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As filed with the Securities and Exchange Commission
on November 4, 1999
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Registration No. 333-________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No. __ |_| Post-Effective Amendment No. __
WARBURG, PINCUS EMERGING MARKETS FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (212) 878-0600
466 Lexington Avenue
New York, New York 10017-3147
-----------------------------
(Address of Principal Executive Offices) (Zip code)
Hal Liebes, Esq.
Warburg, Pincus Emerging Markets Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
-----------------------------
(Name and Address of Agent for Service)
copies to:
Rose F. DiMartino, Esq.
and
J. Stephen King, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Approximate date of proposed public offering: Registrant proposes that this
Registration Statement become effective on December 3, 1999 pursuant to Rule
488.
Title of Securities Being Registered: Common Stock, $.001 par value per share.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith in reliance upon Section 24(f).
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CONTENTS OF
REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
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WARBURG, PINCUS EMERGING MARKETS II FUND, INC.
---------------------
Your Vote is Important
Dear Shareholder:
The Board of Directors of Warburg, Pincus Emerging Markets II Fund, Inc. (the
"Fund") has recently reviewed and unanimously endorsed a proposal for the
acquisition of the Fund by another Warburg Pincus Fund. Under the terms of the
proposal, Warburg, Pincus Emerging Markets Fund, Inc. (the "Acquiring Fund")
would acquire all or substantially all of the assets and liabilities of the
Fund. We are pleased to invite you to attend a special meeting (the "Meeting")
of the shareholders of the Fund to consider the approval of a Plan of
Reorganization (the "Plan") pursuant to which the acquisition of the Fund by the
Acquiring Fund (the "Acquisition ") would be effected.
The Fund's Board of Directors and Credit Suisse Asset Management, LLC, the
Fund's investment adviser ("CSAM"), believe that the Acquisition is in the best
interests of the Fund and its shareholders.
The Acquisition will not result in any material changes to the investment
philosophy or operations of the Fund, since the Fund has a substantially similar
investment objective and substantially similar investment policies as the
Acquiring Fund. The Acquiring Fund also has the same investment adviser,
distributor, transfer agent and independent accountant as the Fund. In addition,
the portfolio management team of the Fund will become part of the portfolio
management team of the Acquiring Fund after consummation of the Acquisition.
Also, CSAM and Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), the
co-administrator of each Fund, have agreed to waive fees, and CSAM has agreed to
reimburse expenses, for the two-year period beginning on the date of the closing
of the Acquisition to the extent necessary (a) for the management fee payable by
the Acquiring Fund to be no higher than the management fee payable by the Fund
as set forth in the Fund's investment advisory agreement with CSAM, (b) for the
co-administration fee payable by the Acquiring Fund to be no higher than the
co-administration fee payable by the Fund as set forth in the Fund's
co-administration agreement with CSAMSI and (c) to maintain the net expense
ratio of each class of the Acquiring Fund at a level no higher than the lower of
that of the corresponding class of the Fund or the Acquiring Fund as of the
30-day period ended on such date. The closing of the Acquisition (the "Closing
Date") is expected to be January 28, 2000.
If shareholders of the Fund approve the Plan, the Fund will be liquidated upon
consummation of the Acquisition. You will become a shareholder of the Acquiring
Fund, having received shares of the same class with an aggregate value equal to
the aggregate net asset value of your investment in the Fund immediately prior
to the Acquisition. No sales or other charge will be imposed in connection with
the transaction. The transaction will, in the opinion of counsel, be free from
federal income taxes to you, the Fund and the Acquiring Fund. CSAM or its
affiliates will bear all expenses incurred in connection with the Acquisition.
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The Meeting will be held on January 27, 2000 to consider this transaction. We
strongly invite your participation by asking you to review, complete and return
your proxy promptly.
Detailed information about the proposed Acquisition is described in the attached
prospectus/proxy statement. THE BOARD OF DIRECTORS OF THE FUND HAS UNANIMOUSLY
APPROVED THE Acquisition AND RECOMMENDS THAT YOU VOTE TO APPROVE THE PLAN. On
behalf of the Board of Directors, I thank you for your participation as a
shareholder and urge you to please exercise your right to vote by completing,
dating and signing the enclosed proxy card(s). A self-addressed, postage-paid
envelope has been enclosed for your convenience; if you prefer, you can fax the
proxy card to D.F. King & Co., Inc., Attn.: [INSERT], at (800) [INSERT]. We
also encourage you to vote by telephone or through the Internet. Proxies may be
voted by telephone by calling (800) [INSERT] or through the Internet using the
Internet address located on your proxy card.
Voting by fax, telephone or through the Internet will reduce the time and costs
associated with the proxy solicitation. When 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.
Whichever voting method you choose, please read the full text of the proxy
statement before you vote.
If you have any questions regarding the proposed Acquisition, please feel free
to call [Hal Liebes, Vice President and Secretary of the Fund, at (212)
326-5454], who will be pleased to assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY.
Sincerely,
Eugene L. Podsiadlo
President of the Fund
December 3, 1999
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WARBURG, PINCUS EMERGING MARKETS II FUND, INC.
466 Lexington Avenue
New York, New York 10017-3147
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on January 27, 2000
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Warburg, Pincus Emerging Markets II Fund, Inc. (the "Fund") will
be held at the offices of the Fund, 466 Lexington Avenue, New York, New York
10017-3147 on January 27, 2000, commencing at 3:30 p.m. for the following
purposes:
1. To approve the Agreement and Plan of Reorganization dated as of
[INSERT], 1999 (the "Plan") providing that (i) the Fund would
transfer to Warburg, Pincus Emerging Markets Fund, Inc. (the
"Acquiring Fund") all or substantially all of its assets in exchange
for shares of the Acquiring Fund and the assumption by the Acquiring
Fund of the Fund's liabilities, (ii) such shares of the Acquiring
Fund would be distributed to shareholders of the Fund in liquidation
of the Fund, and (iii) the Fund would subsequently be terminated.
2. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE PLAN.
The Board of Directors of the Fund has fixed the close of business
on November 16, 1999 as the record date for the determination of shareholders of
the Fund entitled to notice of and to vote at the Meeting and any adjournment or
adjournments thereof. As a convenience to shareholders, you can now vote in any
one of four ways:
o By mail, with the enclosed proxy card(s);
o By telephone, with a toll-free call to the telephone number
that appears on your proxy card or, if no toll-free telephone
number appears on your proxy card, to D. F. King & Co., Inc.,
the Fund's proxy solicitor, at [(800) 848-3409];
o Through the Internet, by using the Internet address located on
your proxy card and following the instructions on the site; or
o In person at the meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
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SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE URGED TO
(A) SIGN AND RETURN WITHOUT DELAY THE ENCLOSED PROXY CARD(S) IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, (B) VOTE BY
TELEPHONE WITH A TOLL-FREE CALL TO [(800) 848-3409], (C) VOTE THROUGH THE
INTERNET, BY USING THE INTERNET ADDRESS LOCATED ON THE PROXY CARD OR (D) FAX THE
ENCLOSED PROXY CARD(S) TO D.F. KING & CO., INC. AT (800) 848-3409], SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. INSTRUCTIONS FOR THE PROPER
EXECUTION OF PROXY CARDS ARE SET FORTH ON THE FOLLOWING PAGE. PROXIES MAY BE
REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY THE SUBSEQUENT EXECUTION AND
SUBMISSION OF A REVISED PROXY, BY GIVING WRITTEN NOTICE OF REVOCATION TO THE
FUND AT ANY TIME BEFORE THE PROXY IS EXERCISED OR BY VOTING IN PERSON AT THE
MEETING.
By Order of the Board of Directors
Hal Liebes
Vice President and Secretary
December 3, 1999
YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY WILL HELP TO
AVOID THE EXPENSE OF FURTHER SOLICITATION.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and avoid the time and expense involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration
on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signatures
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Corporate Accounts
(1) ABC Corp............................ ABC Corp.
(2) ABC Corp............................ John Doe, Treasurer
(3) ABC Corp............................
c/o John Doe, Treasurer............ John Doe
(4) ABC Corp. Profit Sharing Plan....... John Doe, Trustee
Trust Accounts
(1) ABC Trust........................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78.................... Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA..... John B. Smith
(2) John B. Smith....................... John B. Smith, Jr., Executor
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1999
PROSPECTUS/PROXY STATEMENT
December 3, 1999
Acquisition of the Assets of
WARBURG, PINCUS EMERGING MARKETS II FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
By and in Exchange for Shares of
WARBURG, PINCUS EMERGING MARKETS FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
This Prospectus/Proxy Statement is being furnished to shareholders
of Warburg, Pincus Emerging Markets II Fund, Inc., an open-end, non-diversified
management investment company organized as a Maryland corporation (the "Fund"),
in connection with a proposed agreement and plan of reorganization (the "Plan")
to be submitted to shareholders of the Fund for consideration at a Special
Meeting of Shareholders to be held on January 27, 2000 at 3:30 p.m. (the
"Meeting"), at the offices of the Fund located at 466 Lexington Avenue, New
York, New York 10017, or any adjournment(s) thereof. Pursuant to the Plan, the
Fund would transfer to Warburg, Pincus Emerging Markets Fund, Inc., an open-end,
non-diversified management investment company organized as a Maryland
corporation (the "Acquiring Fund" and, together with the Fund, the "Funds"), all
or substantially all of its assets in exchange for shares of the Acquiring Fund
and the assumption by the Acquiring Fund of the Fund's liabilities; such shares
of the Acquiring Fund would be distributed to shareholders of the Fund in
liquidation of the Fund; and the Fund would subsequently be terminated
(hereinafter collectively referred to as the "Acquisition").
The Plan will not result in any material changes in the investment
philosophy of the Fund. The investment objectives of the Fund (e.g., growth of
capital) and the Acquiring Fund (e.g., long-term appreciation of capital) are
substantially similar and the investment policies of the Acquiring Fund are
substantially similar to those of the Fund, except with respect to investing in
debt securities and currency hedging and options and other differences described
under "Comparison of Investment Objectives and Policies" in this
Prospectus/Proxy Statement. The investment adviser, distributor, transfer agent
and independent accountant for the Acquiring Fund are also the same as those of
the Fund. In addition, the Fund's portfolio management team will become part of
the portfolio management team of the Acquiring Fund after consummation of the
Acquisition. However, the Fund's sub-investment adviser will not provide
investment advisory services to the Acquiring Fund.
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As a result of the proposed Acquisition, each shareholder of a class
of shares of the Fund will receive that number of shares of the same class of
the Acquiring Fund having an aggregate net asset value equal to the aggregate
value of such shareholder's shares of the Fund immediately prior to the
Acquisition. All expenses of the Acquisition will be borne by CSAM or its
affiliates. No sales or other charge will be imposed on the shares of the
Acquiring Fund received by the shareholders of the Fund. This transaction is
structured to be tax-free for federal income tax purposes to shareholders of the
Fund and to each of the Fund and the Acquiring Fund.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Acquiring Fund that a
prospective investor should know before voting. This Prospectus/Proxy Statement
is expected to first be sent to shareholders on or about December 3, 1999. A
Statement of Additional Information dated December 3, 1999, relating to this
Prospectus/Proxy Statement and the Acquisition, has been filed with the
Securities and Exchange Commission (the "SEC") and is incorporated by reference
into this Prospectus/Proxy Statement. A copy of such Statement of Additional
Information is available upon oral or written request and without charge by
writing to the Acquiring Fund at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling 800-WARBURG.
The following documents, which have been filed with the SEC, are
incorporated herein in their entirety by reference.
1. The current Prospectus of each class of shares offered by the
Acquiring Fund, each dated February 22, 1999. The Acquiring Fund
Prospectuses relating to each class of shares of the Fund held by a
shareholder accompanies this Prospectus/Proxy Statement.
2. The current Prospectuses of each class of shares offered by the
Fund, each dated October 26, 1998. These may be obtained without
charge by writing to the address on the cover page of this
Prospectus/Proxy Statement or by calling 800-WARBURG.
3. The Annual Report of each of the Fund and the Acquiring Fund for the
fiscal years ended August 31, 1999 and October 31, 1998,
respectively, and the Semiannual Report of the Acquiring Fund for
the six-month period ended April 30, 1999.
Accompanying this Prospectus/Proxy Statement as Exhibit A is a copy
of the form of Agreement and Plan of Reorganization (the "Plan") for the
proposed Acquisition.
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.
2
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUNDS.
3
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TABLE OF CONTENTS
PAGE
ADDITIONAL MATERIALS .........................................................5
SUMMARY ......................................................................6
RISK FACTORS .................................................................8
REASONS FOR THE ACQUISITION ..................................................9
FEE TABLE ....................................................................10
INFORMATION ABOUT THE ACQUISITION ............................................12
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES .............................18
INTEREST OF CSAM IN THE ACQUISITION ..........................................22
INFORMATION ON SHAREHOLDERS' RIGHTS ..........................................23
VOTING INFORMATION ...........................................................25
FINANCIAL STATEMENTS AND EXPERTS .............................................26
LEGAL MATTERS ................................................................27
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION......................A-1
4
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ADDITIONAL MATERIALS
The following additional materials, which have been incorporated by
reference into the Statement of Additional Information dated December 3, 1999
relating to this Prospectus/Proxy Statement and the Acquisitio, will be sent to
all shareholders of the Fund requesting a copy of such Statement of Additional
Information.
1. The current Statement of Additional Information for the Acquiring Fund,
dated [February 22, 1999, as revised July 6, 1999].
2. The current Statement of Additional Information for each class of
shares offered by the Fund, dated October 26, 1998, as revised July 6, 1999.
5
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SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
ADDITIONAL INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT,
THE PLAN (A COPY OF THE FORM OF WHICH IS ATTACHED TO THIS PROSPECTUS/PROXY
STATEMENT AS EXHIBIT A), THE PROSPECTUSES OF THE FUND, THE STATEMENTS OF
ADDITIONAL INFORMATION OF THE FUND, THE PROSPECTUSES OF THE ACQUIRING FUND AND
THE STATEMENT OF ADDITIONAL INFORMATION OF THE ACQUIRING FUND.
PROPOSED Acquisition. The Plan provides for the acquisition of all
or substantially all of the assets and liabilities of the Fund to the Acquiring
Fund in exchange for shares of the Acquiring Fund. The Plan also calls for the
distribution of shares of the Acquiring Fund to the Fund's shareholders in
liquidation of the Fund. As a result of the Acquisition, each shareholder of a
class of shares of the Fund will become the owner of that number of full and
fractional shares of the same class of the Acquiring Fund having an aggregate
net asset value equal to the aggregate value of the shareholder's shares of the
Fund as of the close of business on the date that the Fund's assets are
exchanged for shares of the Acquiring Fund. See "Information About the
Acquisition -- Plan of Reorganization."
For the reasons set forth below under "Reasons for the Acquisition,"
the Board of Directors of the Fund, including the Directors of the Fund who are
not "interested persons" (the "Independent Directors"), as that term is defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), has
unanimously concluded that the Acquisition would be in the best interests of the
shareholders of the Fund and that the interests of the Fund's existing
shareholders will not be diluted as a result of the transaction contemplated by
the Acquisition. The Board therefore has submitted the Plan for approval by the
Fund's shareholders. The Board of Directors of the Acquiring Fund has also
reached similar conclusions and approved the Acquisition with respect to the
Acquiring Fund.
Approval of the Acquisition of the Fund will require the affirmative
vote of the holders of a majority of the Fund's outstanding shares. See "Voting
Information." In the event that the Plan is not approved by shareholders of the
Fund, the Board will consider other possible courses of action available to it,
including resubmitting the Acquisition proposal to shareholders.
TAX CONSEQUENCES. Prior to completion of the Acquisition, the Fund
and the Acquiring Fund will have received an opinion of counsel that, upon the
closing of the Acquisition and the transfer of the assets of the Fund, no gain
or loss will be recognized by the Fund or its shareholders for federal income
tax purposes. The holding period and aggregate tax basis of the Acquiring Fund
shares received by a Fund shareholder will be the same as the holding period and
aggregate tax basis of the shares of the Fund previously held by such
shareholder. In addition, the holding period and tax basis of the assets of the
Fund in the
6
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hands of the Acquiring Fund as a result of the Acquisition will be the same as
in the hands of the Fund immediately prior to the Acquisition.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of the
Acquiring Fund (i.e., growth of capital) is substantially similar to the
investment objective of the Fund (i.e., long-term appreciation of capital). The
investment policies of the Acquiring Fund are substantially similar to those of
the Fund. However, the Acquiring Fund may invest up to 35% of total assets in
investment-grade debt securities and, within that limitation, up to 35% of net
assets in non-investment-grade debt securities, while the Fund may only invest
5% of net assets in either investment-grade or non-investment-grade debt
securities. In addition, the Fund may (but currently does not) engage in
currency hedging and options transactions while the Acquiring Fund may (and
does) engage in such transactions. The other investment policies of the
Acquiring Fund are substantially similar to those of the Fund except for
differences noted below under "Comparison of Investment Objectives and
Policies." Except as noted below under "Comparison of Investment Objectives and
Policies," each Fund has substantially similar fundamental and non-fundamental
investment limitations.
PURCHASE AND REDEMPTION PROCEDURES. The purchase and redemption
procedures available to shareholders of the Acquiring Fund are identical to
those available to shareholders of the Fund. Purchases of shares of each Fund
may be made by mail or, with advance arrangements, by wire. Shares of the Funds
are sold at net asset value per share and without an initial sales charge.
Common Shares of each Fund are subject to a 12b-1 fee of .25% per annum.
EXCHANGE PRIVILEGES. The exchange privileges available to
shareholders of the Acquiring Fund are identical to those available to
shareholders of the Fund. Shareholders of each Fund may exchange at net asset
value all or a portion of their shares for shares of the same class of other
mutual funds in the Warburg Pincus family of funds (each, a "Warburg Pincus
Fund") at their respective net asset values. Shareholders may thus not effect
exchanges between one class of shares (e.g., Common Shares) of a Warburg Pincus
Fund and any other class of shares (e.g., Institutional or Advisor Shares) of
any other Warburg Pincus Fund. Exchanges may be effected by mail or by
telephone. Exchanges will be effected without a sales charge but must satisfy
the minimum dollar amount necessary for new purchases in the fund in which
shares are being purchased. Each Fund may refuse exchange purchases at any time
without prior notice. The exchange privilege may be modified or terminated at
any time upon 30 days' notice to shareholders.
The exchange privilege is available to shareholders residing in any
state in which the relevant Fund's 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. No initial sales charge
is imposed on the shares being acquired in an exchange. See the Shareholder
Guide which accompanies the Prospectuses of the Acquiring Fund.
7
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DIVIDENDS. The Acquiring Fund and the Fund each distribute
substantially all of their respective net investment income and net realized
capital gains, if any, to their respective shareholders. All distributions are
reinvested in the form of additional full and fractional shares of the relevant
Fund unless a shareholder elects otherwise. Each Fund declares and pays
dividends, if any, from net investment income annually. Net realized capital
gains (including net short-term capital gains), if any, of each Fund will be
distributed at least annually. See "About Your Account -- Distributions" in the
accompanying Prospectuses of the Acquiring Fund.
SHAREHOLDER VOTING RIGHTS. The Acquiring Fund and the Fund are each
registered with the SEC as open-end, non-diversified management investment
companies. Each Fund is a Maryland corporation, each having a Board of
Directors. Shareholders of each Fund have similar voting rights. Neither Fund
holds a meeting of shareholders annually, except as required by the 1940 Act or
other applicable law. Each Fund's By-Laws provide that a special meeting of
shareholders will be called at the written request of shareholders entitled to
cast at least ten percent of the votes entitled to be cast at the meeting, upon
payment by such shareholders of the reasonably estimated cost of preparing and
mailing a notice of the meeting, provided, however, that the matter to be
considered at such special meeting of shareholders is not substantially the same
as a matter voted on at a special meeting of shareholders held during the
preceding 12 months. To the extent required by law, each Fund will assist in
shareholder communication in such matters. The presence of one-third of the
shareholders of the relevant Fund at a shareholder meeting will constitute a
quorum.
