As filed with the Securities and Exchange Commission
on March 9, 2001
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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. __
CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS
(formerly, DLJ Focus Funds)
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (212) 875-3000
466 Lexington Avenue
New York, New York 10017
(Address of Principal Executive Offices) (Zip code)
Hal Liebes, Esq.
Credit Suisse Warburg Pincus Capital Funds
466 Lexington Avenue
New York, New York 10017
(Name and address of Agent for Service)
With copies to:
Rose F. DiMartino, Esq. Earl D. Weiner, Esq.
Willkie Farr & Gallagher Sullivan & Cromwell
787 Seventh Avenue 125 Broad Street
New York, NY 10019-6099 New York, NY 10004
Approximate date of public offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
Title of Securities Being Registered: Shares of beneficial interest, $.01 par
value per share.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDEMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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).
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
WARBURG PINCUS SMALL COMPANY VALUE II FUND
YOUR VOTE IS IMPORTANT
Dear Shareholder:
We are pleased to invite you to attend a special meeting (the
"Meeting") of the shareholders of Warburg, Pincus Small Company Value II Fund,
Inc. (the "Acquired Fund"). The Board of Directors of the Acquired Fund has
recently reviewed and unanimously endorsed a proposal for the Acquired Fund to
be acquired by Credit Suisse Warburg Pincus Small Company Value Fund (formerly
the DLJ Small Company Value Fund) (the "Acquiring Fund"), a series of Credit
Suisse Warburg Pincus Capital Funds (formerly the DLJ Focus Funds) (the
"Acquiring Trust"). The Acquiring Fund is a similar fund managed by your Fund's
investment adviser, Credit Suisse Asset Management, LLC ("CSAM"). Under the
terms of the proposal, the Acquiring Fund would acquire all of the assets and
liabilities of the Acquired Fund. You are being asked to approve an Agreement
and Plan of Reorganization (the "Plan") pursuant to which the acquisition of the
Acquired Fund by the Acquiring Fund (the "Acquisition") would be effected.
The Acquired Fund's Board of Directors and CSAM believe that the
Acquisition is in the best interests of the Acquired Fund and its shareholders.
As disclosed in the attached prospectus/proxy statement, the
Acquisition is not expected to result in any material changes to the investment
philosophy or operations of the Acquired Fund since the Acquired Fund and the
Acquiring Fund have similar investment objectives and investment policies,
although the Acquiring Fund has certain different investment limitations as
compared to the Acquired Fund. Although the Acquiring Fund also has a different
custodian, transfer agent and independent accountant, the quality and level of
service provided currently to the Acquired Fund by CSAM are expected to continue
as CSAM is the successor to DLJ Asset Management Group, Inc., the Acquiring
Trust's previous investment adviser. Also, 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 to maintain the net average annualized
expense ratio of the Common Class of the Acquiring Fund at the lower of that of
the net average annualized expense ratio of the Common Class of the Acquiring
Fund at the closing of the Acquisition or the class of the Acquired Fund that
such holder will surrender at such closing measured over the 60-day period
ending on the closing of the Acquisition (the "Closing Date"). The Closing Date
is expected to be on or about June 8, 2001.
If shareholders of the Acquired Fund approve the Plan, the Acquired
Fund will be liquidated upon consummation of the Acquisition and subsequently
dissolved. Upon consummation of the Acquisition, you will become a shareholder
of the Acquiring Fund, having received shares of the Acquiring Fund's Common
Class shares with an aggregate net asset value equal to the aggregate net asset
value of your investment in the Acquired Fund immediately prior to the
Acquisition. No sales or other charges will be imposed in connection with the
Acquisition. The Acquisition will, in the opinion of counsel, be free from
federal income taxes to you, the Acquired Fund and the Acquiring Fund. CSAM or
its affiliates will bear all expenses incurred in connection with the
Acquisition.
The Meeting will be held on May 25, 2001 to consider the Acquisition
and the other matters being presented. We strongly invite your participation by
asking you to review, complete and return your proxy promptly.
Detailed information about the proposal is described in the attached
prospectus/proxy statement. THE BOARD OF DIRECTORS OF THE ACQUIRED FUND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. 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., the Acquired Fund's proxy solicitor, Attn.: Dominic F.
Maurillo, at (212) 269-2796. We also encourage you to vote by telephone or
through the Internet. Proxies may be voted by telephone by calling
1-800-290-6424 between the hours of 9:00 a.m. and 10:00 p.m. (Eastern time) 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 Acquired 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. Shareholders voting
via the Internet should understand that there may be costs associated with
electronic access, such as usage charges from Internet access providers and
telephone companies, that must be borne by the shareholder. We have been advised
that the Internet voting procedures that have been made available to you are
consistent with the requirements of applicable law.
Whichever voting method you choose, please read the full text of the
prospectus/proxy statement before you vote.
If you have any questions regarding the proposed Acquisition, please
feel free to call D.F. King & Co., Inc. at 1-800-290-6424 who will be pleased to
assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED
PROMPTLY.
Sincerely,
/s/Hal Liebes
Hal Liebes
Secretary
__________, 2001
________, 2001
WARBURG PINCUS SMALL COMPANY VALUE II FUND
Important News For Fund Shareholders
While we encourage you to read the full text of the enclosed
Prospectus/Proxy Statement, here is a brief overview of the proposal you are
being asked to vote on.
Q & A: QUESTIONS AND ANSWERS
Q: WHAT IS HAPPENING?
A: Credit Suisse Group ("Credit Suisse") has acquired Donaldson, Lufkin &
Jenrette, Inc. ("DLJ"), including its subsidiary, DLJ Asset Management
Group, Inc. ("DLJAM"), the prior investment adviser of the Acquiring
Fund, and has combined the investment advisory business of DLJAM with
its existing U.S. asset management business, which is managed by your
fund's investment adviser, Credit Suisse Asset Management, LLC
("CSAM"). CSAM is part of Credit Suisse Asset Management, which is the
institutional asset management and mutual fund arm of Credit Suisse,
with global assets under management of approximately $298 billion.
Credit Suisse is a global financial services company, providing a
comprehensive range of banking and insurance products.
To reduce confusion in the marketplace by eliminating multiple, similar
funds advised by the same investment adviser, CSAM is proposing to
combine the assets of Warburg, Pincus Small Company Value II Fund, Inc.
(the "Acquired Fund") with Credit Suisse Warburg Pincus Small Company
Value Fund (the "Acquiring Fund"), a series of Credit Suisse Warburg
Pincus Capital Funds, with the Acquiring Fund surviving the
acquisition.
You are being asked to vote on an Agreement and Plan of Reorganization
(the "Plan") for the assets and liabilities of the Acquired Fund to be
acquired by the Acquiring Fund in a tax-free exchange of shares (the
"Acquisition"). If the Plan is approved and the Acquisition
consummated, you would no longer be a shareholder of the Acquired Fund,
but would become a shareholder of the Acquiring Fund.
Q: WHAT ARE THE DIFFERENCES BETWEEN THE ACQUIRED FUND AND THE ACQUIRING
FUND?
A: The Acquisition is not expected to result in any material changes to
the investment philosophy or operations of the Acquired Fund since the
Acquired Fund and the Acquiring Fund have similar investment objectives
and investment policies, although the Acquiring Fund has
certain different investment limitations as compared to the Acquired
Fund. The Acquiring Fund has the same investment adviser,
co-administrators and distributor as the Acquired Fund. The custodian,
transfer agent and independent accountant will change in connection
with the Acquisition.
Q: WHAT WILL HAPPEN TO FUND EXPENSES?
A: CSAM, each Fund's investment adviser, has agreed to reimburse expenses,
for the two-year period beginning on the date of the closing of the
Acquisition, to the extent necessary to maintain the net average
annualized expense ratio of the Common Class of the Acquiring Fund at
the lower of that of (a) the net average annualized expense ratio of
the Common Class of the Acquiring Fund at the closing of the
Acquisition or (b) the net average annualized expense ratio of the
class of the Acquired Fund that such holder will surrender at such
closing, in each case measured over the 60-day period ending on the
closing of the Acquisition. In other words, we will compute the net
average annualized expense ratio over the 60-day period before the
closing for your class and the class that you will receive and your
expenses as a shareholder of the Acquiring Fund will not exceed the
lower of the two for two years. The expense ratio of a class of a Fund
during the 60-day computation period could be higher than as presented
in this Prospectus/Proxy Statement due to redemptions of Fund shares
prior to the Acquisition or for other reasons. The closing of the
proposed Acquisition is expected to be on or about June 8, 2001.
Q: WHAT ARE THE BENEFITS OF THE TRANSACTION?
A: The Board members of the Acquired Fund believe that you may benefit
from the proposed Acquisition, in part, because it will result in a
single larger fund with a potentially lower expense ratio and will
eliminate confusion in the marketplace associated with there being two
small company value-oriented funds managed by the same investment
adviser. The proposed Acquisition may result in efficiencies due to a
larger asset base. The following pages give you additional information
on the proposed Acquisition on which you are being asked to vote.
Q: WILL I INCUR TAXES AS A RESULT OF THE TRANSACTION?
A: The Acquisition is expected to be a tax-free event. Generally,
shareholders of the Acquired Fund will not incur capital gains or
losses on the conversion from the Acquired Fund to the Acquiring Fund.
Shareholders will incur capital gains or losses if they sell their
shares in the Acquired Fund before the Acquisition becomes effective or
sell (or exchange) their Acquiring Fund shares after the Acquisition
becomes effective. Shareholders will also be responsible for tax
obligations associated with periodic dividend and capital gains
distributions that occur prior to and
after the Acquisition. The Acquired Fund will pay a dividend of any
undistributed net investment income and capital gains, which may be
substantial, immediately prior to the closing date. Please note that
retirement accounts are exempt from such tax consequences.
Q: WHAT HAPPENS IF THE PLAN IS NOT APPROVED?
A: In the event the Plan is not approved, you will continue to be a
shareholder of the Acquired Fund and the Board will consider other
possible courses of action available to it, including resubmitting the
Acquisition proposal to shareholders.
Q: HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A: AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF THE ACQUIRED
FUND, INCLUDING THOSE DIRECTORS WHO ARE NOT AFFILIATED WITH THE
ACQUIRED FUND OR CSAM, RECOMMEND THAT YOU VOTE FOR THE PROPOSAL.
Q: WHOM DO I CALL FOR MORE INFORMATION?
A: Please call D.F. King & Co., Inc., the Acquired Fund's proxy solicitor,
at 1-800-290-6424.
Q: HOW CAN I VOTE MY SHARES?
A: Please choose one of the following options to vote your shares:
o By mail, with the enclosed proxy card;
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 Acquired Fund's proxy
solicitor, at 1-800-290-6424;
o By faxing the enclosed proxy card to D.F. King & Co., Inc.,
Attn: Dominic F. Maurillo, at 212-269-2796;
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 special meeting.
Q: WILL THE ACQUIRED FUND PAY FOR THIS PROXY SOLICITATION?
A: No. CSAM or its affiliates will bear these costs.
WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC.
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on May 25, 2001
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired
Fund") will be held at the offices of the Acquired Fund, 466 Lexington Avenue,
16th Floor, New York, New York 10017 on May 25, 2001, commencing at 3:00 p.m.
for the following purposes:
1. To approve an Agreement and Plan of Reorganization (the "Plan")
providing that (i) the Acquired Fund would transfer to Credit Suisse
Warburg Pincus Small Company Value Fund (the "Acquiring Fund"), a
series of Credit Suisse Warburg Pincus Capital Funds, all of the
Acquired Fund's assets in exchange for shares of the Common Class of
the Acquiring Fund and the assumption by the Acquiring Fund of the
Acquired Fund's liabilities, (ii) such shares of the Acquiring Fund
would be distributed to shareholders of the Acquired Fund in
liquidation of the Acquired Fund, and (iii) the Acquired Fund would
subsequently be dissolved;
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 ACQUIRED FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE THE PROPOSAL.
The Board of Directors of the Acquired Fund has fixed the close of
business on March 15, 2001, as the record date for the determination of
shareholders of the Acquired 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 five 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 Acquired Fund's proxy
solicitor, at 1-800-290-6424;
o By faxing the enclosed proxy card to D.F. King & Co., Inc.,
Attn: Dominic F. Maurillo, at 212-269-2796;
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.
If you have any questions regarding the proposals, please feel free to
call D.F. King & Co., Inc. at 1-800-290-6424.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
By Order of the Board of Directors,
/s/Hal Liebes
Hal Liebes
Secretary
__________, 2001
YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY WILL HELP TO
AVOID THE EXPENSE OF FURTHER SOLICITATION.
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
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
SUBJECT TO COMPLETION, DATED MARCH 9, 2001
PRELIMINARY PROSPECTUS/PROXY STATEMENT
__________, 2001
PROXY STATEMENT
WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC.
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
800-WARBURG
PROSPECTUS
CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND,
A SERIES OF CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
800-225-8011
This Prospectus/Proxy Statement is being furnished to shareholders of
Warburg, Pincus Small Company Value II Fund, Inc. (the "Acquired Fund"), an
open-end, diversified management investment company organized as a Maryland
corporation, in connection with the solicitation of proxies by its Board of
Directors for use at a Special Meeting of Shareholders to be held on May 25,
2001 at 3:00 p.m. (the "Meeting"), at the offices of the Acquired Fund located
at 466 Lexington Avenue, 16th Floor, New York, New York 10017, or any
adjournment(s) thereof. The only proposals to be considered are set forth below:
1. to approve an Agreement and Plan of Reorganization (the "Plan");
2. to transact such other business as may properly come before the
Meeting and any adjournment(s) thereof.
Pursuant to the Plan, the Acquired Fund would transfer to Credit Suisse
Warburg Pincus Small Company Value Fund (formerly the DLJ Small Company Value
Fund) (the "Acquiring Fund" and, together with the Acquired Fund, the "Funds"),
a series of Credit Suisse Warburg Pincus Capital Funds (formerly the DLJ Focus
Funds) (the "Acquiring Trust"), an open-end, diversified management investment
company organized as a Massachusetts business trust, all of the Acquired Fund's
assets in exchange for shares of the Common Class of the
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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.
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.
================================================================================
Acquiring Fund and the assumption by the Acquiring Fund of the Acquired Fund's
liabilities; such shares of the Acquiring Fund would be distributed to
shareholders of the Acquired Fund in liquidation of the Acquired Fund; and the
Acquired Fund would subsequently be dissolved (hereinafter collectively referred
to as the "Acquisition").
As disclosed herein, the proposed Acquisition is not expected to result
in any material changes to the investment philosophy or operations of the
Acquired Fund since the Acquired Fund and the Acquiring Fund have similar
investment objectives and investment policies, although the Acquiring Fund has
certain different investment limitations as compared to the Acquired Fund. The
investment objective of the Acquired Fund is long-term capital appreciation and,
similarly, the investment objective of the Acquiring Fund is a high level of
growth of capital. The Acquired Fund pursues its objective by investing in
equity securities of "small" U.S. value companies. Current income is a secondary
consideration in selecting portfolio investments. The Acquiring Fund pursues its
objective by investing in common stock and other equity securities of small
capitalization companies employing a value-oriented investment approach. The
Acquiring and Acquired Funds define a "small" company slightly differently: the
Acquiring Fund considers a company to be small if it has a market capitalization
of $2 billion or less at the time of purchase, whereas the Acquired Fund
considers a company to be small if its capitalization, at the time of purchase,
is within the range of capitalization of companies in the Russell 2000 Index
(between $4 million and $6.1 billion as of December 31, 2000). Neither Fund is
required to dispose of investments that outgrow the definition of small company
after purchase. Consequently, the investment objective and policies of the
Acquiring Fund are similar to those of the Acquired Fund, except as described
herein and under "Comparison of Investment Objectives and Policies" in this
Prospectus/Proxy Statement. Credit Suisse Asset Management, LLC, the investment
adviser for the Acquiring Fund ("CSAM"), and Credit Suisse Asset Management
Securities, Inc. ("CSAMSI") and PFPC, Inc. ("PFPC"), co-administrators of the
Acquiring Fund, serve in the same capacities for the Acquired Fund, although the
custodian, transfer agent and independent accountant will change in connection
with the Acquisition.
