SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE RBB FUND, INC.
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(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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<PAGE>
PRELIMINARY COPY
TAX FREE PORTFOLIO
OF
THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 9, 1995
TO THE SHAREHOLDERS:
A special meeting of shareholders of Class D shares of Common Stock ("Tax
Free Shares") of The RBB Fund, Inc. (the "Fund") representing interests in the
Tax Free Portfolio (the "Portfolio") will be held on March 31, 1995 at 10:00
a.m. at 400 Bellevue Parkway, Suite 100, Wilmington, Delaware. Holders of the
Tax Free Shares will meet for the following purposes:
(1) To approve or disapprove a proposed new Investment Advisory
Agreement between the Fund and Warburg, Pincus Counsellors, Inc.
which provides for no change in investment advisory fees.
(2) To approve or disapprove a modification of the fundamental
policies of the Portfolio to permit the Portfolio to temporarily
borrow for the purposes of meeting redemptions up to 30% of the
value of the Portfolio's total assets, and to pledge as security
in connection with such borrowing an amount up to 125% of the
amount borrowed.
Shareholders of record at the close of business on March 1, 1995 are
entitled to vote at the special meeting and any adjournments. If you attend the
meeting, you may vote your shares in person. If you do not expect to attend the
meeting, please fill in, date, sign and return the proxy in the enclosed
envelope which requires no postage if mailed in the United States.
It is important that you return your signed proxy promptly so that a quorum
may be assured.
By order of the Board of Directors,
Donald van Roden
Chairman
<PAGE>
TAX FREE PORTFOLIO
OF
THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
----------------------
PROXY STATEMENT
----------------------
SPECIAL MEETING OF SHAREHOLDERS
To Be Held March 31, 1995
The accompanying proxy is solicited by the Board of Directors of The RBB
Fund, Inc. (the "Fund"). A shareholder can revoke the proxy prior to its use by
appearing at the March 31, 1995 special meeting of shareholders (such meeting
and any adjournments thereof are hereinafter collectively called the "Meeting")
and voting in person, by giving written notice of such revocation to the
Secretary of the Fund or by returning a subsequently dated proxy. It is
anticipated that the solicitation of proxies will be primarily by mail. The
officers and directors of the Fund and the Fund's service providers may also
solicit proxies by telephone, telegraph or personal interview. The cost of
soliciting proxies will be borne by the Fund. The Fund may also pay persons
holding stock in their names, or those of their nominees, for their expenses in
sending proxies and proxy materials to beneficial owners or principals. It is
expected that this proxy statement and accompanying proxy will be first sent to
shareholders on or about March 9, 1995
Only shareholders of record holding Class D shares of Common Stock of the
Fund (the "Tax Free Shares") representing interests in the Tax Free Portfolio
(the "Portfolio") at the close of business on March 1, 1995 (the "Record Date")
will be entitled to vote at the Meeting. On the Record Date, there were
__________ Tax Free Shares outstanding. Each shareholder is entitled to one vote
for each full Tax Free Share held.
At the Record Date, _______________________________ was owner of record of
_______% of the Tax Free Shares; ____________________ was owner of record of
_______% of the Tax Free Shares; and ____________ was owner of record of ______%
of the Tax Free Shares.
The Board of Directors has named Donald van Roden, Chairman of the Board of
Directors of the Fund, and Edward J. Roach, President and Treasurer of the
Portfolio, and each of them with power of substitution as attorneys and proxies.
Unless otherwise directed by the accompanying proxy, the proxies will vote in
favor of the proposed new advisory contract and the proposed modifications of
the Portfolio's investment restrictions.
In addition, in accordance with the Fund's Charter, the Board of Directors
of the Fund has redesignated the Portfolio as the "Warburg Pincus Tax Free
Fund." Such change, will be effective on March 31, 1995 to reflect the
Portfolio's proposed affiliation with Warburg, Pincus Counsellors, Inc.
("Warburg Pincus"). As before, the Portfolio remains a class of shares of the
Fund.
Shareholders may obtain, without charge, a copy of the Portfolio's most
recent annual report by writing the Fund at 400 Bellevue Parkway, Wilmington DE
19809 or by calling 1-800-___-____.
<PAGE>2
PROPOSAL 1: APPROVAL OR DISAPPROVAL
OF THE NEW INVESTMENT ADVISORY AGREEMENT
At the Meeting, shareholders of the Portfolio will be asked to approve the
proposed new advisory arrangements for the Portfolio. Approval of the new
advisory arrangements will replace the existing investment adviser, PNC
Institutional Management Corporation ("PIMC"), and the existing investment
sub-adviser, PNC Bank, National Association ("PNC Bank"), with Warburg Pincus as
the new investment adviser.
At a meeting of the Fund's Board of Directors ("Board") held on February 1,
1995, the Board considered and approved the establishment of new investment
advisory arrangements for the Portfolio, subject to the approval of the
Portfolio's shareholders. Currently, PIMC serves as the investment adviser to
the Portfolio pursuant to an investment advisory contract dated August 16, 1988
("Current Advisory Agreement"). In addition, pursuant to a subadvisory agreement
("Sub-Advisory Agreement") by and among the Fund, PIMC and PNC Bank, PNC Bank
serves as sub-adviser to the Portfolio. These agreements were last approved by
shareholders at a meeting held on December 22, 1989.
Under the new arrangements approved by the Board, the Current Advisory and
Sub-Advisory Agreements would be terminated and Warburg Pincus would become the
Portfolio's sole investment adviser in accordance with the terms of a proposed
new advisory agreement between Warburg Pincus and the Fund relating to the
Portfolio ("Proposed Advisory Agreement"). If the Proposed Advisory Agreement is
approved by shareholders, the Portfolio would be managed by Warburg Pincus.
Arnold M. Reichman, a director of the Fund, is a Managing Director of E.M.
Warburg, Pincus & Co., Inc., which controls Warburg Pincus, a wholly-owned
subsidiary of Warburg, Pincus Counsellors G.P., through its ownership of the
voting preferred stock of Warburg Pincus. Counsellors Securities Inc., the
Fund's distributor, is a wholly-owned subsidiary of Warburg Pincus. The Proposed
Advisory Agreement provides that the Portfolio would pay an advisory fee to
Warburg Pincus at an annual rate of .50% of the Portfolio's average daily net
assets. This proposed fee is the same as the Portfolio's current investment
advisory fee which is payable to PIMC under the Current Advisory Agreement.
Except as specifically set forth below, the Proposed Advisory Agreement is the
same as the Current Advisory Agreement. The Proposed Advisory Agreement appears
as Appendix A to this Proxy Statement. In the event the Proposed Advisory
Agreement is not approved, the Current Advisory Agreement and Sub-Advisory
Agreement will remain in effect.
[Insert: Description of Portfolio Manager]
<PAGE>3
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE
"FOR" PROPOSAL 1
Description of the Proposed Advisory Agreement
Under the Proposed Advisory Agreement, Warburg Pincus will serve as
investment adviser to the Portfolio and be responsible for the overall
management of the Portfolio. Warburg Pincus may determine what securities and
other investments will be purchased, retained or sold and may place orders for
purchases and sales of portfolio securities. Warburg Pincus will provide its
services under the Proposed Advisory Agreement in accordance with the
Portfolio's investment objectives, restrictions and policies. Warburg Pincus
generally will pay the expenses it incurs in performing its duties under the
Proposed Advisory Agreement, although the Portfolio will bear its own operating
expenses.
For the services provided and expenses assumed by it, Warburg Pincus will
be entitled to receive with respect to the Portfolio an investment advisory fee,
computed daily and payable monthly, of .50% of the Portfolio's average daily net
assets.
The Proposed Advisory Agreement provides that Warburg Pincus will reimburse
the Portfolio for the amount, if any, by which the total operating expenses of
the Portfolio in any fiscal year exceed the most restrictive applicable state
expense limitation. Currently, the most restrictive applicable expense
limitation would require Warburg Pincus to reimburse the Portfolio to the extent
that the aggregate expenses borne by the Portfolio in any fiscal year, exclusive
of brokerage commissions, interest, taxes and distribution expenses calculated
on at least a monthly basis, exceed 2-1/2% of average annual net assets up to
$30 million, 2% of the next $70 million average annual net assets and 1-1/2% of
the remaining average annual net assets. Warburg Pincus has voluntarily
undertaken to cap the Portfolio's total operating expenses at .50% for the first
twelve (12) months that it manages the Portfolio. The Proposed Advisory
Agreement also provides that none of its provisions shall be deemed to protect
Warburg Pincus against any liability to the Portfolio or its shareholders to
which it would otherwise be subject by reason of any breach of fiduciary duty
with respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
under the Proposed Advisory Agreement.
The Proposed Advisory Agreement is terminable at any time without penalty
by the Board of Directors or by a vote of the holders of a majority of the Tax
Free Shares on 60 days' prior written notice to Warburg Pincus, or by Warburg
Pincus on 60 days' prior written notice to the Fund. The Proposed Advisory
Agreement also terminates automatically upon its assignment.
Under the proposed new arrangements, administrative services for the
Portfolio would be provided by PFPC, Inc., ("PFPC") with offices at 400 Bellevue
Parkway, Wilmington, Delaware 19809, and Counsellors Funds Services, Inc.
("Counsellors Services"), an affiliate of Warburg Pincus with offices at 466
Lexington Avenue, New York, New York, 10017-3147. Such administrative services
will be provided pursuant to separate Co-Administration Agreements
("Co-Administration Agreements"), to be dated March 31, 1995. Currently, there
is no Administration Agreement in effect for the Portfolio and PIMC administers
the Portfolio under the Current Advisory Agreement which will terminate upon
shareholder approval of the Proposed Advisory Agreement with Warburg Pincus. At
its meeting held on February 1, 1995, the Board approved the Co-Administration
Agreements with PFPC and Counsellors Services. PFPC will be compensated at an
annual rate of .15% of the average daily net asset value, and Counsellors
Services will be compensated at an annual rate of .10% of average daily net
asset
<PAGE>4
value. Although these Agreements are not subject to shareholder approval, they
will not become effective unless and until shareholders approve the Proposed
Advisory Agreement.
In considering whether to approve an increase in the administrative fee in
the event that Proposal 1 is approved by shareholders, the Board specifically
noted that, under the Current Advisory Agreement, PIMC is responsible for
providing certain administrative services which will, under the proposed new
co-administration arrangements, be performed by PFPC (primarily accounting and
fund administrative services) and Counsellors Services (primarily shareholder
liaison and account maintenance services).
In addition to the foregoing, the Board considered and approved a proposal
to eliminate sales charges in connection with the sale of shares of the
Portfolio. Previously, a sales charge of up to 4.75% of the public offering
price was imposed on purchases of Portfolio shares. At the same time, the Board
voted to limit the payment of distribution expenses to 0.25% of the Portfolio's
daily net assets. The Portfolio currently pays 0.40% of its average daily net
assets for distribution expenses. The Board determined to create a more
competitive distribution fee structure by eliminating the sales charges and
reducing the distribution fees. The Board was also furnished with information
relating to the manner in which Warburg Pincus plans to promote sales of
Portfolio shares, particularly in light of the amendment of the Distribution
Agreement Supplement and elimination of sales charges. It should be noted,
however, that the amendment of the Distribution Agreement Supplement to reduce
the distribution fee and elimination of sales charges became effective on
February 1, 1995 and is not contingent on approval of the Proposed Advisory
Agreement.
Comparison of the Proposed Advisory Agreement to the Current Advisory Agreement
Contract Terms. Under the Proposed Advisory Agreement, Warburg Pincus will
be entitled to receive an advisory fee at an annual rate of .50% of the
Portfolio's average daily net assets. Under the Current Advisory Agreement, PIMC
is entitled to receive the following fees, computed daily and payable monthly:
.50% of the first $250 million of the Portfolio's average daily net assets; .45%
of the next $250 million of the Portfolio's average daily net assets; and .40%
of the Portfolio's average daily net assets in excess of $500 million. PIMC pays
75% of this fee to PNC Bank for services under the Current Subadvisory
Agreement.
The Current Advisory and Sub-Advisory Agreements are each dated August 16,
1994, and were re-approved by the Board of Directors of the Fund at a meeting
called for that purpose on August 3, 1994. The Current Advisory and Sub-Advisory
Agreements were last submitted to a vote of Shareholders of the Portfolio at a
meeting held on December 22, 1989.
Under the Current Advisory and Sub-Advisory Agreement, PIMC and PNC Bank
are liable to the Portfolio for damages arising from the gross negligence, bad
faith or willful misfeasance on their part in the performance of their duties or
from reckless disregard by them of their obligations. Under the Proposed
Advisory Agreement, Warburg Pincus will be liable under the same standard of
care currently applied to PIMC and PNC Bank. The Proposed Advisory Agreement
requires the Portfolio to indemnify Warburg Pincus against liability resulting
from claims not involving gross negligence, willful misfeasance, bad faith or
reckless disregard on the part of Warburg Pincus. No such indemnification is
included in the Current Advisory Agreement or Current Sub-Advisory Agreement.
Under the Proposed Advisory Agreement, Warburg Pincus will be responsible
for providing the overall management of the Portfolio, including the provision
of a continuous investment research and management program for the Portfolio
with respect to all securities, investments, cash and cash equivalents. In
addition, the Proposed Advisory Agreement provides that Warburg Pincus will
furnish to the Fund, its agents and service providers prompt
<PAGE>5
and accurate information with respect to all of the Portfolio's activities for
which Warburg Pincus is responsible. Like the Current Advisory Agreement, the
Proposed Advisory Agreement authorizes the Portfolio's investment adviser to
direct brokerage transactions to brokers who provide research and certain other
services to such adviser.
Comparison of Fees and Expenses. As of March 1, 1995, the Portfolio had net
assets of $_______. During the fiscal year ended August 31, 1994, pursuant to
the terms of the Current Advisory Agreement, PIMC received fees of $0 and paid
$0 to PNC Bank. During that same period, PIMC voluntarily waived fees in the
amount of $29,801 payable to it with respect to the Portfolio.
<PAGE>6
The table set forth below illustrates the effect that the compensation
arrangements contained in the Proposed Advisory Agreement and the
Co-Administration Agreements, would have had on the fees payable by and expense
ratio of the Portfolio had those agreements been in effect during the
Portfolio's last fiscal year.
<TABLE>
<CAPTION>
Current Arrangements Pro Forma
-------------------- ---------
Aggregate Fee
Rate of Fee Payable by the
(% of avg. Portfolio for the Rate of Fee
daily net Fiscal Year (% of avg. Aggregate
assets) Ended 8/31/94 daily net assets) Fee
---------- ----------------- ----------------- ---------
<S> <C> <C> <C> <C>
PIMC
(Advisory
Services) .50%(1)(2) $29,801(1)(3)
Warburg Pincus
(Advisory Fees) .50% $29,801
Rule 12b-1 fees
(payable to .40% $23,841 .25% $14,900
Counsellors
Securities Inc.)
PFPC
(Administrative
Services) -0- -0- .15% $8,940
Counsellors Services
(Administrative
Services) -0- -0- .10% $5,960
Other Expenses .94% 55,947 .94% $55,947
Total (before
waivers and
reimbursements) 1.84% $109,589 1.94% $115,548
===== ======== ===== ========
Total (after
waivers and
reimbursements) .15% $8,952 .50% $29,801
===== ======== ====== =======
<FN>
1 Of the fee payable by the Portfolio, PIMC waived $29,801 for the year ended August 31, 1994, resulting
in an effective rate of 0%.
2 PNC Bank is entitled to receive 75% of the fee paid to PIMC by the Portfolio.
3 PNC Bank would have received $22,351 from PIMC for services to the Portfolio if there has been no
waivers of fees by PIMC.
</FN>
</TABLE>
<PAGE>7
Board Consideration of the Advisory Agreement
On February 1, 1995, the Board held an in-person meeting called for the
purpose, among other things, of considering the Proposed Advisory Agreement.
Following the deliberations summarized below, the Board, including a majority of
those directors who are not "interested persons" of the Fund approved, subject
to the approval of the Portfolio's shareholders, the Proposed Advisory Agreement
for an initial term ending on August 16, 1995.
In its presentation to the Board, Warburg Pincus proposed that in the event
that shareholders approve the Proposed Advisory Agreement, it will manage the
Portfolio consistent with the Portfolio's investment objective in the
Prospectus.
In reaching its decision to approve the Proposed Advisory Agreement, the
Board considered such factors as it deemed reasonably necessary. These factors
included, among others: (1) the nature and quality of advisory services
available through Warburg Pincus; (2) the experience of the portfolio managers
to be assigned to manage the Portfolio; (3) the relationship of the proposed
advisory fee to the fee schedules of comparable mutual funds; (4) other changes
in the administrative and distribution arrangements relating to the Portfolio;
(5) the costs that will be borne by Warburg Pincus in serving as the Portfolio's
sole investment adviser; and (6) the relationship between the Portfolio's
projected expense ratio and those of comparable funds.
In approving the Proposed Advisory Agreement, the Board took special note
of the outstanding investment performance achieved by Warburg Pincus in its
capacity as adviser to the Fund's Warburg Pincus Growth & Income Fund and
recognized that the Portfolio would have access to the same quality of service
under the Proposed Advisory Agreement. The Board also reviewed comparative
industry statistics for tax-free funds which included, among other things,
comparisons of investment advisory fees, expense ratios and cost per account
information. The Board noted that the fee payable to Warburg Pincus is
comparable to the fee payable by most funds with comparable investment
objectives. The Board believes that in light of its expectations that the level
of investment services to be provided by Warburg Pincus will benefit
shareholders, the investment advisory fee is appropriate. The Board specifically
determined that the proposed rate of advisory fee is reasonable, and not
excessive, in light of the nature, quality and scope of the advisory and
portfolio management services to be provided by Warburg Pincus.
Under the Investment Company Act of 1940 (the "1940 Act"), the Proposed
Advisory Agreement must be approved by the holders of a majority of the
outstanding Tax Free Shares. As used herein, "a majority of the outstanding Tax
Free Shares" means the lesser of (i) 67% of the Tax Free Shares present at the
Meeting if the holders of more than 50% of the outstanding Tax Free Shares are
present in person or by proxy, or (ii) more than 50% of the outstanding Tax Free
Shares. For purposes of this vote, abstentions will count toward the presence of
a quorum and will have the same effect as a vote "Against" Proposal 1. Broker
non-votes will not be counted toward the presence of a quorum and will have no
effect on the result of the vote.
PROPOSAL 2: MODIFICATION OF INVESTMENT LIMITATIONS
At its meeting, the Board also approved a proposal by PIMC and Warburg
Pincus that the fundamental policies applicable to the Portfolio be modified to
the extent necessary to permit the Portfolio to temporarily borrow for the sole
purpose of meeting redemptions up to 30% of the value of the Portfolio's total
assets, and to pledge as security in connection with such borrowing in an amount
up to 125% of the amount borrowed. In the event the proposed modification to the
Portfolio's fundamental policies is not approved, the Portfolio will remain
subject to its current fundamental policy (see below) on temporary borrowing.
The proposed change permits the Portfolio to collateralize such borrowings
by pledging assets in excess of the amount borrowed. The Portfolio has been
informed by various lenders that such lenders require collateral in excess of
100% of the amount of the loan. Collateral might be requested at 110% to 115% of
the loan amount. Under the present policy the Portfolio is effectively unable to
borrow, even for temporary purposes, since it is
<PAGE>8
prohibited from pledging collateral above the amount of the loan. The Board
therefore recommends to shareholders that the policy be changed to permit the
Portfolio to pledge assets in excess of the amount of the borrowing.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 2
The following sets forth the current and the proposed fundamental policies
applicable to the Portfolio to permit temporary borrowing.
The Portfolio's current fundamental policy with respect to temporary
borrowing is stated as follows:
The Tax Free Portfolio may not:
* * *
2. Borrow money, except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Portfolios's total assets
at the time of such borrowing, and only if after such borrowing there is
asset coverage of at least 300% for all borrowings of the Portfolio; or
mortgage, pledge or hypothecate any of its 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 Portfolio's total assets at the
time of such borrowing; or purchase portfolio securities while borrowings
in excess of 5% of the Portfolio's net assets are outstanding. (This
borrowing provision is not for investment leverage, but solely to
facilitate management of the Portfolio's securities by enabling the
Portfolio to meet redemption requests where the liquidation of portfolio
securities is deemed to be disadvantageous or inconvenient.)
* * *
The Board proposes to shareholders a change in this policy to read as
follows:
The Tax Free Portfolio may not:
* * *
2. Borrow money, except from banks for temporary purposes and then in
amounts not in excess of 30% of the value of the Portfolio's total assets
at the time of such borrowing, and only if after such borrowing there is
asset coverage of at least 300% for all borrowings of the Portfolio; or
mortgage, pledge or hypothecate any of its assets except in connection with
any such borrowing and in amounts not in excess of 125% of the dollar
amounts borrowed; or purchase portfolio securities while borrowings in
excess of 5% of the Portfolio's net assets are outstanding. (This borrowing
provision is not for investment leverage, but solely to facilitate
management of the Portfolio's securities by enabling the Portfolio to meet
redemption requests where the liquidation of portfolio securities is deemed
to be disadvantageous or inconvenient.)
* * *
Under the Investment Company Act of 1940 (the "1940 Act"), the proposed
modification in the fundamental policy must be approved by the holders of a
majority of the outstanding Tax Free Shares. As used herein, "a majority of the
outstanding Tax Free Shares" means the lesser of (i) 67% of the Tax Free Shares
present at the Meeting if the holders of more than 50% of the outstanding Tax
Free Shares are present in person or by
<PAGE>9
proxy, or (ii) more than 50% of the outstanding Tax Free Shares. For purposes of
this vote, abstentions will count toward the presence of a quorum and will have
the same effect as a vote "Against" Proposal 2. Broker non-votes will not count
toward the presence of a quorum and will have no effect on the result of the
vote.
Information About Warburg Pincus
Warburg Pincus. Warburg Pincus, a Delaware corporation, was organized in
1970. Its offices are located at 466 Lexington Avenue, New York, New York
10017-3147. An audited balance sheet of Warburg Pincus as of December 31, 1994
is attached hereto as Appendix B. Warburg Pincus is a wholly-owned subsidiary of
Warburg, Pincus Counsellors G.P. ("Warburg Pincus G.P."), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ("E.M. Warburg") controls Warburg
Pincus through its ownership of a class of voting preferred stock of Warburg
Pincus. E.M. Warburg's principal offices are located at 466 Lexington Avenue,
New York, New York 10017-3147. E.M. Warburg is wholly-owned by Warburg, Pincus
and Co., a general partnership.
Warburg Pincus provides investment management services for individuals and
institutions (including pension and profit sharing plans, foundations and
endowment funds). As of March 1, 1995 Warburg Pincus also provides advisory
services to the following registered investment companies, certain information
as to which is set forth below:
<TABLE>
<CAPTION>
Annual Rate of Fee
Name of Net Assets at (based on average
Investment Company March 1, 1995 net assets)
------------------ ------------- ------------------
<S> <C> <C>
Warburg Pincus New York
Tax Exempt Fund (a) $__________ .25%
Warburg Pincus Cash
Reserve Fund (a) $__________ .25%
Warburg Pincus New York
Municipal Bond Fund $__________ .40%
Warburg Pincus Intermediate
Maturity Government
Fund $__________ .50%
Warburg Pincus Fixed
Income Fund $__________ .50%
Warburg Pincus Global Fixed
Income Fund $__________ 1.00%
Warburg Pincus Capital
Appreciation Fund $__________ .70%
Warburg Pincus Emerging
Growth Fund $__________ .90%
</TABLE>
<PAGE>10
<TABLE>
<CAPTION>
Annual Rate of Fee
Name of Net Assets at (based on average
Investment Company March 1, 1995 net assets)
------------------ ------------- ------------------
<S> <C> <C>
Counsellors Tandem
Securities Fund, Inc. $_________ .75%
Warburg Pincus International
Equity Fund $_________ 1.00%
Warburg Pincus Institutional
Fund, Inc. -- International
Equity Portfolio $_________ .80%
Warburg Pincus Japan OTC Fund $_________ ___%
Warburg Pincus Emerging Market Fund $_________ ___%
Warburg Pincus Short-Term After-Tax
Bond Fund $_________ ___%
Warburg Pincus Growth &
Income Fund (a portfolio of The $_________ .75%
RBB Fund, Inc.)
Warburg Pincus Balanced
Fund (a portfolio of The
RBB Fund, Inc.) $_________ .90%
- ---------------
<FN>
(a) PIMC serves as a subadviser and receives an annual fee of .25% of the
average net assets of Warburg Pincus Cash Reserve Fund and Warburg
Pincus New York Tax Exempt Fund.
</FN>
</TABLE>
The names and principal occupations of the chief executive officer and each
director of Warburg Pincus as of March 1, 1995 are as follows: Lionel I. Pincus,
Chairman, Chief Executive Officer and Director of Warburg Pincus and E.M.
Warburg and officer and director of certain of its affiliates; John L. Furth,
President and Director of Warburg Pincus, Vice Chairman and Director of E.M.
Warburg and officer and director of certain of its affiliates; and John L.
Vogelstein, Director and Managing Director of Warburg Pincus, Vice Chairman and
Director of E.M. Warburg and officer and director of certain of its affiliates.
Each of the above persons may be reached c/o E.M. Warburg, Pincus & Co., Inc.,
466 Lexington Avenue, New York, New York 10017-3147. Arnold M. Reichman, a
Director of the Fund, is the Managing Director and Assistant Secretary of E.M.
Warburg, Pincus & Co., Chief Executive Officer and Secretary of Counsellors
Securities Inc., and an Officer of various investment companies advised by
Warburg Pincus.
Since December 31, 1995, there have been no purchases or sales of
securities of Warburg Pincus, its parents or subsidiaries, by Directors of the
Fund in excess of 1% of the outstanding securities of any class of Warburg
Pincus, its parents or subsidiaries.
<PAGE>11
Distribution Arrangements. Counsellors Securities Inc., a wholly owned
subsidiary of Warburg Pincus, with offices at 466 Lexington Avenue, New York,
New York 10017-3147, serves as distributor to each of the twenty-eight classes
of Common Stock of the Fund being sold to the public as of the Record Date,
representing interests in eighteen investment portfolios. The Fund's Board has
adopted separate plans of distribution for each of such classes pursuant to Rule
12b-1 under the 1940 Act. As described above, however, the Board has reduced the
amount payable by the Portfolio under the plan to .25% of the Portfolio's
average daily net assets. Counsellors Securities Inc. will continue to serve as
distributor regardless of whether the Proposed Advisory Agreement is approved or
disapproved.
ADDITIONAL INFORMATION ABOUT THE FUND
Executive Officers
Executive officers of the Fund are elected by the Board of Directors and
serve at the pleasure of the Board. The following table sets forth certain
information about the executive officers of the Fund.
<TABLE>
<CAPTION>
Officer Position with Business Experience
Name Age Since the Fund During Past Five Years
- ---- --- ------- ------------- ----------------------
<S> <C> <C> <C> <C>
Edward J. Roach 69 1988 President and Certified Public Accountant; Partner in the
Treasurer public accounting firm of Main Hurdman until
1981; Vice Chairman of the Board, Fox Chase
Cancer Center; Vice President and Trustee,
Pennsylvania School for the Deaf; Trustee,
Immaculata College; Vice President and Treasurer,
of various investment companies advised by PIMC
Morgan R. Jones 54 1988 Secretary Chairman of the law firm of Drinker Biddle &
Reath, Philadelphia, Pennsylvania (counsel to the
Fund's disinterested directors).
</TABLE>
Mr. Roach receives an annual fee of $5,000 from the Fund as compensation
for his services as President and Treasurer of the Fund.
<PAGE>12
Brokerage and Portfolio Turnover
During the fiscal year ended August 31, 1994, the Portfolio did not pay any
brokerage commissions on purchases and sales of its securities. In respect of
all investment portfolios of the Fund, the Fund paid an aggregate amount of
$6,619,028 in commissions on purchases and sales of such portfolios' securities
during the fiscal year ended August 31, 1994.
Subject to policies established by the Board, the Portfolio's adviser is
primarily responsible for the execution of portfolio transactions and the
allocation of brokerage transactions for the Portfolio. In executing portfolio
transactions, the adviser will seek to obtain the best net results for the
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. While the adviser
generally seeks reasonably competitive commission rates, payment of the lowest
commission or spread is not necessarily consistent with obtaining the best
results in particular transactions.
The Portfolio has no obligation to deal with any broker-dealer or group of
brokers-dealers in the execution of portfolio transactions. The adviser may,
consistent with the interests of the Portfolio and subject to the approval of
the Fund's Board, select brokers-dealers on the basis of the research services
(which may include analysts', strategists', economists' and technicians' reports
and statistical data) and pricing services they provide to the Portfolio and
other clients of the adviser. Research services furnished by brokers-dealers
through whom the adviser effects securities transactions may be used by the
adviser in servicing all of its accounts, and not all such services may be used
by the adviser in connection with the Portfolio and the Fund. Information and
research received from such brokers-dealers will be in addition to, and not in
lieu of, the services required to be performed by the adviser under its
agreement. A commission paid to such brokers-dealers may be higher than that
which another qualified broker-dealer would have charged for effecting the same
transactions, provided that the adviser determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of the adviser, as applicable, to the Fund and its other clients
and that the total commissions paid by the Portfolio will be reasonable in
relation to the benefits to the Portfolio over the long-term. In no instance
will portfolio securities be purchased from or sold to the adviser or any
affiliated person of the adviser except as permitted by Securities and Exchange
Commission ("SEC") exemptive order or by applicable law.
Investment decisions for the Portfolio and for other investment accounts
managed by the adviser are made independently of each other in the light of
different investment objectives and portfolio conditions. However, the same
investment decision may occasionally be made for two or more of such accounts.
In such cases, simultaneous transactions are inevitable. Purchases or sales are
then averaged as to price and allocated as to amount according to a formula
deemed equitable to each such account. While in some cases this practice could
have a detrimental effect upon the price or value of the security as far as the
Portfolio is concerned, in other cases it is believed to be beneficial to the
Portfolio. The Portfolio will not purchase securities during the existence of
any underwriting or selling group relating to such security of which the adviser
or any affiliated person (as defined in the 1940 Act) thereof is a member except
pursuant to procedures adopted by the Fund's Board pursuant to Rule 10f-3 under
the 1940 Act. Among other things, these procedures require that the commission
paid in connection with such a purchase be reasonable and fair, that the
purchase be at not more than the public offering price prior to the end of the
first business day after the date of the public offer, and that the adviser or
any affiliated person not participate in or benefit from the sale to the
Portfolio.
For the fiscal year ended August 31, 1994, the Portfolio's portfolio
turnover rate was 20%.
<PAGE>13
Additional Information Concerning the Fund's Portfolios
In addition to the Portfolio, on the Record Date, the Fund also offered
classes of shares of Common Stock representing interests in seventeen other
investment portfolios:
<TABLE>
<CAPTION>
Portfolio Shares Outstanding
--------- ------------------
<S> <C>
Warburg Pincus Growth & Income Fund ______________
Warburg Pincus Balanced Fund ______________
Money Market Portfolio ______________
Municipal Money Market Portfolio ______________
New York Municipal Money Market Portfolio ______________
Government Securities Portfolio ______________
Government Obligations Money Market Portfolio ______________
BEA International Equity Portfolio ______________
BEA Emerging Markets Equity Portfolio ______________
BEA Strategic Fixed Income Portfolio ______________
BEA U.S. Core Equity Portfolio ______________
BEA U.S. Core Fixed Income Portfolio ______________
BEA Global Fixed Income Portfolio ______________
BEA Municipal Bond Fund Portfolio ______________
BEA Balanced Portfolio ______________
BEA Short Duration Portfolio ______________
Laffer/Canto Equity Portfolio ______________
</TABLE>
<PAGE>14
Principal Holders of the Fund's Outstanding Common Stock
The Fund's outstanding Common Stock has been classified into twenty-nine
classes (Classes A, C through J, L through P, R through Z, and AA through EE).
The following table sets forth as of March 1, 1995, those known by the Fund to
be the owners of record of more than 5% of any class of the Fund's outstanding
Common Stock. The Fund has no knowledge regarding the beneficial ownership of
such shares.
<TABLE>
<CAPTION>
Percent of
Outstanding
Names and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- --------------------- ---------------- --------------- -----------
<S> <C> <C> <C>
Class A
(Growth & Income)
Class C
(Balanced)
Class D
(Tax-Free)
Class E
(Money)
Class F
(Municipal Money)
Class G
(Money)
Class H
(Municipal Money)
Class I
(Money)
Class J
(Municipal Money)
Class L
(Money)
Class M
(Municipal Money)
Class N
(U.S. Government Money)
Class O
(New York Money)
</TABLE>
<PAGE>15
<TABLE>
<CAPTION>
Percent of
Outstanding
Names and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- --------------------- ---------------- --------------- -----------
<S> <C> <C> <C>
Class P
(Government)
Class R
(Municipal Money)
Class S
(U.S. Government Money)
Class T
(BEA International Equity)
Class U
(BEA Strategic)
Class V
(BEA Emerging)
Class W
(Laffer)
Class X
(BEA U.S. Core Equity)
Class Y
(BEA U.S. Core Fixed Income)
Class Z
(BEA Global Fixed Income)
Class AA
(BEA Municipal Bond)
Class BB
(BEA Balanced)
Class CC
(BEA Short Duration)
Class DD
(Growth & Income Series 2)
</TABLE>
<PAGE>16
<TABLE>
<CAPTION>
Percent of
Outstanding
Names and Addresses Number of Shares Shares of
Class of Common Stock of Record Owners Owned of Record Class Owned
- --------------------- ---------------- --------------- -----------
<S> <C> <C> <C>
Class EE
(Balanced Series 2)
</TABLE>
Ownership of the Fund's Stock by Directors and Officers
As of March 1, 1995, the officers and directors of the Fund beneficially
owned less than 1% of the outstanding shares of the Fund.
ANNUAL MEETINGS
The Fund does not currently intend to hold annual meetings of shareholders
except as required by the 1940 Act or other applicable law. Under the Fund's
amended By-laws, shareholders who, taken together, own 10% of the outstanding
shares of all classes of the Fund have the right to call for a meeting of
shareholders to consider the removal of one or more directors.
By order of the Board of Directors,
DONALD VAN RODEN
Chairman
March 9, 1995
<PAGE>
APPENDIX A
INVESTMENT ADVISORY AGREEMENT
(Warburg Pincus Tax Free Fund)
AGREEMENT made as of March __, 1995 between THE RBB FUND, INC., a Maryland
corporation (herein called the "Company"), and Warburg, Pincus Counsellors, Inc.
(herein called the "Investment Advisor").
WHEREAS, the Company is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act"), of which the
Warburg Pincus Tax Free Fund (the "Fund") is a separate investment portfolio;
and
WHEREAS, the Company desires to retain the Investment Advisor to render
certain investment advisory services to the Company with respect to the Fund,
and the Investment Advisor is willing to so render such services,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment Advisor to act
as investment advisor for the Fund for the period and on the terms set forth in
this Agreement. The Investment Advisor accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Company has furnished the Investment Advisor
with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Board of Directors of the Company authorizing
the appointment of the Investment Advisor and the execution and delivery of this
Agreement;
(b) The Prospectus and Statement of Additional Information relating to
the class of Shares representing interests in the Fund of the Company in effect
under the 1933 Act (such prospectus and statement of additional information, as
presently in effect and as it shall from time to time be amended and
supplemented, is herein called the "Prospectus").
The Company will furnish the Investment Advisor from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
<PAGE>2
3. Management of the Fund. Subject to the supervision of the Board of
Directors of the Company, the Investment Advisor will provide for the overall
management of the Fund including (i) the provision of a continuous investment
program for the Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents in the Fund, (ii) the
determination from time to time of what securities and other investments will be
purchased, retained, or sold by the Company for the Fund, and (iii) the
placement from time to time of orders for all purchases and sales made for the
Fund. The Investment Advisor will provide the services rendered by it hereunder
in accordance with the Fund's investment objectives, restrictions and policies
as stated in the applicable Prospectus contained in the Registration Statement.
The Investment Advisor further agrees that it will render to the Company's Board
of Directors such periodic and special reports regarding the performance of its
duties under this Agreement as the Board may request. The Investment Advisor
agrees to provide to the Company (or its agents and service providers) prompt
and accurate data with respect to the Fund's transactions and, where not
otherwise available, the daily valuation of securities in the Fund.
4. Brokerage. The Investment Advisor may place orders either directly with
the issuer or with any broker or dealer. In placing orders with brokers and
dealers, the Investment Advisor will attempt to obtain the best price and the
most favorable execution of its orders. In placing orders, the Investment
Advisor will consider the experience and skill of the firm's securities traders
as well as the firm's financial responsibility and administrative efficiency.
Consistent with this obligation, the Investment Advisor may, subject to the
review of the Board of Directors, select brokers on the basis of the research,
statistical and pricing services they provide to the Fund and other clients of
the Investment Advisor. Information and research received from such brokers will
be in addition to, and not in lieu of, the services required to be performed by
the Investment Advisor hereunder. A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that the Investment Advisor determines in good
faith that such commission is reasonable in terms of either the transaction or
the overall responsibility of the Investment Advisor to the Fund and its other
clients and that the total commissions paid by the Fund will be reasonable in
relation to the benefits to the Fund over the long-term. In no instance will the
Fund's securities be purchased from or sold to the Company's principal
underwriter, the Investment Advisor, or any affiliated person thereof, except to
the extent permitted by SEC exemptive order or by applicable law.
<PAGE>3
5. Conformity with Law; Confidentiality. The Investment Advisor further
agrees that it will comply with all applicable rules and regulations of all
federal regulatory agencies having jurisdiction over the Investment Advisor in
the performance of its duties hereunder. The Investment Advisor will treat
confidentially and as proprietary information of the Company all records and
other information relating to the Company and prior, present or potential
shareholders (except clients of the Investment Advisor and its affiliates), and
will not 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 Company, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Advisor 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 Company.
6. Services Not Exclusive. The investment management and services rendered
by the Investment Advisor hereunder are not to be deemed exclusive, and the
Investment Advisor shall be free to render similar services to others so long as
its services under this Agreement are not impaired thereby.
7. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Advisor hereby agrees that all records which
it maintains for the Fund are the property of the Company and further agrees to
surrender promptly to the Company any of such records upon the Company's
request. The Investment Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Investment Advisor will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities purchased for the Fund (including
brokerage commissions, if any), the cost of independent pricing services used in
valuing the Fund's securities and fees and expenses of registering and
qualifying shares for distribution under state securities laws.
If the expenses borne by the Fund in any fiscal year exceed the most
restrictive applicable expense limitations imposed by the securities regulations
of any state in which the Shares of the Fund are registered or qualified for
sale to the public, the Investment Advisor shall reimburse the Fund for any
excess up to the amount of the fees payable by the Fund to it during such fiscal
year pursuant to Paragraph 9 hereof; provided,
<PAGE>4
however, that notwithstanding the foregoing, the Investment Advisor shall
reimburse the Fund for such excess expenses regardless of the amount of such
fees payable to it during such fiscal year to the extent that the securities
regulations of any state in which the Shares are registered or qualified for
sale so require.
9. Compensation.
(a) For the services provided and the expenses assumed pursuant to
this Agreement with respect to the Fund, the Company will pay the Investment
Advisor from the assets of the Fund and the Investment Advisor will accept as
full compensation therefor a fee, computed daily and payable monthly, at the
annual rate of .50% of the Fund's average daily net assets.
(b) The fee attributable to the Fund shall be satisfied only against
assets of the Fund and not against the assets of any other investment portfolio
of the Company.
10. Limitation of Liability of the Investment Advisor. The Investment
Advisor shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Company in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Advisor in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement ("Disabling Conduct"). The Fund will
indemnify the Investment Advisor against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand, action or suit not
resulting from Disabling Conduct by the Investment Advisor. Indemnification
shall be made only following: (i) a final decision on the merits by a court or
other body before whom the proceeding was brought that the Investment Advisor
was not liable by reason of Disabling Conduct; or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
Investment Advisor was not liable by reason of Disabling Conduct by (a) the vote
of a majority of a quorum of directors of the Fund who are neither "interested
persons" of the Fund nor parties to the proceeding ("Disinterested Non-Party
Directors") or (b) an independent legal counsel in a written opinion. The
Investment Advisor shall be entitled to advances from the Fund for payment of
the reasonable expenses incurred by it in connection with the matter as to which
it is seeking indemnification in the manner and to the fullest extent
permissible under the Maryland General Corporation Law.
<PAGE>5
The Investment Advisor shall provide to the Fund a written affirmation of its
good faith belief that the standard of conduct necessary for indemnification by
the Fund has been met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not been met.
In addition, at least one of the following additional conditions shall be met:
(a) the Investment Advisor shall provide a security in form and amount
acceptable to the Fund for its undertaking; (b) the Fund is insured against
losses arising by reason of the advance; or (c) a majority of a quorum of
Disinterested Non-Party Directors, or independent legal counsel, in a written
opinion, shall have determined, based upon a review of facts readily available
to the Fund at the time the advance is proposed to be made, that there is reason
to believe that the Investment Advisor will ultimately be found to be entitled
to indemnification. Any amounts payable by the Fund under this Section shall be
satisfied only against the assets of the Fund and not against the assets of any
other investment portfolio of the Company.
11. Duration and Termination. This Agreement shall become effective with
respect to the Fund on the day after approval of this Agreement by vote of a
majority of the outstanding voting securities of the Fund and, unless sooner
terminated as provided herein, shall continue with respect to the Fund until
August 16, 1995. Thereafter, if not terminated, this Agreement shall continue
with respect to the Fund for successive annual periods ending on August 16,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Board of Directors of the Company who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) by the Board of Directors of the Company or by vote of a majority of the
outstanding voting securities of the Fund; provided, however, that this
Agreement may be terminated with respect to the Fund by the Company at any time,
without the payment of any penalty, by the Board of Directors of the Company or
by vote of a majority of the outstanding voting securities of the Fund, on 60
days' prior written notice to the Investment Advisor, or by the Investment
Advisor at any time, without payment of any penalty, on 90 days' prior written
notice to the Company. This Agreement will immediately terminate in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meaning as such terms have in the 1940 Act).
12. Amendment of this Agreement. No provision of this Agreement may be
changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which
<PAGE>6
enforcement of the change, discharge or termination is sought, and no amendment
of this Agreement affecting the Fund shall be effective until approved by vote
of the holders of a majority of the outstanding voting securities of the Fund.
13. 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 a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by and construed and enforced in accordance with the laws of the state
of New York without giving effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE RBB FUND, INC.
By: __________________________
President
WARBURG, PINCUS COUNSELLORS, INC.
By:___________________________
<PAGE>
PRELIMINARY COPY
PROXY
Tax Free Portfolio of The RBB Fund, Inc.
Special Meeting of Shareholders
March 31, 1995
This Proxy is solicited on behalf of the Directors
The undersigned hereby appoints Donald van Roden and Edward J. Roach,
and each of them, attorneys and proxies, with power of substitution in each of
them, to vote and act on behalf of the undersigned at the Special Meeting of
Shareholders of Class D shares of Common Stock (the "Tax Free Shares") of The
RBB Fund, Inc. (the "Fund") representing interests in the Tax Free Portfolio
(the "Portfolio") at 400 Bellevue Parkway, Wilmington, Delaware 19809 on March
31, 1995 at 10:00 a.m., and at all adjournments thereof, according to the number
of Tax Free Shares which the undersigned would be entitled to vote if then
personally present, upon such subjects as may properly come before the meeting,
all as set forth in the notice of the meeting and the proxy statement furnished
herewith, copies of which have been received by the undersigned; hereby
ratifying and confirming all that said attorneys and proxies may do or cause to
be done by virtue hereof.
It is agreed that unless otherwise marked hereon, said attorneys and
proxies are appointed with authority to vote For Proposal 1 and Proposal 2.
The Directors recommend voting "FOR" Proposal 1 and Proposal 2.
1. Proposal to approve the proposed new Investment Advisory Agreement between
the Fund and Warburg, Pincus Counsellors, Inc. in respect of the Fund's
Portfolio which provides for no increase in investment advisory fees.
FOR AGAINST ABSTAIN
/ / / / / /
-- -- --
<PAGE>2
2. Proposal to approve a modification of the fundamental policies of the
Portfolio to permit the Portfolio to temporarily borrow for the purposes of
meeting redemptions up to 30% of the value of the Portfolio's total assets,
and to pledge as security in connection with such borrowing an amount up to
125% of the amount borrowed.
FOR AGAINST ABSTAIN
/ / / / / /
-- -- --
3. In the discretion of such proxies, upon such other business as may properly
come before the meeting or any adjournment thereof.
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. WHEN TAX FREE SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN
SIGNING AS ATTORNEY OR AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
Dated: __________________________, 1995
X______________________________
Signature/Title
X______________________________
Signature, if held jointly
Please Sign, Date and Return the Proxy Promptly Using the
Enclosed Envelope.