In addition, under the laws of the State of Maryland, shareholders
of either the Acquiring Fund or the Fund do not have appraisal rights in
connection with a combination or acquisition of the assets of the relevant Fund
by another entity. Shareholders of the Fund may, however, redeem their shares at
net asset value prior to the date of the Acquisition (subject only to certain
restrictions set forth in the 1940 Act). See "Information on Shareholders'
Rights -- Voting Rights."
RISK FACTORS
Due to the fact that the investment objectives of the Acquiring Fund
(i.e., growth of capital) and the Fund (i.e., long-term appreciation of capital)
are substantially similar and the investment policies and restrictions of the
Acquiring Fund are, except as noted herein, substantially similar to those of
the Fund, the investment risks are also substantially similar. The principal
risk factors affecting both the Fund and the Acquiring Fund are market risk and
the risks associated with (i) foreign securities, (ii) emerging-markets focus
and (iii) non-diversified status. In addition, because the Acquiring Fund may
invest up to 35% of total assets in investment-grade debt securities and, within
that limitation, up to 35% of net assets in non-investment-grade debt
securities, while the Fund may only invest 5% of net assets in either
investment-grade or non-investment-grade debt securities, the Acquiring Fund has
greater exposure to the risks associated with investments in such securities.
Furthermore, because the Fund currently does not engage in currency hedging and
options transactions while the Acquiring Fund does engage in such transactions,
the Acquiring Fund has greater exposure
8
<PAGE>
to the risks associated with such transactions. See the accompanying
Prospectuses of the Acquiring Fund for a complete discussion of the risks of
investing in that Fund.
REASONS FOR THE ACQUISITION
The Board of Directors of the Fund has determined that it is in the
best interest of the Fund to effect the Acquisition. In reaching this
conclusion, the Board considered a number of factors, including the following:
1. the Acquisition will result in a single larger fund, thereby
eliminating confusion in the marketplace associated with there being two
Warburg Pincus emerging markets funds;
2. the Acquisition may increase efficiencies, eliminating one
of the two sets of prospectuses, annual reports and other documents
required for two funds;
3. a larger asset base could provide portfolio management benefits,
such as greater diversification to mitigate the risks of investing in
emerging markets and the ability to command more attention from brokers
and underwriters of portfolio securities;
4. the terms and conditions of the Acquisition;
5. the substantially similar investment objective and investment
policies and restrictions of the Acquiring Fund in relation to those of
the Fund;
6. that the investment adviser, distributor, transfer agent and
accountant for the Acquiring Fund are the same as those of the Fund and
the portfolio management team of the Fund will become part of the
portfolio management team of the Acquiring Fund upon consummation of the
Acquisition;
7. the federal tax consequences of the Acquisition to the Fund, the
Acquiring Fund and the shareholders of each Fund, and that a legal opinion
will be rendered that no recognition of income, gain or loss for federal
income tax purposes will occur as a result of the Acquisition to any of
them;
8. that the interests of shareholders of the Fund will not be
diluted as a result of the Acquisition;
9. CSAM and CSAMSI, as applicable, have agreed to waive fees, and
CSAM has agreed to reimburse expenses, for the two-year period beginning
on the date of the closing of the Acquisition to the extent necessary (a)
for the management fee payable by the Acquiring Fund to be no higher than
the management fee payable by the Fund as set forth in the Fund's
investment advisory agreement with CSAM, (b) for the co-administration fee
payable by the Acquiring Fund to be no higher than the co-administration
fee payable by the Fund as set forth in the Fund's co-administration
agreement with CSAMSI and (c) to maintain the net expense ratio of each
class of the Acquiring Fund at a level no higher than the lower of that of
the corresponding class of the Fund or the Acquiring Fund as of the
30-day period ended on such date.
9
<PAGE>
10. that the expenses of the Acquisition will be borne by CSAM or
its affiliates; and
11. that no sales or other charge will be imposed in connection with
the Acquisition.
The Board also considered that the Acquisition will result in the
combined Fund's not having the sub-advisory services of Credit Suisse Asset
Management, Ltd. ("CSAM Ltd."), which had been performed for the Fund. CSAM
advised the Board that its capability to advise the combined Fund would not be
adversely affected by this change.
In light of the foregoing, the Board of Directors of the Fund,
including the Independent Directors, has determined that it is in the best
interests of the Fund and its shareholders to effect the Acquisition. The Board
of Directors of the Fund has also determined that the Acquisition would not
result in a dilution of the interests of the Fund's shareholders.
The Board of Directors of the Acquiring Fund has also determined
that it is advantageous to the Acquiring Fund to effect the Acquisition. Each
Fund's Board of Directors considered, among other things, the terms and
conditions of the Acquisition and representations that the Acquisition would be
effected as a tax-free reorganization. Accordingly, the Board of Directors of
the Acquiring Fund, including a majority of the Independent Directors, has
determined that the Acquisition is in the best interests of the Acquiring Fund's
shareholders and that the interests of the Acquiring Fund's shareholders would
not be diluted as a result of the Acquisition.
FEE TABLE
Following is a table showing current fees and expenses of the Common
Shares and Institutional Shares of the Fund and the costs and expenses of the
corresponding class of the Acquiring Fund before and after giving effect to the
Acquisition. The table does not reflect charges that institutions and financial
intermediaries may impose on their customers.
10
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
` Common Shares* Institutional Shares**
====================================================================================================================================
Pro Forma Pro Forma
Acquiring (after Acquiring (after
Fund Fund Acquisition) Fund Fund Acquisition)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses:
Maximum sales charge
imposed on purchases
(as a percentage of
offering price).............................. None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
expenses that are deducted
from fund assets)
Management fees ............................. 1.00% 1.25% 1.25% 1.00% 1.25% 1.25%
12b-1 fees .................................. .25% .25% .25% .00% .00% .00%
Other expenses .............................. 1.28% .79% .65% 1.23% .77% .60%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses*** ....................... 2.53% 2.29% 2.15% 2.23% 2.02% 1.85%
====================================================================================================================================
</TABLE>
- ----------
* Actual fees and expenses for the eleven month period ended September 30,
1999 are shown below and are annualized. Fee waivers and expense
reimbursements or credits reduced expenses for the Funds during that
period but may be discontinued at any time.
** The Institutional shares of the Acquiring Fund had not commenced
operations as of September 30, 1999. The amounts shown are amounts
estimated to be charged for the fiscal year ending October 31, 2000.
*** CSAM and CSAMSI, as applicable, have agreed to waive fees, and CSAM has
agreed to reimburse expenses, for the two-year period beginning on the
date of the closing of the Acquisition to the extent necessary (a) for the
management fee payable by the Acquiring Fund to be no higher than the
management fee payable by the Fund as set forth in the Fund's investment
advisory agreement with CSAM, (b) for the co-administration fee payable by
the Acquiring Fund to be no higher than the co-administration fee payable
by the Fund as set forth in the Fund's co-administration agreement with
CSAMSI and (c) to maintain the net expense ratio of each class of the
Acquiring Fund at a level no higher than the lower of that of the
corresponding class of the Fund or the Acquiring Fund as of the
30-day period ended on such date.
<TABLE>
<CAPTION>
After fee waivers and reimbursements Common Shares* Institutional Shares**
Acquiring Pro Acquiring Pro Forma
Fund Fund Forma Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum sales charge imposed
on purchases (as a percentage
of offering price)................................. None None None None None None
Annual Fund Operating Expenses
(expenses that are deducted from
fund assets)
Management fees ................................... .21% .63% .81% .24% .63% .81%
12b-1 fees ........................................ .25% .25% .25% .00% .00% .00%
Other expenses .................................... 1.26% .77% .59% 1.24% .77% .59%
Total Annual Fund
Operating Expenses ................................ 1.75% 1.65% 1.65% 1.48% 1.40% 1.40%
</TABLE>
11
<PAGE>
Examples
The following examples are intended to assist an investor in
understanding the various costs that an investor in each Fund will bear directly
or indirectly. The examples assume payment of operating expenses at the levels
set forth in the first table above (i.e., before fee waivers and expense
reimbursements and credits). The examples also assume that all dividends and
distributions are reinvested.
================================================================================
Assume you invest $10,000, each Fund 1 Year 3 Years 5 Years 10 Years
returns 5% annually and you close your
account at the end of each of the time
periods shown. Based on these
assumptions, your cost would be:
- --------------------------------------------------------------------------------
Common Shares
Fund................................ $256 $ 788 $1,345 $2,866
Acquiring Fund...................... $232 $ 715 $1,225 $2,626
Pro Forma (after acquisition of the
Fund) $218 $ 673 $1,154 $2,483
Institutional Shares
Fund................................ $226 $ 697 $1,195 $2,565
Acquiring Fund...................... $205 $ 634 $1,088 $2,348
Pro Forma (after acquisition of the
Fund) $188 $ 582 $1,001 $2,169
- --------------------------------------------------------------------------------
The examples provide a means for an investor to compare expense
levels of funds with different fee structures over varying investment periods.
To facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, each Fund's actual return will vary and may be
greater or less than 5.00%. These examples should not be considered
representations of past or future expenses and actual expenses may be greater or
less than those shown.
INFORMATION ABOUT THE ACQUISITION
AGREEMENT AND PLAN OF REORGANIZATION. The following summary of the
Plan is qualified in its entirety by reference to the form of Plan (Exhibit A
hereto). The Plan provides that the Acquiring Fund will acquire all or
substantially all of the assets of the Fund in exchange for shares of the
Acquiring Fund and the assumption by the Acquiring Fund of the liabilities of
the Fund on the Closing Date. The Closing Date is expected to be January 28,
2000.
Prior to the Closing Date, the Fund will endeavor to discharge all
of its known liabilities and obligations. The Acquiring Fund shall assume all
liabilities, expenses, costs, charges and reserves reflected on an unaudited
statement of assets and liabilities of the Fund as of the close of regular
trading on The New York Stock Exchange, Inc., currently 4:00 p.m.
12
<PAGE>
New York City time, on the Closing Date, in accordance with generally accepted
accounting principles consistently applied from the prior audited period. The
Acquiring Fund shall also assume any liabilities of the Fund arising from the
operations and/or transactions of the Fund prior to and including the Closing
Date. The net asset value per share of each class of each Fund will be
calculated by determining the total assets attributable to such class,
subtracting the relevant class' pro rata share of the actual and accrued
liabilities of a Fund and the liabilities specifically allocated to that class
of shares, and dividing the result by the total number of outstanding shares of
the relevant class. Each Fund will utilize the procedures set forth in its
respective current Prospectuses or Statements of Additional Information to
determine the value of their respective portfolio securities and to determine
the aggregate value of each Fund's portfolio.
On or as soon after the Closing Date as conveniently practicable,
the Fund will liquidate and distribute pro rata to shareholders of record as of
the close of business on the Closing Date the shares of the same class of the
Acquiring Fund received by the Fund. Such liquidation and distribution will be
accomplished by the establishment of accounts in the names of the Fund's
shareholders on the share records of the Acquiring Fund's transfer agent. Each
account will represent the number of shares of the relevant class of shares of
the Acquiring Fund due to each of the Fund's shareholders calculated in
accordance with the Plan. After such distribution and the winding up of its
affairs, the Fund will terminate as a management investment company and dissolve
as a Maryland corporation.
The consummation of the Acquisition is subject to the conditions set
forth in the Plan. Notwithstanding approval by the shareholders of the Fund, the
Plan may be terminated at any time at or prior to the Closing Date: (i) by
mutual agreement of the Fund and the Acquiring Fund; (ii) by the Fund in the
event the Acquiring Fund shall, or by the Acquiring Fund, in the event the Fund
shall, materially breach any representation, warranty or agreement contained in
the Plan to be performed at or prior to the Closing Date; or (iii) if a
condition to the Plan expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it will not or
cannot be met within a reasonable time.
Pursuant to the Plan, the Acquiring Fund has agreed to indemnify and
advance expenses to each Director or officer of the Fund against money damages
incurred in connection with any claim arising out of such person's services as a
Director or officer with respect to matters specifically relating to the Fund.
Approval of the Plan with respect to the Fund will require the
affirmative vote of a majority of the Fund's outstanding shares in the aggregate
without regard to class, in person or by proxy, if a quorum is present.
Shareholders of the Fund are entitled to one vote for each share. If the
Acquisition is not approved by shareholders of the Fund, the Board of Directors
of the Fund will consider other possible courses of action available to it,
including resubmitting the Acquisition proposal to shareholders.
DESCRIPTION OF THE ACQUIRING FUND SHARES. Shares of the Acquiring
Fund will be issued to the Fund in accordance with the procedures detailed in
the
13
<PAGE>
Plan and as described in the Acquiring Fund's Prospectuses. The Acquiring Fund,
like the Fund, will not issue share certificates to its shareholders. See
"Information on Shareholders' Rights" and the Prospectuses of the Acquiring Fund
for additional information with respect to the shares of the Acquiring Fund.
The Acquiring Fund has authorized three classes of common stock,
called Common Shares, Institutional Shares and Advisor Shares. Institutional
Shares of the Acquiring Fund have not been issued prior to the Closing Date. The
Acquiring Fund intends to continuously offer Common Shares, Institutional Shares
and Advisor Shares after consummation of the Acquisition. Institutional Shares
are currently available for purchase by investors who have entered into an
investment management agreement with CSAM or its affiliates. Individual
investors are only able to purchase Advisor Shares through financial-services
firms such as banks, brokers and financial advisors. Shares of each class of the
Acquiring Fund represent equal pro rata interests in the Acquiring Fund and
accrue dividends and calculate net asset value and performance quotations in the
same manner. Because of the higher 12b-1 fees to be paid by the Advisor Shares,
the total return on the Advisor Shares can be expected to be lower than the
total return on the Common Shares or the Institutional Shares.
FEDERAL INCOME TAX CONSEQUENCES. The exchange of assets of the Fund
for shares of the Acquiring Fund, followed by the distribution of these shares,
is intended to qualify for federal income tax purposes as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). As a condition to the closing of the Acquisition, the
Acquiring Fund and the Fund will receive an opinion from Willkie Farr &
Gallagher, counsel to each Fund, to the effect that, on the basis of the
existing provisions of the Code, U.S. Treasury regulations issued thereunder,
current administrative rules, pronouncements and court decisions, for federal
income tax purposes, upon consummation of the Acquisition:
(1) the transfer of all or substantially all of the Fund's assets in
exchange for the Acquiring Fund shares and the assumption by the Acquiring
Fund of liabilities of the Fund, and the distribution of the Acquiring
Fund shares to the shareholders of the Fund in exchange for their shares
of the Fund, will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Fund will each
be a "party to a reorganization" within the meaning of Section 368(b) of
the Code;
(2) no gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Fund solely in exchange for the Acquiring
Fund shares and the assumption by the Acquiring Fund of liabilities of the
Fund;
(3) no gain or loss will be recognized by the Fund upon the transfer
of the Fund's assets to the Acquiring Fund in exchange for the Acquiring
Fund shares and the assumption by the Acquiring Fund of liabilities of the
Fund or upon the distribution of the Acquiring Fund shares to the Fund's
shareholders;
14
<PAGE>
(4) no gain or loss will be recognized by shareholders of the Fund
upon the exchange of their shares for Acquiring Fund shares or upon the
assumption by the Acquiring Fund of liabilities of the Fund;
(5) the aggregate tax basis of the Acquiring Fund shares received by
each shareholder of the Fund pursuant to the Acquisition will be the same
as the aggregate tax basis of shares of the Fund held by such shareholder
immediately prior to the Acquisition, and the holding period of Acquiring
Fund shares to be received by each shareholder of the Fund will include
the period during which shares of the Fund exchanged therefor were held by
such shareholder (provided shares of the Fund were held as capital assets
on the date of the Acquisition); and
(6) the tax basis of the Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Fund
immediately prior to the Acquisition, and the holding period of the assets
of the Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Fund.
Shareholders of the Fund should consult their tax advisors regarding
the effect, if any, of the proposed Acquisition in light of their individual
circumstances. Since the foregoing discussion only relates to the federal income
tax consequences of the Acquisition, shareholders of the Fund should also
consult their tax advisors as to state and local tax consequences, if any, of
the Acquisition.
CAPITALIZATION. The following table shows the capitalization of each
Fund as of September 30, 1999 and the capitalization of the Acquiring Fund on a
pro forma basis as of the Closing Date, after giving effect to the
Acquisition.(1)
ACQUIRING PRO FORMA
FUND FUND ADJUSTMENTS PRO FORMA
(Actual) (Actual) (2) COMBINED
-------- -------- ------------- --------
Net Assets-
Fund Level 66,183,246 6,704,401 (45,270) 72,842,377
Common 66,151,626 922,277 (41,659) 67,032,244
Advisor 31,619 -- (573) 31,046
Institutional -- 5,782,124 (3,038) 5,779,086
Net Asset Value
Per Share(3)
Common 8.88 14.60 -- 8.88
Advisor 8.65 n/a -- 8.65
Institutional n/a 14.57 (5.69) 8.88
Shares
Outstanding(4)
Common 7,445,845.936 63,181.838 39,648.390 7,548,676.164
Advisor 3,654.297 n/a (65.164) 3,589.133
Institutional n/a 396,779.150 254,018.862 650,798.012
- ----------
(1) Assumes the Acquisition had been consummated on September 30, 1999 and is
for information purposes only. No assurance can be given as to how many
Acquiring Fund shares will be received by shareholders of the Fund on the
date the Acquisition takes place, and the foregoing should not be relied
upon to reflect the number of Acquiring Fund shares that actually will be
received on or after such date.
(2) Assumes pro forma capital gains distributions, without any reinvestment,
of $[INSERT] and $[INSERT] for the Acquiring Fund and the Fund,
respectively. These numbers are estimates and are subject to change.
(3) Net asset value per share after pro forma capital gains distributions,
assuming no reinvestment.
(4) Assumes the pro forma issuance of [INSERT] Acquiring Fund shares in
exchange for the net assets of the Fund. The number of Acquiring Fund
shares issued was based on the pro forma net asset value of each Fund on
September 30, 1999.
15
<PAGE>
TOTAL RETURNS
Total return is a measure of the change in value of an investment in
a fund over the period covered, which assumes that any dividends or capital
gains distributions are automatically reinvested in shares of the fund rather
than paid to the investor in cash. The formula for total return used by a fund
is prescribed by the SEC and includes three steps: (1) adding to the total
number of shares of the fund that would be purchased by a hypothetical $1,000
investment in the fund all additional shares that would have been purchased if
all dividends and distributions paid or distributed during the period had been
automatically reinvested; (2) calculating the redeemable value of the
hypothetical initial investment as of the end of the period by multiplying the
total number of shares owned at the end of the period by the net asset value per
share on the last trading day of the period; and (3) dividing this account value
for the hypothetical investor by the amount of the initial investment, and
annualizing the result for periods of less than one year. Total return may be
stated with or without giving effect to any expense limitations in effect for a
fund.
The following table reflects the average annual total return for the
1- and 3- year and since inception periods ending September 30, 1999 for each
Fund:
FUND(1) ACQUIRING FUND
------- --------------
Common Institutional Common Institutional(2)
------ ------------- ------ ----------------
Average Annual Total Return(3)
1-year.................... 39.14% 39.56% 46.05% N/A
3-year.................... -4.97% -4.75% -9.23% N/A
Since Inception........... 1.91%(4) 2.02%(5) -0.95%(6) N/A
- ----------
(1) On October 23, 1998, pursuant to an Agreement and Plan of Reorganization,
the Fund acquired all the assets and liabilities of the Emerging Markets
Equity Fund of The RBB Fund, Inc. Performance figures for periods prior to
this date reflect the performance of the Emerging Markets Equity Fund of
The RBB Fund, Inc.