As a result of the proposed Acquisition, each Common Class and Advisor
Class shareholder of the Acquired Fund will receive that number of shares of the
Common Class of the Acquiring Fund having an aggregate net asset value equal to
the aggregate net asset value of such shareholder's shares of the Acquired Fund
immediately prior to the Acquisition. All expenses of the Acquisition and of
this solicitation will be borne by CSAM or its affiliates. No sales or other
charges will be imposed on the shares of the Acquiring Fund received by the
shareholders of the Acquired Fund in connection with the Acquisition. This
transaction is structured to be tax-free for federal income tax purposes to
shareholders of the Acquired Fund and to each of the Acquired 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 April 1, 2001. A
Statement of Additional Information, dated _________, 2001, 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 1-800-225-8011.
The following documents, which have been filed with the SEC, are
incorporated herein in their entirety by reference.
o The current Prospectus of the Acquiring Fund, dated February 28, 2001. The
Acquiring Fund's Prospectus accompanies this Prospectus/Proxy Statement.
o The current Common Class Prospectus and Advisor Class Prospectus of the
Acquired Fund, each dated February 28, 2001, and the Shareholder Guide, which
accompanies the Common Class Prospectus. Copies may be obtained without charge
by writing to the Acquiring Fund at the address on the cover page of this
Prospectus/Proxy Statement or by calling 1-800-225-8011.
o The Annual Report of each of the Acquired Fund and of the Acquiring Fund for
the fiscal year ended October 31, 2000. The Annual Report of the Acquiring Fund
accompanies this Prospectus/Proxy Statement. The Acquired Fund's most recent
Annual Report to shareholders is available upon request without charge by
writing to the address listed on the cover page of this Prospectus/Proxy
Statement or by calling 1-800-WARBURG.
Accompanying this Prospectus/Proxy Statement as Exhibit A is a copy of
the form of the Plan for the proposed Acquisition.
TABLE OF CONTENTS
PROPOSAL - APPROVAL OF THE PLAN ........................................... 1
Summary ................................................................ 1
Risk Factors ........................................................... 5
Reasons for the Acquisition ............................................ 6
Fee Table .............................................................. 7
Information About the Acquisition ...................................... 9
Total Returns .......................................................... 13
Share Ownership of the Funds ........................................... 14
Comparison of Investment Objectives and Policies ....................... 15
Determination of Net Asset Value of Shares of the Acquiring Fund ....... 19
Management of Each Fund ................................................ 19
Interest of CSAM in the Acquisition .................................... 21
Information on Shareholders' Rights .................................... 21
Conclusion ............................................................. 23
Required Vote .......................................................... 24
ADDITIONAL INFORMATION .................................................... 24
VOTING INFORMATION ........................................................ 24
OTHER BUSINESS ............................................................ 26
FINANCIAL STATEMENTS AND EXPERTS .......................................... 26
ADDITIONAL MATERIALS ...................................................... 26
VALIDITYOFSHARES .......................................................... 26
EXHIBIT A: AGREEMENT AND PLAN OF REORGANIZATION .......................... A-1
PROPOSAL - APPROVAL OF THE PLAN
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 ACQUIRED FUND, THE STATEMENT OF ADDITIONAL
INFORMATION OF THE ACQUIRED FUND, THE PROSPECTUS OF THE ACQUIRING FUND AND THE
STATEMENT OF ADDITIONAL INFORMATION OF THE ACQUIRING FUND.
PROPOSED ACQUISITION. The Plan provides for the acquisition of all of
the assets and liabilities of the Acquired Fund by the Acquiring Fund in
exchange for shares of the Acquiring Fund. The Plan also calls for the
distribution of Common Class shares of the Acquiring Fund to the Acquired Fund's
Common Class and Advisor Class shareholders in liquidation of the Acquired Fund.
As a result of the Acquisition, each holder of Common Class and Advisor Class
shares of the Acquired Fund will become the owner of that number of full and
fractional Common Class shares of the Acquiring Fund having an aggregate net
asset value equal to the aggregate net asset value of the shareholder's shares
of the Acquired Fund as of the close of business on the date that the Acquired
Fund's assets and liabilities are exchanged for shares of the Acquiring Fund.
See "Information About the Acquisition -- Agreement and Plan of Reorganization."
Because the Acquiring Fund is a series of the Acquiring Trust, it does
not have a Board of Trustees separate from the other series of the Acquiring
Trust. Accordingly, when we refer to the "Trustees of the Acquiring Fund" or the
"Board of Trustees of the Acquiring Fund" elsewhere in this prospectus/proxy
statement, we mean the Trustees and the Board of Trustees of the Acquiring
Trust.
For the reasons set forth below under "Reasons for the Acquisition,"
the Board of Directors of the Acquired Fund, including the Directors of the
Acquired 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 Acquired Fund and that the interests of the
Acquired 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 Acquired Fund's shareholders. The Board of Trustees
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 Acquired Fund will require the
affirmative vote of a majority of the Acquired Fund's outstanding shares, in the
aggregate without regard to class, present in person or represented by proxy.
See "Voting Information." In the event that the Plan is not approved by
shareholders of
the Acquired 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 Acquired
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 Acquired
Fund, no gain or loss will be recognized by the Acquired Fund or its
shareholders for federal income tax purposes. The holding period and aggregate
tax basis of the Acquiring Fund shares received by an Acquired Fund shareholder
will be the same as the holding period and aggregate tax basis of the shares of
the Acquired Fund previously held by such shareholder. In addition, the holding
period and aggregate tax basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund as a result of the Acquisition will be the same as in the
hands of the Acquired Fund immediately prior to the Acquisition.
INVESTMENT OBJECTIVES AND POLICIES. The proposed Acquisition is not
expected to result in any material changes to the investment philosophy or
operations of the Acquired Fund since the Acquired Fund and the Acquiring Fund
have similar investment objectives and investment policies, although the
Acquiring Fund has certain different investment limitations as compared to the
Acquired Fund. The investment objective of the Acquired Fund is long-term
capital appreciation and, similarly, the investment objective of the Acquiring
Fund is a high level of growth of capital. The Acquired Fund pursues its
objective by investing in equity securities of "small" U.S. value companies.
Current income is a secondary consideration in selecting portfolio investments.
The Acquiring Fund pursues its objective by investing in common stock and other
equity securities of small capitalization companies employing a value-oriented
investment approach. The Acquiring Fund is not intended for investors whose
principal objective is assured income or preservation of capital. The Acquiring
and Acquired Funds define a "small" company slightly differently: the Acquiring
Fund considers a company to be small if it has a market capitalization of $2
billion or less at the time of purchase, whereas the Acquired Fund considers a
company to be small if its capitalization, at the time of purchase, is within
the range of capitalization of companies in the Russell 2000 Index (between $4
million and $6.1 billion as of December 31, 2000). Neither Fund is required to
dispose of investments that outgrow the definition of small company after
purchase. Consequently, the investment objective and policies of the Acquiring
Fund are similar to those of the Acquired Fund, except as otherwise described
herein. The investment objective of each Fund is a fundamental policy which
means that it can not be changed without shareholder approval. The other
investment policies and fundamental and non-fundamental investment limitations
of the Acquiring Fund are similar to those of the Acquired Fund except for
differences noted below under "Comparison of Investment Objectives and
Policies."
PURCHASE AND REDEMPTION PROCEDURES. Except as otherwise indicated in
this section, the Funds have similar policies with respect to purchases,
redemptions and exchanges of shares. Common Class shares of the Acquiring
2
Fund are available for purchase by Common Class and Advisor Class shareholders
of the Acquired Fund and generally by other individuals. Advisor Class shares of
the Acquired Fund are offered through the Fund's distributor and various
financial intermediaries. Each Fund's Common Class shares may be purchased
directly from the Fund, through the Fund's distributor and through various
financial intermediaries. Shares of the Common Class of the Acquired Fund
require a minimum initial investment of $2,500, and a minimum additional
investment of $100 if made by check, although this amount varies based on the
method of payment. As of the Closing Date, Common Class shares of the Acquiring
Fund require a minimum additional investment of $100 and offer the same
privileges currently available to Common Class shareholders of the Acquired
Fund, such as an automatic monthly investment plan, a dividend direction option
or a systematic withdrawal plan. Both Funds require that requests for
redemptions of large amounts be made in writing and be accompanied by a
signature guarantee. Both Funds also reserve the right to take actions designed
to discourage frequent or excessive trading associated with market timing.
You should also note that certain financial institutions who make
shares of the Acquired Fund available to their customers may not distribute
shares of the Acquiring Fund. Please see the Prospectuses and Shareholder Guide,
as applicable, of each of the Acquiring Fund and the Acquired Fund for more
detailed information on purchasing and redeeming shares of the relevant Fund.
SALES CHARGES. Common Class shares of the Acquiring Fund and Common
Class shares of the Acquired Fund are sold at net asset value per share and
without an initial or contingent deferred sales charge, but are subject to the
same 12b-1 fee of 0.25% per annum of average daily net assets. Advisor Class
shares of the Acquired Fund are subject to a 12b-1 fee of up to 0.75% per annum,
although the current 12b-1 fee is 0.50% per annum. Each Fund has compensation
type 12b-1 plans in which the distributor receives the distribution fee
regardless of the cost of the distribution activities performed. See "Fee Table"
below.
EXCHANGE PRIVILEGES. The exchange privileges available to shareholders
of the Acquiring Fund are similar to those available to shareholders of the
Acquired 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
their respective family of funds at their respective net asset values, provided
that such Fund offers the relevant class of shares. For former Acquired Fund
shareholders, the family of funds available for exchange immediately after the
Acquisition will consist of the Credit Suisse Warburg Pincus family of funds
(previously called the DLJ Mutual Funds) offering Common Class shares. Exchanges
from the Credit Suisse Warburg Pincus Funds into a fund in the Warburg Pincus
family of funds (and vice versa) would not be permitted. It is anticipated that,
at such time as the transfer agent of both fund families is changed to be the
same, exchanges between funds in the two families will be permitted. This change
is expected to occur on or before July 1, 2001. Between the Closing Date and
this date, if a former Acquired Fund shareholder wishes to exchange shares in
the Acquiring Fund for shares of a
3
fund in the Warburg Pincus family of funds, that shareholder would be required
to place both a sale order with the Acquiring Fund and a purchase order with the
relevant fund in the Warburg Pincus family of funds. Although the tax
consequences of that sale/purchase would be the same as those of any exchange,
the sale and purchase transactions would be effected on successive business
days, unlike an exchange which is effected on a single day.
Exchanges may be effected by mail or by telephone. Exchanges must
satisfy the minimum dollar amount necessary for new purchases in the fund in
which shares are being purchased. Each of the Acquired Fund and the Acquiring
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. Please see the
Prospectuses and Shareholder Guide, as applicable, of each of the Acquiring Fund
and the Acquired Fund for more detailed information on exchanging shares of the
relevant Fund.
DIVIDENDS. The Acquiring Fund and the Acquired 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 once a year. It is expected that the Acquired Fund will pay a
dividend of any undistributed net investment income and capital gains, which may
be substantial, immediately prior to the Closing Date. If paid as of February
28, 2001, the amount of this dividend would have been $.99 per Common Class
share of the Acquired Fund, consisting of $.01 per share of net investment
income and $.98 per share of net realized capital gains. The amount of such
dividend with respect to the Advisor Class of the Acquired Fund would have been
slightly lower due to its higher expenses. The amount of any dividend actually
paid prior to the Closing Date may be higher or lower than this amount (perhaps
materially so), depending on a number of factors, such as changes in the value
of Acquired Fund holdings and net redemptions of Acquired Fund shares. See
"Distributions" in the Prospectus of the Acquired Fund.
SHAREHOLDER VOTING RIGHTS. The Acquiring Trust and the Acquired Fund
are each registered with the SEC as open-end, diversified management investment
companies. The Acquiring Fund is a series of a Massachusetts business trust,
having a Board of Trustees. The Acquired Fund is a Maryland corporation with a
Board of Directors. Shareholders of each Fund have similar voting rights.
Neither
4
Fund holds a meeting of shareholders annually, except as required by the 1940
Act or other applicable law. The Acquired 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 10% of the votes entitled to be cast at the meeting.
Payment by such shareholders of the reasonably estimated cost of preparing and
mailing a notice of the meeting is required in advance 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. The Acquiring
Fund's Amended and Restated Agreement and Declaration of Trust (the "Agreement
and Declaration of Trust") provides that a special meeting of shareholders will
be called at the written request of shareholders holding at least 10% of the
outstanding shares of the Fund. To the extent required by law, each Fund will
assist in shareholder communications in such matters. The presence of one-third
of the votes to be cast at a shareholder meeting of the Acquired Fund will
constitute a quorum whereas the presence of a majority of shares of the
Acquiring Fund at a meeting will constitute a quorum.
Under the laws of the Commonwealth of Massachusetts, shareholders of
the Acquiring Fund do not have appraisal rights in connection with a combination
or acquisition of the assets of the Acquiring Fund. In addition, under the laws
of the State of Maryland, shareholders of the Acquired Fund do not have
appraisal rights in connection with a combination or acquisition of the assets
of the Acquired Fund by another entity. Shareholders of the Acquired 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
The investment objectives of the Acquiring Fund (i.e., high level of
growth of capital) and the Acquired Fund (i.e., long-term capital appreciation)
are similar, and the investment policies of the Acquiring Fund and the Acquired
Fund (and the risks related thereto) along with each Fund's "small company
value" orientation are, except as noted herein, similar. The principal risk
factors affecting both the Acquiring Fund and the Acquired Fund are (i) market
risk and (ii) the risk of investing in start-up and other small companies. The
Acquiring Fund is not intended for investors whose principal objective is
assured income or preservation of capital. The Acquiring Fund may not invest in
restricted securities, although securities freely saleable among certain
institutional investors pursuant to Rule 144A under the Securities Act are not
considered "restricted securities" for purposes of this limitation. The Acquired
Fund can invest up to 10% of its net assets in restricted securities. The
Acquiring Fund can have greater exposure to the risks associated with investing
in non-U.S. securities as the Acquiring Fund may invest up to 20% of its total
assets in non-U.S. securities, while the Acquired Fund may invest up to 10% of
its total assets. The Acquiring Fund may also invest in "special situation"
companies. These companies have a value that may be affected by particular
developments unrelated to business conditions generally such as a development
particularly or uniquely applicable to that company. If the
5
development does not occur, the value of the investment may decline. See the
accompanying Prospectus 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 Acquired Fund has unanimously determined
that it is in the best interest of the Acquired 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 "small
company value" oriented funds managed by CSAM;
2. the Acquisition may increase efficiencies, eliminating one of the
two sets of prospectuses, annual reports and other documents required for two
funds, although there is no guarantee that the combined fund will realize such
efficiencies;
3. a larger asset base could provide portfolio management benefits,
such as greater diversification to mitigate the risks of investing in a limited
number of equity securities and the ability to command more attention from
brokers and underwriters of portfolio securities;
4. the performance record of the Acquiring Fund;
5. the terms and conditions of the Acquisition;
6. the similar investment objectives, investment philosophies,
investment policies and restrictions of the Acquiring Fund in relation to those
of the Acquired Fund;
7. that the investment adviser for the Acquiring Fund is the same as
that of the Acquired Fund;
8. the federal tax consequences of the Acquisition to the Acquired
Fund, the Acquiring Fund and the shareholders of each Fund, and that a legal
opinion will be rendered that no recognition of gain or loss for federal income
tax purposes will occur as a result of the Acquisition to any of them;
9. the possibility of alternative transactions, including the
possibility of a transaction with a fund that is not managed by CSAM;
10. that the interests of shareholders of the Acquired Fund will not be
diluted as a result of the Acquisition;
6
11. 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
to maintain the average annualized expense ratio of the Common Class of the
Acquiring Fund (after waivers) at the lower of that of (i) the net average
annualized expense ratio of the Common Class of the Acquiring Fund at the
closing of the Acquisition or (ii) the net average annualized expense ratio of
the class of the Acquired Fund that such holder will surrender at such closing,
in each case measured over the 60-day period ending on the Closing Date;
12. that the expenses of the Acquisition will be borne by CSAM or its
affiliates; and
13. that no sales or other charges will be imposed in connection with
the Acquisition.
