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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Rule 14a-11(c) or Rule 14a-12
WARBURG, PINCUS JAPAN OTC FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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 number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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WARBURG, PINCUS JAPAN OTC FUND, INC.
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3147
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
AUGUST 21, 1998
Dear Shareholders:
A special meeting of the shareholders (the "Meeting") of the Warburg,
Pincus Japan OTC Fund, Inc. (the "Fund") will be held on August 21, 1998, at
3:00 p.m., Eastern Time, at the offices of the Fund, 466 Lexington Avenue, New
York, New York 10017-3147 (12th Floor), or any adjournment thereof, for the
following purposes:
I. To approve or disapprove a new investment policy for the Fund (the
"New Investment Policy"); and
II. To transact such other business as may properly come before the
meeting.
The Board of Directors of the Fund (the "Board") unanimously recommends
that you vote FOR approval of the New Investment Policy.
The enclosed proxy is being solicited on behalf of the Board. The costs
associated with this proxy are being paid for by Warburg Pincus Asset
Management, Inc., the Fund's investment adviser. You are entitled to vote at the
Meeting and any adjournments thereof if you owned shares of the Fund at the
close of business on June 19, 1998, even if you currently do not own any shares.
As a convenience to shareholders, you can now vote in any one of three ways:
- Through the Internet at www.[INSERT].com (or by going to www.warburg.com
and clicking on [Proxy Voting]);
- By mail, with the enclosed proxy; or
- In person at the meeting.
We encourage you to vote through the Internet, using the xx-digit "control"
number that appears on your proxy card. This voting method will reduce the time
and costs associated with the proxy solicitation. Whichever method you choose,
please read the full text of the proxy statement before you vote.
By Order of the Board of Directors,
Eugene P. Grace
Vice President and Secretary
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL AND
SEMI-ANNUAL REPORT TO A SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD BE
DIRECTED TO THE FUND BY CALLING 800-WARBURG (800-927-2874) OR BY WRITING TO THE
FUND AT THE ABOVE ADDRESS.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK
THAT YOU VOTE YOUR SHARES PROMPTLY NO MATTER HOW MANY SHARES YOU OWN. YOUR VOTE
IS IMPORTANT.
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WARBURG, PINCUS JAPAN OTC FUND, INC.
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3147
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
AUGUST 21, 1998
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This document is a proxy statement for Warburg, Pincus Japan OTC Fund, Inc.
(the "Fund"), an open-end investment company having two classes of common stock.
This proxy statement, which will be mailed to the Fund's shareholders on or
about July 1, 1998 is furnished in connection with the solicitation of proxies
by the Board of Directors of the Fund (the "Board") to be used at a special
meeting of shareholders of the Fund and any adjournments thereof (the
"Meeting"). The Meeting will be held on August 21, 1998 at 3:00 p.m., Eastern
Time, at the offices of the Fund, 466 Lexington Avenue, New York, New York
10017-3147 (12th floor), for the purposes set forth in the Fund's enclosed
Notice of Special Meeting of Shareholders.
The costs of the Meeting (estimated at approximately [INSERT], including
the solicitation of proxies) will be paid by Warburg Pincus Asset Management,
Inc., the Fund's investment adviser ("Warburg"). The principal solicitation of
proxies will be by the mailing of this proxy statement, but proxies may also be
solicited by telephone and/or in person by representatives of the Fund and
regular employees of Warburg or its affiliates. Such representatives and
employees will not receive additional compensation for solicitation activities.
Warburg has retained the services of D.F. King & Co., Inc. to assist in the
solicitation of proxies.
In connection with the solicitation of proxies by telephone, the Fund will
attempt to employ this procedure only after other more cost effective means of
soliciting shareholder approval have been exhausted. The Fund believes that this
telephone voting system will comply with Maryland Law and will obtain an opinion
of counsel to that effect prior to implementing such procedures.
If the Fund records proxies by telephone or through the Internet, it will
use procedures designed to (i) authenticate shareholders' identities, (ii) allow
shareholders to authorize the voting of their shares in accordance with their
instructions and (iii) confirm that their instructions have been properly
recorded.
The persons named as proxies on the enclosed proxy card of the Fund will
vote in accordance with the directions indicated thereon if your properly
executed proxy is received by mail, by telephone or through the Internet. If you
properly execute your proxy and give no voting instruction, your shares will be
voted "FOR" the proposal set forth herein. Abstentions will be counted as
present for purposes of determining a quorum, but will not be counted as voting
and will have the effect of a "no" vote. Broker non-votes (i.e., proxies
received from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote the
shares on a particular matter with respect to which the broker or nominees do
not have discretionary power) will not constitute "yes" or "no" votes and will
be disregarded in determining the voting securities "present" for the purposes
of determining a quorum.