(2) As of the date of this Prospectus/Proxy Statement, the Acquiring Fund had
not issued Institutional Shares. The Institutional Shares of the Acquiring
Fund will have substantially similar annual returns as the Common Shares
of the Acquiring Fund because the Institutional Shares will be invested in
the same investment portfolio as the Common Shares of the Acquiring Fund.
The Institutional Shares, however, will have lower expenses than the
Common Shares.
(3) If CSAM or its predecessor had not temporarily waived fees and reimbursed
expenses, the cumulative total return of each Fund for the one-year and
three-year periods and since inception would have been lower.
(4) Inception Date 11/1/96.
(5) Inception Date 2/1/93.
(6) Inception Date 12/30/94.
SHARE OWNERSHIP OF THE FUNDS
As of November 16, 1999 (the "Record Date"), the officers and
Directors of each Fund beneficially owned as a group less than 1% of the
outstanding securities of the relevant Fund. To the best knowledge of a Fund, as
of October 28, 1999, no shareholder or "group" (as that term is used in Section
13(d) of the Securities Exchange Act of 1934 (the "1934 Act")), except as set
forth below, owned beneficially or of record more than 5% of the outstanding
shares of a class of the Fund.
16
<PAGE>
ACQUIRING FUND PERCENT OWNED
AS OF RECORD DATE
NAME AND ADDRESS COMMON SHARES ADVISOR SHARES
- ---------------- ------------- --------------
Charles Schwab & Co. Inc.* 27.90%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
National Financial Services Corp.* 12.81%
FBO Customers
PO Box 3908
Church Street Station
New York, New York 10008-3908
Salomon Smith Barney Inc. 16.37%
Book Entry Account
Attn: Matt Maesstri
333 West 34 Street, Mutual Fund Dept. (7 Fl.)
New York, New York 10001-2483
Donaldson Lufkin & Jenrette* 43.07%
P.O. Box 2052
Jersey City, NJ 07303-2052
Lewco Securities* 21.49%
FBO Acct# W68-202016-9-01
34 Exchange Place, 4 FL
Jersey City, NJ 07303
Bear Sterns & Co.* 10.24%
FBO 523-00435
1 Metrotech Center North
Brooklyn, NY 11201-3820
Banc of America Securities LLC* 22.61%
600 Montgomery Street
San Francisco, CA 94111-2702
PERCENT OWNED
FUND AS OF RECORD DATE
INSTITUTIONAL
NAME AND ADDRESS COMMON SHARES SHARES
- ---------------- ------------- ------
SEMA AND CO* 73.51%
95400141
12 E 49 ST 41 FL
NEW YORK NY 10017
CHARLES SCHWAB & CO* 10.80%
SPECIAL CUSTODY ACCOUNT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMERS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4122
NAT'L FINANCIAL SVCS CORP* 6.86%
FBO CUSTOMERS
CHURCH ST STATION
PO BOX 3908
NEW YORK NY 10008-3908
NATIONAL ACADEMY OF SCIENCES* 31.95%
2101 CONSTITUTION AVE NW
WASHINGTON DC 20418-0006
COMMUNITY FOUNDATION PALM BEACH 27.85%
MARTIN COUNTIES INC
324 DATURA ST #340
WEST PALM BEACH FL 33401-5420
SAC & CO* 17.46%
12 E 49TH ST
NEW YORK NY 10017-1028
FTC & CO* 12.09%
ATTN DATALYNX # HOUSE ACCT
PO BOX 173736
DENVER CO 80217-3736
- ----------
* Each Fund believes these entities are not the beneficial owners of shares
held of record by them.
17
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is based upon and qualified in its entirety
by the disclosures in the respective Prospectuses and Statements of Additional
Information of the Acquiring Fund and the Fund.
INVESTMENT OBJECTIVES. As stated above each Fund has a substantially
similar investment objective. There can be no assurance that any Fund will
achieve its investment objective.
PRIMARY INVESTMENTS. Each Fund seeks to achieve its investment
objective by investing primarily in equity securities of issuers from at least
three emerging markets. The Acquiring Fund has a broader definition of "emerging
markets" than the Fund. Each Fund defines an emerging market as any country
generally considered to be an emerging market or developing country by the
United Nations, or by the World Bank and the International Finance Corporation
(IFC). In addition, the Acquiring Fund includes in the definition of an emerging
market any country (i) included in the IFC Investable Index or the Morgan
Stanley Capital International Emerging Markets Index or (ii) having a per-capita
gross national product of $2,000 or less. Each Fund may invest in common and
preferred stocks, rights and warrants, securities convertible into common or
preferred stock, equity interests in trusts and partnership and depositary
receipts of an issuer (i) the principal securities trading market for which is
in an emerging market; (ii) which derives at least 50% of its revenues (or
earnings, in the case of the Acquiring Fund) from goods produced or sold (or
investments made, in the case of the Acquiring Fund), or services performed in
an emerging market, (or which has at least 50% of its total or net assets
situated in one or more emerging markets, in the case of the Acquiring Fund); or
(iii) that is organized under the laws of, and with a principal office in, an
emerging market.
INVESTMENT LIMITATIONS. The Fund and the Acquiring Fund have adopted
certain fundamental and non-fundamental investment limitations. Fundamental
investment limitations may not be changed without the affirmative vote of the
holders of a majority of the relevant Fund's outstanding shares. Each Fund has
identical fundamental investment limitations with respect to borrowing money;
industry concentration; issuer concentration; making loans; underwriting
securities; purchasing or selling real estate; investing in commodities; and
issuing senior securities. The Acquiring Fund also has fundamental limitations
with respect to short sales of securities; purchasing or selling certain natural
resources; and purchasing securities on margin. The Acquiring Fund's fundamental
investment limitations with respect to purchasing or selling natural resources
and purchasing securities on margin are non-fundamental investment limitations
for the Fund. In addition, the Fund has a non-fundamental investment limitation
with respect to making investments for the purpose of exercising control or
management. The Acquiring Fund has non-fundamental investment limitations with
respect to purchasing securities of other investment companies; pledging,
mortgaging or hypothecating its assets; investing in illiquid investments;
investing in warrants; and making additional investments if the Fund has
borrowings in excess of 5% of its net assets.
18
<PAGE>
CERTAIN INVESTMENT PRACTICES. For each of the following practices,
this table shows the applicable investment limitation. Risks are indicated for
each practice in italics. The specific risks associated with each of the
investment practices described below are defined in the Acquiring Fund's
Prospectuses, which accompany this Prospectus/Proxy Statement.
Key to Table:
|X| Permitted without limitation; does not indicate actual
use
20% Italic type (e.g., 20%) represents an investment
limitation as a percentage of net fund assets; does not
indicate actual use
20% Roman type (e.g. 20%) represents an investment
limitation as a percentage of total fund assets; does
not indicate actual use
|_| Permitted, but not expected to be used to a significant
extent
__ Not permitted
- --------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
- --------------------------------------------------------------------------------
ACQUIRING
FUND FUND
---- ---------
Borrowing The borrowing of money from banks to 33 1/3% 30%
meet redemptions or for other temporary or
emergency purposes. Speculative exposure risk.
Country/region focus Investing a significant |X| |X|
portion of fund assets in a single country or
region. Market swings in the targeted country or
region will be likely to have a greater effect
on fund performance than they would in a more
geographically diversified equity fund.
Currency, market, political risks.
Currency hedging Instruments, such as options, |_| |X|
futures or forwards, intended to manage fund
exposure to currency risk. Options, futures or
forwards involve the right or obligation to buy or
sell a given amount of foreign currency at a
specified price and future date.(1) Correlation,
credit, currency, hedged exposure, liquidity,
political, valuation risks.
Emerging markets Countries generally considered to |X| |X|
be relatively less developed or industrialized.
Emerging markets often face economic problems that
could subject a fund to increased volatility or
substantial declines in value. Deficiencies in
regulatory oversight, market infrastructure,
shareholder protections and company laws could
expose a fund to risks beyond those generally
encountered in developed countries. Access,
currency, information, liquidity, market,
operational, political, valuation risks.
Futures and options on futures Exchange-traded |_| |_|
contracts that enable a fund to hedge against or
speculate on future changes in currency values,
interest rates or stock indexes. Futures obligate
the fund (or give it the right, in the case of
options) to receive or make payment at a specific
future time based on those future changes.(1)
Correlation, currency, hedged exposure,
interest-rate, market, speculative exposure risks.(2)
19
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
- --------------------------------------------------------------------------------
ACQUIRING
FUND FUND
---- ---------
Investment-grade debt securities Debt securities 5% 35%
rated within the four highest grades (AAA/Aaa
through BBB/Baa) by Standard & Poor's or Moody's
rating service, and unrated securities of
comparable quality. Credit, interest-rate, market
risks.
Mortgage-backed and asset-backed securities Debt |_| |_|
securities backed by pools of mortgages,
including passthrough certificates and other
senior classes of collateralized mortgage
obligations (CMOs), or other receivables. Credit,
extension, interest-rate, liquidity, prepayment
risks.
Non-investment-grade debt securities Debt 5% 35%
securities and convertible securities rated below
the fourth-highest grade (BBB/Baa) by Standard &
Poor's or Moody's rating service, and unrated
securities of comparable quality. Commonly
referred to as junk bonds. Credit, information,
interest-rate, liquidity, market, valuation
risks.
Options Instruments that provide a right to buy |_| 25%
(call) or sell (put) a particular security or an
index of securities at a fixed price within a
certain time period. A fund may purchase and
write both put and call options for hedging or
speculative purposes.(1) Correlation, credit,
hedged exposure, liquidity, market, speculative
exposure risks.
Privatization programs Foreign governments may |X| |X|
sell all or part of their interests in
enterprises they own or control. Access,
currency, information, liquidity, operational,
political, valuation risks.
Restricted and other illiquid securities 15% 15%
Securities with restrictions on trading, or those
not actively traded. May include private
placements. Liquidity, market, valuation risks.
Securities lending Lending portfolio securities 33 1/3% 33 1/3%
to financial institutions; a fund receives cash,
U.S. government securities or bank letters of
credit as collateral. Credit, liquidity, market,
operational risks.
Short sales "against the box" A short sale where 5% |_|
the fund owns enough shares of the security
involved to cover the borrowed securities, if
necessary. Liquidity, market, speculative
exposure risks.
Special-situation companies Companies |_| |_|
experiencing unusual developments affecting their
market values. Special situations may include
acquisition, consolidation, reorganization,
recapitalization, merger, liquidation, special
distribution, tender or exchange offer, or
potentially favorable litigation. Securities of a
special-situation company could decline in value
and hurt a fund's performance if the anticipated
benefits of the special situation do not
materialize. Information, market risks.
Start-up and other small companies Companies with |X| |X|
small relative market capitalizations, including
those with continuous operations of less than
three years. Information, liquidity, market,
valuation risks.
20
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
- --------------------------------------------------------------------------------
ACQUIRING
FUND FUND
---- ---------
Swaps A contract between a fund and another party |_| |_|
in which the parties agree to exchange streams of
payments based on certain benchmarks. For
example, a fund may use swaps to gain access to
the performance of a benchmark asset (such as an
index or one or more stocks) where the fund's
direct investment is restricted. Credit,
currency, interest-rate, liquidity, market,
political, speculative exposure, valuation risks.
Temporary defensive tactics Placing some or all |_| |_|
of a fund's assets in investments such as
money-market obligations and investment-grade
debt securities for defensive purposes. Although
intended to avoid losses in adverse market,
economic, political or other conditions,
defensive tactics might be inconsistent with a
fund's principal investment strategies and might
prevent a fund from achieving its goal.
Warrants Options issued by a company granting the |_| 10%
holder the right to buy certain securities,
generally common stock, at a specified price and
usually for a limited time. Liquidity, market,
speculative exposure risks.
When-issued securities and forward commitments 25% 20%
The purchase or sale of securities for delivery
at a future date; market value may change before
delivery. Liquidity, market, speculative exposure
risks.
- ------
(1) The Funds are not obligated to pursue any hedging strategy and do not
represent that these techniques are available now or will be available at
any time in the future.
(2) Each Fund is limited to 5% of net assets for initial margin and premium
amounts on futures positions considered to be speculative by the Commodity
Futures Trading Commission.
MANAGEMENT OF EACH FUND
CSAM provides investment advisory services to both Funds under
separate advisory agreements. CSAM Ltd. provides sub-investment advisory
services to the Fund under a sub-investment advisory agreement. CSAM Ltd. is
described in the Prospectuses for the Fund. (The specific persons at CSAM who
are responsible for the day-to-day management of the Acquiring Fund are
described in the Prospectuses of the Acquiring Fund, which accompany this
Prospectus/Proxy Statement.) CSAM Ltd. does not and will not provide
sub-investment advisory services to the Acquiring Fund. After consummation of
the Acquisition, the Fund's portfolio management team will become part of the
portfolio management team of the Acquiring Fund.
In addition, PFPC Inc. and CSAMSI will continue to provide
accounting and co-administrative services as applicable. CSAMSI (or its
predecessor) has served as distributor of each Fund since inception and will
continue to provide distribution services following the Acquisition. Counsellors
Funds Service, Inc. had served as co-administrator of each Fund until October
26, 1999, when CSAMSI became co-administrator of each Fund. State Street Bank
and the Trust Company ("State Street") will continue its role as shareholder
servicing
21
<PAGE>
agent, transfer agent and dividend disbursing agent after consummation of the
Acquisition. PFPC Trust Company and State Street will serve as custodian of the
U.S. assets and non-U.S. assets, respectively, of the Fund.
PricewaterhouseCoopers LLP, the auditor for the Fund, also serves in that
capacity for the Acquiring Fund.
The Acquiring Fund pays a management fee to CSAM of 1.25% of average
daily net assets whereas the Fund pays a management fee to CSAM of 1.00% of
average daily net assets. The Acquiring Fund pays a co-administration fee CSAMSI
of .10% of average daily net assets while the Fund pays CSAMSI a
co-administration fee of .05% of the Fund's first $125 million in average daily
net assets attributable to the Common Shares and .10% of average daily net
assets in excess of $25 million attributable to the Common Shares. CSAM and
CSAMSI have, however, agreed to waive their respective fees as described below.
The fees paid to PFPC could change over time (and possibly decrease) due to
PFPC's different fee structure with the Acquiring Fund. (Whereas the Fund pays
PFPC a fee calculated at an annual rate of .125% of its average daily net
assets, subject to a minimum annual fee and exclusive of out-of-pocket expenses,
the Acquiring Fund pays PFPC a fee calculated at an annual rate of .12% of its
first $250 million in average daily net assets, .10% of the next $250 million in
average daily net assets, .08% of the next $250 million in average daily net
assets, and .05% of average daily net assets over $750 million, subject to a
minimum annual fee and exclusive of out-of-pocket expenses.) Importantly, the
distribution fee of the Fund would remain unchanged following the Acquisition
and CSAM and CSAMSI, as applicable, have agreed to waive fees, and CSAM has
agreed to reimburse expenses, for the two-year period beginning on the Closing
Date to the extent necessary (a) for the management fee payable by the Acquiring
Fund to be no higher than the management fee payable by the Fund as set forth in
the Fund's investment advisory agreement with CSAM, (b) for the
co-administration fee payable by the Acquiring Fund to be no higher than the
co-administration fee payable by the Fund as set forth in the Fund's
co-administration agreement with CSAMSI and (c) to maintain the net expense
ratio of each class of the Acquiring Fund at a level no higher than the lower of
that of the corresponding class of the Fund or the Acquiring Fund as of the
30-day period ended on such date.
INTEREST OF CSAM IN THE Acquisition
CSAM may be deemed to have an interest in the Plan and the
Acquisition because it provides investment advisory services to each Fund. CSAM
receives compensation from each Fund for services it provides pursuant to
separate advisory agreements. The terms and provisions of these arrangements are
described in each Fund's Prospectuses and Statement of Additional Information.
Future growth of assets of the Acquiring Fund, if any, can be expected to
increase the total amount of fees payable to CSAM and its affiliates and to
reduce the amount of fees and expenses required to be waived to maintain total
fees and expenses of the Acquiring Fund at agreed upon levels. [CSAM may also be
deemed to have an interest in the Plan and the Acquisition because, as of the
Record Date, it or one or more of its affiliates possessed or shared voting
power or investment power as a beneficial owner or as a fiduciary on behalf of
its customers or employees in the Fund (see "Information About the Acquisition
- -- Share Ownership of the Fund" above).] CSAM and its affiliates have advised
the Fund that they intend to vote the shares over which they have voting power
at the Meeting (i) in the manner instructed by the customers for which such
shares are held or (ii) in the event that such
22
<PAGE>
instructions are not received or where shares are held directly or on behalf of
employees, in the same proportion as votes cast by other shareholders. See
"Voting Information."
CSAM may also be deemed to have an interest in the Plan and
Acquisition because its affiliate, CSAMSI, serves as the co-administrator and
distributor for both the Fund and the Acquiring Fund. As such, CSAMSI receives
compensation for its services.
INFORMATION ON SHAREHOLDERS' RIGHTS
GENERAL. Each Fund is an open-end, non-diversified management
investment company registered under the 1940 Act, which continuously offers to
sell shares at its current net asset values. The Fund is a Maryland corporation
that was incorporated on July 31, 1998 and is governed by its Articles of
Incorporation, By-Laws and Board of Directors. The Acquiring Fund is also a
Maryland corporation organized on December 23, 1993 and is similarly governed by
its Articles of Incorporation, By-Laws and Board of Directors. Each Fund is also
governed by applicable state and federal law. Each Fund has an authorized
capital of three billion shares of common stock with a par value of $.001 per
share. In each Fund, shares represent interests in the assets of the relevant
Fund and have identical voting, dividend, liquidation and other rights on the
same terms and conditions except that expenses related to the distribution of
each class of shares of the relevant Fund are borne solely by such class and
each class of shares has exclusive voting rights with respect to provisions of
such Fund's Rule 12b-1 distribution plan, if any, pertaining to that particular
class.
MULTI-CLASS STRUCTURE. Each Fund is authorized to offer Common,
Institutional and Advisor shares. The Fund does not currently offer Advisor
Shares. The Acquiring Fund expects to continue to offer both Common shares and
Advisor Shares, and to commence offering Institutional shares following the
Acquisition.
DIRECTORS. The By-Laws of each Fund provide that the term of office
of each Director shall be from the time of his or her election and qualification
until his or her successor shall have been elected and shall have qualified. Any
Director of either Fund may be removed by the vote of at least a majority of the
shares of capital stock then entitled to be cast for the election of Directors.
Vacancies on the Boards of either Fund may be filled by the Directors remaining
in office, provided that no vacancy or vacancies may 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 shareholders of the relevant Fund. A meeting of shareholders will be
required for the purpose of electing Directors whenever (a) fewer than a
majority of the Directors then in office were elected by shareholders of the
relevant Fund or (b) a vacancy exists that may not be filled by the remaining
Directors.
VOTING RIGHTS. Neither Fund holds a meeting of shareholders
annually, and there normally is no meeting of shareholders for the purpose of
electing Directors unless and until such time as less than a majority of the
Directors of the relevant Fund holding office have been elected by shareholders
or a vacancy exists that may not be filled by the remaining
23
<PAGE>
Directors. At such times, the Directors then in office will call a shareholders'
meeting for the election of Directors.
