,396,767 339,019,743
Reinvested dividends 8,456,201 4,917,132 1,066,251 523,769
Net asset value of shares redeemed (1,769,313,517) (1,665,046,571) (237,850,988) (348,596,659)
--------------- --------------- ------------- -------------
Net increase (decrease)
in net assets from
capital share
transactions 125,643,674 (10,181,102) 9,612,030 (9,053,147)
--------------- --------------- ------------- -------------
Net increase (decrease)
in net assets 125,653,315 (10,165,656) 9,611,835 (9,053,007)
NET ASSETS:
Beginning of year 277,557,467 287,723,123 78,107,529 87,160,536
--------------- --------------- ------------- -------------
End of year $ 403,210,782 $ 277,557,467 $ 87,719,364 $ 78,107,529
--------------- --------------- ------------- -------------
--------------- --------------- ------------- -------------
</TABLE>
* Reclassification made for comparative purposes.
See Accompanying Notes to Financial Statements.
18
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS CASH RESERVE FUND
FINANCIAL HIGHLIGHTS
(For a Share of the Fund Outstanding Throughout Each Year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended February 28 or 29,
--------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income .0426 .0273 .0322 .0542 .0760
Net Realized Gain on Securities 0 0 0 .0010 0
-------- -------- -------- -------- --------
Total from Investment Operations .0426 .0273 .0322 .0552 .0760
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income (.0426) (.0273) (.0322) (.0542) (.0760)
Distributions from capital gains 0 0 0 (.0010) 0
-------- -------- -------- -------- --------
Total Distributions (.0426) (.0273) (.0322) (.0552) (.0760)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return 4.35% 2.76% 3.27% 5.66% 7.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (000s) $403,211 $277,557 $287,723 $426,479 $361,428
Ratios to average daily net assets:
Operating expenses .55% .54% .50% .50% .50%
Net investment income 4.41% 2.73% 3.22% 5.45% 7.59%
Decrease reflected in above operating expense
ratios due to waivers/reimbursements .19% .13% .17% .16% .13%
</TABLE>
See Accompanying Notes to Financial Statements.
TAX STATUS OF 1995 DIVIDENDS (Unaudited)
Dividends paid by the Fund are taxable as ordinary income.
19
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS
February 28, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Warburg Pincus Money Market Funds are comprised of the Warburg Pincus
Cash Reserve Fund (the 'Cash Reserve Fund') and the Warburg Pincus New York Tax
Exempt Fund (the 'New York Tax Exempt Fund') which are registered under the
Investment Company Act of 1940, as amended (the '1940 Act'), as diversified and
non-diversified, open-end management investment companies, respectively.
Investment objectives for each Fund are as follows: the Cash Reserve Fund
is designed to provide investors with high current income consistent with
liquidity and stability of principal; the New York Tax Exempt Fund is designed
to provide investors with as high a level of current income that is exempt from
Federal, New York State, and New York City personal income taxes as is
consistent with preservation of capital and liquidity.
Issuers of New York tax-exempt securities (including issuers whose
obligations may be acquired by the New York Tax Exempt Fund) have experienced
serious financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowing abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowings and fewer markets for their outstanding debt obligations. During the
recent past, several different issuers of Municipal Securities of New York State
and its agencies and instrumentalities and of New York City have been downgraded
by Standard & Poor's Ratings Group and Moody's Investors Service, Inc. A
recurrence of the financial difficulties experienced by certain issuers of New
York tax-exempt securities could result in defaults or declines in the market
values of their existing obligations and, possibly, in the obligations of other
issuers of New York tax-exempt securities.
The net asset value of each Fund is determined as of noon and the close of
regular trading on the New York Stock Exchange on each day, except on days when
the Exchange is closed. Each Fund's investments are valued under the amortized
cost method which approximates current market value. Under this method,
investments are valued at cost when purchased and thereafter a constant
proportionate amortization of any discount or premium is recorded until maturity
of the investment.
Security transactions are accounted for on trade date. Interest income is
recorded on the accrual basis. The cost of investments sold is determined by use
of the specific identification method for both financial reporting and income
tax purposes.
Dividends from net investment income are declared daily and paid monthly.
Distributions of net capital gains, if any, are declared and paid annually,
although the Cash Reserve Fund may declare and pay short-term capital gains, if
any, periodically as the Board of Directors determines. To the extent that a net
realized capital gain can be reduced by a capital loss carryover, such gain will
not be distributed.
Each Fund intends to continue to comply with the special provisions of the
Internal Revenue Code available to investment companies and therefore no Federal
income tax provision is required.
Each Fund may enter into repurchase agreement transactions. Under the terms
of a typical repurchase agreement, each Fund acquires an underlying security
subject to an obligation of the seller to repurchase the security. The value of
the underlying security will be maintained at an amount at least equal to the
total amount of the repurchase obligation, including interest. The collateral is
in the Fund's possession.
21
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISER AND SUB-ADVISER, CO-ADMINISTRATORS AND DISTRIBUTOR
Warburg, Pincus Counsellors, Inc. ('Counsellors'), a wholly-owned
subsidiary of Warburg, Pincus Counsellors G.P. ('Counsellors G.P.'), serves as
each Fund's investment adviser. For its investment advisory services,
Counsellors currently receives a fee calculated at an annual rate of .25% of
each Fund's average daily net assets. For the year ended February 28, 1995,
investment advisory fees and waivers were as follows:
<TABLE>
<CAPTION>
GROSS NET
FUND ADVISORY FEE WAIVER ADVISORY FEE
- -------------------------------------------- --------------------- --------- ---------------------
<S> <C> <C> <C>
Cash Reserve $ 795,255 $ (73,215) $ 722,040
New York Tax Exempt 221,553 (55,231) 166,322
</TABLE>
PNC Institutional Management Corporation ('PIMC'), a wholly-owned
subsidiary of PNC Bank, N.A., serves as each Fund's sub-investment adviser and
administrator. For its sub-investment advisory and administrative services, PIMC
currently receives a fee calculated at an annual rate of .25% of each Fund's
average daily net assets. For the year ended February 28, 1995, sub-investment
advisory and administration fees and waivers were as follows:
<TABLE>
<CAPTION>
GROSS SUB-ADVISORY NET SUB-ADVISORY
AND AND
FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
- -------------------------------------------------- ------------------ --------- ------------------
<S> <C> <C> <C>
Cash Reserve $795,255 $(365,725) $429,530
New York Tax Exempt 221,553 (143,795) 77,758
</TABLE>
Counsellors Funds Service, Inc. ('CFSI'), a wholly-owned subsidiary of
Counsellors, serves as each Fund's co-administrator. For its administrative
services, CFSI currently receives a fee calculated at an annual rate of .10% of
each Fund's average daily net assets. For the year ended February 28, 1995,
administrative services fees earned and waived by CFSI were as follows:
<TABLE>
<CAPTION>
GROSS NET
FUND ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
- -------------------------------------------------- ------------------ --------- ------------------
<S> <C> <C> <C>
Cash Reserve $316,605 $(159,051) $157,554
New York Tax Exempt 88,871 (44,311) 44,560
</TABLE>
Counsellors Securities Inc. ('CSI'), also a wholly-owned subsidiary of
Counsellors, serves as each Fund's distributor. No compensation is payable by
the Funds to CSI for distribution services.
3. CAPITAL SHARE TRANSACTIONS
Each Fund is authorized to issue three billion full and fractional shares
of capital stock, $.001 par value per share, of which one billion shares of New
York Tax Exempt Fund are designated as Series 2 Shares. Series 2 Shares are
identical to Common Shares in all respects except that Series 2 Shares are
22
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
sold to institutions ('Service Organizations') that perform certain
distribution, shareholder servicing, accounting and/or administrative services
for their customers who are beneficial owners of Series 2 Shares. Series 2
Shares bear the fees paid pursuant to a distribution plan adopted by each Fund
in an amount not to exceed .75 of 1.00% (on an annualized basis) of the average
daily net asset value of the shares held by the institutions for the benefit of
their customers and enjoy certain exclusive voting rights on matters relating to
those fees.
With respect to Series 2 Shares, Service Organizations earned the following
distribution fees for the year ended February 28, 1995:
<TABLE>
<CAPTION>
FUND DISTRIBUTION FEE
- ------------------------------------------------------------------- ----------------
<S> <C>
New York Tax Exempt $ 41,225
</TABLE>
Transactions in shares of each Fund were as follows:
<TABLE>
<CAPTION>
NEW YORK TAX NEW YORK TAX
CASH RESERVE FUND EXEMPT FUND EXEMPT FUND
-------------------------------- ---------------------------- --------------------------
Common Shares Common Shares Series 2 Shares
For the Year Ended For the Year Ended For the Year Ended
February 28, February 28, February 28,
1995 1994 1995 1994 1995 1994
-------------- -------------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,886,500,990 1,649,948,337 204,764,009 287,518,833 41,632,750 51,500,910
Shares issued to shareholders on
reinvestment of dividends 8,456,201 4,917,132 822,241 379,886 244,010 143,883
Shares redeemed (1,769,313,517) (1,665,046,571) (194,459,365) (298,909,931) (43,391,623) (49,686,728)
-------------- -------------- ------------ ------------ ----------- -----------
Net increase (decrease) in shares 125,643,674 (10,181,102) 11,126,885 (11,011,212) (1,514,863) 1,958,065
-------------- -------------- ------------ ------------ ----------- -----------
-------------- -------------- ------------ ------------ ----------- -----------
</TABLE>
4. NET ASSETS
Net Assets at February 28, 1995, consisted of the following:
<TABLE>
<CAPTION>
CASH RESERVE FUND NEW YORK TAX EXEMPT FUND
----------------- -----------------------------------------------
Common Shares Common Shares Series 2 Shares Total
----------------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
Capital contributed, net $ 403,210,711 $77,124,029 $10,609,106 $87,733,135
Accumulated net realized gain (loss)
from security transactions 71 (13,278) (493) (13,771)
----------------- ------------- --------------- -----------
Net assets $ 403,210,782 $77,110,751 $10,608,613 $87,719,364
----------------- ------------- --------------- -----------
----------------- ------------- --------------- -----------
</TABLE>
23
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WARBURG PINCUS MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 28, 1995
- --------------------------------------------------------------------------------
5. CAPITAL LOSS CARRYOVER
At February 28, 1995, the New York Tax Exempt Fund has a capital loss
carryover of $13,771 to offset possible future capital gains of the Fund. These
carryovers expire as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ----- ------
<S> <C>
1997 $5,467
1998 4,026
2000 4,089
2002 189
</TABLE>
24
- --------------------------------------------------------------------------------
<PAGE>C-1
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:
(a) Report of Coopers & Lybrand L.L.P., Independent Auditors.
(b) Statement of Net Assets as of February 28, 1995.
(c) Maturity Schedule of Portfolio as of February 28, 1995.
(d) Statement of Operations for the year ended February 28,
1995.
(e) Statement of Changes in Net Assets for the years ended
February 28, 1995 and February 28, 1994.
(f) Notes to Financial Statements.
(b) Exhibits:
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(a) Articles of Incorporation.
1(b) Articles Supplementary.
2 Amended and Restated By-Laws.
3 Not applicable.
4(a) Form of certificate for common stock.
4(b) Form of certificate for common stock -- Series 1 and Series 2.
5(a) Form of Investment Advisory Agreement.
5(b) Form of Sub-Investment Advisory and Administration Agreement.
5(c) Form of Co-Administration Agreement.
6 Form of Distribution Agreement.
7 Not applicable.
8 Form of Custodian Agreement.
9 Form of Transfer Agency Agreement.
<PAGE>C-2
Exhibit No. Description of Exhibit
- ----------- ----------------------
10(a) Opinion of Willkie Farr & Gallagher.*
10(b) Consent of Willkie Farr & Gallagher.
11 Consent of Coopers & Lybrand L.L.P.
12 Not applicable.
13 Form of Purchase Agreement.
14 Form of Retirement Plans.**
15(a) Form of Shareholder Services Plan.
15(b) Form of Distribution Plan.
16 Computation of Performance Quotations.
17 Financial Data Schedule.
- --------------------------
* Incorporated by reference to Registrant's Rule 24f-2 Notice filed on
April 28, 1995.
** Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A for Warburg, Pincus Capital
Appreciation Fund filed on May 16, 1988 (Securities Act File No. 33-
12344).
Item 25. Persons Controlled by or Under Common Control
with Registrant
Warburg, Pincus Counsellors, Inc. ("Counsellors"), Registrant's
investment adviser, may be deemed a controlling person of Registrant because
it possesses or shares investment or voting power with respect to more than
25% of the outstanding securities of Registrant. E.M. Warburg, Pincus & Co.,
Inc. controls Counsellors through its ownership of a class of voting preferred
stock of Counsellors. John L. Furth, director of the Fund, and Lionel
I. Pincus may be deemed to be controlling persons of the Fund because they may
be deemed to possess or share investment power over shares owned by clients of
Counsellors and certain other entities.
<PAGE>C-3
Item 26. Number of Holders of Securities
As of May 31, 1995:
Number of Record
Title of Class Holders
-------------- ----------------
Common Stock 3,439
Item 27. Indemnification
Registrant, officers and directors or trustees 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. Discussion of this coverage is
incorporated by reference to Item 27 of Part C of the Registration Statement
of Warburg, Pincus Trust (Securities Act File No. 33-58125), filed on March
17, 1995.
Item 28. (a) Business and Other Connections of Investment
Adviser
Counsellors, the investment counselling subsidiary of Warburg, Pincus
Counsellors G.P., acts as investment adviser to Registrant. Counsellors
renders investment advice to a wide variety of individual and institutional
clients. The list required by this Item 28 of officers and directors of
Counsellors, 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
Counsellors (SEC File No. 801-28-496).
(b) Business and Other Connections of Sub-Investment
Adviser and Administrator
PNC Institutional Management Corporation ("PIMC"), a wholly owned
subsidiary of PNC Bank, National Association ("PNC"), performs sub-investment
advisory services for Registrant and advisory services for certain other
investment companies. PNC and its predecessors have been in the business of
managing the investments of fiduciary and other accounts in the Philadelphia
area since 1847. In addition to its trust business, PNC provides commercial
banking services. The list required by this Item 28 of officers and directors
of PIMC, 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 PIMC (SEC
File No. 801-13-304).
<PAGE>C-4
Item 29. Principal Underwriter
(a) Counsellors Securities acts as distributor for Registrant.
Counsellors Securities currently acts as distributor for Warburg, Pincus
Balanced Fund; Warburg, Pincus Capital Appreciation Fund; Warburg, Pincus
Emerging Growth Fund; Warburg, Pincus Emerging Markets Fund; Warburg, Pincus
Fixed Income Fund; Warburg, Pincus Global Fixed Income Fund; Warburg, Pincus
Growth & Income Fund; Warburg, Pincus Institutional Fund, Inc.; Warburg,
Pincus Intermediate Maturity Government Fund; Warburg, Pincus International
Equity Fund; Warburg, Pincus Japan OTC Fund; Warburg, Pincus New York
Intermediate Municipal Fund; Warburg, Pincus New York Tax Exempt Fund;
Warburg, Pincus Short-Term Tax-Advantaged Bond Fund and Warburg, Pincus Tax-
Free Fund.
(b) For information relating to each director, officer or partner of
Counsellors Securities, reference is made to Form BD (SEC File No. 15-654)
filed by Counsellors Securities under the Securities Exchange Act of 1934.
(c) None.
Item 30. Location of Accounts and Records
(1) Warburg, Pincus Cash Reserve Fund
466 Lexington Avenue
New York, New York 10017-3147
(Fund's articles of incorporation, by-laws and minute books)
(2) PNC Institutional Management Corporation
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as sub-investment adviser and
administrator)
(3) Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as co-
administrator)
(4) PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(records relating to its functions as transfer and dividend
disbursing agent)
(5) PNC Bank, National Association
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19103
(records relating to its functions as custodian)
<PAGE>C-5
(6) Counsellors Securities Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as distributor)
(7) Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017-3147
(records relating to its functions as investment adviser)
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>C-6
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 and has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and the State of New York, on the 28th day of June, 1995.
COUNSELLORS CASH RESERVE FUND, INC.
By:/s/Dale C. Christensen
Dale C. Christensen
President
Pursuant to the requirements of the Securities Act of 1933 this
Amendment has been signed by the following persons in the capacities and on
the date indicated:
Signature Title Date
- --------- ----- ----
/s/Dale C. Christensen President June 28, 1995
Dale C. Christensen
/s/Stephen Distler Vice President and June 28, 1995
Stephen Distler Chief Financial
Officer
/s/Howard Conroy Vice President, June 28, 1995
Howard Conroy Treasurer and Chief
Accounting Officer
/s/Richard N. Cooper Director June 28, 1995
Richard N. Cooper
/s/Donald J. Donahue Director June 28, 1995
Donald J. Donahue
/s/John L. Furth Director June 28, 1995
John L. Furth
/s/Jack W. Fritz Director June 28, 1995
Jack W. Fritz
/s/Thomas A. Melfe Director June 28, 1995
Thomas A. Melfe
/s/Alexander B. Trowbridge Director June 28, 1995
Alexander B. Trowbridge
<PAGE>1
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
1(a) Articles of Incorporation.
1(b) Articles Supplementary.
2 Amended and Restated By-Laws.
3 Not applicable.
4(a) Form of certificate for
common stock.
4(b) Form of certificate for common
stock -- Series 1 and Series 2.
5(a) Form of Investment Advisory Agreement.
5(b) Form of Sub-Investment Advisory and
Administration Agreement.
5(c) Form of Co-Administration Agreement.
6 Form of Distribution Agreement.
7 Not applicable.
8 Form of Custodian Agreement.
9 Form of Transfer Agency Agreement.
10(a) Opinion of Willkie Farr & Gallagher.*
10(b) Consent of Willkie Farr &
Gallagher.
11 Consent of Coopers & Lybrand
L.L.P.
12 Not applicable.
13 Form of Purchase Agreement.
- --------------------------
* Incorporated by reference to Registrant's Rule 24f-2 Notice filed on April
28, 1995.
<PAGE>2
Exhibit
No. Description
- ------- -----------
14 Form of Retirement Plans.**
15(a) Form of Shareholder Services Plan.
15(b) Form of Distribution Plan.
16 Computation of Performance
Quotations.
17 Financial Data Schedule.
- --------------------------
** Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A for Warburg, Pincus Capital
Appreciation Fund filed on May 16, 1988 (Securities Act File No. 33-
12344).
<PAGE>1
ARTICLES OF INCORPORATION
OF
COUNSELLORS CASH RESERVE FUND, INC.
ARTICLE I
THE UNDERSIGNED, Victoria D. Salhus, whose post office address is c/o
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022, being at least eighteen years of age, does hereby act as an
incorporator, under and by virtue of the Maryland General Corporation Law
authorizing the formation of corporations.
ARTICLE II
NAME
The name of the Corporation is COUNSELLORS CASH RESERVE FUND, INC.
ARTICLE III
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts and on
such terms and conditions and for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner, hold, dispose
of, resell, transfer, reissue or cancel (all without the vote or consent of
the stockholders of the Corporation) shares of its capital stock, in any
manner and to the extent now or hereafter permitted by law and by these
Articles of Incorporation.
(5) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
<PAGE>2
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by
the Maryland General Corporation Law now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Company Incorporated, 32 South
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in the State of Maryland is The Corporation Trust Company
Incorporated, a Maryland Corporation. The post office address of the resident
agent is 32 South Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock that the Corporation
shall have authority to issue is three billion (3,000,000,000) shares, of the
par value of one tenth of one cent ($.001) per share and of the aggregate par
value of three million dollars ($3,000,000) all of which three billion
(3,000,000,000) shares are designated Common Stock.
(2) Any fractional share shall carry proportionately the rights of a
whole share including, without limitation, the right to vote and the right to
receive dividends. A fractional share shall not, however, have the right to
receive a certificate evidencing it.
(3) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of these Articles of Incorporation and the
By-Laws of the Corporation.
(4) No holder of stock of the Corporation by virtue of being such a
holder shall have any right to purchase or subscribe for any shares of the
Corporation's capital stock or any other security that the Corporation may
issue or sell (whether out of the number of shares authorized by these
Articles of Incorporation or out of any shares of the Corporation's capital
stock that the Corporation may acquire) other than a right that the Board of
Directors in its discretion may determine to grant.
<PAGE>3
(5) The Board of Directors shall have authority by resolution to
classify and reclassify any authorized but unissued shares of capital stock
from time to time by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption of the capital stock. Subject to the provisions of Sections 6, 7
and 8 of this Article V and applicable law, the power of the Board of
Directors to classify or reclassify any of the shares of capital stock shall
include, without limitation, authority to classify or reclassify the stock
into a class or not more than ten (10) classes of capital stock and to divide
and classify shares of any class into one or more series of the class, by
determining, fixing or altering one or more of the following:
(i) The distinctive designation of a class or series; provided
that, unless otherwise prohibited by the terms of the class or series, the
number of shares of any class or series may be decreased by the Board of
Directors in connection with any classification or reclassification of
unissued shares and the number of shares of the class or series may be
increased by the Board of Directors in connection with the classification or
reclassification, and any shares of any class or series that have been
redeemed, purchased or acquired in any other manner by the Corporation shall
remain part of the authorized capital stock and be subject to classification
and reclassification as provided herein.
(ii) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on shares of
the class or series.
(iii) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and, if so,
the terms of such voting rights.
(iv) The rights of the holders of shares of the class or series
upon the liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation.
(v) Any other rights, restrictions, including
restrictions on transferability, and qualifications of shares of the class or
series, not inconsistent with law and these Articles of Incorporation.
(6) All consideration received by the Corporation for the issue or sale
of stock of any class, together with all income, earnings, profits and
proceeds thereof, including any proceeds
<PAGE>4
derived from the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of the proceeds in whatever form the
same may be, shall irrevocably belong to the class of shares of stock with
respect to which the assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the Corporation. Such
assets, income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any assets derived
from any reinvestment of the proceeds in whatever form, are herein referred to
as "assets belonging to" such class.
(7) In the event of the liquidation or dissolution of the Corporation,
shareholders of each class shall be entitled to receive, as a class, out of
the assets of the Corporation available for distribution to shareholders, but
other than general assets not belonging to any particular class of stock, the
assets belonging to the class; and the assets so distributable to the
stockholders of any class shall be distributed among the stockholders in
proportion to the number of shares of the class held by them and recorded on
the books of the Corporation. In the event that there are any general assets
not belonging to any particular class of stock and available for distribution,
the distribution shall be made to the holders of stock of all classes in
proportion to the asset value of the respective classes determined as
hereinafter provided.
(8) The assets belonging to any class of stock shall be charged with the
liabilities of the class, and shall also be charged with the class's share of
the general liabilities of the Corporation, in proportion to the total net
asset value of the respective classes before taking into account general
liabilities, determined as hereinafter provided. The determination of the
Board of Directors shall be conclusive (i) as to the amount of such
liabilities, including the amount of accrued expenses and reserves; (ii) as to
any allocation of the same to a given class; and (iii) whether the same, or
general assets of the Corporation, are allocable to one or more classes. The
liabilities so allocated to a class are herein referred to as "liabilities
belonging to" the class.
(9) Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a designated
proportion of the votes of all classes or of any class of stock of the
Corporation, such action shall be effective and valid if taken or authorized
by the affirmative vote of a majority of the total number of votes entitled to
be
<PAGE>5
cast thereon, except as otherwise provided in these Articles of Incorporation.
ARTICLE VI
REDEMPTION
Each holder of shares of the Corporation's capital stock shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of the holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the
redemption price of the shares as in effect from time to time as may be
determined by the Board of Directors of the Corporation in accordance with the
provisions of this Article VI, subject to the right of the Board of Directors
of the Corporation to suspend the right of redemption or postpone the date of
payment of the redemption price in accordance with provisions of applicable
law. Without limiting the generality of the foregoing, the Corporation shall,
to the extent permitted by applicable law, have the right at any time to
redeem the shares owned by any holder of capital stock of the Corporation (i)
if the redemption is, in the opinion of the Board of Directors of the
Corporation, desirable in order to prevent the Corporation from being deemed a
"personal holding company" within the meaning of the Internal Revenue Code of
1954, as amended, or (ii) if the value of the shares in the account maintained
by the Corporation or its transfer agent for any class of stock is less than
$1,000 (one thousand dollars); provided, however, that a shareholder shall be
notified that the value of his account is less than $1,000 (one thousand
dollars) and shall be allowed 60 (sixty) days to make additional purchases of
shares before the redemption is processed by the Corporation. The redemption
price of shares of capital stock of the Corporation shall be net asset value
as determined by the Board of Directors of the Corporation from time to time
in accordance with the provisions of applicable law, less a redemption fee or
other charge, if any, as may be fixed by resolution of the Board of Directors
of the Corporation. Payment of the redemption price shall be made in cash by
the Corporation at the time and in the manner as may be determined from time
to time by the Board of Directors of the Corporation unless, in the opinion of
the Board of Directors, which shall be conclusive, conditions exist that make
payment wholly in cash unwise or undesirable; in such event the Corporation
may make payment wholly or partly by securities or other property included in
the assets belonging or allocable to the class of the shares redemption of
which is being sought, the value of which shall be determined as provided
herein. The
<PAGE>6
Board of Directors may establish procedures for redemption of shares.
ARTICLE VII
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of Directors shall be
two, which number may be changed pursuant to the By-Laws of the Corporation.
The name of the directors who shall act until the first annual meeting of
shareholders or until their successors are duly chosen and qualified are:
Charles A. Steinberg
Arnold Reichman
(2) In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Maryland, the Board of Directors is expressly
authorized:
(i) To make, alter or repeal the By-Laws of the Corporation, except
where such power is reserved by the By-Laws to the stockholders, and except as
otherwise required by the Investment Company Act of 1940, as amended.
(ii) From time to time to determine whether and to what extent and
at what times and places and under what conditions and regulations the books
and accounts of the Corporation, or any of them other than the stock ledger,
shall be open to the inspection of the stockholders. No stockholder shall
have any right to inspect any account or book or document of the Corporation,
except as conferred by law or authorized by resolution of the Board of
Directors or by the stockholders.
(iii) Without the assent or vote of the stockholders, to authorize
the issuance from time to time of shares of the stock of any class of the
Corporation, whether now or hereafter authorized, and securities convertible
into shares of stock of the Corporation of any class or classes, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable.
(iv) Without the assent or vote of the stockholders, to authorize
and issue obligations of the Corporation, secured and unsecured, as the Board
of Directors may determine, and to authorize and cause to be executed
mortgages and liens upon the real or personal property of the Corporation.
<PAGE>7
(v) Notwithstanding anything in these Articles of Incorporation to
the contrary, to establish in its absolute discretion the basis or method for
determining the value of the assets belonging to any class, the value of the
liabilities belonging to any class, and the net asset value of each share of
any class of the Corporation's stock for purposes of sales, redemptions,
repurchases of shares or otherwise.
(vi) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or
net assets in excess of capital, and to determine what accounting periods
shall be used by the Corporation for any purpose; to set apart out of any
funds of the Corporation reserves for such purposes as it shall determine and
to abolish the same; to declare and pay any dividends and distributions in
cash, securities or other property from surplus or any funds legally available
therefor, at such intervals as it shall determine; to declare dividends or
distributions by means of a formula or other method of determination, at
meetings held less frequently than the frequency of the effectiveness of such
declarations; to establish payment dates for dividends or any other
distributions on any basis, including dates occurring less frequently than the
effectiveness of declarations thereof; and to provide for the payment of
declared dividends on a date earlier or later than the specified payment date
in the case of stockholders of the Corporation redeeming their entire
ownership of shares of any class of the Corporation.
(vii) In addition to the powers and authorities granted herein and
by statute expressly conferred upon it, the Board of Directors is authorized
to exercise all powers and do all acts that may be exercised or done by the
Corporation pursuant to the provisions of the laws of the State of Maryland,
these Articles of Incorporation and the By-Laws of the Corporation.
(3) Any determination made in good faith, and in accordance with
accepted accounting practices, if applicable, by or pursuant to the direction
of the Board of Directors, with respect to the amount of assets, obligations
or liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, as to the amount of any
reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
the reserves or charges have been created has been paid or discharged or is
then or thereafter required to be paid or discharged), as to the value of
<PAGE>8
any security owned by the Corporation, the determination of the net asset
value of shares of any class of the Corporation's capital stock, or as to any
other matters relating to the issuance, sale, redemption or other acquisition
or disposition of securities or shares of capital stock of the Corporation,
and any reasonable determination made in good faith by the Board of Directors
whether any transaction constitutes a purchase of securities on "margin," a
sale of securities "short," or an underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the
public distribution of, any securities, shall be final and conclusive, and
shall be binding upon the Corporation and all holders of its capital stock,
past, present and future, and shares of the capital stock of the Corporation
are issued and sold on the condition and understanding, evidenced by the
purchase of shares of capital stock or acceptance of share certificates, that
any and all such determinations shall be binding as aforesaid. No provision
of these Articles of Incorporation of the Corporation shall be effective to
(i) require a waiver of compliance with any provision of the Securities Act of
1933, as amended, or the Investment Company Act of 1940, as amended, or of any
valid rule, regulation or order of the Securities and Exchange Commission
under those Acts or (ii) protect or purport to protect any director or officer
of the Corporation against any liability to the Corporation or its security
holders 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.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right from time to time to make any
amendment to its Articles of Incorporation, now or hereafter authorized by
law, including any amendment that alters the contract rights, as expressly set
forth in its Articles of Incorporation, of any outstanding stock.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated the 31st day of October, 1984.
Victoria D. Salhus
Incorporator
<PAGE>1
ARTICLES SUPPLEMENTARY
OF
COUNSELLORS CASH RESERVE FUND, INC.
COUNSELLORS CASH RESERVE FUND, INC. (the "Fund"), a Maryland
corporation with its principal corporate offices in the State of Maryland in
Baltimore City, Maryland, DOES HEREBY CERTIFY:
1. Pursuant to Article V of the Fund's Articles of Incorporation,
(1) one billion shares of the Fund's authorized but unissued common stock, par
value $.001 per share ("Common Stock"), have been divided into and classified
as a series of Common Stock, designated Common Stock - Series 1 ("Series 1
Shares"), and (2) one billion shares of authorized but unissued Common Stock
have been divided into and classified as a series of Common Stock, designated
Common Stock - Series 2 ("Series 2 Shares"; Series 1 Shares and Series 2
Shares are collectively referred to as "Series Shares").
2. Each Series Share will have the same preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption as every other share of
Common Stock, irrespective of series, except that:
(a) Series Shares will share equally with Common Stock other
than Series Shares ("Existing Shares") in the income, earnings and
profits derived from investment and reinvestment of the assets
belonging to the Fund and will be charged equally with Existing
Shares with the liabilities and expenses of the Fund, except that:
(1) Series 1 Shares will bear the expense of payments made pursuant
to any shareholder services plan adopted by the Fund, to
institutions under any agreements entered into between the Fund and
institutions providing for services by the institutions to their
customers who beneficially own Series 1 Shares; (2) Series 2 Shares
will bear the expense of payments made pursuant to any distribution
plan adopted by the Fund, to institutions under any agreements
entered into between the Fund and institutions providing for
services to the customers of the institutions who beneficially own
Series 2 Shares; (3) Series 1 Shares will not bear the expense of
payments to institutions which hold of record Series 2 Shares; and
(4) Series 2 Shares will not bear the expense of payments to
institutions which hold of record Series 1 Shares;
<PAGE>2
(b) On any matter submitted to a vote of shareholders of the
Fund that pertains to (i) the agreements or expenses described in
clause (a)(1) above (or to any plan adopted by the Fund relating to
said agreements or expenses), only Series 1 Shares will be entitled
to vote, and (ii) the agreements or expenses described in clause
(a)(2) above (or to any plan adopted by the Fund relating to said
agreements or expenses), only Series 2 Shares will be entitled to
vote, except that: (1) if said matter affects Existing Shares,
Existing Shares will also be entitled to vote, and in such case
Series Shares will be voted in the aggregate together with such
Existing Shares and not by series except where otherwise required by
law; and (2) if said matter does not affect Series Shares, said
Shares will not be entitled to vote (except where otherwise required
by law) even though the matter is submitted to a vote of the holders
of Existing Shares; and
(c) The Board of Directors of the Fund in its sole discretion
may determine whether a matter affects a particular class or series
of Fund shares.
3. Series 1 Shares and Series 2 Shares have been classified by the
Fund's Board of Directors under the authority contained in the Fund's Articles
of Incorporation.
IN WITNESS WHEREOF, the undersigned have executed these Articles
Supplementary on behalf of Counsellors Cash Reserve Fund, Inc. and acknowledge
that it is the act and deed of the Fund and state, under penalty of perjury,
to the best of the knowledge, information and belief of each of them, the
matters contained herein with respect to the approval thereof are true in all
material respects.
Dated: December 6, 1985 COUNSELLORS CASH RESERVE
FUND, INC.
By: /s/ Stuart M. Goode
Stuart M. Goode
President
ATTEST:
/s/ Arnold M. Reichman
Arnold M. Reichman
Secretary
<PAGE>1
AMENDED AND RESTATED
BY-LAWS
OF
COUNSELLORS CASH RESERVE FUND, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. No annual meeting of the stockholders
of the Corporation shall be held in any year in which the election of
directors is not required to be acted upon under the Investment Company Act is
1940, as amended unless otherwise determined by the Board of Directors. An
annual meeting may be held at any place within the United States as may be
determined by the Board of Directors and as shall be designated in the notice
of the meeting, and at the time specified by the Board of Directors. Any
business of the Corporation may be transacted at an annual meeting without
being specifically designated in the notice unless otherwise provided by
statute, the Corporation's Articles of Incorporation or these By-Laws.
SECTION 2. Special Meetings. Special meetings of the stockholders
for any purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Articles of Incorporation, may be held at any place within the
United States, and may be called at any time by the Board of Directors or by
the President, and shall be called by the President or Secretary at the
request in writing of a majority of the Board of Directors or at the request
in writing of stockholders entitled to cast at least 25 (twenty-five) percent
(at least ten (10) percent for the purpose of removing a director) of the
votes entitled to be cast at the meeting upon payment by such stockholders to
the Corporation of the reasonably estimated cost of preparing and mailing a
notice of the meeting (which estimated cost shall be provided to such
stockholders by the Secretary of the Corporation). Notwithstanding the
foregoing, unless requested by stockholders entitled to cast a majority of the
votes entitled to be cast at the meeting, a special meeting of the
stockholders need not be called at the request of stockholders to consider any
matter which is substantially the same as a matter voted on at any special
meeting of the stockholders held during the preceding
<PAGE>2
12 (twelve) months. A written request shall state the purpose or purposes of
the proposed meeting.
SECTION 3. Notice of Meetings. Written or printed notice of the
purpose or purposes and of the time and place of every meeting of the
stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing the notice
in the mail at least 10 (ten) days, but not more than 90 (ninety) days, prior
to the date designated for the meeting addressed to each stockholder at his
address appearing on the books of the Corporation or supplied by the
stockholder to the Corporation for the purpose of notice. The notice of any
meeting of stockholders may be accompanied by a form of proxy approved by the
Board of Directors in favor of the actions or persons as the Board of
Directors may select. Notice of any meeting of stockholders shall be deemed
waived by any stockholder who attends the meeting in person or by proxy, or
who before or after the meeting submits a signed waiver of notice that is
filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by statute or by
the Corporation's Articles of Incorporation, the presence in person or by
proxy of stockholders of the Corporation entitled to cast at least a majority
of the votes to be cast shall constitute a quorum at each meeting of the
stockholders and all questions shall be decided by majority vote of the shares
so represented in person or by proxy at the meeting and entitled to vote. In
the absence of a quorum, the stockholders present in person or by proxy, by
majority vote and without notice other than by announcement, may adjourn the
meeting from time to time as provided in Section 5 of this Article I until a
quorum shall attend. The stockholders present at any duly organized meeting
may continue to do business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum. The absence from any
meeting in person or by proxy of holders of the number of shares of stock of
the Corporation in excess of a majority that may be required by the laws of
the State of Maryland, the Investment Company Act of 1940, as amended, or
other applicable statute, the Corporation's Articles of Incorporation or these
By-Laws, for action upon any given matter shall not prevent action at the
meeting on any other matter or matters that may properly come before the
meeting, so long as there are present, in person or by proxy, holders of the
number of shares of stock of the Corporation required for action upon the
other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be
adjourned from time to time, without notice other than by announcement at the
meeting at which the
<PAGE>3
adjournment is taken. At any adjourned meeting at which a quorum shall be
present any action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be adjourned to a
date more than 120 (one hundred twenty) days after the original record date.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, or in his absence or inability to act, the President,
or in his absence or inability to act, a Vice President, or in the absence or
inability to act of the Chairman of the Board, the President and all the Vice
Presidents, a chairman chosen by the stockholders, shall act as Chairman of
the meeting. The Secretary, or in his absence or inability to act, a person
appointed by the chairman of the meeting, shall act as secretary of the
meeting and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at all
meetings of the stockholders shall be as determined by the chairman of the
meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the
Corporation's Articles of Incorporation, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each meeting
of the stockholders to one vote for every share of stock standing in his name
on the records of the Corporation as of the record date determined pursuant to
Section 9 of this Article I.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by the
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases in which the proxy states that
it is irrevocable and in which an irrevocable proxy is permitted by law.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute
or these By-Laws, or determined by the chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by his proxy, and shall
state the number of shares voted.
SECTION 9. Fixing of Record Date. The Board of Directors may set a
record date for the purpose of determining
<PAGE>4
stockholders entitled to vote at any meeting of the stockholders. The record
date for a particular meeting shall be not more than 90 (ninety) nor fewer
than 10 (ten) days before the date of the meeting. All persons who were
holders of record of shares as of the record date of a meeting, and no others,
shall be entitled to vote at such meeting and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance of
any meeting of stockholders, appoint one or more inspectors to act at the
meeting or at any adjournment of the meeting. If the inspectors shall not be
so appointed or if any of them shall fail to appear or act, the chairman of
the meeting may, and on the request of any stockholder entitled to vote at the
meeting shall, appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully the
duties of inspector at the meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each share, the number of shares
represented at the meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do those acts as are proper to conduct the election or vote with fairness
to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote at the meeting, the inspectors shall make a
report in writing of any challenge, request or matter determined by them and
shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as inspector of an election of
directors. Inspectors need not be stockholders of the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute or the Corporation's Articles of Incorporation,
any action required to be taken at any meeting of stockholders, or any action
that may be taken at any meeting of the stockholders, may be taken without a
meeting, without prior notice and without a vote, if the following are filed
with the records of stockholders' meetings: (i) a unanimous written consent
that sets forth the action and is signed by each stockholder entitled to vote
on the matter and (ii) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote at the
meeting.
<PAGE>5
SECTION 12. Notice of Stockholder Business.
(a) At any Annual or Special Meeting of the Stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an Annual or Special Meeting business
must be (A) (i) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, (ii) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (iii) subject to the provisions of Section 12 of this Article I,
otherwise properly brought before the meeting by a Stockholder and (B) a
proper subject under applicable law for Stockholder action.
(b) For business to be properly brought before an Annual or Special
Meeting by a Stockholder, the Stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, any
such notice must be delivered to or mailed and received at the principal
executive offices of the Corporation not later than 60 days prior to the date
of the meeting; provided, however, that if less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to Stockholders,
any such notice by a Stockholder to be timely must be so received not later
than the close of business on the 10th day following the day on which notice
of the date of the Annual or Special Meeting was given or such public
disclosure was made.
(c) Any such notice by a Stockholder shall set forth as to each
matter the Stockholder proposes to bring before the Annual or Special Meeting
(i) a brief description of the business desired to be brought before the
Annual or Special Meeting and the reasons for conducting such business at the
Annual or Special Meeting, (ii) the name and address, as they appear on the
Corporation's books, of the Stockholder proposing such business, (iii) the
class and number of shares of the capital stock of the Corporation which are
beneficially owned by the Stockholder, and (iv) any material interest of the
Stockholder in such business.
(d) Notwithstanding anything in the By-Laws to the contrary, no
business shall be conducted at any Annual or Special Meeting except in
accordance with the procedures set forth in this Section 12. The Chairman of
the Annual or Special Meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this Section 12, and if he
should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be considered or transacted.
<PAGE>6
SECTION 13. Stockholder Business not Eligible for Consideration.
(a) Notwithstanding anything in these By-Laws to the contrary, any
proposal that is otherwise properly brought before an Annual or Special
Meeting by a Stockholder will not be eligible for consideration by the
Stockholders at such Annual or Special Meeting if such proposal is
substantially the same as a matter properly brought before such Annual or
Special Meeting by or at the direction of the Board of Directors of the
Corporation. The Chairman of such Annual or Special Meeting shall, if the
facts warrant, determine and declare that a Stockholder proposal is
substantially the same as a matter properly brought before the meeting by or
at the direction of the Board of Directors, and, if he should so determine, he
shall so declare to the meeting and any such Stockholder proposal shall not be
considered at the meeting.
(b) This Section 13 shall not be construed or applied to make
ineligible for consideration by the Stockholders at any Annual or Special
Meeting any Stockholder proposal required to be included in the Corporation's
proxy statement relating to such meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, or any successor rule thereto.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided in the
Corporation's Articles of Incorporation, the business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
All powers of the Corporation may be exercised by or under authority of the
Board of Directors except as conferred on or reserved to the stockholders by
law, by the Corporation's Articles of Incorporation or by these By-Laws.
SECTION 2. Number of Directors. The number of directors shall be
fixed from time to time by resolution of the Board of Directors adopted by a
majority of the Directors then in office; provided, however, that the number
of directors shall in no event be fewer than one nor more than fifteen. Any
vacancy created by an increase in Directors may be filled in accordance with
Section 6 of this Article II. No reduction in the number of directors shall
have the effect of removing any director from office prior to the expiration
of his term unless the director is specifically removed pursuant to Section 5
of this Article II at the time of the decrease. A director need not be a
stockholder
<PAGE>7
of the Corporation, a citizen of the United States or a resident of the State
of Maryland.
SECTION 3. Election and Term of Directors. The term of office of
each director shall be from the time of his election and qualification until
his successor shall have been elected and shall have qualified, or until his
death, or until he shall have resigned or have been removed as provided in
these By-laws, or as otherwise provided by statute or the Corporation's
Articles of Incorporation.
SECTION 3.1 Director Nominations.
(a) Only persons who are nominated in accordance with the
procedures set forth in this Section 3.1 shall be eligible for election or re-
election as Directors. Nominations of persons for election or re-election to
the Board of Directors of the Corporation may be made at a meeting of
Stockholders by or at the direction of the Board of Directors or by any
Stockholder of the Corporation who is entitled to vote for the election of
such nominee at the meeting and who complies with the notice procedures set
forth in this Section 3.1.
(b) Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice delivered
in writing to the Secretary of the Corporation. To be timely, any such notice
by a Stockholder must be delivered to or mailed and received at the principal
executive offices of the Corporation not later than 60 days prior to the
meeting; provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to Stockholders, any
such notice by a Stockholder to be timely must be so received not later than
the close of business on the 10th day following the day on which notice of the
date of the meeting was given or such public disclosure was made.
(c) Any such notice by a Stockholder shall set forth (i) as to each
person whom the Stockholder proposes to nominate for election or re-election
as a Director, (A) the name, age, business address and residence address of
such person, (B) the principal occupation or employment of such person, (C)
the class and number of shares of the capital stock of the Corporation which
are beneficially owned by such person, and (D) any other information relating
to such person that is required to be disclosed in solicitations of proxies
for the election of Directors pursuant to Regulation 14A under the Securities
Exchange Act of 1934 or any successor regulation thereto (including without
limitation such persons' written consent to being named in the proxy statement
as a nominee and to serving as
<PAGE>8
a Director if elected and whether any person intends to seek reimbursement
from the Corporation of the expenses of any solicitation of proxies should
such person be elected a Director of the Corporation); and (ii) as to the
Stockholder giving the notice (A) the name and address, as they appear on the
Corporation's books, of such Stockholder and (B) the class and number of
shares of the capital stock of the Corporation which are beneficially owned by
such Stockholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a Director shall furnish
to the Secretary of the Corporation that information required to be set forth
in a Stockholder's notice of nomination which pertains to the nominee.
(d) If a notice by a Stockholder is required to be given pursuant
to this Section 3.1, no person shall be entitled to receive reimbursement from
the Corporation of the expenses of a solicitation of proxies for the election
as a Director of a person named in such notice unless such notice states that
such reimbursement will be sought from the Corporation. No person shall be
eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth in this Section 3.1. The Chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the procedures prescribed by
the By-Laws, and if he should so determine, he shall so declare to the meeting
and the defective nomination shall be disregarded for all purposes.
SECTION 4. Resignation. A director of the Corporation may resign
at any time by giving written notice of his resignation to the Board of
Directors or the Chairman of the Board or to the President or the Secretary of
the Corporation. Any resignation shall take effect at the time specified in
it or, should the time when it is to become effective not be specified in it,
immediately upon its receipt. Acceptance of a resignation shall not be
necessary to make it effective unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any director of the Corporation
may be removed by the stockholders with or without cause at any time by a vote
of a majority of the votes entitled to be cast for the election of directors.
SECTION 6. Vacancies. Subject to the provisions of the Investment
Company Act of 1940, as amended, any vacancies in the Board of Directors,
whether arising from death, resignation, removal or any other cause except an
increase in the number of directors, shall be filled by a vote of the majority
of the Board
<PAGE>9
of Directors then in office even though that majority is less than a quorum,
provided that no vacancy or vacancies shall be filled by action of the
remaining directors if, after the filling of the vacancy or vacancies, fewer
than two-thirds of the directors then holding office shall have been elected
by the stockholders of the Corporation. A majority of the entire Board may
fill a vacancy which results from an increase in the number of directors. In
the event that at any time a vacancy exists in any office of a director that
may not be filled by the remaining directors, a special meeting of the
stockholders shall be held as promptly as possible and in any event within 60
(sixty) days, for the purpose of filling the vacancy or vacancies. Any
director elected or appointed to fill a vacancy shall hold office until a
successor has been chosen and qualifies or until his earlier resignation or
removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at
any place that the Board of Directors may from time to time determine or that
is specified in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at the time and place determined by the
Board of Directors.
SECTION 9. Special Meetings. Special meetings of the Board of
Directors may be called by two or more directors of the Corporation or by the
Chairman of the Board or the President.
SECTION 10. Notice of Special Meetings. Notice of each special
meeting of the Board of Directors shall be given by the Secretary as
hereinafter provided. Each notice shall state the time and place of the
meeting and shall be delivered to each director, either personally or by
telephone or other standard form of telecommunication, at least 24 (twenty-
four) hours before the time at which the meeting is to be held, or by first-
class mail, postage prepaid, addressed to the director at his residence or
usual place of business, and mailed at least 3 (three) days before the day on
which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of any special
meeting need not be given to any director who shall, either before or after
the meeting, sign a written waiver of notice that is filed with the records of
the meeting or who shall attend the meeting.
SECTION 12. Quorum and Voting. One-third (but not fewer than 1
(one)) of the members of the entire Board of Directors shall be present in
person at any meeting of the Board
<PAGE>10
in order to constitute a quorum for the transaction of business at the
meeting, and except as otherwise expressly required by statute, the
Corporation's Articles of Incorporation, these By-Laws, the Investment Company
Act of 1940, as amended, or any other applicable statute, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board. In the absence of a quorum at any meeting of
the Board, a majority of the directors present may adjourn the meeting to
another time and place until a quorum shall be present. Notice of the time
and place of any adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place were
announced at the meeting at which the adjournment was taken, to the other
directors. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting as
originally called.
SECTION 13. Organization. The Board of Directors may, by
resolution adopted by a majority of the entire Board, designate a Chairman of
the Board, who shall preside at each meeting of the Board. In the absence or
inability of the Chairman of the Board to act, the President, or, in his
absence or inability to act, another director chosen by a majority of the
directors present, shall act as chairman of the meeting and preside at the
meeting. The Secretary, or, in his absence or inability to act, any person
appointed by the chairman, shall act as secretary of the meeting and keep the
minutes thereof.
SECTION 14. Committees. The Board of Directors may designate one
or more committees of the Board of Directors, each consisting of 2 (two) or
more directors. To the extent provided in the resolution, and permitted by
law, the committee or committees shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers that may require it. Any committee or committees shall have the name
or names determined from time to time by resolution adopted by the Board of
Directors. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required. The members of a
committee present at any meeting, whether or not they constitute a quorum, may
appoint a director to act in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a Meeting.
Subject to the provisions of the Investment Company Act of 1940, as amended,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee of the Board may be taken without a meeting if
all members of the
<PAGE>11
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the Board
or committee.
SECTION 16. Telephone Conference. Members of the Board of
Directors or any committee of the Board may participate in any Board of
committee meeting by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 17. Compensation. Each director shall be entitled to
receive compensation, if any, as may from time to time be fixed by the Board
of Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by
the Corporation for all reasonable expenses incurred in traveling to and from
the place of a Board or committee meeting.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the
Corporation shall be a President, a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. The Board of Directors may elect
or appoint one or more Vice Presidents and may also appoint any other
officers, agents and employees it deems necessary or proper. Any two or more
offices may be held by the same person, except the offices of President and
Vice President, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity. Officers shall be elected by the Board
of Directors each year at its first meeting held after the annual meeting of
stockholders, each to hold office until the meeting of the Board following the
next annual meeting of the stockholders and until his successor shall have
been duly elected and shall have qualified, or until his death, or until he
shall have resigned or have been removed, as provided in these By-Laws. The
Board of Directors may from time to time elect, or designate to the President
the power to appoint, such officers (including one or more Assistant Vice
Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries) and such agents as may be necessary or desirable for the business
of the Corporation. Such other officers and agents shall have such duties and
shall hold their offices for such terms as may be prescribed by the Board or
by the appointing authority.
<PAGE>12
SECTION 2. Resignations. Any officer of the Corporation may resign
at any time by giving written notice of his resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary. Any
resignation shall take effect at the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it
effective unless the resignation states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer,
agent or employee of the Corporation may be removed by the Board of Directors
with or without cause at any time, and the Board may delegate the power of
removal as to agents and employees not elected or appointed by the Board of
Directors. Removal shall be without prejudice to the person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising from
death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of the office that shall be vacant, in the
manner prescribed in these By-Laws for the regular election or appointment to
the office.
SECTION 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in an amount and with any
surety or sureties as the Board may require.
SECTION 7. President. The President shall be the chief executive
officer of the Corporation. In the absence or inability of the Chairman of
the Board (or if there is none) to act, the President shall preside at all
meetings of the stockholders and of the Board of Directors. The President
shall have, subject to the control of the Board of Directors, general charge
of the business and affairs of the Corporation, and may employ and discharge
employees and agents of the Corporation, except those elected or appointed by
the Board, and he may delegate these powers.
<PAGE>13
SECTION 8. Vice President. Each Vice President shall have the
powers and perform the duties that the Board of Directors or the President may
from time to time prescribe.
SECTION 9. Treasurer. Subject to the provisions of any contract
that may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
the Corporation's funds and securities; he shall have full authority to
receive and give receipts for all money due and payable to the Corporation,
and to endorse checks, drafts and warrants, in its name and on its behalf and
to give full discharge for the same; he shall deposit all funds of the
Corporation, except those that may be required for current use, in such banks
or other places of deposit as the Board of Directors may from time to time
designate; and, in general, he shall perform all duties incident to the office
of Treasurer and such other duties as may from time to time be assigned to him
by the Board of Directors or the President.
SECTION 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the committees
of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation (unless
the seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept
and filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of Directors or the President.
<PAGE>14
SECTION 11. Delegation of Duties. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or
upon any director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the
Corporation shall be entitled upon specific written request to such person as
may be designated by the Corporation to have a certificate or certificates, in
a form approved by the Board, representing the number of shares of stock of
the Corporation owned by him; provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar were
still in office at the date of issue.
SECTION 2. Books of Account and Record of Stockholders. There
shall be kept at the principal executive office of the Corporation correct and
complete books and records of account of all the business and transactions of
the Corporation. There shall be made available upon request of any
stockholder, in accordance with Maryland law, a record containing the number
of shares of stock issued during a specified period not to exceed 12 (twelve)
months and the consideration received by the Corporation for each such share.
SECTION 3. Transfers of Shares. Transfers of shares of stock of
the Corporation shall be made on the stock records of the Corporation only by
the registered holder thereof, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or with a
transfer agent or transfer clerk, and on surrender of the certificate or
certificates, if issued, for the shares properly endorsed or accompanied by a
duly
<PAGE>15
executed stock transfer power and the payment of all taxes thereon. Except as
otherwise provided by law, the Corporation shall be entitled to recognize the
exclusive right of a person in whose name any share or shares stand on the
record of stockholders as the owner of the share or shares for all purposes,
including, without limitation, the rights to receive dividends or other
distributions and to vote as the owner, and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person.
SECTION 4. Regulations. The Board of Directors may make any
additional rules and regulations, not inconsistent with these By-Laws, as it
may deem expedient concerning the issue, transfer and registration of
certificates for shares of stock of the Corporation. It may appoint, or
authorize any officer or officers to appoint, one or more transfer agents or
one or more transfer clerks and one or more registrars and may require all
certificates for shares of stock to bear the signature or signatures of any of
them.
SECTION 5. Stolen, Lost, Destroyed or Mutilated Certificates. The
holder of any certificate representing shares of stock of the Corporation
shall immediately notify the Corporation of its theft, loss, destruction or
mutilation and the Corporation may issue a new certificate of stock in the
place of any certificate issued by it that has been alleged to have been
stolen, lost or destroyed or that shall have been mutilated. The Board may,
in its discretion, require the owner (or his legal representative) of a
stolen, lost, destroyed or mutilated certificate: to give to the Corporation
a bond in a sum, limited or unlimited, and in a form and with any surety or
sureties, as the Board in its absolute discretion shall determine, to
indemnify the Corporation against any claim that may be made against it on
account of the alleged theft, loss or destruction of any such certificate, or
issuance of a new certificate. Anything herein to the contrary
notwithstanding, the Board of Directors, in its absolute discretion, may
refuse to issue any such new certificate, except pursuant to legal proceedings
under the laws of the State of Maryland.
SECTION 6. Fixing of Record Date for Dividends, Distributions, etc.
The Board may fix, in advance, a date not more than 90 (ninety) days preceding
the date fixed for the payment of any dividend or the making of any
distribution or the allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of common stock or
other securities, as the record date
<PAGE>16
for the determination of the stockholders entitled to receive any such
dividend, distribution, allotment, rights or interests, and in such case only
the stockholders of record at the time so fixed shall be entitled to receive
such dividend, distribution, allotment, rights or interests.
SECTION 7. Information to Stockholders and Others. Any stockholder
of the Corporation or his agent may inspect and copy during the Corporation's
usual business hours the Corporation's By-Laws, minutes of the proceedings of
its stockholders, annual statements of its affairs and voting trust agreements
on file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. 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 the Corporation, or is or was serving
while a director or officer of the Corporation at the request of the
Corporation 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 the Corporation
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 Securities Act of 1933 and the
Investment Company Act of 1940, as such statutes are now or hereafter in
force, except that such indemnity shall not protect any such person against
any liability to the Corporation 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 his office ("disabling conduct").
SECTION 2. Advances. Any current or former director or officer of
the Corporation claiming indemnification within the scope of this Article V
shall be entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with proceedings to which he
is a party in the manner and to the full extent permissible under the Maryland
General Corporation Law, the Securities Act of 1933 and the
<PAGE>17
Investment Company Act of 1940, as such statutes are now or hereafter in
force; provided however, that the person seeking indemnification shall provide
to the Corporation a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met and a written undertaking to repay any such advance unless it is
ultimately determined that he is entitled to indemnification, and provided
further that at least one of the following additional conditions is met: (1)
the person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (2) the Corporation is
insured against losses arising by reason of the advance; or (3) a majority of
a quorum of directors of the Corporation who are neither "interested persons"
as defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party directors"),
or independent legal counsel, in a written opinion, shall determine, based on
a review of facts readily available to the Corporation at the time the advance
is proposed to be made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be entitled to
indemnification.
SECTION 3. Procedure. At the request of any current or former
director or officer, or any employee or agent whom the Corporation proposes to
indemnify, the Board of Directors shall determine, or cause to be determined,
in a manner consistent with the Maryland General Corporation Law, the
Securities Act of 1933 and the Investment Company Act of 1940, as such
statutes are now or hereafter in force, whether the standards required by this
Article V have been met; provided, however, that indemnification shall be made
only following: (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be indemnified was
not liable by reason of disabling conduct or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the person to be indemnified was not liable by reason of disabling conduct, by
(a) the vote of a majority of a quorum of disinterested non-party directors or
(b) an independent legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or directors of the Corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, in accordance with the procedures set forth in this Article V to the
extent permissible under the Investment Company Act of 1940, the Securities
Act of 1933 and the Maryland General Corporation Law, as such statutes are now
or hereafter in force, and to such further extent,
<PAGE>18
consistent with the foregoing, as may be provided by action of the Board of
Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this
Article V shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may
be entitled under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director or
officer of the Corporation in his official capacity and as to action by such
person in another capacity while holding such office or position, and shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 6. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or who, while a
director, officer, employee or agent of the Corporation, is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint
venture, trust, enterprise or employee benefit plan, against any liability
asserted against and incurred by him in any such capacity, or arising out of
his status as such, provided that no insurance may be obtained by the
Corporation for liabilities against which it would not have the power to
indemnify him under this Article V or applicable law.
SECTION 7. Constituent, Resulting or Surviving Corporations. For
the purposes of this Article V, references to the "Corporation" shall include
all constituent corporations absorbed in a consolidation or merger as well the
resulting or surviving corporation so that any person who is or was a
director, officer, employee or agent of a constituent corporation or is or was
serving at the request of a constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under this Article V with
respect to the resulting or surviving corporation as he would if he had served
the resulting or surviving corporation in the same capacity.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and shall bear
the name of the Corporation, the year of its
<PAGE>19
incorporation, the words "Corporate Seal" and "Maryland" and any emblem or
device approved by the Board of Directors. The seal may be used by causing it
or a facsimile to be impressed or affixed or in any other manner reproduced,
or by placing the word "(seal)" adjacent to the signature of the authorized
officer of the Corporation.
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of
Directors.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or repealed by the affirmative vote of
a majority of the Board of Directors at any regular or special meeting of the
Board of Directors, subject to the requirements of the Investment Company Act
of 1940, as amended.
As adopted, February 7, 1990
<PAGE>1
60530169
FORM OF SHARE CERTIFICATE
[FRONT OF CERTIFICATE]
No. __________ Shares
Incorporated under the Laws of the State of Maryland
Counsellors Cash Reserve Fund, Inc.
SHARES OF COMMON STOCK
PAR VALUE $.001 PER SHARE
This Certifies that __________________________ is the owner of
_______________________ fully paid and non-assessable Shares of the
above-named Corporation, transferable on the books of the Corporation
by the holder hereof in person or by duly authorized Attorney upon
surrender of this Certificate properly endorsed.
Witness the seal of the Corporation and the
signatures of its duly authorized officers.
Dated:_________________
____________________________ ________________________
Secretary Treasurer Vice-President President
<PAGE>2
60530169
FORM OF SHARE CERTIFICATE
[BACK OF CERTIFICATE]
For value Received, ____________________ hereby sell,
assign and transfer unto
_________________________________________________
_____________________________________________________ Shares
represented by the within Certificate and do hereby irrevocably
constitute and appoint
______________________________________________________ Attorney
to transfer the said shares on the Books of the within named
Corporation with full power of substitution in the premises
Dated: _______________ 19___
______________________________
In Presence of________________________
<PAGE>
COUNSELLORS CASH RESERVE FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
Number 1 Share
Common Stock - Series 1 Par Value $.001 Each
FULLY PAID AND NON-ASSESSABLE
This certifies that _________________ is the registered holder of
***_______*** share of the COMMON STOCK - Series 1 of Counsellors Cash Reserve
Fund, Inc. transferable only on the books of the Corporation by the holder
hereof in person or offering upon surrender of this Certificate properly
endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate
to be signed by its fully authorized officers and its Corporate Seal to be
hereunto affixed this _______ day of _________, 198_.
______________________________ ___________________________
Secretary President
60530166
<PAGE>
COUNSELLORS CASH RESERVE FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
Number 1 Share
Common Stock - Series 2 Par Value $.001 Each
FULLY PAID AND NON-ASSESSABLE
This certifies that _________________ is the registered holder of
***_______*** share of the COMMON STOCK - Series 2 of Counsellors Cash Reserve
Fund, Inc. transferable only on the books of the Corporation by the holder
hereof in person or offering upon surrender of this Certificate properly
endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate
to be signed by its fully authorized officers and its Corporate Seal to be
hereunto affixed this _______ day of _________, 198_.
______________________________ ___________________________
Secretary President
60530166
<PAGE>1
INVESTMENT ADVISORY AGREEMENT
April 17, 1985
Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017
Dear Sirs:
Counsellors Cash Reserve Fund, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, herewith confirms its
agreement with Warburg, Pincus Counsellors, Inc. ("Counsellors"), a Delaware
corporation registered as an adviser under the Investment Advisers Act of
1940, as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its articles of incorporation, as amended, and in its Prospectus and Statement
of Additional Information as from time to time in effect, 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 Fund's Prospectus, Statement of
Additional Information and articles of incorporation, as amended, have been or
will be submitted to Counsellors. The Fund desires to employ and hereby
appoints Counsellors to act as its investment adviser. Counsellors accepts
the appointment and agrees to furnish the services set forth below for the
compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Directors
of the Fund, Counsellors will (a) act in strict conformity with the Fund's
articles of incorporation and by-laws, the Investment Company Act of 1940 and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Fund's portfolio in accordance with the Fund's
investment objective and policies as stated in its Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Fund including decisions concerning (i) the
specific types of securities to be held by the Fund and the proportion of the
Fund's assets that should be allocated to such investments during particular
market cycles, (ii) the specific issuers whose securities will be purchased or
sold by the Fund, (iii) the appropriate maturity of its portfolio investments
and (iv) the
<PAGE>2
appropriate average weighted maturity of its portfolio in light of current
market conditions, (d) provide officers and certain directors for the Fund and
(e) supervise the performance of services to be rendered by the Fund's sub-
investment adviser and administrator. In providing those services,
Counsellors will supervise the Fund's investments generally and conduct a
continual program of evaluation of the Fund's assets.
3. Information Provided to the Fund; Books and Records
(a) Counsellors will keep the Fund informed of developments
materially affecting the Fund's portfolio, and will, on its own initiative,
furnish the Fund from time to time with whatever information Counsellors
believes is appropriate for this purpose.
(b) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940, Counsellors hereby agrees that all records
which it maintains for the Fund are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's
request.
4. Standard of Care
Counsellors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Counsellors shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect Counsellors
against any liability to the Fund or to its shareholders to which Counsellors
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
Counsellors' reckless disregard of its obligations and duties under this
Agreement.
5. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay Counsellors on the first business day of each
month a fee for the previous month, calculated daily, at the annual rate of
.25 of 1.00% of the Fund's average daily net assets. The fee for the period
from the date the Fund's initial registration statement is declared effective
by the Securities and Exchange Commission to the end of the month during which
the initial registration statement is declared effective shall be prorated
according to the proportion that such period bears to the full monthly period.
Upon any
<PAGE>3
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
Counsellors, the value of the Fund's net assets shall be computed at the times
and in the manner specified in the Fund's Prospectus or Statement of
Additional Information as from time to time in effect.
6. Expenses
Counsellors will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear certain
other expenses to be incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any; fees of directors of the Fund who are
not officers, directors or employees of Counsellors, Counsellors Securities
Inc., Provident Institutional Management Corporation or Provident Financial
Processing Corporation; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate 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, officers or Board of Directors of the Fund; and any
extraordinary expenses.
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's sub-investment advisory and
administration agreement, but excluding interest, taxes, brokerage and, if
permitted by state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund, Counsellors
will reimburse the Fund for 50% of such excess expense. Counsellors' expense
reimbursement obligation will be limited to the amount of its fees received
pursuant to this Agreement, however, Counsellors shall reimburse the Fund for
50% of such excess expenses regardless of the amount of fees paid to it during
such fiscal year to the extent that the securities regulations of any state in
which Fund shares are registered and qualified for sale so require. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
<PAGE>4
8. Services to Other Companies or Accounts
The Fund understands that Counsellors now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and may act in the future as investment adviser to one or more other
investment companies, and the Fund has no objection to Counsellors' so acting,
provided that whenever the Fund and one or more other accounts or investment
companies advised by Counsellors have available funds for investment,
investments suitable and appropriate for each will be allocated in a manner
believed to be equitable to each entity. The Fund recognizes that in some
cases this procedure may adversely affect the size of the position obtainable
for the Fund. In addition, the Fund understands that the persons employed by
Counsellors to assist in the performance of Counsellors' duties hereunder will
not devote their full time to such service and nothing contained herein shall
be deemed to limit or restrict the right of Counsellors or any affiliate of
Counsellors to engage in and devote time and attention to other businesses or
to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall continue until April 17, 1987 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) the Board of Directors of the Fund or (b) a vote of a
"majority" (as defined in the Investment Company Act of 1940) 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 in said 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, on 60 days' written
notice, by the Board of Directors of the Fund or by vote of holders of a
majority of the Fund's shares, or upon 90 days' written notice, by
Counsellors. This Agreement will also terminate automatically in the event of
its assignment (as defined in said Act).
10. Amendment of this Agreement
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 material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund.
<PAGE>5
11. Miscellaneous
The Fund recognizes that directors, officers and employees of
Counsellors may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"Counsellors" as part of their name, and that Counsellors or its affiliates
may enter into investment advisory or other agreements with such other
corporations and trusts. If Counsellors ceases to act as the investment
adviser, of the Fund's shares, the Fund agrees that, at Counsellors' request,
the Fund's license to use the word "Counsellors" will terminate and that the
Fund will take all necessary action to change the name of the Fund to a name
not including the word "Counsellors."
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be invalidated or
rendered unforceable thereby. This Agreement shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
New York law.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning the enclosed copy
hereof.
Very truly yours,
COUNSELLORS CASH RESERVE FUND, INC.
By:________________________________
President
Accepted:
WARBURG, PINCUS COUNSELLORS, INC.
By:______________________________
Authorized Officer
<PAGE>1
SUB-INVESTMENT ADVISORY
AND
ADMINISTRATION AGREEMENT
April 17, 1985
Provident Institutional Management Corporation
Suite 200
Bedford Building
3531 Silverside Road
Wilmington, Delaware 19810
Dear Sirs:
Counsellors Cash Reserve Fund, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, herewith confirms its
agreement with Provident Institutional Management Corporation ("PIMC"), a
Delaware corporation registered as an investment adviser under the Investment
Advisers Act of 1940 and wholly-owned by Provident National Bank, as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its articles of incorporation, as amended, and in its Prospectus and Statement
of Additional Information as from time to time in effect, 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 Fund's Prospectus, Statement of
Additional Information and articles of incorporation, as amended, have been or
will be submitted to PIMC. The Fund employs Warburg, Pincus Counsellors, Inc.
("Counsellors") as its investment adviser and desires to employ and hereby
appoints PIMC to act as its sub-investment adviser and administrator. PIMC
accepts this appointment and agrees to furnish the services set forth below
for the compensation set forth below.
<PAGE>2
2. Services as Sub-Investment Adviser
Subject to the supervision and direction of Counsellors and the
Board of Directors of the Fund, PIMC will provide investment advisory
assistance and portfolio management advice with respect to the Fund's
portfolio in accordance with (a) the Fund's articles of incorporation and by-
laws, (b) the Investment Company Act of 1940 and the Investment Advisers Act
of 1940, as the same may from time to time be amended, (c) all applicable
Rules and Regulations of the Securities and Exchange Commission, (d)
regulations of the Board of Governors of the Federal Reserve System pertaining
to investment advisory activities of bank holding companies to the same extent
as if such regulations were by their terms applicable to the activities of
PIMC, and (e) the Fund's investment objective and policies as stated in its
Prospectus and Statement of Additional Information as from time to time in
effect. In connection therewith, PIMC will supervise the day-to-day
operations of the Fund and perform the following services: (a) provide
investment research and credit analysis concerning the Fund's investments, (b)
conduct a continual program of evaluation of the Fund's assets, (c) place
orders for all purchases and sales of the Fund's portfolio investments and (d)
maintain the books and records required to support the Fund's operations. In
addition, PIMC will keep the Fund informed of developments materially
affecting the Fund's portfolio and shall, on its own initiative, furnish to
the Fund from time to time whatever information PIMC believes appropriate for
this purpose. PIMC will not invest its assets or the assets of any accounts
with respect to which it or Provident National Bank exercises sole investment
discretion in the Fund, make loans for the purpose of purchasing or carrying
Fund shares or make loans to the Fund.
3. Brokerage
In executing portfolio transactions for the Fund and selecting
brokers or dealers, PIMC will use its best efforts to seek the best overall
terms available. In assessing the best overall terms available for any
portfolio transaction, PIMC will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of any commission for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, PIMC may consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided
<PAGE>3
to the Fund and/or other accounts over which Counsellors, PIMC or an affiliate
of either of them exercises investment discretion.
4. Services as Administrator
Subject to the supervision and direction of the Board of Directors
of the Fund and Counsellors, PIMC will (a) assist in supervising all aspects
of the Fund's operations except those performed by the Fund's investment
adviser under its investment advisory agreement; (b) supply the Fund with
office facilities (which may be in PIMC's own offices), statistical and
research data, data processing services, clerical, accounting and bookkeeping
services, including, but not limited to, the calculation of the net asset
value of shares of the Fund, internal auditing and legal services in
connection with the performance of its duties under this Agreement, internal
executive and administrative services, and stationery and office supplies; and
(c) accumulate information for and coordinate the preparation of reports to
shareholders of the Fund, tax returns and reports to and filings with the
Securities and Exchange Commission.
5. Books and Records
In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940, PIMC hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request.
6. Compensation
In consideration of services rendered pursuant to this Agreement,
the Fund will pay PIMC on the first business day of each month a fee for the
previous month, calculated daily, at an annual rate of .25 of 1.00% of the
Fund's average daily net assets. The fee for the period from the date the
Fund's initial registration statement is declared effective by the Securities
and Exchange Commission to the end of the month during which the initial
registration statement is declared effective shall be prorated according to
the proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee for such
part of a month shall be prorated according to the proportion which such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
PIMC, the value of the Fund's net assets shall be computed at the times and in
the manner specified
<PAGE>4
in the Fund's Prospectus and Statement of Additional Information as from time
to time in effect.
7. Expenses
PIMC will bear all expenses in connection with the performance of
its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees
and commissions, if any; fees of directors of the Fund who are not officers,
directors or employees of Counsellors, Counsellors Securities Inc., PIMC or
Provident Financial Processing Corporation; Securities and Exchange Commission
fees and state Blue Sky qualification fees; charges of custodians and transfer
and dividend disbursing agents; certain insurance premiums; outside auditing
and legal expenses; costs of maintenance of corporate 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 and meetings of the officers or Board of Directors of the Fund; and
any extraordinary expenses.
8. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's investment advisory agreement,
but excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitations of any
state having jurisdiction over the Fund, PIMC will reimburse the Fund for 50%
of such excess expense. The expense reimbursement obligation of PIMC will be
limited to the amount of its fees pursuant to this Agreement; provided,
however, that PIMC shall reimburse the Fund for 50% of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state in which Fund shares are
registered and qualified for sale so require. Such expense reimbursement, if
any, will be estimated, reconciled and paid on a monthly basis.
9. Standard of Care
PIMC shall exercise its best judgment in rendering the services
listed in paragraphs 2, 3 and 4 above. PIMC shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except for a loss
resulting from a breach
<PAGE>5
of fiduciary duty with respect to the receipt of compensation for services;
provided that nothing herein shall be deemed to protect or purport to protect
PIMC against liability to the Fund or to its shareholders to which PIMC 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 PIMC's
reckless disregard of its obligations and duties under this Agreement.
10. Term of Agreement
This Agreement shall continue until April 17, 1987 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) the Board of Directors of the Fund or (b) a vote of a
"majority" (as defined in the Investment Company Act of 1940) 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 in said Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Directors of the Fund or by vote of holders of a
majority of the Fund's shares, or upon 90 days' written notice, by PIMC. This
Agreement will also terminate automatically in the event of its assignment (as
defined in said Act).
11. Service to Other Companies or Accounts
The Fund understands that PIMC now acts, will continue to act and
may act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser, sub-investment adviser and/or
administrator to one or more other investment companies, and the Fund has no
objection to PIMC's so acting, provided that whenever the Fund and one or more
other accounts or investment companies advised by PIMC have available funds
for investment, investments suitable and appropriate for each will be
allocated in a manner believed to be equitable to each entity. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for the Fund. In addition, the Fund understands that
the persons employed by PIMC to assist in the performance of PIMC's duties
hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of PIMC or any
affiliate of PIMC to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
<PAGE>6
12. Amendment of this Agreement
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 vote of the holders of a majority of the outstanding voting securities of
the Fund.
13. Proprietary and Confidential Information
PIMC 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 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 by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where PIMC
may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities or when so requested by the Fund.
14. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be invalidated or
rendered unenforceable thereby. This Agreement shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
New York law.
<PAGE>7
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
COUNSELLORS CASH RESERVE FUND, INC.
By:________________________________
President
Accepted:
PROVIDENT INSTITUTIONAL MANAGEMENT
CORPORATION
By:_______________________________
Authorized Officer
<PAGE>1
CO-ADMINISTRATION AGREEMENT
June 29, 1994
Counsellors Funds Service, Inc.
466 Lexington Avenue
New York, New York 10017-3147
Dear Sirs:
Warburg, Pincus Cash Reserve Fund (the "Fund"), a corporation
organized under the laws of the State of Maryland, confirms its agreement with
Counsellors Funds Service, Inc. ("Counsellors Service") with respect to the
Fund as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its Articles of Incorporation, as amended from time to time (the "Charter"),
in its By-laws, as amended from time to time (the "By-laws"), in the Fund's
prospectus (the "Prospectus") and Statement of Additional Information (the
"Statement of Additional Information") as in effect from time to time, and in
such manner and to the extent as may from time to time be approved by the
Board of Directors of the Fund. Copies of the Fund's Prospectus, Statement of
Additional Information and the Charter and By-laws have been submitted to
Counsellors Service. The Fund employs Warburg, Pincus Counsellors, Inc. (the
"Adviser") as its investment adviser and desires to employ and hereby appoints
Counsellors Service as its co-administrator. Counsellors Service accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. Services as Co-Administrator
Subject to the supervision and direction of the Board of Directors
of the Fund, Counsellors Service will:
(a) assist in supervising all aspects of the Fund's operations,
except those performed by other parties pursuant to written agreements with
the Fund;
<PAGE>2
(b) provide various shareholder liaison services including, but not
limited to, responding to inquiries of shareholders regarding the Fund,
providing information on shareholder investments, assisting shareholders of
the Fund in changing dividend options, account designations and addresses, and
other similar services;
(c) provide certain administrative services including, but not
limited to, providing periodic statements showing the account balance of a
Fund shareholder and integrating the statements with those of other
transactions and balances in the shareholder's other accounts serviced by the
Fund's custodian or transfer agent;
(d) supply the Fund with office facilities (which may be
Counsellors Service's own offices), data processing services, clerical,
internal executive and administrative services, and stationery and office
supplies;
(e) furnish corporate secretarial services, including assisting in
the preparation of materials for Board of Directors meetings and distributing
those materials and preparing minutes of meetings of the Fund's Board of
Directors and any Committees thereof and of the Fund's shareholders;
(f) coordinate the preparation of reports to the Fund's
shareholders of record and the Securities and Exchange Commission (the "SEC")
including, but not limited to, proxy statements; annual, semi-annual and
quarterly reports to shareholders; annual and semi-annual reports on Form N-
SAR; and post-effective amendments to the Fund's Registration Statement on
Form N-1A (the "Registration Statements");
(g) develop computer systems for the generation of consolidated
periodic reports to investors;
(h) assist in other regulatory filings as necessary;
(i) assist the Fund's investment adviser, at the investment
adviser's request, in monitoring and developing compliance procedures for the
Fund which will include, among other matters, procedures to assist the
investment adviser in monitoring compliance with the Fund's investment
objective, policies, restrictions, tax matters and applicable laws and
regulations; and
(j) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and co-
administrator and taking all reasonable
<PAGE>3
action in the performance of its obligations under this Agreement to assure
that all necessary information is made available to each of them.
In performing all services under this Agreement, Counsellors Service
shall act in conformity with applicable law, the Fund's Articles of
Incorporation and By-Laws, and all amendments thereto, and the investment
objective, investment policies and other practices and policies set forth in
the Fund's Registration Statement, as such Registration Statement and
practices and policies may be amended from time to time.
3. Compensation
In consideration of services rendered pursuant to this Agreement,
the Fund will pay Counsellors Service on the first business day of each month
a fee for the previous month at an annual rate of .10% of the Fund's average
daily net assets. The fee for the period from the date the Fund commences its
investment operations to the end of the month during which the Fund commences
its investment operations shall be prorated according to the proportion that
such period bears to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall
be prorated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to Counsellors
Service, fees shall be calculated monthly and the value of the Fund's net
assets shall be computed at the times and in the manner specified in the
Prospectus and Statement of Additional Information as from time to time in
effect.
4. Expenses
Counsellors Service will bear all expenses in connection with the
performance of its services under this Agreement; provided, however, that the
Fund will reimburse Counsellors Service for the out-of-pocket expenses
incurred by it on behalf of the Fund. Such reimbursable expenses shall
include, but not be limited to, postage, telephone, telex and Federal Express
charges. Counsellors Service will bill the Fund as soon as practicable after
the end of each calendar month for the expenses it is entitled to have
reimbursed.
The Fund will bear certain other expenses to be incurred in its
operation, including: taxes, interest, brokerage fees and commissions, if
any; fees of Directors of the Fund who are not officers, directors, or
employees of the Adviser or
<PAGE>4
Counsellors Service; Securities and Exchange Commission fees and state Blue
Sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; except as otherwise
provided herein, 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, and meetings of the officers of Board of Directors of the Fund;
costs of any pricing services; and any extraordinary expenses.
5. Standard of Care
Counsellors Service shall exercise its best judgment in rendering
the services listed in paragraph 2 above. Counsellors Service shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates
provided that nothing in this Agreement shall be deemed to protect or purport
to protect Counsellors Service against liability to the Fund or to its
shareholders to which Counsellors Service would otherwise be subject by reason
of willful misfeasance, bad faith or negligence on its part in the performance
of its duties or by reason of Counsellors Service's reckless disregard of its
obligations and duties under this Agreement.
6. Term of Agreement
This Agreement shall become effective as of the date the Fund
commences its investment operations and shall continue until April 17, 1995
and shall continue automatically (unless terminated as provided herein) for
successive annual periods ending on April 17th of each year, provided that
such continuance is specifically approved at least annually by the Board of
Directors of the Fund, including a majority of the Board of Directors who are
not "interested persons" (as defined in the Investment Company Act of 1940, as
amended) 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, on 60 days' written notice, by the Board of
Directors of the Fund or by vote of holders of a majority of the Fund's
shares, or upon 60 days' written notice, by Counsellors Service.
<PAGE>5
7. Service to Other Companies or Accounts
The Fund understands that Counsellors Service now acts, will
continue to act and may act in the future as administrator, co-administrator
or administrative services agent to one or more other investment companies,
and the Fund has no objection to Counsellors Service's so acting. The Fund
understands that the persons employed by Counsellors Service to assist in the
performance of Counsellors Service's duties hereunder will not devote their
full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of Counsellors Service or any affiliate
of Counsellors Service to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
WARBURG, PINCUS
CASH RESERVE FUND
By:
Name:
Title:
Accepted:
COUNSELLORS FUNDS SERVICE, INC.
By:
Name:
Title:
<PAGE>1
DISTRIBUTION AGREEMENT
April 17, 1985
Counsellors Securities Inc.
466 Lexington Avenue
New York, New York 10017
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Counsellors Cash Reserve Fund, Inc. (the "Fund"),
a corporation organized under the laws of the State of Maryland, has agreed
that Counsellors Securities Inc. ("Counsellors Securities") shall be, for the
period of this Agreement, the distributor of shares of the Fund.
1. Services as Distributor
1.1 Counsellors Securities will act as agent for the distribution
of shares of the Fund covered by the registration statement, prospectus and
statement of additional information then in effect (the "Registration
Statement") under the Securities Act of 1933, as amended (the "1933 Act"), and
the Investment Company Act of 1940, as amended (the "1940 Act").
1.2 Counsellors Securities agrees to use its best efforts to
solicit orders for the sale of shares of the Fund at the public offering
price, as determined in accordance with the Registration Statement, and will
undertake such advertising and promotion as it believes is reasonable in
connection with such solicitation. Counsellors Securities agrees to bear all
selling expenses, including the cost of printing prospectuses and statements
of additional information and distributing them to prospective shareholders.
1.3 All activities by Counsellors Securities as distributor of the
Fund's 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 securities
association registered under the Securities Exchange Act of 1934.
1.4 Counsellors Securities will provide one or more persons during
normal business hours to respond to telephone questions concerning the Fund.
<PAGE>2
1.5 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
Fund's shares until such time as those officers deem it advisable to accept
such orders and to make such sales.
1.6 Counsellors Securities will act only on its own behalf as
principal should it choose to enter into selling agreements with selected
dealers or others.
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 qualification of the
Fund's shares for sale 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 Fund's shares, such information reports with respect to
the Fund and its 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 in the
Fund's portfolio, (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. Representatives 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
shares of the Fund 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
<PAGE>3
additional information" shall mean any registration statement, prospectus and
statement of additional information filed by the Fund 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, prospectus and statement of additional
information, 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, prospectus or
statement of additional information will be true and correct when such
registration statement becomes effective; and that neither any registration
statement nor any prospectus or statement of additional information 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 Fund's 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 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, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes Counsellors Securities and any dealers with
whom Counsellors Securities has entered into dealer agreements to use any
prospectus or statement of additional information furnished by the Fund from
time to time, in connection with the sale of the Fund's shares. 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
<PAGE>4
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, 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, 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 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 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 days after the summons or other first legal process shall
have been served. The failure so to 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
<PAGE>5
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 Fund's 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 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 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 days after the summons or other first
legal process shall have been served. The failure so to notify Counsellors
Securities of any such action shall not relieve Counsellors Securities from
any liability that
<PAGE>6
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
Fund's shares.
4.3 In case any action shall be brought against any indemnified
party under paragraph 4.1 or 4.2, and it shall 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 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 Fund's 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 shares hereunder shall be accepted by
the Fund if and so long as the effectiveness of the registration statement
then in effect or any necessary amendments thereto shall be suspended under
any of the provisions of the 1933 Act or if and so long as a current
prospectus as required by Section 5(b)(2) of the 1933 Act 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 Fund's prospectus, statement of additional information
or articles of incorporation.
<PAGE>7
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 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 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 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
which may from time to time be filed with the SEC.
7. Term of Agreement
This Agreement shall continue until April 17, 1987 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) the Fund's Board of Directors 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
Directors of the Fund who are not interested persons (as defined in 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, on 60 days' written notice, by the Fund's Board
of Directors or by vote of the holders of a majority of the Fund's shares, or
on 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).
<PAGE>8
8. Miscellaneous
The Fund recognizes that directors, officers and employees of
Counsellors Securities may from time to time serve as directors, trustees,
officers and employees of corporations and business trusts (including other
investment companies) and that such other corporations and trusts may include
the name "Counsellors" or "Counsellors Securities" as part of their names, and
that Counsellors Securities or its affiliates may enter into distribution or
other agreements with such other corporations and trusts. If Counsellors
Securities ceases to act as the distributor of the Fund's shares, the Fund
agrees that, at Counsellors Securities' request, the Fund's license to use the
word "Counsellors" will terminate and that the Fund will take all necessary
action to change the name of the Fund to a name not including the word
"Counsellors."
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,
COUNSELLORS CASH RESERVE FUND, INC.
By:________________________________
President
Accepted: Counsellors Securities Inc.
COUNSELLORS SECURITIES INC.
By:________________________
Authorized Officer
<PAGE>1
CUSTODIAN AGREEMENT
THIS AGREEMENT is made this 17th day of April, 1985, by and
between COUNSELLORS CASH RESERVE FUND, INC., a Maryland corporation ("Fund")
and PROVIDENT NATIONAL BANK, a national banking association ("Provident").
R E C I T A L
WHEREAS, the Fund is registered as an open-end, diversified,
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund desires to retain Provident to serve as the Fund's
custodian, and Provident is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment. The Fund hereby appoints Provident to act as
custodian of the portfolio securities, cash, and other property of the Fund
(which term shall include any class or series of the Fund) for the period and
on the terms set forth in this Agreement. Provident accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Paragraph 23 of this Agreement. Provident, in its
capacity as custodian, agrees to comply with
<PAGE>2
all relevant provisions of the 1940 Act and applicable rules and regulations
thereunder.
2. Delivery of Documents. The Fund will furnish Provident or its
counsel with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Fund's Board of Directors authorizing
the appointment of Provident as custodian of the portfolio securities, cash
and other property of the Fund; and approving this Agreement;
(b) Incumbency and signature certificates identifying and
containing the signatures of the Fund's officers and/or other persons
authorized to sign Written Instructions, as hereinafter defined, on behalf of
the Fund;
(c) The Fund's Articles of Incorporation, filed with the
Department of Assessments and Taxation of the State of Maryland on November
15, 1984 and all amendments thereto (such Articles of Incorporation, as
presently in effect and as they shall from time to time be amended, are herein
called the "Charter");
(d) The Fund's By-Laws and all amendments thereto (such By-
Laws, as presently in effect and as they shall from time to time be amended,
are herein called "By-Laws");
(e) Resolutions of the Fund's Board of Directors appointing
Warburg, Pincus Counsellors, Inc. ("Counsellors") as the investment adviser
for the Fund and resolutions of the Fund's
<PAGE>3
Board of Directors approving the Investment Advisory Contract between
Counsellors and the Fund (the "Advisory Agreement");
(f) Resolutions of the Fund's Board of Directors appointing
Provident Institutional Management Corporation ("PIMC") as the sub-investment
adviser and administrator for the Fund and resolutions of the Fund's Board of
Directors approving the Sub-Investment Advisory and Administration Agreement
between Counsellors and PIMC (the "Sub-Advisory and Administration
Agreement");
(g) Resolutions of the Fund's Board of Directors appointing
Counsellors Securities Inc. ("Counsellors Securities") as the distributor for
the Fund and resolutions of the Fund's Board of Directors approving the
Distribution Agreement between Counsellors Securities and the Fund (the
"Distribution Agreement");
(h) Resolutions of the Fund's Board of Directors appointing
Provident Financial Processing Corporation ("PFPC") as the transfer agent for
the Fund and resolutions of the Fund's Board of Directors approving the
Transfer Agency Agreement between PFPC and the Fund (the "Transfer Agency
Agreement");
(i) The Advisory Agreement, the Sub-Advisory and
Administration Agreement, the Distribution Agreement, and the Transfer Agency
Agreement;
(j) The Notification of Registration filed by the Fund,
pursuant to Section 8(a) of the 1940 Act on Form N-8A under
<PAGE>4
the 1940 Act with the Securities and Exchange Commission ("SEC") on December
12, 1984;
(k) The Registration Statement of the Fund, on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") (File No. 2-94840) and
under the 1940 Act as filed with the SEC on December 12, 1984, as amended and
adopted by the Fund, relating to shares of the Fund's Common Stock ($.001 par
value) ("Shares") and all amendments thereto; and
(l) The Fund's most recent Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information, as presently in effect and all amendments and supplements thereto
are herein called the "Prospectus").
The Fund will furnish Provident or its counsel from time to time
with copies properly certified or authenticated of all amendments of or
supplements to the foregoing, if any.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the Fund's President, Treasurer, Secretary and any
Vice President of the Fund, and any other person, whether or not any such
person is an officer or employee of the Fund, duly authorized by the Board of
Directors of the Fund to give Oral and Written Instructions on behalf of the
Fund and listed on the Certificate annexed hereto as Appendix A or such other
Certificate listing persons duly
<PAGE>5
authorized to give Oral and Written Instructions on behalf of the Fund as may
be received by Provident from time to time.
(b) "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and
its nominee or nominees, the Philadelphia Depository Trust Company and the
Depository Trust Company with respect to securities eligible for deposit
therein.
(c) "Oral Instructions". As used in this Agreement, the term
"Oral Instructions" means verbal instructions actually received by Provident
from an Authorized Person or from a person reasonably believed by Provident to
be an Authorized Person. The Fund agrees to deliver or cause to be delivered
to Provident, at the time and in the manner specified in Paragraph 8(b) of
this Agreement, Written Instructions confirming Oral Instructions.
(d) "Property". The term "Property", as used in this
Agreement, means:
(i) any and all securities and other property which the
Fund may from time to time deposit, or cause to be deposited, with
Provident or which Provident may from time to time hold for the Fund;
(ii) all income in respect of any of such securities or
other property;
<PAGE>6
(iii) all proceeds of the sale of any of such securities
or other property; and
(iv) all proceeds of the sale of Shares, which are
received by Provident from time to time on behalf of the Fund.
(e) "Written Instructions". As used in this Agreement, the
term "Written Instructions" means written instructions delivered by mail,
tested telegram, cable, telex or facsimile sending device, and received by
Provident, signed by two Authorized Persons.
4. Delivery and Registration of the Property. The Fund will
deliver or cause to be delivered to Provident all securities and all moneys
owned by it, including cash received for the issuance of its Shares, at any
time during the period of this Agreement. Provident will not be responsible
for such securities and such moneys until they have actually been received by
it. All securities delivered to Provident (other than in bearer form) shall
be registered in the name of the Fund or in the name of a nominee of the Fund
or in the name of any nominee of Provident, which nominee shall be assigned
exclusively to the Fund (with or without indication of fiduciary status) or in
the name of any subcustodian or any nominee of any such subcustodian appointed
pursuant to Paragraph 6 hereof or shall be properly endorsed and in form for
transfer satisfactory to Provident.
<PAGE>7
5. Receipt and Disbursement of Money.
(a) Provident shall open and maintain a separate custodial
account or accounts in the name of the Fund, subject only to draft or order by
Provident acting pursuant to the terms of this Agreement, and shall hold in
such account or accounts, subject to the provisions hereof, all cash received
by it from or for the account of the Fund. Provident shall make payments of
cash to, or for the account of, the Fund from such cash only (i) for the
purchase of securities for the Fund's portfolio provided in Paragraph 11
hereof; (ii) for the redemption of Fund Shares as provided in sub-paragraph
(b) of Paragraph 9 hereof; (iii) upon receipt of Written Instructions for the
payment of interest, dividends, taxes, administration, distribution, service
or advisory fees or expenses which are to be borne by the Fund under the terms
of this Agreement, the Advisory Agreement, the Sub-Advisory and Administration
Agreement, the Transfer Agency Agreement and the Distribution Agreement; (iv)
upon receipt of Written Instructions for payments in connection with the
conversion, exchange or surrender of securities owned or subscribed to by the
Fund and held by or to be delivered to Provident; (v) to a subcustodian
pursuant to Paragraph 6 hereof; or (vi) upon receipt of Written Instructions
for other proper corporate purposes.
<PAGE>8
(b) Provident is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the account of the Fund.
6. Receipt of Securities. (a) Except as provided by Paragraph 7
hereof, Provident shall hold and physically segregate in a separate account,
identifiable at all times from those of any other persons, firms, or
corporations, all securities and non-cash property received by it for the
account of the Fund. All such securities and non-cash property are to be held
or disposed of by Provident for the Fund pursuant to the terms of this
Agreement. In the absence of Written Instructions accompanied by a certified
resolution authorizing the transaction by the Fund's Board, Provident shall
have no power or authority to withdraw, deliver, assign, hypothecate, pledge
or otherwise dispose of any such securities and investments, except in
accordance with the express terms provided for in this Agreement. In no case
may any director, officer, employee or agent of the Fund withdraw any
securities. In connection with its duties under this Paragraph 6, Provident
may, at its own expense, enter into subcustodian agreements with other banks
or trust companies for the receipt of certain securities and cash to be held
by Provident for the account of the Fund pursuant to this Agreement; provided
that each such bank or trust company has an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
five hundred thousand dollars
<PAGE>9
($500,000) and that such bank or trust company agrees with Provident to comply
with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder. Provident shall remain responsible for the
performance of all of its duties under this Agreement and shall hold the Fund
harmless from the acts and omissions of any bank or trust company that it
might choose pursuant to this Paragraph 6.
(b) Promptly after the close of business on each day Provident
shall furnish the Fund with confirmations and a summary of all transfers to or
from the account of the Fund during said day. Where securities are
transferred to an account of the Fund established pursuant to Paragraph 7
hereof, Provident shall also by book entry or otherwise identify as belonging
to the Fund the quantity of securities in a fungible bulk of securities
registered in the name of Provident (or its nominee) as shown in Provident's
account on the books of the Book-Entry System. At least monthly and from time
to time, Provident shall furnish the Fund with a detailed statement of the
Property held for it under this Agreement.
7. Use of Book-Entry System. The Fund shall deliver to Provident
a certified resolution of the Board of Directors of the Fund approving,
authorizing and instructing Provident on a continuous and on-going basis until
instructed to the contrary by Oral or Written Instructions actually received
by Provident (i) to deposit in the Book-Entry System all securities of the
Fund
<PAGE>10
eligible for deposit therein and (ii) to utilize the Book-Entry System to the
extent possible in connection with settlements of purchases and sales of
securities by the Fund, and deliveries and returns of securities collateral in
connection with borrowings. Without limiting the generality of such use, it
is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in the Book-
Entry System will at all times be segregated from any assets and cash
controlled by Provident in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such capacities. Provident will
pay out money only upon receipt of securities in the Book-Entry System and
will cause securities to be delivered from the Book-Entry System only upon the
receipt of money.
(b) All books and records maintained by Provident which relate
to the Fund's participation in the Book-Entry System will at all times during
Provident's regular business hours be open to the inspection of the Fund's
duly authorized employees or agents, and the Fund will be furnished with all
information in respect of the services rendered to it as it may require.
(c) Provident will provide the Fund with copies of any report
obtained by Provident on the system of internal accounting control of the
Book-Entry System within ten days after receipt of such a report by Provident.
Provident will also
<PAGE>11
provide the Fund with such reports on its own system of internal control as
the Fund may reasonably request from time to time.
8. Instructions Consistent with Charter.
(a) Unless otherwise provided in this Agreement, Provident
shall act only upon Oral and Written Instructions. Although Provident may
take cognizance of the provisions of the Charter and By-Laws of the Fund,
Provident may assume that any Oral or Written Instructions received hereunder
are not in any way inconsistent with any provisions of such Charter or By-Laws
or any vote, resolution or proceeding of the Shareholders, or of the Board of
Directors, or of any committee thereof.
(b) Provident shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by Provident
pursuant to this Agreement. The Fund agrees to forward to Provident Written
Instructions confirming Oral Instructions in such manner that the Written
Instructions are received by Provident, whether by hand delivery, telex,
facsimile sending device or otherwise, by the close of business of the same
day that such Oral Instructions are given to Provident. The Fund agrees that
the fact that such confirming Written Instructions are not received by
Provident shall in no way affect the validity of the transactions or
enforceability of the transactions authorized by the Fund by giving Oral
Instructions. The Fund agrees that Provident shall incur no liability to the
Fund in acting upon Oral Instructions given to Provident hereunder
<PAGE>12
concerning such transactions provided such instructions reasonably appear to
have been received from an Authorized Person.
9. Transactions Not Requiring Instructions. Provident is
authorized to take the following action without Oral or Written Instructions:
(a) Deposits of Proceeds of Issuance of Shares. Provident
shall collect and receive for the account of the Fund all payments received in
payment for Shares.
(b) Redemptions. Upon receipt of notice from the Fund's
transfer agent stating that such transfer agent is required to redeem Shares
and specifying the number of Shares which such transfer agent is required to
redeem and the date and time the request or requests for redemption were
received by the Fund's transfer agent, Provident shall make payments in the
manner described in the Prospectus, in accordance with such procedures and
controls as are mutually agreed upon from time to time by and among Provident,
the Fund and the Fund's transfer agent. In addition, whenever Shares are
redeemed pursuant to the check redemption privilege offered by the Fund, the
Custodian shall honor the check presented as part of such check redemption
privilege in accordance with the procedures and controls set forth in the
Fund's Prospectus, and shall communicate to the Fund's transfer agent the
amount of such check and the name of the individual Shareholder and such other
information as the
<PAGE>13
transfer agent may reasonably require in order to record the redemption.
(c) Collection of Income and Other Payments. Provident shall:
(i) collect and receive for the account of the Fund, all
income and other payments and distributions, including (without
limitation) stock dividends, rights, warrants and similar items, included
or to be included in the Property of the Fund, and promptly advise the
Fund of such receipt and shall credit such income, as collected, to the
Fund's custodian account;
(ii) endorse and deposit for collection, in the name of
the Fund, checks, drafts, or other orders for the payment of money on the
same day as received;
(iii) receive and hold for the account of the Fund all
securities received as a distribution on the Fund's portfolio securities
as a result of a stock dividend, share split-up or reorganization,
recapitalization, readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any portfolio
securities of the Fund held by Provident hereunder;
(iv) present for payment and collect the amount payable
upon all securities which may mature or be
<PAGE>14
called, redeemed, or retired, or otherwise become payable on the date such
securities become payable; and
(v) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other
payments and the endorsement for collection of checks, drafts, and other
negotiable instruments.
(d) Miscellaneous Transactions. Provident is authorized to
deliver or cause to be delivered Property against payment or other
consideration or written receipt therefor in the following cases:
(i) for examination by a broker selling for the account
of the Fund in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary
securities for definitive securities;
(iii) for transfer of securities into the name of the
Fund or Provident or nominee of either, or for exchange of securities for
a different number of bonds, certificates, or other evidence,
representing the same aggregate face amount or number of units bearing
the same interest rate, maturity date and call provisions, if any;
provided that, in any such case, the new securities are to be delivered
to Provident.
<PAGE>15
10. Transactions Requiring Instructions. Upon receipt of Oral or
Written Instructions and not otherwise, Provident, directly or through the use
of the Book-Entry System shall:
(a) execute and deliver to such persons as may be designated
in such Oral or Written Instructions, proxies, consents, authorizations, and
any other instruments whereby the authority of the Fund as owner of any
securities may be exercised;
(b) deliver any securities held for the Fund against receipt
of other securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale
of assets of any corporation, against receipt of such certificates of deposit,
interim receipts or other instruments or documents as may be issued to it to
evidence such delivery;
(d) make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said instructions to be for
the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund; and
<PAGE>16
(e) release securities belonging to the Fund to any bank or
trust company for the purpose of pledge or hypothecation to secure any loan
incurred by the Fund; provided, however, that securities shall be released
only upon payment to Provident of the monies borrowed, except that in cases
where additional collateral is required to secure a borrowing already made,
subject to proper prior authorization, further securities may be released for
that purpose; and pay such loan upon redelivery to it of the securities
pledged or hypothecated therefor and upon surrender of the note or notes
evidencing the loan.
11. Purchases of Securities. Promptly after each decision to
purchase securities by the Fund's investment adviser or sub-investment
adviser, the Fund, through the Fund's sub-investment adviser, shall deliver to
Provident Oral Instructions specifying with respect to each such purchase:
(a) the name of the issuer and the title of the securities, (b) the number of
shares or the principal amount purchased and accrued interest, if any, (c) the
date of purchase and settlement, (d) the purchase price per unit, (e) the
total amount payable upon such purchase, and (f) the name of the person from
whom or the broker through whom the purchase was made. Provident shall upon
receipt of securities purchased by or for the Fund pay out of the moneys held
for the account of the Fund the total amount payable to the person from whom
or the broker through whom the purchase was
<PAGE>17
made, provided that the same conforms to the total amount payable as set forth
in such Oral Instructions.
12. Sales of Securities. Promptly after each decision to sell
securities by the Fund's investment adviser or sub-investment advisor, the
Fund, through the Fund's sub-investment adviser, shall deliver to Provident
Oral Instructions, specifying with respect to each such sale: (a) the name of
the issuer and the title of the security, (b) the number of shares or
principal amount sold, and accrued interest, if any, (c) the date of sale, (d)
the sale price per unit, (e) the total amount payable to the Fund upon such
sale, and (f) the name of the broker through whom or the person to whom the
sale was made. Provident shall deliver the securities upon receipt of the
total amount payable to the Fund upon such sale, provided that the same
conforms to the total amount payable as set forth in such Oral Instructions.
Subject to the foregoing, Provident may accept payment in such form as shall
be satisfactory to it, and may deliver securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
13. Dividends and Distributions. The Fund shall furnish Provident
with appropriate evidence of action by the Fund's Board of Directors
authorizing the declaration and payment of any dividends and distributions to
the Fund's Shareholders. Upon receipt by Provident of Written Instructions
with respect to dividends and distributions payable to the Fund's
Shareholders,
<PAGE>18
and in conformance with procedures mutually agreed upon by Provident, the
Fund, and the Fund's transfer agent, Provident shall pay to the Fund's
transfer agent, as agent for the Shareholders, an amount equal to the amount
indicated in said Written Instructions as payable by the Fund to the
Shareholders for distribution in cash by the transfer agent to the
Shareholders. In lieu of paying the Fund's transfer agent cash dividends and
distributions, the Fund, the Fund's transfer agent and Provident may arrange
for the direct payment of cash dividends and distributions to Shareholders by
Provident in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Fund, Provident and the Fund's
transfer agent.
14. Repurchase Agreements. Provident will perform the duties for
which it is responsible as set forth in repurchase agreements to which the
Fund is a party.
15. Correspondence. Provident will answer such correspondence from
securities brokers and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon between
Provident and the Fund.
16. Records. Provident shall keep and maintain the financial books
and records of account for the Fund.
The books and records pertaining to the Fund which are in the
possession of Provident shall be the property of the Fund. Such books and
records shall be prepared and maintained as
<PAGE>19
required by the 1940 Act and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records at all times during Provident's normal
business hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by Provident to the Fund or the Fund's
authorized representative at the Fund's expense.
17. Reports. In addition to the daily confirmations and summary
provided to the Fund pursuant to Paragraph 6(b) hereof, Provident shall
furnish the Fund the following reports:
(a) such periodic and special reports as the Fund may
reasonably request;
(b) a monthly statement summarizing all transactions and
entries for the account of the Fund;
(c) a monthly report of portfolio securities of the Fund
showing the adjusted average cost of each issue and the market value at the
end of such month;
(d) a monthly report of the cash account of the Fund showing
disbursements; and
(e) such other information as may be agreed upon from time to
time between the Fund and Provident.
18. Cooperation With Accountants. Provident shall cooperate with
the Fund's independent public accountants and shall take all reasonable action
in the performance of its obligations under this Agreement to ensure that the
necessary
<PAGE>20
information is made available to such accountants for the expression of their
unqualified opinion, including but not limited to any opinion included in the
Fund's reports on Form N-SAR.
19. Confidentiality. Provident agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the
Fund all records and other information relative to the Fund and its prior,
present or potential Shareholders and relative to Counsellors Securities and
its prior, present or potential customers, 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
by the Fund, which approval shall not unreasonably be withheld and may not be
withheld where Provident may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested by the Fund.
20. Equipment Failures. In the event of equipment failures beyond
Provident's control, Provident shall, at no additional expense to the Fund,
take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto. Provident shall enter into and shall maintain
in effect with appropriate parties one or more agreements making reasonable
<PAGE>21
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available.
21. Right to Receive Advice.
(a) Advice to Fund. If Provident shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive, from
the Fund directions or advice, including Oral or Written Instructions where
appropriate.
(b) Advice of Counsel. If Provident shall be in doubt as to
any question of law involved in any action to be taken or omitted by
Provident, it may request advice at its own cost from counsel of its own
choosing (who may be counsel for Counsellors, PIMC, Counsellors Securities,
the Fund or Provident, at the option of Provident).
(c) Conflicting Advice. In case of conflict between
directions, advice or Oral or Written Instructions received by Provident
pursuant to subsection (a) of this paragraph and advice received by Provident
pursuant to subsection (b) of this paragraph, Provident shall be entitled to
rely on and follow the advice received pursuant to the latter provision alone.
(d) Protection of Provident. Provident shall be protected in
any action or inaction which it takes in reliance on any directions, advice or
Oral or Written Instructions received pursuant to subsections (a) or (b) of
this paragraph which Provident, after receipt of any such directions, advice
or Oral
<PAGE>22
or Written Instructions, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
However, nothing in this paragraph shall be construed as imposing upon
Provident any obligation (i) to seek such directions, advice or Oral or
Written Instructions, or (ii) to act in accordance with such directions,
advice or Oral or Written Instructions when received, unless, under the terms
of another provision of this Agreement, the same is a condition to Provident's
properly taking or omitting to take such action. Nothing in this subsection
shall excuse Provident when an action or omission on the part of Provident
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard by Provident of its duties under this Agreement.
22. Compliance with Governmental Rules and Regulations. The Fund
assumes full responsibility for ensuring that the contents of the Fund's
Prospectus complies with all applicable requirements of the 1933 Act, the 1940
Act, and any laws, rules and regulations of governmental authorities having
jurisdiction, except that the foregoing shall not apply to any information
furnished in writing to the Fund by or on behalf of Provident expressly for
use therein.
23. Compensation. As compensation for the services rendered by
Provident during the term of this Agreement, the Fund will pay to Provident
monthly fees equal to $.25 per year for each $1,000 of the average gross
assets of the Fund for such year
<PAGE>23
(based on the average of the assets included in the net asset value of the
Fund on each day in such month that such value is calculated), plus
Provident's out-of-pocket expenses relating to such services.
24. Indemnification. The Fund, as sole owner of the Property,
agrees to indemnify and hold harmless Provident and its nominees from all
taxes, charges, expenses, assessments, claims and liabilities (including,
without limitation, liabilities arising under the 1933 Act, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities and
blue sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly (a) from the fact that securities included in the
Property are registered in the name of any such nominee or (b) without
limiting the generality of the foregoing clause (a) from any action or thing
which Provident takes or does or omits to take or do (i) at the request or on
the direction of or in reliance on the advice of the Fund or (ii) upon Oral or
Written Instructions, provided, that neither Provident nor any of its nominees
shall be indemnified against any liability to the Fund or to its Shareholders
(or any expenses incident to such liability) arising out of (x) Provident's or
such nominee's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties under this Agreement or (y) Provident's own
negligent failure to perform its duties under this Agreement.
<PAGE>24
In the event of any advance of cash for any purpose made by Provident
resulting from orders or Oral or Written Instructions of the Fund, or in the
event that Provident or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act, willful misconduct,
or reckless disregard, any Property at any time held for the account of the
Fund shall be security therefor.
25. Responsibility of Provident. Provident shall be under no duty
to take any action on behalf of the Fund except as specifically set forth
herein or as may be specifically agreed to by Provident in writing. In the
performance of its duties hereunder, Provident shall be obligated to exercise
care and diligence and to act in good faith and to use its best efforts within
reasonable limits to insure the accuracy and completeness of all services
performed under the Agreement. Provident shall be responsible for its own
negligent failure to perform its duties under this Agreement, but to the
extent that duties, obligations and responsibilities are not expressly set
forth in this Agreement, Provident shall not be liable for any act or omission
which does not constitute willful misfeasance, bad faith or gross negligence
on the part of Provident or reckless disregard of such duties, obligations and
responsibilities. Without limiting the generality of the foregoing or of any
other
<PAGE>25
provision of this Agreement, Provident in connection with its duties under
this Agreement shall not be under any duty or obligation to inquire into and
shall not be liable for or in respect of (a) the validity or invalidity or
authority or lack thereof of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this Agreement, if
any, and which Provident reasonably believes to be genuine; (b) the validity
or invalidity of the issuance of any securities included or to be included in
the Property, the legality or illegality of the purchase of such securities,
or the propriety or impropriety of the amount paid therefor; (c) the legality
or illegality of the sale (or exchange) of any Property or the propriety or
impropriety of the amount for which such Property is sold (or exchanged); or
(d) delays or errors or loss of data occurring by reason of circumstances
beyond Provident's control, including acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdown (except
as provided in Paragraph 20), flood or catastrophe, acts of God, insurrection,
war, riots or failure of the mails, transportation, communication or power
supply, nor shall Provident be under any duty or obligation to ascertain
whether any Property at any time delivered to or held by Provident may
properly be held by or for the Fund.
26. Collections. All collections of monies or other property in
respect, or which are to become part, of the Property
<PAGE>26
(but not the safekeeping thereof upon receipt by Provident) shall be at the
sole risk of the Fund. In any case in which Provident does not receive any
payment due the Fund or security due the Fund as the result of a stock
dividend, share split-up or reorganization, readjustment or other
rearrangement or distribution of rights or similar securities issued with
respect to any portfolio securities within a reasonable time after Provident
has made proper demands for the same, it shall so notify the Fund in writing,
including copies of all demand letters, any written responses thereto, and
memoranda of all oral responses thereto and to telephonic demands, and await
instructions from the Fund. Provident shall not be obliged to take legal
action for collection unless and until reasonably indemnified to its
satisfaction. Provident shall also notify the Fund as soon as reasonably
practicable whenever income due on securities is not collected in due course.
27. Duration and Termination. This Agreement is terminable,
without penalty, on 60 days' written notice, by the Fund or upon 90 days'
written notice, by Provident. Upon any termination of this Agreement, pending
appointment of a successor to Provident or a vote of the Shareholders of the
Fund to dissolve or to function without a custodian of its cash, securities or
other property, Provident shall not deliver cash, securities or other property
of the Fund to the Fund, but may deliver them to a bank or trust company of
its own selection,
<PAGE>27
having an aggregate capital, surplus and undivided profits, as shown by its
last published report of not less than five hundred thousand dollars
($500,000) as a custodian for the Fund to be held under terms similar to those
of this Agreement, provided, however, that Provident shall not be required to
make any such delivery or payment until full payment shall have been made by
the Fund of all liabilities constituting a charge on or against the properties
then held by Provident or on or against Provident and until full payment shall
have been made to Provident of all of its fees, compensation, costs and
expenses, subject to the provisions of Paragraph 23 of this Agreement.
28. Notices. All notices and other communications, including
Written Instructions (collectively referred to as "Notice" or "Notices" in
this paragraph), hereunder shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notices shall be addressed (a) if
to Provident at Provident's address, 17th and Chestnut Streets, Philadelphia,
Pennsylvania 19103, marked for the attention of the Custodian Services
Department (or its successor); (b) if to the Fund, at the address of the Fund;
or (c) if to neither of the foregoing, at such other address as shall have
been notified to the sender of any such Notice or other communication. If the
location of the sender of a Notice and the address of the addressee thereof
are, at the time of sending, more than 100 miles apart, the Notice may be sent
by first-class mail, in which case it shall be
<PAGE>28
deemed to have been given three days after it is sent, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately, and, if the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending,
not more than 100 miles apart, the Notice may be sent by first-class mail, in
which case it shall be deemed to have been given two days after it is sent, or
if sent by messenger, it shall be deemed to have been given on the day it is
delivered, or if sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. All
postage, cable, telegram, telex and facsimile sending device charges arising
from the sending of a Notice hereunder shall be paid by the sender.
29. Further Actions. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
30. Amendments. The Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
31. Assignment. This Agreement and the performance hereunder may
be assigned by Provident to an affiliate or wholly-owned subsidiary of it or
PNC Financial Corp, without the Fund's consent but with at least thirty (30)
days' prior written notice. Provident shall remain responsible for the
performance of all of
<PAGE>29
its duties under this Agreement and shall hold the Fund harmless from the acts
and omissions of any such affiliate or wholly-owned subsidiary to which
Provident may assign this Agreement pursuant to this Paragraph 31.
32. Miscellaneous. This Agreement embodies the entire agreement
and understanding between the parties thereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof, provided
that the parties hereto may embody in one or more separate documents their
agreement, if any, with respect to delegated duties and/or Oral or Written
Instructions. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement shall be deemed
to be a contract made in Pennsylvania and governed by Pennsylvania law. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be
<PAGE>30
binding and shall inure to the benefit of the parties hereto and their
respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
[SEAL] COUNSELLORS CASH RESERVE FUND, INC.
Attest: By:
[SEAL] PROVIDENT NATIONAL BANK
Attest: By:
<PAGE>1
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made this 17th day of April, 1985 by and between
COUNSELLORS CASH RESERVE FUND, INC., a Maryland corporation ("Fund"), and
PROVIDENT FINANCIAL PROCESSING CORPORATION, a Delaware corporation ("PFPC"),
which is an indirect, wholly-owned subsidiary of PNC Financial Corp.
R E C I T A L
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain PFPC to serve as the Fund's
transfer agent, registrar and dividend disbursing agent, and PFPC is willing
to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment. The Fund hereby appoints PFPC to serve as
transfer agent, registrar and dividend disbursing agent for the Fund (which
term shall include any class or series of the Fund), for the period and on the
terms set forth in this Agreement. PFPC accepts such appointment and agrees
to furnish the services herein set forth in return for the compensation as
provided in Paragraph 16 of this Agreement.
<PAGE>2
2. Delivery of Documents. The Fund will furnish PFPC or its
counsel with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Fund's Board of Directors authorizing
the appointment of PFPC as transfer agent, registrar and dividend disbursing
agent for the Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and
containing the signatures of the Fund's officers authorized to sign Written
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Articles of Incorporation filed with the
Department of Assessments and Taxation of the State of Maryland on November
15, 1984 and all amendments thereto (such Articles of Incorporation, as
presently in effect and as they shall from time to time be amended, are herein
called the "Charter");
(d) The Fund's By-Laws and all amendments thereto (such By-
Laws, as presently in effect and as they shall from time to time be amended,
are herein called the "By-Laws");
(e) Resolutions of the Fund's Board of Directors appointing
Warburg, Pincus Counsellors, Inc. ("Counsellors") as the investment adviser
for the Fund and resolutions of the Fund's Board of Directors approving the
Investment Advisory Agreement between Counsellors and the Fund (the "Advisory
Agreement");
<PAGE>3
(f) Resolutions of the Fund's Board of Directors appointing
Provident Institutional Management Corporation ("PIMC") as the sub-investment
adviser and administrator for the Fund and resolutions of the Fund's Board
of Directors approving the Sub-Investment Advisory and Administration
Agreement between Counsellors and PIMC (the "Sub-Advisory Agreement");
(g) Resolutions of the Fund's Board of Directors appointing
Counsellors Securities Inc. ("Counsellors Securities") distributor for the
Fund and resolutions of the Fund's Board of Directors approving the
Distribution Agreement between Counsellors Securities and the Fund (the
"Distribution Agreement");
(h) Resolutions of the Fund's Board of Directors appointing
Provident National Bank ("Provident") custodian for the Fund and resolutions
of the Fund's Board of Directors approving the Custodian Agreement between
Provident and the Fund (the "Custodian Agreement");
(i) Copies of the Advisory Agreement, the Sub-Advisory
Agreement, and the Custodian Agreement;
(j) Notification of Registration filed by the Fund, pursuant
to Section 8(a) of the 1940 Act on Form N-8A under the 1940 Act with the
Securities and Exchange Commission ("SEC") on December 12, 1984;
(k) The Registration Statement of the Fund, on Form N-1A under
the Securities Act of 1933, as amended (the "1933
<PAGE>4
Act") (File No. 2-94840) and under the 1940 Act as filed with the SEC on
December 12, 1984 relating to shares of the Fund's Common Stock ($.001 par
value) ("Shares"), and all amendments thereto; and
(l) The Fund's most recent Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information, as presently in effect, and all amendments and supplements
thereto are herein called the "Prospectus").
The Fund will furnish PFPC or its counsel from time to time with
copies properly certified or authenticated of all amendments of or supplements
to the foregoing, if any.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the President, Treasurer, Secretary and any Vice
President of the Fund and any other person, whether or not such person is an
officer or employee of the Fund, duly authorized by the Board of Directors of
the Fund to give Oral and Written Instructions on behalf of the Fund and
listed on the Certificate annexed hereto as Appendix A or any other
certificate listing persons duly authorized to give Oral and Written
Instructions on behalf of the Fund as may be received by PFPC from time to
time.
(b) "Oral Instructions". As used in this Agreement, the term
"Oral Instructions" means verbal instructions
<PAGE>5
actually received by PFPC from an Authorized Person or from a person
reasonably believed by PFPC to be an Authorized Person. The Fund agrees to
deliver or cause to be delivered to PFPC, at the time and in the manner
specified in Paragraph 4(b) of this Agreement, Written Instructions confirming
Oral Instructions.
(c) "Written Instructions". As used in this Agreement, the term
"Written Instructions" means written instructions delivered by mail, tested
telegram, cable, telex or facsimile sending device, and received by PFPC and
signed by two Authorized Persons.
4. Instructions Consistent with Charter, etc.
(a) Unless otherwise provided in this Agreement, PFPC shall
act only upon Oral or Written Instructions. Although PFPC may take cognizance
of the provisions of the Charter and By-Laws of the Fund, PFPC may assume that
any Oral or Written Instructions received hereunder are not in any way
inconsistent with any provisions of such Charter or By-Laws or any vote,
resolution or proceeding of the Shareholders, or of the Board of Directors, or
of any committee thereof.
(b) PFPC shall be entitled to rely upon any Oral Instructions
and any Written Instructions actually received by PFPC pursuant to this
Agreement. The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions in such manner that the Written Instructions are received by
PFPC, whether by hand delivery, telex, facsimile sending device or
<PAGE>6
otherwise, by the close of business of the same day that such Oral
Instructions are given to PFPC. The Fund agrees that the fact that such
confirming Written Instructions are not received by PFPC shall in no way
affect the validity of the transactions or enforceability of the transactions
authorized by the Fund by giving Oral Instructions. The Fund agrees that PFPC
shall incur no liability to the Fund in acting upon Oral Instructions given to
PFPC hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Authorized Person.
5. Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, PFPC is authorized to take the following
action:
(a) Issuance of Shares. Upon receipt of an order for the
purchase of Fund Shares and sufficient information to enable PFPC to process
the order and, if necessary, establish a Shareholder account, and after
confirmation of receipt or crediting of Federal funds for the order from the
Fund's Custodian, PFPC shall issue and credit the account of the investor with
Fund Shares in the manner described in the Prospectus. PFPC shall issue
certificates to those Fund Shareholders who have elected to receive such
certificates.
(b) Redemptions. Upon receipt of a redemption order in proper
form or notice of a redemption by check, which may be in the form of a check
written against an account of
<PAGE>7
Provident for the purpose of redeeming Fund Shares, PFPC shall redeem Fund
Shares and make payments or cause payments to be made in the manner described
in the Prospectus, in accordance with such procedures and controls as are
mutually agreed upon from time to time between the Fund, PFPC and the Fund's
custodian.
(c) Lost, Stolen, Seized or Destroyed Certificates. PFPC may
issue new stock certificates in place of stock certificates represented to
have been lost, stolen, seized or destroyed, upon receiving written
instructions from the Fund and indemnity satisfactory to PFPC and the Fund.
Such instructions from the Fund shall be in such form as approved by the Board
of Directors of the Fund in accordance with the provisions of law or of the
By-Laws of the Fund governing such matters. If PFPC receives written
notification from the owner of the lost, destroyed, seized or stolen stock
certificate within a reasonable time after he has notice of it, PFPC shall
promptly notify the Fund and shall act pursuant to the written instructions of
the Fund. If the Fund receives such written notification from the owner of
the lost, destroyed, seized or stolen stock certificate it shall promptly send
written instructions to PFPC. PFPC shall not be liable for any act done or
omitted by it pursuant to or awaiting the written instruction of the Fund.
PFPC may issue new stock certificates in exchange for, and upon surrender of,
mutilated stock certificates.
<PAGE>8
6. Authorized Shares. The Fund's authorized capital stock
consists of an aggregate of 3,000,000,000 Shares of Common Stock
($.001 par value). PFPC shall record issues of all Shares and shall notify
the Fund reasonably in advance in case any proposed issue of Shares by the
Fund shall result in an over-issue as defined by Section 8-104(2) of Article 8
of the Maryland Uniform Commercial Code. In case any issue of Shares would
result in such an over-issue, PFPC shall refuse to issue said Shares and shall
not countersign and issue certificates for such Shares. The Fund agrees to
notify PFPC promptly of any change in the number of authorized Shares and of
any change in the number of Shares registered under the 1933 Act.
7. Dividends and Distributions. The Fund shall furnish PFPC with
appropriate evidence of action by the Fund's Board of Directors authorizing
the declaration and payment of dividends and distributions as described in the
then current Prospectus. After deducting any amount required to be withheld
by any applicable laws, rules and regulations PFPC shall, as agent for each
Shareholder and in accordance with the provisions of the Fund's Charter and
then current Prospectus, invest dividends in full and fractional Shares, or,
if so requested in proper form by a Shareholder, pay dividends in cash, in the
manner described in the Prospectus. PFPC will receive from the Fund's
custodian an amount equal to the amount indicated in Written Instructions
received by the Fund's custodian for the payment of such dividends
<PAGE>9
in cash, or in lieu thereof, the Fund, PFPC and the Fund's custodian may
arrange for the direct payment of cash dividends and distributions to
Shareholders by the Fund's custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time by and among the Fund,
PFPC and the Fund's custodian.
PFPC shall prepare, file with the Internal Revenue Service, and
address and mail to Shareholders such returns and information relating to
dividends and distributions paid by the Fund as are required to be so
prepared, filed and mailed by applicable laws, rules and regulations, or such
substitute form of notice as may from time to time be permitted or required by
the Internal Revenue Service. On behalf of the Fund, PFPC shall pay or cause
to be paid on a timely basis to the appropriate Federal authorities any taxes
required by applicable Federal tax laws to be withheld on dividends and
distributions paid by the Fund.
8. Communications with Shareholders.
(a) Communications to Shareholders. PFPC will address and
mail all communications by the Fund to its Shareholders, including reports to
Shareholders, dividend and distribution notices and proxy material for its
meetings of Shareholders. PFPC will receive and tabulate the proxy cards for
the meetings of the Fund's Shareholders.
(b) Correspondence. PFPC will answer such correspondence from
Shareholders, securities brokers and others
<PAGE>10
relating to its duties hereunder and such other correspondence as may from
time to time be mutually agreed upon between PFPC and the Fund.
(c) Confirmations. PFPC will issue and mail confirmations to
each Shareholder on a timely basis with respect to its purchase or redemption
of Shares (other than a purchase transaction in connection with the automatic
reinvestment of Shares).
(d) Telephone Inquiries. PFPC will provide one or more
persons during normal business hours to respond to telephone questions
concerning the Fund, including but not limited to providing information about
the Fund's current yield.
9. Records. PFPC shall keep the following records:
(a) accounts for each Shareholder showing the following
information:
(i) name, address and United States Tax Identification or
Social Security number;
(ii) number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
(iii) historical information regarding the account of each
Shareholder, including dividends and distributions paid and the date and
price for all transactions on a Shareholder's account;
(iv) any stop or restraining order placed
<PAGE>11
against a Shareholder's account;
(v) any correspondence relating to the current
maintenance of a Shareholder's account;
(vi) information with respect to withholdings; and
(vii) any information required in order for PFPC to
perform any calculations contemplated or required by this Agreement.
(b) PFPC shall also keep subaccounts for each Shareholder
requesting such services in connection with Shares held by such Shareholder
for separate accounts containing the same information for each subaccount as
required by subparagraph (a) above. PFPC reserves the right to charge
Shareholders who request additional subaccounting services a separate fee
therefor.
The books and records pertaining to the Fund which are in the
possession of PFPC shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Fund, or the Fund's
authorized representatives, shall have access to such books and records at all
times during PFPC's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by PFPC to the
Fund or the Fund's authorized representative at the Fund's expense.
<PAGE>12
10. Reports. PFPC shall furnish the Fund the following reports:
(a) reasonable information required in order for the Fund to
make necessary filings with state securities Commissions;
(b) such periodic and special reports as the Fund may
reasonably request;
(c) state by state registration reports; and
(d) such other information, including Shareholder lists and
statistical information concerning accounts as may be agreed upon from time to
time between the Fund and PFPC.
11. Cooperation With Accountants. PFPC shall cooperate with the
Fund's independent public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to ensure that the
necessary information is made available to such accountants for the expression
of their unqualified opinion, including but not limited to any opinion
included in the Fund's reports on Form N-SAR.
12. Confidentiality. PFPC agrees on behalf of itself and its
employees to treat confidentially all records and other information relative
to the Fund and its prior, present or potential Shareholders and relative to
Counsellors Securities and its prior, present or potential customers, except,
after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be
<PAGE>13
withheld where PFPC may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
13. Equipment Failures. In the event of equipment failures beyond
PFPC's control, PFPC shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall have no liability
with respect thereto. The foregoing obligation shall not extend to computer
terminals located outside of premises maintained by PFPC. PFPC shall enter
into and shall maintain in effect with appropriate parties one or more
agreements making reasonable provision for emergency use of electronic data
processing equipment to the extent appropriate equipment is available.
14. Right to Receive Advice.
(a) Advice of Fund. If PFPC shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive, from
the Fund directions or advice, including Oral or Written Instructions where
appropriate.
(b) Advice of Counsel. If PFPC shall be in doubt as to any
question of law involved in any action to.be taken or omitted by PFPC, it may
request advice at its own cost from counsel of its own choosing (who may be
counsel for Counsellors, PIMC, Counsellors Securities, the Fund or PFPC, at
the option of PFPC).
<PAGE>14
(c) Conflicting Advice. In case of conflict between
directions, advice or Oral or Written Instructions received by PFPC pursuant
to subparagraph (a) of this paragraph and advice received by PFPC pursuant to
subparagraph (b) of this paragraph, PFPC shall be entitled to rely on and
follow the advice received pursuant to the latter provision alone.
(d) Protection of PFPC. PFPC shall be protected in any action
or inaction which it takes in reliance on any directions, advice or Oral or
Written Instructions received pursuant to subparagraphs (a) or (b) of this
paragraph which PFPC, after receipt of any such directions, advice or Oral or
Written Instructions, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
However, nothing in this paragraph shall be construed as imposing upon PFPC
any obligation (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or
Oral or Written Instructions when received, unless, under the terms of another
provision of this Agreement, the same is a condition to PFPC's properly taking
or omitting to take such action. Nothing in this subsection shall excuse PFPC
when an action or omission on the part of PFPC constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by PFPC of any
duties, obligations or responsibilities not expressly provided for in this
Agreement or PFPC's negligent failure to perform its duties
<PAGE>15
expressly provided for in this Agreement.
15. Compliance with Governmental Rules and Regulations. The Fund
assumes full responsibility for ensuring that the contents of the Fund's
Prospectus complies with all applicable requirements of the 1933 Act, the 1940
Act, and any laws, rules and regulations of governmental authorities having
jurisdiction, except that the foregoing shall not apply to any information
furnished in writing to the Fund by or on behalf of PFPC expressly for use
therein.
16. Compensation. As compensation for the services rendered by
PFPC during the term of this Agreement, the Fund will pay to PFPC monthly fees
equal to $15 per account and subaccount of the Fund per year, prorated in the
case of accounts and subaccounts maintained for only a portion of a full year,
plus $1.00 for each purchase or redemption transaction by an account (other
than a purchase transaction in connection with the automatic reinvestment of
Shares), plus PFPC's out-of-pocket expenses relating to such services,
including, but not limited to, expenses of postage, telephone, TWX rental and
line charges, communications forms, checks and check processing. In the event
such fees for accounts, subaccounts and transactions do not equal $5000 per
year, the Fund agrees to pay PFPC an amount equal to the difference between
the aggregate fees received and $5000.
17. Indemnification. The Fund agrees to indemnify and hold
harmless PFPC and its nominees from all taxes, charges,
<PAGE>16
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the Securities Exchange Act of 1934,
the 1940 Act, and any state and foreign securities and blue sky laws, all as
or to be amended from time to time) and expenses, including (without
limitation) attorneys' fees and disbursements, arising directly or indirectly
from any action or thing which PFPC takes or does or omits to take or do (i)
at the request or on the direction of or in reliance on the advice of the Fund
or (ii) upon Oral or Written Instructions, provided, that neither PFPC nor any
of its nominees shall be indemnified against any liability to the Fund or to
its Shareholders (or any expenses incident to such liability) arising out of
(x) PFPC's or such nominee's own willful misfeasance, bad faith or gross
negligence or reckless disregard of its duties in connection with the
performance of any duties, obligations or responsibilities not expressly
provided for in this Agreement or (y) PFPC's or such nominee's own negligent
failure to perform its duties expressly provided for in this Agreement or
otherwise agreed to by PFPC in writing.
18. Responsibility of PFPC. PFPC shall be under no duty to
take any action on behalf of the Fund except as specifically set forth herein
or as may be specifically agreed to by PFPC in writing. In the performance of
its duties hereunder, PFPC shall be obligated to exercise care and diligence
and to act in good faith and to use its best efforts within reasonable limits
<PAGE>17
to insure the accuracy and completeness of all services performed under this
Agreement. PFPC shall be responsible for its own negligent failure to perform
its duties under this Agreement, but to the extent that duties, obligations
and responsibilities are not expressly set forth in this Agreement, PFPC shall
not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of PFPC or reckless
disregard of such duties, obligations and responsibilities. Without limiting
the generality of the foregoing or of any other provision of this Agreement,
PFPC in connection with its duties under this Agreement shall not be under any
duty or obligation to inquire into and shall not be liable for or in respect
of (a) the validity or invalidity or authority or lack thereof of any Oral or
Written Instruction, notice or other instrument which conforms to the
applicable requirements of this Agreement, if any, and which PFPC reasonably
believes to be genuine, or (b) delays or errors or loss of data occurring by
reason of circumstances beyond PFPC's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Paragraph 13), flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
19. Duration and Termination. This Agreement is terminable,
without penalty, on 60 days' written notice of the
<PAGE>18
Fund, or upon 90 days' written notice by PFPC.
20. Notices. All notices and other communications, including
Written Instructions (collectively referred to as "Notice" or "Notices" in
this paragraph), hereunder shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notices shall be addressed (a) if
to PFPC at PFPC's address, P.O. Box 8950, Wilmington, Delaware 19899; (b) if
to the Fund, at the address of the Fund; or (c) if to neither of the
foregoing, at such other address as shall have been notified to the sender of
any such Notice or other communication. If the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending,
more than 100 miles apart, the Notice may be sent by first-class mail, in
which case it shall be deemed to have been given five days after it is sent,
or if sent by confirming telegram, cable, telex or facsimile sending device,
it shall be deemed to have been given immediately, and, if the location of the
sender of a Notice and the address of the addressee thereof are, at the time
of sending, not more than 100 miles apart, the Notice may be sent by first-
class mail, in which case it shall be deemed to have been given three days
after it is sent, or if sent by messenger, it shall be deemed to have been
given on the day it is delivered, or if sent by confirming telegram, cable,
telex or facsimile sending device, it shall be deemed to have been given
immediately. All postage, cable, telegram, telex and facsimile sending device
charges arising from
<PAGE>19
the sending of a Notice hereunder shall be paid by the sender.
21. Further Actions. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
22. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
23. Assignment. This Agreement and the performance hereunder
may be assigned by PFPC to an affiliate or wholly-owned subsidiary of it or
PNC Financial Corp, without the Fund's consent, but with at least thirty (30)
days' prior written notice. PFPC shall remain responsible for the performance
of all of its duties under this Agreement and shall hold the Fund harmless
from the acts and omissions of any such affiliate or wholly-owned subsidiary
to which PFPC may assign this Agreement pursuant to this Paragraph 23.
24. Miscellaneous. This Agreement embodies the entire
agreement and understanding between the parties hereto, and supersedes all
prior agreements and understandings relating to the subject matter hereof,
provided that the parties hereto may embody in one or more separate documents
their agreement, if any, with respect to delegated and/or Oral or Written
Instructions. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
<PAGE>20
provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in Delaware and governed by
Delaware law. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding and
shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
[SEAL] COUNSELLORS CASH RESERVE
FUND, INC.
Attest: By
[SEAL] PROVIDENT FINANCIAL PROCESSING
CORPORATION
Attest: By
<PAGE>1
CONSENT OF COUNSEL
Counsellors Cash Reserve Fund, Inc.
We hereby consent to being named in the Statement of Additional
Information included in Post-Effective Amendment No. 12 (the "Amendment") to
the Registration Statement on Form N-1A (Securities Act File No. 2-94840,
Investment Company Act File No. 811-4171) of Counsellors Cash Reserve Fund,
Inc. (the "Fund") under the caption "Auditors and Counsel" and
to the Fund's filing a copy of this Consent as an exhibit to the Amendment.
Willkie Farr & Gallagher
New York, New York
June 28, 1995
<PAGE>1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment
No. 12 to the registration statement under the Securities Act of 1933
of Counsellors Cash Reserve Fund, Inc. on Form N-1A (No. 2-94840) of
our report dated March 31, 1995 on our audit of the financial statements
and financial highlights of Warburg, Pincus Cash Reserve Fund, Inc.
We also consent to the reference to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditors and Counsel" in the
Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
June 26, 1995
<PAGE>1
60530168
PURCHASE AGREEMENT
Counsellors Cash Reserve Fund, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, and Counsellors Securities
Inc. ("Counsellors Securities"), a corporation organized under the laws of the
State of New York, hereby agree as follows:
1. The Fund offers Counsellors Securities and Counsellors
Securities hereby purchases 100,000 shares of the Fund having a par value of
$.001 per share (the "Shares") at a price of $1.00 per Share. Counsellors
Securities hereby acknowledges receipt of one certificate representing the
100,000 Shares and the Fund hereby acknowledges receipt from Counsellors
Securities of $100,000.00 in full payment for the Shares.
2. Counsellors Securities represents and warrants to the Fund that
the Shares are being acquired for investment purposes and not for the purpose
of distributing them.
3. Counsellors Securities agrees that if it redeems any Shares
before five years after the date of this Agreement, it will pay to the Fund an
amount equal to the number resulting from multiplying the Fund's total
unamortized organizational expenses by a fraction, the numerator of which is
equal to the number of Shares redeemed and the denominator of which is equal
to the aggregate number of Shares outstanding at the time of such redemption.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the 17th day of April, 1985.
COUNSELLORS CASH RESERVE FUND, INC.
By: _______________________________
Stuart M. Goode
ATTEST: President
_________________________
Arnold Reichman
Secretary
COUNSELLORS SECURITIES, INC.
By: _______________________________
ATTEST:
_________________________
<PAGE>1
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan (the "Plan") is adopted by
Counsellors Cash Reserve Fund, Inc., a corporation organized under the laws of
the State of Maryland (the "Fund"), subject to the following terms and
conditions:
Section 1. Servicing Agreements; Annual Fee.
Any officer of the Fund is authorized to execute and deliver, in the
name and on behalf of the Fund, written agreements in substantially the form
attached hereto or in any form duly approved by the Board of Directors of the
Fund (the "Servicing Agreements") with institutional shareholders of record
("Service Organizations") of shares of the Fund's common stock, par value
$.001 per share, designated Common Stock - Series 1 (the "Series 1 Shares").
Pursuant to the Servicing Agreements, Service Organizations will be paid an
annual fee for providing certain shareholder servicing, administrative and
accounting services to their customers or clients who beneficially own the
Series 1 Shares ("Customers"). The annual fee paid to a Service Organization
under the Plan will be calculated daily and paid monthly will consist of a
service fee at an annual rate of up to .25% of the average daily net assets of
the Series 1 Shares held by the Service Organization on behalf of its
customers (the "Customers' Shares") and an administrative fee at an annual
rate of up to .25% of the average daily net assets of the Customers' Shares.
<PAGE>2
Section 2. Services.
The service fee paid to Service Organizations under Section 1 of the
Plan will compensate Service Organizations for (i) personal service and/or the
maintenance of shareholder 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
administrative fee paid to Service Organizations under Section 1 of the Plan
will compensate Service Organizations for certain sub-transfer agency,
administrative and/or sub-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 Fund Shares;
(c) processing dividend payments from the Fund on behalf of Customers;
(d) providing information periodically to Customers showing their positions in
Fund Shares; (e) arranging for bank wires; (f) providing sub-accounting with
respect to Series 1 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
<PAGE>3
by law; and (h) providing other similar services to the extent permitted
under applicable statutes, rules and regulations.
Section 3. Monitoring.
PNC Institutional Management Corporation, the Fund's sub-investment
adviser and administrator ("PIMC"), shall monitor the arrangements pertaining
to the Fund's Servicing Agreements with Service Organizations.
Section 4. Approval by Directors.
The Plan will not take effect and payments under any related
agreement will not be made until the Plan and such agreement are approved by a
majority vote of both (a) the full Board of Directors of the Fund and
(b) those Directors 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 Directors"), cast in person at a
meeting called for the purpose of voting on the Plan and the related
agreements.
Section 5. 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 of Directors in
the manner described in Section 4 above.
<PAGE>4
Section 6. Termination.
The Plan may be terminated at any time by a majority vote of the
Qualified Directors or by a majority vote of the outstanding Series 1 Shares
of the Fund.
Section 7. Amendments.
The Plan may be amended at any time by the Board of Directors,
provided that no material amendment to the Plan shall become effective unless
approved by the Fund's Board of Directors in the manner described in Section 4
above.
Section 8. Selection of Certain Directors.
While the Plan is in effect, the selection and nomination of the
Fund's Directors who are not interested persons of the Fund will be committed
to the discretion of the Directors then in office who are not interested
persons of the Fund.
Section 9. Written Reports.
In each year during which the Plan remains in effect, PIMC will
furnish to the Fund's Board of Directors, 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 10. Preservation of Materials.
The Fund will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 9 above, for a period of not
less than six years (the
<PAGE>5
first two years in an easily accessible place) from the date of the Plan,
agreement or report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" will be deemed to
have the same meaning that the term has under the Investment Company Act of
1940 and the rules and regulations thereunder, subject to any exemption that
may be granted to the Fund under that Act by the Securities and Exchange
Commission.
IN WITNESS WHEREOF, the Fund has executed the Plan as of April 14,
1993.
COUNSELLORS CASH RESERVE FUND, INC.
By:
President
Acknowledged this
day of April, 1993.
PNC INSTITUTIONAL MANAGEMENT CORPORATION
By:
Title:
<PAGE>1
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 Counsellors Cash Reserve Fund, Inc., a corporation organized under
the laws of the State of Maryland (the "Fund"), subject to the following terms
and conditions:
Section 1. Distribution Agreements; Annual Fee.
Any officer of the Fund is authorized to execute and deliver, in the
name and on behalf of the Fund, written agreements in substantially the form
attached hereto or in any form duly approved by the Board of Directors of the
Fund (the "Distribution Agreements") with institutional shareholders of record
("Service Organizations") of shares of the Fund's common stock, par value
$.001 per share, designated Common Stock - Series 2 (the "Series 2 Shares").
Pursuant to the Distribution Agreements, Service Organizations will be paid an
annual fee for providing (a) services primarily intended to result in the sale
of Fund Shares ("Distribution Services"), (b) shareholder servicing to their
customers or clients who beneficially own the Series 2 Shares ("Customers")
("Shareholder Services"), and (c) administrative and accounting services to
Customers ("Administrative Services"). A Service Organization will be paid an
annual service fee under the Plan calculated daily and paid monthly at an
annual rate of up to .25% of the average daily net
<PAGE>2
assets of the Series 2 Shares held by the Service Organization on behalf of
its Customers ("Customers' Shares") with respect to Shareholder Services and
an annual distribution fee of up to .50% of the average daily net assets of
Customers' Shares with respect to Distribution Services and Administrative
Services.
Section 2. Services.
The annual fee paid to Service Organizations under Section 1 of the
Plan with respect to Distribution Services will compensate Service
Organizations to cover certain expenses primarily intended to result in the
sale of the Fund's shares, including, but not limited to: (a) costs of
payments made to employees that engage in the distribution of the Fund's
shares; (b) payments made to, and expenses of, persons who provide support
services in connection with the distribution of the Fund's 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 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 shareholders of the Fund;
<PAGE>3
(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 will compensate Service
Organizations for personal service and/or the maintenance of shareholder
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 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 Fund Shares;
(c) processing dividend payments from the Fund on behalf of Customers;
(d) providing information periodically to Customers showing their positions in
Fund Shares; (e) arranging for bank wires; (f) providing sub-accounting with
<PAGE>4
respect to Series 2 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.
Section 3. Monitoring.
PNC Institutional Management Corporation, the Fund's sub-investment
adviser and administrator ("PIMC"), shall monitor the arrangements pertaining
to the Fund's Distribution Agreements with Service Organizations.
Section 4. Approval by Shareholders.
The Plan will not take effect, and no fee will be payable in
accordance with Section 1 of the Plan until the Plan has been approved by a
vote of at least a majority of the outstanding Series 2 Shares.
Section 5. Approval by Directors.
The Plan will not take effect and payments under any related
agreement will not be made until the Plan and such agreement are approved by a
majority vote of both (a) the full Board of Directors of the Fund and
(b) those Directors who are not interested persons of the Fund and who have no
direct or
<PAGE>5
indirect financial interest in the operation of the Plan or in any agreements
related to it (the "Qualified Directors"), cast in person at a meeting called
for the purpose of voting on the Plan and the related agreements.
Section 6. 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 of Directors in
the manner described in Section 5 above.
Section 7. Termination.
The Plan may be terminated at any time by a majority vote of the
Qualified Directors or by a majority vote of the outstanding Series 2 Shares.
Section 8. Amendments.
The Plan may be amended at any time by the Board of Directors,
provided that no material amendment to the Plan shall become effective unless
approved by the Fund's Board of Directors in the manner described in Section 5
above.
Section 9. Selection of Certain Directors.
While the Plan is in effect, the selection and nomination of the
Fund's Directors who are not interested persons of the Fund will be committed
to the discretion of the Directors then in office who are not interested
persons of the Fund.
<PAGE>6
Section 10. Written Reports.
In each year during which the Plan remains in effect, PIMC will
furnish to the Fund's Board of Directors, 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 11. Preservation of Materials.
The Fund will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 10 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 12. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" will be deemed to
have the same meaning that the term has 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>7
IN WITNESS WHEREOF, the Fund has executed the Plan as of April 14,
1993.
COUNSELLORS CASH RESERVE FUND, INC.
By:
President
Acknowledged this
day of April, 1993.
PNC INSTITUTIONAL MANAGEMENT CORPORATION
By:
Title:
<PAGE>
Warburg Pincus Cash Reserve Fund
As of 02/28/95
Current Yield:
With Waiver .001084428 x (365/7) = 5.65%
Without Waiver .001052892 x (365/7) = 5.49%
Effective Yield:
With Waiver ((1 + .001084428)/7)[*GRAPHIC OMITTED-SEE FOOTNOTE] - 1 = 5.81%
Without Waiver ((1 + .001052892)/7)[*GRAPHIC OMITTED-SEE FOOTNOTE] - 1 = 5.64%
--------------------------
* - This mathematical expression is being raised to the power of 365.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000759433
<NAME> WARBURG PINCUS CASH RESERVE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 411533992
<INVESTMENTS-AT-VALUE> 411533992
<RECEIVABLES> 3772266
<ASSETS-OTHER> 5261
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 415362099
<PAYABLE-FOR-SECURITIES> 10000000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2151317
<TOTAL-LIABILITIES> 12151317
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 403211560
<SHARES-COMMON-STOCK> 403205588
<SHARES-COMMON-PRIOR> 277567885
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 778
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 403210782
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15767758
<OTHER-INCOME> 0
<EXPENSES-NET> 1749561
<NET-INVESTMENT-INCOME> 14018197
<REALIZED-GAINS-CURRENT> 9641
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 14027838
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14018197
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1886501132
<NUMBER-OF-SHARES-REDEEMED> 1769313516
<SHARES-REINVESTED> 8456058
<NET-CHANGE-IN-ASSETS> 125653315
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (10419)
<GROSS-ADVISORY-FEES> 795255
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2347552
<AVERAGE-NET-ASSETS> 318102021
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .043
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .043
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