Proxies, including those received by telephone or through the Internet, may
be revoked at any time prior to their exercise by written notice to the
Secretary of the Fund or by voting in person at the Meeting. In addition you can
revoke a prior proxy simply by voting again -- using a proxy card, by telephone
or through the Internet.
Approval of the proposal set forth herein will require the affirmative vote
of a majority of the outstanding voting securities of the Fund, voting in the
aggregate without regard to class, in person or by proxy ("Majority Vote").
"Majority Vote" for purposes of this proxy statement, and under the Investment
Company Act of 1940, as amended (the "1940 Act"), means the lesser of (i) 67% or
more of the shares present or represented
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by proxy at the Meeting, if 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 of the Fund. In the event a quorum is not present at the Meeting, or in
the event a quorum is present but sufficient votes to approve the proposal are
not received, the persons named as proxies by the Fund may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of the Fund's shares
represented at the Meeting in person or by proxy.
Shareholders of record at the close of business on June 19, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting, even if
they sold their Fund shares after the Record Date. Each full share outstanding
is entitled to one vote and each fractional share outstanding is entitled to a
proportionate share of one vote. As of the Record Date, the Fund had outstanding
[INSERT] Common Shares and [INSERT] Advisor Shares. The persons who owned more
than 5% of any class of the Fund's outstanding shares as of the Record Date, to
the knowledge of the Fund, are set forth in EXHIBIT A hereto.
PROPOSAL I
PROPOSAL TO APPROVE OR DISAPPROVE
A NEW INVESTMENT POLICY FOR THE FUND
The shareholders of the Fund will be asked at the Meeting to approve a new
investment policy, which was unanimously approved by the Board at a meeting held
on June 10, 1998. Presently, the Fund will invest, under normal market
conditions, at least 65% of its total assets in securities of companies traded
through JASDAQ, the primary Japanese over-the-counter ("OTC") market, or the
Frontier Market Japanese Second Section OTC Market (the "Frontier Market"). If
the requisite shareholder approval is obtained, this investment policy will be
eliminated, and the Fund will adopt a new investment policy, which will require
instead that the Fund invest at least 65% of its total assets in common stocks,
warrants and securities convertible into or exchangeable for common stocks of
small-sized Japanese companies, whether traded on an exchange or OTC (the "New
Investment Policy").
The primary purpose of the proposal to adopt the New Investment Policy is
to broaden the universe of small company investments for the Fund. The Board
believes that Fund shareholders would benefit from the Fund's ability to seek a
broader range of investment opportunities in Japan. Developments have occurred
in the Japanese markets since 1994, when the Fund commenced investment
operations. In 1994, it was anticipated that the JASDAQ would grow rapidly.
Contrary to expectations, JASDAQ has not developed as had been anticipated and
has been marked by persistent low trading volumes and a low volume of new
issues. Securities of significant small companies are traded in the Second
Section of the Tokyo Stock Exchange and on other securities exchanges in Japan,
many of which have relatively greater liquidity. Modifying the Fund's current
investment policy will provide the Fund with access to a greater variety of
securities. This may permit greater portfolio diversification by industry and
issuer and enhance portfolio choices.
In connection with the adoption of the New Investment Policy, the Fund will
consider a "Japanese company" to be a company (A) organized under the laws of
Japan, (B) whose principal business activities are conducted in Japan and which
derives at least 50% of its revenues or profits from goods produced or sold,
investments made, or services performed in Japan, or has at least 50% of its
assets in Japan, or (C) which has issued securities that are traded principally
in Japan. Warburg will determine the eligibility of Japanese companies under the
foregoing definition based on publicly available information and inquiries made
to the companies. Additionally, for purposes of the New Investment Policy, the
Fund will consider a "small-sized" Japanese company to be one whose market
capitalization, measured at the time the Fund purchases a security of that
company, is no larger than the largest market capitalization of companies
represented in either (i) the JASDAQ Index, (ii) the Second Section of the Tokyo
Stock Exchange or (iii) the smaller one-half (deciles 6 through 10) of the First
Section of the Tokyo Stock Exchange (the "Small-Cap Indexes"). (As of
, 1998, the largest market capitalization of companies represented
in any of the Small-Cap Indexes was US$ .) Companies whose market
capitalization no longer meets this definition after purchase continue to be
considered small companies for purposes of the Fund's policy of investing at
least 65% of its assets in small-sized Japanese companies.
2
<PAGE> 5
The portion of the Fund's assets that is not invested in equity securities
of small-sized Japanese companies may be invested in securities of other
Japanese issuers or securities of companies in other Asian markets, in addition
to the other instruments described in the Fund's Prospectus.
If shareholder approval of the New Investment Policy is obtained, the name
of the Fund will be changed from "Warburg, Pincus Japan OTC Fund, Inc." to
"Warburg, Pincus Japan Small Company Fund, Inc." in order to reflect more
accurately the broader investment focus of the Fund.