LIQUIDATION OR TERMINATION. In the event of the liquidation or
termination of either Fund, the shareholders of the relevant Fund are entitled
to receive, when and as declared by the Directors, the excess of the assets over
the liabilities belonging to such Fund. In either case, the assets so
distributed to shareholders will be distributed among the shareholders in
proportion to the number of shares held by them and recorded on the books of
such Fund.
LIABILITY OF DIRECTORS. The Articles of Incorporation of each Fund
provide that its Directors and officers shall not be liable for monetary damages
for breach of fiduciary duty as a Director or officer, except to the extent such
exemption is not permitted by law. The Articles of Incorporation of each Fund
provide that the relevant Fund shall indemnify each Director and officer and
permit advances for the payment of expenses relating to the matter for which
identification is sought, each to the fullest extent permitted by Maryland
General Corporation Law and other applicable law. Pursuant to the Plan, the
Acquiring Fund extends this same protection to current Directors and officers of
the Fund for liability relating to that Fund.
RIGHTS OF INSPECTION. Maryland law permits any shareholder of either
Fund or any agent of such shareholder to inspect and copy, during usual business
hours, the By-Laws, minutes of shareholder proceedings, annual statements of the
affairs and voting trust agreements of the relevant Fund on file at its
principal offices.
SHAREHOLDER LIABILITY. Under Maryland law, shareholders of either
Fund do not have personal liability for corporate acts and obligations. Shares
of the Acquiring Fund issued to the shareholders of the Fund in the Acquisition
will be fully paid and nonassessable when issued, transferable without
restrictions and will have no preemptive rights.
The foregoing is only a summary of certain characteristics of the
operations of the Acquiring Fund and the Fund. The foregoing is not a complete
description of the documents cited. Shareholders should refer to the provisions
of the corporate documents and state laws governing each Fund for a more
thorough description.
ADDITIONAL INFORMATION
The Acquiring Fund and the Fund are each subject to the
informational requirements of the 1934 Act and the 1940 Act and in accordance
therewith file reports and other information including proxy material, reports
and charter documents, with the SEC. These materials can be inspected and copies
obtained at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the New York Regional Office of the
SEC at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549 at
24
<PAGE>
prescribed rates. The Prospectuses and the Statement of Additional Information
for the Acquiring Fund, along with related information, may be found on the SEC
website as well (http://www.sec.gov).
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors of the Fund to be used at the
Special Meeting of Shareholders of the Fund to be held at 3:30 p.m. on January
27, 2000, at the offices of the Fund, 466 Lexington Avenue, New York, New York
10017 and at any adjournment(s) thereof. This Prospectus/Proxy Statement, along
with a Notice of the Meeting and proxy card(s), is first being mailed to
shareholders of the Fund on or about December 3, 1999. Only shareholders of
record as of the close of business on the Record Date will be entitled to notice
of, and to vote at, the Special Meeting or any adjournment thereof. As of the
Record Date, the Fund had the following shares outstanding and entitled to vote:
[INSERT]. The holders of one-third of the shares of a Fund outstanding at the
close of business on the Record Date present in person or represented by proxy
will constitute a quorum for the Special Meeting of the Fund. For purposes of
determining a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. For this
reason, abstentions and broker non-votes will have the effect of a "no" vote for
purposes of obtaining the requisite approval of the Plan. If the enclosed proxy
is properly executed and returned in time to be voted at the Special Meeting,
the proxies named therein will vote the shares represented by the proxy in
accordance with the instructions marked thereon. Executed, but unmarked proxies
(i.e., executed proxies in which there is no indication of the shareholder's
voting instructions) will be voted FOR approval of the Plan and FOR approval of
any other matters deemed appropriate. A proxy may be revoked at any time on or
before the Special Meeting by the subsequent execution and submission of a
revised proxy, by written notice to Hal Liebes, Secretary of the Fund, 466
Lexington Avenue, New York, New York 10017 or by voting in person at the Special
Meeting.
Approval of the Plan will require the affirmative vote of a majority
of the Fund's outstanding shares, voting in the aggregate without regard to
class, in person or by proxy, if a quorum is present. Shareholders of the Fund
are entitled to one vote for each share.
Proxy solicitations will be made primarily by mail, but proxy
solicitations also may be made by telephone, facsimile or personal interviews
conducted by officers and employees of CSAM and its affiliates [and/or by D.F.
King & Co., Inc.]. All expenses of the Acquisition, which are currently
estimated to be $[INSERT], including the costs of the proxy solicitation and the
preparation of enclosures to the Prospectus/Proxy Statement, reimbursement of
expenses of forwarding solicitation material to beneficial owners of shares of
the Fund and expenses incurred in connection with the preparation of this
Prospectus/Proxy
25
<PAGE>
Statement, will be borne by CSAM or its affiliates (excluding extraordinary
expenses not normally associated with transactions of this type). It is
anticipated that banks, brokerage houses and other institutions, nominees and
fiduciaries will be requested to forward proxy materials to beneficial owners
and to obtain authorization for the execution of proxies. CSAM or its
affiliates, may, upon request, reimburse banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in forwarding proxy
materials to beneficial owners.
In the event that a quorum necessary for the shareholders' meeting
is not present or sufficient votes to approve the Acquisition are not received
prior to 3:30 p.m. on January 27, 2000, the persons named as proxies may propose
one or more adjournments of the Special Meeting to permit further solicitation
of proxies. In determining whether to adjourn the Special Meeting, the following
factors may be considered: the percentage of votes actually cast, the percentage
of negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any such adjournment will require an affirmative vote by the
holders of a majority of the shares of the Fund present in person or by proxy
and entitled to vote at the Special Meeting. The persons named as proxies will
vote upon a decision to adjourn the Special Meeting after consideration of the
best interests of all shareholders of the Fund.
As of the Record Date, CSAM (or its affiliates) possessed or shared
voting power or investment power as a fiduciary on behalf of its customers, with
respect to the Fund as set forth above under "Information About the Acquisition
- -- Share Ownership of the Fund."
OTHER BUSINESS
The Fund's Board of Directors knows of no other business to be
brought before the Special Meeting. However, if any other matters come before
the Special Meeting, proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed Proxy Card(s).
The approval of shareholders of the Acquiring Fund is not required
in order to affect the Acquisition and, accordingly, the votes of the
shareholders of the Acquiring Fund are not being solicited by this
Prospectus/Proxy Statement.
FINANCIAL STATEMENTS AND EXPERTS
The audited statement of net assets of each Fund, including the
schedule of portfolio investments, as of August 31, 1999 and October 31, 1998
for the Fund and the Acquiring Fund, respectively, the related statements of
operations for the year and/or period then ended, the statement of changes in
net assets for each of the two years in the period then ended and the financial
highlights for each of the five years (or such shorter period as the relevant
Fund, or share class, has been in existence) in the period then ended, have been
incorporated by reference into this Prospectus/Proxy Statement in reliance upon
the reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of such firm as experts in accounting and auditing.
26
<PAGE>
The unaudited financial information contained in the Acquiring
Fund's semi-annual report for the period ended April 30, 1999 is also
incorporated by reference.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the
Acquiring Fund will be passed upon by Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York 10019-6099, counsel to the Acquiring Fund. In
rendering such opinion, Willkie Farr & Gallagher may rely on an opinion of
Venable Baetjer and Howard, L.L.P. as to certain matters under Maryland law.
27
<PAGE>
EXHIBIT A
FORM OF PLAN OF REORGANIZATION
A-1
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this ___ day of [INSERT], 1999, between and among Warburg, Pincus Emerging
Markets Fund, Inc., a Maryland corporation (the "Acquiring Fund"), and Warburg,
Pincus Emerging Markets II Fund, Inc., a Maryland corporation (the "Fund" and,
together with the Acquiring Fund, the "Funds"), and, solely for purposes of
Section 9.2 hereof, Credit Suisse Asset Management, LLC, a limited liability
company organized under the laws of the State of Delaware ("CSAM").
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization of
the Fund (collectively, the "Reorganization") will consist of the transfer of
substantially all of the assets of the Fund in exchange solely for shares of the
applicable class or classes of common stock (collectively, the "Shares") of the
Acquiring Fund, and the assumption by the Acquiring Fund of liabilities of the
Fund, and the distribution, on or after the Closing Date hereinafter referred
to, of Shares of the Acquiring Fund ("Acquiring Fund Shares") to the
shareholders of the Fund in liquidation of the Fund as provided herein, all upon
the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Board of Directors of the Fund has determined that the
exchange of all of the assets of the Fund for Acquiring Fund Shares and the
assumption of the liabilities of the Fund by the Acquiring Fund is in the best
interests of the Fund and that the interests of the existing shareholders of the
Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Directors of the Acquiring Fund has determined that
the exchange of all of the assets of the Fund for Acquiring Fund Shares is in
the best interests of the Acquiring Fund's shareholders and that the interests
of the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Transfer of Assets of the Fund in Exchange for Acquiring Fund Shares and
Assumption of the Fund's Liabilities and Liquidation of the Fund
1.1. Subject to the terms and conditions herein set forth and on the basis of
the representations and warranties contained herein, the Fund agrees to transfer
its assets as set forth in paragraph 1.2 to the Acquiring Fund, and the
Acquiring Fund agrees in exchange therefor: (i) to deliver to the Fund the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, of
each class of the Fund determined by dividing the value of the Fund's net assets
attributable to each such class of shares, computed in the manner and as of the
time and date set forth in paragraph 2.1, by the net asset value of one
Acquiring Fund Share of the same class; and (ii) to assume the liabilities of
the Fund, as set forth in
A-2
<PAGE>
paragraph 1.3. Such transactions shall take place at the closing provided for in
paragraph 3.1 (the "Closing").
1.2. (a) The assets of the Fund to be acquired by the Acquiring Fund shall
consist of all property including, without limitation, all cash, securities and
dividend or interest receivables that are owned by or owed to the Fund and any
deferred or prepaid expenses shown as an asset on the books of the Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Fund has provided the Acquiring Fund with a list of all its assets as of
the date of execution of this Agreement. The Fund reserves the right to sell any
of these securities but will not, without the prior approval of the Acquiring
Fund, acquire any additional securities other than securities of the type in
which the Acquiring Fund is permitted to invest. The Fund will, within a
reasonable time prior to the Closing Date, furnish the Acquiring Fund with a
list of the securities, if any, on the Fund's list referred to in the first
sentence of this paragraph which do not conform to the Acquiring Fund's
investment objective, policies and restrictions. In the event that the Fund
holds any investments which the Acquiring Fund may not hold, the Fund will
dispose of such securities prior to the Closing Date. In addition, if it is
determined that the portfolios of the Fund and the Acquiring Fund, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the Acquiring Fund with respect to such investments, the Fund, if
requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient
amount of such investments as may be necessary to avoid violating such
limitations as of the Closing Date.
1.3. The Fund will endeavor to discharge all its known liabilities and
obligations prior to the Closing Date, other than those liabilities and
obligations which would otherwise be discharged at a later date in the ordinary
course of business. The Acquiring Fund shall assume all liabilities, expenses,
costs, charges and reserves, including those liabilities reflected on an
unaudited statement of assets and liabilities of the Fund prepared by PFPC,
Inc., each Fund's accounting agent ("PFPC"), as of the Valuation Date (as
defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The Acquiring
Fund shall also assume any liabilities, expenses, costs or charges incurred by
or on behalf of the Fund specifically arising from or relating to the operations
and/or transactions of the Fund prior to and including the Closing Date but
which are not reflected on the above-mentioned statement of assets and
liabilities, including any liabilities, expenses, costs or charges arising under
paragraph 5.10 hereof.
1.4. As provided in paragraph 3.4, as soon on or after the Closing Date as is
conveniently practicable (the "Liquidation Date"), the Fund will liquidate and
distribute pro rata to the Fund's shareholders of record determined as of the
close of business on the Closing Date (the "Fund Shareholders") the Acquiring
Fund Shares it receives pursuant to paragraph 1.1. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
then credited to the account of the Fund on the books of the Acquiring Fund to
open accounts on the share records of the Acquiring Fund in the name of the
Fund's shareholders representing the respective pro rata number of the Acquiring
Fund Shares of the particular class due such shareholders. All issued and
outstanding shares of the Fund will simultaneously
A-3
<PAGE>
be canceled on the books of the Fund, although share certificates representing
interests in the Fund will represent a number of Acquiring Fund Shares after the
Closing Date as determined in accordance with Section 2.3. The Acquiring Fund
shall not issue certificates representing the Acquiring Fund Shares in
connection with such exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued in
the manner described in the Acquiring Fund's current prospectuses and statement
of additional information.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a
name other than the registered holder of the Fund Shares on the books of the
Fund as of that time shall, as a condition of such issuance and transfer, be
paid by the person to whom such Acquiring Fund Shares are to be issued and
transferred.
1.7. Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the applicable Closing Date and
such later dates on which the Fund is terminated.
2. Valuation
2.1. The value of the Fund's assets to be acquired hereunder shall be the value
of such assets computed as of the close of regular trading on The New York Stock
Exchange, Inc. (the "NYSE") on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Fund's then current prospectuses or statements of additional
information.
2.2. The number of Shares of each class of the Acquiring Fund to be issued
(including fractional shares, if any) in exchange for the Fund's net assets
shall be determined by dividing the value of the net assets of the Fund
attributable to the respective classes of Shares determined using the same
valuation procedures referred to in paragraph 2.1 by the net asset value per
Share of such class of the Acquiring Fund computed as of the close of regular
trading on the NYSE on the Closing Date, using the valuation procedures set
forth in the Acquiring Fund's then current prospectuses or statement of
additional information.
2.3. All computations of value shall be made by PFPC Inc. in accordance with its
regular practice as pricing agent for the Fund and the Acquiring Fund.
3. Closing and Closing Date
3.1. The Closing Date for the Reorganization shall be January 28, 2000, or such
other date as the parties to such Reorganization may agree to in writing. All
acts taking place at the Closing shall be deemed to take place simultaneously as
of the close of trading on the NYSE on the Closing Date unless otherwise
provided. The Closing shall be held as of [4:00 p.m.],
A-4
<PAGE>
at the offices of Willkie Farr & Gallagher or at such other time and/or place as
the parties may agree.
3.2. The custodian for the Acquiring Fund (the "Custodian") shall deliver at the
Closing a certificate of an authorized officer stating that: (a) the Fund's
portfolio securities, cash and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date and (b) all necessary taxes,
including all applicable federal and state stock transfer stamps, if any, have
been paid, or provision for payment has been made, in conjunction with the
delivery of portfolio securities.
3.3. In the event that on the Valuation Date (a) the NYSE or another primary
trading market for portfolio securities of the Acquiring Fund or the Fund shall
be closed to trading or trading thereon shall be restricted or (b) trading or
the reporting of trading on the NYSE or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Fund is impracticable, the applicable Closing Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4. The Fund shall deliver at the Closing a list of the names and addresses of
the Fund's shareholders and the number and class of outstanding Shares owned by
each such shareholder immediately prior to the Closing or provide evidence that
such information has been provided to the Acquiring Fund's transfer agent. The
Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring
Fund Shares to be credited to the Fund's account on the Closing Date to the
Secretary of the Fund or provide evidence satisfactory to the Fund that such
Acquiring Fund Shares have been credited to the Fund's account on the books of
the Acquiring Fund. At the Closing, each party shall deliver to the relevant
other parties such bills of sale, checks, assignments, share certificates, if
any, receipts or other documents as such other party or its counsel may
reasonably request.
4. Representations and Warranties
4.1. The Fund represents and warrants to the Acquiring Fund as follows:
(a) The Fund is a Maryland corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland;
(b) The Fund is a registered investment company classified as a
management company of the open-end type and its registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"), is in full force and effect;
(c) The Fund is not, and the execution, delivery and performance of
this Agreement will not result, in a violation of its Charter or By-Laws
or any material agreement, indenture, instrument, contract, lease or other
undertaking to which the Fund is a party or by which the Fund or its
property is bound or affected;
A-5
<PAGE>
(d) There are no contracts or other commitments (other than this
Agreement) of the Fund which will be terminated with liability to the Fund
prior to the Closing Date;
(e) Except as previously disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business.
The Fund knows of no facts which might form the basis for the institution
of such proceedings and is not party to or subject to the provisions of
any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or the business of the Fund
or its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, including the
Investment Portfolio, Operations, and Changes in Net Assets, and the
Financial Highlights of the Fund at and for each of the fiscal years ended
August 31 in the period beginning with commencement of the Fund and ending
August 31, 1999 have been audited by PricewaterhouseCoopers LLP,
independent accountants, and are in accordance with generally accepted
accounting principles consistently applied, and such statements (copies of
which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Fund as of such dates, and there are no known
contingent liabilities of the Fund as of such dates not disclosed therein;
(g) Since August 31, 1999, there has not been any material adverse
change in the Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Fund of indebtedness maturing more than one year from
the date that such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund. For the purposes of this
subparagraph (g), a decline in net asset value per share or the total
assets of the Fund in the ordinary course of business shall not constitute
a material adverse change;
(h) At the date hereof and the Closing Date, all federal and other
tax returns and reports, including extensions, of the Fund required by law
to have been filed by such dates shall have been filed, and all federal
and other taxes shall have been paid so far as due, or provision shall
have been made for the payment thereof and, to the best of the Fund's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company; all of the Fund's
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issued and outstanding shares have been offered and sold in compliance in
all material respects with applicable federal and state securities laws;
(j) All issued and outstanding shares of each class of the Fund are,
and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable by the Fund. All of the issued and
outstanding shares of the Fund will, at the time of Closing, be held by
the persons and the amounts set forth in the records of the transfer agent
as provided in paragraph 3.4. The Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of the
Fund's shares, nor is there outstanding any security convertible into any
of the Fund's shares;
(k) At the Closing Date, the Fund will have good and marketable
title to its assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.2 and full right, power and authority to sell, assign,
transfer and deliver such assets hereunder and, upon delivery and payment
for such assets, the Acquiring Fund will acquire good and marketable title
thereto, subject to no restrictions on the full transfer thereof, except
such restrictions as might arise under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act with respect to privately
placed or otherwise restricted securities that the Fund may have acquired
in the ordinary course of business and which the Acquiring Fund has
received notice and necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary actions on the part of the Fund's
Board of Directors, and subject to the approval of the Fund's
shareholders, this Agreement will constitute a valid and binding
obligation of the Fund, enforceable in accordance with its terms, subject
to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(m) The information to be furnished by the Fund for use in
applications for orders, registration statements or proxy materials or for
use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the National Association of
Securities Dealers, Inc.), which may be necessary in connection with the
transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(n) The current prospectus and statements of additional information
of the Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not materially
misleading; and
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(o) Insofar as the following relate to the Fund, the registration
statement filed by the Acquiring Fund on Form N-14 relating to Acquiring
Fund Shares that will be registered with the Commission pursuant to this
Agreement, which, without limitation, shall include a proxy statement of
the Fund (the "Proxy Statement') and the prospectuses of the Acquiring
Fund with respect to the transactions contemplated by this Agreement, and
any supplement or amendment thereto, and the documents contained or
incorporated therein by reference (the "N-14 Registration Statement"), on
the effective date of the N-14 Registration Statement, at the time of any
shareholders' meeting referred to herein, on the Valuation Date and on the
Closing Date: (i) shall comply in all material respects with the
provisions of the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act") and the 1940 Act and the rules and regulations under those Acts, and
(ii) shall not contain any 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; provided, however, that the
representations and warranties in this section shall not apply to
statements in or omissions from the Proxy Statement and the N-14
Registration Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished by the
Acquiring Fund for use therein.
4.2. The Acquiring Fund represents and warrants to the Fund as follows:
(a) The Acquiring Fund is a Maryland corporation, duly organized,
validly existing and in good standing under the laws of the State of
Maryland;
(b) The Acquiring Fund is a registered investment company classified
as a management company of the open-end type and its registration with the
Commission as an investment company under the 1940 Act is in full force
and effect;
(c) The current prospectuses and statement of additional information
filed as part of the Acquiring Fund registration statement on Form N-1A
(the "Acquiring Fund Registration Statement") conform in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act
and the rules and regulations of the Commission under those Acts and do
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets;
(e) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result in, a violation of its
Charter or By-Laws or any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring Fund is a
party or by which the Acquiring Fund or its property is bound;
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(f) Except as previously disclosed in writing to and accepted by the
Fund, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of its properties
or assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business. The
Acquiring Fund knows of no facts which might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions contemplated herein;
(g) Since October 31, 1999, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquiring Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred except as otherwise
disclosed to and accepted in writing by the Fund. For purposes of this
subsection (g), a decline in net asset value per share of the Acquiring
Fund due to declines in market values of securities in the Acquiring
Fund's portfolio, the discharge of Acquiring Fund liabilities, or the
redemption of Acquiring Fund shares by Acquiring Fund Shareholders shall
not constitute a material adverse change;
(h) At the Closing Date, all federal and other tax returns and
reports, including extensions, of the Acquiring Fund required by law then
to be filed shall have been filed, and all federal and other taxes shown
as due on said returns and reports shall have been paid or provision shall
have been made for the payment thereof;
(i) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such, has been
eligible to and has computed its federal income tax under Section 852 of
the Code;
(j) At the date hereof, all issued and outstanding Acquiring Fund
Shares are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable, with no personal liability
attaching to the ownership thereof. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares;
(k) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary actions on the part of the Acquiring
Fund's Board of Directors, and this Agreement will constitute a valid and
binding obligation of the Acquiring Fund enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
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<PAGE>
(l) The Acquiring Fund Shares to be issued and delivered to the
Fund, for the account of the Fund's shareholders, pursuant to the terms of
this Agreement, will at the Closing Date have been duly authorized and
when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable with no personal
liability attaching to the ownership thereof;
(m) Insofar as the following relate to the Acquiring Fund, the N-14
Registration Statement, on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein, on
the Valuation Date and on the Closing Date: (i) shall comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations under those Acts, and (ii)
shall not contain any 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; provided, however, that the
representations and warranties in this section shall not apply to
statements in or omissions from the proxy statement and the N-14
Registration Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished by the Fund
for use therein; and
(n) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940
Act and such of the state Blue Sky or securities laws as it may deem
appropriate in order to continue its operations after the Closing Date.
5. Covenants of the Fund and the Acquiring Fund
5.1. The Acquiring Fund and the Fund will operate its business in the ordinary
course between the date hereof and the Closing Date. It is understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions.
5.2. The Fund will call a meeting of its shareholders to consider and act upon
this Agreement and to take all other actions necessary to obtain approval of the
transactions contemplated herein.
5.3. The Fund covenants that the Acquiring Fund Shares to be issued hereunder
are not being acquired for the purpose of making any distribution thereof other
than in accordance with the terms of this Agreement.
5.4. The Fund will assist the Acquiring Fund in obtaining such information as
the Acquiring Fund reasonably requests concerning the beneficial ownership of
the Fund's Shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and the
Fund each will take, or cause to be taken, all action, and do or cause to be
done, all things reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement.
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5.6. The Fund will provide the Acquiring Fund with information reasonably
necessary for the preparation of a prospectus (the "Prospectus") which will
include the Proxy Statement referred to in paragraph 4.1(o), all to be included
in the N-14 Registration Statement, in compliance with the 1933 Act, the 1934
Act and the 1940 Act in connection with the meeting of the Fund's shareholders
to consider approval of this Agreement and the transactions contemplated herein.
5.7. The Fund will provide the Acquiring Fund with information reasonably
necessary for the preparation of the Acquiring Fund Registration Statement.
5.8. As promptly as practicable, but in any case within thirty days of the
Closing Date, the Fund shall furnish the Acquiring Fund with a statement
containing information required for purposes of complying with Rule 24f-2 under
the 1940 Act. A notice pursuant to Rule 24f-2 will be filed by the Acquiring
Fund offsetting redemptions by the Fund during the fiscal year ending on or
after the applicable Closing Date against sales of Acquiring Fund Shares and the
Fund agrees that it will not net redemptions during such period by the Fund
against sales of its shares.
5.9. The Acquiring Fund agrees to indemnify and advance expenses to each person
who at the time of the execution of this Agreement serves as a Director or
Officer ("Indemnified Person") of the Fund, against money damages actually and
reasonably incurred by such Indemnified Person in connection with any claim that
is asserted against such Indemnified Person arising out of such person's service
as a Director or officer of the Fund with respect to matters specifically
relating to the Fund, provided that such indemnification and advancement of
expenses shall be permitted to the fullest extent that is available under the
Maryland General Corporation law and other applicable law. This paragraph 5.9
shall not protect any such Indemnified Person against any liability to the Fund,
the Acquiring Fund or their shareholders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or from reckless
disregard of the duties involved in the conduct of his office. An Indemnified
Person seeking indemnification shall be entitled to advances from the Acquiring
Fund for payment of the reasonable expenses incurred by him in connection with
the matter as to which he is seeking indemnification in the manner and to the
fullest extent permissible under the Maryland General Corporation law and other
applicable law. Such Indemnified Person shall provide to the Acquiring Fund a
written affirmation of his good faith belief that the standard of conduct
necessary for indemnification by the Acquiring Fund has been met and a written
undertaking to repay any 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 Indemnified Person shall provide
security in form and amount acceptable to the Acquiring Fund for its
undertaking; (b) the Acquiring Fund is insured against losses arising by reason
of the advance; or (c) either a majority of a quorum of disinterested non-party
Directors of the Acquiring Fund (collectively, the "Disinterested Directors"),
or independent legal counsel experienced in mutual fund matters, selected by the
Indemnified Person, in a written opinion, shall have determined, based on a
review of facts readily
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available to the Acquiring Fund at the time the advance is proposed to be made,
that there is reason to believe that the Director will ultimately be found to be
entitled to indemnification.
5.10. The Acquiring Fund agrees to take no action that would adversely affect
the qualification of the Reorganization as a reorganization under Section 368(a)
of the Code. In this regard, the Acquiring Fund covenants that, following the
Reorganization, it (a) will (i) continue the historic business of the Fund or
(ii) use a significant portion of the Fund's historic business assets in a
business, and (b) will not sell or otherwise dispose of any of the assets of the
Fund, except for dispositions in the ordinary course of business or transfers to
a corporation (or other entity classified for federal income tax purposes as an
association taxable as a corporation) that is "controlled" by the Acquiring Fund
within the meaning of Section 368(c) of the Code.
6. Conditions Precedent to Obligations of the Fund
The obligations of the Fund to consummate the transactions provided for herein
shall be subject, at its election, to the performance by the Acquiring Fund of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following further conditions:
6.1. All representations and warranties of the Acquiring Fund contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the actions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if made on
and as of the Closing Date;
6.2. The Acquiring Fund shall have delivered to the Fund a certificate executed
in its name by its President or Vice President and its Secretary, Treasurer or
Assistant Treasurer, in a form reasonably satisfactory to the Fund and dated as
of the Closing Date, to the effect that the representations and warranties of
the Acquiring Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement and as to such other matters as the Fund shall reasonably
request;
6.3. The Fund shall have received a written agreement from (a) CSAM to waive a
portion of the management fee charged to the Acquiring Fund to the extent
necessary for the management fee payable by the Acquiring Fund for the two-year
period beginning on the Closing Date to be no higher than the management fee
payable by the Fund as set forth in the Fund's investment advisory agreement
with CSAM, (b) Credit Suisse Asset Management Securities, Inc. ("CSAMSI") to
waive a portion of its co-administration fee charged to the Acquiring Fund to
the extent necessary for the co-administration fee payable by the Acquiring Fund
for the two-year period beginning on the Closing Date to be no higher than the
co-administration fee payable by the Fund as set forth in the Fund's
co-administration agreement with CSAMSI and (c) CSAM to maintain the net expense
ratio of each class of the Acquiring Fund for the two-year period beginning on
the Closing Date at a level no higher than the lower of that of the
corresponding class of the Fund or the Acquiring Fund as of the 30-day period
ended on such date. These expense ratios will be in effect except for increases
in expense ratios due to redemptions of shares outside of the ordinary course of
business; and
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6.4. The Fund shall have received on the Closing Date a favorable opinion from
Willkie Farr & Gallagher, counsel to the Acquiring Fund, dated as of the Closing
Date, in a form reasonably satisfactory to the Fund, covering the following
points:
That (a) the Acquiring Fund is a validly existing corporation and in good
standing under the laws of the State of Maryland, has the corporate power
to own all of its properties and assets and to carry on its business as a
registered investment company; (b) the Agreement has been duly authorized,
executed and delivered by the Acquiring Fund and, assuming due
authorization, execution and delivery of the Agreement by the other
parties thereto, is a valid and binding obligation of the Acquiring Fund
enforceable against the Acquiring Fund in accordance with its terms,
subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles; (c) the
Acquiring Fund Shares to be issued to the Fund's shareholders as provided
by this Agreement are duly authorized and upon such delivery will be
validly issued and outstanding and are fully paid and nonassessable with
no personal liability attaching to ownership thereof, and no shareholder
of the Acquiring Fund has any preemptive rights to subscription or
purchase in respect thereof; (d) the execution and delivery of this
Agreement did not, and the consummation of the transactions contemplated
hereby will not, result in a violation of the Acquiring Fund's Charter or
By-Laws or in a material violation of any provision of any agreement
(known to such counsel) to which the Acquiring Fund is a party or by which
it or its property is bound or, to the knowledge of such counsel, result
in the acceleration of any obligation or the imposition of any penalty,
under any agreement, judgment, or decree to which the Acquiring Fund is a
party or by which it or its property is bound; (e) to the knowledge of
such counsel, no consent, approval, authorization or order of any court or
governmental authority of the United States or state of Maryland is
required for the consummation by the Acquiring Fund of the actions
contemplated herein, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act, and such as may be required under state
securities laws; (f) only insofar as they relate to the Acquiring Fund,
the descriptions in the Proxy Statement of statutes, legal and
governmental proceedings, investigations, orders, decrees or judgments of
any court or governmental body in the United States and contracts and
other documents, if any, are accurate and fairly present the information
required to be shown; (g) such counsel does not know of any legal,
administrative or governmental proceedings, investigation, order, decree
or judgment of any court or governmental body, only insofar as they relate
to the Acquiring Fund or its assets or properties, pending, threatened or
otherwise existing on or before the effective date of the N-14
Registration Statement or the Closing Date, which are required to be
described in the N-14 Registration Statement or to be filed as exhibits to
the N-14 Registration Statement which are not described and filed as
required; (h) the Acquiring Fund is registered as an investment company
under the 1940 Act and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect; (i) the
Proxy Statement and the Acquiring Fund Registration Statement (except as
to financial and statistical data contained therein, as to which no
opinion need be given) comply as to form in all
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<PAGE>
material respects with the requirements of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations thereunder; and (j) the
Acquiring Fund Registration Statement is effective under the 1933 Act and
the 1940 Act and no stop-order suspending its effectiveness or order
pursuant to section 8(e) of the 1940 Act has been issued.
In addition, such counsel also shall state that they have participated in
conferences with officers and other representatives of the Acquiring Fund at
which the contents of the Proxy Statement, the Acquiring Fund Registration
Statement and related matters were discussed and, although they are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Proxy Statement and the Acquiring
Fund Registration Statement (except to the extent indicated in paragraph (i) of
their above opinion), on the basis of the foregoing (relying as to materiality
to a large extent upon the opinions and certificates of officers and other
representatives of the Acquiring Fund), they do not believe that the Proxy
Statement and the Acquiring Fund Registration Statement as of their respective
dates, as of the date of the Fund shareholders' meeting, and as of the Closing
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein regarding the Acquiring Fund or
necessary to make the statements therein regarding the Acquiring Fund, in the
light of the circumstances under which they were made, not misleading.
Such opinion may state that such counsel does not express any opinion or
belief as to the financial statements or other financial data, or as to the
information relating to the Fund, contained in the Proxy Statement, N-14
Registration Statement or Acquiring Fund Registration Statement, and that such
opinion is solely for the benefit of the Fund, its Directors and its officers.
Such counsel may rely as to matters governed by the laws of the state of
Maryland on an opinion of Maryland counsel and/or certificates of officers or
directors of the Acquiring Fund. Such opinion also shall include such other
matters incident to the transaction contemplated hereby, as the Fund may
reasonably request.
In this paragraph 6.4, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not, except as specifically
stated above, to any exhibits or attachments thereto or to any documents
incorporated by reference therein.
7. Conditions Precedent to Obligations of the Acquiring Fund
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Fund contained in this Agreement
shall be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if made on
and as of the Closing Date;
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7.2. The Fund shall have delivered to the Acquiring Fund a statement of the
Fund's assets and liabilities as of the Closing Date, certified by the Treasurer
or Assistant Treasurer of the Fund;
7.3. The Fund shall have delivered to the Acquiring Fund on the Closing Date a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Fund made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as the
Acquiring Fund shall reasonably request; and
7.4. The Acquiring Fund shall have received on the Closing Date a favorable
opinion of Willkie Farr & Gallagher, counsel to the Fund, in a form satisfactory
to the Secretary of the Acquiring Fund, covering the following points:
That (a) the Fund is a validly existing corporation and in good standing
under the laws of the State of Maryland and has the statutory power to own
all of its properties and assets and to carry on its business as a
registered investment company; (b) the Agreement has been duly authorized,
executed and delivered by the Fund and, assuming due authorization,
execution and delivery of the Agreement by the other parties hereto, is a
valid and binding obligation of the Fund enforceable against the Fund in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and to general
equity principles; (c) the execution and delivery of the Agreement did
not, and the consummation of the transactions contemplated hereby will
not, result in a violation of the Fund's Charter or By-Laws or a material
violation of any provision of any agreement (known to such counsel) to
which the Fund is a party or by which it or its properties are bound or,
to the knowledge of such counsel, result in the acceleration of any
obligation or the imposition of any penalty, under any agreement, judgment
or decree to which the Fund is a party or by which it or its properties
are bound, (d) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the
United States or state of Maryland is required for the consummation by the
Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such as
may be required under state securities laws; (e) the Proxy Statement
(except as to financial and statistical data contained therein, as to
which no opinion need be given) complies as to form in all material
respects with the requirements of the 1934 Act and the 1940 Act and the
rules and regulations thereunder; (f) such counsel does not know of any
legal, administrative or governmental proceedings, investigation, order,
decree or judgment of any court or governmental body, only insofar as they
relate to the Fund or its assets or properties, pending, threatened or
otherwise existing on or before the effective date of the N-14
Registration Statement or the Closing Date, which are required to be
described in the N-14 Registration
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Statement or to be filed as exhibits to the N-14 Registration Statement
which are not described and filed as required or which materially and
adversely affect the Fund's business; and (g) the Fund is registered as an
investment company under the 1940 Act and its registration with the
Commission as an investment company under the 1940 Act is in full force
and effect.
Such counsel also shall state that they have participated in conferences
with officers and other representatives of the Fund at which the contents of the
Proxy Statement and related matters were discussed and, although they are not
passing upon and do not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Proxy Statement (except to the
extent indicated in paragraph (e) of their above opinion), on the basis of the
foregoing (relying as to materiality to a large extent upon the opinions and
certificates of officers and other representatives of the Fund), they do not
believe that the Proxy Statement as of its date, as of the date of the Fund's
shareholder meeting, and as of the Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein regarding the Fund or necessary in the light of the circumstances under
which they were made, to make the statements therein regarding the Fund not
misleading.
Such opinion may state that such counsel does not express any opinion or
belief as to the financial statements or other financial data, or as to the
information relating to the Acquiring Fund, contained in the Proxy Statement or
N-14 Registration Statement, and that such opinion is solely for the benefit of
the Acquiring Fund and its directors and officers. Such opinion also shall
include such other matters incident to the transaction contemplated hereby as
the Acquiring Fund may reasonably request.
In this paragraph 7.4, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not to any exhibits or
attachments thereto or to any documents incorporated by reference therein.
7.5. The Acquiring Fund shall have received from PricewaterhouseCoopers LLP a
letter addressed to the Acquiring Fund dated as of the effective date of the
N-14 Registration Statement in form and substance satisfactory to the Acquiring
Fund, to the effect that:
(a) they are independent public accountants with respect to the Fund
within the meaning of the 1933 Act and the applicable regulations
thereunder;
(b) in their opinion, the financial statements and financial
highlights of the Fund included or incorporated by reference in the N-14
Registration Statement and reported on by them comply as to form in all
material aspects with the applicable accounting requirements of the 1933
Act and the rules and regulations thereunder; and
(c) on the basis of limited procedures agreed upon by the Acquiring
Fund and the Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), specified
information relating to the Fund appearing in the N-14 Registration
Statement and the Proxy Statement has been obtained from the accounting
records of such Fund or from schedules prepared by
A-16
<PAGE>
officers of the Fund having responsibility for financial and reporting
matters and such information is in agreement with such records, schedules
or computations made therefrom.
7.6. The Fund shall have delivered to the Acquiring Fund, pursuant to paragraph
4.1(f), copies of financial statements of the Fund as of and for the fiscal year
ended August 31, 1999.
7.7. The Acquiring Fund shall have received from PricewaterhouseCoopers LLP a
letter addressed to the Acquiring Fund and dated as of the Closing Date stating
that, as of a date no more than three (3) business days prior to the Closing
Date, PricewaterhouseCoopers LLP performed limited procedures and that on the
basis of those procedures it confirmed the matters set forth in paragraph 7.5.
7.8. The Board of Directors of the Fund, including a majority of the directors
who are not "interested persons" of the Fund (as defined by the 1940 Act), shall
have determined that this Agreement and the transactions contemplated hereby are
in the best interests of the Fund and that the interests of the shareholders in
the Fund would not be diluted as a result of such transactions, and the Fund
shall have delivered to the Acquiring Fund at the Closing, a certificate,
executed by an officer, to the effect that the condition described in this
subparagraph has been satisfied.
8. Further Conditions Precedent to Obligations of the Acquiring Fund and the
Fund
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to the Acquiring Fund, the Fund shall, and if any of such
conditions do not exist on or before the Closing Date with respect to the Fund,
the Acquiring Fund shall, at their respective option, not be required to
consummate the transactions contemplated by this Agreement.
8.1. The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding Shares of the
Fund in accordance with the provisions of the Fund's Charter and applicable law
and certified copies of the votes evidencing such approval shall have been
delivered to the Acquiring Fund.
8.2. On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and permits of
federal, state and local regulatory authorities (including those of the
Commission and of state blue sky and securities authorities, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by the Acquiring Fund or the Fund to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Fund, provided that either party hereto
may for itself waive any of such conditions.
A-17
<PAGE>
8.4. The N-14 Registration Statement and the Acquiring Fund Registration
Statement shall each have become or be effective under the 1933 Act and no stop
orders suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the 1933 Act.
8.5. The parties shall have received a favorable opinion of Willkie Farr &
Gallagher, addressed to, and in form and substance satisfactory to, the Fund and
the Acquiring Fund, substantially to the effect that for federal income tax
purposes:
(a) The transfer of all or substantially all of the Fund's assets in
exchange for the Acquiring Fund Shares and the assumption by the Acquiring
Fund of liabilities of the Fund, and the distribution of such Acquiring
Fund Shares to shareholders of the Fund in exchange for their shares of
the Fund, will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and the Acquiring Fund and the Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of the
Code; (b) no gain or loss will be recognized by the Acquiring Fund on the
receipt of the assets of the Fund solely in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of liabilities of the
Fund; (c) no gain or loss will be recognized by the Fund upon the transfer
of the Fund's assets to the Acquiring Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of liabilities of the
Fund or upon the distribution of the Acquiring Fund Shares to the Fund's
shareholders in exchange for their shares of the Fund; (d) no gain or loss
will be recognized by shareholders of the Fund upon the exchange of their
Fund shares for the Acquiring Fund Shares or upon the assumption by the
Acquiring Fund of liabilities of the Fund; (e) the aggregate tax basis for
the Acquiring Fund Shares received by each of the Fund's shareholders
pursuant to the Reorganization will be the same as the aggregate tax basis
of the Fund Shares held by such shareholder immediately prior to the
Reorganization, and the holding period of the Acquiring Fund Shares to be
received by each Fund shareholder will include the period during which the
Fund Shares exchanged therefor were held by such shareholder (provided
that the Fund Shares were held as capital assets on the date of the
Reorganization); and (f) the tax basis of the Fund's assets acquired by
the Acquiring Fund will be the same as the tax basis of such assets to the
Fund immediately prior to the Reorganization, and the holding period of
the assets of the Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor
the Fund may waive the conditions set forth in this paragraph 8.5.
9. Brokerage Fees and Expenses; Other Agreements
9.1. The Acquiring Fund represents and warrants to the Fund, and the Fund
represents and warrants to the Acquiring Fund, that there are no brokers or
finders or other entities to receive any payments in connection with the
transactions provided for herein.
A-18
<PAGE>
9.2. CSAM or its affiliates agrees to bear the reasonable expenses incurred in
connection with the transactions contemplated by this Agreement, whether or not
consummated (excluding extraordinary expenses such as litigation expenses,
damages and other expenses not normally associated with transactions of the type
contemplated by this Agreement). These expenses consist of: (i) expenses
associated with preparing this Agreement, the N-14 Registration Statement and
expenses of the shareholder meetings; (ii) preparing and filing the N-14
Registration Statement covering the Acquiring Fund Shares to be issued in the
Reorganization; (iii) registration or qualification fees and expenses of
preparing and filing such forms, if any, necessary under applicable state
securities laws to qualify the Acquiring Fund Shares to be issued in connection
with the Reorganization; (iv) postage; printing; accounting fees; and legal fees
incurred by the Acquiring Fund and by the Fund in connection with the
transactions contemplated by this Agreement; (v) solicitation costs incurred in
connection with the shareholders meeting referred to in clause (i) above and
paragraph 5.2 hereof and (vi) any other reasonable Reorganization expenses.
9.3. Any other provision of this Agreement to the contrary notwithstanding, any
liability of either Fund under this Agreement, or in connection with the
transactions contemplated herein with respect to such Fund, shall be discharged
only out of the assets of such Fund.
10. Entire Agreement; Survival of Warranties
10.1. The Acquiring Fund and the Fund agree that neither party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement among the parties.
10.2. The representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall
survive the consummation of the transactions contemplated hereunder.
11. Termination
11.1. This Agreement may be terminated at any time at or prior to the Closing
Date by: (1) mutual agreement of the Fund and the Acquiring Fund; (2) the Fund
in the event the Acquiring Fund shall, or the Acquiring Fund, in the event the
Fund shall, materially breach any representation, warranty or agreement
contained herein to be performed at or prior to the Closing Date; or (3) the
Fund or the Acquiring Fund in the event a condition herein expressed to be
precedent to the obligations of the terminating party or parties has not been
met and it reasonably appears that it will not or cannot be met within a
reasonable time.
11.2. In the event of any such termination, there shall be no liability for
damages on the part of either the Acquiring Fund or the Fund, or their
respective Directors or officers, to the other party or parties.
A-19
<PAGE>
12. Amendments
This Agreement may be amended, modified or supplemented in writing in such
manner as may be mutually agreed upon by the authorized officers of the Fund and
the Acquiring Fund; provided, however, that following the meeting of the Fund's
shareholders called by the Fund pursuant to paragraph 5.2 of this Agreement no
such amendment may have the effect of changing the provisions for determining
the number of the Acquiring Fund Shares to be issued to the Fund's Shareholders
under this Agreement to the detriment of such shareholders without their further
approval.
13. Notices
13.1. Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Fund at:
466 Lexington Avenue
New York, NY 10017
Attention: Hal Liebes, Esq.
with a copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
or to the Acquiring Fund at:
466 Lexington Avenue
New York, NY 10017
Attention: Hal Liebes, Esq.
with a copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
14. Headings; Counterparts; Governing Law; Assignment; Limitation of Liability
14.1. The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
A-20
<PAGE>
14.3. This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland.
14.4. This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
[Signature page follows]
A-21
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its Chairman of the Board, President or Vice President and
attested to by its Secretary or Assistant Secretary.
WARBURG, PINCUS EMERGING MARKETS II FUND, INC.
By:___________________________________________________
Name:
Title:
Attestation By:_______________________________________
Name:
Title:
WARBURG, PINCUS EMERGING MARKETS FUND, INC.
By:___________________________________________________
Name:
Title:
Attestation By:_______________________________________
Name:
Title:
Solely with respect to paragraph 9.2:
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:___________________________________________________
Name:
Title:
Attestation By:_______________________________________
Name:
Title:
A-22
<PAGE>
PROSPECTUSES OF THE ACQUIRING FUND ARE
INCORPORATED BY REFERENCE TO ITS
N-1A REGISTRATION STATEMENT
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1999
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 3, 1999
Acquisition of the Assets of
WARBURG, PINCUS EMERGING MARKETS II FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
By and in Exchange for Shares of
WARBURG, PINCUS EMERGING MARKETS FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
This Statement of Additional Information, relating specifically to
the proposed transfer of all or substantially all of the assets of Warburg,
Pincus Emerging Markets II Fund, Inc. (the "Fund") to Warburg, Pincus Emerging
Markets Fund, Inc. (the "Acquiring Fund") in exchange for shares of the
Acquiring Fund and the assumption by the Acquiring Fund of liabilities of the
Fund, consists of this cover page and the following described documents, each of
which accompanies this Statement of Additional Information and is incorporated
herein by reference.
1. Statement of Additional Information for the Acquiring Fund,
dated [February 22, 1999, as revised July 6, 1999].
2. Annual Reports of the Acquiring Fund and the Acquired Fund
for the fiscal years ended October 31, 1998 and August 31, 1999,
respectively.
3. The Semi-Annual Report of the Acquiring Fund for the
six-month period ended April 30, 1999.
This Statement of Additional Information is not a prospectus. A
Prospectus/Proxy Statement, dated December 3, 1999, relating to the
above-referenced matter may be obtained without charge by calling or writing the
Acquiring Fund at the telephone number or address set forth above. This
Statement of Additional Information should be read in conjunction with the
Prospectus/Proxy Statement.
<PAGE>
FINANCIAL STATEMENTS
The Annual Report of the Fund for the year ended August 31, 1999 and the
Annual Report of the Acquiring Fund for the year ended October 31, 1998, each
including audited financial statements, notes to the financial statements and
report of the independent auditors, are incorporated by reference herein. To
obtain a copy of the Annual Reports without charge, please call 800-WARBURG.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The following tables set forth the unaudited pro forma condensed Statement
of Assets and Liabilities as of September 30, 1999, and the unaudited pro forma
condensed Statement of Operations for the eleven month period ended September
30, 1999 for the Fund and the Acquiring Fund as adjusted giving effect to the
Reorganization.
PRO FORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Acquiring Fund Fund
--------------------------------- -------------------------------
Cost Value Cost Value
---- ----- ---- -----
<S> <C> <C> <C> <C>
ASSETS
Investments at value 55,320,077 63,789,354 6,431,140 6,575,198
Receivable for fund shares sold -- 2,280,216 -- --
Collateral received for securities loaned -- -- -- 181,900
Cash -- 853,092 -- --
Receivable for investment sold unsettled 654,601 654,838 -- 37,231
Dividends, interest, and reclaims receivable 205,176 164,723 -- 50,786
Prepaid expenses and other assets -- 11,378 -- 41,637
Receivable from advisor -- 249 -- 53,845
---------- ---------
Total Assets 67,753,850 6,940,597
---------- ---------
LIABILITIES
Payable for investments purchased unsettled 1,419,412 1,417,971 -- --
Payable on securities loaned -- -- -- 181,900
Advisory fee payable -- 38,433 -- --
Distribution fee payable -- 14,280 -- 621
Administration fee payable -- 9,777 -- 710
Sub-administration fee payable -- 5,729 -- 90
Accrued expenses payable -- 84,413 -- 52,875
---------- ---------
Total Liabilities 1,570,604 236,196
---------- ---------
NET ASSETS 66,183,246 6,704,401
========== =========
<CAPTION>
Adjustments Acquiring Fund Pro Forma
----------- -----------------------------
Cost Value
<S> <C> <C> <C>
ASSETS
Investments at value 61,751,217 70,364,552
Receivable for fund shares sold -- 2,280,216
Collateral received for securities loaned -- 181,900
Cash -- 853,092
Receivable for investment sold unsettled 654,601 692,069
Dividends, interest, and reclaims receivable 205,176 215,509
Prepaid expenses and other assets (41,637)(a) -- 11,378
-- 54,094
----------
74,652,810
----------
LIABILITIES
Payable for investments purchased unsettled 1,419,412 1,417,971
Payable on securities loaned -- 181,900
Advisory fee payable 3,633(b) -- 42,066
Distribution fee payable -- 14,901
Administration fee payable -- 10,487
Sub-administration fee payable -- 5,819
Accrued expenses payable -- 137,288
----------
Total Liabilities 1,810,433
----------
NET ASSETS 72,842,377
==========
</TABLE>
- ------------------
<TABLE>
<CAPTION>
Acquiring Fund
Fund Fund Adjustments Pro Forma
---------- --------- ----------- --------------
<S> <C> <C> <C> <C>
Common Class
Net Assets .................. 66,151,626 922,277 (41,659) 67,032,244
Share Outstanding ........... 7,445,846 63,182 39,648 7,469,380
Net asset value, offering and
redemption price per share 8.88 14.60 8.88
Institutional Class
Net Assets .................. -- 5,782,124 (3,038) 5,779,086
Share outstanding ........... -- 396,779 254,019 650,798
Net asset value, offering and
redemption price per share -- 14.51 8.88
</TABLE>
<PAGE>
1. Basis of Combination
The unaudited Pro Forma Combined Portfolio of Investments, Pro Forma
Combined Statement of Assets and Liabilities and Pro Forma Combined Statement of
Operations give effect to the proposed merger of the Fund into the Acquiring
Fund. The proposed merger will be accounted for by the method of accounting for
tax-free mergers of investment companies (sometimes referred to as the
pooling-of-interest basis). The merger provides for the transfer of all or
substantially all of the assets of the Fund to the Acquiring Fund in exchange
for the Acquiring Fund's Common Class and Institutional Class shares, the
distribution of such Acquiring Fund Common Class shares to Common Class
shareholders of the Fund and such Acquiring Fund Institutional Class shares to
Institutional Class shareholders of the Fund, and the subsequent liquidation of
the Fund.
The pro forma combined statements should be read in conjunction with the
historical financial statements of the constituent fund and the notes thereto
incorporated by reference in the in the Registration Statement filed on Form
N-14.
The Acquiring Fund and the Fund are both, open-end, management investment
companies registered under the Investment Company Act of 1940, as amended.
Pro Forma Adjustments:
The Pro Forma adjustments below reflect the impact of the merger between
the Fund and the Acquiring Fund.
(a) to remove and adjust the Fund's Blue sky fees
(b) to increase the Fund's management fee to the Acquiring Fund's rate of 1.25%
(c) to reduce custody charges for the Fund.
(d) to record Administration and accounting fees decrease for the Fund of .005%.
(e) to record decrease in Administration and servicing fee for the Acquiring
Fund of .05%.
(f) to remove and adjust the Fund's legal and auditing fees with the Acquiring
Fund.
<PAGE>
(g) to remove and combine the Fund's legal, auditing and certain accounting fees
with the Acquiring Fund.
2. Summary of Significant Accounting Policies
Following is a summary of significant accounting policies, which are
consistently followed by each Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. Preparation of the financial statements includes the use of
management estimates. Actual results could differ from those estimates.
Security Valuation - Securities traded on a U.S. or foreign stock
exchange, or The Nasdaq Stock Market Inc. ("Nasdaq") system, are valued at the
last quoted sale price reported as of the close of regular trading on the
exchange the security is traded most extensively. If there is no such sale, the
security is valued at the calculated mean between the last bid and asked price
on the exchange. Securities not traded on an exchange or Nasdaq, but traded in
another over-the-counter market are valued at the average between the current
bid and asked price in such markets. Short-term obligations and commercial paper
are valued at amortized cost, which approximates market. Debt securities (other
than short-term obligations and commercial paper) are valued on the basis of
valuations furnished by a pricing service authorized by the Board of Directors
(the "Board"), which determines valuations based upon market transactions for
normal, institutional-size trading units of such securities. All other
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board.
Security Transactions and Investment Income - Security transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date, and interest income is accrued on a daily basis. Corporate actions,
including dividends, on foreign securities are recorded on the ex-dividend date.
If such information is not available on the ex-dividend date, corporate actions
are recorded as soon as reliable information is available from the Fund's
sources. Realized gains and losses from security transactions are calculated on
an identified cost basis.
Federal Income Taxes - Each Fund intends to qualify for tax treatment
applicable to regulated investment companies under the Internal Revenue Code of
1986, as amended (the "Code"), and distribute all of its taxable income to its
shareholders. Therefore, no provision has been recorded for Federal income or
excise taxes.
Distributions to Shareholders - Distributions from net investment income
and net realized capital gains, if any, are declared in December.
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE ELEVEN MONTH PERIOD ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Acquiring Acquiring Fund
Fund Fund Adjustments Pro Forma
--------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Investment Income
Dividends 1,216,687 312,475 -- 1,529,162
Interest 311,351 43,123 -- 354,474
Securities Lending -- 11,821 -- 11,821
Foreign Taxes (120,361) (41,032) -- (161,393)
Thailand Capital Gain Taxes (722,400) -- -- (722,400)
----------- ---------- ---------- ----------
Total Investment Income 685,277 326,387 -- 1,011,664
----------- ---------- ---------- ----------
Expenses
Investment advisory services 751,171 161,763 40,517 (b) 953,451
12b-1 150,919 2,076 -- 152,995
Transfer agent 98,868 1,014 -- 99,882
Custodian 87,035 139,350 (100,877)(c) 125,508
Administrative and accounting fees 78,858 20,636 (810)(d) 98,684
Administrative services fees 60,387 -- (30,246)(e) 30,141
Blue sky 48,499 20,808 (37,224)(a) 32,083
Amortization of organization costs 43,009 -- -- 43,009
Interest 19,226 -- -- 19,226
Legal 12,008 271 (271)(f) 12,008
Directors fees 11,116 11,298 (11,298)(i) 11,116
Audit 10,674 772 (1,363)(f) 10,083
Printing 10,489 1,934 -- 12,423
Insurance expense 2,301 668 -- 2,969
Miscellaneous 1,153 1,996 -- 3,149
Shareholder servicing fees 98 -- -- 98
----------- ---------- ---------- ----------
1,385,811 362,586 (141,573) 1,606,824
Less: Expenses waived and reimbursed
by CSAM/Warburg (372,868) (122,186) 165,000 (330,054)
Less: Expenses waived by PFPC (16,507) -- -- (16,507)
----------- ---------- ---------- ----------
Total Expenses 996,436 240,400 23,427 1,260,263
----------- ---------- ---------- ----------
Net Investment Income/(Loss) (311,159) 85,987 (23,427) (248,599)
----------- ---------- ---------- ----------
Net Realized and Unrealized Gain/(Loss) from Investments:
Net realized gain/(loss) from security transactions 3,400,032 1,396,576 -- 4,796,608
Net realized foreign exchange gain/(loss) (747,550) (223,130) -- (970,680)
Net change in unrealized appreciation/(depreciation) from
investments and foreign currency related items 17,829,673 4,052,162 -- 21,881,835
----------- ---------- ---------- ----------
Net realized and unrealized gain/(loss) from
investments and foreign currency related items 20,482,155 5,225,608 -- 25,707,763
----------- ---------- ---------- ----------
Net increase/(decrease) in net assets resulting
from operations 20,170,996 5,311,595 (23,427) 25,459,164
=========== ========== ========== ==========
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
Portfolio of Investments at September 30, 1999 (Unaudited)
Acquiring Fund
<TABLE>
<CAPTION>
Security Name Shares Market Value
- ------------- ------ ------------
<S> <C> <C>
Akbank TAS 47,445,000 709,522
C.G. Smith, Ltd. 413,600 1,165,008
Elektrim Spolka Akcyjna SA 28,000 259,677
Icici, Ltd. + 67,600 811,200
OTP Bank 36,240 1,602,760
P.T. Hanjaya Mandala Sampoerna 84,000 148,550
PT Indofood Sukses Makmur TBK 164,000 155,564
Petroleo Brasileiro SA 11,995,400 1,849,320
Samsung Electronics Co. 6,503 1,053,128
South African Breweries, Ltd. 127,400 1,082,932
Telefonos de Mexico SA ADR 16,600 1,182,750
Yapi ve Kredi Bankasi AS 36,983,558 504,981
Abs Corp. + 696,300 783,148
Alfa SA de CV Series A 418,000 1,768,831
Amalgamated Banks of South Africa, Ltd. 204,100 799,416
Aptech, Ltd. 64,500 1,255,786
Bank Slaski SA 7,307 365,582
Billiton PLC 248,800 1,032,551
Blue Square Israel Co., Ltd. ADR 34,800 478,500
Carso Global Telecom 139,000 770,385
Ceska Sporiteln + 112,700 590,900
Commerce Asset Holdings BHD 274,000 486,719
Commercial International Bank, Ltd. 26 248
Companhia Paranaense de Energia ADR 143,300 940,406
Companhia Vale do Rio Doce PN Pfd. 70,000 1,472,940
Credicorp Ltd. ADR 125,600 1,310,950
Daelim Industrial Co., Ltd. 22,294 280,402
Daelim Industrial Co., Ltd. Pfd. 46,530 281,522
ECI Telecommunications, Ltd. 3,100 76,531
Egyptian Pound 963 282
Far Eastern Textile, Ltd. 503,970 715,108
Fomento Economico Mexicano SA de CV ADR + 22,500 704,531
Grasim Industries, Ltd. 500 4,542
Greece Drachma 2 0
Grupo Financiero Banorte SA de CV + 316,400 328,376
Grupo Industrial Bimbo SA de CV 507,100 1,063,441
Grupo Industrial Saltillo SA de CV 255,500 694,366
Grupo Iusacell SA ADR + 118,400 1,124,800
Guoco Group, Ltd. 338,000 887,692
Hana Microelectronics Public Co., Ltd. 296,900 979,418
Hankuk Electric Glass Co., Ltd. + 38,440 2,053,987
Hellenic Telecommunication Organization SA ADR + 101,600 1,136,650
Hite Brewery Co., Ltd. 25,816 855,254
Hong Kong Dollars 0 0
Hungarian Forints 7,779 32
Hyundai Electronics Industries Co. + 30,000 813,835
Hyundai Industrial Development & Construction 28,182 309,282
India Rupee 491,606 11,277
Indonesian Rupiah 0 0
Israel New Shekel 37 9
Korea Data System 41,000 647,122
Korea Mobile Telecommunications Corp., Ltd. 6,600 610,376
Korean Won 8,412,800 6,916
Mahanagar Telephone Nigam, Ltd. 266,950 1,116,330
Neptune Orient Lines, Ltd. 701,000 840,968
Novus Petroleum, Ltd. 718,875 707,962
Oil Search, Ltd. 574,100 741,856
Orbotech, Ltd. 13,400 829,125
Overseas Union Bank, Ltd. 253,524 1,125,634
Pentafour Software & Exports, Ltd. 91,600 1,260,732
Philippine Long Distance Telephone Co. 48,220 1,043,422
Phoenixtec Power Co., Ltd. + 598,343 1,242,466
Pliva DD GDR 115,400 1,222,617
Polish Zloty 25,157 6,140
Radware, Ltd. + 17,400 478,500
RBB Money Market Fund 1 1
Reliance Industries, Ltd. 659 3,575
Sanlam, Ltd. 1,191,600 1,300,869
Sappi, Ltd. + 90,500 882,401
Satyam Computers 56,800 1,500,765
Shinhan Bank 150,600 1,398,957
Singapore Dollar 2,414 1,419
Singapore Local Bank Basket 2 19,311 142,407
Singapore Local Bank Basket 3 68,661 449,000
Smartone Telecommunications 106,340 327,197
Taishin International Bank + 1,588,080 879,378
Taishin International Bank Pfd. + 306,735 96,506
Taiwan Dollar 50,917,013 1,601,966
Taiwan Semiconductor Manufacturing Co. + 312,310 1,311,769
Tata Tea 55,600 771,434
Tele Norte Leste Participacoes SA ADR (Telephone) 91,900 1,424,450
Tenaga Nasional BHD 157,000 322,269
Trigem Computer, Inc. 20,010 1,373,519
Turkish Lira 62,241,518 135
Unisem (M) Berhad 146,100 595,945
United Microelectronics Co., Ltd. + 503,350 1,171,904
Yang Ming Marine Transport, Ltd. + 1,574,000 955,768
Yapi ve Kredi Bankasi AS Non-Tradable Receipts 36,213,246 494,463
63,789,354
</TABLE>
Fund
<TABLE>
<CAPTION>
Security Name Shares Market Value
- ------------- ------ ------------
<S> <C> <C>
Advanced Information Services Public Co. Ltd. 1,200 13,723
Advanced Semiconductor Engineering Inc. 3,000 57,990
Akbank T.A.S. 7,453,432 111,463
Anglo American Corp. of South Africa Ltd. 1,567 87,807
Aracruz Celulose S.A. ADR 1,400 29,225
Arcelik A.S. 3,430,668 109,672
Asia Pulp & Paper Warrants 1,060 861
Bank Handlowy W. Warszawie 144A ADR 1,303 15,050
Bank Rozwoju Eksportu S.A. 871 22,639
BBH Grand Cayman U.S. Dollar Time Deposit 7,000 7,000
BEC World Public Co., Ltd. 7,400 40,866
Beijing Enterprises Holdings, Ltd. 17,100 28,619
Bharat Heavy Electricals Ltd. Participation Notes 8,035 50,678
C.G. Smith Ltd. 26,713 75,244
Cementos Paz del Rio ADR 118 658
Cemex SA de C.V. ADR 3,669 88,515
Centrais Eletricas Brasileiras S.A. ADR 3,786 32,044
Check Point Software Technologies, Ltd. 800 67,550
Chilectra S.A. ADR 4,667 88,471
China Steel Corp. ADR 11,300 225,096
China Telecom (Hong Kong), Ltd. 15,600 48,100
Cifra S.A. de C.V. Cl. V ADR 7,483 117,695
Companhia Brasileira de Distribuicao Grupo Pao de Acucar 900 17,831
Companhia Cervejaria Brahma 111,303 66,167
Companhia Cervejaria Brahma ADR 1,160 13,920
Companhia Vale do Rio Doce ADR 800 16,875
Companhia Vale do Rio Doce PN 3,952 82,533
Companhia Vale do Rio Doce PN Cl. B 39,000 0
Compania de Telecomunicaciones de Chile S.A. ADR 5,202 93,961
Comverse Technology, Inc. 600 56,588
Dimension Data Holdings Ltd. 21,082 83,803
Distribucion Y Servicio D & S S.A. ADR 1,325 22,277
Elektrim Spolka Akcyjna S.A. 1,634 15,154
Embotelladora Andina S.A. ADR, Series B 2,300 29,900
Empresa Nacional de Electricidad S.A. ADR 2,100 27,300
Enersis S.A. ADR 1,300 27,138
Evergreen Marine Corp. 3,388 46,585
Gener S.A. ADR 481 7,335
Grupo Modelo S.A. de C.V. Cl. C 13,403 33,901
Grupo Televisa S.A. de C.V. GDS 3,001 119,852
Guangdong Kelon Electrical Holdings Co., Ltd. 27,300 27,414
Haci Omer Sabanci Holdings 144A ADR 5,000 32,510
Hindalco Industries Ltd. GDR 3,400 92,905
Hindustan Petroleum Corporation Ltd. Participation Notes 32,400 188,779
Housing & Commercial Bank, Korea 2,570 49,648
ICICI, Ltd. 3,000 36,000
Infosys Technologies, Ltd. ADR 600 85,800
Intracom S.A. 143 12,144
ITC Agro-Tech, Ltd. GDR 2,700 68,513
Johnnies Industrial Corp. Ltd. 4,960 32,654
KGHM Polska Miedz S.A. 4,183 23,480
Kimberly-Clark de Mexico S.A. de C.V. Cl. A 22,437 79,020
Koc Holding A.S. 355,000 34,238
Korea Electric Power Corp. 2,800 92,070
Korea Electric Power Corp. ADR 3,200 51,400
Korea Telecom Corp. 1,200 74,084
Korea Telecom Corp. ADR 4,700 173,900
L.G. Information & Communication, Ltd. Rts. 407 4,851
La Electricidad de Caracas 2 1
Larsen & Toubro Ltd. Participation Notes 2,093 17,572
Legend Holdings, Ltd. 36,000 34,296
Liberty International plc 1 8
Liberty Life Association of Africa, Ltd. 7,166 56,135
Lukoil Holding ADR 900 24,480
Magyar Tavkozlesi Rt. ADR 2,300 62,675
Mahanagar Telephone Nigam, Ltd. 144A GDR 2,700 26,663
Mahindra & Mahindra Ltd. Participation Notes 1,750 13,729
Manila Electric Company 7,400 21,350
Migros Turk T.A.S. 114,400 49,589
MOL Magyar Olaj - es Gazipari GDR 144A 3,200 67,786
Morgan Stanley India Investment Fund, Inc. 100 1,325
Morgan Stanley Taiwan Opals 2,900 356,149
Nedcor Limited 5,476 107,333
OTP Bank GDR 1,000 44,226
Oversea-Chinese Banking Corp. Ltd. 231 1,793
P.T. Bank Dagang Nasional Indonesia Warrants 400 0
P.T. Bank International Indonesia 34 1
P.T. Bank International Indonesia Options 100 0
P.T. Bank International Indonesia Warrants 4 0
P.T. Hanjaya Mandala Sampoerna Tbk 24,000 42,443
P.T. Indofood Sukses Makmur Tbk 33,000 31,303
Petroleo Brasileiro S.A. ADR 2,360 36,384
Petroleo Brasileiro S.A. PN 264,669 40,497
Philippine Long Distance Telephone Company ADR 2,701 58,747
Pohang Iron & Steel Company, Ltd. ADR 3,500 109,594
R.O.C. Taiwan Fund 11,900 87,763
Ranbaxy Laboratories, Ltd. 144A GDR 2,500 60,313
Reliance Industries Ltd. 144A GDR 5,304 73,460
Samsung Electronics Co. 1,292 209,233
Serrana S.A. PN 12,175 3,273
Shandong International Power Development Co., Ltd. 197,700 31,306
Siam City Cement Public Co. Ltd. 800 16,655
Siam Commercial Bank Pfd. 34,800 31,251
Siam Commerical Bank - Warrants 75,000 21,534
Siliconware Precision Industries GDR 3,868 40,324
Singapore Press Holdings Ltd. 39 615
SM Prime Holdings 118,500 19,992
South African Breweries plc 17,948 152,563
Standard Bank Investment Corp., Ltd. 8,404 26,894
Surgutneftegaz ADR 3,800 24,985
Taiwan Fund 4,800 87,000
Taiwan Semiconductor Manufacturing Co., Ltd. ADR 7,872 232,224
Tele Centro Sul Participacoes S.A. ADR 800 44,400
Telecomunicacoes Brasileiras S.A. PN Block 800 59,950
Telecomunicacoes de Sao Paulo S.A. PN 819,934 72,902
Telecomunicacoes do Rio de Janeiro S.A. PN 8,733 123
Telefonos de Mexico S.A., Cl. L ADR 5,100 363,375
Telekomunikacja Polska GDR 6,450 31,640
Teva Pharmaceutical Industries Ltd. ADR 600 30,188
The Bidvest Group, Ltd. 5,741 38,274
Videsh Sanchar Nigam, Ltd. 5,000 70,375
Yageo Corp. - GDR (Reg. S) 29,600 187,190
Yanzhou Coal Mining Co., Ltd. 36,000 13,904
Yapi Ve Kredi Bankasi A.S. 5,235,831 71,491
Yizheng Chemical Fibre Co., Ltd. Cl. H 96,000 28,426
6,575,198
</TABLE>
Acquiring Fund Pro Forma
<TABLE>
<CAPTION>
Security Name Shares Market Value
- ------------- ------ ------------
<S> <C> <C>
Advanced Information Services Public Co. Ltd. 1,200 13,723
Advanced Semiconductor Engineering Inc. 3,000 57,990
Akbank TAS ######## 820,985
Anglo American Corp. of South Africa Ltd. 1,567 87,807
Aracruz Celulose S.A. ADR 1,400 29,225
Arcelik A.S. 3,430,668 109,672
Asia Pulp & Paper Warrants 1,060 861
Bank Handlowy W. Warszawie 144A ADR 1,303 15,050
Bank Rozwoju Eksportu S.A. 871 22,639
BBH Grand Cayman U.S. Dollar Time Deposit 7,000 7,000
BEC World Public Co., Ltd. 7,400 40,866
Beijing Enterprises Holdings, Ltd. 17,100 28,619
Bharat Heavy Electricals Ltd. Participation Notes 8,035 50,678
C.G. Smith Ltd. 440,313 1,240,252
Cementos Paz del Rio ADR 118 658
Cemex SA de C.V. ADR 3,669 88,515
Centrais Eletricas Brasileiras S.A. ADR 3,786 32,044
Check Point Software Technologies, Ltd. 800 67,550
Chilectra S.A. ADR 4,667 88,471
China Steel Corp. ADR 11,300 225,096
China Telecom (Hong Kong), Ltd. 15,600 48,100
Cifra S.A. de C.V. Cl. V ADR 7,483 117,695
Companhia Brasileira de Distribuicao Grupo Pao de Acucar 900 17,831
Companhia Cervejaria Brahma 111,303 66,167
Companhia Cervejaria Brahma ADR 1,160 13,920
Companhia Vale do Rio Doce ADR 800 16,875
Companhia Vale do Rio Doce PN 3,952 82,533
Companhia Vale do Rio Doce PN Cl. B 39,000 0
Compania de Telecomunicaciones de Chile S.A. ADR 5,202 93,961
Comverse Technology, Inc. 600 56,588
Dimension Data Holdings Ltd. 21,082 83,803
Distribucion Y Servicio D & S S.A. ADR 1,325 22,277
Elektrim Spolka Akcyjna S.A. 29,634 274,831
Embotelladora Andina S.A. ADR, Series B 2,300 29,900
Empresa Nacional de Electricidad S.A. ADR 2,100 27,300
Enersis S.A. ADR 1,300 27,138
Evergreen Marine Corp. 3,388 46,585
Gener S.A. ADR 481 7,335
Grupo Modelo S.A. de C.V. Cl. C 13,403 33,901
Grupo Televisa S.A. de C.V. GDS 3,001 119,852
Guangdong Kelon Electrical Holdings Co., Ltd. 27,300 27,414
Haci Omer Sabanci Holdings 144A ADR 5,000 32,510
Hindalco Industries Ltd. GDR 3,400 92,905
Hindustan Petroleum Corporation Ltd. Participation Notes 32,400 188,779
Housing & Commercial Bank, Korea 2,570 49,648
ICICI, Ltd. 70,600 847,200
Infosys Technologies, Ltd. ADR 600 85,800
Intracom S.A. 143 12,144
ITC Agro-Tech, Ltd. GDR 2,700 68,513
Johnnies Industrial Corp. Ltd. 4,960 32,654
KGHM Polska Miedz S.A. 4,183 23,480
Kimberly-Clark de Mexico S.A. de C.V. Cl. A 22,437 79,020
Koc Holding A.S. 355,000 34,238
Korea Electric Power Corp. 2,800 92,070
Korea Electric Power Corp. ADR 3,200 51,400
Korea Telecom Corp. 1,200 74,084
Korea Telecom Corp. ADR 4,700 173,900
L.G. Information & Communication, Ltd. Rts. 407 4,851
La Electricidad de Caracas 2 1
Larsen & Toubro Ltd. Participation Notes 2,093 17,572
Legend Holdings, Ltd. 36,000 34,296
Liberty International plc 1 8
Liberty Life Association of Africa, Ltd. 7,166 56,135
Lukoil Holding ADR 900 24,480
Magyar Tavkozlesi Rt. ADR 2,300 62,675
Mahanagar Telephone Nigam, Ltd. 144A GDR 2,700 26,663
Mahindra & Mahindra Ltd. Participation Notes 1,750 13,729
Manila Electric Company 7,400 21,350
Migros Turk T.A.S. 114,400 49,589
MOL Magyar Olaj - es Gazipari GDR 144A 3,200 67,786
Morgan Stanley India Investment Fund, Inc. 100 1,325
Morgan Stanley Taiwan Opals 2,900 356,149
Nedcor Limited 5,476 107,333
OTP Bank GDR 37,240 1,646,986
Oversea-Chinese Banking Corp. Ltd. 231 1,793
P.T. Bank Dagang Nasional Indonesia Warrants 400 0
P.T. Bank International Indonesia 34 1
P.T. Bank International Indonesia Options 100 0
P.T. Bank International Indonesia Warrants 4 0
P.T. Hanjaya Mandala Sampoerna Tbk 108,000 190,993
P.T. Indofood Sukses Makmur Tbk 197,000 186,867
Petroleo Brasileiro S.A. ADR 2,360 36,384
Petroleo Brasileiro S.A. PN ######## 1,889,817
Philippine Long Distance Telephone Company ADR 2,701 58,747
Pohang Iron & Steel Company, Ltd. ADR 3,500 109,594
R.O.C. Taiwan Fund 11,900 87,763
Ranbaxy Laboratories, Ltd. 144A GDR 2,500 60,313
Reliance Industries Ltd. 144A GDR 5,304 73,460
Samsung Electronics Co. 7,795 1,262,361
Serrana S.A. PN 12,175 3,273
Shandong International Power Development Co., Ltd. 197,700 31,306
Siam City Cement Public Co. Ltd. 800 16,655
Siam Commercial Bank Pfd. 34,800 31,251
Siam Commerical Bank - Warrants 75,000 21,534
Siliconware Precision Industries GDR 3,868 40,324
Singapore Press Holdings Ltd. 39 615
SM Prime Holdings 118,500 19,992
South African Breweries plc 145,348 1,235,495
Standard Bank Investment Corp., Ltd. 8,404 26,894
Surgutneftegaz ADR 3,800 24,985
Taiwan Fund 4,800 87,000
Taiwan Semiconductor Manufacturing Co., Ltd. ADR 7,872 232,224
Tele Centro Sul Participacoes S.A. ADR 800 44,400
Telecomunicacoes Brasileiras S.A. PN Block 800 59,950
Telecomunicacoes de Sao Paulo S.A. PN 819,934 72,902
Telecomunicacoes do Rio de Janeiro S.A. PN 8,733 123
Telefonos de Mexico S.A., Cl. L ADR 21,700 1,546,125
Telekomunikacja Polska GDR 6,450 31,640
Teva Pharmaceutical Industries Ltd. ADR 600 30,188
The Bidvest Group, Ltd. 5,741 38,274
Videsh Sanchar Nigam, Ltd. 5,000 70,375
Yageo Corp. - GDR (Reg. S) 29,600 187,190
Yanzhou Coal Mining Co., Ltd. 36,000 13,904
Yapi Ve Kredi Bankasi A.S. ######## 576,472
Yizheng Chemical Fibre Co., Ltd. Cl. H 96,000 28,426
Abs Corp. + 696,300 783,148
Alfa SA de CV Series A 418,000 1,768,831
Amalgamated Banks of South Africa, Ltd. 204,100 799,416
Aptech, Ltd. 64,500 1,255,786
Bank Slaski SA 7,307 365,582
Billiton PLC 248,800 1,032,551
Blue Square Israel Co., Ltd. ADR 34,800 478,500
Carso Global Telecom 139,000 770,385
Ceska Sporiteln + 112,700 590,900
Commerce Asset Holdings BHD 274,000 486,719
Commercial International Bank, Ltd. 26 248
Companhia Paranaense de Energia ADR 143,300 940,406
Companhia Vale do Rio Doce PN Pfd. 70,000 1,472,940
Credicorp Ltd. ADR 125,600 1,310,950
Daelim Industrial Co., Ltd. 22,294 280,402
Daelim Industrial Co., Ltd. Pfd. 46,530 281,522
ECI Telecommunications, Ltd. 3,100 76,531
Egyptian Pound 963 282
Far Eastern Textile, Ltd. 503,970 715,108
Fomento Economico Mexicano SA de CV ADR + 22,500 704,531
Grasim Industries, Ltd. 500 4,542
Greece Drachma 2 0
Grupo Financiero Banorte SA de CV + 316,400 328,376
Grupo Industrial Bimbo SA de CV 507,100 1,063,441
Grupo Industrial Saltillo SA de CV 255,500 694,366
Grupo Iusacell SA ADR + 118,400 1,124,800
Guoco Group, Ltd. 338,000 887,692
Hana Microelectronics Public Co., Ltd. 296,900 979,418
Hankuk Electric Glass Co., Ltd. + 38,440 2,053,987
Hellenic Telecommunication Organization SA ADR + 101,600 1,136,650
Hite Brewery Co., Ltd. 25,816 855,254
Hong Kong Dollars 0 0
Hungarian Forints 7,779 32
Hyundai Electronics Industries Co. + 30,000 813,835
Hyundai Industrial Development & Construction 28,182 309,282
India Rupee 491,606 11,277
Indonesian Rupiah 0 0
Israel New Shekel 37 9
Korea Data System 41,000 647,122
Korea Mobile Telecommunications Corp., Ltd. 6,600 610,376
Korean Won 8,412,800 6,916
Mahanagar Telephone Nigam, Ltd. 266,950 1,116,330
Neptune Orient Lines, Ltd. 701,000 840,968
Novus Petroleum, Ltd. 718,875 707,962
Oil Search, Ltd. 574,100 741,856
Orbotech, Ltd. 13,400 829,125
Overseas Union Bank, Ltd. 253,524 1,125,634
Pentafour Software & Exports, Ltd. 91,600 1,260,732
Philippine Long Distance Telephone Co. 48,220 1,043,422
Phoenixtec Power Co., Ltd. + 598,343 1,242,466
Pliva DD GDR 115,400 1,222,617
Polish Zloty 25,157 6,140
Radware, Ltd. + 17,400 478,500
RBB Money Market Fund 1 1
Reliance Industries, Ltd. 659 3,575
Sanlam, Ltd. 1,191,600 1,300,869
Sappi, Ltd. + 90,500 882,401
Satyam Computers 56,800 1,500,765
Shinhan Bank 150,600 1,398,957
Singapore Dollar 2,414 1,419
Singapore Local Bank Basket 2 19,311 142,407
Singapore Local Bank Basket 3 68,661 449,000
Smartone Telecommunications 106,340 327,197
Taishin International Bank + 1,588,080 879,378
Taishin International Bank Pfd. + 306,735 96,506
Taiwan Dollar ######## 1,601,966
Taiwan Semiconductor Manufacturing Co. + 312,310 1,311,769
Tata Tea 55,600 771,434
Tele Norte Leste Participacoes SA ADR (Telephone) 91,900 1,424,450
Tenaga Nasional BHD 157,000 322,269
Trigem Computer, Inc. 20,010 1,373,519
Turkish Lira ######## 135
Unisem (M) Berhad 146,100 595,945
United Microelectronics Co., Ltd. + 503,350 1,171,904
Yang Ming Marine Transport, Ltd. + 1,574,000 955,768
Yapi ve Kredi Bankasi AS Non-Tradable Receipts ######## 494,463
70,364,552
</TABLE>
<PAGE>
THE ANNUAL REPORTS AND STATEMENT OF ADDITIONAL
INFORMATION OF THE ACQUIRING FUND ARE
INCORPORATED BY REFERENCE TO ITS
N-1A REGISTRATION STATEMENT
(INVESTMENT COMPANY ACT FILE NO. 811-08937)
<PAGE>
THE ANNUAL REPORTS, PROSPECTUSES AND STATEMENT
OF ADDITIONAL INFORMATION OF THE FUND ARE
INCORPORATED BY REFERENCE TO THE MOST
RECENT FILINGS THEREOF BY THE FUND
(INVESTMENT COMPANY ACT FILE NO. 811-08937)
<PAGE>
PART C
OTHER INFORMATION
Item 15. Indemnification -- The response to this item is incorporated by
reference to "Plan of Reorganization" under the caption "Information
About the Reorganization" and to "Liability of Directors" under the
caption "Information on Shareholders' Rights" in Part A of this
Registration Statement.
Item 16. Exhibits
(1)(a) Registrant's Articles of Incorporation are incorporated by reference
to the Registration Statement on Form N-1A filed on June 30, 1995.
(1)(b) Registrant's Articles of Amendment are incorporated by reference to
the Registration Statement on Form N-1A filed on June 30, 1995.
(1)(c) Registrant's Articles of Amendment are incorporated by reference to
the Registration Statement on Form N-1A filed on February 25, 1997.
(1)(d) Registrant's Articles Supplementary are incorporated by reference to
the Registration Statement on Form N-1A filed on February 25, 1997.
(2)(a) By-Laws of the Registrant are incorporated by reference to the
Registration Statement on Form N-1A filed on June 30, 1995.
(2)(b) Amendment to the By-Laws is incorporated by reference, material
provisions of this exhibit substantially similar to those of the
corresponding exhibit in Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A of Warburg, Pincus Global Fixed
Income Fund, Inc., filed on February 17, 1998 (Securities Act File
No. 33-36066).
(3) Not Applicable.
(4) Plan of Reorganization (included as Exhibit A to Registrant's
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(5) Not Applicable.
<PAGE>
(6)(a) Form of Investment Advisory Agreement is incorporated by reference;
material provisions of this exhibit are substantially similar to
those of the corresponding exhibit in the Registration Statement on
Form N-14 of Warburg, Pincus Global Post-Venture Capital Fund, Inc.,
filed on November 4, 1999.
(7) Not Applicable.
(8) Not Applicable.
(9)(a) Form of Custodian Agreement with PFPC Trust Company is incorporated
by reference; material provisions of this exhibit substantially
similar to those of the corresponding exhibit in Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A of
Warburg, Pincus Trust filed on April 16, 1999 (Securities Act File
No. 33-58125).
(9)(b) Form of Custodian Agreement with State Street Bank & Trust Company
is incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit to the
Registration Statement on Form N-14 of the Warburg, Pincus Managed
EAFE(R) Countries Fund, Inc. filed on November 5, 1997 (Securities
Act File No. 333-39611).
(10)(a) Forms of Distribution Plan pursuant to Rule 12b-1 under the 1940 Act
is incorporated by reference; material provisions of this exhibit
are substantially similar to those of the corresponding exhibit in
the Registration Statement on Form N-14 of Warburg, Pincus Global
Post-Venture Capital Fund, Inc., filed on November 4, 1999.
(10)(b) Form of Distribution Agreement is incorporated by reference;
material provisions of this exhibit are substantially similar to
those of the corresponding exhibit in the Registration Statement on
Form N-14 of Warburg, Pincus Global Post-Venture Capital Fund, Inc.,
filed on November 4, 1999.
(10)(c) Forms of Services Agreements are incorporated by reference to the
Registration Statement on Form N-1A filed on February 25, 1997.
(10)(d) Form of 18f-3 Plan is incorporated by reference; material provisions
of this exhibit are substantially similar to those of the
corresponding exhibit in the Registration Statement on Form N-14 of
Warburg, Pincus Global Post-Venture Capital Fund, Inc., filed on
November 4, 1999
(11)(a) Opinion and Consent of Willkie Farr & Gallagher, counsel to
Registrant, with respect to validity of shares filed herewith.
<PAGE>
(11)(b) Opinion of Venable, Baetjer and Howard, L.L.P., Maryland counsel to
Registrant, with respect to validity of shares filed herewith.
(12) Form of Opinion of Willkie Farr & Gallagher with respect to tax
matters filed herewith.
(13)(a) Form of Transfer Agency Agreement is incorporated by reference;
material provisions of this exhibit substantially similar to those
of the corresponding exhibit in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of Warburg, Pincus Trust filed
on June 14, 1995 (Securities Act File No. 33-58125).
(13)(b) Form of Co-Administration Agreement with PFPC Inc. is incorporated
by reference; material provisions of this exhibit substantially
similar to those of the corresponding exhibit in Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A of
Warburg, Pincus Trust filed on June 14, 1995 (Securities Act File
No. 33-58125).
(13)(c) Form of Co-Administration Agreement with Credit Suisse Asset
Management Securities, Inc. is incorporated by reference; material
provisions of this exhibit are substantially similar to those of the
corresponding exhibit in the Registration Statement on Form N-14 of
Warburg, Pincus Global Post-Venture Capital Fund, Inc., filed on
November 4, 1999.
(14) Consent of PricewaterhouseCoopers LLP filed herewith.
(15) Not Applicable.
(16) Powers of Attorney is incorporated by reference to the corresponding
exhibit in the Registration Statement on Form N-14 of Warburg,
Pincus Global Post-Venture Capital Fund, Inc., filed on November 4,
1999.
(17)(a) Form of Proxy Card filed herewith.
(17)(b) Registrant's declaration pursuant to Rule 24f-2 is incorporated by
reference to the Registration Statements.
<PAGE>
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be
deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the Registration Statement and will not be used until
the amendment is effective, and that, in determining any liability
under the Securities Act of 1933, as amended, each post-effective
amendment shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of
them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this
Registration Statement has been signed on behalf of the registrant, in the City
of New York and State of New York, on the 4th day of November, 1999.
Warburg, Pincus Emerging Markets Fund, Inc.
By: /s/ Eugene L. Podsiadlo
-----------------------
Name: Eugene L. Podsiadlo
Title: President
As required by the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ William W. Priest
- --------------------------------------- Chairman of the
William W. Priest Board of Directors November 4, 1999
/s/ Eugene L. Podsiadlo
- --------------------------------------- President November 4, 1999
Eugene L. Podsiadlo
/s/ Michael A. Pignataro
- --------------------------------------- Treasurer and Chief
Michael A. Pignataro Financial Officer November 4, 1999
/s/ Richard H. Francis
- --------------------------------------- Director November 4, 1999
Richard H. Francis
/s/ Jack W. Fritz
- --------------------------------------- Director November 4, 1999
Jack W. Fritz
/s/ Jeffrey E. Garten
- --------------------------------------- Director November 4, 1999
Jeffrey E. Garten
/s/ James S. Pasman, Jr.
- --------------------------------------- Director November 4, 1999
James S. Pasman, Jr.
/s/ Steven N. Rappaport
- --------------------------------------- Director November 4, 1999
Steven N. Rappaport
/s/ Alexander B. Trowbridge
- --------------------------------------- Director November 4, 1999
Alexander B. Trowbridge
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
- ------ ----------- ----
(11)(a) Opinion and Consent of Willkie Farr & Gallagher, counsel to
Registrant, with respect to validity of shares.
11(b) Opinion of Venable, Baetjer and Howard L.L.P., Maryland Counsel to
Registrant, with respect to validity of shares.
(12) Form of Opinion of Willkie Farr & Gallagher with respect to tax
matters.
(14) Consent of PricewaterhouseCoopers LLP.
(17)(a) Form of Proxy Card.
November 4, 1999
Warburg, Pincus Emerging Markets Fund, Inc.
466 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
We have acted as counsel to Warburg, Pincus Emerging Markets Fund, Inc., a
Maryland corporation (the "Acquiring Fund"), in connection with the proposed
acquisition by the Acquiring Fund of all or substantially all of the assets and
liabilities of Warburg, Pincus Emerging Markets II Fund, Inc., a Maryland
corporation (the "Acquired Fund"), in exchange for shares of common stock of the
Acquiring Fund (the "Shares"), pursuant to an Agreement and Plan of
Reorganization, to be executed by the Acquiring Fund and by the
Acquired Fund (the "Plan").
We have examined the Acquiring Fund's Registration Statement on Form N-14
substantially in the form in which it is to become effective (the "Registration
Statement"), the Acquiring Fund's Articles of Incorporation and Bylaws, and the
Plan.
We have also examined and relied upon other documents and certificates with
respect to factual matters as we have deemed necessary to render the opinions
expressed herein. We have assumed, without independent verification, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with originals of all documents submitted to us
as copies. We have further assumed that the Plan will constitute the legal,
valid and binding obligation of the Acquired Fund, enforceable against the
Acquired Fund in accordance with its terms.
We are members of the bar of the State of New York and do not purport to be
experts on, or to express any opinion herein, concerning any law, other than the
laws of the State of New York and the federal laws of the United States of
America. Anything in this opinion to the contrary notwithstanding, we render or
imply no opinion with respect to compliance with any applicable securities or
anti-fraud statutes, rules, regulations or other similar laws of any state
(including the State of Maryland) or the United States of America. In rendering
the opinions herein, we assume that there will be no
<PAGE>
material changes in the facts and conditions on which we base such opinions
between the date hereof and the time of issuance of the Acquiring Fund's Shares
pursuant to the Plan.
Based upon the foregoing, we are of the opinion that:
(a) The Acquiring Fund is a duly organized corporation validly existing
under the laws of the State of Maryland;
(b) The Shares of the Acquiring Fund to be issued as contemplated in the
Plan have been duly authorized, and, subject to the receipt by the
Acquiring Fund of consideration equal to the net asset value thereof
(but in no event less than the par value thereof), when issued in
accordance with the Plan, will be validly issued, fully paid and
nonassessable Shares of the Acquiring Fund under the laws of the
State of Maryland.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the references to us in the Prospectus/Proxy
Statement included as part of the Registration Statement and to the filing of
this opinion as an exhibit to any application made by or on behalf of the
Acquiring Fund or any distributor or dealer in connection with the registration
or qualification of the Acquiring Fund or the Shares under the securities laws
of any state or other jurisdiction.
This opinion is furnished by us as counsel to the Acquiring Fund, is solely for
the benefit of the Acquiring Fund and its Directors and its officers in
connection with the above described acquisition of assets and may not be relied
upon for any other purpose or by any other person.
Very truly yours,
/s/ Willkie Farr & Gallagher
[LETTERHEAD OF VENABLE, BAETJER AND HOWARD]
December 15, 1994
Willkie, Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: Warburg, Pincus Emerging Markets Fund, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Warburg, Pincus
Emerging Markets Fund, Inc., a Maryland corporation (the "Fund"), in connection
with the organization of the Fund and the issuance of shares of its common
stock, including Common Stock - Series 2 Shares, par value $.001 per share (the
"Common Stock").
As Maryland counsel for the Fund, we are familiar with its Charter
and Bylaws. We have examined its Registration Statement on Form N-1A, Securities
Act File No. 33-73498 and Investment Company Act File No. 811-8252, including
the prospectus and statement of additional information contained therein,
substantially in the form in which it is to become effective (the "Registration
Statement"). We have further examined and relied upon a certificate of the
Maryland State Department of Assessments and Taxation to the effect that the
Fund is duly incorporated and existing under the laws of the State of Maryland
and is in good standing and duly authorized to transact business in the State of
Maryland.
We have also examined and relied upon such corporate records of the
Fund and other documents and certificates with respect to factual matters as we
have deemed necessary to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies.
<PAGE>
Willkie Farr & Gallagher
December 15, 1994
Page 2
Based on such examination, we are of the opinion and so advise you
that:
1. The Fund is duly organized and validly existing as a
corporation in good standing under the laws of the State of
Maryland.
2. The 10,100 presently issued and outstanding shares of Common
Stock, including 100 presently issued and outstanding shares
of Common Stock - Series 2 Shares, of the Fund have been
validly and legally issued and are fully paid and
nonassessable.
3. The shares of Common Stock of the Fund to be offered for sale
pursuant to the Registration Statement are, to the extent of
the number of shares authorized to be issued by the Fund in
its Articles of Incorporation, duly authorized and, when sold,
issued and paid for as contemplated by the Registration
Statement, will have been validly and legally issued and will
be fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"blue sky" laws of Maryland, to federal securities laws or to other laws.
You may rely upon our foregoing opinion in rendering your opinion to
the Fund that is to be filed as an exhibit to the Registration Statement. We
consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard
Venable, Baetjer and Howard
__________, 1999
Warburg, Pincus Emerging Markets II Fund, Inc.
466 Lexington Avenue
New York, New York 10017
Warburg, Pincus Emerging Markets Fund, Inc.
466 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
You have asked us for our opinion concerning certain federal income tax
consequences to (a) Warburg, Pincus Emerging Markets II Fund, Inc., a Maryland
corporation (the "Acquired Fund"), (b) Warburg, Pincus Emerging Markets Fund,
Inc., a Maryland corporation (the "Acquiring Fund"), and (c) holders of shares
of common stock in the Acquired Fund ("Acquired Fund Shareholders") when
Acquired Fund Shareholders receive shares of common stock of the Acquiring Fund
(the "Acquiring Fund Shares") in exchange for their interests in the Acquired
Fund pursuant to an acquisition by the Acquiring Fund of all or substantially
all of the assets of the Acquired Fund in exchange for the Acquiring Fund Shares
and the assumption by the Acquiring Fund of liabilities of the Acquired Fund
(the "Reorganization"), all pursuant to an agreement and plan of reorganization.
We have reviewed such documents and materials as we have considered necessary
for the purpose of rendering this opinion. In rendering this opinion, we have
assumed that such documents as yet unexecuted will, when executed, conform in
all material respects to the proposed forms of such documents that we have
examined. In addition, we have assumed the genuineness of all signatures, the
capacity of each party executing a document so to execute that document, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as certified or photostatic
copies.
We have made inquiry as to the underlying facts which we considered to be
relevant to the conclusions set forth in this letter. The opinions expressed in
this letter are based upon certain factual statements relating to the Acquired
Fund and
<PAGE>
the Acquiring Fund set forth in the Registration Statement on Form N-14 (the
"Registration Statement") filed by the Acquiring Fund with the Securities and
Exchange Commission and representations made in letters from the Acquired Fund
and the Acquiring Fund addressed to us for our use in rendering this
opinion. We have no reason to believe that these representations and facts are
not valid, but we have not attempted to verify independently any of these
representations and facts, and this opinion is based upon the assumption that
each of them is accurate. Capitalized terms used herein and not otherwise
defined shall have the meaning given them in the Registration Statement.
The conclusions expressed herein are based upon the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations issued thereunder, published
rulings and procedures of the Internal Revenue Service and judicial decisions,
all as in effect on the date of this letter.
Based upon the foregoing, we are of the opinion that for federal income tax
purposes:
1. The transfer of all or substantially all of the Acquired Fund's
assets in exchange for the Acquiring Fund Shares and the assumption
by the Acquiring Fund of liabilities of the Acquired Fund, and the
distribution of such Acquiring Fund Shares to shareholders of the
Acquired Fund in exchange for their shares of the Acquired Fund,
will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code;
2. no gain or loss will be recognized by the Acquiring Fund on the
receipt of the assets of the Acquired Fund solely in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund
of liabilities of the Acquired Fund;
3. no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of liabilities of the Acquired Fund or upon the
distribution of the Acquiring Fund Shares to the Acquired Fund's
shareholders in exchange for their shares of the Acquired Fund;
4. no gain or loss will be recognized by shareholders of the Acquired
Fund upon the exchange of their
<PAGE>
Acquired Fund shares for the Acquiring Fund Shares or upon the
assumption by the Acquiring Fund of liabilities of the Acquired
Fund;
5. the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund's shareholders pursuant to the
Reorganization will be the same as the aggregate tax basis of the
Acquired Fund shares held by such shareholder immediately prior to
the Reorganization, and the holding period of the Acquiring Fund
Shares to be received by each Acquired Fund shareholder will include
the period during which the Acquired Fund shares exchanged therefor
were held by such shareholder (provided that the Acquired Fund
shares were held as capital assets on the date of the
Reorganization); and
6. the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to
the Acquired Fund immediately prior to the Reorganization, and the
holding period of the assets of the Acquired Fund in the hands of
the Acquiring Fund will include the period during which those assets
were held by the Acquired Fund.
Very truly yours,
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the filing of the Registration
Statement of the Warburg, Pincus Emerging Markets Fund, Inc. on Form N-14 of our
reports dated October 7, 1999 and December 11, 1998 on our audits of the
financial statements and financial highlights of the Warburg, Pincus Emerging
Markets II Fund, Inc. and Warburg, Pincus Emerging Markets Fund, Inc.,
respectively, which reports are included in the Annual Report to Shareholders
for the years ended August 31, 1999 and October 31, 1998, respectively, which
are incorporated by reference in the Registration Statement. We also consent to
the reference to our Firm under the headings "Management of Each Fund" and
"Financial Statements and Experts" in the Prospectus/Proxy Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 29, 1999
PROXY WARBURG PINCUS EMERGING MARKETS II FUND PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Shareholders -- January 27, 2000
The undersigned hereby appoints Hal Liebes and Michael A. Pignataro, each with
the power of substitution, as proxies for the undersigned to vote all shares of
the Warburg Pincus Emerging Markets II Fund which the undersigned is entitled to
vote at the Special Meeting of Shareholders of the Fund to be held at the
offices of the Fund, 466 Lexington Avenue, New York, New York 10017-3147, on
Thursday, January 27, 2000 at 3:30 p.m., Eastern time, and at any adjournments
thereof.
Unless otherwise specified in the boxes provided, the undersigned's vote
will be cast FOR each item listed on the reverse side.
A properly executed proxy in which no specification is
made will be voted in favor of the Proposal.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
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Please sign exactly as your name or names appear. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title as such.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------------- ----------------------------------------
- ----------------------------------- ----------------------------------------
- ----------------------------------- ----------------------------------------
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------------
WARBURG PINCUS EMERGING MARKETS II FUND
- ------------------------------------------------
Mark box at right if an address change or |_|
comment has been noted on the reverse side
of this card
1. To approve the Agreement and Plan of Reorganization dated as of [INSERT],
1999 providing that (i) the Fund would transfer to the Warburg Pincus
Emerging Markets Fund (the "Acquiring Fund") all or substantially all of
its assets in exchange for shares of the Acquiring Fund and the assumption
by the Acquiring Fund of the Fund's liabilities, (ii) such shares of the
Acquiring Fund would be distributed to shareholders of the Fund in
liquidation of the Fund, and (iii) the Fund would subsequently be
terminated.
For Against Abstain
|_| |_| |_|
The Proxies are authorized to vote upon such other business as may properly come
before the Meeting.
----------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