In light of the foregoing, the Board of Directors of the Acquired Fund,
including the Independent Directors, has determined that it is in the best
interests of the Acquired Fund and its shareholders to effect the Acquisition.
The Board of Directors of the Acquired Fund has also determined that the
Acquisition would not result in a dilution of the interests of the Acquired
Fund's shareholders. In making these determinations, the Board did not give
equal weight to each factor.
The Board of Trustees of the Acquiring Fund has also determined that it
is advantageous to the Acquiring Fund to effect the Acquisition. The Acquiring
Fund's Board of Trustees considered, among other things, (1) the terms and
conditions of the Acquisition, (2) CSAM's representation that, to its knowledge,
there are no claims, or circumstances that are reasonably likely to give rise to
claims, against the Acquired Fund that would materially adversely affect the
Acquired Fund or its assets or business, (3) CSAM's covenant that the Acquiring
Fund will succeed to all rights that the Acquired Fund has, or would have but
for the Acquisition, against CSAM or its affiliates by reason of any failure to
act by CSAM or its affiliates prior to the Closing Date and (4) representations
that the Acquisition would be effected as a tax-free reorganization.
Accordingly, the Board of Trustees of the Acquiring Fund, including a majority
of the Independent Trustees, 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
Class shares and Advisor Class shares of the Acquired Fund, holders of which
will receive the Common Class shares of the Acquiring Fund upon closing of the
Acquisition and the costs and expenses of Common Class shares 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.
7
TOTAL ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS -- REFLECTING CURRENT FEES)
- -------------------------------------------------------------------------------------------------
CREDIT SUISSE
WARBURG
PINCUS SMALL
COMPANY
VALUE FUND
ACQUIRING FUND ACQUIRED FUND PRO FORMA
- -------------------------------------------------------------------------------------------------
(COMMON
BEFORE FEE WAIVERS AND COMMON ADVISOR CLASS AFTER
REIMBURSEMENTS COMMON CLASS CLASS* CLASS* ACQUISITION)
- -------------------------------------------------------------------------------------------------
Transaction Expenses:
Maximum sales charge imposed on
purchases (as a percentage of offering price) None None None None
- -------------------------------------------------------------------------------------------------
Maximum deferred sales charge (as a
percentage of original purchase price, or
redemption proceeds, as applicable) None None None None
- --------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management fees .81% 1.00% 1.00% .79%
12b-1 fees .25% 25% .50% .25%
Other expenses .42% .74% .74% .42%
- -------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.48% 1.99% 2.24% 1.46%**
- -------------------------------------------------------------------------------------------------
* Fee waivers and expense reimbursements or credits reduced expenses for the
Acquired Fund during its most recent fiscal years but it may be discontinued
at any time.
- -------------------------------------------------------------------------------------------------
CREDIT SUISSE
WARBURG
PINCUS SMALL
COMPANY
VALUE FUND
ACQUIRING FUND ACQUIRED FUND PRO FORMA
- -------------------------------------------------------------------------------------------------
(COMMON
AFTER FEE WAIVERS AND COMMON ADVISOR CLASS AFTER
REIMBURSEMENTS COMMON CLASS CLASS CLASS ACQUISITION)
- --------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management fees .81% .84% .84% .68%
12b-1 fees .25% .25% .50% .25%
Other expenses .29% .65% .65% .42%
- -------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.35%*** 1.74% 1.99% 1.35%**
- -------------------------------------------------------------------------------------------------
* Fee waivers and expense reimbursements or credits reduced expenses for the
Acquired Fund during its most recent fiscal years but it may be discontinued
at any time.
** 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 to
maintain the net average annualized expense ratio of the Common Class of the
Acquiring Fund at the lower of that of (i) the net average annualized
expense ratio of the Common Class of the Acquiring Fund at the closing of
the Acquisition or (ii) the net average annualized expense ratio of the
class of the Acquired Fund that such holder will surrender at such closing,
in each case measured over the 60-day period ending on the closing of the
Acquisition. The expense ratio of a Fund during the 60-day computation
period could be higher than that shown above, due to redemptions of Fund
shares prior to the Acquisition or for other reasons. If this occurred, the
level at which Acquiring Fund expenses would be waived and/or reimbursed
could be higher than that shown above. In addition, there can be no
assurance that Acquiring Fund expenses will not increase following the
two-year period.
*** Effective February 1, 2001, CSAMSI and PFPC began providing administrative
services to the Acquiring Fund. Administrative services previously were
provided by DLJAM and CSAM without charge. Although these services are now
provided for a total rate not to exceed .175% of average daily net assets,
CSAM will limit average annual expenses of the Acquiring Fund from the date
of the acquisition of DLJ, November 3, 2000, until November 3, 2002 to the
annualized levels previously paid by the Acquiring Fund, measured over the
60-day period ended on November 3, 2000. As a result, it is not anticipated
that the Acquiring Fund's average annualized operating expense ratio will
increase through November 3, 2002 as a result of the retention of new
co-administrators. This limit is not reflected in the first fee table above.
8
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), except
(i) for the Acquiring Fund example, the waiver of fees described above for the
period until November 3, 2002 has been taken into account and (ii) for the pro
forma example, the waiver of fees described above for the two-year period
beginning on the Closing Date has been taken into account. The examples also
assume that all dividends and distributions are reinvested.
Assume you invest $10,000, each Fund 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:
- -------------------------------------------------------------------------------------------------
CREDIT SUISSE WARBURG
PINCUS SMALL
COMPANY
VALUE FUND
ACQUIRING FUND ACQUIRED FUND PRO FORMA
- -------------------------------------------------------------------------------------------------
COMMON CLASS COMMON CLASS ADVISOR CLASS COMMON CLASS
- -------------------------------------------------------------------------------------------------
1 Year $137 $202 $227 $137
3 Year 448 624 700 440
5 Year 789 1,073 1,200 776
10 Year 1,751 2,317 2,575 1,727
- -------------------------------------------------------------------------------------------------
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 of the
assets of the Acquired Fund in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund on the
Closing Date. The Closing Date is expected to be on or about June 8, 2001.
Prior to the Closing Date, the Acquired Fund will endeavor to discharge
all of its known liabilities and obligations, other than those liabilities and
obligations which would otherwise be discharged at a later date in the ordinary
course of business. The Acquiring Fund will assume all liabilities, expenses,
costs, charges and reserves, including those liabilities reflected on an
unaudited statement of assets and liabilities of the Acquired Fund, as of the
close of regular trading on the New York Stock Exchange, Inc. ("NYSE"),
currently 4:00 p.m. New York City time, on the Closing Date, in accordance with
generally accepted
9
accounting principles consistently applied from the prior audited period. 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 Prospectus
or Statement 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
Acquired 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 Common Class
of the Acquiring Fund received by the Acquired Fund. Such liquidation and
distribution will be accomplished by the establishment of accounts in the names
of the Acquired Fund's shareholders on the share records of the Acquiring Fund's
transfer agent. Each account will represent the number of shares of the Common
Class of shares of the Acquiring Fund due to each of the Acquired Fund's
shareholders calculated in accordance with the Plan. After such distribution and
the winding up of its affairs, the Acquired 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, including approval of the Plan by the shareholders of the
Acquired Fund. Notwithstanding approval by the shareholders of the Acquired
Fund, the Plan may be terminated at any time at or prior to the Closing Date:
(i) by mutual agreement of the Acquired Fund and the Acquiring Fund; (ii) by the
Acquired Fund, in the event the Acquiring Fund shall, or by the Acquiring Fund,
in the event the Acquired 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 Acquired 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 Acquisition.
Approval of the Plan with respect to the Acquired 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 Acquired Fund are entitled to one vote for each share. If
the Acquisition is not approved by shareholders of the Acquired Fund, the Board
of Directors of the Acquired Fund will consider other possible courses of action
available to it, including resubmitting the Acquisition proposal to
shareholders.
10
DESCRIPTION OF THE ACQUIRING FUND SHARES. Shares of the Acquiring Fund
will be issued to the Acquired Fund in accordance with the procedures detailed
in the Plan and as described in the Acquiring Fund's Prospectus and Statement of
Additional Information. The Acquiring Fund, like the Acquired Fund, will not
issue share certificates to its shareholders. See "Information on Shareholders'
Rights" and the Prospectus of the Acquiring Fund for additional information with
respect to the shares of the Acquiring Fund.
The Acquiring Fund has authorized five classes of common stock, called
Class A shares, Class B shares, Class C shares, Class D shares and Common Class
shares. Common Class shares of the Acquiring Fund will be issued to holders of
Common Class shares and Advisor Class shares of the Acquired Fund. The Acquiring
Fund intends to continuously offer Common Class shares after consummation of the
Acquisition. 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.
FEDERAL INCOME TAX CONSEQUENCES. The exchange of assets of the Acquired
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 Acquired Fund will receive an opinion from Willkie Farr &
Gallagher, counsel to the Acquired 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 of the Acquired Fund's assets in exchange for
the Acquiring Fund shares and the assumption by the Acquiring Fund of the
liabilities of the Acquired Fund, and the distribution of the Acquiring Fund
shares to the 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 upon 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 the 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 the
liabilities of the Acquired Fund or upon the distribution of the Acquiring Fund
shares to the Acquired Fund's shareholders;
11
(4) no gain or loss will be recognized by shareholders of the Acquired
Fund upon the exchange of their shares for Acquiring Fund shares or upon the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund;
(5) the aggregate tax basis of the Acquiring Fund shares received by
each shareholder of the Acquired Fund pursuant to the Acquisition will be the
same as the aggregate tax basis of shares of the Acquired 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 Acquired Fund
will include the period during which the shares of the Acquired Fund exchanged
therefor were held by such shareholder (provided that such shares of the
Acquired Fund were held as capital assets on the date of the Acquisition); 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 Acquisition, 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.
You should recognize that an opinion of counsel is not binding on the
Internal Revenue Service ("IRS") or any court. Neither the Acquired Fund nor the
Acquiring Fund will seek to obtain a ruling from the IRS regarding the tax
consequences of the Acquisition. Accordingly, if the IRS sought to challenge the
tax treatment of the Acquisition and was successful, neither of which is
anticipated, the Acquisition could be treated, in whole or in part, as a taxable
sale of assets of the Acquired Fund, followed by the taxable liquidation
thereof.
Shareholders of the Acquired 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 Acquired
Fund should also consult their tax advisors as to state and local tax
consequences, if any, of the Acquisition.
12
CAPITALIZATION. The following table shows the capitalization of each
Fund as of October 31, 2000 and the capitalization of the Acquiring Fund on a
pro forma basis as of such date, after giving effect to the Acquisition.(1)
CREDIT SUISSE
WARBURG PINCUS
SMALL COMPANY
ACQUIRED PRO FORMA VALUE FUND
FUND ACQUIRING FUND ADJUSTMENTS PRO FORMA
- -------------------------------------------------------------------------------------
Net Assets - Fund Level $26,432,873 $206,081,654 -- $232,514,527
Common 26,403,491 -- ($26,403,491) --
Advisor 29,382 -- (29,382) --
Class A -- 188,501,273 -- 188,501,273
Class B -- 17,255,162 -- 17,255,162
Class C -- 219,866 -- 219,866
Class D(2) -- -- -- --
Common Class(3) -- 105,353 26,432,873 26,538,226
Net Asset Value
Common $13.57 -- ($13.57) --
Advisor 13.45 -- (13.45) --
Class A -- $22.54 -- $22.54
Class B -- 21.95 -- 21.95
Class C -- 21.94 -- 21.94
Class D(2) -- -- -- --
Common Class(3) -- 22.62 -- 22.62
Shares Outstanding
Common 1,945,293 -- (1,945,293) --
Advisor 2,185 -- (2,185) --
Class A -- 8,362,136 -- 8,362,136
Class B -- 786,118 -- 786,118
Class C -- 10,020 -- 10,020
Class D(2) -- -- -- --
Common Class(3) -- 4,658 1,168,562 1,173,220
- -------------------------------------------------------------------------------------
(1)Assumes the Acquisition had been consummated on October 31, 2000 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 Acquired 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)Class D of the Acquiring Fund had not commenced operations as of October 31,
2000.
(3)Class R shares have been redesignated Common Class shares of the Acquiring
Fund.
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
13
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 (excluding
sales charges) for the 1-year, 5-year, 10-year and since inception periods ended
October 31, 2000 for each Fund:
ACQUIRING FUND(2) ACQUIRED FUND(3)
- ---------------------------------------------------------------------------------
CLASS A CLASS B CLASS C COMMON CLASS COMMON ADVISOR
- ---------------------------------------------------------------------------------
Average Annual Total Return(1)
1-year 21.69% 20.80% n/a n/a 22.56% 22.04%
5-year 11.43% n/a n/a n/a n/a n/a
10-year 16.44% n/a n/a n/a n/a n/a
Since Inception --% 9.72% 22.16% 5.95% 12.76% 12.46%
n/a = Not disclosed as the classes were not in existence during all of the
period indicated.
- --------------------------------------------------------------------------------
(1)If CSAM or its predecessor had not temporarily waived fees and reimbursed
expenses, the total returns shown above would have been lower for the
Acquired Fund.
(2)Inception Date February 8, 1967 for Class A, February 28, 1996 for Class B,
February 28, 2000 for Class C and August 1, 2000 for Common Class. Class D of
the Acquiring Fund had not commenced operations as of October 31, 2000.
(3)Inception Date December 29, 1995 for Common Class and Advisor Class.
SHARE OWNERSHIP OF THE FUNDS
As of March 15, 2001 (the "Record Date"), the officers, Trustees or
Directors of the Acquiring Fund and the Acquired 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 the Record Date, 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 Funds.
NAME PERCENT OWNED AS OF RECORD DATE
- -------------------------------------------------------------------------------------
ACQUIRED FUND COMMON ADVISOR
- -------------------------------------------------------------------------------------
Charles Schwab & Co.* [34.32%]
National Financial Services Corp.* [9.81%] [19.15%]
Fidelity Investments Institutional Operations CNT* [9.22%]
Merrill Lynch Pierce Fenner & Smith [5.30%]
Donaldson Lufkin Jenrette Securities Corp.* [34.25%]
State Street Bank & Trust Cust. for the
IRA of Peggy D. Polonky [15.92%]
James Reis Montagne IRA E-Trade Custodian [11.35%]
Advanced Clearing FBO* [7.44%]
TRUSTLYNX & Co.* [7.04%]
14
NAME PERCENT OWNED AS OF RECORD DATE
- ----------------------------------------------------------------------------------------------
COMMON
ACQUIRING FUND CLASS A CLASS B CLASS C CLASS D CLASS
- ----------------------------------------------------------------------------------------------
Donald Macdonald [15.55%]
Karen Smith IRA [15.34%]
Robert W. Ahola [14.91%]
Norman Hormozl [11.21%]
Olive Jacobson [6.53%]
Frank Navarro Money Purchase Plan [5.63%]
G.M. Cochran Cust Elizabeth P Cochran [22.44%]
Bryan & Sara Foulk [20.03%]
G.M. Cochran Cust Lee Cochran II [14.97%]
Weiman Shi & Xianjun Kong [8.84%]
Wendy Martin IRA [7.96%]
Robert & Jane Oliver [5.76%]
Jay Hufford IRA [38.88%]
Alice M. Liey Trust [36.63%]
Pamela T. Vand [17.06%]
Henry Gibbans-Neff Jr. [7.27%]
DLJ Asset Management Group* [6.82%]
- ----------------------------------------------------------------------------------------------
* Each Fund believes these entities are not the beneficial owners of shares held
of record by them.
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 Acquired Fund.
INVESTMENT OBJECTIVES. The investment objective of the Acquired Fund is
long-term capital appreciation. The investment objective of the Acquiring Fund
is a high level of growth of capital. The Acquiring Fund is not intended for
investors whose principal objective is assured income or preservation of
capital. Each Fund's investment objective is a fundamental policy that can not
be changed without the approval of the respective shareholders. There can be no
assurance that either Fund will achieve its investment objective.
PRIMARY INVESTMENTS. To pursue its investment objective, the Acquired
Fund invests in equity securities of small U.S. value companies (at least 65% of
assets, under normal market conditions). Current income is a secondary
consideration in selecting portfolio investments. The Acquired Fund's adviser
defines value companies as companies whose earnings power or asset value does
not appear to be reflected in the current stock price. As a result, value
companies look underpriced according to financial measurements of their
intrinsic worth or business prospects. The Acquired Fund's adviser determines
value based upon research and analysis, taking all relevant factors into
account. The Acquired Fund considers a company to be small if its
capitalization, at the time of purchase, is within the range of capitalization
of companies in the Russell 2000 Index
15
(between $4 million and $6.1 billion as of December 31, 2000). The Acquired Fund
expects to invest primarily in the following types of equity securities: common
stocks and preferred stock; securities convertible into common stocks; and
securities such as rights and warrants, whose values are based on common stock.
To pursue its investment objective, the Acquiring Fund invests
primarily in equity securities of small market capitalization companies (at
least 65% of assets, under normal market conditions), including common stock,
securities convertible into common stock, preferred stock, other equity
securities, bonds or certain other debt securities. The Acquiring Fund considers
small companies to be companies with market capitalizations of $2 billion or
less at the time of purchase. The adviser seeks securities that appear to be
underpriced. The adviser looks for stocks issued by companies with proven
management, consistent earnings, sound finances and strong potential for market
growth. The Acquiring Fund focuses on the fundamentals of each small-cap company
instead of trying to anticipate what changes might occur in the stock market,
the economy, or the political environment.
The Acquiring Fund may invest up to 35% of its assets in investment
grade debt securities and may invest up to 20% of its assets in foreign
securities, whereas the Acquired Fund is subject to a corresponding 20% and 10%,
respectively, of total assets limitation. The Acquiring Fund invests in both
listed and unlisted securities, although the Acquiring Fund may not invest in
restricted securities (as compared to a limitation of up to 10% of net assets
for the Acquired Fund) but may invest in securities freely saleable among
certain institutional investors pursuant to Rule 144A under the Securities Act.
Like the Acquired Fund, the Acquiring Fund may enter into derivative
transactions, but the Acquiring Fund is generally subject to more stringent
limitations as to the types of derivative transactions which may be entered into
as well the purposes for which they are intended.
INVESTMENT LIMITATIONS. The Acquired 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 substantially similar fundamental investment limitations with
respect to issuer concentration; industry concentration; making loans;
underwriting securities; purchasing securities on margin; purchasing or selling
real estate; and issuing senior securities. Each Fund has a different
fundamental investment limitation with respect to borrowing as the Acquiring
Fund is limited to 15% of its total assets, while the Acquired Fund is limited
to 30% of its total assets. While the Acquired Fund has fundamental investment
limitations which prohibit investing in short sales and oil, gas or mineral
exploration or development programs, the Acquiring Fund has no stated
limitations in this context. While the Acquired Fund has a fundamental
limitation which prohibits investing in commodities, except it may purchase and
sell futures contracts, the Acquiring Fund may invest in commodities for hedging
purposes. While the Acquiring Fund has a fundamental investment limitation which
prohibits investing in restricted securities, the
16
Acquired Fund is subject to a non-fundamental limitation of up to 10% of its net
assets in securities which may be illiquid because of legal or contractual
restrictions on resale or securities for which there are no readily available
market quotations. Although each Fund has substantially similar limitations with
respect to pledging, mortgaging or hypothecating its assets and making
additional investments if borrowing exceeds 5% of assets, the Acquiring Fund's
limitations are fundamental while the Acquired Fund's limitations are
non-fundamental. While the Acquiring Fund has a fundamental investment
limitation which prohibits investing in companies for the purpose of exercising
control or management, the Acquired Fund has no stated limitation in this
context. Each Fund has substantially similar non-fundamental limitations with
respect to investing in other investment companies. Each Fund has a different
non-fundamental investment limitation with respect to investing in warrants,
options, futures and options thereon, securities lending, and when-issued
securities and forward commitments (see table below).
CERTAIN INVESTMENT PRACTICES. For each of the following practices, this
table shows the applicable investment limitation. Risks are indicated for each
practice. The specific risks associated with each of the investment practices
described below are defined for the Acquiring Fund in the Acquiring Fund's
Prospectus, which accompanies this Prospectus/Proxy Statement, and for the
Acquired Fund in the Acquired Fund's Prospectuses.
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 Acquired
Fund Fund
- ---------------------------------------------------------------------------------------------------
BORROWING. The borrowing of money from banks to meet 15% 30%
redemptions or for other temporary or emergency purposes. only 5% permitted for
Speculative exposure risk. purposes other than
meeting redemptions
CONVERTIBLE SECURITIES. Bond or preferred stock convertible to /x/ /x/
common stock of an issuer. Correlation, credit, hedged
exposure, liquidity, market, speculative exposure risks.
HEDGING TRANSACTIONS. Instruments, such as options, futures or /x/ /x/
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.
17
INVESTMENT PRACTICE LIMIT
- ---------------------------------------------------------------------------------------------------
Acquiring Acquired
Fund Fund
- ---------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities of foreign issuers. May include 20% 10%
depositary receipts. Currency, Information, market, political,
valuation risks.
FUTURES AND OPTIONS ON FUTURES. Exchange-traded contracts that enable 5% / /
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)
INVESTMENT COMPANIES. Investments in other investment companies. To the extent To the extent
Market, liquidity, operational risks. permitted by the permitted by the
1940 Act 1940 Act
INVESTMENT-GRADE DEBT SECURITIES. Debt securities rated within the four 35% 20%
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 securities and convertible -- 10%
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 (call) or sell (put) a 10% 25%
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.
RESTRICTED AND OTHER ILLIQUID SECURITIES. Securities with restrictions -- 10%
on trading, or those not actively traded. May include private May invest 10% in
placements. Liquidity, market, valuation risks. instruments having no
ready market
SECURITIES LENDING. Lending portfolio securities to financial institutions; 25% 33 1/3%
a fund receives cash, U.S. government securities or bank letters of
credit as collateral. Credit, liquidity, market, operational risks.
SHORT SALES. Selling borrowed securities with the intention of -- --
repurchasing them for a profit on the expectation that the market Shorts sales Shorts sales
pricewill drop. If a fund were to take short positions in stocks that "against the box" "against the box"
increase in value, then it would be likely to underperform are permitted up are permitted up
similar mutual funds that do not take short positions. to 10% of net to 10% of net
Liquidity, market, speculative exposure risks. assets assets
SINGLE INDUSTRY. Companies within a single industry. Correlation, 25% 25%
market, operational risks. except US except US
government government
instruments instruments
SPECIAL-SITUATION COMPANIES. Companies experiencing unusual /x/ /x/
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.
18
INVESTMENT PRACTICE LIMIT
- ---------------------------------------------------------------------------------------------------
Acquiring Acquired
Fund Fund
- ---------------------------------------------------------------------------------------------------
START-UP AND OTHER SMALL COMPANIES. Companies with small relative /x/ /x/
market capitalizations, including those with continuous Limited to 10% for
operations of less than three years. Information, liquidity, start-up companies
market, 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 holder the right 5% 10%
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. The purchase / / 20%
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.
DETERMINATION OF NET ASSET VALUE OF SHARES OF THE ACQUIRING FUND
The net asset value ("NAV") of shares of the Acquiring Fund is
determined at the close of regular trading on the NYSE (usually 4 p.m. Eastern
Time) each day the NYSE is open for business. It is calculated by dividing a
Class' total assets less its liabilities, by the number of shares of such Class
outstanding. The Acquiring Fund values its securities based on market quotations
when it calculates its NAV. If market quotations are not readily available,
securities and other assets are valued by another method the Board of Trustees
believes accurately reflects fair value. Debt obligations that will mature in 60
days or less are valued on the basis of amortized cost, unless the Board
determines that using this method would not reflect an investment's value. Some
securities of the Acquiring Fund may be listed on foreign exchanges that are
open on days (such as U.S. holidays) when the Acquiring Fund does not compute
its price. This could cause the value of the Acquiring Fund's portfolio
investments to be affected by trading on days when you cannot buy or sell
shares.
MANAGEMENT OF EACH FUND
CSAM, located at 466 Lexington Avenue, 16th Floor, New York, New York
10017-3174, provides investment advisory services to both Funds under separate
advisory agreements. The same persons at CSAM are responsible for the day-to-day
management of each of the Acquiring Fund and the Acquired Fund.
19
In addition, PFPC and CSAMSI provide accounting and co-administrative
services as applicable to each Fund. PFPC and CSAMSI provide certain financial
administration, accounting, administrative, personnel and other services
necessary to operate the Acquired Fund. CSAMSI has served as distributor of the
Acquired Fund prior to January 3, 2000 and since August 1, 2000 and has provided
distribution services to the Acquiring Fund since December 18, 2000. Provident
Distributors, Inc. served as distributor of the Acquired Fund from January 3 to
August 1, 2000. Boston Financial Data Services, Inc. ("BFDS") is the shareholder
servicing agent, transfer agent and dividend disbursing agent for the Acquired
Fund; Brown Brothers Harriman & Co. is the custodian of the Acquired Fund; and
PricewaterhouseCoopers LLP serves as auditor for the Acquired Fund. PFPC serves
as the transfer agent for the Acquiring Fund and Ernst & Young LLP serves as
auditor for the Acquiring Fund. The Board of Trustees of the Acquiring Fund has,
however, approved BFDS to serve as the transfer agent of such Fund.
The Acquired Fund pays a management fee to CSAM of 1.00% of average
daily net assets and the Acquiring Fund pays a management fee to CSAM of 0.75%
of the first $75 million in average daily net assets and 0.50% of the balance of
average daily net assets above $75 million. In addition to the management fee,
the Acquired Fund pays a co-administration fee to CSAMSI of .10% of average
daily net assets of its shares. On February 1, 2001, the Board of Trustees of
the Acquiring Fund approved the same fee for the Acquiring Fund. CSAM and CSAMSI
have, however, agreed to waive their respective fees as described below. On
February 1 and February 5, 2001, the Board of Trustees of the Acquiring Fund and
the Board of Directors of the Acquired Fund, respectively, approved the payment
to PFPC of a fee calculated at an annual rate of .075% of its first $500
million, .065% of the next $1 billion and .055% over $1.5 billion of the average
daily net assets (exclusive of out-of-pocket expenses). These new
co-administration fees payable by the Acquiring Fund are reflected in the
expense tables above, however, CSAM will limit average annual expenses of the
Acquiring Fund from the date of the acquisition of DLJ, November 3, 2000, until
November 3, 2002 to the annualized levels previously paid by the Acquiring Fund,
measured over the 60-day period ended on November 3, 2000. As a result, it is
not anticipated that the Acquiring Fund's average annualized operating expense
ratio will increase through November 3, 2002 as a result of the retention of new
co-administrators. In addition, 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 to maintain the net
average annualized expense ratio of the Common Class of the Acquiring Fund at
the lower of that of (a) the net average annualized expense ratio of the Common
Class of the Acquiring Fund at the closing of the Acquisition or (b) the net
average annualized expense ratio of the class of the Acquired Fund that such
holder will surrender at such closing, in each case measured over the 60-day
period ending on the Closing Date.
20
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 the current arrangements with
CSAM are described in each Fund's Prospectus 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 Acquired Fund (see "Information
About the Acquisition -- Share Ownership of the Funds" above). CSAM and its
affiliates have advised the Acquired Fund that they intend to vote the shares
over which they have voting power at the Meeting in the manner instructed by the
customers for which such shares are held. As of March 15, 2001, CSAM had
discretionary power to vote or dispose of securities over accounts which held in
the aggregate ____ shares or ____ % of the Acquired Fund's outstanding shares.
See "Voting Information."
CSAM may also be deemed to have an interest in the Plan and the
Acquisition because CSAMSI serves as the co-administrator and distributor for
each Fund. As such, CSAMSI receives compensation for its services.
INFORMATION ON SHAREHOLDERS' RIGHTS
GENERAL. The Funds are both open-end management investment companies
registered under the 1940 Act. Both Funds continuously offer to sell shares at
their current net asset values. The Acquiring Fund is a series of a
Massachusetts business trust, governed by its Agreement and Declaration of
Trust, dated February 22, 1996, as amended, By-Laws and Board of Trustees. The
Acquired Fund is a Maryland corporation organized on October 23, 1995 and is
governed by its Articles of Incorporation, By-Laws and Board of Directors. Each
Fund is also governed by applicable state and federal law. The Acquiring Fund
has an unlimited number of transferable shares of beneficial interest with par
value of $.01 per share. The Acquired Fund has an authorized capital of three
billion shares of common stock with a par value of $.001 per share, of which one
billion are designated Common Class and two billion are designated Advisor
Class. In each Fund, shares represent interests in the assets of the relevant
Fund and have identical voting, dividend, liquidation and other rights (other
than as set forth below) 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.
21
MULTI-CLASS STRUCTURE. Each Fund is authorized to offer multiple
classes. The Acquiring Fund offers Class A, B, C, D and Common Class shares. The
Acquired Fund offers Common Class and Advisor Class shares. The Acquiring Fund
expects to continue to offer shares of its Class A, B, C, D and Common Class
shares following the Acquisition.
TRUSTEES/DIRECTORS. The Agreement and Declaration of Trust of the
Acquiring Fund and the By-Laws of the Acquired Fund provide that the term of
office of each Trustee or Director, respectively, 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. In the case of the Acquiring Fund, the
Trustees have the power to set and alter their terms of office, and at any time
to lengthen or shorten their own terms or make their terms of unlimited
duration. Trustees of the Acquiring Fund may be removed by at least two-thirds
of the shares entitled to vote. Directors of the Acquired Fund may be removed by
a majority of the shares entitled to vote. Vacancies on the Boards of either
Fund may be filled by the Trustees/Directors remaining in office, provided that
no vacancy or vacancies may be filled by action of the remaining
Trustee/Directors if, after the filling of the vacancy or vacancies, fewer than
two-thirds of the Trustees/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 Trustees/Directors whenever (a) fewer than
a majority of the Trustees/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 Trustees/Directors and must be filled.
VOTING RIGHTS. Neither Fund holds a meeting of shareholders annually,
and there normally is no meeting of shareholders for the purpose of electing
Trustees/Directors unless and until such time as less than a majority of the
Trustees/Directors of the relevant Fund holding office have been elected by
shareholders or a vacancy exists that may not be filled by the remaining
Trustees/Directors. At such times, the Trustees or Directors then in office will
call a shareholders' meeting for the election of Trustees/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 Trustees or 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 TRUSTEES OR DIRECTORS. The constituent documents of each
Fund provide that its Trustees/Directors and officers shall not be liable in
such capacity for monetary damages for breach of fiduciary duty as a
Trustee/Director or officer, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of duties in the conduct of his office or the
discharge of his functions on the part of such Trustee, Director or officer. The
constituent instruments of each Fund provide that the relevant Fund shall
indemnify each Trustee/Director and officer and permit advances for the payment
of expenses relating to the matter for
22
which indemnification is sought, in the case of the Acquired Fund, to the
fullest extent permitted by applicable law and, in the case of both Funds,
except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties in the conduct of his office or the discharge of his
functions on the part of such Trustee/ Director or officer.
RIGHTS OF INSPECTION. Maryland law permits any shareholder of the
Acquired 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. Massachusetts business trust law does not have
such provisions. However, the Acquiring Fund's Agreement and Declaration of
Trust provides that the records of the Acquiring Fund shall be open to
inspection by shareholders to the same extent as is permitted to stockholders of
a corporation under the Massachusetts business corporation statute.
SHAREHOLDER LIABILITY. Under Maryland law, shareholders of the Acquired
Fund do not have personal liability for corporate acts and obligations.
Massachusetts law provides that shareholders of the Acquiring Fund could, under
certain circumstances, be held personally liable for the obligation of the
Acquiring Fund. However, the Agreement and Declaration of Trust of the Acquiring
Fund disclaims shareholder liability for acts or obligations of the Acquiring
Fund and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by such Fund or a Trustee. The
Plan contains such a disclaimer. The Agreement and Declaration of Trust of the
Acquiring Fund provides for indemnification from the Acquiring Fund's property
for all losses and expenses arising from such liability. Thus, the risk of
shareholder liability is limited to circumstances in which the Acquiring Fund
would be unable to meet its obligations. Upon payment of any liability incurred
by the Acquiring Fund, the shareholder paying the liability will be entitled to
reimbursement from the general assets of the Acquiring Fund.
The foregoing is only a summary of certain characteristics of the
operations of each Fund. The foregoing is not a complete description of the
documents cited. Shareholders should refer to the provisions of the constituent
documents and state laws governing each Fund for a more thorough description.
CONCLUSION
The Plan was approved by the Board of Trustees of the Acquiring Fund on
February 1, 2001 and by the Board of Directors of the Acquired Fund on February
5, 2001. The Board of each Fund has determined that the Acquisition is in the
best interests of shareholders of their respective Fund and that the interests
of existing shareholders of the Acquired Fund and the Acquiring Fund would not
be diluted as a result of the Acquisition. If the shareholders of the Acquired
Fund do not approve the Plan or if the Acquisition is not completed, the
Acquired Fund will continue to engage in business as a registered investment
company and the Board of the Acquired Fund will consider other possible courses
of action available to it, including resubmitting the Acquisition proposal to
shareholders.
23
REQUIRED VOTE
Approval of the Plan requires the affirmative vote of a majority of the Acquired
Fund's outstanding shares in the aggregate without regard to class, in person or
by proxy, if a quorum is present.
THE BOARD OF DIRECTORS OF THE ACQUIRED FUND, INCLUDING THE INDEPENDENT
DIRECTORS, RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
ADDITIONAL INFORMATION
The Acquiring Fund and the Acquired 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
prescribed rates. The Prospectus 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 Acquired Fund to be
used at the Special Meeting of Shareholders of the Acquired Fund to be held at
3:00 p.m. on May 25, 2001, at the offices of the Acquired Fund, 466 Lexington
Avenue, New York, New York 10017-3147 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 Acquired Fund on or about
April 1, 2001. Only shareholders of record as of the close of business on March
15, 2001 (the "Record Date") will be entitled to notice of, and to vote at, the
Meeting or any adjournment(s) thereof. As of the Record Date, the Acquired Fund
had the following shares outstanding and entitled to vote: ___________. The
holders of one-third of the shares of the Acquired Fund outstanding at the close
of business on the Record Date present in person or represented by proxy will
constitute a quorum for the Meeting of the Fund. For purposes of determining a
quorum for transacting business at the 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 vote against the Plan for purposes of
obtaining the requisite approval of the
24
Plan. If the enclosed proxy is properly executed and returned in time to be
voted at the 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 Meeting by the subsequent execution and submission of
a revised proxy, by written notice to Hal Liebes, Secretary of the Acquired
Fund, 466 Lexington Avenue, New York, New York 10017-3147 or by voting in person
at the Meeting.
CSAM has retained D.F. King & Co. to solicit proxies. 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. All expenses of the Acquisition, which are
currently estimated to be $[_________], 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 Acquired Fund and expenses incurred in
connection with the preparation of this Prospectus/Proxy 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 any proposal at the Meeting is
not present or sufficient votes to approve any proposal are not received prior
to 3:00 p.m. on May 25, 2001, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies with
respect to any proposal which did not receive the vote necessary for its passage
or to obtain a quorum. With respect to any proposal for which there is
represented a sufficient number of votes in favor, an act taken at the Meeting
will be effective irrespective of any adjournments with respect to any other
proposal. In determining whether to adjourn the 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 Acquired Fund present in person or by
proxy and entitled to vote at the Meeting. The persons named as proxies will
vote upon a decision to adjourn the Meeting after consideration of the best
interests of all shareholders of the Acquired Fund.
As of March 15, 2001, CSAM (or its affiliates) possessed or shared
voting power or investment power as a fiduciary on behalf of its customers, with
respect to the Acquired Fund as set forth above under "Proposal - Information
25
About the Acquisition -- Interest of CSAM in the Acquisition." CSAM and its
affiliates have advised the Acquired Fund that they intend to vote the shares
over which they have voting power at the Meeting, including shares that are held
directly or on behalf of employees, in the manner instructed by the customers or
employees for which such shares are held.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before
the Meeting. However, if any other matters come before the 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 Assets and Liabilities of each Fund as of
October 31, 2000, including their respective schedules of portfolio investments,
and 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's 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 Ernst & Young LLP, in
the case of the Acquiring Fund, and PricewaterhouseCoopers LLP, in the case of
the Acquired Fund, independent accountants, given on the authority of such firms
as experts in accounting and auditing.
ADDITIONAL MATERIALS
The following additional materials, which have been incorporated by
reference into the Statement of Additional Information, dated __________, 2001,
relating to this Prospectus/Proxy Statement and the Acquisition, will be sent to
all shareholders of the Acquired Fund requesting a copy of such Statement of
Additional Information.
1. The current Statement of Additional Information for the Acquiring
Fund, dated February 28, 2001 and any supplements thereto.
2. The current Statement of Additional Information for the Acquired
Fund, dated February 28, 2001 and any supplements thereto.
VALIDITY OF SHARES
The validity of the shares of the Acquiring Fund will be passed upon by
Hale & Dorr, 60 State Street, Boston, Massachusetts 02109, special counsel to
the Acquiring Fund.
26
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this ___ day of [INSERT], 2001, between and among Credit Suisse Warburg
Pincus Capital Funds (formerly the DLJ Focus Funds), a Massachusetts business
trust (the "Acquiring Trust"), for and on behalf of its series, Credit Suisse
Warburg Pincus Small Company Value Fund (formerly the DLJ Small Company Value
Fund) (the "Acquiring Fund"), Warburg, Pincus Small Company Value II Fund, Inc.,
a Maryland corporation (the "Acquired Fund"), and, solely for purposes of
Sections 4.3, 5.11 and 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 Acquired Fund (collectively, the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund in exchange solely for shares
of the Common Class shares of beneficial interest (the "Shares") of the
Acquiring Fund, and the assumption by the Acquiring Fund of liabilities of the
Acquired 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 Acquired Fund in liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
As the Acquiring Fund is a series of the Acquiring Trust, all parties
to this Agreement acknowledge and accept that the Acquiring Fund does not have a
Board of Trustees or officers separate from the other series of the Acquiring
Trust. Accordingly, all representations, warranties, covenants and/or other
obligations of any kind made by the Acquiring Fund in this Agreement are
expressly understood by all parties to this Agreement as being made by the
Trustees or officers of the Acquiring Trust, as applicable, in their respective
capacities as Trustees or officers (and not in their individual capacities) for,
and on behalf of, the Acquiring Fund.
WHEREAS, the Board of Directors of the Acquired Fund has determined
that the exchange of all of the assets of the Acquired Fund for Acquiring Fund
Shares and the assumption of the liabilities of the Acquired Fund by the
Acquiring Fund is in the best interests of the Acquired Fund and that the
interests of the existing shareholders of the Acquired Fund would not be diluted
as a result of this transaction; and
WHEREAS, the Board of Trustees of the Acquiring Trust has determined
that the exchange of all of the assets of the Acquired 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.
A-1
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 Acquired Fund in Exchange for Acquiring
Fund Shares and Assumption of the Acquired Fund's Liabilities and Liquidation
of the Acquired Fund
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired 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
Acquired Fund the number of Acquiring Fund Shares, including fractional
Acquiring Fund Shares, of each class of the Acquired Fund determined by dividing
the value of the Acquired 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
applicable class; and (ii) to assume the liabilities of the Acquired Fund, as
set forth in 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 Acquired 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 Acquired Fund and any deferred or prepaid expenses shown as an asset on
the books of the Acquired Fund on the Closing date provided in paragraph 3.1
(the "Closing Date").
(b) The Acquired Fund has provided the Acquiring Fund with a list of
all of the Acquired Fund's assets as of the date of execution of this Agreement.
The Acquired 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 Acquired 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 Acquired 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 Acquired Fund holds any
investments which the Acquiring Fund may not hold, the Acquired Fund will
dispose of such securities prior to the Closing Date. In addition, if it is
determined that the portfolios of the Acquired 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 Acquired
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 Acquired Fund will endeavor to discharge all of the known
liabilities and obligations of the Acquired Fund 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
A-2
liabilities, expenses, costs, charges and reserves, including those liabilities
reflected on unaudited statements of assets and liabilities of the Acquired Fund
and the Acquiring Fund prepared by PFPC, Inc. ("PFPC"), the accounting agent of
each Fund, 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 Acquired Fund
specifically arising from or relating to the operations and/or transactions of
the Acquired 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 soon on or after the Closing Date as is conveniently
practicable (the "Liquidation Date"), the Acquired Fund will liquidate and
distribute pro rata to the Acquired 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 Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the Acquiring Fund in
the name of the Acquired Fund's shareholders representing the respective pro
rata number of the Acquiring Fund Shares due such shareholders. All issued and
outstanding shares of the Acquired Fund will simultaneously be canceled on the
books of the Acquired Fund, although share certificates representing interests
in the Acquired Fund will represent a number of Acquiring Fund Shares after the
Closing Date as determined in accordance with Section 2.2. 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 Acquired Fund Shares on
the books of the Acquired 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 Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the
applicable Closing Date and such later date on which the Acquired Fund is
terminated.
2. Valuation
2.1. The value of the Acquired 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
A-3
being hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the Acquired Fund's then current prospectus or statement of
additional information.
2.2. The number of Common Class of the Acquiring Fund to be issued
(including fractional shares, if any) in exchange for Common Class and Advisor
Class shares of the Acquired Fund shall be determined by dividing the value of
the net assets of the Acquired Fund attributable to its respective Common Class
or Advisor Class shares determined using the same valuation procedures referred
to in paragraph 2.1 by the net asset value per Share of the Common Class shares
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 prospectus or statement of additional information.
2.3. All computations of value with respect to the Acquiring Fund and
the Acquired Fund shall be made by PFPC in accordance with its regular practice
as pricing agent for the Acquiring Fund.
3. Closing and Closing Date
3.1. The Closing Date for the Reorganization shall be June 8, 2001, 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 [10:00 a.m.], at the offices
of Willkie Farr & Gallagher or at such other time and/or place as the parties
may agree.
3.2. Citibank, N.A., the custodian for the Acquiring Fund (the
"Custodian"), shall deliver at the Closing a certificate of an authorized
officer stating that: (a) the Acquired 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
Acquired 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 Acquired 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 Acquired Fund shall deliver at the Closing a list of the names
and addresses of the Acquired 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
A-4
confirmation evidencing the Acquiring Fund Shares to be credited to the Acquired
Fund's account on the Closing Date to the Secretary of the Acquired Fund or
provide evidence satisfactory to the Acquired Fund that such Acquiring Fund
Shares have been credited to the Acquired 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 Acquired Fund represents and warrants to the Acquiring Fund as
follows:
(a) The Acquired Fund is a duly organized, validly existing corporation
in good standing under the laws of the State of Maryland;
(b) The Acquired 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 Acquired Fund is not, and the execution, delivery and
performance of this Agreement by the Acquired Fund will not result, in a
violation of its Articles of Incorporation or By-Laws or any material agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquired Fund is a party or by which the Acquired Fund or its property is bound
or affected;
(d) There are no contracts or other commitments (other than this
Agreement) of the Acquired Fund which will be terminated with liability to the
Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired Fund at October 31, 2000 and for each fiscal period from
December 29, 1995 (commencement of operations) to October 31, 2000 have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with generally accepted accounting principles consistently applied,
and such statements
A-5
(copies of which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Acquired Fund as of such dates, and there are no
known contingent liabilities of the Acquired Fund as of such dates not disclosed
therein;
(g) Since October 31, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired 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 Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Fund liabilities, or the redemption of the Acquired Fund shares by Fund
shareholders 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 Acquired 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 Acquired 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 Acquired Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company; all of the Acquired Fund's 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 Acquired
Fund are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and, except as set forth in the Fund's Articles of
Incorporation, non-assessable, by the Acquired Fund. All of the issued and
outstanding shares of the Acquired Fund will, at the time of Closing, be held by
the persons and in the amounts set forth in the records of the transfer agent as
provided in paragraph 3.4. The Acquired Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of the
Acquired Fund's shares, nor is there outstanding any security convertible into
any of the Acquired Fund's shares;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's 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 Acquired Fund may have acquired in
A-6
the ordinary course of business and of 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 Acquired Fund's
Board of Directors, and subject to the approval of the Acquired Fund's
shareholders, this Agreement will constitute a valid and binding obligation of
the Acquired 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 Acquired 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 prospectuses and statement of additional information of
the Acquired 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
(o) Insofar as the following relate to the Acquired 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 Acquired Fund that is responsive to the proxy statement requirements of a
registration statement on Form N-14 (the "Proxy Statement") and the prospectus
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.
A-7
4.2. The Acquiring Fund represents and warrants to the Acquired Fund as
follows:
(a) The Acquiring Fund is a duly established series of the Acquiring
Trust; the Acquiring Trust is a Massachusetts business trust duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts;
(b) The Acquiring Trust 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 prospectus 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 the Acquiring
Trust's Amended and Restated Agreement and Declaration of Trust (the "Agreement
and Declaration of Trust") 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;
(f) Except as previously disclosed in writing to and accepted by the
Acquired 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, 2000, 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 Acquired 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
A-8
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, except as set forth in the Acquiring
Trust's Agreement and Declaration of Trust. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Acquiring Fund Shares (except for the conversion feature with respect to
Class B shares of the Acquiring Fund), 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 Trustees, 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;
(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired 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, except as set forth in the
Acquiring Trust's Agreement and Declaration of Trust;
(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
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in conformity with information that was furnished by the Acquired 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.
4.3. CSAM represents and warrants to the Acquiring Trust as follows: To
the knowledge of CSAM (i) there are no claims, actions, suits or proceedings
pending against the Acquired Fund, and (ii) there are no claims, actions, suits
or proceedings threatened, or circumstances that have been identified by the
Management Committee of CSAM and the Secretary thereof as reasonably likely to
give rise to any claims, actions, suits or proceedings, against the Acquired
Fund that would materially adversely affect the Acquired Fund or its assets or
business.
5. Covenants of the Acquired Fund, the Acquiring Fund and CSAM
5.1. The Acquiring Fund and the Acquired Fund will operate their
respective businesses 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 Acquired Fund will call a meeting of the shareholders of the
Acquired Fund 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 Acquired 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 Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's Shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund
and the Acquired Fund will each 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.
5.6. The Acquired 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 Acquired
Fund's shareholders to consider approval of this Agreement and the transactions
contemplated herein.
5.7. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of the Acquiring Fund Registration
Statement.
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5.8. As promptly as practicable, but in any case within thirty days of
the Closing Date, the Acquired Fund shall furnish the Acquiring Fund with a
statement containing information required for purposes of complying with Rule
24f-2 under the 1940 Act.
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 Acquired 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 Acquired
Fund with respect to matters specifically relating to the Reorganization,
provided that such indemnification and advancement of expenses shall be
permitted to the fullest extent that is available under applicable law. This
paragraph 5.9 shall not protect any such Indemnified Person against any
liability to the Acquired 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
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
trustees of the Acquiring Fund (collectively, the "Disinterested Trustees"), 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 available to the Acquiring Fund at the time the advance
is proposed to be made, that there is reason to believe that the Indemnified
Person 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
Acquired Fund or (ii) use a significant portion of the Acquired Fund's historic
business assets in a business, and (b) will not sell or otherwise dispose of any
of the assets of the Acquired 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.
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5.11. CSAM agrees that the Acquiring Trust will succeed to all rights
that the Acquired Fund has, or would have but for the Reorganization, against
CSAM or its affiliates by reason of any act or failure to act by CSAM or any of
its affiliates prior to the Closing Date.
6. Conditions Precedent to Obligations of the Acquired Fund
The obligations of the Acquired 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 Acquired Fund a
certificate executed in its name by its President, Vice President, Secretary,
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the
Acquired 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 Acquired Fund shall reasonably request;
6.3. The Acquired Fund shall have received a written agreement from
CSAM to reimburse expenses to the Acquiring Fund to the extent necessary to
maintain the average annualized expense ratio of the Common Class shares of the
Acquiring Fund (after waivers) for the two-year period beginning on the Closing
Date at the lower of the average annualized expense ratio of Common Class Shares
or Advisor Class shares, respectively, of the Acquired Fund (after waivers) or
the Common Class shares of the Acquiring Fund (after waivers) measured over the
60-day period ending on the Closing Date; and
6.4. The Acquired Fund shall have received on the Closing Date a
favorable opinion from Sullivan & Cromwell, counsel to the Acquiring Trust,
dated as of the Closing Date, in a form reasonably satisfactory to the Acquired
Fund, covering the following points:
That (a) the Acquiring Trust is a validly existing business trust in
good standing under the laws of The Commonwealth of Massachusetts, has the
statutory power to own all of its properties and assets and to carry on its
business as a registered investment company and the Acquiring Fund is a duly
established series of the Acquiring Trust; (b) the Agreement has been duly
authorized, executed and delivered by the Acquiring Trust 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
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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 Acquired Fund's shareholders as
provided by this Agreement are duly authorized and upon such delivery will be
validly issued, fully paid and nonassessable (except as set forth in the
Acquiring Trust's Agreement and Declaration of Trust) 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 (i) a
violation of the Acquiring Trust's Agreement and Declaration of Trust or
By-Laws; or (ii) a default or breach of (A) the Interim Investment Advisory
Agreement, dated as of November 3, 2000, between the Acquiring Trust and CSAM;
(B) the Custodian Contract, dated as of July 15, 1999, between the Acquiring
Trust and Citibank, N.A.; (C) the Distribution Agreement, dated as of December
18, 2000, between the Acquiring Trust and CSAMSI; or (D) the agreements set
forth in Annex A to this Agreement; (e) to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or The Commonwealth of Massachusetts 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) to the knowledge of
such counsel, there is no legal, administrative or governmental proceeding,
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; (g)
the Acquiring Trust is registered as an investment company under the 1940 Act
and to the knowledge of such counsel, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect; (h) the
Prospectus, as of its date, and the Acquiring Fund Registration Statement
(except as to financial and statistical data contained therein, as to which no
opinion need be given), as of the date of the effectiveness of the Registration
Statement, appeared on their face to be appropriately responsive in all material
respects to the requirements of the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations thereunder; provided, however, that such counsel shall
be entitled to state that it does not assume any responsibility for the
accuracy, completeness or fairness of the Prospectus and the Acquiring Fund
Registration Statement; and (i) to the knowledge of such counsel 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.
With respect to all matters of Massachusetts law, such counsel shall be
entitled to state that, with the approval of the Acquired Fund, they have relied
upon the opinion of Hale & Dorr, and that their opinion is subject to the same
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assumptions, qualifications and limitations with respect to such matters as are
contained in the opinion of Hale & Dorr. Such opinion also shall include such
other matters incident to the transaction contemplated hereby as the Acquired
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
Acquired 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 by or on behalf of the Acquired
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;
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer or Assistant Treasurer of the Acquired Fund;
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President, Vice
President, Secretary, Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquiring Trust and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquired 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 Acquired Fund, in
a form satisfactory to the Secretary of the Acquiring Fund, covering the
following points:
That (a) the Acquired Fund is a validly existing corporation and in
good standing under the laws of the State of Maryland and 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 Acquired Fund and, assuming due authorization,
execution and delivery of the Agreement by the other parties hereto, is a valid
and binding obligation of the Acquired Fund enforceable against the Acquired
Fund in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or
A-14
affecting creditors' rights 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, conflict with the Acquired Fund's Articles of
Incorporation or By-Laws or in a material violation of any provision of any
material agreement (known to such counsel) to which the Acquired 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 material agreement, judgment, or decree to which the Acquired Fund is
a party or by which it or its property is 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 the state of Maryland is required
for the consummation by the Acquired 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), as of its date, appeared on its face to
be appropriately responsive in all material respects to the 1934 Act and the
1940 Act and the rules and regulations thereunder; provided, however, that such
counsel shall be entitled to state that it does not assume any responsibility
for the accuracy, completeness or fairness of the Proxy Statement; (f) to the
knowledge of such counsel, there is no legal, administrative or governmental
proceeding, investigation, order, decree or judgment of any court or
governmental body, only insofar as they relate to the Acquired 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 is
required to be described in the N-14 Registration Statement or to be filed as an
exhibit to the N-14 Registration Statement which is not described or filed as
required or which materially and adversely affect the Acquired Fund's business;
and (g) the Acquired Fund is registered as an investment company under the 1940
Act, and, to our knowledge, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
With respect to all matters of Maryland law, such counsel shall be
entitled to state that, with the approval of the Acquiring Fund, they have
relied upon the opinion of Venable, Baetjer and Howard and that their opinion is
subject to the same assumptions, qualifications and limitations with respect to
such matters as are contained in the opinion of Venable, Baetjer and Howard.
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-15
(a) they are independent public accountants with respect to the
Acquired Fund within the meaning of the 1933 Act and the applicable regulations
thereunder; and
(b) in their opinion, the financial statements and financial highlights
of the Acquired 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.
7.6. The Acquiring Fund shall have received from Ernst & Young 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
Acquiring 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 Acquiring 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 Acquired Fund and described in such letter (but not an examination
in accordance with generally accepted auditing standards), specified information
relating to each Fund appearing in the N-14 Registration Statement and the Proxy
Statement has been obtained from the accounting records of each Fund or from
schedules prepared by officers of each Fund having responsibility for financial
and reporting matters and such information is in agreement with such records,
schedules or computations made therefrom.
7.7. The Acquired Fund shall have delivered to the Acquiring Fund,
pursuant to paragraph 4.1(f), copies of financial statements of the Acquired
Fund as of and for the fiscal year ended October 31, 2000.
7.8. The Acquiring Fund shall have received from Ernst & Young 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, Ernst & Young LLP performed limited procedures and that on the basis of
those procedures it confirmed the matters set forth in paragraph 7.6.
7.9. The Board of Directors of the Acquired Fund, including a majority
of the directors who are not "interested persons" of the Acquired 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 Acquired Fund
and that the interests of the shareholders in the Acquired Fund would not be
diluted as a result
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of such transactions, and the Acquired 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 Acquired 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 Acquired Fund shall, and if
any of such conditions do not exist on or before the Closing Date with respect
to the Acquired 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 Acquired Fund in accordance with the provisions of the Acquired Fund's
Articles of Incorporation 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 Acquired 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 Acquired Fund, provided
that either party hereto may for itself waive any of such conditions.
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
Acquired Fund and the Acquiring Fund, substantially to the effect that for
federal income tax purposes:
(a) The transfer of all of the Acquired Fund's assets in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
liabilities of
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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; (b) 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 the liabilities of the Acquired Fund; (c) 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 the 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;
(d) no gain or loss will be recognized by shareholders of the Acquired Fund upon
the exchange of their Acquired Fund shares for the Acquiring Fund Shares or upon
the assumption by the Acquiring Fund of the liabilities of the Acquired Fund;
(e) 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 such Acquired Fund Shares were held as capital
assets on the date of the Reorganization); and (f) 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.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Acquired 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 Acquired Fund,
and the Acquired 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.
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
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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 Acquired 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 Acquired 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 Acquired Fund and the Acquiring
Fund; (2) the Acquired Fund in the event the Acquiring Fund shall, or the
Acquiring Fund, in the event the Acquired Fund shall, materially breach any
representation, warranty or agreement contained herein to be performed at or
prior to the Closing Date; or (3) the Acquired 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, the Acquiring Trust or the
Acquired Fund, or their respective Trustees, Directors or officers, to the other
party or parties.
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
Acquired Fund and the Acquiring Fund; provided, however, that following the
meeting of the Acquired Fund's shareholders called by the Acquired 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 Acquired Fund's Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
A-19
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 Acquiring Trust
at:
466 Lexington Avenue
New York, NY 10017
Attention: Martin Jaffe
with a copy to:
Earl D. Weiner, Esq.
Sullivan & Cromwell
125 Broad St.
New York, NY 10004
or to the Acquired 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.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
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.
A-20
14.5. Notice is hereby given that this Agreement is entered into on
behalf of the Acquiring Fund by an officer of the Acquiring Trust in such
officer's capacity as an officer and not individually. It is understood and
expressly stipulated that none of the Trustees, officers or shareholders of the
Acquiring Trust are personally liable hereunder. All persons dealing with the
Acquiring Trust shall look solely to the property of the Acquiring Trust for the
enforcement of any claims against the Acquiring Trust.
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.
CREDIT SUISSE WARBURG PINCUS CAPITAL FUNDS,
For and on Behalf of CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND
By:_____________________________________________________________________________
Name:
Title:
Attestation By:_________________________________________________________________
Name:
Title:
WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC.
By:_____________________________________________________________________________
Name: Hal Liebes
Title: Vice President and Secretary
Attestation By:_________________________________________________________________
Name: Gregory Bressler
Title: Assistant Secretary
Solely with respect to paragraphs 4.3, 5.11 and 9.2 hereof:
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:_____________________________________________________________________________
Name: Hal Liebes
Title: Managing Director
Attestation By:_________________________________________________________________
Name: Gregory Bressler
Title: Vice President
A-21
ANNEX A
TO AGREEMENT AND PLAN OF REORGANIZATION
LIST OF ADDITIONAL EXAMINED AGREEMENTS TO WHICH CREDIT SUISSE WARBURG
PINCUS CAPITAL FUNDS IS A PARTY
o Co-Administration Agreement with CSAMSI.
o Co-Administration Agreement with PFPC.
o Transfer Agency Agreement.
PROXY
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC.
VOTE THIS CARD TODAY
BY MAIL, BY FAX AT 1-212-_________, BY PHONE AT 1-800-_________
OR ON-LINE AT _________
CONTROL NUMBER:
Please be sure to sign and date this Proxy. Date_______________
Shareholder sign here____________________Co-owner sign here __________________
1. To approve the Agreement and Plan of Reorganization For Against Abstain
(the "Plan") providing that (i) Warburg, Pincus Small [ ] [ ] [ ]
Company Value II Fund, Inc. (the "Acquired Fund") would
transfer to Credit Suisse Warburg Pincus Small Company
Value Fund (the "Acquiring Fund"), a series of Credit
Suisse Warburg Pincus Capital Funds, all of its assets
in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the Acquired Fund's
liabilities, (ii) such shares of the Acquiring Fund
would be distributed to shareholders of the Acquired
Fund in liquidation of the Acquired Fund, and (iii) the
Acquired Fund would subsequently be dissolved.
The proxies are authorized to vote upon such other business as may properly come
before the Meeting or any adjournment or adjournments thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card.
RECORD DATE SHARES:
WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS - MAY 25, 2001
The undersigned hereby appoints [Hal Liebes, Michael Pignataro and Gregory
Bressler], each with the power of substitution, as proxies for the undersigned
to vote all shares of the Warburg, Pincus Small Company Value II Fund, Inc.
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, on May 25, 2001 at [10:00] a.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.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
NOTE: Please sign exactly as name(s) appear(s) hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________ _______________________________
_____________________________ _______________________________
_____________________________ _______________________________
PART B
STATEMENT OF ADDITIONAL INFORMATION DATED ____________ , 2001
Acquisition of the Assets of
WARBURG, PINCUS SMALL COMPANY VALUE II FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
By and in Exchange for Shares of
CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND,
a series of Credit Suisse Warburg Pincus Capital Funds,
466 Lexington Avenue
New York, New York 10017
(800) 225-8011
This Statement of Additional Information, relating specifically to the
proposed transfer of all of the assets of the Warburg, Pincus Small Company
Value II Fund, Inc. (the "Acquired Fund") to Credit Suisse Warburg Pincus Small
Company Value Fund (the "Acquiring Fund"), a series of Credit Suisse Warburg
Pincus Capital Funds (the "Acquiring Trust"), in exchange for shares of the
Acquiring Fund and the assumption by the Acquiring Fund of liabilities of the
Acquired Fund (the "Acquisition"), 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 28, 2001.
2. Annual Reports of the Acquiring Fund and the Acquired Fund for the
fiscal year ended October 31, 2000.
This Statement of Additional Information is not a prospectus. Extra copies
of the Prospectus/Proxy Statement, dated _________, 2001, 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.
FINANCIAL STATEMENTS
The Annual Reports of the Acquiring Fund and the Acquired Fund, for the
fiscal year ended October 31, 2000, and 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 and Schedule of Investments as of October 31, 2000
and the unaudited pro forma condensed Statement of Operations for the fiscal
year ended October 31, 2000 for each of the Acquiring Fund and the Acquired
Fund, as adjusted, giving effect to the Acquisition.
Warburg Pincus Small Company Value II Fund into Credit
Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Operations
For the 12 months ended October 31, 2000 (unaudited)
Credit Suisse
Warburg Credit Suisse Warburg Pincus
Pincus Small Warburg Pincus Small Co Value
Co Value Small Co Value Adjustments Pro-Forma
------------ -------------- ----------- ---------
Investment Income
Dividends ............................. 399,806 3,216,557 -- 3,616,363
Interest .............................. 86,841 123,339 -- 210,180
--------- ---------- --------- ----------
Total Investment Income ............. 486,647 3,339,896 -- 3,826,543
--------- ---------- --------- ----------
Expenses
Investment advisory services .......... 265,466 1,622,703 (99,549)(a) 1,788,620
Distribution fees - Class A ........... -- 524,059 -- 524,059
Distribution fees - Class B ........... -- 176,261 -- 176,261
Distribution fees - Class C ........... -- 363 -- 363
Distribution fees - Common Class
(former Class R) ...................... -- 19 66,187 (b,c) 66,206
Distribution fees - Common Class ...... 66,098 -- (66,098)(b) --
Distribution fees - Adviser Class ..... 179 (179)(b)
Transfer agent ........................ 13,455 264,000 20,407 (d) 297,862
Custodian ............................. 33,033 101,000 (111,326)(e) 22,707
Administrative and accounting fees .... 30,282 -- 150,038 (f) 180,320
Administrative services fees .......... 26,547 -- 200,051 (g) 226,598
Registration Fees ..................... 25,196 58,000 (25,196)(h) 58,000
Legal ................................. 15,894 37,000 (15,894)(h) 37,000
Directors'/Trustees' fees ............. 10,624 27,000 (10,624)(h) 27,000
Audit ................................. 12,000 16,000 (12,000)(h) 16,000
Printing .............................. 14,419 31,000 (14,419)(h) 31,000
Insurance expense ..................... 1,524 -- (1,524)(h) --
Miscellaneous ......................... -- 52,146 -- (h) 52,146
Offering Costs ........................ 14,944 -- (14,944)(h) --
--------- ---------- --------- ----------
529,661 2,909,551 64,930 3,504,142
Less: Expenses waived and
reimbursed by CSAM/DLJ .............. (43,515) -- (205,786)(i) (249,301)
Less: Expenses offset by Transfer Agent (5,175) -- 5,175 (i) --
Less: Expenses waived by PFPC ......... (17,786) -- 17,786 (i) --
--------- ---------- --------- ----------
Net Expenses .......................... 463,185 2,909,551 (117,895) 3,254,841
--------- ---------- --------- ----------
Net Investment Income ................... 23,462 430,345 117,895 571,702
--------- ---------- --------- ----------
Net Realized and Unrealized
Gain/(Loss) from Investments:
Net realized gain/(loss) from
investments .......................... 3,733,200 29,349,170 -- 33,082,370
Net change in unrealized
appreciation/(depreciation)
from investments ..................... 1,967,554 9,049,299 -- 11,016,853
--------- ---------- --------- ----------
Net realized and unrealized
gain from investments ................ 5,700,754 38,398,469 -- 44,099,223
--------- ---------- --------- ----------
Net increase in net assets
resulting from operations ............ 5,724,216 38,828,814 117,895 44,670,925
========= ========== ========= ==========
See notes to pro forma financial statements.
Warburg Pincus Small Company Value II Fund into Credit
Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Assets and Liabilities (unaudited)
As of October 31, 2000
Credit Suisse Warburg
Credit Suisse Warburg Pincus Small Co Value
WP Small Co. Value II Pincus Small Co Value Pro Forma
------------------------- ------------------------ ------------------------
Cost Value Cost Value Adjustments Cost Value
----------- ----------- ----------- ----------- ------------ ----------- -----------
ASSETS
Investments at value 22,182,943 26,296,812 147,859,222 208,948,194 170,042,165 235,245,006
Cash -- -- -- -- -- --
Receivable for investments sold
unsettled -- -- -- 1,414,374 -- 1,414,374
Receivable for Fund shares sold -- 1,084,648 -- 23,095 1,107,743
Dividends and interest
receivable -- 80,054 -- 151,118 -- 231,172
Prepaid expenses and other
assets -- 190,043 -- -- -- 190,043
----------- ----------- -----------
Total Assets 27,651,557 210,536,781 238,188,338
----------- ----------- -----------
LIABILITIES
Payable for investments purchased
unsettled -- 1,162,562 -- 3,742,368 -- 4,904,930
Due to Custodian -- -- -- 3,107 -- 3,107
Advisory fee payable -- 10,792 -- 135,173 -- 145,965
Administration fee payable -- 2,113 -- -- -- 2,113
Directors fee payable -- 2,725 -- -- -- 2,725
Distribution fee payable -- -- -- 52,879 -- 52,879
Payable for Fund shares redeemed -- 4,861 -- 157,799 -- 162,660
Accrued expenses payable -- 35,631 -- 363,801 -- 399,432
----------- ----------- -----------
Total Liabilities 1,218,684 4,455,127 5,673,811
----------- ----------- -----------
NET ASSETS 26,432,873 206,081,654 232,514,527
=========== =========== ===========
Common Class
Net Assets 26,403,491 -- (26,403,491) --
Shares outstanding 1,945,293 -- (1,945,293) --
Net asset value, offering 13.57 -- (13.57) --
price and redemption price per
share
Adviser Class
Net Assets 29,382 -- (29,382) --
Shares outstanding 2,185 -- (2,185) --
Net asset value, offering
price and redemption price per
share 13.45 -- (13.45) --
Class A Shares
Net Assets -- 188,501,273 -- 188,501,273
Shares outstanding -- 8,362,136 -- 8,362,136
Net asset value, offering -- 22.54 -- 22.54
price and redemption price per
share
Maximum offering price per share -- 23.92 -- 23.92
(net asset value plus maximum
sales charge)
Class B Shares
Net Assets -- 17,255,162 -- 17,255,162
Shares outstanding -- 786,118 -- 786,118
Net asset value, offering -- 21.95 -- 21.95
price and redemption price per
share
Class C Shares
Net Assets -- 219,866 -- 219,866
Shares outstanding -- 10,020 -- 10,020
Net asset value, offering -- 21.94 -- 21.94
price and redemption price per
share
Common Class Shares
Net Assets -- 105,353 26,432,873 26,538,226
Shares outstanding -- 4,658 1,168,562 1,173,220
Net asset value, offering -- 22.62 22.62
price and redemption price per
share
See notes to pro forma financial statements.
Warburg Pincus Small Company Value II Fund and
Credit Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Investments (unaudited)
As of October 31, 2000
- --------------------------------------------------------------------------------
Credit Suisse Warburg Pincus
Small Company Value
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
AMETEK, INC 185,000 4,023,750
AMSOUTH BANCORPORATION 127,022 1,770,369
APTARGROUP, INC 146,600 3,032,787
ARROW INTERNATIONAL, INC 116,000 4,676,250
ASSOCIATED BANC-CORP 24,300 584,719
BANKNORTH GROUP, INC 198,000 3,588,750
BANTA CORP 200,250 4,618,266
BECKMAN COULTER, INC 56,600 3,965,537
BENCHMARK ELECTRONICS, INC.* 45,500 1,831,375
BISYS GROUP, INC.* 106,000 4,995,250
BRADY (W.H.) CL. A 102,700 3,183,700
BROWN & BROWN, INC 153,800 4,998,500
C&D TECHNOLOGIES, INC.* 48,000 2,838,000
CAMBREX CORP 104,800 4,185,450
CARLISLE COMPANIES, INC 108,200 4,503,825
CENTURA BANKS, INC 33,000 1,268,437
CFW COMMUNICATIONS CO 8,500 168,937
CHROMCRAFT REVINGTON, INC.* 156,600 1,291,950
CULLEN/FROST BANKERS, INC 128,000 4,264,000
DALLAS SEMICONDUCTOR CORP 87,800 3,479,075
Warburg Pincus Small Company Value II Fund
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
AFTERMARKET TECH * 45,800 243,313
AMERICREDIT CORP. * 22,100 593,938
AVANT! CORP * 21,200 356,425
AVID TECHNOLOGY INC 7,200 99,900
BERGEN BRUNSWIG CORP 13,700 124,156
BORGWARNER, INC 7,000 264,250
BRE PROPERTIES, INC 17,100 540,788
CARAUSTAR IND 30 302
CENTERPOINT PROPERTIES CORP 11,800 524,363
CENTURY BANCORP, INC. CL. A 30,300 416,625
CROSS TIMBERS OIL CO 8,850 166,491
CUTTER & BUCK INC 12,600 129,150
DELPHI FINL GRP * 10,000 370,000
Credit Suisse Warburg Pincus Small Co Value Pro-Forma
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
AFTERMARKET TECH * 45,800 243,313
AMERICREDIT CORP. * 22,100 593,938
AMETEK, INC 185,000 4,023,750
AMSOUTH BANCORPORATION 127,022 1,770,369
APTARGROUP, INC 146,600 3,032,787
ARROW INTERNATIONAL, INC 116,000 4,676,250
ASSOCIATED BANC-CORP 24,300 584,719
AVANT! CORP * 21,200 356,425
AVID TECHNOLOGY INC 7,200 99,900
BANKNORTH GROUP, INC 198,000 3,588,750
BANTA CORP 200,250 4,618,266
BECKMAN COULTER, INC 56,600 3,965,537
BENCHMARK ELECTRONICS, INC.* 45,500 1,831,375
BERGEN BRUNSWIG CORP 13,700 124,156
BISYS GROUP, INC.* 106,000 4,995,250
BORGWARNER, INC 7,000 264,250
BRADY (W.H.) CL. A 102,700 3,183,700
BRE PROPERTIES, INC 17,100 540,788
BROWN & BROWN, INC 153,800 4,998,500
C&D TECHNOLOGIES, INC.* 48,000 2,838,000
CAMBREX CORP 104,800 4,185,450
CARAUSTAR IND 30 302
CARLISLE COMPANIES, INC 108,200 4,503,825
CENTERPOINT PROPERTIES CORP 11,800 524,363
CENTURA BANKS, INC 33,000 1,268,437
CENTURY BANCORP, INC. CL. A 30,300 416,625
CFW COMMUNICATIONS CO 8,500 168,937
CHROMCRAFT REVINGTON, INC.* 156,600 1,291,950
CROSS TIMBERS OIL CO 8,850 166,491
CULLEN/FROST BANKERS, INC 128,000 4,264,000
CUTTER & BUCK INC 12,600 129,150
DALLAS SEMICONDUCTOR CORP 87,800 3,479,075
DELPHI FINL GRP * 10,000 370,000
Warburg Pincus Small Company Value II Fund and
Credit Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Investments (unaudited)
As of October 31, 2000
- --------------------------------------------------------------------------------
Credit Suisse Warburg Pincus
Small Company Value
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
DENTSPLY INTERNATIONAL, INC 50,000 1,734,375
ELECTRO SCIENTIFIC 52,700 1,841,206
INDUSTRIES, INC.*
EQUITABLE RESOURCES, INC 84,000 4,872,000
ESCO ELECTRONICS CORP.* 148,000 2,691,750
FIRSTMERIT CORP 180,000 4,106,250
H.B. FULLER CO 59,610 2,015,563
HARTE HANKS, INC 100,000 2,212,500
HON INDUSTRIES, INC 77,000 1,852,813
HORACE MANN EDUCATORS CORP 52,400 880,975
HSB GROUP, INC 96,950 3,835,584
INVACARE CORP 166,700 4,750,950
KING PHARMACEUTICALS, INC 64,312 2,881,981
LIBERTY PROPERTY TRUST 49,000 1,295,437
LONGVIEW FIBRE CO 205,000 2,793,125
Warburg Pincus Small Company Value II Fund
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
DIME BANCORP 18,500 452,094
DTE ENERGY CO 9,200 332,350
EA INDUSTRIES, INC 1 --
ENERGY EAST CORP 17,700 357,319
ESSEX PROPERTY TRUST INC 9,800 509,600
EVERGREEN RESOURCES INC.* 13,100 360,250
FREMONT GENERAL CORP 159,200 577,100
GATX CORP 13,900 584,669
HARMAN INTERNATIONAL INDUS 13,400 643,200
HCC INSURANCE HOLDINGS 12,000 228,750
HEALTH MANAGEMENT ASSOC 12,900 255,581
HOME PROP OF NY, INC 7,800 212,063
HS RESOURCES INC 5,400 168,075
ICU MEDICAL, INC. * 9,100 227,500
INST MONEY MARKET TRUST 2,721,795 2,721,795
INTEGRATED DEVICE * 1,300 73,206
IVEX PACKAGING CORP. * 68,900 676,081
JDA SOFTWARE GROUP INC.* 4,820 72,601
LANDSTAR SYSTEMS, INC. * 7,700 363,825
LEAR CORP 10,000 272,500
LIFEPOINT HOSPITALS INC. * 5,200 201,500
LOJACK CORP. * 51,400 411,200
Credit Suisse Warburg Pincus Small Co Value Pro-Forma
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
DENTSPLY INTERNATIONAL, INC 50,000 1,734,375
DIME BANCORP 18,500 452,094
DTE ENERGY CO 9,200 332,350
EA INDUSTRIES, INC 1 --
ELECTRO SCIENTIFIC INDUSTRIES, 52,700 1,841,206
INC.*
ENERGY EAST CORP 17,700 357,319
EQUITABLE RESOURCES, INC 84,000 4,872,000
ESCO ELECTRONICS CORP.* 148,000 2,691,750
ESSEX PROPERTY TRUST INC 9,800 509,600
EVERGREEN RESOURCES INC.* 13,100 360,250
FIRSTMERIT CORP 180,000 4,106,250
FREMONT GENERAL CORP 159,200 577,100
GATX CORP 13,900 584,669
H.B. FULLER CO 59,610 2,015,563
HARMAN INTERNATIONAL INDUS 13,400 643,200
HARTE HANKS, INC 100,000 2,212,500
HCC INSURANCE HOLDINGS 12,000 228,750
HEALTH MANAGEMENT ASSOC 12,900 255,581
HOME PROP OF NY, INC 7,800 212,063
HON INDUSTRIES, INC 77,000 1,852,813
HORACE MANN EDUCATORS CORP 52,400 880,975
HS RESOURCES INC 5,400 168,075
HSB GROUP, INC 96,950 3,835,584
ICU MEDICAL, INC. * 9,100 227,500
INVACARE CORP 166,700 4,750,950
INST MONEY MARKET TRUST 2,721,795 2,721,795
INTEGRATED DEVICE * 1,300 73,206
IVEX PACKAGING CORP. * 68,900 676,081
JDA SOFTWARE GROUP INC.* 4,820 72,601
KING PHARMACEUTICALS, INC 64,312 2,881,981
LANDSTAR SYSTEMS, INC. * 7,700 363,825
LEAR CORP 10,000 272,500
LIBERTY PROPERTY TRUST 49,000 1,295,437
LIFEPOINT HOSPITALS INC. * 5,200 201,500
LOJACK CORP. * 51,400 411,200
LONGVIEW FIBRE CO 205,000 2,793,125
Warburg Pincus Small Company Value II Fund and
Credit Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Investments (unaudited)
As of October 31, 2000
- --------------------------------------------------------------------------------
Credit Suisse Warburg Pincus
Small Company Value
- --------------------------------------------------------------------------------
Market
Security Name Shares/Principal Value
- ------------- ------- -----------
LYDALL, INC.* 184,500 1,948,781
MANITOWOC, INC.* 85,000 2,310,938
MARCUS CORP 149,975 2,127,770
MENTOR GRAPHICS CORP.* 81,100 1,900,781
MERCURY COMPUTER SYSTEMS, INC 112,000 3,472,000
MEREDITH CORP 72,000 2,286,000
METHODE ELECTRONICS, INC 62,150 2,338,394
MICHAEL'S STORES, INC.* 39,000 948,188
MODINE MANUFACTURING CO 131,400 3,465,675
MYERS INDUSTRIES, INC 192,969 2,556,839
NATIONAL AUSTRALIA FUNDING 6,282,000 6,282,000
6.581%, 11/01/00**
NATIONAL COMMERCE 156,800 3,332,000
BANCORPORATION
NATIONAL FUEL GAS CO 89,600 4,804,800
NEIMAN MARCUS GROUP, INC.* 90,000 3,116,250
OCEANEERING INTERNATIONAL, 112,000 1,575,000
INC.*
PATTERSON DENTAL CO 15,000 469,688
PEOPLES' BANK, INC 105,000 2,126,250
Warburg Pincus Small Company Value II Fund
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
LSI INDUSTRIES INC 12,300 230,625
MANUFACTURED HOME COMMUNITIES 13,200 328,350
MCN CORP 14,300 352,138
MDC HOLDINGS INC 9,332 255,464
MISSION WEST PROPERTIES INC 49,386 663,624
MORRISON MANAGEMENT SPECIALIST 8,450 283,075
NATIONAL DATA CORP 3,400 129,625
NATL WESTRN LIFE INS CO CL. A * 2,500 221,250
NEWFIELD EXPLORATION CO 4,700 177,425
NEWPARK RESOURCES, INC. * 23,200 208,800
NSTAR 10,900 421,694
OCEAN ENERGY INC 13,400 185,925
OMNICARE, INC 28,500 498,750
PACKAGING CORP OF AMERICA 22,500 330,469
PATHMARK STORES INC 38,700 607,106
Credit Suisse Warburg Pincus Small Co Value Pro-Forma
- --------------------------------------------------------------------------------
Market
Security Name Shares/Principal Value
- ------------- ------- -----------
LSI INDUSTRIES INC 12,300 230,625
LYDALL, INC.* 184,500 1,948,781
MANITOWOC, INC.* 85,000 2,310,938
MANUFACTURED HOME COMMUNITIES 13,200 328,350
MARCUS CORP 149,975 2,127,770
MCN CORP 14,300 352,138
MDC HOLDINGS INC 9,332 255,464
MENTOR GRAPHICS CORP.* 81,100 1,900,781
MERCURY COMPUTER SYSTEMS, INC 112,000 3,472,000
MEREDITH CORP 72,000 2,286,000
METHODE ELECTRONICS, INC 62,150 2,338,394
MICHAEL'S STORES, INC.* 39,000 948,188
MISSION WEST PROPERTIES INC 49,386 663,624
MODINE MANUFACTURING CO 131,400 3,465,675
MORRISON MANAGEMENT SPECIALIST 8,450 283,075
MYERS INDUSTRIES, INC 192,969 2,556,839
NATIONAL AUSTRALIA FUNDING 6,282,000 6,282,000
6.581%, 11/01/00**
NATIONAL COMMERCE BANCORPORATION 156,800 3,332,000
NATIONAL DATA CORP 3,400 129,625
NATIONAL FUEL GAS CO 89,600 4,804,800
NATL WESTRN LIFE INS CO. CL A * 2,500 221,250
NEIMAN MARCUS GROUP, INC.* 90,000 3,116,250
NEWFIELD EXPLORATION CO 4,700 177,425
NEWPARK RESOURCES, INC. * 23,200 208,800
NSTAR 10,900 421,694
OCEANEERING INTERNATIONAL, INC.* 112,000 1,575,000
OCEAN ENERGY INC 13,400 185,925
OMNICARE, INC 28,500 498,750
PACKAGING CORP OF AMERICA 22,500 330,469
PATHMARK STORES INC 38,700 607,106
PATTERSON DENTAL CO 15,000 469,688
PEOPLES' BANK, INC 105,000 2,126,250
Warburg Pincus Small Company Value II Fund and
Credit Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Investments (unaudited)
As of October 31, 2000
- --------------------------------------------------------------------------------
Credit Suisse Warburg Pincus
Small Company Value
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
PERFORMANCE FOOD GROUP, 127,000 5,143,500
INC.*
PHARMACEUTICAL PRODUCT 155,000 4,853,438
DEVELOPMENT, INC.*
PIONEER STANDARD 239,450 3,322,369
ELECTRONICS, INC
POLYONE CORP 11,800 92,925
PROGRESS SOFTWARE CORP.* 196,800 3,111,900
PROTECTIVE LIFE CORP 120,200 2,779,625
ROGERS CORP.* 96,600 3,453,450
ROPER INDUSTRIES, INC 69,700 2,439,500
RPM, INC. OHIO 85,187 761,359
RUDDICK CORP 227,700 2,988,563
STEWART & STEVENSON 50,000 1,200,000
SERVICES, INC
SUSQUEHANNA BANCSHARES, 75,000 1,059,375
INC
TECHNITROL, INC 31,600 3,503,650
TELEFLEX, INC 99,900 3,452,794
TETRA TECH, INC 105,175 3,654,831
TIDEWATER, INC 54,100 2,498,744
UNIVERSAL FOODS CORP 196,800 3,886,800
Warburg Pincus Small Company Value II Fund
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
PHILIPS-VAN HEUSEN CORP 46,900 556,938
PRIDE INTERNATIONAL, INC.* 10,200 258,188
PROSPERITY BANCSHARES, INC 38,000 717,250
PUBLIC SERVICE CO NEW MEXICO 23,300 642,206
RADIAN GROUP, INC 3,905 276,767
RBB SWEEP 1,205,652 1,205,652
SCP POOL CORP. * 11,319 292,879
SENSORMATIC ELECTR * 6,000 108,000
SIERRA PACIFIC RESOURCES 23,100 397,031
SILICON GRAPHICS INC 18,700 84,150
STANCORP FINANCIAL GROUP 14,900 607,175
STANLEY WORKS 10,200 271,575
STORAGE TECHNOLOGY CORP 7,700 75,075
SUNRISE ASSISTED LIVING INC 13,200 308,550
TESORO PETROLEUM CORP 17,900 185,713
TRANSACTION SYSTEMS ARCHIT 4,700 63,450
UNISOURCE ENERGY 16,200 241,988
Credit Suisse Warburg Pincus Small Company Value Pro-Forma
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
PERFORMANCE FOOD GROUP, INC.* 127,000 5,143,500
PHARMACEUTICAL PRODUCT 155,000 4,853,438
DEVELOPMENT, INC.*
PHILIPS-VAN HEUSEN CORP 46,900 556,938
PIONEER STANDARD ELECTRONICS, 239,450 3,322,369
INC
PRIDE INTERNATIONAL, INC.* 10,200 258,188
POLYONE CORP 11,800 92,925
PROGRESS SOFTWARE CORP.* 196,800 3,111,900
PROSPERITY BANCSHARES, INC 38,000 717,250
PROTECTIVE LIFE CORP 120,200 2,779,625
PUBLIC SERVICE CO NEW MEXICO 23,300 642,206
RADIAN GROUP, INC 3,905 276,767
RBB SWEEP 1,205,652 1,205,652
ROGERS CORP.* 96,600 3,453,450
ROPER INDUSTRIES, INC 69,700 2,439,500
RPM, INC. OHIO 85,187 761,359
RUDDICK CORP 227,700 2,988,563
SCP POOL CORP. * 11,319 292,879
SENSORMATIC ELECTR * 6,000 108,000
SIERRA PACIFIC RESOURCES 23,100 397,031
SILICON GRAPHICS INC 18,700 84,150
STANCORP FINANCIAL GROUP 14,900 607,175
STANLEY WORKS 10,200 271,575
STEWART & STEVENSON SERVICES, 50,000 1,200,000
INC
STORAGE TECHNOLOGY CORP 7,700 75,075
SUNRISE ASSISTED LIVING INC 13,200 308,550
SUSQUEHANNA BANCSHARES, INC 75,000 1,059,375
TECHNITROL, INC 31,600 3,503,650
TELEFLEX, INC 99,900 3,452,794
TESORO PETROLEUM CORP 17,900 185,713
TETRA TECH, INC 105,175 3,654,831
TIDEWATER, INC 54,100 2,498,744
TRANSACTION SYSTEMS ARCHIT 4,700 63,450
UNISOURCE ENERGY 16,200 241,988
UNIVERSAL FOODS CORP 196,800 3,886,800
Warburg Pincus Small Company Value II Fund and
Credit Suisse Warburg Pincus Small Company Value Fund
Combined Statement of Investments (unaudited)
As of October 31, 2000
- --------------------------------------------------------------------------------
Credit Suisse Warburg Pincus
Small Company Value
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
VARCO INTERNATIONAL, INC.* 159,767 2,755,981
WASHINGTON GAS LIGHT CO 134,500 3,429,750
WEBSTER FINANCIAL CORP 50,000 1,218,750
WERNER ENTERPRISES, INC 206,750 2,894,500
WOODHEAD INDUSTRIES, INC 197,800 4,351,600
-----------
208,948,194
===========
Warburg Pincus Small Company Value II Fund
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
UNIVERSAL HEALTH * 3,700 310,338
URBAN SHOPPING CENTERS INC 10,900 522,519
WALTER INDUSTRIES, INC. * 50,500 375,594
WEBSTER FINANCIAL CORP 15,200 370,500
-----------
26,296,812
===========
Credit Suisse Warburg Pincus Small Company Value Pro-Forma
- --------------------------------------------------------------------------------
Market
Security Name Shares Value
- ------------- ------- -----------
UNIVERSAL HEALTH * 3,700 310,338
URBAN SHOPPING CENTERS INC 10,900 522,519
VARCO INTERNATIONAL, INC.* 159,767 2,755,981
WALTER INDUSTRIES, INC. * 50,500 375,594
WASHINGTON GAS LIGHT CO 134,500 3,429,750
WEBSTER FINANCIAL CORP 65,200 1,589,250
WERNER ENTERPRISES, INC 206,750 2,894,500
WOODHEAD INDUSTRIES, INC 197,800 4,351,600
-----------
235,245,006
===========
* NON-INCOME PRODUCING SECURITIES
** COMMERCIAL PAPER IS TRADED ON A DISCOUNT BASIS: THE INTEREST RATE SHOWN
REFLECTS THE DISCOUNT RATE PAID AT THE TIME OF PURCHASE BY THE FUND.
*** CREDIT SUISSE WARBURG PINCUS SMALL COMPANY VALUE FUND DOES NOT ANTICIPATE
HAVING TO SELL ANY SECURITIES AS A RESULT OF THIS ACQUISITION.
See notes to pro forma financial statements.
Credit Suisse Warburg Pincus Small Company Value Fund
Warburg Pincus Small Company Value II Fund
Notes to Pro Forma Financial Statements (unaudited)
October 31, 2000
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 Warburg Pincus Small
Company Value II Fund ("WP Small Company") into the Credit Suisse Warburg Pincus
Small Company Value Fund ("Credit Suisse Small Company"). The proposed
acquisition will be accounted for by the method of accounting for tax-free
mergers of investment companies. The acquisition provides for the transfer of
all of the assets of WP Small Company to Credit Suisse Small Company in exchange
for Credit Suisse Small Company Common Shares, the distribution of such Credit
Suisse Small Company Common Shares to Common Class and Advisor Class
shareholders of WP Small Company and the subsequent liquidation of WP Small
Company. The accounting survivor in the proposed acquisition will be Credit
Suisse Small Company. This is because although WP Small Company has the same
investment objective as Credit Suisse Small Company, the surviving fund will
invest in a style that is similar to the way in which Credit Suisse Small
Company is currently operated (including hedging and investment in debt
securities). Additionally, Credit Suisse Small Company has a significantly
larger asset base than WP Small Company.
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 Registration Statement filed on Form N-14.
WP Small Company and Credit Suisse Small Company 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 acquisition of WP
Small Company by Credit Suisse Small Company.
(a) To decrease Investment Advisory Services Fees to reflect the revised fee
schedule.
(b) To re-classify Distribution fees from WP Small Company Common Class Shares
and Advisor Class Shares to Credit Suisse Small Company Common Shares.
(c) To decrease Distribution fees in WP Small Company Advisor Shares from 0.50%
to 0.25%.
(d) Adjustment based on the contractual agreement with the transfer agent for
the combined fund.
(e) Adjustment based on the contractual agreements with the custodian for the
combined fund.
(f) Adjustment based on the addition of PFPC as administrator based on fee
schedule.
(g) Adjustment based on the addition of CSAMSI as co-administrator.
(h) Assumes elimination of duplicate charges in combination, and reflects
management's estimates of combined pro-forma operations.
(i) Adjustment to eliminate fee waiver for PFPC and Transfer Agent offset.
Increase CSAM waiver and reduce total expense ratio.
2. Summary of Significant Accounting Policies
Following is a summary of significant accounting policies, which are
consistently followed by WP Small Company and Credit Suisse Small Company in the
preparation of their 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 Trustees
(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 - WP Small Company and Credit Suisse Small Company
intend to qualify for tax treatment applicable to regulated investment companies
under the Internal Revenue Code of 1986 (the "Code"), as amended, and distribute
all of their taxable income to their 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 annually.
PART C
OTHER INFORMATION
Item 15. Indemnification. The response to this item is incorporated by reference
to "Plan of Reorganization" under the caption Proposal Number 1 - Information
About the Reorganization" and to "Liability of Directors" under the caption
"Proposal - Information on Shareholders' Rights" in Part A of this Registration
Statement.
Item 16. Exhibits
(1)(a) Registrant's Amended and Restated Declaration of Trust is incorporated
by reference to Post-Effective Amendment No. 14 to Registrant's
Registration Statement on Form N-1A (File No. 33-3706) filed on
December 29, 1995.
(1)(b) Registrant's Amendment to Amended and Restated Declaration of Trust is
incorporated by reference to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N1-A (File No. 33-3706)
filed on February 20, 1997.
(1)(c) Registrant's Amendment No. 2 to Amended and Restated Declaration of
Trust is incorporated by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N1-A (File No. 33-3706)
filed on February 28, 2000.
(1)(d) Registrant's Amendment No. 3 to Amended and Restated Declaration of
Trust is incorporated by reference to Post-Effective Amendment No. 27
to Registrant's Registration Statement on Form N1-A (File No.
33-3706) filed on January 24, 2001.
(1)(e) Registrant's Amendment No. 4 to Amended and Restated Declaration of
Trust is incorporated by reference to Post-Effective Amendment No. 28
to Registrant's Registration Statement on Form N1-A (File No. 33-3706)
filed on February 28, 2001.
(2)(a) By-Laws of the Registrant are incorporated by reference to Registrant's
Registration Statement on Form N1-A (File No. 33-3706) filed on
March 4, 1986.
(2)(b) Amendments to the By-Laws are incorporated by reference to
Post-Effective Amendment No. 28 to Registrant's Registration Statement
on Form N1-A (File No. 33-3706) filed on February 28, 2001.
(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) Specimen Stock Certificate is incorporated by reference to
Post-Effective Amendment No. 8 to Registrant's Registration Statement
on Form N1-A (File No. 33-3706) filed on February 24, 1992.
(6)(a) Investment Advisory Agreement is incorporated by reference to
Post-Effective Amendment No. 8 to Registrant's Registration Statement
on Form N1-A (File No. 33-3706) filed on February 24, 1992.
(6)(b) Interim Investment Advisory Contract with Credit Suisse Asset
Management, LLC dated November 3, 2000 is incorporated by reference to
Post-Effective Amendment No. 26 to Registrant's Registration Statement
on Form N1-A (File No. 33-3706) filed on December 29, 2000.
(7) Not Applicable.
(8) Not Applicable.
(9) Custodial Services Agreement is incorporated by reference to
Post-Effective Amendment No. 9 to Registrant's Registration Statement
on Form N1-A (File No. 33-3706) filed on December 31, 1992.
(10)(a) Form of Distribution Plan pursuant to Rule 12b-1 under the 1940 Act is
incorporated by reference; material provisions, other than the fee rate,
as set forth under "Summary - Sales Charges" in Part A of this
Registration Statement are substantially similar to those of the
corresponding exhibit in Post-Effective Amendment No. 25 to Registrant's
Registration Statement on Form N1-A (File No. 33-3706) filed on
August 1, 2000.
(10)(b) Distribution Agreement dated as of December 18, 2000 is incorporated by
reference to Post-Effective Amendment No. 26 to Registrant's
Registration Statement on Form N1-A (File No. 33-3706) filed on
December 29, 2000.
(10)(c) Registrant's Plan for Multiple Classes of Shares pursuant to Rule 18f-3
is incorporated by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N1-A (File No. 33-3706)
filed on February 28, 2001.
(11) Opinion and Consent of Hale & Dorr, counsel to Registrant, with
respect to validity of shares, to be filed by amendment.
(12) Opinion of Willkie Farr & Gallagher with respect to tax matters.*
(13)(a) Form of Transfer Agency Agreement is incorporated by reference to
Post-Effective Amendment No. 28 to Registrant's Registration Statement
on Form N1-A (File No. 33-3706) filed on February 28, 2001.
- ----------
* See Item 17 (undertakings).
(13)(b) Form of Co-Administration Agreement with Credit Suisse Asset Management
Securities, Inc. is incorporated by reference to Post-Effective
Amendment No. 28 to Registrant's Registration Statement on Form N1-A
(File No. 33-3706) filed on February 28, 2001.
(13)(c) Form of Co-Administration Agreement with PFPC, Inc. is incorporated by
reference to Post-Effective Amendment No. 28 to Registrant's
Registration Statement on Form N1-A (File No. 33-3706) filed on
February 28, 2001.
(14)(a) Consent of Ernst & Young LLP.
(14)(b) Consent of PricewaterhouseCoopers LLP.
(15) Not Applicable.
(16) Powers of Attorney.
(17)(a) Form of Proxy Card (included as an exhibit to Registrant's
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(17)(b) Registrant's declaration pursuant to Rule 24f-2 is incorporated by
reference to the Registration Statements.
(17)(c) Prospectus of the Registrant.
(17)(d) Prospectuses of the Acquired Fund.
(17)(e) Statement of Additional Information for the Registrant.
(17)(f) Annual Report of the Registrant.
(17)(g) Annual Report of the Acquired Fund.
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 to file the tax opinion required by
Item 16(12) in a post-effective amendment to this Registration Statement
after the Closing of the Reorganization.
(3) 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.
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 9th day of March, 2001.
Credit Suisse Warburg Pincus Capital Funds
on behalf of Credit Suisse Warburg Pincus
Small Company Value Fund
By: /s/ G. Moffett Cochran*
---------------------------------------
Name: G. Moffett Cochran
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/ G. Moffett Cochran* President and Chairman March 9, 2001
- -------------------------- of the Board
G. Moffett Cochran
/s/ Martin Jaffe Trustee and Treasurer March 9, 2001
- --------------------------
Martin Jaffe
/s/ Stig Host* Trustee March 9, 2001
- --------------------------
Stig Host
/s/ Peter F. Krogh* Trustee March 9, 2001
- --------------------------
Peter F. Krogh
/s/ Robert E. Fischer* Trustee March 9, 2001
- --------------------------
Robert Fisher
/s/ Wilmot H. Kidd, III* Trustee March 9, 2001
- --------------------------
Wilmot H. Kidd, III
/s/ John J. Sheehan* Trustee March 9, 2001
- --------------------------
John J. Sheehan
* By:
/s/ Martin Jaffe
- --------------------------
Martin Jaffe
(Attorney-in-fact)
Pursuant to Power of Attorney
EXHIBIT INDEX
Exhibit Number Description Page
- -------------- ----------- ----
14(a) Consent of Ernst & Young LLP ________
14(b) Consent of PricewaterhouseCoopers LLP ________
16 Powers of Attorney ________
17(c) Prospectus of the Acquiring Fund. ________
17(d) Prospectuses of the Acquired Fund. ________
17(e) Statement of Additional Information for
the Acquiring Fund. ________
17(f) Annual Report of the Acquiring Fund ________
17(g) Annual Report of the Acquired Fund ________