THE BOARD'S RECOMMENDATION
The Board of the Fund believes that it is in the best interests of
shareholders to approve the New Investment Policy and recommends that the Fund's
shareholders vote FOR approval of Proposal I. In determining whether it was
appropriate to approve the New Investment Policy and to recommend approval to
the Fund's shareholders, the Board considered various matters and materials
provided by Warburg. The Board considered that shareholders may have invested in
the Fund expecting it to have a narrow investment focus on the OTC markets in
Japan. The Board believed that these considerations were outweighed by several
benefits that can be expected from operation of the New Investment Policy: (1) a
broadened universe of small company investments with access to the same kind of
companies found in JASDAQ, (2) opportunities for greater diversification and (3)
access to more small company liquid investments. The Board also considered
developments that Warburg explained had occurred in the JASDAQ since the Fund's
inception (e.g., persistent low trading volumes and low volume of new issuers).
These developments have made the JASDAQ less attractive from an investment
perspective than had been the case in 1994 when the Fund commenced operations.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL I. ANY UNMARKED
PROXIES WILL BE SO VOTED.
OTHER BUSINESS
The Board does not know of any matters to be presented at the Meeting other
than that which is set forth in this proxy statement. If any other matter
requiring the vote of the Fund's shareholders should arise, the persons named as
proxies will vote thereon according to their best judgment in the interests of
the Fund.
* * * * *
SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold annual meetings of
shareholders. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent meeting of shareholders should send their written
proposals to the Secretary of the Fund, 466 Lexington Avenue, New York, New York
10017-3147. Proposals must be received at a reasonable time prior to the date of
a meeting of shareholders to be considered for inclusion in the materials for
the Fund's meeting. Timely submission of a proposal does not, however,
necessarily mean that such proposal will be included.
By Order of the Board of Directors,
Eugene P. Grace
Vice President and Secretary
New York, New York
June 29, 1998
3
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EXHIBIT A
WARBURG, PINCUS JAPAN OTC FUND, INC.
OWNERS OF MORE THAN 5% OF THE
OUTSTANDING SHARES OF A CLASS OF THE FUND
COMMON SHARES
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
COMMON SHARES COMMON SHARES
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING
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<S> <C> <C>
</TABLE>
ADVISOR SHARES
<TABLE>
<CAPTION>
NUMBER OF
ADVISOR SHARES PERCENT OF
BENEFICIALLY ADVISOR SHARES
NAME AND ADDRESS OWNED OUTSTANDING
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<S> <C> <C>
</TABLE>
<PAGE> 7
[PROXY CARD]
WARBURG, PINCUS JAPAN OTC FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
I hereby instruct Eugene P. Grace and Janna Manes, and each of them, with full
power of substitution, to vote the shares of Warburg, Pincus Japan OTC Fund,
Inc. (the "Fund") as to which I am entitled to vote, as shown on the reverse
side, at a special meeting of the shareholders of the Fund (the "Meeting") to be
held on August 21, 1998, at 3:00 p.m., Eastern Time, at the offices of the Fund,
466 Lexington Avenue, New York, New York 10017 (12th Floor), and any
adjournments thereof.
I hereby revoke any and all proxies with respect to such shares previously given
by me. I acknowledge receipt of the Proxy Statement dated June 29, 1998. THIS
PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE FOR ANY PROPOSAL,
THIS PROXY WILL BE VOTED "FOR" SUCH PROPOSAL.
This instruction may be revoked at any time prior to its exercise at the Meeting
by execution of a subsequent proxy card, by written notice to the Secretary of
the Fund or by voting in person at the Meeting.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
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SIGNATURE SHOULD BE EXACTLY AS THE NAME OR NAMES APPEAR(S) ON THIS PROXY CARD.
IF THE INDIVIDUAL SIGNING THE PROXY CARD IS A FIDUCIARY (E.G., ATTORNEY,
EXECUTOR, TRUSTEE, GUARDIAN, ETC.), THE INDIVIDUAL'S SIGNATURE MUST BE FOLLOWED
BY HIS FULL TITLE.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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<PAGE> 8
[REVERSE SIDE]
{X} PLEASE MARK VOTES
AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS OF THE FUND
UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1,
WARBURG PINCUS JAPAN OTC FUND For Against Abstain
[ ] [ ] [ ]
VOTE THIS PROXY CARD TODAY! 1) To approve or disapprove a new
YOUR PROMPT RESPONSE WILL SAVE investment policy for the Fund.
THE EXPENSE OF ADDITIONAL MAILINGS
This proxy, if properly 2) To transact such other business as may
executed, will be voted properly come before the Meeting or any
in this manner directed adjournment thereof.
by the undersigned
shareholder.
IF NO DIRECTION IS Mark box at right if comments or
MADE FOR ANY address change have been noted on the
PROPOSAL, THIS reverse side. [ ]
PROXY WILL BE
VOTED "FOR" SUCH
PROPOSAL.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
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Shareholder sign here Co-owner sign here:
